Dibrugarh University Question Papers: Advanced Financial Accounting Nov' 2017 | B.Com 3rd Sem

 Advance Financial Accounting

2017 (November)

Commerce (Speciality)

Course: 301: Advance Financial Accounting)

Full Marks: 80

Pass Marks: 32

The figures in the margin indicate full marks for the questions.

1.       (a) State whether the following statements are True or False:                           1x4=4

a)      Paid up capital of a banking company must be at least two-third of the subscribed capital of a banking company.                        False, one half

b)      In the financial statements of insurance companies liabilities under the existing policies are determined by actuarial valuation in case of life insurance.          True

c)       In case of marine insurance, the provision against unexpired risk is 50%.        False, 100%

d)      Brokerage is added in the cost of investment in the books of purchaser of investment.          True

(b) Fill in the blanks:                                                                                                        1x4=4

a)      A banking company cannot grant loan to any of its directors.

b)      Life insurance business is carried on by Life Insurance Corporation of India since 1956.

c)       The general insurance business was taken over by the central Government with effect from 1972.

d)      Sale of right is a capital receipts in case of right issue.

2.       Write short notes on any four of the following:                    4x4=16

a)      Statutory reserve

b)      Surrender value

c)       Reserve for unexpired risk

d)      Purposes of an Investment A/c

e)      Ex-interest quotations

3.       (a) Discuss the following items which are usually found in a Bank Balance Sheet: 3 x4=14

a)      Rebate on bills discounted

b)      Inter branch adjustments

c)       Contingent liabilities

d)      Money at call and short notice


(b) From the following information, prepare Profit & Loss A/c of Jai Bharat Bank Ltd. For the year ended 31st March, 2017. Working should from a part of your answer: 14



(in ‘000)



 (in ‘000)

Interest on loans

Interest on fixed deposits


Exchange and brokerage

Salaries and allowances

Discount on bills(gross)

Interest on cash credit

Interest on temporary overdrafts in current accounts










Interest on Savings Bank deposits

Postage and stamps

Printing and stationery

Sundry expenses


Taxes and licences

Audit fees








Additional information:

a)      Rebate on bills discounted- Rs. 30,000

b)      Salary of managing director- Rs. 30,000

c)       Provision for bad debts- Rs. 40,000

d)      Provision for income tax is to be made @ 55% (round off to the nearest thousands)

e)      Interest of Rs. 4,000 on doubtful debts was wrongly credited to Interest on Loan A/c

f)       Provide Rs. 15,000 as dividend

4. (a) What is Life Insurance? What are the statutory and subsidiary books maintained by a life insurance company. 2+6+6=14


(b) From the figures set out below, prepare Revenue A/c of Eastern India Life Insurance company for the ended 31st march 2017:                                     14

                                                                                                                                                Rs.(in ‘000)

Life assurance Fund (01.04.2016)                                                                              7,50,000

Premiums                                                                                                                           3,72,000

Interest, dividends and rents                                                                                     2,26,000

Consideration for annuities granted                                                                        12,500

Fines for revival of lapsed policies                                                                            200

Claims paid                                                                                                                         42,500

Bad debts                                                                                                                            400

Expenses of management                                                                                           35,000

Commission                                                                                                                       16,000

Bonus in reduction of premium                                                                                 500

Annuities paid                                                                                                                   18,500

Surrenders                                                                                                                         25,500

Surplus on revaluation of reversions purchased                                                                 1,500

Income tax paid                                                                                                                                32,000

Bonus in cash                                                                                                                     18,000

5. (a) What is General Insurance? Point the main features of accounts of general insurance companies. How profit or loss is ascertained in general insurance business? 2+7+5=14


(b) You are required to prepare Revenue A/c of X Fire Insurance Co. Ltd. From the following figures for the year ended 31st March 2017:


Reserve for unexpired risk (01.04.2016)                                                                 1,65,000

Fire insurance premium                                                                                                                4,00,000

Fire insurance claims paid                                                                                             2,10,000

Fire insurance commission                                                                                           24,730

Fire insurance expenses                                                                                                               85,000

Contribution to fire brigades                                                                                       2,800

Additional fire insurance reserve                                                                              1,55,000

Dividend to shareholders                                                                                             8,000

Transfer fees (general)                                                                                                 30

Interest and dividend (fire fund)                                                                                              10,000

Make provision for unexpired risk on the basis of fire insurance premiums           14

6. (a) What is Investment Account? Why is it prepared? Mention the special features of Investment Account. How are stock exchange transactions (sale and purchase of securities) recorded in books?   2+2+6+4=14


(b) On 1st April, 2016 , 400 12% debentures 0f Rs. 100 in X Ltd. held as investment by Y Ltd. at a cost of Rs. 36,800. Interest is payable on 31st March every year. On 1st August, 2016, 50 debentures were purchased @ Rs. 96 cum-interest and on 1st February 2017, 250 debentures were sold at Rs. 99 ex-interest. On 1st march 2017, 100 debentures were purchased at Rs. 94 ex-interest. On 31st March 2017, 150 debentures were sold at Rs. 98 cum-interest. Prepare investment A/c from the above for the year ending 31st March, 2017 using FIFO method. Market price of using debentures on 31st March 2017 is at par.              14

(Old course)

Full marks: 80

Pass marks: 32

1. (a) Fill in the blanks:                                   1x4=4

a)      A non performing asset is an asset that ceases to generate income for the bank.

b)      Revenue account of a life insurance business is prepared in the prescribed Form A - RA of the Insurance act.

c)       Under the Provincial Insolvency Act, rent due to the ________is not preferential.

d)      Investment Account is a real Account.

(b) Write True and False:                              1x4=4

a)   Banks show the provision for income tax under Provision and Contingencies.               False, other liabilities and provisions

b)   Life Assurance fund represents profit of the life insurance company.                False

c)    Only FIFO method is used to calculate cost of closing balance of investment. False, fifo and average

d)   Inflation is a state in which too much of money is chasing too few goods.

2. Write short notes on any four of the following:                                                             4x4=16

a)      Sub-standard Assets

b)      Life insurance Corporation act, 1956

c)       Deficiency A/c

d)      Columnar Investment A/c

e)      Historical Accounting

3. (a) From the following information, prepare the profit & Loss A/c with necessary schedules of AB Bank Ltd. for the year ended 31st March 2017:                                 12


Interest on Loans                                                                             25,90,000

Interest on Deposits                                                                       38,50,000

Rebate on Bills Discounted                                                          4,90,000

Commission                                                                                       82,000

Establishment Charges                                                                  5,40,000

Discount on Bills Discounted (Net)                                           14,60,000

Interest on Cash Credit                                                                 22,30,000

Rent and rates                                                                                  1,80,000

Interest on overdrafts                                                                   15,40,000

Directors fees                                                                                    30,000

Auditor’s fees                                                                                   12,000

Postal expenses                                                                                               14,000

Printing and Stationery                                                                  29,000

Sundry Expenses                                                                             17,000

Other information:

a)      Bad debts Rs. 4,00,000

b)      Provision for Income Tax Rs. 10,00,000


(b) Explain in relation to bank Accounting:                                 3x4=12

a)      Non Performing Assets

b)      Rebate on Bills Discounted

c)       Cash Reserve Ratio

d)      Slip System of Posting

4. (a) What is meant by Reserve for Unexpired Risk? How and why is it created in general insurance? Also distinguish between general insurance and life insurance.     2+3+3+3=11


(b) The Life Assurance Fund of an insurance company showed a balance of Rs. 64,24,000. It is found that the following adjustments are yet to be made:                             Rs.

Dividend from investments                                                         3,21,000

Income tax on above                                                                     65,200

Bonus in reduction of premium                                                                 9,35,400

Claims covered under reinsurance                                           3,79,000

Claims intimated but not accepted                                           9,40,000

Pass necessary Journal Entries and compute the actual Life Assurance fund 8+3=11

5. (a) What is Statement of Affairs? How is it prepared? Distinguish between a statement of Affairs and a Deficiency account.                                                               2+5+4=11


(b) Mr. Rajen filed his petition for bankruptcy on 31st March 2017, 2017 on which date his books showed the following balance:               11

                                                                                           Dr.                                          Cr.

Cash in hand                                                                  200

Fixtures and fittings (estimated to

produce Rs. 1,600)                                                      5,000

Stock in trade(estimated

to produce Rs. 24,000)                                              36,000

Trade creditors                                                                                                             40,000

Bills payable                                                                                                                   44,000

Sundry debtors:

     Goods                                                                         20,000

     Doubtful (estimated

to produce 50%)                                                          40,000

Bad                                                                                    40,000

Bank overdraft                                                                                                             24,000

Capital                                                                                                                              33,200

                                                                                           1,41,200                               1,41,200


(b) Mr. A held on 1st January 2016 Rs. 1,00,000 of 3.5% Government Loan at Rs. 95,000. Three months interest had accrued. On 31st May, he purchased a further Rs. 40,000 of the loan @ Rs. 96 (net) cum interest. On 31st July, Rs. 30,000 of the loan was sold at Rs. 94 (net) ex interest. On 31 March and 30 September and was collected on 4th April and 5th October. The price of the loan on 31st December 2016 was Rs. 96. Draw up the loan A/c. Ignore income tax and paise.                         11

7. (a) What do you mean by Accounting for Price Level Changes? Explain clearly accounting for price level changes under Current Purchasing Power (CPP) method.            3+8=11


(b) Ram Ltd. followed the LIFO system. From the particulars given below, ascertain the cost of sales and closing inventory under CPP method:                         11

                                                                                                           General price index

Inventory on 01.01.2016

           Rs. 20,000                                                                            200

Purchases during 2016

           Rs. 75,000                                                                            240(average for 2016)

Inventory on 31.12.2016

           Rs. 25,000                                                                            300


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