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Gauhati University QuestioAn Papers:ADVANCED FINANCIAL ACCOUNTING (MAJOR) (May-June’ 2017)

Gauhati University Question Papers
ADVANCED FINANCIAL ACCOUNTING (May-June’ 2017)
(MAJOR)
Full Marks: 80
Time Allowed: 3 hours
Answer either in English or Assamese
The figures in the margin indicate full marks for the questions
1. Answer as directed:                                   1x8=8

a)      Write the meaning of Non-performing Assets of a Bank.
b)      Rebate on bills discounted for a banking company is an income. (State whether the statement is true or false.)
c)       Commission of re-insurance ceded is an income. (State whether the statement is true or false.)
d)      Consideration for annuities granted is _____ for a life insurance company. (Fill in the blank with appropriate word)
e)      Mention one feature of an Investment Account.
f)       Face Value of the investment is always equal to the Capital Value of the investment. (State whether the statement is true or false)
g)      Government accounts are generally kept under Single entry system. (State whether the statement is true or false.)
h)      Loss of Profit Insurance is also known as _____. (Fill in the blank with appropriate word/words.)
2. Answer the following:                                               2x6=12
a)      Briefly explain the meaning of ‘Capital Adequacy’ of a banking company.
b)      Mention two basic features of Government Accounting.
c)       Explain the meaning of ‘re-insurance’ in respect of insurance business.
d)      Mention two objectives of preparing Investment Account.
e)      What is ‘average clause’ in insurance claim?
f)       Write two differences between Government Accounting and Commercial Accounting.
3. (a) From the following particulars, calculate gross profit on short sales: 5
1)      Profit for 2015 amounted to Rs. 65,000 after debiting standing charges totalling Rs. 75,000.
2)      Sales for 2015 amounted to Rs. 11,20,000.
3)      Fire occurred on June 1, 2016 and affected sales for four months.
4)      Sales for four months ending September 30th, in 2015 and 2016 amounted to Rs. 3,00,000 and Rs. 40,000 respectively.
5)      Accounts are prepared on 31st December each year.
Or
Explain the accounting treatment of ‘bonus shares’ and ‘right shares’ in Investment Account.
(b) From the following information, find out the amount of provision to be made and to be shown in the Profit and Loss Account of a Commercial Bank as on 31.03.2017:                                               5

Rs. (in lakhs)
Standard Assets
Sub-standard Advance (unsecured)
Sub-standard Advances (secured)
Doubtful Advances (all unsecured) :
Upto one year
Upto three years
More than three years
Loss Assets
4,000
2,000
1,200

900
400
300
500

Or
State in brief the books maintained by a banking company.                   5
(c) A Life Insurance Company gets its valuation made once in every three years. The Life Assurance Fund on 31st March, 2017 amounted to Rs. 40,00,000 before providing Rs. 45,000 for the shareholders’ dividend for the year 2016-17. Its actuarial valuation on 31st March, 2017 disclosed a net liability of Rs. 36,00,000 under the assurance and annuity contracts. An interim bonus of Rs. 60,000 was paid to the policy holders during the triennium ending 31st March, 2017. Prepare a statement showing the amount available as bonus to policy holders.                                      5
Or
Point out the main features of accounts of General Insurance Company.                                                        5
(d) Briefly describe five principles of Government Accounting.                                   5
Or
Briefly describe the powers of the Comptroller and Auditor General of India in connection with audit of accounts.                                                                                                                                                                                                      5
4. From the following balances, prepare the Profit and Loss Account UCO Bank Ltd. for the year ended 31.03.2017:      10

Rs.
Rent and taxes
Director’s fees
Interest on overdraft
ATM charges
ATM maintenance charges
Interest on Current Accounts
Interest on Loans
Interest on Fixed Deposit
Commission and brokerage
Establishment expenses
Discount on bills discounted (gross)
Interest on Cash credit
Interest on Savings Bank Deposit
Printing and Stationery
Lockers rent
Depreciation on Bank’s properties
Sundry charges
Other Information:
1)       Rebate on bills discounted
2)       Bad debt
3)       Provision for taxation to be made at 30%
26,000
6,000
3,00,000
1,000
500
84,000
5,18,000
5,50,000
15,000
80,000
4,00,000
4,60,000
1,36,000
5,500
2,000
10,000
3,400

90,000
12,000

Or
Explain the following items in the context of Bank Accounts:                       5+5=10
a)      Non-banking assets.
b)      Provision and contingencies.
5. Nagaon Investment Ltd. furnishes the following details relating to holding in 12% Government Stock:                                10
01.01.2016 Opening balance: Face value Rs. 30,000. Cost Rs. 25,000.
01.03.2016 Purchased Rs. 12,000 Stock @ Rs. 91 cum-interest.
01.06.2016 Sold Rs. 8,000 Stock @ Rs. 95 cum-interest.
01.08.2016 Purchased Rs. 6,000 Stock @ Rs. 94 ex-interest.
01.11.2016 Sold Rs. 10,000 Stock @ Rs. 96 ex-interest.
Interest being payable on 31st March and 30th September each year. Brokerage and other expenses being 1% in each case. Prepare an Investment Account in the books of Nagaon Investment Ltd. for the year ending 31st December, 2016. Apply FIFO method.
Or
Describe the procedure of recording for accounting for investments in variable income bearing securities.     10
6. From the following particulars, prepare a Fire Revenue Account of LM Insurance Co. Ltd. for the year ended 31st March, 2017:                                     10

Rs.
Reserve for unexpired risk on April 1, 2016
Additional Reserve on April 1, 2016
Claims paid
Management expenses
Premiums
Interest and Dividend
Income Tax on Interest and Dividend
Re-insurance premium
Profit on sale of Investment
Legal charges regarding claims
Re-insurance recoveries
Commission on direct business
Outstanding claims:
On 31st March, 2017
On 31st March, 2016
2,56,000
59,000
3,25,000
1,40,000
5,10,000
90,000
3,500
45,000
10,000
7,200
13,500
52,500

35,000
42,000
The Company calculates its reserve for unexpired risks at 50% of the net premium each year.
Or
Explain the method followed for assessing the profit of life insurance business.                                             10
7. A fire occurred on the midnight of 30th June, 2016 in premises of M/S Bad Luck Ltd. From the following figures, calculate the amount of claim to be lodged with the insurance company for loss of stock:                                                10

Rs.
Stock at cost on 01.01.2015
Stock at cost on 01.01.2016
Purchases during 2015
Purchases from 01.01.2016 to 30.06.2016
Sales during 2015
Sales from 01.01.2016 to 30.06.2016
90,000
70,000
4,00,000
6,00,000
6,00,000
8,80,000

You are informed that:
a)      In 2016 the cost of purchases has risen by 20% over the levels prevailing in 2015.
b)      In 2016 the selling prices have gone up by 10% over the levels prevailing in 2015.
c)       Salvaged value is Rs. 700.
Or
Write in details the System of Financial Administration in India.                              10

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