Advance Financial Accounting
2018 (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) Fill in the blanks: 1x4=4
1)
A Non
Performing asset is an asset that ceases to generate income for the bank.
2)
Consideration for annuities granted is a source
of income for a life
insurance company.
3)
In case of marine insurance, the provision against
unexpired risk is maintained at 100
% of net premium.
4)
Investments are freely bought and sold in the stock exchange through banks and
brokers.
(b) Write True or
False: 1x4=4
1)
Rebate on bills discounted for a banking company
is an income. False, advance income
2)
Balance Sheet of a life insurance business is
prepared in the prescribed from A-BS of the Insurance Act. True
3)
Revenue Account of a general insurance company
has five Schedules. False, 4
4)
Brokerage is added in the cost of investment in
the books of purchaser of investment. True
2. Write short notes on any four of the
following: 4x4=16
a)
Money at Call and Short Notice.
b)
Double Insurance.
c)
Fire Insurance Revenue Account.
d)
Cub-dividend and EX-dividend.
e)
Columnar Investment Accounts.
3. (a) What is bank accounting? What are
the main features of bank’s accounting system? Point out the main advantages
and disadvantages of slip system of posting in Bank Accounts. 2+6+3+3=14
Or
(b) The following are the figures
extracted from the books of XYZ Bank Ltd. as on 31st March, 2018: 14
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Rs.
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Interest
and Discount received
Interest
paid on Deposits
Issued
and Subscribed Capital
Reserve
under Section 17
Commission,
Exchange and Brokerage
Rent
Received
Profit
on Sale of Investment
Salaries
and Allowances
Director’s
Fees and Allowances
Rent
and Taxes paid
Stationery
and Printing
Postage,
Telephone and Internet Charges
Audit
Fees
Depreciation
on Bank’s Properties
Other
Expenses
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20,30,000
12,02,000
5,00,000
3,50,000
90,000
30,000
95,000
1,05,000
12,000
54,000
12,000
25,000
4,000
12,500
12,000
|
Other Information:
1)
A customer to whom a sum of Rs. 2,50,000 has
been advanced, has become insolvent and it is expected that 40% of the sum can
be recovered from his estate. Interest due at 15% on his debt has not been
provided in the books.
2)
Provision for bad and doubtful debts on other
debts necessary Rs. 50,000.
3)
Provide Rs. 3,50,000 for Income-tax.
4)
The directors desire to declare 10% dividend.
Make the necessary assumptions and
prepare the Profit and Loss Account of XYZ Bank Ltd. in accordance with law.
4. (a) (1) Draw a proforma of Revenue
Account of life insurance company with imaginary figures. 10
(2) How is bonus is reduction of premium
treated in the Revenue Account?
Or
(b) The Young India Life Assurance Co.
Ltd. had a paid-up share capital of Rs. 25,00,000 dividend into 25,000 equity
shares of Rs. 100 each. Its net liability on all contracts in force as on 31st
March, 2018 was Rs. 2,25,00,000 and on 31st March, 2017, this
liability was Rs. 2,00,00,000. From the following figures, extracted from the
books of the company for the year ended 31st March, 2018, prepare
Revenue Account. The company has paid an interim bonus of Rs. 11,00,000 and 20%
of the surplus is to be allocated to shareholders, 10% to catastrophe reserve
and the balance being carried forward: 14
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Rs.
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Life
fund as on 1st April, 2017
Premium
less re-insurance
Interest,
dividend and rent
Fines
and fees
Income-tax
Management
expenses
Annuities
paid
Commission
Surrenders
Bad
debts
Claims
less re-insurance claims
Consideration
for annuities granted
|
2,45,00,000
1,38,00,000
75,00,000
40,000
11,80,000
17,50,000
1,00,000
5,40,000
8,50,000
10,000
89,00,000
4,90,000
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5. (a) Point out the main features of
accounts of general insurance companies. What statutory books are required to
be maintained by a general insurance company under the Insurance Act? 6+8=14
Or
(b) From the following particulars, you
are required to prepare Fire Revenue Account for the year ended 31st
March, 2018: 14
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Rs.
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Reserve
for unexpired risk as on 1st April, 2017
Additional
reserve as on 1st April, 2017
Claims
paid
Management
expenses
Insurance
Premium
Interest
and dividends
Income-tax
on interest and dividends
Re-insurance
premium
Profit
on sale of investments
Legal
charges regarding claims
Re-insurance
claims recoveries
Commission
on direct business
Commission
on re-insurance ceded
Commission
on re-insurance accepted
Outstanding
claims:
On 31st March, 2018
On 31st March, 2017
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52,000
12,000
65,000
28,250
1,14,000
6,400
800
7,000
1,600
400
2,800
11,200
600
400
7,000
9,000
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The company calculates the Reserve for
unexpired risks @ 50% of the net premium each year and increase additional
reserve by 5% of net premium annually.
6. (a) What is Investment Account?
Explain about the nature and purposes of an Investment Account. How are
Investment Accounts prepared when there is issue of bonus shares and right
shares by the company? 2+3+3+6=14
Or
(b) Mr. Investor furnishes the following
details relating to his holding in 6% Government Bonds of Rs. 100 each:
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Opening
balance face value Rs. 60,000 (cost Rs. 59,000)
1.3.2017
100 units purchased ex-interest at Rs. 98.
1.7.2017
Sold 200 units ex-interest of the original holding at Rs. 100.
1.10.2017
Purchased 50 units at Rs. 98 cum-interest.
1.11.2017
Sold 200 units ex-interest at Rs. 99 out of the original holdings.
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Interest dates are 30th
September and 31st March. Mr. Investor closes his books every 31st
December. Show the Investment Account as it would appear in his books. 14
(OLD COURSE)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the
questions
1. (a) Fill in the blanks: 1x4=4
1)
Banks in India are under the general supervision
of the RBI.
2)
In the contract of insurance, there are two parties
namely the insurer and the insured.
3)
All properties of the insolvent,
both movable and immovable are shown under ___ of Statement of Affairs.
4)
Changes in the price level are
not taken into account in the preparation of _______ Accounts.
(b) Write True or
False: 1x4=4
1)
Rebate on bills discounted for a banking company
is an income. False, advance income
2)
General insurance includes all types of
insurance. false
3)
The insolvency proceedings begin
with an insolvency petition field in a proper court of law.
4)
In an Investment Account, cum-interest means
including accrued interest on an investment. True
2. Write short notes on any four of the
following: 4x4=16
a)
Slip System of Posting.
b)
Bonus in Reduction of Premium.
c)
Statement of Affairs.
d)
Cum-dividend and Ex-dividend.
e)
General Price Level Accounting.
3. (a) From the following particulars,
prepare Profit and Loss Account of Safety Bank Ltd. for the year ended on 31st
March, 2018: 12
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Rs. (‘000)
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Interest
on Deposits
Commission
(Cr.)
Interest
on Loans
Sundry
Charges (Dr.)
Rent
and Taxes
Payment
to Employees
Discount
on Bills Discounted
Interest
on Overdrafts
Interest
on Cash-credit
Auditor’s
fees
Director’s
fees
Bad
debts to be written off
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3,200
100
2,490
100
200
500
1,490
1,600
2,320
30
20
130
|
Or
(b) Give a proforma of Balance Sheet of a
banking company, showing imaginary figures. 12
4. (a) What is general insurance? How
does it differ from life insurance? Explain ‘Reserve for Unexpired Risk’ in
case of general insurance. 2+4+5=11
Or
(b) From the following particular,
prepare a Fire Revenue A/c of Tinsukia Fire Insurance Company for the year
ended on 31st March, 2018: 11
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Rs.
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Reserve
for unexpired risk on 1st April, 2017
Additional
Reserve as on 1st April, 2017
Claims
paid
Re-insurance
claim
Management
expenses
Premium
Re-insurance
premium
Commission
on direct business
Commission
on re-insurance ceded
Commission
on re-insurance accepted
Legal
charges regarding claim
Survey
expenses
Profit
on sale of investments
Interest
and Dividend
Income-tax
thereon
Contribution
to fire brigade
Outstanding
claims
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1,40,000
30,000
80,000
10,000
20,000
2,00,000
12,000
20,000
2,000
1,000
2,000
1,000
1,000
20,000
2,000
1,000
5,000
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The company calculates its reserve for
unexpired risks at 50% of the net premium each year and maintain additional
reserve same as in the last year.
5. (a) (1) Mention the various lists that
have to be prepared in support of the Statement of Affairs, prepared under the
Indian Insolvency Act, giving short particulars as to the contents of each of
them. 6
(2) Distinguish
between a Statement of Affairs and a Balance Sheet. 5
Or
(b) From the following
information prepare a Statement of Affairs of Mr. Dukhi Ram who is declared
insolvent on 31st March, 2018: 11
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Rs.
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Cash
in hand
Debtors:
Good
12,500
Doubtful (expected to realize Rs. 2,000) 6,000
Bad
10,000
Shares
in X Ltd.
Bills
receivable (Good)
Other
securities (Rs. 30,000 pledged with partly secured creditors and the balance
with fully secured creditors)
Drawings
Trade
expenses
Creditors
(unsecured)
Creditors
(partly secured)
Creditors
(fully secured)
Preferential
claims
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2,500
28,500
50,000
42,500
2,80,000
1,74,000
74,000
2,50,000
1,70,000
2,37,000
7,500
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6. (a) (1) Discuss about the nature and
purposes of an Investment Account. 3+4=7
(2) Distinguish between Cum-interest and
Ex-interest. 4
Or
(b) On 1.1.2017, 6% 200 debentures of Rs.
100 each in Y Ltd. were held as investments by X Ltd. at a cost of Rs. 18,200.
Interest is payable on 31st December. On 1.4.2017, Rs. 4,000 of such
debentures were purchased by X Ltd. @ Rs. 98 cum-interest and on 1.9.2017, Rs.
6,000 debentures were sold @ Rs. 96 ex-interest. On 1.12.2017, Rs. 8,000
debentures were sold @ Rs. 99 cum-interest. On 31.12.2017, X Ltd. sold Rs.
10,000 debentures @ Rs. 95 ex-interest. Prepare Investment Account for 6%
Debentures in Y Ltd. in the books of X Ltd. Ignore income-tax (apply FIFO
method). 11
7. (a) What is Inflation Accounting? What
are its objectives? Discuss in brief the CPP method of Inflation Accounting.
2+4+5=11
Or
(b) The Balance Sheet of PK Ltd. revealed
the following among other things:
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31.3.2016 (Rs.)
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31.3.2017 (Rs.)
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Investments
Book
Debts
Cash
at Bank
Advances
for supply of Materials
Due
to Suppliers
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5,50,000
4,50,000
60,000
1,00,000
2,50,000
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6,10,000
5,50,000
80,000
1,26,500
3,22,000
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During 2016 – 17, material prices rose by
15% and those of finished goods by 10%. Calculate the Monetary Working Capital
Adjustment to be made under Current Cost Accounting System. 11
***
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