Dibrugarh University Question Papers: Advanced Financial Accounting Nov' 2019 | B.Com 3rd Sem

Advance Financial Accounting

2019 (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)         As per the Finance Act, 2005, banks are allowed to issue _________ shares.

2)         Life insurance business is carried on by Life Insurance Corporation of India since _________.

3)         The general insurance business was taken over by the Central Government with effect from _________.

4)         _________ price is not the real price of investment.

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

1)         Banks in India are under the general supervision of the Central Government.

2)         Life insurance is more appropriate to be called life assurance.

3)         Commission on re-insurance ceded is an income.

4)         Only FIFO method is used to calculate cost of closing balance of investment.

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

a)         Slip System of Posting.

b)         Insurance Regulatory and Development Authority.

c)          Life Assurance Fund.

d)         Marine Insurance.

e)         Cum-interest and Ex-interest Quotations.

3. (a) Discuss the following items which are related to a banking company:                3½ x 4=14

1)         Rebate on Bills Discounted.

2)         Non-performing Assets.

3)         Statutory Reserve.

4)         Statutory Liquidity Ratio.

Or

(b) Following figures are extracted from the books of J. K. Bank Ltd. as on 31.03.2019:

 

Rs. (‘000)

Interest and discount received

Interest paid on deposits

Share Capital

Commission and exchange

Rent received

Profit on sale of Investment

Salaries paid to employees

Rent paid

Stationery

Postal expenses

Audit fees

Depreciation on Bank’s properties

Director’s fees

Preliminary expenses

4,060

2,404

1,000

180

60

190

210

108

48

40

8

25

34

10

Further Information:

1)         A customer to whom a sum of Rs. 5,00,000 has been advanced has become insolvent and 40% recovered from his estate.

2)         Provision for bad and doubtful debts necessary Rs. 1,00,000.

3)         Rebate on bills discounted as on 31.03.2018 Rs. 10,000.

Rebate on bills discounted as on 31.03.2019 Rs. 15,000.

4)         Provide Rs. 7,00,000 for income tax.

5)         The directors desire to declare 10% dividend.

Prepare Profit & Loss A/c of J. K. Bank Ltd. in accordance with law.           14

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

Or

(b) Best Life Insurance Co. Ltd. had a paid-up capital of Rs. 10,00,000 divided into 1,00,000 shares of Rs. 10 each. Its net liability on all contracts in force as on 31st March, 2019 was Rs. 96,00,000 and on 31st March, 2018, this liability was      Rs. 84,00,000. The company has paid an interim bonus of Rs. 2,60,000 and 20% of the surplus is to be allocated to shareholders, 20% to reserves and balance being carried forward. Following figures are extracted from the books of the company for the year ended 31st March, 2019:

 

Rs.

Premium less re-insurance premium

Interest, dividend and rent

Fees

Income tax

Management expenses

Annuities paid

Commission

Surrenders

Surplus on revaluation of reversions

Re-insurance irrecoverable

Claims less re-insurance claims

Consideration for annuities granted

57,20,000

28,00,000

16,000

4,40,000

7,00,000

50,000

2,20,000

3,20,000

20,000

16,000

34,00,000

1,60,000

Prepare Revenue A/c of Best Life Insurance Co. Ltd. for the year ended 31st March, 2019.       14

5. (a) What do you mean by ‘Reserve for Unexpired Risk’? How and why is it created in General Insurance? Also distinguish between General Insurance and Life Insurance.            2+4+4+4=14

Or

(b) Prepare a Revenue A/c in respect of Fire Business from the following details for the year ended 31st March, 2019:   14

 

Rs.

Reserve for unexpired risk on 01.04.2018 @ 50%

Additional Reserve as on 01.04.2018

Estimated liabilities for claims:

Intimated on 01.04.2018

31.03.2019

Claims paid

Legal expenses

Medical expenses

Re-insurance, recoveries of claims

Bad debts

Premium recovered

Premium on re-insurance accepted

Premium on re-insurance ceded

Commission on re-insurance accepted

Commission on direct business

Commission on re-insurance ceded

Expenses of management

Interest, dividend and rent

Profit on sale of investments

1,80,000

36,000

 

31,000

42,000

3,65,000

6,000

4,000

32,000

800

4,86,000

32,000

43,000

1,600

48,600

2,150

90,000

24,000

3,000

Create Reserve on 31st March, 2019 on the same extent as on 1st April, 2018.

6. (a) (1) What is Investment A/c? Discuss about the features and purposes of Investment A/c. 2+4+4=10

(2) Distinguish between Cum-interest and Ex-interest in Investment A/c.          4

Or

(b) Mr. Babu bhai furnishes the following details relating to his holding in 6% Government Bonds:

Opening Balance

(On 01.04.2018)

01.06.2018

01.10.2018

01.01.2019

01.02.2019

: 1,200 bonds of Rs. 100 each at a cost of Rs. 1,18,000.

 

: 200 bonds purchased ex-interest at Rs. 98.

: Sold 400 bonds ex-interest out of the original holding at Rs. 100.

: Purchased 100 bonds at Rs. 98 cum-interest.

: Sold 400 bonds ex-interest at Rs. 99 out of the original holdings.

Interests are calculated as on 30th June and 31st December. Mr. Babu Bhai closes his books on every 31st March. Show the Investment A/c as it would appear in his books. Working note should be a part of your answer.                 14

(Old Course)

Full Marks: 80

Pass Marks: 32

Time: 3 hours

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

1)         Non-banking assets are shown in Schedule _________ of a bank Balance Sheet.

2)         In case of marine insurance, the provision against unexpired risk is maintained at _________% of net premium.

3)         The Presidency Towns Insolvency Act, _________ applies to the persons residing in the Presidency Towns of Mumbai, Kolkata and Chennai.

4)         Investment A/c is a _________ A/c.

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

1)         A bank can open a branch only at the permission of the Reserve Bank of India.

2)         Valuation Balance Sheet is prepared to know surplus or deficiency of the life insurance business.

3)         Preferential creditors are shown under List C of the Statement of Affairs.

4)         By the term inflation, we mean a rise in the value of money and a fall in general price level.

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

a)         Rebate on Bills Discounted.

b)         Life Insurance Corporation Act, 1956.

c)          Deficiency A/c.

d)         Objectives of Investment Accounting.

e)         Mid-period Conversion.

3. (a) Explain in relation to Bank Accounting:               3x4=12

1)         Cash credit and overdraft.

2)         Cash reserve ratio.

3)         Core banking.

4)         Non-performing assets.

Or

(b) Prepare the Profit & Loss A/c with necessary schedule of Trinity Bank Ltd. for the year ended 31st March, 2019:       12

 

Rs. (‘000)

Interest on loans

Interest on deposits

Commission, exchange and brokerage

Discount on bills discounted (gross)

Payment to employees

Interest on cash credit

Rent and rates

Interest on overdrafts

Directors’ fees

Auditors’ fees

Postal expenses

Printing and stationery

Sundry expenses

2,590

3,850

82

1,950

540

2,230

180

1,540

30

12

14

29

17

Other Information:

 

Rs. (‘000)

(1) Rebate on bills discounted

(2) Bad debts

(3) Provision for Income Tax

490

400

1,000

 

4. (a) (1) What are the different types of insurance contracts? Explain them in brief.

(2) How is profit or surplus ascertained and distributed by a life insurance company?         7+4=11

Or

(b) From the following information, prepare a Revenue A/c of North-East Life Insurance Company for the year ended 31st March, 2019:      11

 

Rs. (‘000)

Life assurance fund as on 1st April, 2018

Premiums

Interest, dividends and rents

Consideration for annuities granted

Fines for revival of lapsed policies

Claims paid

Bad debts

Expenses of management

Commission

Bonus in reduction of premiums

Annuities paid

Surrenders

Surplus on revaluation of reversions purchased

Income tax paid

Bonus in cash

7,50,000

3,72,000

2,26,000

12,500

200

42,500

400

35,000

16,000

500

18,500

25,500

1,500

32,000

18,000

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

Or

(b) Mr. Ramesh Kumar filed a petition of insolvency on 30th June, 2018. His books showed the following balances:

 

Rs.

Rs.

Cash in Hand

Fixture and Fittings  (estimated to produce Rs. 1,200)

Stock-in-Trade  (estimated to produce Rs. 18,000)

Sundry Creditors:

Trade Creditors

Bills Payable

Sundry Debtors:

Good

Doubtful (estimated at 50%)

Bad

Bank Overdraft

Capital

150

3,750

27,000

 

 

 

 

15,000

30,000

30,000

 

 

 

 

 

30,000

33,000

 

 

 

 

18,000

24,900

 

1,05,900

1,05,900

Other Information:

1)         Liability on bills discounted amounting to Rs. 7,500 (expected to rank Rs. 1,500)

2)         His household furniture, etc. was valued at Rs. 3,750. He owned a house valued at Rs. 11,250, having a mortgage on it of Rs. 9,000 at 4% p.a. Interest thereon was paid up to the preceding 31st December.

3)         Preferential creditors amounted to Rs. 525 (include in Sundry Creditors) and Rs. 225 for rates on the house.

Prepare a Statement of Affairs and Deficiency A/c.          7+4=11

6. (a) What are the special features of Investment Accounts? How are stock exchange transactions (sale and purchase of securities) recorded in books?          6+5=11

Or

(b) Jaipur Investment Ltd. holds 1,000, 15% debentures of Rs. 100 each in Udaipur Industries Ltd. as on 1st April, 2018, at a cost of Rs. 1,05,000. Interest is payable on 30th June and 31st December each year. On 1st May, 2018, 500 debentures are purchased cum-interest at Rs. 53,500. On 1st November, 2018, 600 debentures are sold ex-interest at Rs. 57,300. On 30th November, 2018, 400 debentures are purchased ex-interest at Rs. 38,400. On 31st December, 2018, 400 debentures are sold cum-interest for Rs. 55,000. Prepare Investment A/c valuing holding on 31st March, 2019 at cost (applying FIFO method).                 11

7. (a) What do you mean by ‘Inflation Accounting’? What are the limitations of historical accounting in a period of inflation? Also distinguish between holding gain and operating gain.      2+5+4=11

Or

(b) Compute the net monetary result of X Co. Ltd. as on 31st March, 2019. The relevant data are given below:     11

 

01.04.2018

Rs.

31.03.2019

Rs.

Cash

Book Debts

Creditors

Loan

Retain Price Index Numbers:

1st April

31st March

Average for the year 240

5,000

20,000

15,000

20,000

 

200

-

 

10,000

25,000

20,000

20,000

 

-

300

***

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