Answer to MTP_ Intermediate _Syllabus 2012_Dec2016_Set 1
Paper 5- Financial Accounting
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1
, Answer to MTP_ Intermediate _Syllabus 2012_Dec2016_Set 1
Paper 5- Financial Accounting
Full Marks : 100 Time allowed: 3 hours
Section-A
1. Answer the following questions:
(a) Multiple choice questions: [5x1=5]
(i) Provision for bad and doubtful debts is created in anticipation of actual bad debts on
the basis of:
(a) Business Entity Concept;
(b) Conservatism Concept;
(c) Accrual Concept;
(d) Full Disclosure Concept.
(ii) The out flow of funds to acquire an asset that will benefit the business for more than
one accounting period is referred to as:
(a) Miscellaneous Expenditure;
(b) Revenue Expenditure;
(c) Capital Expenditure;
(d) Deferred Revenue Expenditure.
(iii) Goods are sent to the Branch at cost plus 25%. The loading on invoice price is:
(a) 20%;
(b) 25%;
(c) 30%;
(d) None of the above.
(iv) In Hire Purchase System cash price plus interest is known as:
(a) Capital value of asset;
(b) Book value of asset;
(c) Hire Purchase price of asset;
(d) Hire purchase charges.
(v) Actuarial valuation relates to:
(a) Banking company;
(b) Electric Supply Company;
(c) Insurance Company;
(d) None of the above.
Solution:
(i) —B
(ii) —C
(iii) —A
(iv) —C
(v) —C
(b) Match the following: [5x1=5]
Column ‘A’ Column ‘B’
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2
, Answer to MTP_ Intermediate _Syllabus 2012_Dec2016_Set 1
1. Non Performing Assets A Single Entry System
2. Intangible assets B Trial Balance
3. Statement of Affairs C AS-26
4. Depreciation Accounting D Banking Companies
5. Check Arithmetic Accuracy E AS-10
Solution:
1. —D
2. —C
3. —A
4. —E
5. —B
(c) State whether the following statements are true or false: [5x1=5]
(i) Goodwill is a fictitious asset.
(ii) Every banking company incorporated in India is required to transfer at least 25% of
its profit to Reserve Fund.
(iii) Wages incurred by departmental workers of a factory in installing a new
machinery is a revenue expenditure.
(iv) Royalty account is a nominal account in nature.
(v) Trial Balance would not disclose error of omission.
Solution:
(i) — False;
(ii) — True;
(iii) — False;
(iv) — True;
(v) — True.
(d) Answer the following: [5x2=10]
(i) From the following particulars, determine Closing Stock at Branch
` `
Opening Stock at Branch 30,000 Expenses:
Goods sent to Branch 90,000 Salaries 10,000
Sales (Cash) 1,20,000 Other expenses 4,000
The branch sells at cost plus 20%. The branch manager is entitled to a commission of
5% on the profits of the branch before charging such commission.
Solution:
Calculation of closing stock at branch:
Particulars `
Opening stock at branch 30,000
Goods sent to branch 90,000
1,20,000
Less: Cost of sales 1,20,000 100 20,000
120
(ii) Goods costing ` 6,30,000 were sent out to consignee at a profit of 20 percent on
invoice price. Consignee sold 2/3rd goods for ` 6,00,000. Consignee was entitled to
an ordinary commission of 3 per cent on sales at invoice price and overriding
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3
Paper 5- Financial Accounting
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1
, Answer to MTP_ Intermediate _Syllabus 2012_Dec2016_Set 1
Paper 5- Financial Accounting
Full Marks : 100 Time allowed: 3 hours
Section-A
1. Answer the following questions:
(a) Multiple choice questions: [5x1=5]
(i) Provision for bad and doubtful debts is created in anticipation of actual bad debts on
the basis of:
(a) Business Entity Concept;
(b) Conservatism Concept;
(c) Accrual Concept;
(d) Full Disclosure Concept.
(ii) The out flow of funds to acquire an asset that will benefit the business for more than
one accounting period is referred to as:
(a) Miscellaneous Expenditure;
(b) Revenue Expenditure;
(c) Capital Expenditure;
(d) Deferred Revenue Expenditure.
(iii) Goods are sent to the Branch at cost plus 25%. The loading on invoice price is:
(a) 20%;
(b) 25%;
(c) 30%;
(d) None of the above.
(iv) In Hire Purchase System cash price plus interest is known as:
(a) Capital value of asset;
(b) Book value of asset;
(c) Hire Purchase price of asset;
(d) Hire purchase charges.
(v) Actuarial valuation relates to:
(a) Banking company;
(b) Electric Supply Company;
(c) Insurance Company;
(d) None of the above.
Solution:
(i) —B
(ii) —C
(iii) —A
(iv) —C
(v) —C
(b) Match the following: [5x1=5]
Column ‘A’ Column ‘B’
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2
, Answer to MTP_ Intermediate _Syllabus 2012_Dec2016_Set 1
1. Non Performing Assets A Single Entry System
2. Intangible assets B Trial Balance
3. Statement of Affairs C AS-26
4. Depreciation Accounting D Banking Companies
5. Check Arithmetic Accuracy E AS-10
Solution:
1. —D
2. —C
3. —A
4. —E
5. —B
(c) State whether the following statements are true or false: [5x1=5]
(i) Goodwill is a fictitious asset.
(ii) Every banking company incorporated in India is required to transfer at least 25% of
its profit to Reserve Fund.
(iii) Wages incurred by departmental workers of a factory in installing a new
machinery is a revenue expenditure.
(iv) Royalty account is a nominal account in nature.
(v) Trial Balance would not disclose error of omission.
Solution:
(i) — False;
(ii) — True;
(iii) — False;
(iv) — True;
(v) — True.
(d) Answer the following: [5x2=10]
(i) From the following particulars, determine Closing Stock at Branch
` `
Opening Stock at Branch 30,000 Expenses:
Goods sent to Branch 90,000 Salaries 10,000
Sales (Cash) 1,20,000 Other expenses 4,000
The branch sells at cost plus 20%. The branch manager is entitled to a commission of
5% on the profits of the branch before charging such commission.
Solution:
Calculation of closing stock at branch:
Particulars `
Opening stock at branch 30,000
Goods sent to branch 90,000
1,20,000
Less: Cost of sales 1,20,000 100 20,000
120
(ii) Goods costing ` 6,30,000 were sent out to consignee at a profit of 20 percent on
invoice price. Consignee sold 2/3rd goods for ` 6,00,000. Consignee was entitled to
an ordinary commission of 3 per cent on sales at invoice price and overriding
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3
