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CHRIST UNIVERSITY, BANGALORE-560029

End Semester Examination Sept / Oct - 2014
V Sem - BCom - Reg / BCom - E
Code : COM542A Max. Marks : 100
Sub : ADVANCED FINANCIAL ACCOUNTING Duration : 3Hrs

SECTION A

Answer any 12 questions. Each question carries 2 marks. 12 X 2 = 24

1 List any four registers maintained by a Banking company.
2 State the Principal books maintained by a Banking Company.
3 What do you mean by Rebate on bills discounted?
4 Give the meaning of "Time Liabilities" and "Demand liabilities" for a Bank.
5 Distinguish between Cash bonus and Reversionary bonus.
6 Distinguish between Life Insurance business and General Insurance business.
7 What is meant by Catastrophe reserve? Give two examples.
8 What do you mean by Reversionary Bonus?
9 Write a note on minimum lease payment in the context of lease.
10 Write a note on bargain option in the context of lease.
11 How the Human Resources of an organisation are valued under Replacement cost Approach?
12 Mention any four indicators of social responsibility.
13 What are the significances of environmental accounting?
14 How backlog depreciation is calculated in CCA method?

SECTION B

Answer any 5 questions. Each question carries 8 marks. 5 X 8 = 40

15 Prepare Profit and Loss Account for the year ended 31st March 2012, form the following balances
relating to Zee Bank Ltd.

Interest on Loans Rs.(000) Rs.(000)

Interest on SB A/c
174
600
Interest on fixed deposits 550Postage, telegrams and 20
stamps
Commission 20Printing and stationery 40
Exchange and brokerage 40Sundry expenses 20
Salaries and allowances 300Rent 30
Discount on bills (gross) 304Taxes and Licenses 20
Interest on cash credits 480Audit fees 20
Interest on overdrafts 60

Additional Information:

i. Rebate on bills discounted Rs. 60,000

ii. Salary outstanding for Managing Director Rs. 60,000

iii. Provision for Bad debts Rs. 80,000

iv. Provision for Income Tax is to be made @ 55%

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16 From the Following information relating to New Bank Ltd. Calculate the amount of provision to be
provided during the year 31st March 2009.

i. Standard assets Rs. 1,500 Lakhs

ii.Sub-standard assets 1,100 lakhs

iii.Doubtful assets:

a.for one year Rs. 450 lakhs

b.for two years Rs 300 lakhs

c.for three years 200 lakhs

d.for more than three years Rs. 150 lakhs

iv Loss assets Rs. 300 lakhs

17 From the following balances as at March 31, 2011 in the books of General Insurance company Ltd.,
prepare a Revenue Account in respect of Fire Insurance business carried on by them:

Claims paid 4,80,000Commission on reinsurance 4,000

accepted
Claims outstanding on 40,000Expenses of management 3,14,000
1.4.2010
Claims intimated and accepted Reinsurance recoveries of 8,000
but not paid on 31.3.2011 70,000 claims
Premium received 12,12,000Survey expenses claims 5,000
Reinsurance premium paid 1,20,000Loss on sale of motor car 3,500
Commission 2,00,000Bad debts 2,500
Commission on reinsurance 8,000Refund of double taxation 4,500
ceded
Reserve for unexpired risk 4,00,000Interest and dividends 8,000
1.4.2010
Additional reserve 1.4.2010 20,000Income tax there on 1,500
Rent of staff quarters 2,400Legal expenses for claims 4,000
deducted from salaries
Depreciation on furniture 4,600Profit on sale of investments 3,500

You are required to provide for additional reserve for unexpired risk at 1% of the net premium in addition
to the opening balance of additional reserves.
18 From the following Trial Balance of Urban Life Insurance Ltd. Prepare Revenue Account for the year
ended 31-3-2011.

Rs. Rs
Claims paid & 1,15,200Postage and Telegram 1,050
outstanding
Surrenders 3,300Office rent 4,200
Reversionary bonus paid 12,300Sundry expenses 800
Establishment expenses 23,500Bank charges & 950
commission
Commission to agents 48,500Credit Balances:
Medical fees 10,100Fines and fees received 300
Directors fees 24,000Interest, dividends 2,25,300
received
Stationary and Printing 4,800Premiums received 3,30,800

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Investments 40,47,400Life fund in the 37,80,000

beginning of the year
19 The following are the information available for lease. Lessors cost of leased computer Rs 118000.Fair
value of leased computer at the inception of the lease (1-1-2004) Rs 120000.The lease term is four years.
The rental is Rs 70000,Rs 32000,Rs 16000 and Rs 7000 respectively in four years, payable in advance
very year. The estimated residual value of the computer at the end of the leased term is 5% of the cost of
the asset to the lessor. The lessee has the right to continue to lease at the end of the aforesaid lease term at
a nominal rent.The relevant statutory WDV depreciation rate is 40%.Give the journal entries in the books
of lessor for two years when financing cost transacted was 14%.
20 Briefly explain various methods of human resource Accounting. which one will you recommend for
adoption in India under the prevailing conditions?
21 Briefly explain the social costs and benefits.

SECTION C

Answer any 3 questions. Each question carries twelve marks. 3 X 12 = 36

22 From the following information relating to The Krishna Bank Ltd., Prepare Balance sheet as on
31st March 2008.

Debit Rs. in Credit Rs. in

000 000
Overdraft and cash credit 2,800Share Capital 19,800

19,80,000 Shares of Rs.10

each
Bills purchased 81,210Statutory Reserves 23,100
Cash in hand 16,015Net profit before 15,000
appropriation
Balance with RBI 3,788Profit and loss A/c 41,200
Cash with banks 15,587Fixed deposits 51,700
Money at call & short 21,012Saving bank deposits 45,000
notice
Gold bullion 5,523Current account deposits 52,012
Treasury bills (at cost) 11,017Bills payable 10
Bank property 15,570Borrowing from other 11,000
Institutions
Furnitures and fixtures 7,012
Term loans 79,288
2,58,822 2,58,822

Other Information:

a. Bills for collection Rs. 18,10,000

b. Acceptances and Endorsements Rs. 14,12,000

c. Claims against the Bank not acknowledge as debts Rs. 55,000

d. depreciation charges - Premises 1,10,000; Furniture Rs. 78,000

e. 50% of the Term loans are secured by Treasury bills guarantees. 10% of cash credits are unsecured.
23 The following figures are extracted from the books of National insurance company in respect of Marine
business for 2011-12.

Rs. In Rs. In
Laksh Laksh

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Rs. Rs.
Direct business income received 50Commission paid 5
Reserve for unexpired risk on 60Expenses of management 5
1.4.2011
Claims outstanding as on 20TDS on income received 3
1.4.2011
Bad debts 10P/L a/c on 1.4.2011 (Cr) 10
Income from investment (gross) 10Other expenses 1.25
Rent received from properties 5Reinsurance premium receipts 5
Investment in govt. securities 100Outstanding claims as on 30
31.3.2012 (net)
Investments in shares 20Direct claims paid (gross) 25
Reinsurance claims paid 4

Prepare a Marine Final Account after considering the following information:

a. Market value of investment as 31.3.2012 is as follows

i. Government securities Rs. 105 lakhs

ii. Shares Rs. 18 lakhs

b.Provide 65% for Income tax

24 From the following Trial Balance of Life long Assurance Company Ltd., Prepare the revenue account and
the Balance Sheet. The statement need to be in the prescribed formats:

Debit Rs. In lakhs Credit Rs. In

lakhs
Income tax on interest, 30Life assurance fund 5,500
dividend & rent opening balance
Income tax paid 25Premium less reinsurance 2,000
Claims paid by death 250Outstanding claims opening
balances:
By maturity 170 By death 110
Property at cost 600 By maturity 75
Furniture and equipment 50Consideration for annuities 100
granted
Annuities 150Registration fees 5
Stationery 8Interest, dividend & rent 250
Cash at Bank 396Contingencies reserve 200
Cash in hand 4Provision for taxation 50
Surrenders 5Depreciation on property 35
Commission 80Depreciation on Furniture & 5
equipment
Expenses of management 400Sundry creditors 30
Sundry debtors 12
Loans on policies 350
Deposits with RBI 30
Investments other 5,800
companies
8,360 8,360

Other information:

i. Premium outstanding at the end of the year Rs. 250 lakhs.

ii.Claims less reinsurance outstanding at the end of the year are Rs. 50 lakhs (by death) and Rs. 30 lakhs

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(by maturity).

iii. Depreciation to be provided Rs. 10 lakhs on property and Rs. 1.6 lakhs on furniture and equipment.

iv. Accrued interest, dividend and rents are Rs. 25 lakhs.

25 SG ltd acquired a machinery on lease from P ltd on 1st january, 2002. The lease term was of five years
which is its expected useful life. lease agreement provided an equal annual lease payment of Rs.2,40,000
over five years payable at the end of each year. The guaranteed and Unguaranteed residual value of
machinery was Rs.60,000 and Rs.20,000 respectively. Fair value of machine on the date of lease
agreement was Rs.9,00,000 and implicit cost of return is 12% per annum. Prepare the ledger accounts in
the books of Lessee assuming depreciation @ 20% per annum (WDV).
26 Answer the following questions:

A) The current cost balance sheet of a company contained the following figures:

Current assets: (Rs000)

Bank and cash (not included in
450
monetary working capital)
Current liabilities:
Creditors (Hire purchase) 170
Taxation 210
Propose dividend 250
Bank overdraft (Not included in
190
monetary capital)
Net assets employed 3,540
Shareholders funds 2,680
Long term loans- debentures 540
Deferred taxation
320

Calculate the current cost gearing proportion.

B) The current cost adjustment were:

Depreciation 870
Fixed asset disposals 80
Cost of sales 1,050
Monetary working capital 320

Calculate the current cost adjustment

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