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Test Module 1

The document outlines various accounting tasks including the preparation of financial statements, trading and profit and loss accounts, and the evaluation of accounting standards exemptions for a company. It also includes a balance sheet example and additional information for calculations, as well as true/false statements regarding fundamental accounting assumptions. The tasks require understanding of accounting principles and the application of specific rules for financial reporting.

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bharathbharat0008
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28 views2 pages

Test Module 1

The document outlines various accounting tasks including the preparation of financial statements, trading and profit and loss accounts, and the evaluation of accounting standards exemptions for a company. It also includes a balance sheet example and additional information for calculations, as well as true/false statements regarding fundamental accounting assumptions. The tasks require understanding of accounting principles and the application of specific rules for financial reporting.

Uploaded by

bharathbharat0008
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1)"Explain in brief, the alternative measurement bases, for determining the value at

which an element can be recognized in the Balance Sheet or Statement of Profit and
Loss." (5 marks)
2)The following is the Balance Sheet of Manish and Suresh as on 1st April, 2021:

Equity and Liabilities Rs. Assets Rs.


Capital Accounts: Building 1,00,000
Manish 1,50,000 Machinery 65,000
Suresh 75,000 Stock 40,000
Creditors for goods 30,000 Debtors 50,000
Creditors for expenses 25,000 Bank 25,000
Total 2,80,000 Total 2,80,000

They give you the following additional information:


(i) Creditors’ Velocity 1.5 month & Debtors’ Velocity 2 months. Here velocity indicates
the no. of times the creditors and debtors are turned over a year.
(ii) Stock level is maintained uniformly in value throughout all over the year.
(iii) Depreciation on machinery is charged @ 10%, Depreciation on building @ 5% in the
current year.
(iv) Cost price will go up 15% as compared to last year and also sales in the current
year will increase by 25% in volume.
(v) Rate of gross profit remains the same.
(vi) Business Expenditures are Rs. 50,000 for the year. All expenditures are paid off in
cash.
(vii) Closing stock is to be valued on LIFO Basis.
All sales and purchases are on credit basis and there are no cash purchases and sales.​
You are required to prepare Trading, Profit and Loss Account, Trade Debtors Account
and Trade Creditors Account for the year ending 31.03.2022. (15 Marks)
3)“XYZ Ltd., with a turnover of Rs. 50 crores during previous year and borrowings of Rs.
1 crore during any time in the previous year, wants to avail the exemptions available in
adoption of Accounting Standards applicable to companies for the year ended
31.3.20X1. Advise the management on the exemptions that are available as per the
Companies (Accounting Standards) Rules, 2021.” (10 marks)
4)State whether the following statements are ‘True’ or ‘False’ in line with the provisions
of AS. Also give reason for your answer. (5 marks)
1.​ Certain fundamental accounting assumptions underline the preparation and
presentation of financial statements. They are usually specifically stated because
their acceptance and use are not assumed.

2.​ If fundamental accounting assumptions are not followed in presentation and


preparation of financial statements, a specific disclosure is not required.

3.​ All significant accounting policies adopted in the preparation and presentation of
financial statements should form part of the financial statements.

4.​ Any change in an accounting policy, which has a material effect should be
disclosed. Where the amount by which any item in the financial statements is
affected by such change is not ascertainable, wholly or in part, the fact need not
to be indicated.

5.​ There is no single list of accounting policies which are applicable to all
circumstances.

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