AD–1004

M.Com. Semester—I (CGS) Examination

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Time : Three Hours]
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Note :— (1) All questions are compulsory. Section A and Section B should both be solved.

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(2) The figures to the right indicate marks to the question.

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(3) Give working notes wherever necessary.

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SECTION—A
1. The main function of Accounting is to _______.

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(a) Record economic data (b) Provide information basis for action

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(c) Classify and record business transaction (d) All of the above
2. Double entry system of bookkeeping involves at least :
(a) one account (b) Two accounts
(c) Three accounts (d) None of these
3. Accounting is the language of _______.
(a) Business a il
(b) Books of Accounts

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4.
(c) Accountant
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Which account is generally used for rectification of errors ?
(a) Memorandum Account R R (b) Suspense Account
(c) Rectification Account
A (d) Adjustment Account
5. Unclaimed dividend is shown on the liability side of the balance sheet under the heading ____.
(a) Reserve & Surplus (b) Provisions
(c) Current liabilities (d) Miscellaneous items
6. Carriage outwards are shown in the _______.
(a) Trading A/c (b) Profit & Loss A/c
(c) Balance Sheet (d) None of the above
7.
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When two or more companies carrying on similar business decide to combine, a new company
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is formed. It is known as _______.
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(a) Amalgamation
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(c) Internal reconstruction (d) External reconstruction
8. A A R
When one of the existing companies take over business of another company or companies, it is
known as :
(a) Amalgamation (b) Absorption
(c) Internal reconstruction (d) External reconstruction
LT—28042 1 (Contd.)
9. Cost sheet is also known as _____.
(a) Bank Requisition statement (b) Statement of cost
(c) Statement of Income & Expenditure (d) None of the above

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10. Calculate profit, given cost of sales Rs. 120,000 profit 20% on sales :
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(a) Rs. 30,000
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(c) Rs. 150,000 (d) Rs. 200,000

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11. Cost sheet may be prepared _____.

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(a) Weekly (b) Yearly

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(c) Monthly (d) All of the above

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12. Cost of direct material consumed :

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(a) Prime Cost + Direct labour cost – Direct Expenses
(b) Prime Cost – Direct labour cost + Direct Expenses
(c) Prime Cost + Direct labour cost + Direct Expenses
(d) Prime Cost – Direct labour cost – Direct Expenses
13. Under Machine Hour Rate method a machine is treated as :
(a) Cost unit
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(b) A cost centre
(c) Service Department
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(d) None of these

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14. In ascertainment of Machine hour rate, Rent, Rates and Tax are apportioned :

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(a) In the ratio of space occupied by each machine
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(b) In the ratio of space occupied by various machines
(c) In the ratio of insured value of machines
(d) None of the above
15. Operating costing is also known as :
(a) Standard costing (b) Service costing
(c) Batch costing (d) Process costing
16. Operating costing is usually applicable in :

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(a) Transport Companies (b) Supply Agencies
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(c) Hotels (d) All the above
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17. Which of the following appear on the credit side of process costing ?

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(a) Normal loss (b) Abnormal loss
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(c) Both (a) and (b)
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(d) None of the above R
18. In process costing to arrive at the cost per unit, total process cost is divided by :
(a) Cost of units produced (b) Number of Unit Produced
(c) Both (a) and (b) (d) None of the above
LT—28042 2 (Contd.)
19. When work certified is nothing is credited to costing profit and loss account ?
(a) More than 25% (b) Less than 35%

(c) Less than 25% (d) More than 35%

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20. In contract costing all direct costs are debited to :
(a) Contract Account
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(c) Profit & Loss Account (d) None of the above 20×1=20

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SECTION—B
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While preparing the final accounts and balancing the books of a Trader, it was found that there

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is difference in Trial Balance of Rs. 8,700. This difference was taken to the debit of Suspense

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Account. Following mistakes are observed :

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(i) Goods purchased from a Trader Rs. 550, credited to his account as Rs. 5,500.
(ii) Dishonoured bills Rs. 20,000 returned by the bank were credited to Bank Account and
debited to bills receivables account.
(iii) A transaction of Rs. 1,000 received in Sales Return Book debited to the Customer's Account
who returned the Goods.

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(iv) Plant sold Rs. 26,000 recorded in Sales Book and posted in the Sales Account.

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(v) A Customer from whom Rs. 6,000 was receivable was not included in the list of Debtors.

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(vi) Discount Rs. 250 received from a creditor debited to his account but not credited to
discount account.
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Pass necessary Journal entries to rectify above errors and prepare Suspense Account. 12
OR
On 31st March 2022, the Balance Sheet of Pratik Company Limited disclosed to following
position :
Balance Sheet
Liabilities Rs. Assets Rs.
Issued Capital @ Rs. 10 Fixed Assets 5,00,000
per share 4,00,000 Current Assets 2,00,000
Reserve
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50,000
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Profit & Loss A/c 20,000
5% Debentures
E 1,00,000
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Current liabilities 1,30,000
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A 7,00,000 A 7,00,000
On 31s t March 2022, the Fixed Assets were independently valued at Rs. 6,00,000. The Net Profit
for three years was Rs. 51,600 in 2020, Rs. 52,000 in 2021 and Rs. 51,650 in 2022 out of this

LT—28042 3 (Contd.)
 20% was placed in reserve. This proportion being considered reasonable in the Industry in which
the company is engaged and where a fair investment return may be taken at 10% p.a.
Compute the value of the company share by :
(a) The Asset method.
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(b) The Yield method.
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2. The following are the balances of Maharashtra Ltd. as on 31st March 2022 :

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Particulars Rs. Particulars Rs.

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Share Capital 40,00,000 Premises 30,72,000
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12% Debentures 30,00,000 Plant 33,00,000
Profit and Loss Account 2,62,500 Stock 7,50,000

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Bills Payable 370,000 Debtors 8,70,000
Creditors 400,000 Goodwill 2,50,000
Sales 4,150,000 Cash at Bank 4,06,500
General Reserve 250,000 Call-in Arrear 75,000
Bad Debt Provision as Interim Dividend paid 3,92,500

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on 1-4-2021 35,000 Purchases 18,50,000
Preliminary Exp. 50,000
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Wages 9,79,800

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Bad Debts
2,02,250
21,100
Debenture Interest Paid 1,80,000
12,67,500 12,67,500

Additional Information :—
(a) Depreciation plant by 15%.
(b) Write off Rs. 5,000 from Preliminary Expenses
(c) Half year Debenture Interest due

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(d) Provision for Doubtful Debts should be raised to 5% on Debtors.
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(e) Provide for Income Tax @ 50%.
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(f)
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Stock as on 31st March 2021 was Rs. 950,000
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(g) A claim of Rs. 25,000 for workmen’s compensation is being disputed by Company.
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(h) Ignore Corporate dividend tax. A
Prepare Final Accounts of the company. 12
OR

LT—28042 4 (Contd.)
 X Ltd. and Y Ltd. are two companies carrying on business in the same line of activity. Their
balance sheets as on 31-3-2022 are given :
Balance Sheet

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(As on 31st March 2022)
Liabilities
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Fully paid up Land & Building 100,000
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Equity share of Plant and

A Rs. 10 each 600,000 200,000 Machinery 7,00,000 300,000

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General Reserve 400,000 200,000 Investments 100,000 —

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Secured Loan 600,000 100,000 Stock 900,000 400,000

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Current liabilities 600,000 400,000 Debtors 300,000 100,000
Cash at bank 100,000 100,000
2,200,000 900,000 2,200,000 900,000
The two companies decided to amalgamate into XY Ltd. The following further information is
given :
(1) X Ltd. holds 8000 shares in Y Ltd. Rs. 12.50 each.
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(2) All assets and liabilities of the two companies expect investment are taken over by XY Ltd.
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(3) Each share in Y Ltd. is valued @ Rs. 25 for the purpose of the amalgamation.
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(4) Shareholders in X Ltd. and Y Ltd. are paid-off by issuing to them sufficient number of equity
shares of Rs. 10 each in XY Ltd as fully paid up at par.
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(5) Each share in X Ltd. is valued @ Rs. 15 for the purpose of the amalgamation.
Show journal entires to close the books of both the companies. 12
3. From the undermentioned, prepare a cost sheet of a Bricks work showing cost of profit per 1000
Bricks :
Wages Rs. 150,00,000
Coal 5,000 tons @ 1500 per ton
Royalties Rs. 150 per 1000 Bricks made

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Depeciation of Plant & Machinery @ 10% (Capital outlay Rs. 3,00,00,000.

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Remove of overburden at Rs. 100 per 1000 Bricks
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Work overhead
Office overhead G E 10% of wages and coal
2.5% of wages and coal G E
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Bricks made E 101,52,284 (Allow for waste
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at 1.5% of output)
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Stock of Bricks on 1 July 2022 — 20,00,000 @ Rs. 3,000 per 1,000
Stock of Bricks on 31st July 2022 — 40,00,000 @ Rs. 3,000 per 1,000 12
OR

LT—28042 5 (Contd.)
 "A good system of costing is an invaluable aid to management." Enumerate the main points in
support of this statement. 12
4. The following data related to a vehicle of a transport company. The vehicle in question runs on

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an average, 20 km per hour. After charging interest on cost of vehicle @ 5% p.a. compute cost
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per km run by the vehicle.
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Estimated life

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A R Annual kilometreage 60,000 km
Rs.

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Cost of vehicle 500,000

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Driver's wages per hour 60

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Petrol per litre 50
Repairs per km 2.50
Tyre allocation per km 1.00
Annual Expenses :—
License
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Insurance
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Garage Rent
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Supervision and salaries
R R 15,000

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The vehicle runs 20 km per litre. 12
OR
Compute Machine Hour Rate for Machine No. 08 from the following data :—
Rs.
Cost of machine 110,000
Scrap value 10,000
Effective life 10000 Hours

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Repairs and maintenance of whole lifeil 25,000
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Standing charges for shop m E m
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(for month of 25 working days) 4,000
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No of machines in the shop 10
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Working Hours per day 8 Hours A
Power used per machine per month 750
Machine Insurance 5% of Depreciation. 12

LT—28042 6 (Contd.)
5. A factory produces chemical X and in the course of its manufacture a by-product Y is produced
which is made saleable after a separate process. For the month of February 2022 cost data are
as under :

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X
(Rs.)
Y
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Materials 192,000 73,600 7,800

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A RWages
Overheads
117,000
34,500
76,800
15,000
26,420
5,440

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The output for the month was 1420 ton of 'X' and 490 ton of 'Y' and sales value of 'Y' averaged

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Rs. 240 per ton. Assuming 5% estimated Profit on sales value of by product 'Y', show the cost

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per ton of product 'X'. 12
OR
Define Cost Audit. Explain the difference between Financial Audit and Cost Audit. 12

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LT—28042 7 25