ADV ACC FULL COURSE TEST 1

Time Allowed: 3:00 Maximum Marks: 100

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PAPER INSTRUCTION :-

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ALL MCQS ARE COMPULSORY

QUESTION 1 IS COMPULSORY AND SOLVE ANY 3 FROM REMAINING 4

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Q. Which of the following statements is true regarding the presentation of financial statements under Ind AS? 1
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MCQ.116 a. Ind AS allows flexibility in the format and layout of financial statements.
b. Ind AS mandates a specific format for the presentation of financial statements.
c. Ind AS requires the presentation of financial statements in a single currency only.
d. Ind AS prohibits the use of comparative financial statements.
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Q. Under Ind AS, where should an entity present the components of other comprehensive income? 1
MCQ.2 a. In the statement of profit and loss
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b. In the statement of changes in equity

c. In the notes to the financial statements
d. In a separate comprehensive income statement
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Q. Accounting Standards for non-corporate entities in India are issued by 1

MCQ.3 a. Central Govt
b. State Govt.
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c. Institute of Chartered Accountants of India.

d. MCA
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Q. Accounting Standards 1
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MCQ.4 a. Harmonies accounting policies and eliminate the non-comparability of financial statements.
b. Improve the reliability of financial statements
c. Both (a) and (b).
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d. Manipulate the data for the management.

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Q. Non-corporate entities which are not Level I entities whose turnover (excluding other income) exceeds 1
MCQ.5 rupees ------ but does not exceed rupees two-fifty crores in the immediately preceding accounting year are
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classified as Level II entities.

a. Five crores.
b. Two crores
c. Fifty crores
d. Ten crores

Q. The following Accounting Standard is not applicable to Non-Corporate Entities falling in Level II in its 1
MCQ.6 entirety.
a. AS 10
b. AS 17
c. AS 2
d. AS 13

Q. Adoption of different accounting policies by different companies operating in the same industry affects 1
MCQ.7 which of the qualitative characteristics the most?
a. Comparability
b. Relevance
c. Faithful representation
d. Reliability

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Q. Non-accumulating compensating absence is commonly referred to as: (New SM) 1
MCQ.8 a. Earned Leave
b. Sick Leave
c. Casual leave
d. All of the above

Q. The plans that are established by legislation to cover all enterprises and are operated by Governments includ 1
MCQ.9 e
a. Multi-Employer plans
b. State plans
c. Insured Benefits
d. Employee benefit plan

Q. Cash amounting to ` 4 lakhs, stolen by the cashier in the month of March 20X1, was detected in April, 20X1. 1
MCQ.10 The financial statements for the year ended 31st March, 20X1 were approved by the Board of Directors on
15th May, 20X1. As per Accounting Standards, this is for the financial statements year ended on 31st March,
20X1.
a. An Adjusting event.
b. Non-adjusting event.
c. Contingency.
d. Provision

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Q. A Ltd. sold its building for ` 50 lakhs to B Ltd. and has also given the possession to B Ltd. The book value of 1

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MCQ.11 the building is ` 30 lakhs. As on 31st March, 20X1, the documentation and legal formalities are pending. For
the financial year ended 31st March, 20X1.

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a. The company should record the sale.
b. The company should recognise the profit of ` 20 lakhs in its profit and loss account.
c. Both (a) and (b).
d. The company should disclose the profit of ` 20 lakhs in notes to accounts.

Q. Revenue to be recognized by XY Ltd. for the year ended 31st March 20X2 is
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MCQ.12 a. ₹ 28 lakh
b. ₹ 42 lakh
c. ₹ 30 lakh
d. ₹ 32 lakh
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Q. Consignment inventory is an arrangement whereby inventory is held by one party but owned by another 1
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MCQ.13 party. Which of the following indicates that the inventory in question is a consignment inventory?
a. Manufacturer cannot require the dealer to return the inventory
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b. Dealer has the right to return the inventory

c. Manufacture is responsible for the pricing of goods and any changes inthe pricing can only be approved by the
manufacturer.
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d. Manufacture is responsible for the holding the goods and any changesin the pricing can only be approved by the
dealer

Q. Which of the following transactions qualify as revenue for M/s AB Enterprises? 1

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MCQ.14 a. Sales of ₹ 20 lakhs made under consignment sales.

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b. Sale of an old machine amounting ₹ 5 lakhs

c. Services provided to the customer in the normal course of business. Sales recorded is ₹ 50,000.
d. Sales of ₹ 25 lakhs made under consignment sales
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Q. The Accounting Club has 100 members who are required to pay an annual membership fee of ₹ 5,000 each. 1
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MCQ.15 During the current year, all members have paid the fee. However, 5 members have paid an amount of ₹
10,000 each. Of these, 3 members paid the current year’s fee and also the previous year’s dues. Remaining 2
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members have paid next years’ fee of ₹ 5,000 in advance.

Revenue from membership fee for the current year to be recognised will be:
a. ₹ 5,25,000
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b. ₹ 5,10,000
c. ₹ 5,00,000
d. ₹ 5,15,000

Q. To encourage industrial promotion, IDCI offers subsidy worth Rs. 50 lakhs to all new industries set up in the 1
MCQ.16 specified industrial areas. This grant is in the nature of promoter’s contribution. How such subsidy should
be accounted in the books?
a. Credit it to capital reserve
b. Credit it as ‘other income’ in the profit and loss account in the year of commencement of commercial operations c
c. Both (a) and (b) are permitted
d. Income from house property

Q. Which of the following is an acceptable method of accounting presentation for a government grant relating 1
MCQ.17 to an asset?
a. Show the grant as part of Capital Reserve
b. Reduce the grant from the cost of the asset or show it separately as a deferred income on the Liability side of the
Balance Sheet.
c. Show the grant as part of general Reserve
d. 31st July, 2023

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Q. Which of the following statement is correct: 1
MCQ.18 a. In case of merger – ESH can be issued only equity shares as a part of Purchase consideration.
b. In case of purchase – ESH can be issued Preference shares also as a part of Purchase consideration.
c. Both (a) and (b) are correct.
d. Both (a) and (b) are incorrect.

Q. State which statement is correct: 1

MCQ.19 a. In case of merger – assets and liabilities can only be taken over at book values.
b. In case of purchase – assets and liabilities can be taken over at book values or agreed values.
c. (c) Both (a) and (b) are correct.
d. Both (a) and (b) are incorrect.

Q. Minority interest should be presented in the consolidated balance sheet 1

MCQ.20 a. As a part of liabilities.
b. As a part of equity of the parent’s shareholders.
c. Separately from liabilities and the equity of the parent’s shareholders.
d. As a part of assets

Q. Minority of the subsidiary is entitled to 1

MCQ.21 a. Capital profits of the subsidiary company.

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b. Revenue profits of the subsidiary company.
c. Both capital and revenue profits of the subsidiary company.

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d. Neither capital nor revenue profits of the subsidiary.

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Q. Identity which of the statements are correct. 1

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MCQ.22 An enterprise can influence the significant economic decision making by many ways like:
(i) Representation on the board of directors or governing body of the investee.
(ii) Participation in policy-making processes.
(iii) Interchange of managerial personnel.

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(iv) Provision of essential technical information.
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a. Statement (i) and (ii) are correct.
b. Statement (i), (ii) and (iii) are correct.
c. Statement (i), (ii), (iii) and (iv) are correct.
d. Statement (ii) and (iii) are correct.
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Q. A Ltd. acquired 10% stake of B Ltd. on April 01 and further 15% on October 01 of the same year. Other 1
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MCQ.23 information is as follows:

Cost of Investment for 10% ` 1,00,000 and for 15% ` 1,55,000
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Net asset on April 01 ` 8,50,000 and on October 01 ` 10,00,000.

What is the amount of goodwill or capital reserve arising on significant influence?
a. Goodwill = ` 10,000.
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b. Goodwill = ` 20,000.
c. Capital Reserve = ` 10,000.
d. ₹ 1,000 Under Section 234f
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Q. Trade payables as per Schedule III will include: 1

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MCQ.24 a. Dues payable in respect to statutory obligation

b. Interest accrued on trade payables
c. Bills payables.
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d. Bills receivables
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Q. Securities Premium Account is shown on the liabilities side in the Balance Sheet under the heading: 1
MCQ.25 a. Reserves and Surplus.
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b. Current Liabilities.
c. Share Capital.
d. Share application money pending allotment
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Q. Phase I of Ind AS was applicable to: 1

MCQ.26 a. All listed companies in India or outside India
b. Companies with turnover INR 500 crores or more
c. Companies with net worth INR 500 crores or more.
d. Companies with turnover INR 250 crores or more

Q. An accounting policy can be changed if the change is required 1

MCQ.27 a. By statute or accounting standard
b. For more appropriate presentation of financial statements
c. Both (a) and (b)
d. By statute as well as accounting standards.

Q. Value of equity may change due to 1

MCQ.28 a. Contribution from or Distribution to equity participants
b. Income earned
c. expenses incurred
d. All the three.

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Q. All non-corporate entities engaged in commercial, industrial or business activities having borrowings 1
MCQ.29 (including public deposits) in excess of rupees two crores but does not exceed rupees ten crores at any time
during the immediately preceding accounting year.
a. Level II entities.
b. Level IV entities.
c. Level III entities.
d. Level I entities.

Q. “Small and Medium Sized Company” (SMC) means, a company- 1

MCQ.30 a. which may be a bank, financial institution or an insurance company.
b. whose turnover (excluding other income) does not exceed rupees two-fifty crores in the immediately preceding
accounting year;
c. whose turnover (excluding other income) does not exceed rupees fifty crores in the immediately preceding
accounting year;
d. whose turnover (excluding other income) does not exceed rupees five hundred crores in the immediately preceding
accounting year.

Q. 1(a) Explain the objective of 'Accounting Standards’ in brief. State the advantages of setting Accounting Standards 5

Q. 1(b) The following extract of Balance Sheet of Ram Ltd. (a non-investment company) was obtained: Balance Sheet (Extract) 5

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as on 31st March ,2022

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Liabilities ₹

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Issued and subscribed capital:
20,000, 14% Preference shares of ₹ 100 each fully paid 20,00,000

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1,20,000 Equity shares of ₹ 100 each, ₹ 80 paid-up 96,00,000
Capital reserves (₹ 1,50,000 is revaluation reserve) 1,95,000
Securities premium 50,000

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15% Debentures 65,00,000
Unsecured loans: Public deposits repayable after one year 3,70,000
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Investment in shares, debentures, etc. 75,00,000
Profit and Loss account (debit balance) 15,00,000
You are required to compute Effective Capital as per the provisions of Schedule V to Companies Act, 2013.
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Q. 1(c) From the following information, prepare the Cash Flow from Financing activities as per AS 3 5
‘Cash Flow Statements’ as the accountant of XYZ Limited is not able to decide and seeks your advice:
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(i) Received ₹ 4,00,000 as redemption of short-term deposit

(ii) Proceeds of ₹ 20,00,000 from issuance of equity share capital
(iii) Received interest of ₹ 70,000 on Govt. bonds.
(iv) An amount of ₹ 13,00,000 incurred for purchase of goodwill
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(v) Proceeds of ₹ 5,00,000 from sale of patent.

(vi) Proceeds of ₹ 12,00,000 from long term borrowing.
(vii) Amount paid for redemption of debentures of ₹ 22,00,000
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(viii) Underwriting commission of ₹ 40,000 paid on issue of equity share capital

Interest of ₹ 1,44,000 paid on long-term borrowing
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Q. 1(d) In 2015, Royal Ltd. issued 12% fully paid debentures of Rs. 100 each, interest being payable half yearly on 30th 4
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September and 31st March of every accounting year.

On 1st December, 2016, M/s. Kumar purchased 10,000 of these debentures at Rs.101 cum-interest price, also paying
brokerage @ 1% of cum-interest amount of the purchase. On 1st March, 2017 the firm sold all of these debentures at
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Rs.106 cum-interest price, again paying brokerage @ 1 % of cum- interest amount. Prepare Investment Account in the
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books of M/s. Kumar for the period 1st December, 2016 to 1st March, 2017
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Q. 2(a) Peter Ltd. discontinues a business segment. Under the agreement with employee₹s union, the employees of the 5
discontinued segment will earn no further benefit. This is a curtailment without settlement, because employees will
continue to receive benefits for services rendered before discontinuance of the business segment. Curtailment reduces
the gross obligation for various reasons including change in actuarial assumptions made before curtailment. If the
benefits are determined based on the last pay drawn by employees, the gross obligation reduces after the curtailment
because the last pay earlier assumed is no longer valid.
Peter Ltd. estimates the share of unamortized service cost that relates to the part of the obligation at Rs. 18 (10% of
Rs. 180). Calculate the gain from curtailment and liability after curtailment to be recognised in the balance sheet of
Peter Ltd. on the basis of given information:
(a) Immediately before the curtailment, gross obligation is estimated at Rs. 6,000 based on current actuarial
assumption.
(b) The fair value of plan assets on the date is estimated at Rs. 5,100.
(c) The unamortized past service cost is Rs. 180.
(d) Curtailment reduces the obligation by Rs. 600, which is 10% of the gross obligation.

Q. 2(b) The Board of Directors of New Graphics Ltd. in its Board Meeting held on 18th April, 2017, considered and approved 5
the Audited Financial results along with Auditors Report for the Financial Year ended 31st March, 2017 and
recommended a dividend of Rs. 2 per equity share (on 2 crore fully paid up equity shares of Rs. 10 each) for the year
ended 31st March, 2017 and if approved by the members at the forthcoming Annual General Meeting of the company
on 18th June, 2017, the same will be paid to all the eligible shareholders. Discuss on the accounting treatment and
presentation of the said proposed dividend in the annual accounts of the company for the year ended 31st March, 2017
as per the applicable Accounting Standard and other Statutory Requirements

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Q. 2(c) The following data is provided for M/s. Raj Construction Co. 7
(i) Contract Price - ₹ 85 lakhs
(ii) Materials issued - ₹ 21 Lakhs out of which Materials costing ₹ 4 Lakhs is still lying unused.at the end of the period.
(iii) Labour Expenses for workers engaged at site - ₹ 16 Lakhs (out of which ₹ 1 Lakh is still unpaid)
(iv) Specific Contract Costs = ₹ 5 Lakhs
(v) Sub-Contract Costs for work executed - ₹ 7 Lakhs, Advances paid to Suh-Contractors - ₹ 4 Lakhs
(vi) Further Cost estimated to be incurred to complete the contract - ₹ 35 Lakhs
You are required to compute the Percentage of Completion, the Contract Revenue and Cost to be recognized as per
AS-7

Q. 3(a) Tonk Tanners is engaged in manufacturing of leather shoes. They provide you the following information for the year 5
ended 31st March, 2022:
(i) On 31st December, 2021 shoes worth ₹ 3,20,000 were sent to Mohan Shoes for sale on consignment basis of which
25% shoes were unsold and lying with Mohan Shoes as on 31 st March, 2022.
(ii) On 10th January, 2022, Tonk Tanner supplied shoes worth ₹ 4,50,000 to Shani Shoes and concurrently agrees to re-
purchase the same goods on 11th April. 2022.
(iii) On 21st March, 2022 shoes worth ₹ 1,60,000 were sold to Shoe Shine but due to refurbishing of their showroom
being underway, on their request, shoes were delivered on 12 th April, 2022.
You are required to advise the accountant of Tonk Tanners when amount is to be recognised as revenue in 2021-2022
in above cases in the context of AS 9.

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Q. 3(b) On 1stApril 2021, Eleanor Limited purchased a manufacturing Plant for ₹ 60 lakhs, which has an estimated useful life 5

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of ₹ 10 years with a salvage value of ₹ 10 lakhs. On purchase of the Plant, a grant of ₹ 20 lakhs was received from the
government.

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You are required to calculate the amount of depreciation as per AS-12 for the financial year 2022-23 in the following
cases:
(i) If the grant amount is deducted from the value of Plant.
(ii) If the grant is treated as deferred income.

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(iii) If the grant amount is deducted from the value of Plant, but at the end of the year 2022 -2023 grant is refunded to
the extent of ₹ 4 lakhs, due to non-compliance of certain conditions.
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(iv) If the grant is treated as the promoter's contribution.
(Assume depreciation on the basis of Straight-Line Method.)
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Q. 3(c) A Ltd. acquired 70% equity shares of B Ltd. @ Rs.20 per share (Face value - Rs.10) on 31st March, 2021 at a cost of 7
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Rs. 140 lakhs. Calculate the amount of share of A Ltd. and minority interest in the net assets of B Ltd. on this date. Also
compute goodwill/capital reserve for A Ltd. on acquisition of shares of B Ltd. from the following information available
from the balance sheet of B Ltd. as on 31st March, 2021: (RTP May 21)
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Rs. in lakhs
Property, plant and equipment 360
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Investments 90
Current Assets 140
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Loans & Advances 30

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15% Debentures 180

Current Liabilities 100
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Q. 4(a) The Balance Sheet of Harry Ltd. for the year ending 31st March, 2018 and 31st March, 2017 were summarised as 5
follows:
2018 (₹) 2017 (₹)
Equity share capital 1,20,000 1,00,000
Reserves:
Profit and Loss Account 9,000 8,000
Current Liabilities:
Trade Payables 8,000 5,000
Income tax payable 3,000 2,000
Declared Dividends 4,000 2,000

1,44,000 1,17,000
Property, Plant & Equipment (at W.D.V) :
Building 19,000 20,000
Furniture & Fixture 34,000 22,000
Cars 25,000 16,000
Long Term Investments 32,000 28,000

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Current Assets:

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Inventory 14,000 8,000

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Trade Receivables 8,000 6,000
Cash & Bank 12,000 17,000

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1,44,000 1,17,000
The Profit and Loss account for the year ended 31st March, 2018 disclosed:
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Profit before tax 8,000
Income Tax (3,000)
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Profit after tax 5,000
Declared Dividends (4,000)
Retained Profit 1,000
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Further Information is available:

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1. Depreciation on Building ₹ 1,000.

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2. Depreciation on Furniture & Fixtures for the year ₹ 2,000.

3. Depreciation on Cars for the year ₹ 5,000. One car was disposed during the year for ₹ 3,400 whose written
down value was ₹ 2,000.
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4. Purchase investments for ₹ 6,000.

5. Sold investments for ₹ 10,000, these investments cost ₹ 2,000.
You are required to prepare Cash Flow Statement as per AS-3 (revised) using indirect method.
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Q. 4(b) Following is the summarized Balance Sheet of Complicated Ltd. as on 31st March, 2016: 5
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Liabilities Amount (Rs.)

Equity shares of Rs. 10 each, fully paid up 12,50,000
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Bonus shares of Rs. 10 each, fully paid up 1,00,000

Share option outstanding Account 4,00,000
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Revenue Reserve 15,00,000

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Securities Premium 2,50,000

Profit & Loss Account 1,25,000
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Capital Reserve 2,00,000

Unpaid dividends 1,00,000
12% Debentures (Secured) 18,75,000
Advance from related parties (Unsecured) 10,00,000
Current maturities of long term borrowings 16,50,000
Application money received for allotment due for refund 2,00,000
86,50,000
Property, Plant & Equipment 46,50,000
Current Assets 40,00,000
86,50,000

The Company wants to buy back 25,000 equity shares of Rs. 10 each, on 1st April, 2016 at Rs. 20 per share. Buy back
of shares is duly authorized by its Articles and necessary resolution has been passed by the Company towards this. The
buy -back of shares by the Company is also within the provisions of the Companies Act, 2013. The payment for buy
back of shares will be made by the Company out of sufficientbank balance available shown as part of Current Assets.
You are required to prepare the necessary journal entries towards buy back of shares and prepare the Balance Sheet
after buy back of shares.

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Q. 4(c) Robert Ltd. and Diamond Ltd. give the following information as at 31.03.2020: 7
Robert Ltd. (Rs. in lakhs) Diamond Ltd. (Rs. in lakhs)
Equity Share Capital (Fully paid shares of Rs. 10 each) 22,500 9,000
Securities Premium 4,500 -
Foreign Project Reserve - 465
General Reserve 14,250 4,800
Profit and Loss Account 4,305 1,162.5
12% Debentures - 1,500
Trade payables 1,800 694.5
Provisions 2,745 1,053
Land and Buildings 9,000 -
Plant and Machinery 21,000 7,500
Furniture, Fixtures and Fittings 3,456 2,550
Inventory 11,793 6,061.5
Trade receivables 3,180 1,650
Cash at Bank 1,671 913.5

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All the bills receivable held by Diamond Ltd. were Robert Ltd.'s acceptances.

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On 1st April 2020, Robert Ltd. took over Diamond Ltd. in an amalgamation in the nature of merger. It was agreed that

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in discharge of consideration for the business, Robert Ltd. would allot three fully paid equity shares of Rs. 10 each at
par for every two shares held in Diamond Ltd. It was also agreed that 12% debentures in Diamond Ltd. would be

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converted into 13% debentures in Robert Ltd. of the same amount and denomination.
Details of trade receivables and trade payables are as under:
Robert Ltd. Diamond Ltd.
Particulars

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(Rs. in lakhs)
Trade Payables:
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Creditors 1,620 694.5
Bills Payable 180 -

1,800 694.5
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Trade receivables:
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Debtors 3,180 1,530

Bills Receivables - 120
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3,180 1,650
Expenses of amalgamation amounting to Rs. 1.5 lakhs were borne by Robert Ltd. You are required to:
(i) Pass journal entries in the books of Robert Ltd. and
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Prepare Robert Ltd.'s Balance Sheet immediately after the merger

Q. 5(a) Shine Ltd. provides the following information as on 31st March, 2021: (Rs.in '000) 5
Amount
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Equity Shares of Rs. 10 each 35,000

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8%, Cumulative Preference Shares of Rs. 100 each 17,500

6% Debentures of Rs. 100 each 14,000
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Sundry Creditors 17,500

Provision for taxation 350
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Property, Plant and Equipment 43,750

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Investments (Market value Rs. 3325 thousand) 3,500

Current Assets (Including Bank Balance) 35,000
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Profit and Loss Account (Dr. balance) 2,100

The following Scheme of Internal Reconstruction is approved and put into effect on 31st March, 2021.
(i) All the existing equity shares are reduced to Rs. 4 each.
(ii) All preference shares are reduced to Rs. 60 each.
(iii) The rate of interest on debentures is increased to 9%. The Debenture holders surrender their existing debentures
of Rs. 100 each and exchange them for fresh debentures of Rs. 80 each. Each old debenture is exchanged for one new
debenture.
(iv) Investments are to be brought to their market value.
(v) The Taxation Liability is settled at Rs. 5,25,000 out of current Assets.
(vi) The balance of Profit and Loss Account to be written off and balance of Current Assets left after settlement of
taxation liability are revalued at Rs.1,57,50,000.
(vii) One of the creditors of the Company for Rs. 70,00,000 gives up 50% of his claim. He is allotted 8,75,000 equity
shares of Rs. 4 each in full and final settlement of his claim.
(viii) Property, plant and equipment to be written down to 80%.
You are required to give journal entries for the above transactions and prepare capital reduction account.

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Q. 5(b) On 31st March, 2022 Chennai Branch submits the following Trial Balance to its Head Office at Lucknow: 7
Debit Balances ₹ in lacs
Furniture and Equipment 18
Depreciation on furniture 2
Salaries 25
Rent 10
Advertising 6
Telephone, Postage and Stationery 3
Sundry Office Expenses 1
Stock on 1st April, 2021 60
Goods Received from Head Office 288
Debtors 20
Cash at bank and in hand 8
Carriage Inwards 7
Credit Balances 448
Outstanding Expenses 3

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Goods Returned to Head Office 5

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Sales 360

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Head Office 80

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448

Additional Information:
Stock on 31st March, 2022 was valued at ₹ 62 lacs. On 29th March, 2022 the Head Office dispatched goods costing ₹

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10 lacs to its branch. Branch did not receive these goods before 1st April, 2022. Hence, the figure of goods received
from Head Office does not include these goods. Also the head office has charged the branch ₹ 1 lac for centralized
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services for which the branch has not passed the entry. You are required to
:(i) pass Journal Entries in the books of the Branch to make the necessary adjustments and (ii) prepare Final Accounts
of the Branch including Balance Sheet.
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Q. 5(c) A Ltd. acquire 45% of B Ltd. shares on April 01, 20X1, the price paid was ` 15,00,000. Following are the extracts of 5
balance sheet of B Ltd. as of 1 April 20X1:
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Paid up Equity Share Capital ` 10,00,000

Securities Premium ` 1,00,000
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Reserve & Surplus ` 5,00,000

B Ltd. has reported net profits of ` 3,00,000 and paid dividends of ` 1,00,000 for the year ended 31 March 20X2.
Calculate the amount at which the investment in B Ltd. should be shown in the consolidated balance sheet of A Ltd. as
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on March 31, 20X2.

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