CA FOUNDATION NEW COURSE

ACCOUNTING

FULL SYLLABUS TEST-1

Question No, 1 is compulsory.

Attempt any 5 questions out of reaming 6 questions.

Total Marks: 100

Q-1

a) The Balance of Machinery Account of a firm on 1st April, 2020 was Rs 28,54,000. Out of this,
a plant having book value of Rs 2,16,000 as on 1st April, 2020 was sold on 1st July, 2020 for
Rs 82,000. On the same date a new plant was purchased for Rs 4,58,000 and Rs 22,000 was
spent on its erection. On 1st November, 2020 a new machine was purchased for Rs 5,60,000.
Depreciation is written off @ 15% per annum under the diminishing balance method.
Calculate the depreciation for the year ended 31st March, 2021.
(5 marks)

b) Mercantile system of Accounting and Cash system of Accounting.

(5 marks)

c) The cash book of a firm showed an overdraft (Cr) of Rs 30,000 on 31st March, 2016. A
comparison of the entries in the cash book and pass book revealed that-
(i) On 22nd March, 2016, cheques totaling Rs 6,000 were sent to bankers for collection.
Out of these, a cheque for Rs 1,000 was wrongly recorded on the credit side of the
cash book and cheques amounting to Rs 300 could not be collected by bank before
1st April, 2016.

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 (ii) A cheque for Rs 4,000 was issued to a supplier on 28th March, 2016. The cheque
was presented to bank on 4th April, 2016.
(iii) There were debits of Rs 2,600 in the pass book for interest on overdraft and bank
charges, but the same had not been recorded in the cash book.
(iv) A cheque for Rs 1,000 was issued to a creditor on 27th March, 2016 but by mistake
the same was not recorded in the cash book. The cheque was, however, duly
encashed by 31st March, 2016.
(v) As per standing instructions, the banker collected dividend of Rs 500 on behalf of
the firm and credited the same to its account by 31st March, 2016. The fact was,
however, intimated to the firm on 3rd April, 2016.

You are required to prepare a bank reconciliation statement as on 31st March, 2016.

(5 marks)

d) A firm has two products A and B, It analyses its costs for the products as follows:
A (Rs) B (Rs)
Materials 1,20,000 1,40,000
Labour 80,000 1,00,000
Production Expenses 70,000 70,000
Administration Expenses 50,000 50,000
Advertising 30,000 30,000
3,50,000 3,90,000

Production was 20,000 units of A and 30,000 units of B. The selling price was Rs 20 per unit
of A but the price of B was only Rs 10; agents in both cases received commission @ 5% of
the selling price. The closing stock was 2,000 units and 3,000 units of A and B respectively.
What is the value that should be put on the closing stock?

(5 marks)

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Q-2

a) What do you mean by accounting policies? What are the bases of their selection? What are
the different areas in which different accounting policies are possible?
(8 marks)

b) A Company issued 10,000 shares of Rs 10 each, in the following manner:-

Application Rs 3
Allotment Rs 4
1st Call Rs 2
2nd Call Rs 1
Company received the application for 13,000 Shares Company rejected & refunded the
amount of applications of 1,000 shares & made the pro rata allotment on remaining
applications. Mr. R Holder of 500 shares failed to pay any amount after application money.
Company forfeited his shares after making last call and subsequently reissued 400 of these
shares @ Rs 7 per share. Give necessary journal entries in the books of the company.
(8 marks)

Q-3

a) Deferred Revenues Expenditure & prepaid Expenses.

(6 marks)

b) Journalize the following transactions in the books of Karthik:

(i) Karthik accepted a bill to Balu for Rs 3,500 discharged by a cash payment of Rs 1,500
and a new bill for the balance plus Rs 75 for interest.

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 (ii) Gopal acceptance for Rs 4,500 which was endorsed by Karthik to Mohan was
dishonored. Mohan paid Rs 50 as nothing charges. Bill was withdrawn against
cheque.
(iii) Doshi retires a bill for Rs 2,500 drawn on him by Karthik for Rs 25 discount.
(iv) Karthik’s acceptance to Prem for Rs 6,500 discharged by prem. Ashok’s acceptance
to Karthik for a similar amount.
(6 marks)

c) Prepare Bank Reconciliation statement from the following particulars as on 31st December,
2020:

Particulars Rs
Bank Balance as per cash book (Debit) 1,98,000
Bank Charges debited by the bank not recorded in Cash Book 34,000
Received from debited vide RTGS on 31st December, 2020 not recorded in 1,00,000
Cash Book
Cheque issued but not presented for payment 45,000
Cheque deposited but not cleared 25,000
Cheque received and deposited but dishonored. Entry for dishonor not 5,000
made in the Cash Book
Instruction for payment given to the bank on 31 st December, 2020 but the 4,000
same effected by the Bank on 1st January, 2021
(4 marks)

Q-4

a) Following items appear in the Trail Balance of Start Ltd. as on 31 st March, 2019:

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 Particulars Rs
80,000 Equity shares of Rs 10 each, Rs 8 paid-up 6,40,000
Capital Reserve (including Rs 45,000 being profit on sale of Machinery) 1,10,000
Revaluation Reserve 80,000
Capital Redemption Reserve 75,000
Securities premium 60,000
General Reserve 2,10,000
Profit & Loss Account (Cr. Balance) 1,00,000

On 1st April, 2019, the company has made final call on Equity shares @ Rs 2 per share. The
entire money was received in the month of April, 2019.

On 1st June, 2019, the Company decided to issue to Equity shareholders bonus shares at the
rate of 2 shares for every 5 shares held and for this purpose, it was decided that there should
be minimum reduction in free reserve.

Pass necessary journal entries in the Books of star Ltd.

(8 marks)

b) Trial Balance for the financial year (FY) ended 31st March 2022 of M/s Deepakshi shows
following details:
Particulars Debit (Rs) Credit (Rs)
Purchase & Sales 10,00,000 12,00,000
Debtors & Creditors 5,00,000 4,00,000
Opening Stock 2,00,000
Closing Stock 3,00,000
Other Expenses & Incomes 7,00,000 9,00,000
Fixed Assets & Long Term Liabilities 25,00,000 6,00,000

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 Capital 21,00,000
52,00,000 52,00,000

Additional Information: Creditors balance as on 1st April, 2021 is Rs 3,00,000.

You are required to calculate cost of goods sold and amount paid to creditors during the
year.
(8 marks)

Q-5

a) From the following, find out the amount of subscriptions to be included in the income and
expenditure account for the year ended 31st March, 2019.
Subscriptions were received during the year 2018-19 as follows;
Rs
For the year 2017-18 2,000
For the year 2018-19 30,000
For the year 2019-20 3,000

Subscriptions outstanding as on 31st March, 2018 were Rs 3,500 out of which Rs 500 were
considered to be irrecoverable. One the same date, subscription received in advance for
2018-19 were Rs 2,000. Subscriptions still outstanding as on 31 st March, 2019 amounted to
Rs 6,000.
(5 marks)

b) With the information given in illustration 3, let us give journal entries and prepare balance
sheet assuming that goodwill is brought in cash.
The following is the Balance Sheet of Yellow and Green as at 31st December, 2022:

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 Liabilities Rs Assets Rs
Trade payables 20,000 Cash at Bank 10,000
Capital: Sundry Assets 55,000
Yellow 25,000
Green 20,000
65,000 65,000

The partners shared profits and losses in the ratio 3:2. On the above date, Black was
admitted as partner on the condition that he would pay Rs 20,000 as Capital. Goodwill was
to be valued at 3 years’ purchase of the average of four years’ profits which were:
Rs Rs
2019 9,000 2021 12,000
2020 14,000 2022 13,000

The new profit sharing ratio is 6:5:5.

(5 marks)

c) Mr. Fazhil is a proprietor in Business of trading. An abstract of his Trading and P & L Account
is as follows:
Trading and P & L A/c for the year ended on 31st March, 2018
Particulars (Rs) Particulars (Rs)
To Cost of Goods sold 22,00,000 By Sales 45,00,000
To Gross Profit c/d ?
? 45,00,000
To Salaries paid 12,00,000 By Gross profit b/d ?
To General Expenses 6,00,000 By other Income 45,000
To Selling Expenses ?
To Commission to manager 1,00,000

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 (On Net profit before
charging such commission)
To Net profit ?
? ?

Selling expenses amount to 1% of total Sales.

You are required to compute the missing figure.
(6 marks)

Q-6

a) Red, White and Black shared profits and losses in the ratio of 5:3:2. They took out a joint life
Policy in 2018 for Rs 50,000, a premium of Rs 3,000 being paid annually on 10th June. The
surrender value of the policy on 31st December of various years was as follows: 2018 nil;
2019Rs 900; 2020 Rs 2,000; 2021 Rs 3,600. Black retires on 15th April, 2022.
Required
Prepare ledger accounts assuming no Joint Life Policy Account is maintained.

(6 marks)

b) Rakesh started his business on 1st of April 2021. He invested a capital of Rs 1,00,000. On
31st March 2022, he has the following information available as per the Single-entry system
maintained by him.
Rs
Cash balance (counted) 3,200
Inventory (physically verified) 34,800
Receivable from Ajay against credit sales 31,000
Machine 85,000

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 Payable to Vinod towards credit purchase 12,000
Loan taken from Bank 10,000
Drawings made during the year 24,000
You are required to calculate the profit or loss earned by Rakesh for the year ended 31st
March 2022.

(5 marks)

c) Discuss the provisions of Section 55 of the companies Act, 2013.

(5 marks)

Q-7

a) Deferred Revenue Expenditure & prepaid Expenses.

(6 marks)

b) One of your clients Mr. X asked you to finalize his account for the year ended 31st March,
2022. As a basis for audit , Mr. X furnished you with the following statement:

Dr. (Rs) Cr. (Rs)

X’s capital 4,668
X’s Drawings 1,692
Leasehold premises 2,250
Sales 8,250
Due from customers 1,590
Purchases 3,377

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 Purchases Return 792
Loan from Bank 768
Trade Expense 2,100
Trade Payable 1,584
Bills payable 300
Salaries and wages 1,800
Cash at Bank 678
Opening Inventory 792
Rent and Rates 1,389
Sales Return 294
16,362 16,362

The closing inventory was Rs 1,722. Mr. X claims that he has recorded even Transaction
correctly as the trial balance is tallied. Check the accuracy of the above trial balance and
give reasons for the errors, if any.
(6 marks)

c) X who was closing his books on 31-3-2016 failed to take the actual Stock which he did only
on 9th April, 2016, when it was ascertained by him to be worth Rs 25,000.
It was found that sales are entered in the sales book on the same day of dispatch and return
inwards in the return book as and when the goods are received back. Purchases are entered
in the purchases day book once the invoices are received.
It was found that sales between 31-3-2016 and 9-4-2016 as per the sales day book are Rs
1,720. Purchases between 31-3-2016 and 9-4-2016 as per purchases day book are Rs 120,
out of these goods amounting to Rs 50 were not received until after the stock was taken.
Goods invoiced during the month of March, 2016 but goods received only on 4th April, 2016
amounted to Rs 100. Rate of gross profit is 33 1/3% on cost. Ascertain the value of physical
stock as on 31-3-2016. (4 marks)

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