New Model Questions 2070
Full Marks: 100
Pass Marks: 35
Candidates are required to give their answer in their own words as far as practicable. The figures in the margin indicate full marks.
Attempt All questions
Brief Answer Questions: [2×10=20]
- Write about the two differences between Equity Share Capital and Preference Share Capital.
- Differentiate between pre-acquisition and post-acquisition dividend.
- Define the meaning of cash from financing activities.
- What do you mean by current purchasing power method?
- Why is Capital Budgeting significant for an organization?
- A company presents the following information.
Equity share capital of Rs. 100 each = Rs. 100,000
8% Preference share capital of Rs. 100 each = Rs. 60,000
6% Debentures = Rs. 40,000
The company is within 40% tax racket
Required: EPS at EBIT level of Rs. 100,000
(Ans: Rs. 53.76 per share)
- You are provided the following information.
Sales = Rs. 300,000
Wages to workers = Rs. 50,000
Interest received = Rs. 10,000
Cost of bought in materials and services = Rs. 180,000
Required: Amount of value added.
(Ans: Rs. 130,000)
- A company whose NPAT was Rs. 60,000, has 10% debenture of Rs. 100,000 and 8% preference share capital of Rs. 100,000. If tax rate is 40%, find the interest coverage ratio. (Ans: 11 times)
- The following information are provided
Cost of sales adjustment = Rs.30,000
Depreciation adjustment = Rs.10,000
Current cost adjustment = Rs.60,000
Required: Monetary working capital adjustment (Ans: 20,000)
- A machine was purchased 1st Baisakh, 2068 for Rs.90,000 and incurred Rs.10,000 each for transportation and installation. It was estimated that the machine will have a scrap value of Rs.10,000. The total life of the machine will be 10,000 hours. If machine runs for 3,000 hours during 2068, find out the amount of depreciation for the year 2068. (Ans: Rs.30,000)
Descriptive/ Short Answer Questions (attempt any five): [5×10=50]
11. a. Ratio Analysis is use to measure financial performance of the organization, comment. 
b. The following information give. [1.25×4=5]
Current Ratio =2 Current Liabilities =Rs.250,000
Fixed Assets =Rs.500,000 Stock =Rs.100,000
Prepaid expenses =Rs.25,000 Debenture =Rs.100,000
Share Capital =Rs.300,000 Net Profit =Rs.50,000
Inventory Turnover ratio =5 times
(1)Quick ratio (2) Sales (Rs.) (3) Debt to total capital ratio (4) Return on total assets
(Ans: (1) 1.5:1 (2) Rs.500,000 (3) 22.22% (4) 5%)
- A company is considering the replacement of old machine. The existing machine is 5 year old, has current cash salvage value of Rs.30,000 and remaining depreciable life of 10 years. The machine was originally purchased for Rs.75,000 and it is being depreciated at Rs.5,000 per year for tax purpose. The new machine will cost Rs.150,000 and will be depreciated on straight line basis over 10 years with no salvage value. The management of the company anticipates that with expanded operation, there will be a need of an additional working capital of Rs.30,000. The new machine will allow the company to expand the current operation and there by increase annual sales revenue by Rs.40,000 and annual variable operating cost by Rs.10,000. The company’s tax rate is 50% ad its cost is capital is 10%.
(1) Net cash outlay (NOC) (2) Incremental annual cash inflow (CFAT) (3) Final year cash inflow.
(4) Net present Value (NPV) of the project. (5) Decision regarding replacement of old machine. [2+2+2+2+2=10]
(Ans: (1) Rs.140,000 (2) Rs.20,000 (3) Rs.50,000 (4) Rs.5,545 (5) Should not replace
13. a. Clarify meaning of depreciation with two main objectives.
b. The following are the particulars relating to the machine account.
i. Purchase 5 machines at Rs.10,000 each
ii. Date of purchase January 1, 2008
iii. Depreciation applied Straight line at 20% p.a.
iv. Salvage Value Rs. 2,000 each (Book value)
v. Scrapped One machine realizing Rs.6,000 on the last date of December, 2010
vi. Account closed on The last date of December every year
Required: Machinery account for 2010 (Ans: Profit on sales Rs.800; Balance Rs.20,800)
14. A book store performed the following transactions during the year, 2012. 
|Amount (Rs.) Amount (Rs.)|
|Sales revenue 50,00,000
Less: Cost goods sold:
Beginning inventory 600,000
Ending inventory (400,000) 32,00,000
Less: Operating expenses:
Administration (cash) 500,000
Selling and distribution (cash) 240,000
Depreciation 200,000 10,00,000
Net income before tax 800,000
Less: Income tax 200,000
Net income after tax 600,00
Less: Dividend 300,000
Net profit 300,000
Average Index 160
Time of fixed assets purchased 100
(1) Purchasing power gain or loss on holding monetary items.
(2) Restated purchasing power income statement. [5+5=10]
(Ans: (1) Rs.315,000 (2) Rs.160,000)
15. The balance sheet of a company is as follows: 
|Liabilities Amount Assets Amount|
|3,000 Equity share capital of Rs.100 Land & building 200,000
each, Rs.75 called up 225,000 Paint & machinery 240,000
10% preference share capital up Inventory 190,000
Rs.100 each, fully paid up 100,000 Account receivable 62,000
8% Debenture 200,000 Cash 20,000
Accounts payable 225,000 Profit and loss account 50,000
Preference dividend due 12,000
The company went into voluntary liquidation. the assets except cash realized Rs.450,000 including Rs. 180,000 on sale of plant and machinery, which was mortgaged against 8% debenture. the liquidator was entitled to a remuneration of 4% on value of assets realized and 2% on amount paid to equity shareholders. the cost of liquidation was Rs.12,000.
Required: Liquidator’s final statement of account
(Ans: Liquidator’s remuneration Rs.18,000; Pref. Shareholders Rs.90,000; Total Rs.545,000)
16. Define consolidated balance sheet. how would you ascertain the amount of minority interest and capital reserve or goodwill? Explain with suitable example. [4+6=10]
Analytical/ Long Answer Questions (attempt any two): [2×15=30]
17. A company and B company decided to amalgamate and a new Company, C company is formed to take over the amalgamated companies with effect from January 1, 2013, when their balance sheet stood as follows:
|Liabilities (Rs.) A Co B Co Assets (Rs.) A Co B Co|
|Equity shares of Rs 100,000 500,000 Goodwill 190,000 60,000
100 each Premises 500,000 240,000
Reserve fund 290,000 175,000 Machinery 300,000 195,000
P/LA/C 110,000 75,000 Furniture 85,000
Account payable 95,000 47,000 Inventory 130,000 90,000
Outstanding expenses 5,000 2,500 Account 210,000 175,000
Cash at bank 85,000 30,000
Preliminary expense 10,000
C Company issued 5,000 equity shares of Rs.100 each, 10,000, 8% preference shares of Rs.10 each and 10% debentures Rs.200,000 to the public apart from the issues made to carry out the business combination.
(1) Calculate the amount payable to each company assuming that the purchase consideration was settled by the following in each of the companies. 40% in equity shares, 30% in preference shares, 20% in debentures and the rest in cash.
(2) Necessary journal entries in the book of A Co.
(3) Amalgamated balance sheet of New Company.
(Ans: Purchase consideration Rs.12,10,000 and Rs.680,000; Loss on realization Rs.190,000; B/S total Rs.26,51,000)
18. An unadjusted trial balance of a company is given below.
|Particulars Debit (Rs.) Credit (Rs.)|
Discount allowed 5,000
Interest on loan 6,000
Discount received 10,000
10% Bank loan 100,000
a. Closing stock Rs.50,000.
b. Prepared rent was Rs.2,000.
c. Out standing interest on bank loan was Rs.4,000.
d. Depreciation on furniture at 10% per annum.
(1) Income statement (2) Balance sheet (3) Cash flow statement
(Ans: (1) Net income Rs.145,000 (2) B/S total Rs.799,000 or Rs.745,000 (3) CFOA Rs.74,000; CFIA Rs.(120,000) CFFA Rs.600,000)
19. a. Explain the meaning, feature and privileges of public limited company. [2+3+3=8]
b. “Cash Flow Statement is useful internally to management and externally to investors and creditors.” Discuss.