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Q&A-5.

1
STUDY MATERIAL BASED CONTENTS
Paper 5 Advanced Accounting

Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-5.2
Bird's-Eye View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-5.4
Line Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-5.7
Table Showing Importance of chapter on the basis of Marks . . . . . . . . . . . . . . Q&A-5.8
Table Showing Importance of chapter on the basis of Marks
of Compulsory Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q&A-5.9

Study Material Based Contents
C.N. Scanner Study Chapters P.N.
1. (Chapter 1) Preparation and Presentation of Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Q&A-5.11
2. (Chapter 2) Accounting Standards . . . . . . . . . . . . . . . . . . . . Q&A-5.21
3. (Chapter 4 Unit 1) Company Accounts . . . . . . . . . . . . . . . . . . . . . . Q&A-5.49
4. (Chapter 3 Unit 5) Underwriting of Shares and Debentures . . . . . . Q&A-5.53
5. (Chapter 3 Unit 3
and Unit 7)
Amalgamation and Reconstruction . . . . . . . . . . Q&A-5.63
6. (Chapter 3 Unit 6) Redemption of Debentures. . . . . . . . . . . . . . . . . Q&A-5.99
7. (Chapter 3 Unit 8) Liquidation of Companies . . . . . . . . . . . . . . . . . Q&A-5.111
8. (Chapter 4) Financial Statements of Banking Companies . . Q&A-5.125
9. (Chapter 5) Financial Statements of Insurance Companies . Q&A-5.151
10. (Chapter 6) Financial Statements of Electricity Companies . Q&A-5.181
11. (Chapter 3 Unit 3) Departmental Accounts . . . . . . . . . . . . . . . . . . . Q&A-5.191
12. (Chapter 10 Unit 4) Branch Accounts & Foreign Branches. . . . . . . . Q&A-5.197
13. (Chapter 11 Unit 2) Dissolution of Partnership Firms . . . . . . . . . . . . Q&A-5.223
14. (Chapter 11 Unit 3) Amalgamation, Conversion and Sale of
Partnership Firms . . . . . . . . . . . . . . . . . . . . . . . . Q&A-5.235
Question Paper of May, 2009 . . . . . . . . . . . . . . Q&A-5.261
Question Paper of November, 2009 . . . . . . . . . . Q&A-5.263
Question Paper of May, 2010 . . . . . . . . . . . . . . Q&A-5.270
Question Paper of November, 2010 . . . . . . . . . . Q&A-5.277
Q&A-5.2
Syllabus

Paper 5 Advanced Accounting (100 marks)
(One Paper - Three Hours)
Level of Knowledge: Working Knowledge
Objectives:
(a) To have an understanding of the conceptual framework for the preparation and presentation
of financial statements;
(b) To gain working knowledge of the professional standards and application of accounting
principles to different practical situations; and
(c) To gain the ability to solve advanced problems in the case of different entities.
Contents
1. Conceptual Framework for Preparation and Presentation of Financial Statements
2. Accounting Standards
Working knowledge of :
AS 4 : Contingencies and Events occurring after the Balance Sheet Date
AS 5 : Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
AS 11: The Effects of Changes-in Foreign Exchange Rates (Revised 2003)
AS 12: Accounting for Government Grants
AS 16: Borrowing Costs
AS 19: Leases
AS 20: Earnings Per Share
AS 26: Intangible Assets
AS 29: Provisions, Contingent Liabilities and Contingent Assets.
3. Advanced Issues in Partnership Accounts
Dissolution of partnership firms including piecemeal distribution of assets; Amalgamation
of partnership firms; Conversion into a company and Sale to a company.
4. Company Accounts
(a) Accounting for employee stock option plan, Buy back of securities, Equity shares
with differential rights, Underwriting of shares and debentures, Redemption of
debentures
(b) Advanced problems for business acquisition, Amalgamation and reconstruction
(excluding problems of amalgamation of inter-company holding)
(c) Accounting involved in liquidation of companies, Statement of Affairs (including
deficiency/ surplus accounts) and liquidator's statement of account of the winding up.
(d) Financial Statements of Banking, Insurance and Electricity Companies
5. Accounting for Special Transactions
Departmental and branch accounts including foreign branches
Q&A-5.3
Note :
If either old Accounting Standards (ASs), Announcements and Limited Revisions to ASs
are withdrawn or new ASs, Announcements and Limited Revisions to ASs are issued by
the Institute of Chartered Accountants of India in place of existing ASs, Announcements
and Limited Revisions to ASs, the syllabus will accordingly include/exclude such new
developments in place of the existing ones with effect from the date to be notified by the
Institute.
Birds - Eye View

Paper 5 Advanced Accounting
Question Paper Based Contents of Last Five Examinations
Years Q. No. Compulsory Chapter Marks Category Page
No.
No. Name
2008
Nov.
2. (b)
4. (a)
5. (i)
(vi)
(ix)
(x)
(xi)
(xii)
All
Questions
Compulsory
9
14
2
4
8
1
6
12
Financial Statements of Insurance Companies
Amalgamation, Conversion and Sale of Partnership Firms
Accounting Standards
Underwriting of Shares and Debentures
Financial Statements of Banking Companies
Preparation and Presentation of Financial Statements
Redemption of Debentures
Branch Accounts & Foreign Branches
8
8
2
2
2
2
2
2
Practical
"
"
"
Practical
Descriptive
Practical
"
173
250
37
60
143
13
105
216
6. (a)
(c)
(e)
8
2
7
Financial Statements of Banking Companies
Accounting Standards
Liquidation of Companies
4
4
4
"
"
Descriptive
143
38
113
2009
May
3. (a)
4. (a)
(b)
All
Questions
Compulsory
14
10
7
Amalgamation, Conversion and Sale of Partnership Firms
Financial Statements of Electricity Companies
Liquidation of Companies
8
8
8
Practical
"
"
253
187
119
5. (i)
(v)
(vi)
6. (b)
(d)
(e)
9
4
2
2
2
9
Financial Statements of Insurance Companies
Underwriting of Shares and Debentures
Accounting Standards
" "
" "
Financial Statements of Insurance Companies
2
2
2
4
4
4
"
"
Descriptive
"
Practical
"
176
61
31
31
38
176
Q&A-5.4
2009
Nov.
1. (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
2.
3.
4.
5. (a)
(b)
6. (a)
(b)
All
Questions
Compulsory
2
2
2
2
3
2
2
11
2
6
5
6
12
8
3
13
2
Accounting Standards
" "
" "
" "
Company Accounts
Accounting Standards
" "
Departmental Accounts
Accounting Standards
Redemption of Debentures
Amalgamation and Reconstruction
Redemption of Debentures
Branch Accounts & Foreign Branches
Financial Statements of Banking Companies
Company Accounts
Dissolution of Partnership Firms
Accounting Standards
2
2
2
2
2
2
2
2
2
2
16
16
16
8
8
6
10
Practical
Descriptive
Practical
"
Descriptive
Practical
"
"
"
Descriptive
Practical
"
"
"
"
"
"
39
32
39
39
49
39
40
195
40
100
90
105
216
145
50
232
42
2010
May
1. (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
All
Questions
Compulsory
6
2
2
2
13
9
12
Redemption of Debentures
Accounting Standards
" "
" "
Dissolution of Partnership Firms
Financial Statements of Insurance Companies
Branch Accounts & Foreign Branches
2
2
2
2
2
2
2
Practical
"
"
"
Descriptive
"
Practical
108
44
44
44
225
157
219
(viii)
(ix)
(x)
2.
3.
8
1
1
14
5
Financial Statements of Banking Companies
Preparation and Presentation of Financial Statements
" " " "
Amalgamation, Conversion and Sale of Partnership Firms
Amalgamation and Reconstruction
2
2
2
16
16
Descriptive
Practical
"
"
"
128
17
18
256
94
Q&A-5.5
Q&A-5.6
4. (a)
(b)
5. (a)
(b)
6. (a)
(b)
(c)
(d)
12
9
8
7
4
8
2
10
Branch Accounts & Foreign Branches
Financial Statements of Insurance Companies
Financial Statements of Banking Companies
Liquidation of Companies
Underwriting of Shares and Debentures
Financial Statements of Banking Companies
Accounting Standards
Financial Statements of Electricity Companies
8
8
8
8
4
4
4
4
"
"
"
"
"
"
"
"
220
177
147
121
61
148
45
188
2010
Nov.
1. (i)
(ii)
(iii)
(iv)
2.
3.
4. (a)
(b)
5.
6. (a)
(b)
7. (a)
(b)
(c)
(d)
(e)
{C}
{C}
{C}
{C}
6
8
2
2
13
3
11
9
5
8
10
12
2
2
7
2
Redemption of Debentures
Financial Statements of Banking Companies
Accounting Standards
" " "
Dissolution of Partnership Firms
Company Accounts
Departmental Accounts
Financial Statements of Insurance Companies
Amalgamation and Reconstruction
Financial Statements of Banking Companies
Financial Statements of Electricity Companies
Branch Accounts & Foreign Branches
Accounting Standards
" " "
Liquidation of Companies
Accounting Standards
5
5
5
5
16
16
8
8
16
8
8
4
4
4
4
4
Practical
"
"
Descriptive
Practical
"
"
"
"
"
"
"
"
"
"
"
109
149
46
32
229
52
196
178
96
150
189
222
46
47
122
47
Note: Bird's-Eye View is based on PCC/IPCC Examination.
Q&A-5.7
Table Showing Importance of Chapter on the Basis of Marks

Chap.
No.
Years
Chapter Name
06
May
06
Nov.
07
May
07
Nov.
08
May
08
Nov.
09
May.
09
Nov.
10
May
10
Nov.
Total Ave.
1. Preparation and Presentation of Financial.. 4 2 2 4 12 1.2
2. Accounting Standards AS-4, 5, 11, 12, 16, 19.. 4 10 4 8 6 10 24 10 22 98 9.8
3. Company Accounts 10 16 26 2.6
4. Underwriting of Shares and Debentures 2 4 2 2 4 14 1.4
5. Amalgamation and Reconstruction 16 16 16 16 64 6.4
6. Redemption of Debentures 4 2 18 2 5 31 3.1
7. Liquidation of Companies 4 8 8 4 24 2.4
8. Financial Statements of Banking Companies 12 8 2 10 2 6 8 14 13 75 7.5
9. Financial Statements of Insurance Companies 4 8 2 8 6 10 8 46 4.6
10. Financial Statements of Electricity Companies 8 4 8 20 2.0
11. Departmental Accounts 2 8 10 1.0
12. Branch Accounts & Foreign Branches 16 2 8 2 16 10 4 58 5.8
13. Dissolution of Partnership Firms 2 4 6 2 16 30 3.0
14. Amalgamation, Conversion and Sale.. 16 16 20 8 8 16 84 8.4
Q&A-5.8
Table Showing Importance of Chapter on the Basis of Marks of Compulsory Questions

Chap.
No.
Years
Chapter Name
06
May
06
Nov.
07
May
07
Nov.
08
May
08
Nov.
09
May.
09
Nov.
10
May
10
Nov.
Total Ave.
1. Preparation and Presentation of Financial..
2. Accounting Standards AS-4, 5, 11, 12, 16, 19.. 10 10 1.0
3. Company Accounts
4. Underwriting of Shares and Debentures
5. Amalgamation and Reconstruction
6. Redemption of Debentures 5 5 0.5
7. Liquidation of Companies
8. Financial Statements of Banking Companies 5 5 0.5
9. Financial Statements of Insurance Companies
10. Financial Statements of Electricity Companies
11. Departmental Accounts
12. Branch Accounts & Foreign Branches
13. Dissolution of Partnership Firms
14. Amalgamation, Conversion and Sale..
* Questions upto November - 2006 are from PE-II Gr. I and from May - 2007 onwards are from PCC
Gr. I

Q&A-5.9
Star Rating
On the basis of Maximum marks from a chapter Nil
On the basis of Questions included every year from a chapter Nil
On the basis of Compulsory questions from a chapter Nil
CHAPTER
Preparation and Presentation of
Financial Statements
1
THIS CHAPTER COMPRISES OF
L Introduction L Status and Scope of Framework L Components L Objectives L
Qualitative Characteristics L Elements and measurement of elements of Financial Statement
L Fundamental Accounting Assumptions L Capital Maintenance.
Marks of Objective, Short Notes, Distinguish Between, Descriptive & Practical Questions
DESCRIPTIVE QUESTIONS
1999 - Nov [1] Attempt the following :
(d) Elucidate "accounting convention of conservatism". (5 marks) [S.A. 3]
Answer :
Q&A-5.10 O IPCC Gr. II Paper - 5
Convention of conservation : Literally speaking conservatism means taking the gloomy side
of the situation. Future is uncertain. Though an estimate is made about future events and
circumstances, but no one can guess the future with perfect certainty in business. Hence some
arrangements or provision is made to meet the future uncertainties. Every sincere business makes
an estimate of future loss and then some provision for it is made such as provision for bad debt.
Businessman mostly ignores the items of future profit. This tendency is termed as conservatism.
It is a natural tendency and is in existence since long. Hence, it is a convention saving for money
for meeting future contingencies by people.
2007 - May [6] Answer the following :
(a) What are the qualitative characteristics of the financial statements which improve the
usefulness of the information furnished therein ? (4 marks) [S.A. 18]
Answer :
Yes, Qualitative characteristics are those attributes which make the information provided in the
financial statement useful to the users.
The principal qualitative characteristics are as follows :
1. Understandable : The basic quality of financial statement is that it is understandable by
the user. However to understand, the user is expected to have basic knowledge of business
and accounting.
2. Relevance : The informations provided in the financial statement will loose its importance
if it is not relevant. An information is relevant when it influences the decision of users while
evaluating the past, present and future.
3. Materiality : The informations provided in a financial statement is relevant only if it is
material. Materiality provides a threshold rather than being a primary qualitative
characteristics.
4. Reliability : The financial statement looses its purpose if it is not reliable. Thus it should
be error free and unbiased showing the true and fair picture.
5. Neutrality : The financial statement should be neutral. It should not be a manipulated
statement.
6. Completeness : The financial statement should be complete in all respect within the
boundary of materiality and cost. An omission can cause information misleading.
7. Substance over form : The purpose of financial statement is to provide informations. It
should be thus presented in accordance with their substance and economic reality and not
merely their legal form.
8. Comparability : The measurement and display of informations should be consistent in
order to make it comparable over times to come.
2008 - May [5] Answer the following :
(vi) One of the characteristics of financial statements in neutrality ! Do you agree with this
statement? (2 marks) [S.A. 16]
[Chapter # 1] Preparation and Presentation of Financial... O Q&A-5.11
Answer :
Yes, Qualitative characteristics are the attributes that make the information provided in the
financial statement useful to users. One of the characteristics of financial statement is neutrality.
According to it, to be reliable, the information contained in the financial statement must be
neutral. It should be free from any sort of bias. Financial statements are not neutral, if, by the
selection or presentation of information, they influence the making of a decision or judgement
in order to achieve a predetermined result or outcome.
2008 - Nov [5] Answer the following :
(x) Give the four qualitative characteristics which the financial statements should observe.
(2 marks) [S.A. 19]
Answer :
The financial statements should have the following qualitative characteristics :
(i) Understandability
(ii) Relevance
(iii) Reliability
(iv) Comparability.
PRACTICAL QUESTIONS
1999 - May [5] (a) Media Advertisers obtained advertisement rights for One Day World Cup
Cricket Tournament to be held in May/J une, 1999 for Rs. 250 lakhs.
By 31st March, 1999 they have paid Rs. 150 lakhs to secure these advertisement rights. The
balance Rs. 100 lakhs was paid in April, 1999.
By 31st March, 1999 they procured advertisement for 70% of the available time for Rs. 350
lakhs. The advertisers paid 60% of the amount by that date. The balance 40% was received in
April, 1999.
Advertisements for the balance 30% time were procured in April, 1999 for Rs. 150 lakhs.
The advertisers paid the full amount while booking the advertisement.
25% of the advertisement time is expected to be available in May, 1999 and the balance
75% in J une, 1999.
You are asked to :
(i) Pass journal entries in relation to the above.
(ii) Show in columnar form as to how the items will appear in the monthly financial
statements for March, April, May and J une, 1999.Give reasons for your treatment.
(12 marks) [S.A. 13]
(b) On 31st March, 1998 Ramji Dayalji P. Ltd. a trading organisation owned inventory costing
Rs. 3 lakhs of which inventory valued Rs. 1 lakh was with consignees. It also has in its
possession inventory valued at Rs. 10 lakhs belonging to its own principals.
During the year ended 31st March, 1999 Ramji Dayalji P. Ltd. :
Q&A-5.12 O IPCC Gr. II Paper - 5
(a) purchased inventory worth Rs. 50 lakhs of which 80% was despatched to its
consignees, the transportation cost being 5% of the value of goods sent;
(b) received from its principals inventory of Rs. 150 lakhs;
(c) sold 90% of own goods received and lying with itself at 20% margin on sales;
(d) sold on behalf of principals 95% of goods available at 120% of the value thereof
Ramji Dayalji P. Ltd. is entitled to commission at 10% of such sales.
The consignees sold at 125% of their per unit landed cost (consignees spending nil) 95%
of goods available with them and were entitled to commission at 10% of sales.
You are asked to work out the various figures for recording in the revenue statement of
Ramji Dayalji P. Ltd. for the year ended 31st March, 1999. Prepare the revenue statement.
(10 marks) [S.A. 14]
Answer :
(a) (i) In the books of Media Advertisers
Journal Entries
[Amount in Lakhs]
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
1999
March
Advance for Advertisement right Purchase A/c Dr.
To Bank A/c
(Being advance paid for obtaining advertisement)
150.00
150.00
March Bank A/c Dr.
To Advertisement for Adv. right Sales A/c
(Being advance received from 60% of Rs. 350 Lakhs for
booking 70% of advertisement time)
210.00
210.00
April Advance for Advertisement right (Purchase) A/c Dr.
To Bank A/c
(Being balance advance i.e. 250 lakhs less Rs.150 lakhs
paid)
100.00
100.00
April Bank A/c Dr.
To Advance for Advertisement time (Sales) A/c
(Being balance of advance received from advertisers i.e.
(Rs. 350 Lakhs- Rs.210 lakhs)
140.00
140.00
April Bank A/c Dr.
To Advance for Advertisement time (Sale) A/c
(Being advance received in respect of booking of balance
30% time)
150.00
150.00
May Advertisement right
(Purchase)A/c Dr.
To Advance for Advertisement right (Purchase) A/c
(Being cost of advertisement rights used in May adjusted
advance payment i.e. 25% of Rs. 250 lakhs)
62.50
62.50
[Chapter # 1] Preparation and Presentation of Financial... O Q&A-5.13
Advance for Advertisement time (Sales) A/c Dr.
To Advertisement time (Sales) A/c
(Being sale price of advertisement time available in May
adjusted against advance received i.e. 25% of Rs. 500)
125.00
125.00
P & L A/c Dr.
To Advertisement right (Purchase) A/c
(Being cost of advertisement right transfer to P & L A/c)
62.50
62.50
Advertisement time (Sale) A/c Dr.
To P & L A/c
(Being sales for May transfer to P & L A/c
125.00
125.00
J une Advertisement right
(Purchase) A/c Dr.
To Advance for advertisement right (Purchase) A/c
(Being cost of advertisement right-used in J une adjusted
against advance paid i.e. 75% of Rs. 250 Lakhs)

187.50
187.50
Advance for Advertisement time (Sale) A/c Dr.
To Advertisement time (Sales) A/c
(Being sale price of adv. time used in J une adjusted against
advance received from advertisers. (i.e. 75% of Rs. 500
lakhs)
375.00
375.00
J une P & L A/c Dr.
To Advertisement right (Purchase) A/c
(Being advertisement right used in J une transfer to
P & L A/c)
187.50
187.50
Advertisement time (Sales) A/c Dr.
To P& L A/c
(Being sales for J une transfer to P& L A/c)
375.00
375.00
(ii) Monthly Financial Statements
(A) Revenue Statement
(Rs in Lakhs)
Particulars March
(Rs.)
April
(Rs.)
May
(Rs.)
June
(Rs.)
Q&A-5.14 O IPCC Gr. II Paper - 5
Sale of advertisement time
Less: Purchase of advertisement right

125.00
62.50
375.00
187.50
Net Profit 62.50 187.50
(B) Balance Sheet (as on ........)
31.3.99
(Rs.)
30.4.99
(Rs.)
31.5.99
(Rs.)
30.6.99
(Rs.)
Sources of Funds:
Net Profit 62.50 250.00
Application of Funds:
Current asset: Advance for advertisement time
Bank Balance
150.00
60.00
250.00
250.00
187.50
250.00

250.00
Less: Current liability:
Advance for advertisement time received from
advertisers
210.00
210.00
500.00
500.00
437.50
375.00
250.00

62.50 250.00
Reasons for such treatment: Accounting to AS-9 i.e. Revenue Recognition if service
transaction is made in past then revenue from service transaction should be recognised on a
proportionally basis.
So, income from advertisement is recognised in May 1999 (i.e 25% of Rs. 500 lakhs) and in
J une 1999 (i.e 75% of Rs. 500 lakhs) on the basis of available advertisement time.
(b) In the Books of Ramji Dayalji (P) Ltd.
Revenue Statement
(For the year ended 31st March 1999)
Particulars (Rs.) (Rs.)
Sales revenue
Closing Stock
Less: Opening stock
3,35,000
3,00,000
64,56,250
Surplus of Commission from consigners 35,000
18,24,000
Gross Revenues
Less: Purchase
Commission of consignees
Transportation cost
50,00,000
5,10,625
2,00,000
83,15,250
57,10,625
Net Profit 26,04,625
Working Notes:
(i) Sales
Particulars Ramji Dayalji
(P) Ltd. (Rs.)
Consignees
(Rs.)
Total (Rs.)
[Chapter # 1] Preparation and Presentation of Financial... O Q&A-5.15
Cost of goods sold
Add: Gross Profit (25%)
10,80,000
2,70,000
40,85,000
10,21,250
51,65,000
12,91,250
13,50,000 51,06,250 64,56,250
(ii) Valuation of Closing Stock
Particulars Ramji Dayalji
(P) Ltd (Rs.)
Consignees
(Rs.)
Total (Rs.)
Opening Stock
Add: Purchase
Add: Transportation Cost
2,00,000
10,00,000

1,00,000
40,00,000
2,00,000
3,00,000
50,00,000
2,00,000
Less: Cost of goods sold
12,00,000
10,80,000
43,00,000
40,85,000
55,00,000
51,65,000
Closing stock 1,20,000 2,15,000 3,35,000
(iii) Commission due to consignees
Sales made by consignees
Commission (@10%)
51,06,250
5,10,625
(iv) Sales made by the principle and commission on it:
Particulars Amount (Rs.)
Opening stock
Add: Goods received
10,00,000
1,50,00,000
Goods available for sale 1,60,00,000
Cost of goods sold (i.e. 95% of Rs. 1,60,00,000)
Add: Gross margin @ 20%
1,52,00,000
30,40,000
Sales 1,82,40,000
Commission @ 10% on sales 18,24,000
2010 - May [1] Answer the following questions :
(ix) From the following information, calculate the amount of Sundry Debtors as on
31.3.2010:
Balance as on 1.4.2009 is Rs. 50,000.
Bad debts are 2% and discount to the customers is given @ 1% of the opening balance
of Sundry Debtors.
Returns from the customers are Rs. 3,000.
Cash received from Debtors is Rs. 2,30,000.
Cash received from Debtors in transit is Rs. 14,000.
Cash Sales are Rs. 5,00,000.
Credit Sales are Rs. 2,50,000. (2 marks) [S.A. 2]
Q&A-5.16 O IPCC Gr. II Paper - 5
(x) Closing stock for the year ending on 31.3.2010 is Rs. 50,000 which includes stock
damaged in a fire in 2008-09. On 31.3.2009 the estimated net realisable value of the
damaged stcok was Rs. 12,000. The revised estimate of net realisable value included in
closing stock of 2009-10 is Rs. 4,000.
Find the value of Closing stock to be shown in Profit and Loss account for the year 2009-
10. (2 marks) [S.A. 3]
Answer :
(ix) Computation of sundry debtors as on 31.03.2010
Particulars Rs.
Sundry debtors as on 01.04.2009
Add : Credit sales
Add : Cash received from debtors
Cash received from debtors in transit*
Returns from the customers
Bad debts @ 2% of Rs. 50,000
Discount to the customers @ 1% of Rs. 50,000
2,30,000
14,000
3,000
1,000
500
50,000
2,50,000
3,00,000
2,48,500
Sundry debtors as on 31.03.2010 51,500
* It is assumed that information for cash in transit has already been received.
(x) The fall in estimated net realisable value of damaged stock Rs. 8,000 is the effect of change
in accounting estimate. As per AS 5 Net Profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies, the effect of a change in accounting estimate should
be classified using the same classification in the statement of profit and loss as was used
previously for the estimate.
Therefore, the value of closing stock for the year 2009-10 will be as follows :
Particulars Rs.
Closing Stock (including damaged goods)
Less : Revised value of damaged goods
50,000
(4,000)
Closing stock (excluding damaged goods) 46,000
Similarly Asked Questions*
No. Category Question Marks Frequency
[Chapter # 1] Preparation and Presentation of Financial... O Q&A-5.17
* This table contains the Similarly Asked Questions. Please pay more attention to such
question.
1 Descriptive Answer the following :
What are the qualitative characteristics of the
financial statements which improve the
usefulness of the information furnished therein ?
07 - May [6] (a), 08 - Nov [5] (x) 4, 2 2 Times
Q&A-5.18 O IPCC Gr. II Paper - 5
Classification of Questions as per Accounting Standard Number
Paper 5
Chapter 2 (Accounting Standards)
AS Questions
AS 4 Contingencies and Events
occurring after the Balance
Sheet Date
1998 - May [6] (b) (i) (ii); 2003 - May [6] (c) (i)
(ii) (iii); 2005 - Nov [6] (b); 2006 - Nov [6] (c);
2007 - May [5] (i)
AS 5 Net Profit or Loss for the
Period, Prior Period Items and
Changes in Accounting
Policies
1998 - May [6] (c) (i) (ii); 2004 - Nov [6] (b); 2005
- Nov [6] (a); 2007 - May [6] (f) 2008 - May [6]
(a); 2005 - May [6] (a); 2008 - Nov [5] (i)
AS 11 The Effects of Changes- in
Foreign Exchange Rates
(Revised 2003)
2008 - Nov [6] (c)
AS 12 Accounting for Government
Grants
2003 - May [6] (d); 2004 - May [6] (a); 2005 - May
[6] (f); 2005 - Nov [6] (f); 2007 - May [6] (c); 2008
- May [5] (iv)
AS 16 Borrowing Costs 2002 Nov [6] (a); 2004 - Nov [6] (a);
2008 - May [5] (vii)
AS 19 Leases 2002 - May [6] (e); 2002 - Nov [6] (e)
AS 20 Earnings Per Share 2002 - Nov [6] (c); 2005 - May [6] (c); 2007 - Nov
[6] (f)
AS 26 Intangible Assets 2003 - Nov [6] (a); 2005 - Nov [6] (d)
AS 29 Provi si ons, Conti ngent
Liabilities and Contingent
Assets