Question Bank

Course: B.Com.

Subject: Corporate accounting -II

Semester: V

Batch: 2012 – 13 onwards

 PARK’S COLLEGE (AUTONOMOUS)
Department of Commerce

UNIT – 1
1. Provision for income tax is shown in the bank accounts under the head :---------------------------
a) Borrowings b) Other liabilities c) Operating expenses
d) Contingent liabilities
2. Demand draft and telegraphic transfer are shown in the bank account under the
head:-------------------------
a) Contingent liabilities b) Bills payables c) Loans and advances
d) Borrowings in India.
3. Buildings acquired in satisfactions of claim and interest accured but not due on investments
are
shown in the banks balance sheet under the head :--------------------------
a) Fixed assets b) Investments c) Advances d) Other assets
4. Rebate on bills discounted is :--------------------------
a) An accrued income b) An item of income;
c) A liability d) Income received in advances
5. The percentage of profit to be transferred to statements reserve by the banking company
is:-------------------------
a) 25% b) 15% c) 20% d) 10%
6.Every banking company is required to close its accounts on :---------------------------
a) 31st December b) 31st March c) 30th June d) 30th September.
7.The commission paid by the re-insurer is known as:
a) Commission on direct business b) commission on reinsurance ceded c) commission on
re-insurance accepted d) None of the above.
8. A valuation of Balance sheet is prepared by:
a) joint stock company b) banking company c) life insurance company d) general insurance
company
9. Leasehold grount rents are shown in
a) Revenue A/c b)Profit/ Loss A/c c) Schedule 8 investment d)Schedule 9 loans
10. Claim paid by life insurance companies is shown in
a) Schedule 1 b) Schedule 2 c)Schedule 3 d)Schedule 4
SECTION – B
1. On 31st March 1998, Bharat commercial bank Ltd., finds its advances classified as follows
Standard assets 14,91,300
Sub-standard assets 92,800
Doubtful assets (secured)
:doubtful for one year 25,660
:doubtful for one year to 3 years 15,640
:doubtful for more than 3 years 6,580
Loss assets 10,350
 Calculate the amount of provision to be made by the bank against the above mentioned
advances.
2. Calculation of rebate on bills from the following particulars of ABC Banks Ltd., find out the
closing rebate
and pass necessary entry for the year ending 31.3.2002
Date Of Bill Term Of Bill Discounted Rate Amt Of Bil
26-12-2001 4 Months 14% 2,86,000
12-1-2002 4 Months 14 days 15.5% 3,12,000
15-2-2002 5 Months 15% 1,98,000
5-3-2002 5 Months 16.2% 4,19,000
24-3-2002 3 Months 16% 2,56,000
3. Rebate on bills discounted as on 31.3.2000
Date Of Bills Amount Period Rate Of Discount
15.1.2000 25,000 5 months 8%
10.2.2000 15,000 4 months 7%
25.2.2000 20,000 4 months 7%
20.3.2000 30,000 3 months 9%
4. Calculate the provision
ASSET:
Standard 8,000
Substandard 6,000
DOUBTFUL:
For 1year 1,000
For 3 year 1,600
More than 3 years 400
Loss assets 1,200
5. Legal requirement of Banking A/C.

6. on 31.12.96 popular bank limited as the following Bills in the Portfolio . All the bills are
discounted at 5% ,

Amount in Rs Due date

50,000 31.1.97

40,000 30.4.97

30,000 3.3.97

Calculate rebate on bills discounted , assuming A/cs are closed on 31 Dec.

7. On 31.dec 1998 pandian bank ltd as the following bills

Date 1998 Amount Rs Term in month Discounting @ % P.A

NOV.11 50.000 4 6
NOV.16 60.000 3 5

NOV.07 40.000 4 5.5

Calculate the rebate on bills discounted and give necessary journal entry .assuming
account are closed on the date.
8.Write the Banking Schedule 1 to 12 ?
9. Write the Profit / Loss formate of banking accounts?
10.Calculate the net profit earned by sandhya bank ltd from the data given below for the year
ended 31.3.2003 .

Interest earned 5,00,000

Other incomes 37,000

Interest expended 3,40,000

Operating expenses 1,05,000

Rebate on bills discounted

Date(1.4.2002) 48,000

Date(31.3.2003) 52,000

SECTION – C
1. From the following information relating to Lakshmi Bank Ltd., prepare the profit and loss a/c
for the year ending 31st December,1987.
RS
Rent received 72,000
Exchange and commission 32,000
Interest on fixed deposits 11,00,000
Interest on savings bank A/cs 2,72,000
Interest on overdrafts 2,16,000
Discount on bills discounted 7,80,000
Interest on current accounts 1,68,000
Interest on cash credits 8,92,000
Depreciation on bank property 20,000
Salaries and allowances 2,18,800
Postage 5,600
Sundry charges 4,000
 Director’s & Auditor’s fees 16,800
Printing 8,000
Law charges 3,600
Locker rent 1,400
Transfer fees 2,800
Interest on loans 10,36,000
2. The following figures are extracted from the books of Bheema Bank Ltd.,
as on 31.12.1987.
Interest and discount received 36,95,738
Commission,exchange and broerkage 2,00,000
Directors’ fees and allowances 55,000
Postage and telegrams 62,313
Stationery 17,625
Preliminary expenses 15,000
Interest paid on deposits 20,32,542
Rent received 55,000
Salaries and allowances 1,75,000
Rent and taxes paid 87,973
Profit on sale of investments 2,00,000
Depreciation on building 27,375
Audit fees 5,000
ADDITIONAL INFORMATION:
1. Acustomer to whom a sum of RS.10,00,000 has been advances has become insolvent.It is
expected that only 50%
Can be recovered from his private estate.
2. For the remaining debts, a provision of 1,50,000 was necessary.
3. Rebate on bills discounted as on 31.12.86 RS.12,000 and on 31.12.1987 Rs.16,000.
4. Provide Rs. 6,50,000 for taxation
5. Write off all preliminary expenses.
Prepare profits & loss A/c in accordance with the law.
3. The following is the trial balance extracted from the books of Town Bank Ltd.,
DEBIT BALANCES RS CREDIT BALANCES RS
Balances with banks 46,350 Share capital 3,00,000
Investment in Govt.bond 1,94,370 Security deposits of employees 15,000
Other investments 1,55,630 SB Accounts 7,420
Gold bullion 15,130 Current accounts 97,000
Interest accrued on
investments 24,620 Fixed deposits 1,13,050
Sliver 2,000 Reserve fund 1,40,000 Borrowings from
banks 77,230 Acceptances,etc. 56,500 Profits and loss A/c
6,500 Building 65,000 Bills for collection 43,500
Furniture 5,000 Acceptances and
endorsements 56,500 Money at call 26,000 Interest
72,000
Loans 2,00,000 Commission 25,300
Bills Discounted 12,500 Discounts 42,000
Interest 7,950 Rent 600
Bills for collection 43,500 Profits on bullion 1,200
Audit fees 5,000 Miscellaneous income 2,700
Loss on sale of furniture 1,000 Accumulated depreciation on
Directors’s fees 1,200 buildings 20,000
Salaries 21,200
Postage 50
Managing director’
remuneration 21,000
Loss on sale of investments 30,000
Cash in hand 25,000
Cash with RBI 50,000
Branch asdjustment A/c 20,000
------------ -----------------
10,20,000 10,20,000
You are required to prepare the profit and loss account and balance sheet after taking into
consideration the following
1. Bad debts Rs. 500
2. Rebate on bills 1,000
3. Current year’s depreciation on buildings rs.2,000
4. Some current account are over drawn to the extent of rs.25,000 and total of credit balances is
Rs.1,22,000.

4. From the following particulars of XY Bank Ltd., prepare a balance sheet as on 31-3-96 in the
Revised format.
(RS. in Thousands)
Authorized capital 4,000
Subscribed capital 2,000
Investments 7,000
Bills discounted 15,000
Profit and loss A/c (cr) 850
Endorsement on bills for collection 100
Liability of customers for acceptances 5,000
Money at call and short notice 9,000
Cash in hand 2,000
Cash with RBI 4,000
Statutory reserve 3,000
Cash with state Bank of India 4,000
Letters of credit issued 500
Telegraphic transfers payable 800
Bank drafts payable 1,200
Short loans 40
Rebate on bills discounted 10
Acceptances for customers 5,000
Loans and advances 10,000
Cash credit 10,000
 Overdraft 1,000
Bills purchased 1,000
Current and deposit accounts 56,000
Investment fluctuation fund 100
Bills for collection 100
Buildings 1,000
5. Write format of P&L A/C and their schedule (13 to 16) of bank accounts.
6.write all schedule and profit/loss a/c and balance sheet.

UNIT -2
SECTION - A

1. Insurance business in India is now regulated by the provisions of ------------------

(a) The insurance Act 1938
(b) The IRDA Act 1999
(c) The Banking Regulations Act 1949
(d) The Indian Companies Act 1956
2. Number of Schedules to be prepared by the insurance companies for their financial statements
are
----------------------
(a) 26 schedules
(b) 10 schedules
(c) 12 schedules
(d) 15 schedules

3. In life insurance, the policy amount is payable --------------------

(a) After the death of the assured
(b) After the expiry of the policy period
(c) On death of the insured or on expiry of policy period whichever is earlier
(d) Only when the insured has incurred loss.
4. In General Insurance, the policy amount is payable --------------------
(a) After the death of the insured;
(b) After the expiry of the policy period;
(c) Only when the loss occurs or the liability arises;
(d) Only when the insured has attained a certain age.
5. Claims paid by life insurance companies is shown in ---------------------------
(a) schedule 1 (b) schedule 2
(c) schedule 3 (d) schedule 4
6. The Commission received from the re-insurer is called ----------------------
(a) Commission on re-insurance accepted
(b) Commission on re-insurance ceded
(c) Commission on direct Business
(d) None of the above
7. The bonus which is to be paid on maturity of the policy along with the policy amount is
known as --------------
(a) Reversionary Bonus (b) Annual Bonus
(c) Interim Bonus (d) Eventual Bonus
8. The balance found in the Revenue Account of life insurance companies is considered as
------------------
(a) Net profit/ Net loss (b) Surplus/ Deficit
(c) Life Assurance Fund (d) Gross profit/ Gross loss.
9. The balance found in the Revenue Account of General Insurance Companies is treated as
------------------
(a) provision for unexpired risk
(b) Net profit/ Net loss
(c) Operating profit or loss from insurance business
(d) Gross profit/ Gross loss.
10. The Commission paid by the re-insurer is known as -------------------
(a) Commission on direct business
(b) Commission on re-insurance ceded
(c) Commission on re-insurance accepted
(d) None of the above.
11. A Valuation of Balance sheet is prepared by -----------------
(a) Joint Stock Company (b) Banking Company
(c) Life Insurance Company (d) General Insurance Company.
12. Preliminary expenses incurred by life insurance companies is treated as -------------------
(a) Miscellaneous expenditure
(b) A deduction from paid up share capital
(c) A fixed asset
(d) An operating expense.
13. Agents balances (Dr) is shown in the balance sheet of life insurance companies as
------------------
(a) Current liabilities (b) other assets
(c) Fixed assets (d) Borrowings.

SECTION - B

1. A Life Assurance Company prepared its Revenue A/c for the year ended 31.3.2006 and
ascertained its Life Assurance fund to be Rs. 28, 35,000. It was found later that the following had
been omitted from the accounts:
(a) Interest accrued on investments Rs. 39,000;
Income tax liable to be deducted thereon is estimated to be Rs. 10,500.
(b) Outstanding premiums Rs. 32,800.
(c) Bonus utilized for reduction of premium Rs. 6,750.
(d) Claims intimated but not admitted Rs. 17,400.
(e) Claims covered under re-insurance Rs. 6,500.
What is the true Life Assurance Fund?

2. The Revenue account of a Life Insurance Company showed the life fund at Rs. 73, 17,000 on
31.3.2006 before taking into account the following items:
(a) Claims intimated but not admitted Rs. 98,250.
(b) Bonus utilized in reduction of premium Rs. 13,500.
(c) Interest accrued on investments Rs. 29,750.
(d) Outstanding premiums Rs. 27,000.
(e) Claims covered under re-insurance Rs. 40,500.
(f) Provision for taxation Rs. 31,500.
Pass journal entries giving effect to the above adjustments and show the adjusted life fund.

3. The Life fund of a Life Insurance Company on 31.3.2006 showed a balance of Rs. 54, 00,000.
However, the following items were not taken into account while preparing the Revenue A/c for
2005-06. Ascertain the correct life fund balance.
(a) Interest and dividends accrued on investments Rs. 20,000.
(b) Income tax deducted at source on the above Rs. 6,000.
(c) Re-insurance claims recoverable Rs. 7,000.
(d) Commission due on re-insurance premium paid Rs. 10,000.
(e) Bonus in reduction of premiums Rs. 3,000.

4. The Revenue account of a life assurance company shows the Life Assurance Fund on
31.3.2006 at Rs. 62, 21,310. Before taking into account the following:
(a) Claims covered under re-insurance Rs. 12,000.
(b) Bonus utilized in reduction of life insurance premium Rs. 4,500.
(c) Interest accrued on securities Rs. 8,260.
(d) Outstanding premiums Rs. 5,420.
(e) Claims intimated but not admitted Rs. 26,500.
What is the Life Assurance Fund after taking into account the above omissions?

5. The Revenue Account of a Life Insurance Company showed a balance of Rs. 4, 75,000 at the
end of 2005-06 before considering the following items:
(a) Bonus in reduction of premiums Rs. 40,000.
(b) Outstanding premiums Rs. 1, 00,000.
(c) Interest accrued on investments Rs. 20,000.
(d) Claims intimated but not admitted Rs.35, 000.
(e) Claims recovered under re-insurance Rs. 3,000.
Pass necessary adjustment entries.

6. A Life Insurance Company gets its valuation made once in every two years. Its Life Assurance
Fund on 31.3.06 amounted to Rs. 63, 84,000 before providing Rs. 64,000 for the shareholders'
dividend for the year 2005-06. Its actuarial valuation due on 31.3.06 disclosed a net liability of
Rs. 60, 80,000 under assurance annuity contracts. An interim bonus of Rs. 80,000 was paid to the
policy holders during the two years ending 31.3.2006.
 Prepare a statement showing the amount now available as bonus to policy holders.

7. The following figures relate to Life Insurance Corporation for the year ended 31.3.2006.
Prepare the Revenue A/c.

(Rs. '000)
(Rs. '000)

Claims 39 Consideration for

Management expenses 14 annuities granted 16.5
Director's fees 4 Surrenders 9
Audit fees 3 Premium received 151
Medical expenses 5 Life Fund (1.4.95) 1150
Agents' Commission 5 Interest received 40
Depreciation 4 Rent received 10
Bonus in reduction
Of premium 1.5 Claims cancelled .5
Annuities 1.5

Note: (a) Premium outstanding Rs. 9 Thousand.

(b) Claims outstanding Rs. 3 Thousand.

8. The following balances are extracted from the books of AB Life Insurance Corporation:
Life insurance fund as on 31.3.2006 Rs. 1,600 Lakhs.
Net Liabilities as per Valuation Rs. 1,200 Lakhs.
Interim bonus paid Rs. 150 Lakhs.
You are required to show (a) the valuation Balance sheet as on 31.3.2006 and (b) The
distribution statement.

9. Calculate the net claim to be debited to Revenue a/c of Insurance Company:

Claims Paid for the year ended 31.3.06 Rs. 5, 75,000.
Claims Outstanding on 1.4.05 Rs. 55,000.
Claims Outstanding on 31.3.06 Rs. 98,000.
Claims Covered Under re-insurance Rs. 28,000.

10. Compute commission expenses to be derived in schedule 2 of a life insurance company:

Commission on direct business Rs. 93,000.
Commission on re-insurance accepted Rs. 40,000.
Commission on re-insurance ceded Rs. 5
11. Calculate the amount of benefits paid (Net) to be derived in schedule 4 of a life insurance
company:
Claims paid Rs. 1, 97,000.
Claims outstanding at the end of the year Rs. 10,000.
Claims outstanding at the beginning of the year Rs. 7,000.
Re-insurance recoveries Rs. 80,000.
Annuities paid Rs. 10,000.
Surrenders paid Rs. 7,000.

12. The Life Assurance Fund of Insurance Company on 31.3.2006 showed a balance of Rs. 87,
76,500. It was found later that the following were not taken into account:
Dividend from investments Rs. 4, 80,000.
Income tax on above Rs. 48,000.
Bonus in reduction of premium Rs. 8, 77,500.
Claims covered under re-insurance Rs. 4, 23,000.
Claims intimated but not accepted by company Rs. 7, 62,000.
Ascertain the correct balance of Fund.

13. What do you understand by ' Life Assurance Fund '?

14. Write short notes on ' Valuation Balance Sheet '?

15. Write a note on ' Reserve for unexpired risk '?

SECTION - C

1. The following balances are abstracted from the books of New Bharat Life Insurance Co. Ltd.,
as on 31.3.2006.
Rs (‘000) Rs (‘000)
Life Assurance Fund
(1.4.2005) 15,00,000 Claims paid during the year 64,900
Premiums 4,96,000 Annuities 2,050
Consideration for annuities
granted 15,000 Bonus in reduction of premiums 1,600
Interest & Dividends 1,00,000 Medical fees 2,400
Fines for revival of policies 750 Surrenders 4,000
Re-insurance premium 20,750 Commission 18,650
Claims outstanding (1.4.2005) 4,500 Management expenses 22,000
Income tax on Dividends 8,500
Prepare Revenue A/c after making the following adjustments:
(a) Outstanding balances:
Claims 14,000
Premiums 4,600
(b) Further bonus for premium 2,400 (c)
Claims under re-insurance 8,000 2. From
the following balances extracted from the books of the L.I.C as at 31.3.06, prepare a Revenue
A/c for the year ended 31.3.2006 in the prescribed form:
Rs Rs.
(in '000) (in '000)
Claims by death 3,30,000 Life Assurance fund (1.4.05) 63,31,000
Claims by maturity 2,15,000 Premiums 20,65,000
Agents & Canvasser's
allowance 26,500 Bonus in reduction of premiums 1,000
Salaries 44,200 Income tax on interest & dividends 5,700
Travelling expenses 1,200 Printing & Stationery 13,900
Directors' fees 8,700 Postage & Telegrams 14,300
Auditor's fees 1,000 Receipt stamps 2,300
Medical fees 52,000 Re-insurance premiums 40,950
Commission 2,18,000 Interest & Dividend (Gross) 2,72,000
Rent 2,800 Policy renewal fees 9,600
Law charges 200 Assignment fees 540
Advertising 4,300 Endowment fees 690
Bank charges 1,500 Transfer fees 1,400
General charges 2,000
Surrenders 47,500
Provide Rs. 1,500 Thousands for depreciation of furniture and Rs. 2,20,000
Thousands for depreciation on investments.

3. Zaldi pay Insurance Co. Ltd. has furnished the following information for preparation of
revenue account for fire insurance business for the year ended 31.3.2006 and its Profit and Loss
A/c for the year.
(Rs. in '000) (Rs.
in '000)
Claims admitted but
not paid 42,376 Bad debts 2,500
Commission paid 50,000 Claims paid 15,000
Commission on re-insurance P & L Appn. A/c 10,000
received 12,000 Premium received less
re-insurance 5,52,000
Share transfer fees 5,000 Claims outstanding as
on 1.4.05 27,000
Expenses of management 78,000 Dividend on
share capital 18,500
Reserve for unexpired risk
as on 1.4.05 2,30,000
Additional reserve on 1.4.05 40,000
The following further information has also to be considered:
(a) Premium outstanding at the end of the year Rs. 40,000 Rs. 40,000 Thousands.
(b) Additional reserve at 10% of net premium to be maintained.
(c) It is the policy of the company to maintain 50% of premium towards reserves for unexpired
risks.
4. From the following balances of United General Insurance Co. Ltd. as on 31.3.2006 prepare:
(a) Fire revenue A/c (b) Marine revenue A/c and (c) Profit & Loss A/c
(Rs. '000) (Rs. '000)
Provision for unexpired risk Interest, Dividends, ect 28
on 1.4.05: Fire 500 Difference in exchange (Cr) .6
Marine 1,640 Miscellaneous receipts 10
Additional reserve on 1.4.05:
Fire 100 Profit on sale of land 120
Bad debts: Premium received:
Fire 10 Fire 1,200
Marine 24 Marine 2,160
Auditor's fees 2.4 Expenses of management:
Director's fees 10 Fire 290
Share transfer fees 1.6 Marine 800
Bad debts recovered 2.4 Commission earned on
Claims paid & outstanding: re-insurance ceded:
Fire 380 Fire 60
Marine 760 Marine 120

Commission paid: Fire 180

Marine 216
Depreciation 70
Provision for unexpired risk is to be kept at 50% of the premiums for fire and at
100% for Marine departments. The additional reserve in case of fire insurance is to be increased
by 5% of the net premium.

5. From the following figures relating to India Life Assurance Company for the year ended
31.3.06, prepare a revenue account of the company:
Rs.
(Thousand)
Claims less re-insurance:
By Death 2,00,000
By Maturity 1,40,000
Annuities 12,600
Printing & Stationery 7,700
Surrenders 4,000
Commission 25,050
Expenses of management 3,00,000
Life fund on 1.4.05 39,00,000
Premium received 15,00,000
Claims outstanding on 1.4.05:
By Death 80,000
By Maturity 60,000
Sundry incomes 6,000
Consideration for annuities granted 1,01,200
Interest, Dividends and Rents 2,10,000
Registration and other fees 200
Income tax 45,000
Income tax on interest & dividends 50,000
Additional information:
(a) Claims outstanding on 31.3.06 by death Rs. 50,000 Thousand; by maturity Rs. 40,000
Thousands.
(b) Management expenses outstanding Rs. 6,000 Thousands.
(c) Provide Rs. 4,500 Thousands for depreciation.
(d) Provide outstanding on 31.3.06 is Rs. 2,00,000 Thousands.

6. The following Trial Balance was extracted from the books of the New Bharat Life Insurance
Company Ltd. as on 31.3.06.
Dr
Cr
(Rs. '000) (Rs.'000)
Paid up share capital
(1,00,00,000 shares of Rs. 10 each) - 1,00,000
Life Assurance Fund on 1.4.2005 29,72,300
Dividend paid 15,000 -
Bonus to policy holders 31,500 -
Premiums received 1,01,500
Claims paid 1,97,000 -
Commission paid 9,300 -
Management expenses 32,300 -
Mortgages in India 4,92,200 -
Interest & Dividends received - 1,72,700
Agent's balances 9,300 -
Free hold premises 40,000 -
Investments 23,05,000 -
Loan on Company's policies 1,73,600 -
Cash on deposit 27,000 -
Cash in hand 7,300 -
Surrenders 7,000 -
------------------- -----------------
33,46,500 33,46,500
You are required to prepare the company's revenue A/c for the year ended 31.3.2006 and
its Balance Sheet as on that date after taking the following matters into consideration:
Rs.
('000)
(a) Claims admitted but not paid 9,300
(b) Management expenses due 200
(c) Interest accrued 19,300
(d) Premiums outstanding 12,000

7. From the following balances of Global Insurance Co. Ltd., as on 31st March 2006, prepare the
 (a) Fire revenue A/c (b) Marine revenue A/c and (c) Profit & Loss A/c.
Rs. Rs.
('000) ('000)
Bad debts: Fire 10,000 Depreciation 70,000
Marine 24,000 Interest, Dividend received 28,000
Auditor's fees 6,000 Difference in exchange (Cr) 600
Director's fees 6,400 Miscellaneous receipts 10,000
Share transfer fees 1,600 Profit on sale of land 1,20,000
Bad debts recovered 2,400 Fire premium less
re-insurance 12,00,000
Reserve
(fire as on 1.4.05) 5,00,000 Marine premium less
Reserve
(marine as on 1.4.05)16,40,000 re-insurance 21,60,000
Claims paid and outstanding Management expenses:
(fire) 3,80,000 Fire 2,90,000
Claims paid and
outstanding Marine 8,00,000
(marine) 7,60,000 Commission earned on
Commission paid: re-insurance ceded:
Fire 1,80,000 Fire 60,000
Marine 2,16,000 Marine 1,20,000
Additional reserve (fire)
as on 1.4.05 1,00,000
In addition to the usual reserve additional reserve in the case of fire
insurance is to be increased by 5% of net premiums.

8. From the following balances as on December 31,1970, appearing in the ledger of the Electric
Light and power Co. Ltd. you are required to prepare: (a) revenue account (b) net revenue
account (c) capital account and (d) general balance sheet.
Rs. Rs.
Equity share 54,900 Stores on hand 700
Debentures 20,000 Cash 300
Lands on 31.12.1969 15,000 Cost of generating electricity 3,000
Lands purchase
during 1970 500 Cost of distributing electricity 600
Machinery
on 31.12.1969 60,000 Rent, rates and taxes 400
Machinery puchased
during 1970 500 Management expenses 1,200
Mains including
cost of laying Depreciation 2,000
31.12.1969 20,000 Sale of current 13,200
Spent on mains
during 1970 5,100 Rent of meters 300
Sundry creditors 100 Interest on debentures 1,000
Depreciation fund 25,000 Dividends s2,000
Sundry debtors for Balance of net revenue
current supplied 4,000 account, 31.12.1969 2,850
Other debtors 50

9. The following is the trial balance of the Social Electric Lighting Co. Ltd. for the year ended
December 31,1970:
Dec 31, 1969 Dec 31, 1970
Dr Cr
Nominal capital 10,000 shares
of Rs. 50 each
1,00,000 Subscribed - 5,000 shares, Rs. 25 paid - 1,25,000
75,000 Debentures, 6% interest - 75,000
5,600 Depreciation fund - 5,000
- Calls in arrears 5,000 -
46,000 Freehold land 46,500 -
20,000 Buildings 25,000 -
30,000 Machinery at station 50,000 -
25,000 Mains 40,000 -
5,000 Transformers, Motors, ect. 10,000 -
2,500 Meters 7,500 -
1,500 Electrical instruments 2,000 -
8,000 General stores (cables, mains, ect.) in stock 11,750 -
1,250 Office furniture 1,250 -
- Coal and fuel 9,500 -
- Oil, waste and engine room stores 3,750 -
- Coal, oil waste, ect. in stock 500 -
- Repairs and replacements 2,500 -
- Rates and taxes 1,500 -
- Salaries of secretary, manager, ect. 7,500 -
- Wages at station 15,000 -
- Directors' fees 5,000 -
- Stationery, printing and advertising 3,000 -
- Incidental expenses 500 -
- Law charges 1,000 -
- Sales of meters - 43,750
- Sales by contracts - 25,000
- Meter rents - 1,500
- Sundry creditors - 5,000
- Sundry debtors 15,000 -
- Cash in hand and at bank 16,500 -
Rs. 2,80,250 2,80,250
(a) Provide depreciation on:
Building 2 1/2% ; Machinery 7 1/2%; Mains 5%; Transformers ect. 10%, Meters 15%.
(b) A call of Rs. 5 per share was payable on 30th June, 1970 and arrears are subject to
interest at 5% per annum.
Prepare revenue account and capital account for the year ended December 31, 1970 and Balance
sheet as on that date.

UNIT -3
SECTION – A

1. A company in which more than 50% of shares are held by another company is termed as:
a) Holding company b) Subsidiary company
c) Govt. company d) Public company
2. A holding company is one which holds more than :
a) 2/3 rd share capital of subsidiary company
b) 50% of share capital of subsidiary company
c) 75% of share capital of government company
d) None of these
3. Profit earned by a subsidiary company upto the date of acquisition of shares by the holding
company are called :
a) Revenue profits b) Capital profits
c) Revaluation profits d) Realisation profits
4. Profits made by a subsidiary company after date of purchase of shares by the holding company
are known as:
a) Revaluation profits b) Realisation profits
c) Capital profits d) Realisation profits
5. Bonus shares issued out of post acquisition profits will :
a) Have no effect on CBS b) Decreases the revenue profits
c) Decreases the total of assets side of CBS
d) Increases the goodwill to the extent of the holding company’s share of the bonus
6. the excess price paid by a holding company to acquire “control interest “ in the subsidiary
company is transferred to--------
a) capital reserve b) goowill a/c c) revenue reserve d) none of the above
7.a company should purchase more than ------------ share of another company in order do become
a holding company.
a) 20% b)10% c)50% d)60%
8. bonus share issued out of post acquisition profits will---------------
a) have no effect on CBS
b) decrease the revenue profits
c) decrease the total of assets side of CBS
d) increase the goodwill to the extent of the holding company’s share of the bonus
9. to excess of the share in equity or net assets of the subsidiary over and above the price paid for
the investment is shown as-----
a) capital reserve b) goowill a/c c) revenue reserve d) none of the above
10. Unrealised profit included in stock is :
a) Deducated from stock in combined balance sheet
b) Deducated from P&L a/c balance in combined balancesheet liabilities sides.
c) Deducted from stock and P&L a/c balance in combined balance sheet.
d) Shown separately in assets side of CBS.

SECTION – B
1. H Ltd. acquires all the shares of S Ltd.on 31st march,1989 on which date the balance sheet of
the two companies are as under
H S H S
LTD LTD LTD
Share capital: Sundry assets 4,80,000 2,60,000
Shares of rs.10 each, 100% shares in S ltd 2 ,00,000 -----
Fully paid 5,00,000 2,00,000
Reserves 1,00,000 -----
Creditors 80,000 60,000
----------------------------------- ----------------------------------------
6,80,000 2,60,000 6,80,000 2,60,000
------------------------------------ --------------------------
Prepare a consolidated balance sheet as at 31st march 1989.

2. Balance sheet as at 31st march,1989.

H ltd S ltd H ltd S ltd
rs rs rs rs
Share capital : Sundry assets 4,90,000 2,60,000
Shares of rs.10 eac 5,00,000 2,00,000 100% shares in S Ltd.
Fully paid (at cost) 1,90,000
Reserves 1,00,000 ----
Creditors 80,000 60,000
------------- --------------- -------------- ---------------
6,80,000 2,60,000 6,80,000 2,60,000
st
Prepare a consolidated balance sheet as at 31 march. 1989.
3. Balance sheet as at 31st march,1989
H ltd S ltd H ltd S ltd
rs rs rs rs
Share capital: Sundry assets 5,60,000 2,60,000
Share of rs 10 each,
fully paid 5,00,000 2,00,000 60% shares in s ltd.
Reserves 1,00,000 (at cost) 1,20,000
Creditors 80,000 60,000
---------------------------------------- --------------------------------------
 6,80,000 2,60,000 6,80,000 2,60,000
---------------------------------------- --------------------------------------
Prepare a consolidated balance sheet as at 31st march, 1989.
4.define a “holding company”
5. give the meaning of “subsidiary company”
SECTION-C

1.Balance sheet as on 31st march, 1989.

H ltd S ltd H ltd S ltd

rs rs rs rs
Share capital: Sundry assets 4,36,000 3,04,000
Shares of rs 10
each fully paid 5,00,000 2,00,000 100% sharesin S ltd.
Reserves 1,00,000 50,000 acquired on 31st march,
Creditors 80,000 60,000 1989(cost) 2,44,000
Preliminary expenses 6,000
------------------------------------- -------------------------------------
6,80,000 3,10,000 6,80,000 3,10,000
-------------------------------------- -------------------------------------
Prepare a consolidated balance sheet as at 31st march 1989
2. Balance sheet as at 31st march 1989
H ltd S ltd H ltd S ltd
Rs rs rs rs
Share capital: Fixed assets 3,00,000 1,00,000
Shares of Rs10
each,fully paid 5,00,000 2,00,000 60% shares in Sltd.
Reserves 1,00,000 50,000 acquired on 31st march
Creditors 80,000 60,000 1989(cost) 1,62,400
Currentassets 2,17,600 2,04,000
Preliminaryexpenses 6,000
----------------------------------- --------------------------------------
6,80,000 3,10,000 6,80,000 3,10,000
------------------------------------ ---------------------------------------
On 31 st march 1989 S ltd.revalued oits fixed assets at rs.1,10,000. Prepare the
consolidated balance sheet of H ltd.and its
Subsidiariy S ltd as at 31st march 1989.

3. Following are the balances sheet of H ltd.and its subsidiary S ltd as at 31st march,1989:
H ltd S ltd H ltd S ltd
rs rs rs rs
Share capital: Machinery 3,00,000 1,00,000
Shares of Rs10 each
fully paid 6,00,000 2,00,000 Furniture 70,000 45,000
General reserve 1,50,000 70,000 70% shares in
S ltd at cost 2,60,000
Profit and loss
account 70,000 50,000 stock 1,75,000 1,89,000
Creditors 90,000 60,000 Debtors 55,000 30,000
Cash at bank 50,000 s10,000
Preliminary
expenses 6,000
------------------------------------- --------------------------------------
9,10,000 3,80,000 9,10,000 3,80,000
st st
H Ltd acquired the shares of S ltd. on 31 june 1988.on 1 april 1988 S Ltd. general reserve
and profit and loss account stood at rs.60,000 and rs 20,000 respectively.No part of preliminary
expenses was written off during the year ended 31st march 1989
Prepare the consolidated balance sheet of H Ltd ,.and its subsidiary S Ltd as at 31 st
march,1989.
4. From the following balances sheets of H Ltd.and its subsidiary S Ltd. as ay 31 st march,1989
and the additional information provided thereafter, prepare a consolidated balance sheet of the
two companies as at that date:
H ltd S ltd H ltd S ltd
rs rs rs rs
Sharecapital:
Share of rs10 each
fully paid 10,00,000 2 ,00,000 Fixed assets 11,62,000 1,80,000
General reserve3,10,000 -- 70% shares of Sltd
Profit&loss accou1,50,000 40,000 at cost 1,42,000
Creditors 2,30,000 69,000 Current assets 3,86,000 1,24,000
Preliminary expenses 5,000
------------------------------------- -------------------------------------
16.90,000 3,09,000 16,90,000 3,09,000
------------------------------------- ------------------------------------
H Ltd acquired the shares on 31 st December,1988.on 1st April, 1988 S Ltd.’s Profits and
loss account showed a debit balances of Rs 8,000.on 31 st march, 1989 S Ltd. decided to revalue
its fixed assets at Rs 2,00,000.
4. what do you understand by ‘ capital profit’ or per acquisition profit?
5. distinguish between ‘ capital profit ‘ and ‘revenue profit’ in the context of ‘holding company
accounts’.
6. write a short note on ‘Minority Interest’.
7. A ltd acquired 20,000 equity shares of rs 10 each in B Ltd as at 31 st march 1988. The
summarized balance sheets of the two companies as at 31st march 1989 were as follows:
Liabilities A Ltd B Ltd
Equity share capital (share of rs. 10 each) 8,00,000 2,50,000
General reserve 3,00,000 50,000
Profit and loss account 1,00,000 2,00,000
Creditors 2,00,000 50,000
 ------------------------- -----------------------
14,00,000 5,50,000
------------------------- -----------------------
Assets
Fixed assets 7,00,000 2,50,000
20,000 shares in B Ltd., at cost 3,00,000 -
Current assets 4,00,000 3,00,000
---------------------------- --------------------------
14,00,000 5,50,000
----------------------------- --------------------------
B Ltd has a credit balance of rs 50000 in general reserve and rs 20,000 in profit and loss
account when A Ltd acquired
Shares in B Ltd.
B Ltd issued bonus shares in the ratio of one for every five shares held out of the profits
earned during 1988-89. This
Is not shown in the above balance sheet of B Ltd.
Prepare a consolidated balance sheet of A Ltd and its subsidiary as at 31st march 1989.

UNIT- 4
SECTION – A

1. What is the name of the account showing profit and loss under double account system ?
a) Income & expenditure a/c b) Income Statement
c) Revenue A/c d) Net Revenue A/c
2. What is the name of the account which shows profit & loss appropriation under double
account system?
a) Net Revenue A/c b) Revenue A/c
c) Income statement d) Income & expenditure A/c
3. Under double account system, interest on debentures is shown in :
a) Revenue A/c b) Net Revenue A/c
c) Capital A/c d) General balance sheet.
4. Under double accunt system, share forfeited account is shown in :
a) Credit side of revenue A/c b) Credit side of net revenur a/c
c) Credit side of capital A/c d) Lia bilities side of general balance sheet
5. Under double account system, depreciation is :
a) Debited to revenue A/c b) Debited to net revenue A/c
c) Credited to the assets A/c d) Credited to depreciation fund A/c
6. Under double account system, preliminary expenses is shown on :
a) Debit side of revenue A/c b) debit side of net revenue A/c
c) Debit side of capital A/c d) Assets side in the general balance sheet
7. Cost of licence appears in :
a) General Balance sheet b) Capital A/c
c) Revenue A/c d) Net revenue A/c
8. When an asset is replaced, any amount realised on sale of old materials will be credited to :
a) Net revenue A/c b) Revenue A/c
c) Assets A/c d) Replacement A/c
9. Original cost of an asset rs. 2,50,000. Present cost of replacement Rs. 3,25,000. Amount spent
on replacement
Rs. 3,80,000. The amount chargeable to revenue will be :
a) Rs. 1,30,000 b) Rs. 3,80,000 c) Rs. 2,50,000 d) Rs. 3,25,000
10. Original cost of an asset is Rs. 50,000. Present cost of the replacement is Rs. 65,000. The
amount spent in
Its replacement is Rs. 76,000. The amount to be capitalized will be :
a) Rs. 65,000 b) Rs. 76,000 c) Rs. 11,000 d) Rs.50,000

SECTION – B
1. What is meant by double account system ?
2. Mention any two characteristics features of double account system.
3. State any two differences between double account system and single account system.
4. Mention any two limitations of double account system.
5. The following are the balances on 31-03-04 in the books of the Ernakulam Power and Light
Company ltd.
RS RS
Lands on 31-3-03 1,20,000 --
Lands expended during 2003-04 4,000 --
Machinery on 31-3-03 4,80,000 --
Machinery exopended during 2003-04 4,000 --
Mains including cost of lying 1,60,000 --
Mains expended during 2003-04 40,800 --
Equity shares -- 4,39,200
Debentures -- 1,60,000
Sundry creditors -- 800
Depreciation Funds A/c -- 2,00,000
Sundry debtors for current supplied 32,000 --
Other debtors 400 --
Cash 4,000 --
Cost of generation of electricity 28,000 --
Cost of distribution of electricity 4,000 --
Rent rates and taxes 4,000 --
Management expenses 9,600 --
Depreciation 16,000 --
Sale of current -- 1,04,000
Rent of meters -- 4,000
Interest on debenbures 8,000 --
Interim dividend 16,000 --
Net Revenue A/c Balance on 31-3-03 -- 22,800
-----------------------------------------
9,30,800 9,30,800
 -----------------------------------------
From the above Trial Balance, prepare Revenue A/c.
6.Arun started a company with the capital of rs.75,00,000 the same of which was invested in a
property. On that date the general price index was 120 and specific price index for the property
was 200. After few years the property was sold for 2,00,00,000 on which date the general price
index was 160 and specific price index was 400.
You are required to ascertain profit under a) historical cost b) CCA method c) CPP method.

SECTION - C
1. From the following particulars, draw up :
(a) Balance sheet as on 31-12-03 under the single account system ; and
(b) The capital A/c and general balance sheet as at same date under the double account
system.
Authorised capital – 20,000 shares of Rs. 100 each.
Issued and paid up capital – 10,000 shares of Rs. 100 each including 1,000 shares issued in
2003.
RS
8% Debentures 2,00,000
Reserve Fund 3,00,000
Trade Creditors 1,00,000
Trade Debtors 2,20,000
Cash at Bank 60,000
Stock 1,20,000
Reserve Fund Investment – at cost Rs.3,00,000 ( Market Value Rs. 3,60,000)
Fixed Assets Expenditure upto 31-12-02:
Building 5,00,000
Machinery 5,00,000
Expenditure during the year 2003:
Machinery 1,40,000
Depreciation fund :
Building 60,000
Machinery 1,00,000
2. The following are the balances on 31-03-04 in the books of the Ernakulam Power and Light
Company ltd.
RS RS
Lands on 31-3-03 1,20,000 --
Lands expended during 2003-04 4,000 --
Machinery on 31-3-03 4,80,000 --
Machinery exopended during 2003-04 4,000 --
Mains including cost of lying 1,60,000 --
Mains expended during 2003-04 40,800 --
Equity shares -- 4,39,200
Debentures -- 1,60,000
Sundry creditors -- 800
Depreciation Funds A/c -- 2,00,000
Sundry debtors for current supplied 32,000 --
 Other debtors 400 --
Cash 4,000 --
Cost of generation of electricity 28,000 --
Cost of distribution of electricity 4,000 --
Rent rates and taxes 4,000 --
Management expenses 9,600 --
Depreciation 16,000 --
Sale of current -- 1,04,000
Rent of meters -- 4,000
Interest on debenbures 8,000 --
Interim dividend 16,000 --
Net Revenue A/c Balance on 31-3-03 -- 22,800
-----------------------------------------
9,30,800 9,30,800
From the above Trial
Balance, prepare Revenue A/c, Net Revenue A/c, Capital A/c and General Balance sheet.
3. From the following trial balance and other information relating to Mysore Electric Light and
Power company,
Prepare final accounts in proper form :
TRIAL BALANCES AS ON 31ST MARCH 2004
Amt on CR
31-3-03 Rs Rs
Capital:
Authorised : 20,000 shares of Rs. 100 each
4,00,000 Subscribed : 10,000 shares of Rs. 100 each,
Rs. 50 paid -- 5,00,000
3,00,000 10% Debentures 3,00,000
20,000 Depreciation fund 20,000
 Calls-in-arrears 20,000 --
1,86,000 Land 1,86,000 --
80,000 Buildings 1,00,000 --
1,20,000 Machinery 2,00,000 --
1,00,000 Mains 1,60,000 --
20,000 Motors 40,000 --
10,000 Meters 30,000 --
6,000 Electricals Instruments` 8,000 --
5,000 Furniture 5,000 --
47,000 Cables and lamps 47,000 --
Coal and oil 53,000 --
Coal and oil in stock 2,000 --
Wages and salaries 90,000 --
Repairs 10,000 --
Printing and stationery 38,000 --
Law charges 6,000 --
Sales by meter -- 1,75,000
 Sales by contract -- 1,00,000
Meter rents -- 6,000
Sundry Creditors -- 20,000
Sundry Debtors 60,000 --
Cash at bank 66,000 --
------------------------------------------------
11,21,000 11,21,000
-------------------------------------------------
A call of Rs. 10 per share was payable on 30th sept.2003 and arrears are subject to interest at
5% per annum.
Depreciation to be provided for
Buildings 2 ½ % per annum
Machinery 7 ½% per annum
Mains 5% per annum
Motors 10% per annum
Meters and electrical instruments 15% per annum.
4. Define double account system. Distinguish it from single account system.
5. what are the advantages and disadvantages of the double account system?
6. Explain the silent features of double account system.
7. Bring out the format of “Revenue A/c” of an electricity supply company.
8. How is “Depreciation” ? treated under the double account system?

UNIT-5
SECTION-A
1. Government transactions are recorded on the -------------------------------
a)single entry basis b) double entry basis c) both a and b d) cash basis
2. The treasury is conducted by the -------------------------
a) RBI b) SBI c) ICICI d) HDFC
3. Accounts are compiled in the lines of the -------------------
a)receipts b) budget c) audit d) comptroller
4. Loans of a purly temporary nature know as ---------------------
a) permanent debts b) temporary debts c) floating debts d)
capital debts
5. Public accounts committee is not an --------------------
a) public body b) executive body c) legislature body d) both b and c
SECTION-B
1. Explain the different between government accounting and commercial accounting.
2. Give the general structure of the financial administration in india.
3. Explain the role of treasuries in relation to government accounting.

4. Explain the following terms:

 a) Consolidated fund
b) Contingency fund
5. Describe in detail compilation of government accounts.
6.Write short notes on the following:
a) Appropriation act
b) Vote on account
7. What are the appropriation accounts and who prepares them.
SECTION-C
1 Explain the following terms:
a) Consolidated fund
b) Contingency fund
c) Public accounts
d) Appropriations
2 Explain the powers and duties of the comptroller and auditor-general of india.
3. Explain in brief the system of financial administration in india.
4.Describe in detail compilation of government accounts.
5.What is the role of public accounts committee in the control of public expenditure?
6.Write in detail:
a) Public accounts
b) Contingency fund
7.Describe briefly the treasury system used for the primary record of financial transactions of the
government.