Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Financial Accounting (CFA510):2009 - Question Paper

? The finished goods which have been produced internally for inventory should be priced at
production cost.
? The periodic system computes cost of goods sold as residual amount.
? The perpetual system is more right but more costly.
? The cost of acquisition of inventory includes direct expenses.
? Historical cost of inventory refers to the cost of acquisition of inventory.
Hence, (d) is accurate ans.
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Page 24 of 30
ans cause
37. A
Stores Ledger in the books of Pioneer Company (FIFO Method)
Receipts problems Balance
Date
Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
04-12-2008 12 6,600 79,200 - - - 12 6,600 79,200
18 7,400 1,33,200 - - - 12 6,600
15-12-2008
18 7,400
2,12,400
22-12-2008 - - - nine 6,600 59,400 three 6,600
18 7,400
1,53,000
29-12-2008 - - - three 6,600 19,800
- - - 13 7,400 96,200
5 7,400 37,000
Stores Ledger in the books of Pioneer Company (Weighted avg. Method)
Receipts problems Balance
Date Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
Qty.
(Units)
Rate
(Rs.)
Value
(Rs.)
04-12-2008 12 6,600 79,200 12 6,600 79,200
15-12-2008 18 7,400 1,33,200 30 7,080 2,12,400
22-12-2008 - - - nine 7,080 63,720 21 7,080 1,48,680
29-12-2008 - - - 16 7,080 1,13,280 five 7,080 35,400
Therefore the difference ranging from the FIFO and Weighted avg. method of valuing the inventory
is Rs.37,000 – Rs.35,400 = Rs.1,600
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38. C
Particulars Rs. Rs.
Sundry Debtors 6,75,000
Less:
Bad debt on account of bankruptcy
(Rs.15,000 × 0.5)
7,500
Value of goods to proprietor for his personal use 30,000
Goods sent on ‘Sale or Return Basis’ not approved 75,000
Debtor whose chances of recovery are remote 7,500 1,20,000
5,55,000
Add. Amount of dishonored bill 15,000
5,70,000
Rs.5,70,000 ×5
Provision @5% on sundry debtors =
100 = Rs.28,500.
Provision for debt whose chances are remote = 100% of Rs.7,500 = Rs.7,500.
The provision needed to be created for doubtful debts = Rs.28,500 + Rs.7,500 = Rs.36,000.
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39. E Under the direct write off method of recognizing a bad debt expense, the option (e) is the
accurate ans with the combination of the subsequent statements (I) The bad debt expense is not
matched with the related sales because the expense is written off in the year of occurrence and it is

Earning:   Approval pending.