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

or more future uncertain events. Debts of debtors is not an uncertain event but only the realization
of a part of the debt is doubtful for which provision must be given and hence it is not a
contingent liability.
Contingent Liabilities include:
? Uncalled liability on partly paid shares may be called up in the event of necessity.
? Claims against the company not acknowledged as debt may or may not turn out to be debts in
future.
? Arrears of fixed cumulative dividend are contingent liabilities.
? Liability for bills receivable discounted previously is a contingent liability which is dependent
on the solvency of the drawee.
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25. B ? Historical cost refers to the amount paid or payable to acquire the asset or a benefit.
? The amount that needs to be paid if the asset is to be acquired currently is the current cost.
? The current discounted value of the future inflows that an item is expected to generate in the
normal course of business is the current value.
? Realizable value is the net amount collectible in the event of the asset’s disposal.
Hence, choice (b) is accurate ans.
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Page 22 of 30
ans cause
26. C Net Profit of Jay Bird Ltd., for the year ending March 31, 2008
Dr. Cr.
Particulars Rs. Rs. Particulars Rs. Rs.
To Purchases 5,70,000 By Sales 8,00,000
Add: Omitted to be
recorded
30,000
6,00,000
Less Wrong Credit 1,02,000
6,98,000
By Excess of
closing stock over
opening stock 80,000
To Gross Profit 1,78,,000
7,78,000 7,78,000
To Sales Commission 24,000 By Gross Profit
1,78,000
+ Accrued 12,000 36,000 By Rent received 1,10,000
To Depreciation 60,000 Less: Received in
advance 5,000 1,05,000
To Net Profit 1,87,000
2,83,000 2,83,000
The net profit is Rs.1,87,000.
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27. E Debit balance of discount column of cash book is an expenditure. Debit balance of cash column of
cash book and debit balance of bank column of cash book are assets of a firm. Credit balance of
bank pass book is also an asset of a business. Credit balance of bank column of cash book is a
liability of a firm.
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28. D
Dr. Discount receivable account Cr.
Particulars Rs. Particulars Rs.
To Balance b/d 15,400 By Discount received 11,200
To Profit and Loss a/c (bal.fig) 18,550 By Balance c/d
(2% of Rs.11,37,500)
22,750
33,950 33,950
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29. A Provisional Balance Sheet as on March 31, 2008

Earning:   Approval pending.