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

Liabilities Rs. Assets Rs.
Capital (Bal.fig) 6,05,000 Total of assets 7,10,000
Creditors 90,000
Outstanding expenses 15,000
7,10,000 7,10,000
Opening Capital
= Closing capital plus drawings during the year minus additional capital introduced during the
year
= Rs.6,05,000 + (Rs.15,000 ? nine months) – Rs.60,000 = Rs.6,80,000.
Note: As he had started his business on June 1, 2007, he must have made drawings for nine months
upto March 31, 2008.
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30. E The interest on drawings is an income to the business. Hence the interest on drawings account is to
be credited. As charging the interest on drawings will decrease the capital, capital account is to be
debited. The entry to record interest on drawings is
Capital account Dr.
To Interest on drawings account.
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Page 23 of 30
ans cause
31. C calculation of inventory :
Particulars Rs. Rs.
Inventory value as per books 3,00,000
Add: Purchases received but not accounted 20,000
Sales yet to be delivered 60,000 80,000
3,80,000
Less: Returns outward 10,000
Amount overcast in stock sheet 12,000 22,000
Inventory as per physical stock 3,58,000
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32. D The value of inventory far in excess of the normal requirement of a firm is shown under non-current
assets.
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33. E Closing stock = Opening stock plus purchases minus cost of goods sold.
The value of ending inventory under simple avg. price method is absurd. Usually profit or loss
will arise out of pricing the problems on the basis of simple avg. price method as the volume of
stock purchased at different prices will be various. The value of stock is shown on the assets side of
the balance sheet as current asset. The closing stock should be valued at cost or market price
whichever is lower.
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34. D Markdown means selling price being lowered beneath the original selling price. Selling price beneath
the original selling price cannot be mark-up, markup cancellation, net mark-up or net markdown.
Hence, choice (d) is accurate ans.
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35. B The value of the stock at ‘the lower of cost and net realizable value’ is as follows:
Cars Maybach Mercedes
Benz
Sonata BMW Chevrolet Total
(Rs.)
Value (Rs.) 3,50,00,000 75,00,000 55,00,000 50,00,000 80,00,000 6,10,00,000
The improper stock figure is Rs. 6,10,00,000 as computed above.
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36. D The cost of acquisition includes direct expenses.

Earning:   Approval pending.