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

This profit includes an income of Rs.45,000 being a claim lodged in the month of January 2006 for
which no entry was passed in the year 2005-06. The company expects to introduce a new product in the
year 2007-08. The introduction of the new product leads to an increase of fixed expenses by Rs.50,000.
The estimates for the new product are as under:
The future maintainable post-tax profit of the company for the year 2007-08 (after introduction of the
new product) is
(2 marks)
Sales Rs.5,00,000
Direct expenses (including material and wages) Rs.2,25,000
(a) Rs.4,47,500
(b) Rs.5,10,000
(c) Rs.4,75,000
(d) Rs.2,60,000
(e) Rs.4,70,000.
< ans >
34. The subsequent data is extracted from the books of Sarovar Ltd. for the year ended March 31, 2007:
The Manager of the company is entitled to a commission of 6% on net profit after charging his
commission. The commission payable to the Manager for the year ended March 31, 2007 was
Particulars Rs.
Gross profit 75,000
Salaries and wages 22,000
Printing and stationery 3,000
Rent paid 12,000
Insurance 3,700
Carriage outward 2,500
(a) Rs.1,800
(b) Rs.1,668
(c) Rs.2,366
(d) Rs.1,908
< ans >
(2 marks)
(e) Rs.1,574.
35. Cost of production is equal to
(1 mark)
(a) Materials consumed + Other manufacturing cost
(b) Materials consumed + Direct labour
(c) Materials consumed + Direct labour – Other manufacturing cost + Administration cost
(d) Materials consumed + Direct labour + Other manufacturing cost + Opening WIP – Closing WIP
(e) Materials consumed + Direct labour + Opening stock of finished goods – Closing stock of
finished goods.
< ans >
36. The cost of self-constructed assets is taken as
(1 mark)
(a) Direct material + Direct labour + Indirect cost for construction of the asset
(b) Construction cost + Interest cost on funds borrowed for construction till all the inputs are
acquired
(c) Construction cost + Interest cost on funds borrowed for construction till the asset is ready for its
intended use
(d) Construction cost + Interest on borrowing – Losses due to strikes
(e) Total construction cost or market value, whichever is less.
< ans >
37. Which of the subsequent statements is actual with respect to depreciation under diminishing balance

Earning:   Approval pending.