Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Financial Accounting – I (111) : - Question Paper

*Actual short working are Rs.32,000 (Rs.80,000 – Rs.48,000). But it is decreased to 75% (9 months) i.e.Rs.24,000. Therefore, minimum rent is adjusted accordingly (Rs.48,000 + Rs.24,000 = Rs.72,000.)
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47.
ans : (c)
cause : The lessee is earning royalty when the property is sub-leased. The royalty earned by him out of sub-lease is 1st credited to royalty receivable a/c and this a/c gets adjusted by transferring the balance to royalty payable a/c afterwards.
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48.
ans : (b)
cause : The excess of minimum rent over the true royalties is termed as short-workings.
true royalty
Rs.10 × 1,250 books = Rs.12,500
Minimum rent
Rs.15,000
?Short-workings
= Rs.15,000 – Rs.12,500 = 2,500
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49.
ans : (a)
cause : Adjusted Trial Balance
Debit
Credit
Particulars
Rs.
Rs.
Salaries (Rs.11,000 + Rs.1,000)
12,000
Outstanding salaries
1,000
Interest on loan from Mr. Agarwal (Rs.2,000 + Rs.500)
2,500
Outstanding Interest
500
Sales
96,000
Purchases
93,000
Rent (Rs.13,000 – Rs.1,000)
12,000
Prepaid rent
1,000
Machinery (Rs.1,00,000-Rs.10,000)
90,000
Depreciation
10,000
Sundry debtors
16,000
Sundry creditors
29,000
Loan from Mr. A
50,000
Capital account
70,000
Cash
10,000
2,46,500
2,46,500
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50.
ans : (a)
cause : Posting of an entry to the accurate side of a wrong account will not affect the agreement of a trial balance. Thus an entry of Rs.590 to be posted in A.N.Chopra’s account is posted to the accurate side N.C.Chopra’s account will not reason a mismatch in a trial balance. (a) is the accurate ans
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51.
ans : (e)
cause : The payment of conveyance to Sharma has been wrongly credited to his account. The rectification involves a debit to conveyance account with Rs.350: a debit to Sharma’s account with Rs.350 and a credit to suspense account with Rs.700. (e) is the accurate ans.
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52.
ans : (d)
cause : Bank a/c Dr. Rs.78,000
Discount a/c. Dr. Rs. 2,000
To Mahajan Traders a/c Rs.80,000.
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53.
ans : (a)
cause : The need of foreign currency translation arises in respect of financial statements of foreign branches of the parent enterprise. various rates have been prescribed for translating various items appearing in final accounts of the foreign branches. As per this, monetary items should be translated using the closing rate (a). The options (b) avg. rate is applied for translating revenue items other than opening and closing inventories; where the income or expenses are not evenly spread during the accounting period weighted avg. rate i.e. option (d) is applied. Non-monetary items other than inventories are translated at exchange rate at the date of transaction (c). Forward rate (e) is used in case of forward exchange contracts. Thus, option (a) is the accurate ans.

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