Pa
Pape
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NANC
NCIA
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ACCO
COUN
UNTI
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NG
Time Allowed :
Time Allowed : 3 Hours3 Hours FFu l l Mu l l M a r ka r kss :: 110000 The figures
The figures in the min the m argin on targin on t he right side indiche right side indicate full mate full m arks.arks. Answer
Answer QuesQuestion tion No. 1No. 1,, ww hich is hich is compulsory and compulsory and any fiveany five quesquestions from tions from the rest.the rest.
Q. 1.
Q. 1. (a(a)) FFrom rom the fouthe four alternative answers gr alternative answers given agiven againsainst eact each indicate the correch indicate the correct answert answer :: [1×10=10][1×10=10] (i)
(i) FFrom rom the four alternative athe four alternative answers nswers gigiven agven againsainst each it each indicandicate the correct anste the correct answerwer :: (A)
(A) PPeriodic eriodic inventory sinventory sysystemtem (B
(B)) PePerpetual irpetual inventory snventory sysystemtem ( C
( C)) B o t h o f ( AB o t h o f ( A) a n) a nd ( Bd ( B)) ( D
( D)) N o n e o f (N o n e o f (A ) A ) a n d (a n d (B )B ) (ii)
(ii) The cThe cost of a Fost of a Fixeixed Assd Assets of a ets of a businesbusiness s has has to be wto be writtritten off over itsen off over its ( A
( A)) N a t u r aN a t u r al l LLi f ei f e ( B
( B)) A cA cc o u n t ic o u n t in g Ln g Li f ei f e (C
(C)) PhysPhysicaical Ll Lifeife (D)
(D) EEsstimtimated Eated Economic Lconomic Lifeife ( i i i )
( i i i ) SSh o r t w o r k i n gh o r t w o r k i n gs cs ca n b e r e ca n b e r e co u p e d o u t o fo u p e d o u t o f (
(A )A ) MMiin in im u m r e nm u m r e ntt (B
(B)) EExcxcesess of acs of actual Rtual Royaloyalty over mty over minimum inimum rentrent (C
(C)) EExcxcesess of minims of minimum um rent orent over acver actual Rtual Royaloyaltyty (D
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2
2 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
(iv)
(iv) In Hire In Hire PurchasPurchase se sysystem tem cascash price plus h price plus interest is interest is knowknown asn as (A)
(A) CCapital vapital value of asalue of asssetet (B
(B)) Book vBook value alue of asof asssetet (C
(C)) Hire purchasHire purchase price e price of asof asssetet (D)
(D) Hire Hire purchaspurchase ce chargehargess (v)
(v) In partnersIn partnership when hip when a new Partner bringa new Partner brings his his s sshare of Goodwill ihare of Goodwill in casn cash, then the amh, then the amount ount ofof suc
such Goodwh Goodwill will be cill will be credited to redited to PPartnerartnerss’ ca’ capitals pitals as as per tper the followhe following ratioing ratio :: (A)
(A) Old POld Profit srofit sharing haring ratioratio (B
(B)) SSacacrificrifice ratioe ratio ( C
( C)) G aG ai n r ai n r at i ot i o ( D
( D)) N o n e N o n e o f t h e ao f t h e ab o vb o vee (vi)
(vi) The RThe Receipts eceipts and Paand Paymyments Account ents Account generalgenerally begins ly begins wwithith (A)
(A) CCredit redit BaBalanclancee ( B
( B)) D eD eb i t B ab i t B al al an c en c e (C
(C)) Both Debit and CreBoth Debit and Credit Baldit Balancancee ( D
( D)) N o n e N o n e o f t h e ao f t h e ab o vb o vee (vii
(vii)) WWhich of the followhich of the following iing is s a ca category of Sategory of Share Chare Capital of a apital of a compcompany?any? ( A
( A)) A u t h o r i sA u t h o r i se d C ae d C ap i t ap i t all (B
(B)) IsIsssued Cued Capitaapitall (C
(C)) CCallalled up ed up CCapitaapitall ( D
( D)) A lA ll l o f t h e o f t h e a b o va b o vee (vii
(viii)i) In caIn case of a Bse of a Banking Canking Comompany, pany, entries in the Persentries in the Personal Lonal Ledger are made froedger are made fromm ( A
( A)) D aD ay y BBo o ko o k ( B
( B)) VVo u co u ch e rh e rss (C
(C)) RRough Regough Regisisterter ( D
( D)) N o n e N o n e o f t h e ao f t h e ab o vb o vee ( i x
( i x)) W h e n SW h e n Sa la le s e s == ``1,80,000, Purchase =1,80,000, Purchase = ``1,60,000, Opening Stock =1,60,000, Opening Stock = ``34,034,000 and rate of t00 and rate of thehe
Gross
Gross Profit is 20% on cost, tProfit is 20% on cost, the Closhe Closing Sing Stotock wock would buld bee (A (A)) ``50,00050,000 (B (B)) ``44,00044,000 (C) (C) ``46,00046,000 ( D ( D)) N o n e N o n e o f t h e ao f t h e ab o vb o vee
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 33
(x
(x)) Goods Goods are transare transferred from ferred from DepaDepartmrtment X to Department X to Department Y aent Y at a price st a price so as o as to include a profitto include a profit of 33.33% on cost. If the value of closi
of 33.33% on cost. If the value of closing stock of Departmng stock of Department Y isent Y is``18,018,000, then the am00, then the amountount
of stock reserve on closing s
of stock reserve on closing stock wtock will beill be (A (A)) ``6,0006,000 (B (B)) ``4,5004,500 (C) (C) ``9,0009,000 ( D ( D)) N o n e N o n e o f t h e ao f t h e ab o vb o vee (b (b)) SSttaatte e wwhheetthheer r tthhe e ffoolllloow iw inng g ssttaatteem em enntts s aarre e TTRRUUE E ((TT) ) oor r FFAALLSSE E ((FF) :) : [[11××55==55]] (i)
(i) Original Original coscost mt minus sinus scrap valcrap value is ue is the dthe depreciable epreciable value of asvalue of asset.set. (ii)
(ii) RRoyalty is oyalty is a Ra Revenue Eevenue Expendituxpenditure to Lesre to Lessorsor.. (ii
(iii)i) AccAccording to AS-ording to AS-2 Inventories a2 Inventories are held for sare held for sale in normle in normal cal course of businesourse of business.s. (iv)
(iv) IncIncomome and Exe and Expenditure Account is prepared by adopting accpenditure Account is prepared by adopting accrual princrual principle of acciple of accounting.ounting. (v)
(v) Advance payAdvance paymment oent of Tf Tax iax is s shown shown in thin the Le Liabiliiabilities sties side of Balancide of Balance Se Sheet.heet. (c)
(c) Fill in the blanks in the following sentences using the appropriate word from the alternativesFill in the blanks in the following sentences using the appropriate word from the alternatives i
innddiiccaatteedd :: [[11××55==55]] (i
(i)) DeprecDepreciaiation tion is is an an item item of of . . (g(grosross s profit/expenditure)profit/expenditure) (
(iiii)) CCo m po m peen sn saat it io n o n p ap aiid d t o t o eem p lm p lo yo yeeees s w h o w h o aarre r ee r et rt reen cn ch eh ed d iiss eexxp en dp en diit ut ur e r e ((CCaap ip it at all// Revenue)
Revenue) (ii
(iii)i) RReceipts eceipts and and PPayment ayment AccAccount ount is is a a AccAccount ount is is nature. nature. (R(Real/Noeal/Nomminal)inal) (
(iivv)) UUn cn cllaaiim em ed Dd Diivviid ed en d n d aap pp peeaar s r s u nu nd ed er tr th e h e h eh eaad od off iin tn th e h e BBaallaan cn ce e SSh eh eeet ot of a f a CCo m po m paannyy (Deferred
(Deferred EExpendituxpenditure/re/LLiabilitiesiabilities)) (v)
(v) AccAccording to Insurance ording to Insurance Act, the provisiAct, the provision requon required to be mired to be made agade againsainst unexpired risk t unexpired risk in firein fire insurance
insurance bubusinessiness s is is per per cent. cent. (30/50)(30/50) ( d ( d)) MMa ta tcch t h e fh t h e fo l lo l lo w i n go w i n g:: [1×5=5][1×5=5] ( (ii)) AASS——66 ((II)) BBoorrrroowwiing ng ccoossttss ( (iiii)) AASS——1133 ((IIII)) CCoonnssoolliiddaatteed d FFiinnaanncciiaal l SSttaatteemmeennttss ( (iiiiii)) AASS——1166 ((IIIIII)) DDeepprerecciiaattiioon n AAccccoouunnttiinngg ( (iivv)) AASS——1199 (I(IVV)) AAccccoouunnttiinng g ffoor r IInnvveessttmmeenntt ( (vv) A) ASS——2211 (V(V)) LLeeaasseess ( V ( VI )I ) N o m a t cN o m a t ch i n g h i n g sst a t et a t em e n t s m e n t s f o u n df o u n d Answer 1. (a) Answer 1. (a)
((ii)) —— ((AA)) PPerioeriodic inventodic inventory sry systemystem ((iiii)) —— ((DD)) EEstimstimated Ecated Econoonommic Lic Lifeife
((iiiiii)) —— ((BB)) EExcxcesess of actual Rs of actual Royalty over moyalty over minimuinimum m rentrent ((iivv)) —— ((CC)) Hire puHire purchase price of assetrchase price of asset
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4
4 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
((vv)) —— ((BB)) Sacrifice ratioSacrifice ratio ((vvii)) —— ((BB)) Debit BalanceDebit Balance ((vv iiii)) —— ((DD)) All of the aboveAll of the above ((v iv iiii )i ) —— ((BB)) VoucherVoucher
((iixx)) —— ((BB)) ``44,00044,000 ((xx)) —— ((BB)) ``4,5004,500 Answer 1. (b) Answer 1. (b) ((ii)) —— ((TT)) ((iiii)) —— ((FF)) (( ii ii i )i ) —— ((TT)) ((iivv)) —— ((TT)) ((vv)) —— ((FF)) Answ Answ er 1. (cer 1. (c))
((ii)) —— EExxp ep en d in d it u rt u ree ((iiii)) —— RRe ve ve ne nu eu e ((iiiiii)) —— RRe ae all ( i
( iv )v ) —— LLi ai ab ib il ilit i et i ess ((vv)) —— 5500 Answer 1. (d) Answer 1. (d) ((ii)) AASS--66 —— ((IIIIII)) ((ii ii )) AASS--1133 —— ((IIVV)) (( ii ii ii )) AASS--1166 —— ((II)) ((iivv)) AASS--1199 —— ((VV)) ((vv)) AASS--2211 —— ((IIII)) Q .
Q . 2 .2 . ((aa)) FFor tor the year ehe year endnding 31st Deceming 31st December, 2011, tber, 2011, the Salhe Sales, es, PurchasesPurchases, Openin, Opening Sg Stotock and Closick and Closing Sng Stotockck of a Tra
of a Trader wder wasas``5,00,000,5,00,000,``3,80,000,3,80,000, ``65,000 and65,000 and ``52,000 respectively. Some goods were52,000 respectively. Some goods were
destroyed by fire (w
destroyed by fire (withoithout ut realirealizzation oation of any value) during thf any value) during the yeare year. If the Tra. If the Trader earned der earned GrosGrosss P
Pr or of if it @ 2t @ 25 % 5 % o n So n Saallees s fo r tfo r th e h e yyeeaarr, , ccaallccu lu laat e t e t h e t h e vvaallu e u e o f go f go oo od s d s d esd est rt ro yo yeed b y d b y f if ir er e.. [ 3[ 3]] (b
(b)) On 1st AprOn 1st April, il, 2009, Nath Ltd. purchas2009, Nath Ltd. purchased a seced a secondond-hand M-hand Machine forachine for ``1,20,000 and spent1,20,000 and spent ``30,00030,000
on it
on its renewal. On 1st October, s renewal. On 1st October, 2010,2010,``3,000 was s3,000 was spent pent on repairs. on repairs. On 30tOn 30th Sh Septemeptember, 2011 theber, 2011 the
M
Machine was achine was sold forsold for ``75,000. Deprec75,000. Depreciation is iation is to bto be provided @ 20 pe provided @ 20 per cent per anner cent per annum um accaccordingording
t o w
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 55
Prepare M
Prepare Machinery Accachinery Accounount t reflecting all these transactions asreflecting all these transactions asssumuming Books are closing Books are closed oed on 31stn 31st M
Maarrcchh eeaacchh yyeeaarr.. [[55]] (c)
(c) A and B are cA and B are currenurrently partntly partners iers in a firm n a firm sharing Profit/sharing Profit/LLoss oss in the ratin the ratio of 4 : 3. A new pio of 4 : 3. A new partner Cartner C is
is admadmitted itted and after hand after his is admadmisissision new on new proprofit sharing ratio betwfit sharing ratio between A, B een A, B and C and C becombecomes es 5 : 3 :5 : 3 : 2
2. . WWhhaat t wwiilll l bbe e tthhe e ssaaccrriiffiicce e rraattiio o oof f A A aannd d B B afaftteer r aaddmmiissssiioon n oof f CC?? [[22]] (d
(d)) WWhat do hat do you unyou understand by gradual realisderstand by gradual realisation of ation of asasssets and piecemeal disets and piecemeal distributributiontion? S? State ttate thehe p
prriioorriitty y tthhaat t sshhoouulld d bbe e fofolllloowweed d iin n ppiieecce e mmeeaal l ddiissttrriibbuuttiioonn.. [[55]] Answer
Answer 2. (a)2. (a) C
Calcalculation of value of goods desulation of value of goods destrotro yed by fireyed by fire :: Dr.
Dr. MM emorundum emorundum TTradirading A/cng A/c CrCr.. Particulars
Particulars `` ParticularsParticulars ``
TTo Oo Opp eenniinng g sstt oo cckk 6655 ,,0000 00 BByy SSaallee ss 55,,0000,,000000 TToo PPuu rr cchh aasseess 33,,8800,,00 0000 BByy GGoo oo dd s s dd eesstt rroo yyeed d bby y ffiirre e ((bb aall. . ffiigg..)) 11 88,,00 0000 TToo GGrroo sss s PPrroo ffiit t ((2255% % oo f f SSaalleess)) 11,,2255,,000000 BByy CClloo ssiinn g g sstt oo cckk 55 22,,00 0000 55,,7700,,00 0000 55,,7700 ,,000000 Goods destroyed by Fire =
Goods destroyed by Fire = ``18,00018,000
Answer 2. (b) Answer 2. (b)
LLedger of Nath edger of Nath LLimitimit eded Dr.
Dr. Machinery A/cMachinery A/c CrCr..
Particulars
Particulars `` ParticularsParticulars ``
11..44..0099 TToo BBaann k k AA// cc 11,,2200,,000000 3311..33..1100 BByy DDeepp rr eecciiaatt iioo nn 33 00,,00 0000 B
Baannk k AA// c c ((EExxpp ..)) 3300 ,,0000 00 BBy By Baallaann cce e cc// dd 11,,2200,,000000 11,,5500,,00 0000 11,,5500 ,,000000 11..44..1100 TToo BBaallaann cce e bb // dd 11,,2200,,000000 3311..33..1111 BByy DDeepp rr eecciiaatt iioo nn 22 44,,00 0000
B
By By Baallaann cce e cc// dd 99 66,,00 0000 11,,2200,,00 0000 11,,2200 ,,000000 11..44..1111 TToo BBaallaann cce e bb // dd 9966 ,,0000 00 3300..99..1111 BBy Dy D eepp rr eecciiaatt iioo nn 99,,660000
( @
( @ 2 0 % 2 0 % o no n ``96,00096,000
for ½ year) for ½ year) B
Baannk k AA// c c ((SSaallee)) 7755,,000000 P
P & & L L AA// c c ((LLoo ssss)) 1111,,440000
9966,,000000 9966,,000000 Answ Answ er 2. (cer 2. (c)) S Sacrifice of A = 4/7 – 5acrifice of A = 4/7 – 5/10 = 40/10 = 40 –– (35(35/70) = 5/70) = 5/70/70 S
Sacacrificrifice of B e of B = 3= 3/7/7 –– 3/10 = 3/10 = 3030 –– (21/7(21/70) = 0) = 9/709/70 H e n
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6
6 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Answer 2. (d) Answer 2. (d) W
When hen a partna partnership is iership is in pn procesrocess of being ds of being disissolvsolved, ased, asssets are sold graets are sold gradually one dually one after anoafter another ther to to fetchfetch m
maxiaximmum um price. Asprice. Asssets are realets are realizized individually and it ed individually and it mmay need a timay need a time period e period to to realirealizze from e from all the assall the assets.ets. The partners in such a case may not wish to wait till all the assets are realized. It is universally accepted The partners in such a case may not wish to wait till all the assets are realized. It is universally accepted practice that an interim
practice that an interim distributdistribution is ion is mmade to tade to the partnhe partners ers for tfor their claheir claim (after pim (after payiaying off all cng off all creditors) areditors) ass and w
and when hen cascash is avh is available.ailable. P
Priority of disriority of distribution wtribution will ill be as be as underunder :: (i
(i)) to mto meet the reaeet the realizlization eation expensxpenseses (i
(ii)i) to pay to pay off prefeoff preferential rential crecreditorsditors ( i
( ii ii i)) t o p a y o ft o p a y o ff o t h e r c rf o t h e r c re d ie d it o r st o r s ( i
( iv )v ) t o p a y o f f p at o p a y o f f p ar t n e r ’r t n e r ’s ls lo a n so a n s (v
(v)) to pay to pay off partner’s off partner’s cacapitalpital Q .
Q . 3 .3 . ( a( a)) FFrom rom the the followfollowing informing information relating to ation relating to EEvergreen Svergreen Sportports Cs Club, prepare Balalub, prepare Balance Snce Sheet heet of tof thehe C
Clluub b aas s oon n 1-1-11--2200110 0 aannd d oon n 3311--1122--22001100 :: [[1100]] (i
(i)) AsAsssets aets as on 1-1-s on 1-1-20102010 ``
C Clluub b GGrroouunndd 8800,,000000 S Sppoorrtts s EEqquuipipmmeenntt 5500,,000000 F Fuurrnniittuurree 1100,,000000 (ii)
(ii) AccAccrued Srued Subscubscription as ription as on 1-1-20on 1-1-2010 was10 was ``2,000.2,000.
(iii)
(iii) CCreditor for sreditor for stationery atationery as s on 1-1-on 1-1-2010 was2010 was ``1,800.1,800.
(iv)
(iv) RReceeceipts aipts and Paynd Paymments Acents Account for count for the year ended 31-12-the year ended 31-12-20102010 D Drr.. CCrr.. R Reecceeiippttss PPaayymmeennttss ` ` `` T To Bo Baallaanncce e bbrroouugghht t ddoowwnn 88,0,00000 BByy SSaallaarriieess 1414,,000000 S Suubbssccrriiptptiioon n rreecceeiivveed d ((22000099)) 11,,880000 PPrriinnttiinng g aannd d SSttaattiioonneerryy 33,,550000 --ddoo- - ((22001100)) 2222,,000000 FiFirre e IInnssuurarannccee 22,,220000 --ddoo- - ((22001111)) 660000 AAddvveerrttiisseemmenentt 33,,000000 S Saallees s oof f oolld d NNeewwssppaappeerr 550000 FFuurrnniittuurree 44,,000000 R Reennt t RReecceeiivveedd 55,,880000 IInnvveessttmmeennttss 2211,,000000 E Ennttrraanncce e FeFeeess 1188,,000000 BBaallaanncce e c/c/dd 99,,000000 5 566,,770000 5566,,770000
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 7 7
Income and Ex
Income and Expenditpenditure Account for ture Account for the year ended 31-12-2010.he year ended 31-12-2010. D Drr.. CCrr.. E Exxppeennddiittuurree IInnccoommee ` ` `` T Too SSaallaarriieess 1166,,000000 By SBy Suubbssccrriippttiioonn 2244,,000000 P Prriinnttiinng g & & StStaattiioonneerryy 22,0,00000 EEnnttrraannce ce FFeeeess 99,,000000 A Addvveerrttiisseemmeenntt 33,,000000 RReenntt 66,,000000 A Auuddiit t FFeeeess 880000 SSaalle e oof f oolld d NNeewwssppaappeerrss 550000 F Fiirre e IInnssuurrananccee 22,,000000 Depreciation: Depreciation: E Eqquuiippmmeenntt 77,,000000 F Fuurrnniittuurree 11,,000000 E
Excesxcess of Incoms of Income overe over E
Exxppeennddiittuurree 77,,770000 3
399,,550000 3399,,550000 (b
(b)) A and B are Partners sA and B are Partners sharing profitharing profits is in tn the ratio he ratio of 5 of 5 : 3. F: 3. Followollowing is ing is the the BalBalance Sance Sheet heet of tof the Firmhe Firm o onn 3311--33--22001111 :: [[55]] Balance Sheet as at 31-3-2011 Balance Sheet as at 31-3-2011 ` ` `` C Caappiittaall :: DDrraawwiinnggss A A 8800,,000000 AA 55,,000000 B B 2200,,000000 BB 33,,000000 O Otthheer r AAsssseettss 9922,,000000 1 1,,0000,,000000 1,1,0000,,000000 P
Profit for rofit for the year 2010-11 wasthe year 2010-11 was ``16,000 and was divided betw16,000 and was divided between theen the Pe Partnerartners s as as per agreedper agreed
ratio, but interest on capital @ 5% p.a. and on drawings @ 6% was inadvertently omitted. ratio, but interest on capital @ 5% p.a. and on drawings @ 6% was inadvertently omitted. Interest on d
Interest on drawrawing may caling may calculated on an average basculated on an average basis is for 6 mfor 6 montonths.hs. Y
You ou are required tare required to pass o pass JJournournal Eal Entrntry(ies) to my(ies) to make the adjustmake the adjustments in tents in the Capital ahe Capital accccounounts of Ats of A and B.
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8
8 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Balance S
Balance Sheet heet as at 31.12.2010as at 31.12.2010 Liabilities
Liabilities ` ` `` AssetsAssets ``
C
Caapp iitt aal l FFuu nn dd 11,,4488,,220000 CClluu b b GGrroo uu nndd 88 00,,0000 00 E
Enntt rr aann cce e FFeeeess 99 ,,00 0000 SSpp oo rrtt s s EEqq uuiippmm eenntt 44 33,,0000 00 S
Suu rr pp lluu ss 77,,770000 11,,6644,,990000 ((``5 0 ,5 0 ,0 00 000 –– ``7,000)7,000)
A
Add vvaann cce e SSuu bb ssccrr iipp tt iioo nn 66 00 00 FFuu rrnn iitt uu rree
((``1 01 0,,0 0 00 0 0 ++ 4 ,4 ,0 0 00 0 0 Less Less : : DDeep np n. . 11,,000000)) 1 31 3,,000 00 0
LLiiaabb iilliitt iiees s ff oo r r eexxpp eenn sseess IInn vveesstt mm eenntt ss 22 11,,0000 00 P
Prr iinn tt iinn gg 33 00 00 AAccccrr uu eed d SSuu bb ssccrr iipp tt iioo nn S
Saallaarr iiee ss 22 ,,00 0000 - - 22000099 `` 220000
A
Auu dd iit t ffeeeess 88 00 00 33 ,,11 0000 - - 22001100 ``22,,000000 22 ,,22 0000
A
AccccrruueeddRReenntt 22 00 00 P
Prr eepp aaiid d IInn ssuu rr aann ccee 22 00 00 C Caasshh 99 ,,00 0000 11 ,,6688,,660000 11,,6688,,660000 Answer 3. (b) Answer 3. (b) P Paarrttnneer r AA PaParrttnneer r BB ` ` `` C Caappiittaal l as as aat t 3311--33--1111 8800,,000000 2200,,000000 Less Less ::PPrrooffiitt ccrreeddiitteedd 1100,,000000 66,,000000 7 700,,000000 1144,,000000 (F (Figurigures ines in``)) A Addjjuussttmmeenntts s ffoorr :: PPaarrttnneer r AA PPaarrttnneer r BB D Drr.. CCrr.. DDrr.. CCrr.. I Inntteerreesstt oonn ccaappiittaall @@ 55%% 33,5,50000 770000 I Inntteerreesst t oon n ddrraawwiinnggs s @@ 66%% 115500 9900 P Prrooffiit t wwrriitttteen n bbaacckk 1100,,000000 66,,000000 D Diivviissiibbllee PPrrooffiitt 77 552255 44 551155
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 99
Q .
Q . 4 .4 . ((aa)) MMrr. X. X, a cl, a cloth oth trader otrader of Kolkaf Kolkata opta opened a Branch at Kanpur on ened a Branch at Kanpur on 1-4-2010. T1-4-2010. The goods whe goods were sent byere sent by Head Office to t
Head Office to the Branch and invoiced at sellihe Branch and invoiced at selling price to tng price to the Branch, which is 25% of the costhe Branch, which is 25% of the cost p
prriiccee ooff HHeeaadd OfOfffiiccee.. [[1100]] The following are t
The following are the parthe particulaiculars relars relating to ting to the tthe transaransactions of the Kanpur Branch:ctions of the Kanpur Branch:
` ` `` G Goooodds s sseennt t tto o BBrraanncch h ((aat t ccoosst t tto o HH..OO..)) 44,,5500,,000000 S Saalleess —— CCaasshh 22,,1100,,000000 — — CrCreedditit 33,2,200,0,00000 C Caassh h ccoolllleectcteed d ffrroom m DDeebbttoorrss 22,,8855,,000000 R Reettuurrn n ffrroom m DDeebbttoorrss 1100,,000000 D Diissccoouunntt AAlllolowweedd 88,,550000 C Caassh h sseennt t tto o BBrraanncchhffoor r FFrreeiigghhtt 3300,,000000 f foor r SSaallaarriieess 88,,000000 f foor r ootthheer r eexxppeennseses s 1122,,000000 5500,,000000 S Sppooiilleed d ccllootthhees s wwrriitttteen n oofff f aat t iinnvvooiicce e pprriiccee 1100,,000000 N Noorrmmaal l lloosss s eessttimimaatteed d aatt 1155,,000000 Prepare Bra
Prepare Branch Snch Stock Account, Branch Debtors Acctock Account, Branch Debtors Accounount and t and Branch AdjusBranch Adjustmtment ent AccAccount ount showingshowing the net p
the net profit of trofit of the Branche Branch.h.
(b
(b)) The following inforThe following informmation for ation for the the year ended 31st Myear ended 31st M arch, 2011 is arch, 2011 is avaavailable for Silable for Seva Baeva Bank Ltd.:nk Ltd.: [ [55]] ` ` `` S Sttaannddaarrd d AAsssseettss 55,,5500,,0000,,000000 S Suubb--ssttaannddaarrd d AAsssseettss 3311,5,500,,000000 Doubt
Doubtful Assful Assets but ets but secsecured—ured— U Up p tto o oonne e yyeaearr 2299,,0000,,000000 O Onne e tto o tthhrreee e yeyeaarrss 117,7,0000,,000000 M Moorre e tthhaan n tthhrreee e yyeeaarrs s 77 0000 00000 0 5533 0000 000000
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10
10 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Answer 4. (d) Answer 4. (d) Dr.
Dr. Branch SBranch Stoto ck Accck Accouou ntnt CCr.r. Particulars
Particulars `` ParticularsParticulars ``
TToo GGoooo dd s s sseenn t t tto o BBrr aann cchh 55,,6622,,550000 BByy CCaassh h ssaalleess 22 ,,1100,,000000 ((``4,50,000 + 25% of4,50,000 + 25% of ``44,,5500,,000000)) BBrraann cch h DDeebbtt oo rrs s ((CCrr. . SSaalleess)) 33 ,,2200,,000000
B
Brraann cch h dd eebb tt oorr s s AAccccoo uu nntt 1100 ,,000000 BBrraanncch h aaddjjuusstt mm eenn t t aa// cc
((NNoo rrmm aal l LLoo ssss)) 11 55,,0000 00 Bra
Branch adjusnch adjustmtm ent a/ent a/ cc
((SSpp oo iilleedd )) 22,,00 0000 P
Prroo ffiit t & L& Loo sss s AA// c c ((SSpp oo iilleedd )) 88 ,,00 0000 S
Stt oo cck k sshh oo rrtt aaggee 11 77,,5500 00 55,,7722,,550000 55,,7722,,550000 Dr.
Dr. Branch DebtorBranch Debtor s Acs Accountcount CCr.r. Particulars
Particulars `` ParticularsParticulars ``
TToo GGoooo dd s s sseenn t t tto o BBrr aann cchh 33,,2200,,000000 BByy CCaasshh 22 ,,8855,,000000 D Diissccoo uu nn tt 88,,5500 00 B Brraann cch h SStt oo cck k ((rr eett uu rrnn )) 11 00,,0000 00 B Baallaann cce e cc// dd 11 66,,5500 00 33,,2200,,000000 33,,2200,,000000 Dr.
Dr. BraBranch Adjustmnch Adjustm ent ent AccAccountount CCr.r. Particulars
Particulars `` ParticularsParticulars ``
TToo BBrraann cch h SStt oo cck k AA// c c ((ssppoo iillaaggee)) 22,,000000 BByy 2255% % mm aarrk k uu p p oo n n ggoo oo dds s sseenn tt 11 ,,1122,,550000 Stock shortage (
Stock shortage ( 1212 552525 oo ff ``1177,,550000)) 33,,550000
N
Noo rrmm aal l LLoo ssss 1155 ,,000000 G
Grroo sss s PPrroo ffiit t cc// dd 9922 ,,000000
11,,1122,,550000 11,,1122,,550000 Dr.
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 1111
Answer 4. (b) Answer 4. (b)
S
Seva eva Bank LBank Ltdtd S
Statemtatement showing the ament showing the amount ount of provisof provision for tion for the year ending he year ending 31s31st Mt Marcarch 2011h 2011 A Asssseettss AAmmoouunntt RRaatte e oof f PPrroovvisisiioonn AAmmoouunnt t oof f PPrroovviissiioonn ( (``)) ((%%)) ((``)) 1 1.. SSttaannddaarrd d AAsssseettss 55,,5500,,0000,,000000 00..4400 22,,2200,,000000 2 2.. SSuubb--ssttaannddaarrdd 3311,,5500,,000000 1100 33,,1155,,000000 3 3.. DDoouubbt fut ful l AAsssseet s :t s : U Upptto o oon n yyeeaarr 2299,,0000,,000000 2200 55,,8800,,000000 O Onne e tto o tthhrreee e yyeeaarrss 1177,,0000,,000000 3300 55,,1100,,000000 M Moorre e tthhaan n tthhrreee e yyeeaarrss 77,,0000,,000000 110000 77,,0000,,000000 L Loosss s AAsssseettss 2211,,0000,,000000 110000 2211,,0000,,000000 T Toottaal l aammoouunt nt oof f rreeqquuiirreed d ffoor r pprroovviissiioonn 4444,,2255,,000000 (R
(Rates of ates of propro visivision on as per Mas per M aster Circular issaster Circular issued ued by RBI ‘DBOD No. BPby RBI ‘DBOD No. BP. BC. BC. 11/21.04. 11/21.04 , 048, 048/2005-0/2005-0 6 dat6 dat eded November November 4, 2005’)4, 2005’) Q . Q . 5 .5 . ((aa)) TTh e h e f of ollllo w io w in g n g b ab allaan cn ce s e s aar e r e aap pp peeaar ir in g n g iin t h e n t h e BBo oo okks s o f Ao f Alll Xl Xe re ro x o x LLt d . t d . o n 1o n 1--4 -4 -2 02 01 11 1:: [ 1[ 10 ]0 ] ` ` R
Redeeedeemmable Preferable Preference Sence Share Capital (Share Capital (Sharehares s ofof ``110 0 eeaacchh)) 22,0,000,,000000
C Caallllss--iinn--AArrrreeaarr 22,,000000 G GeenneerraallRReesseerrvvee 11,,0000,,000000 S ShhaarreePPrreemmiiuumm 55,,000000 The preference shares
The preference shares are fully caare fully called up and dulled up and due for re for redemedemption ption at a premat a premium ium of 10%. Cof 10%. Callsalls-in- -in-Arrear are in res
Arrear are in respect of pect of final cafinal call at the rate oll at the rate off ``4 per 4 per share and these sshare and these shares ahares are held bre held by My Mrr..
R
Rahul whose whahul whose whereabouts aereabouts are not re not knowknown.n. The Board of Directors decided th
The Board of Directors decided that 50% of tat 50% of the General Rhe General Reseserve is erve is to to be utbe utilizilized for ed for the the purppurposeose of redem
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12
12 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Answer Answer 5. (a)5. (a)
Book of All Xerox Ltd. Book of All Xerox Ltd.
JJourour nal Entriesnal Entries DDrr.. CCrr.. D
Daatt ee PPaarrtt iiccuullaarrss AAmm oouu nn tt ((``)) A m o u n tA m o u n t ((``))
R
Reedd eeeemm aabb lle e PPrr eeffrreenn cce e SShhaarre e CCaapp iitt aal l AA// cc DDrr.. 11,,9955,,000000 P
Prreemm iiuu m m oo n n RReeddeemm pp tt iioo n n AA// cc DDrr.. 1199,,55 0000
TTo o RReedd eeeemm aabb lle e PPrreeffeerreenncce e SShh aarr hhoo lldd eerrs s AA// cc 22,,1144,,550000 (Being 19,500 fully paid Red. Pref. Shares along with premium
(Being 19,500 fully paid Red. Pref. Shares along with premium Pa
Payable yable on redempon redemp tion as tion as per per Board Board resolution resolution no. no. dt. dt. )) G
Geenneerr aal l RReesseerrvve e AA// cc DDrr.. 5500,,00 0000
TTo o CCaapp iitt aal l RReeddeemm pptt iioo n n RReesseerr vve e AA// cc 55 00,,0000 00 (Being General Reserve transferred)
(Being General Reserve transferred) B
Baann kk AA// cc DDrr.. 11,,7744 ,,000000
TTo o EEqquu iitt y y SShh aarrees s ccaapp iitt aal l AA// cc 11,,4455,,000000 TTo o EEqq uu iitt y y SShh aarre e PPrreemm iiuu m m AA// cc 22 99,,0000 00 (Bei
(Being issng issue oue o f 14,500 Equity shares at a premf 14,500 Equity shares at a prem iumium )) S
Shh aarre e PPrreemm iiuu m m AA// cc DDrr.. 1199,,55 0000
TTo o PPrreemm iiuu m m oo n n RReedd eemm pptt iioo n n AA// cc 11 99,,5500 00 (Being premium payable adjusted)
(Being premium payable adjusted) P
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 1313
Answer 5. (b) Answer 5. (b) Not
Not ww ithstanding anythithstanding anyth ing contained in Sing contained in Section 6 wection 6 w hich shich specifies pecifies the the various formvarious form s of business of business is in wn w hichhich a Ba
a Banking comnking com pany mpany m ay engagay engage in addition e in addition to to thth e businese business of Bas of Banking, no Banking cnking, no Banking comom pany shall pany shall holdhold any imm
any imm ovable properovable proper ty hoty ho ww soever asoever acquired, exccquired, except such as ept such as is is required required for its owfor its ow n use, n use, for any periodfor any period exc
exceeding seeding seven yeaeven years rs from from the acquisithe acquisition ttion t hereof or hereof or from from commcomm encemenencemen t of tt of t he Act, whichever is he Act, whichever is laterlater,, or any extension of such period as in Section provided; and such property shall be disposed of within or any extension of such period as in Section provided; and such property shall be disposed of within ssuch period ouch period o r extendr extend ed perioded period , as , as the tthe t he cashe case me m ay be.ay be.
Provi
Provided tded t hat that t he Banking che Banking comom pany mpany m ayay, wit, wit hin thhin th e period e period of seven yeaof seven years ars as as aforesaforesaid; deal or trade inid; deal or trade in any s
any such propuch prop erty foerty fo r tr t he puhe pu rpose of facilirpose of facilitating ttating t he disposahe disposal thereol thereo f. f. Provided furthProvided furth er ter t hat Rehat Resserve Bankerve Bank m
m ay in any particular casay in any particular case extend te extend t he aforesaid period ohe aforesaid period o f seven years f seven years by such period noby such period no t exceeding fivet exceeding five years
years, wher, wher e it is e it is sasatisfied that such extensitisfied that such extension won w ould be in tould be in t he interhe inter est of thest of th e depositors of the depositors of th e Bankinge Banking company.
company. Q .
Q . 6 .6 . ((aa)) On April 1, 2008 Chandra TOn April 1, 2008 Chandra Transport Compransport Company purchasany purchased a med a mini truini truck from ck from SS. K. K. M. Motootors on hirers on hire purchas
purchase sye sysstemtem. T. The termhe terms were that s were that they wthey would payould pay ``1,01,00,000,000 dow0 down on same date and then on same date and the
balance was payable in three annual instalments. First instalment amounted to
balance was payable in three annual instalments. First instalment amounted to ``74,000 was74,000 was
payable on
payable on 31-3-2009, s31-3-2009, secondecond ``93,000 on 31-3-2010 and third93,000 on 31-3-2010 and third ``84,000 on 384,000 on 31-3-2011. I1-3-2011. Internteresestt
is
is charged @ 12% per annumcharged @ 12% per annum. R. Rate of depate of depreciation is reciation is 20% on w20% on writtritten dowen down value.n value. Y
You ou are required are required to to calcalculate thculate the toe total castal cash ph price and prrice and prepare, (i) Separe, (i) S. K. Mo. K. Motors Account; and tors Account; and (ii)(ii) M i M innii--TTrruuck ck AAccccoouunnt t iin n tthhe e BBooookks s oof f CChhaannddra ra TTrraannssppoorrt t CCoommppaannyy.. [[66]] (b (b)) DDiisst it inngguuiissh bh beet wt weeeen Hn Hiirre e PPuurrcchhasase e SSyysst et em am annd Id Innsst at allm em ennt Pt Paayym em ennt Syt Sysst et em .m . [[44]] (c) (c) G iG iv e t h e jv e t h e jo u r n a l o u r n a l e n t r ie n t r ie s e s t o r e c t it o r e c t if y o r af y o r ad j u sd j u st t h e f o l lt t h e f o l lo w i n g io w i n g in t h e b o o k s n t h e b o o k s o f t h e H e ao f t h e H e ad O f f id O f f ic ec e:: [ 5 ][ 5 ]
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14
14 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Answer Answer 6. (a)6. (a)
C
Calculatalculat ion ion of of CCash Pash Pricerice D
Daatt ee PPaarrtt iiccuullaarrss IInnsstt aallmm eenntt IInn tt eerreesstt CCaassh h PPrriiccee ((``)) ((``)) ((``))
3311--33--1111 33rrd d IInnsstt aallmm eenn tt 8844 ,,000000 99,,00 0000 7755 ,,000000 (–) I
(–) Intnt eresterest ⎜⎜⎛ ⎝ ⎝ ⎛ 1111221122 ××8844,,000000 ⎞ ⎞ ⎠ ⎠⎟⎟ 9,0009,000 Balance o
Balance o f f CCash Priceash Price 75,00075,000
3311--33--1100 + + 22nn d d IInn sstt aallmm eenntt 9933 ,,0000 00 1188 ,,000000 7755 ,,0000 00 1,68,000
1,68,000 (–) I
(–) Intnt eresterest ⎜⎜⎛ ⎝ ⎝ ⎛ 1111221122 ××11,,6688,,000000 ⎞ ⎞ ⎠ ⎠⎟⎟ 18,00018,000 Balance o
Balance o f f CCash Priceash Price 1,50,0001,50,000
3311--33--00 99 + + 11sst t IInn sstt aallmm eenn tt 7744 ,,0000 00 2244 ,,000000 5500 ,,0000 00 2,24,000
2,24,000 (–) I
(–) Intnt eresterest ⎜⎜⎛ ⎝ ⎝ ⎛ 1111221122 ××22,,2244,,000000 ⎞ ⎞ ⎠ ⎠⎟⎟ 24,00024,000 Balance o
Balance o f f CCash Priceash Price 2,00,0002,00,000 +
+ DDoo ww n n PPaayymm eenn tt 11,,0000,,000000 11,,0000,,000000 Total
Total 33,,0000,,000000 33,,0000,,000000 TTotot al Cash Priceal Cash Price ==``3,00,0003,00,000
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 1515
Dr.
Dr. MM ini Tini Truck Accruck Accountount CrCr.. Particulars
Particulars `` ParticularsParticulars ``
11..44..0088 TToo SS. . KK. . MM oo tt oo rrs s AA// cc 33,,0000,,000000 3311..33..0099 BByy DDeepprr eecciiaatt iioo n n AA// cc 66 00,,00 0000 B
By By B aallaann cce e cc// dd 22,,4400,,000000 33,,0000,,00 0000 33,,0000 ,,000000 11..44..0099 TToo BBaallaann cce e bb // dd 22,,4400,,000000 3311..33..1100 BByy DDeepprr eecciiaatt iioo n n AA// cc 44 88,,00 0000
B
By By B aallaann cce e cc// dd 11,,9922,,000000 22,,4400,,00 0000 22,,4400 ,,000000 11..44..1100 TToo BBaallaann cce e bb // dd 11,,9922,,000000 3311..33..1111 BByy DDeepprr eecciiaatt iioo n n AA// cc 33 88,,44 0000
B By By B aallaann cce e cc// dd 11,,5533,,660000 11,,9922,,000000 11,,9922,,000000 Answer 6. (b) Answer 6. (b) Difference bet
Difference bet ww een Hire Purchaseen Hire Purchase Se Sysystem tem and Instamand Instam mm ent ent PurchasPurchase Se Sysystemtem H
Hiirre e PPuu rrcchh aasse e SSyysstt eemm IInn sstt aallmm eenn t t PPuu rrcchhaasse e SSyysstt eemm ((i )i ) IIt it is s aan an aggr er eeem em en t n t o f o f h ih ir ir in g n g o f o f ggo oo od sd s IIt it is s aan an aggr er eeem em en t n t o f o f ssaalle e o f o f ggo oo od sd s.. ( i i )
( i i ) TTh e t i t l e o f t h e g o o d s h e t i t l e o f t h e g o o d s i s i s t r a n st r a n sf e r r ef e r r ed t o d t o t h et h e buyer after paym
buyer after paym ent oent o f lasf last instalt instalmm entent
The title of goods is
The title of goods is passpassed on ted on t o tho th e buyer at te buyer at t hehe si
signing of agreementgning of agreement .. ( i i i )
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16
16 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
Answ
Answ er 6. (cer 6. (c))
E
Entnt ries in Books of Head Offries in Books of Head Off iceice
D
Drr.. CCrr.. A m o u n t
A m o u n t ((``)) A m o u n tA m o u n t ((``))
((ii)) BBrraann cchh AA// cc DDrr.. 77 ,,55 0000 T
Too PPuurrcchhaassee AA//cc 77,,550000 (H.O
(H.O. purchase a. purchase a//c was wroc was wrongly debited ngly debited insteadinstead of Branch a/c, now rectified)
of Branch a/c, now rectified) (
(iiii)) SaSallaarriieess AA//cc DDrr.. 66,,550000 T
Too BBrraanncchh aa//cc 66,,550000 (Being Salaries was paid by Branch to H.O. official)
(Being Salaries was paid by Branch to H.O. official) (
(iiiiii)) BBrraanncchh A/A/cc DDrr.. 1111,,225500 T
Too BBrraanncchh SShhoopp AA//cc 1111,,225500 (Bei
(Being Depreciang Depreciation otion on Branch Sn Branch Shop whop writtritten off)en off) (
(iivv)) BBrraanncchh AA//cc DDrr.. 55,,660000 T
Too EExxppeennsseessAA//cc 55,,660000 (Being expenses charged to Branch)
(Being expenses charged to Branch) (
(vv)) GGoooodds s iin n TTrraannsisit t AA//cc DDr.r. 2255,,000000 T
Too BBrraanncchh AA//cc 2255,,000000 (Bei
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 17 17
T
Turnournover ratios are basver ratios are based on ed on coscost ot of goodf goods ss sold except Debtoold except Debtorsrs’ t’ turnournoverver Bal
Balance Sance Sheet heet as on 31st Mas on 31st March, 2011arch, 2011 L Liiaabbiilliittiieess AAmmouounntt AAsssseettss AAmmmmoouunntt ` ` `` E Eqquuiitty y (n(neet t wwoorrtthh)) FFiixxeed d AAsssseettss L Loonng g ttererm m DDeebbtt CCuurrrreennt t AAsssseettss C Cuurrrreennt t lliiaabbiilliittiieess IInnvveennttoorriieess Debtors Debtors C
Casash in hand h in hand & & bankbank (c)
(c) CCl al assssi f y i f y t h e f o lt h e f o ll o w i n g l o w i n g e xe xp e n d ip e n d it u r e s t u r e s i n t o Ci n t o Ca p ia p it a l Et a l Ex p ex p en d i t u r e an d i t u r e an d Rn d Re v ee v en u e En u e Ex p ex p en d i t u r en d i t u r e:: [ 3 ][ 3 ] (i)
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18
18 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
analysis does not become effective. For example it can be said that if the policies relating to analysis does not become effective. For example it can be said that if the policies relating to inventory valua
inventory valuation, deprecition, depreciation, treatmation, treatment ent of contingent of contingent liabililiabilitiesties, etc. of tw, etc. of two o firms under firms under thethe s
same industry are different thame industry are different the trend e trend indicindicated by an inter-firm ated by an inter-firm compariscomparison ton through ratios doeshrough ratios does not
not carry acarry any effective meaning.ny effective meaning. (
(v )v ) PPe r se r so n a l o n a l i n f li n f lu e n cu e n cee :: The utility of ratio analysis depends a lot on the skill and judgment of theThe utility of ratio analysis depends a lot on the skill and judgment of the interp
interpreter. reter. If the personal sIf the personal sense of judgmenense of judgment and analytical power ot and analytical power of different intf different interpretererpreters s vary avary a particular ratio may indicate different trends. So presence of personal aptitude reduces the particular ratio may indicate different trends. So presence of personal aptitude reduces the effec
effectivenestiveness of ratio analyss of ratio analysisis. M. Moreoveroreover, the , the interpreters minterpreters may exay exert ert undue undue influence on tinfluence on theirheir analysis with unfair motives.
analysis with unfair motives. (
(v iv i)) O n lO n ly q u a n t i t ay q u a n t i t at i v e a n at i v e a n al y sl y si si s::RRatios aatios are oftre often calen called quantled quantitative tooitative tools ls becausbecause their come their computputationsations are based on only quantitative or numerical figures. The qualitative aspects of the concerned are based on only quantitative or numerical figures. The qualitative aspects of the concerned num
numerals erals are toare totally ignored in tally ignored in the the process process of rof ratio analysatio analysisis. Ig. Ignoring qnoring qualitative asualitative aspect mpect mayay m
misislead the ulead the usesers of ratios. Frs of ratios. For examor example, a high current ple, a high current ratio indratio indicaicates a stes a satisatisfactory loan rfactory loan repaymenepaymentt capacity of a firm. But if its current assets consist of a large quantity of obsolete stock or its capacity of a firm. But if its current assets consist of a large quantity of obsolete stock or its
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 1919
S
Shekhhekh ar Ltd.ar Ltd. Balance S
Balance Sheet heet as at 31.12.2010as at 31.12.2010 Liabilities
Liabilities `` AssetsAssets ``
E
Eqquuiitt yy// NNeet t ww oorrtt hh 44,,0000,,000000 FFiixxeed d AAsssseett ss 55,,4400,,000000 LLoonng g TTeerrm m DDeebbtt 33 ,,0000,,000000 CCuurr rreenn t t AAsssseett ss
C
Cuu rr rr eenn t t LLiiaabb iilliitt iieess 22,,0000,,00 0000 IInn vveenn tt oo rr iieess 11,,3355,,000000 D
Deebb tt oorr ss 22,,0000,,000000 C
Caassh h & & BBaannkk 2255 ,,00 0000 33,,6600,,000000 99 ,,0000,,000000 99,,0000,,000000 Answ
Answ er 7. (cer 7. (c)) ( i )
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20
20 Suggested Answers to Question — FAC Suggested Answers to Question — FAC
(vi)
(vi) In aIn addition to above, ddition to above, following afollowing are alre alsso diso disclclososeded :: 1.
1. the amounthe amount uset used as d as the numthe numerator and a reconcerator and a reconciliiliation of those ation of those amounamounts to the net profit/ts to the net profit/loslosss for t
for the acche accounting period.ounting period. 2.
2. the wthe weigeighted averaghted average nume number of equity shares ber of equity shares usused as the denominator ed as the denominator and a reconcand a reconcililiation ofiation of those denom
those denominator to inator to eaceach oth otherher.. 3.
3. the nothe nomminal inal value of svalue of shares hares along with EPalong with EPS S figure.figure. (vii)
(vii) DisDisclclosure may alosure may alsso be mo be made of termade of terms as and conditions of contracnd conditions of contracts gts generating potential equienerating potential equityty w
which affect the basihich affect the basic ac and dilutnd diluted Eed EPS PS botboth on th on the whe weighted average eighted average numnumber of shares ber of shares outoutsstandingtanding and any cons
and any consequent adjustments to equent adjustments to net prnet profit attrofit attributable to equity shareholdersibutable to equity shareholders, foll, followowing theing the comput
computation of tation of the denomhe denominator in accinator in accordance with ASordance with AS-20.-20. Bas
Basic Eic EPS PS is is wworked oorked out ut by dividing the nby dividing the net pet profit rofit //loss loss for tfor the acche accounounting period ting period by thby the equity sharee equity share using
using wweighted average eighted average numnumber of equitber of equity sy shares hares outoutsstandintanding during the sg during the same periodame period.. Dilut
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Suggested Answers to Question — FAC
Suggested Answers to Question — FAC 2121
A spec
A special resial resolutolution should be ion should be passpassed in ted in the general mhe general meeting autheeting authorizing the buy-back;orizing the buy-back; (i)
(i) TThe buy-bache buy-back should be lesk should be less than 25% of ts than 25% of the tothe total paial paid-up capid-up capital and free resetal and free reserves of the comrves of the company;pany; (ii)
(ii) The buy-The buy-back of equity shaback of equity shares ires in any financin any financial yeal year should not exceed 25% of its total paid-ar should not exceed 25% of its total paid-upup equity capital in that financial year;
equity capital in that financial year; (iii)
(iii) TThe Che Comompaniepanies (s (AmendmAmendment) Act, 2001 has ent) Act, 2001 has authorizauthorized the ed the buy-babuy-back by means of a resck by means of a resolution at tolution at thehe comp
company’s any’s Board provided tBoard provided the buy-back does he buy-back does not not exceed 10% of thexceed 10% of the tote total paial paid-up equd-up equity capitality capital and free reserves
and free reserves of tof the comhe company. pany. But, there cannot be mBut, there cannot be more thore than one such buy-back ian one such buy-back in a period on a period off 365 days.
365 days. (iv)
(iv) Debt-equity ratio shalDebt-equity ratio shall not excl not exceed 2:1 aeed 2:1 after such buy-bacfter such buy-back. k. The CThe Central Governmentral Government ment may ay howhoweverever,, prescribe a higher ratio for a class or classes of companies;
prescribe a higher ratio for a class or classes of companies; (v)
(v) All the sAll the shares hares or otor other specher specified sified securities ecurities are fully paiare fully paid up;d up; (vi)
(vi) The buy-back of the shares or other The buy-back of the shares or other ssecurities ecurities lislisted ted on any recognized son any recognized stock exchange itock exchange is is inn acc
accordance wordance with tith the regulations mhe regulations made by tade by the She Securities aecurities and Excnd Exchange Board of hange Board of India in this behalf;India in this behalf; (vii)
