K L UNIVERSITY

DEPARTMENT OF COMMERCE
QUESTION BANK FOR ACCOUNTING AND REPORTING STANDARDS
COURSE CODE: 14BC31C2 LTP: 3-2-0

MARKS TAKEN FROM

Sem
In Sem End Text Book
C.O CL C.O.I Q.NO. QUESTION exam exams BTL Ref. OTHER
1 1 Define accounting standards. 2 2 2 2 CA material
1 2 Define contingencies. 2 2 2 3
1 3 Define qualified asset. 2 2 2 5
2 4 Define contingent liability. 2 2 2 4
2 5 What is adjusting event? 2 2 2 7
2 6 Define financial events. 2 2 2 8
A I
3 7 What is a change in accounting policy? 2 2 2 12
3 8 What is a change in accounting estimates? 2 2 2 15
3 9 What is foreign exchange difference? 2 2 2 16
4 10 Write a brief note on government grant. 2 2 2 18
4 11 Define borrowing cost. 2 2 2 20
4 12 Define Earnings per share. 2 2 2 22
1 13 The members of IASB appointed by whom? 2 2 2 15 ICFAI material
1 14 How many members in IASB? 2 2 2 16
1 15 What is the main responsibility of IASB? 2 2 2 16
2 16 Define revenue as per accounting standards 2 2 2 5
2 17 Define asset as per accounting standards. 2 2 2 5
2 18 How many trustees in IASC? 2 2 2 15
B II
3 19 Who is sole responsible of setting of Accounting Standards in IFRS? 2 2 2 16
3 20 What qualifications required to become a trustee of IASC? 2 2 2 17
3 21 Who is parent entity of IASB? 2 2 2 17
4 22 Which GAAP prohibits the revaluation of property, plant and equipment? 2 2 2 112
4 23 State any two differences between IFRS and Indian GAAP. 2 2 2 112
4 24 The maximum period of amortization of goodwill as per IFRS is 2 2 2 113
1 25 What is Financial Reporting? 2 2 2 21
1 26 List out the complete set of financial statements. 2 2 22
1 27 Define mutual fund. 2 2 2 9A.1 Tulsian
2 28 Write a brief note on Hedge accounting. 2 2 2 8C.1
2 29 Define hedge. 2 2 2 8C.1
2 30 List out the hedge items. 2 2 2 8C-3
A III
3 31 What are growth plans in mutual funds? 2 2 2 9A-3
3 32 Define financial asset. 2 2 2 8A.2
3 33 Give examples of financial assets. 2 2 2 8A.3
4 34 Meaning of financial liability. 2 2 2 8A.3
4 35 Define Merchant Banker. 2 2 2 9C.1
4 36 Meaning of stock broker. 2 2 2 9D.1
1 37 Define value added. Nil 2 2 195 ICFAI material
1 38 Define value added statement. Nil 2 2 197
1 39 What is additive approach? Nil 2 2 195
2 40 What is subtractive approach? Nil 2 2 195
2 41 List out value added ratios. Nil 2 2 195
2 42 What is Economic value added? Nil 2 2 201
3 43 What is market value added? Nil 2 2 203
B IV
3 44 What is shareholders value added? Nil 2 2 195
3 45 What is gross value added? Nil 2 2 196
4 46 What is Net value added? Nil 2 2 196
4 47 What is cost of equity? Nil 2 2 201
4 48 How to calculate EVA?. Nil 2 2 201
4 49 What is employee benefit to value added? Nil 2 2 195
4 50 What is value added retained to value added? Nil 2 2 195
1 51 Write the various issues discussed in Accounting Standards. 5 5 2 5 CA material
1 52 Explain the Accounting setting process. 5 5 2 6
A I 1 53 State the importance of accounting standards. 5 5 2 106 ICFAI material
2 54 State the limitations of Accounting standards. 5 5 2 108
2 55 List out at least 10 accounting standards. 5 5 2 109 -
 2 56 Explain the events occurring after the balance sheet date. 5 5 2 110 -
Cost of a machine acquired on 01/04/2008 was Rs. 1,00,000. The machine
is expected to realize Rs. 5,000 at the end of its working life of 10 years.
Straight-line depreciation of Rs. 9,500 per year has been charged up to
2009-10. For and from 2010-11, the company switched over to 17% p.a.
reducing balance method of depreciation in respect of the machine. The
new rate of depreciation is based on revised useful life of 13 years. The
3 57 new rate shall apply with retrospective effect from 01/04/08. 5 5 2 10 CA material
Kalim Ltd. borrowed US$ 4,50,000 on 01/01/2012, which will be repaid as
on 31/07/2012. X Ltd. prepares financial statement ending on 31/03/2012.
Rate of exchange between reporting currency (INR) and foreign currency
(USD) on different dates are as under:
01/01/2012 1 US$ = Rs. 58.00
31/03/2012 1 US$ = Rs. 59.00
3 58 31/07/2012 1 US$ = Rs. 59.50 5 5 2 13
Z Ltd. purchased a fixed asset for Rs. 50 lakhs, which has the estimated
useful life of 5 years with the salvage value of Rs. 5,00,000. On purchase of
the assets government granted it a grant for Rs. 10 lakhs. Pass the
3 59 necessary journal entries in the books of the company for first two years. 5 5 2 18
Indigo Ltd., received a specific grant of Rs.300 lakh for acquiring the plant
of Rs. 1,500 lakhs during the year 2008-09 having useful life of 10 years.
The grant received was credited to deferred income in the balance sheet
during the year 2011-12 and due to non-compliance of conditions laid
down for the grant of Rs.300 lakh the company had to refund the grant to
the Government. Balance in deferred income on that date was 270 lakh
4 60 and written down value of the plant was Rs.1,080 lakhs. 5 5 2 20 -
X Ltd leased a machine to Surya textiles mills on 1/1/13 for 5years term an
annual rental fees of 110000 and the date of agreement of Surya textiles
paid Rs.50,000 as bonus Rs.1,50,000 as refundable security deposit
4 61 determine the amount of rental revenue in the books of x Ltd 5 5 2 24 -
An industry borrowed Rs.40,00,000 for purchase of machinery on 1.6.2011.
Interest on loan is 9% per annum. The machinery was put to use from
1.1.2012. Pass journal entry for the year ended 31.3.2012 to record the
4 62 borrowing cost of loan as per AS 16. 5 5 2 16.3 Tulsian
1 63 Briefly explain the structure of IASB. 5 5 2 15 ICFAI material
1 64 Explain the role of standard advisory council. 5 5 2 16 -
1 65 Describe the role of members of IASB. 5 5 2 17 -
2 66 What is the role of international financial reporting committee? 5 5 2 18 -
2 67 Explain the important features of IFRS. 5 5 2 19 -
2 68 Describe the features of US GAAP. 5 5 2 19 -
B II
3 69 Enumerate the features of Indian Accounting Standards. 5 5 2 20 -
3 70 What do you mean by harmonization of Accounting system? 5 5 2 21 -
3 71 What are the reasons for dis-harmonization of Accounting system? 5 5 2 22 -
4 72 What are the features of IAS? 5 5 2 112 -
4 73 State the functions of IASB. 5 5 2 113 -
4 74 Distinguish between IFRS and Indian accounting standards. 5 5 2 113 -
1 75 Explain the contents in Board of Directors report. 5 5 2 Self -
1 76 List out the contents of audit report. 5 5 2 Self -
1 77 Explain the corporate Governance structure. 5 5 2 Self -
2 78 Explain the organization of mutual funds. 5 5 2 9A.1 TULSIAN -
2 79 Explain the different mutual fund schemes. 5 5 2 9A.2 -
2 80 Distinguish between banks and NBFC. 5 5 2 9B.1 -
A III
3 81 List out the various types of NBFC regulated by RBI. 5 5 2 9B.2 -
3 82 Write a brief note on Non-performing asset. 5 5 2 9B.3 -
3 83 Classify the assets based on credit period in NBFC. 5 5 2 9B.4 -
4 84 Explain the capital adequacy requirements of merchant bankers. 5 5 2 9C.1 -
4 85 Explain the five conditions for applying hedge accounting. 5 5 2 8C.1 -
4 86 List out the financial instruments. 5 5 2 8A.1 -
1 87 Compare the gross value added and net value added. Nil 5 2 6.2 -
1 88 Advantages of value added statements. Nil 5 2 6.3 -
1 89 Limitations of value added statements. Nil 5 2 6.5 -
The following data was extracted from the books of Manyam Ltd., for the
year ended March 31, 2014:
Particulars Rs.
Profit before Income tax 25,00,000
B IV Depreciation 5,00,000
Wages and salaries 5,00,000
Gratuities and other benefits to employees 2,00,000
Staff welfare expenses 1,00,000
Salaries, commission & sitting fees to Directors 50,000
Cess & Local taxes 50,000
Interest on debentures and fixed loans 1,00,000
2 90 You are required to compute Gross Value added. Nil 5 2 6.5 -
 The following data was extracted from the books of Royal Ltd.,:
Particulars Rs.
Increase in stock of finished goods 31,00,000
Consumption of raw materials 81,00,000
Consumption of stores 13,00,000
Salaries, wages, bonus, gratuity & other benefits 11,00,000
Staff welfare expenses 1,00,000
Cess and local taxes 2,70,000
Other manufacturing expenses 20,00,000
Hire of equipment 5,00,000
2 91 You are required to compute production and operational expenses. Nil 5 2 6.6 -
The following data was furnished by Rolex Ltd., for the year ended March
31, 2014:
PARTICULARS Rs.
Net Sales 2,00,00,000
Trading commission 10,00,000
Increase in stock of finished goods 31,00,000
Consumption of raw materials 81,00,000
Consumption of stores 13,00,000
Salaries, wages, bonus, gratuity & other benefits 11,00,000
Staff welfare expenses 1,00,000
Cess and local taxes 2,70,000
Other manufacturing expenses 20,00,000
Hire of equipment 5,00,000
Administrative expenses 3,00,000
Interest on cash credit 2,00,000
If excise duty amount to one-tenth of value added by manufacturing and
trading activities, you are required to compute the value added by
2 92 manufacturing and trading activities. Nil 5 2 6.7 -
The following data was furnished by Relax Ltd., for the year ended March
31, 2014:
PARTICULARS Rs.
Net Sales 2,00,00,000
Trading commission 10,00,000
Dividend received 15,00,000
Interest received 2,00,000
Losses due to cyclone 7,00,000
Increase in stock of finished goods 31,00,000
Consumption of raw materials 81,00,000
Consumption of stores 13,00,000
Salaries, wages, bonus, gratuity & other benefits 11,00,000
Staff welfare expenses 1,00,000
Cess and local taxes 2,70,000
Other manufacturing expenses 20,00,000
Hire of equipment 5,00,000
Administrative expenses 3,00,000
Interest on cash credit 2,00,000
If excise duty amount to one-tenth of value added by manufacturing and
3 93 trading activities, you are required to compute the gross value added. Nil 5 2 6.6 -
The following information was obtained from Boost Ltd., for the year
ended March 31, 2014:
Particulars Rs.
Gross value added 60,00,000
Salaries, wages, bonus, gratuity & other benefits 11,00,000
Staff welfare expenses 1,00,000
Directors salaries, commission and sitting fees 3,00,000
Cess and local taxes 2,70,000
Income tax 4,00,000
Deferred tax 1,00,000
Dividend distribution tax 30,000
Interest on debentures 2,00,000
Interest on fixed loan 4,00,000
Dividends paid 3,00,000
You are required to compute the amount available for maintenance and
3 94 expansion of the company. Nil 5 2 6.8 -
The following data was obtained from Tulasi Ltd., for the year ended March
31, 2014: (Rs. In crores)
Particulars Rs.
Equity share capital (Rs.10 each) 200
15% Preference share capital (Rs. 100 each) 100
Reserves an d surplus 110
15% Debentures 800
10% Non-trading investments (face value Rs.100) 70
Immovable property held as investments 10
3 95 Advance for purchase of machinery 5 Nil 5 2 6.14 -
 Capital work-in progress 15
Preliminary expenses (to the extent not written-off) 10
Earnings per share Rs.8
Tax rate 30%
Beta factor 1.5
Market value of return 15.5%
Risk free rate 6.5%
You are required to compute net operating profit after taxes and also
compute cost of equity and return on equity.
The following data was obtained from Titan Ltd., for the year ended March
31, 2014: (Rs. In crores)
Particulars Rs.
Equity share capital (Rs.10 each) 200
15% Preference share capital (Rs. 100 each) 100
Reserves an d surplus 110
15% Debentures 800
10% Non-trading investments (face value Rs.100 crores) 70
Immovable property held as investments 10
Advance for purchase of machinery 5
Capital work-in progress 15
Preliminary expenses (to the extent not written-off) 10
4 96 You are required to compute operating capital employed. Nil 5 2 6.15 -
The following information was obtained from the records of Track Ltd., for
the year ended March 31, 2014: (Rs. In crore)
Particulars Rs.
Net operating profit after tax 252
Equity share capital (Rs.10 each) 200
15% Preference share capital (Rs. 100 each) 100
Reserves an d surplus 110
15% Debentures 800
Tax rate 30%
Beta factor 1.5
Market value of return 15.5%
Risk free rate 6.5%
4 97 You are required to compute Economic Value Added. Nil 5 2 6.16 -
The following data was obtained from Shara Ltd., for the year ended March
2014:
Particulars
Rs.30 crores Equity shares of Rs. 10 each
Rs.1 crore, 15% pr eference shares of Rs.100 each
8 crores, 15% Debentures of Rs. 100 each
Tax rate 30%
Beta factor 1.5%
Market rate of return 15.5%
Equity market risk premium 9%
Financial leverage 1.5 times
Immovable property (held as investment) Rs. 100 crore
4 98 You are required to compute Economic Value Added. Nil 5 2 6.17 -
The following data was extracted from the books of Raj Ltd., for the year
ended March 31, 2014:
Particulars
Debt-Equity Ratio (long-term debt/Shareholder fund 2:1
Capital Gearing Ratio 3:1
15% Long-term debt funds Rs.800 crore
Tax rate 30%
15% Preference Share capital ?
Financial leverage 1.5 times
Price earnings ratio 5 times
Immovable property held as investment Rs.100 crore
4 99 You are required to compute Economic Value Added. Nil 5 2 6.18 -
4 100 Distinction between value added and Economic value added. Nil 5 2 6.14 -
An extract from the statement profit and loss of Jaya Ltd., for the year
2013-14 is given below:
Particulars Rs. In ‘000 Rs. In ‘000
Sales 3,000
Opening stock 500
Production cost 2,800
Total 3,300
A I
Closing stock 600 2,700
Gross profit 300
Expenses 250
Profit before tax 50
Less: taxes 20
Profit after tax 30
2 101 The closing stock includes stock damaged in a fire in 2009-10. On 31/03/10, 10 10 2 MATERIAL -
 the estimated net realizable value of this stock was Rs. 15,000. The revised
estimate of net realizable value included in closing stock of 2010-11 is Rs.
5,000. Rewrite the statement of profit and loss if necessary to comply with
requirements of AS 5.
A von Ltd., business having the Head Office in Kolkata has a branch in UK.
The following is the trial balance of Head Office and Branch as at
31.03.2014:
Particulars Amount Amount
in $ in $
Fixed assets (Purchased on 1.4.2008) 5,000
Debtors 1,600
Opening stock 400
Goods received from H.O (recorded in H.O. 6,100
books as Rs.4,02,000)
Sales 20,000
Purchases 10,000
Wages 1,000
Salaries 1,200
Cash ( 3,200
Remitted to HO(recorded in HO books as 2,900
Rs.1,91,000)
Head office account (recorded in HO books 7,400
as Rs.4,90,000)
Creditors 4,000
Other Information:
• Closing stock at branch is $ 700 on 31.03.2014.
• Depreciation @ 10% p.a. is to be charged on fixed assets.
• Prepare the trial balance after been converted in Indian Rupees.
• Exchange rates of Pounds on different dates are as follow:
01.04.2011– Rs. 61; 01.04.2013– Rs. 63 & 31.03.2014 – Rs. 67
You are required to prepare the trial balance of foreign branch converted
3 102 into Indian Rupee for the year ended March 31, 2014. 10 10 2 MATERIAL -
Answer the following cases:
a. A Ltd., whose accounting year ends on 31/03/2011, agreed in
principle to sell a plot of land on 18/03/2011 at a price to be
determined by an independent valuer. Pending the agreement for
sale and due to non-receipt of valuers report, the sale of the land
could not be completed up to 31/03/11. The company received the
report on April 7, 2011 and the agreement was signed on April 10,
2011. The financial statements for 2010-11 were approved by the
board on May 12, 2011.
b. An earthquake destroyed a major warehouse of C Ltd. on April 20,
2011. The last accounting year of the company ended on 31/03/11
and the financial statements for the year were approved on May 8,
2011.
c. In X Co. Ltd., theft of cash of Rs. 5 lakhs by the cashier in January,
2011 was detected only in May, 2011. The accounts of the
company were not yet approved by the Board of Directors of the
company. Whether the theft of cash has to be adjusted in the
4 103 accounts of the company for the year ended 31.3.2011. Decide. 10 10 2 MATERIAL -
Explain the recent changes in IFRS and state the various steps in formation
1 104 of International Accounting Standards. 10 10 2 MATERIAL -
B
II 2 105 Explain the various contents in Corporate Financial Reporting. 10 10 2 MATERIAL -
Explain the various committees and its functions under Corporate
3 106 Governance Report. 10 10 2 MATERIAL -
Explain the various issues and problems with special reference to published
3 107 financial statements. 10 10 2 MATERIAL
Explain the contents of Directors reports in financial Reporting of mutual
4 108 funds. 10 10 2 MATERIAL
A III
Explain the contents of Directors reports in financial Reporting of non-
4 109 banking financial institutions. 10 10 2 MATERIAL
The following data was obtained from Sai Ltd., for the year ended March
31, 2014: (Rs. In crores)
Particulars Rs.
Equity share capital (Rs.10 each) 400
15% Preference share capital (Rs. 100 each) 200
Reserves an d surplus 220
15% Debentures 1600
B IV 10% Non-trading investments (face value Rs.100 crores) 140
Immovable property held as investments 20
Advance for purchase of machinery 10
Capital work-in progress 30
Preliminary expenses (to the extent not written-off) 20
Earnings per share Rs.16
Tax rate 30%
3 110 Beta factor 1.5 -- 10 2 6.15 TULSIAN
 Market value of return 15.5%
Risk free rate 6.5%
You are required to compute Economic value added.
Given below is the Profit and Loss account of Sagar Ltd., for the year
ended March 31, 2013:
Particulars Notes Rs.
Income:
Sales 1 2,85,250
Other Income 7,560
2,92,810
Expenditure:
Operating cost 2 2,56,580
Excise duty 17,180
Interest on Bank over draft 3 930
Interest on 10% Debentures 11,570
2,86,260
Profit before depreciation 6,550
Less depreciation 2,550
Profit before tax 4,000
Provision for tax 4 2,750
Profit after tax 1,250
Less: Tr to fixed assets replacement 250
reserve
1,000
Less: Dividends paid / payable 450
Retained profits 550
Notes:
1. This represents the invoice value of goods supplied after
deducting discounts, returns and sales tax.
2. Operating costs includes Rs.1,02,470 as wages, salaries and
other benefits to employees.
3. The Bank overdraft is treated as a temporary source of
finance.
4. The charge for taxation includes a transfer of Rs.450 to the
credit of deferred tax account.
You are required to prepare a value-added statement for the year
4 111 ended March 31, 2013. -- 10 2 6.13 TULSIAN

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