Roll Number: ________________

Thapar Institute of Engineering & Technology

Deemed-to-be-University, Patiala
L M Thapar School of Management
Mid Semester Test II

MBA (I Semester) Subject: Financial Accounting and Reporting

October 2019 Subject Code: AC5302
Time: 1.5 Hours; MM: 20 Faculty: Dr. Pradeep Kumar Gupta

Instructions:
1. Attempt all questions. Marks are indicated against each question.
2. Answering the questions in sequences either ascending or descending order is required
compulsorily. The penalty of five marks in total score is levied if it is not followed.
3. Use of calculator is allowed.
4. Working notes should form a part of your answers.
5. To the point answers of theoretical questions are expected.
6. No clarifications should be sought during the exam. The appropriate assumptions can be
written in case of doubt in any question.
7. Very neat and clean answers are desirable.

Q1: The Ledger Balances of Avanthi Ltd. as at 31st December 2018 is presented below. You are
required to prepare the Profit & Loss Account for the year ended 31st December 2018 and the
Balance Sheet as on that date. (2+2)

S. No. Name of Account Balances

(₹)
1 Sales 1,26,500
2 Cost of Goods Sold 92,800
3 Cash at Bank 22,000
4 Cash in Hand 48,000
5 Loan from Bank (long-term) 1,00,000
6 Building 75,000
8 Plant & Machinery 15,700
10 Salaries 6,000
11 Rent 7,500
12 Closing Inventory 12,050
13 Owner’s Capital 80,000
14 Drawings (Owner’s withdrawal for personal use) 25,000
15 Carriage Inwards 4,000
16 Account Receivables 27,500
17 Bad Debts 5,000
18 Account Payables 16,000
19 Bank Overdraft 20,950
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 20 Wages 2,900

Q2: Sumo Corporation’s November inventory activity is given below. It uses a periodic
inventory system.

Date Transaction Units Unit Cost Total Cost

₹ ₹
01/01/19 Beginning Inventory 64 55 3520
07/01/19 Purchase 90 60 5400
14/01/19 Purchase 104 65 6760
30/01/19 Ending Inventory 36

a. Value the ending inventory and the cost of goods sold under FIFO, Weighted Average,
and LIFO costing assumptions. (3)
b. Which costing assumption gives highest value of ending inventory? Why? (1)

Q3: M/s Aryan Trading Co. purchased a machine for ₹ 90,000 in cash on 1st April 2014 from
the contributed capital of owner on the same date. The working life of this machine was
estimated five years and its salvage value at the end of useful life was considered ₹ 10,000. You
are required to prepare schedule of depreciation and necessary ledger accounts based on double
decline balance method of depreciation for five years. (2+2)

Q4: Explain the following with a suitable example:

a. Equity (2)
b. Revenue recognition principle (2)
c. Reliability as one of qualitative characteristics of financial statements (2)
d. Average Useful Life and Average Age Ratios of Fixed Asset (2)

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