Mock Exam Paper
ICMAP Fundamental of Financial
Hyderabad Main Campus Accounting (AF-101)
Tutor: Dinesh Lalwani SEMESTER -1
Time allowed: 2 hours 30 minutes Maximum marks = 75 Roll No.
(i) Attempt all questions.
(ii) Answers must be neat, relevant and brief.
(iii) In marking the question paper, the examiners take into account clarity of exposition, logic of arguments,
effective presentation, language and use of clear diagram/ chart, where appropriate.
(iv) Read the instructions printed inside the top cover of answer script CAREFULLY before attempting the paper.
(v) Use of non-programmable scientific calculators of any model is allowed.
(vi) DO NOT write your Name, Reg. No. or Roll No., or any irrelevant information inside the answer script.
(vii) Question Paper must be returned to invigilator before leaving the examination hall.
Q. 1 The first question printed separately comprises 25 MCQs of one (1) mark each having
allowed time of 30 minutes is an integral part of this question paper.
Q.2 Hashmi is a limited liability company with the following trial balance as at 31 October 2014.
Dr Cr
Rs.000 Rs.000
Distribution costs 250
Administrative expenses 126
Salaries 1,180
Discounts received 88
Sales 9,427
Property expenses 290
Returns inward 166
Cash 27
Insurance 130
Purchases 6,248
Inventory at 1 November 2013 610
Bank 311
Loan note interest 58
Share premium account 350
Retained earnings at 1 November 2013 875
Allowance for receivables at 1 November 2013 70
Trade payables 507
Trade receivables 1,700
7% Loan notes 822
Receivables expense 260
Rs1 Ordinary shares 2,850
Dividends paid: Final for year ended 31 October 2013 200
Land at cost 1,295
Buildings at cost 2,640
Motor vehicles at cost 420
Furniture and equipment at cost 800
Accumulated depreciation at 1 November 2013
Buildings 625
Motor vehicles 140
Furniture and equipment 335`
16,400 16,400
Further information relating to Hashmi:
1 The insurance includes Rs.10,000 which relates to November 2014.
2 Buildings are depreciated at 5% of cost. Building depreciation during the year is allocated 50% to
distribution costs and 50% to administrative expenses.
3 At 31 October 2014 the buildings were professionally valued at Rs 3,150,000 and the directors wish
this valuation to be incorporated into the accounts.
4 Depreciation is to be charged as follows:
(i) Motor vehicles at 25% of written down value, allocated to distribution costs
(ii) Furniture and equipment at 20% of cost, allocated to administrative expenses.
5 Inventory at 31 October 2014 was valued at Rs.480,000 based on its original cost.
6 Based on past experience the allowance for receivables is to be increased to 5% of trade receivables
and allocated to administrative expenses.
7 There are salaries outstanding of Rs.60,000 for the year ended 31 October 2014.
8 The items listed below should be apportioned as indicated:
Cost of Sales Distribution Costs Administrative
Expenses
Property expenses 20% 30% 50%
Insurance 20% 40% 40%
Salaries 25% 35% 40%
Discounts received 100%
9 Tax of Rs 120,000 is to be provided for the year.
Required:
Prepare, the following financial statements for Hashmi as per IAS # 1:
(a) the statement of Profit or loss for the year ended 31 October 2014. (13 marks)
(b) the statement of financial position as at 31 October 2014. (12 marks)
Q. 3 (a) Define the following in terms of qualitative characteristics of financial statements:
(i) Matching (02 marks)
(ii) Substance Over Form (02 marks)
(iii) Accruals (02 marks)
(b) Najmal Limited has acquired a plant some years back, the detail of which is as under:
Rs.
01-01-2012 Purchase cost 200,000
Import duties 25,000
Non-refundable taxes 10,000
Installation cost 15,000
Method of depreciation straight line - Useful life 10 years -
31-12-2012 Revalued amount 126,000
The revaluation does not change the useful life of the asset -
31-12-2013 Revalued amount 250,000
The revaluation does not change the useful life of the asset -
Required: Najmal Limited follows the Revaluation Method under IAS 16. Provide extracts to Financial
Statements for both the years? (11 marks)
Q.4 (a)
At the end of each month, Sarah prepares a bank reconciliation statement for her business bank
account. At 31 May 2013 her ledger balance was Rs.2,759(credit) and her bank statement showed that
she had funds of Rs 131 at the bank. She has the following information:
(i) The bank debited Sarah’s account with charges of Rs 129 during May. Sarah has not recorded these
charges.
(ii) Sarah arranged for Rs 2,500 to be transferred from her personal bank account into the business bank
account. The bank made the transfer on 30 May, but Sarah has not made any entry for it in her records.
(iii) On 22 May, Sarah withdrew Rs 100 cash which she did not record.
(iv) Cheque number 543987, which Sarah issued to a supplier, appears on the bank statement as Rs 650.
Sarah incorrectly recorded the cheque as Rs 560.
(v) On 31 May, Sarah lodged (Deposited) Rs 457. On the bank statement, this amount is dated 3 June.
(vi) Sarah was advised by the bank that she earned Rs 52 interest for the period in May that her account
was in credit. Sarah recorded this in May, but the bank did not credit her account until June.
(vii) Three of the cheques issued in May, with a total value of Rs 942, were not debited on the bank
statement until after 31 May.
(viii) A cheque for Rs 276, issued to a supplier, was cancelled but Sarah has not recorded the
cancellation of the cheque.
Required:
(a) Show the bank account in Sarah’s general ledger, including any adjusting entries required due to the
information given in points (i) to (viii).
Note: You MUST present your answer in a format which clearly indicates whether each entry is a debit
or a credit. (7 marks)
(b) Prepare a reconciliation of the bank statement balance to the corrected balance on the bank
account in Sarah’s general ledger. (5 marks)
(c) On 31 December 2012 Rashid Williams had receivables of Rs.10,000.
From past experience Rashid estimated that the equivalent of 3% of these customers was likely never to
pay their debts and he therefore wished to make an allowance for this amount.
During 2013 Rashid made sales on credit totalling Rs.100,000 and received cash from his customers of
Rs.94,000. He still considered that the equivalent of 3% of the closing receivables may never pay and
should be allowed for.
During 2014 Rashid made sales of Rs.95,000 and collected Rs.96,000 from his receivables. At 31
December 2014 Rashid still considered that the equivalent of 3% of his receivables should be allowed
for.
Required: Calculate the allowance for receivables and the irrecoverable debt expense as well as the
closing balance of receivables for each of the years 2012, 2013, 2014. (8 marks)
Q.5
On extracting a trial balance, the accountant of Wasil Co. discovered a suspense account with a debit
balance of Rs.1,075 included therein; she also found that the debits exceeded the credits by Rs.957. She
posted this difference to the suspense account and then investigated the situation.
She discovered:
(1) A debit balance of Rs.75 on the postage account had been incorrectly extracted on the list of
balances as Rs.750 debit.
(2) A payment of Rs.500 to a credit supplier, Zubair, had been correctly entered in the cash book, but no
entry had been made in the supplier’s account.
(3) When a motor vehicle had been purchased during the year the bookkeeper did not know what to do
with the debit entry so he made the entry Dr Suspense, Cr Bank Rs.1,575.
(4) A credit balance of Rs.81 in the sundry income account had been incorrectly extracted on the list of
balances as a debit balance.
(5) A receipt of Rs.5 from a credit customer, Yasir, had been correctly posted to his account but had
been entered in the cash book as Rs.625.
(6) The bookkeeper was not able to deal with the receipt of Rs.500 from the owner’s own bank account,
and he made the entry Dr Bank and Cr Suspense.
(7) No entry has been made for a cheque of Rs.120 received from a credit customer Meesam.
(8) A receipt of Rs.50 from a credit customer, Pardeep, had been entered into his account as Rs.5 and
into the cash book as Rs.5.
What journals are required to correct the errors and eliminate the suspense account? (13 marks)
BEST OF LUCK
THE END
