Q1Revenue recognition under AS 9
2 marks easy
Case: Suman Ltd. is in the business of manufacturing electronics equipment and selling these at its various outlets. It provides installation services for the equipment sold and also provide free 1 year warranty on all the sold products. Beach Resorts are leading resorts in the city. It purchased 5 air conditioners (AC) from Suman Ltd. for its resort. Suman Ltd. sold 5 AC to Beach resort for ` 45,000 each which includes installation fees of ` 1,000 for each AC. The Company also offers 1 year warranty for any repair etc. The Company also offered ` 500 per AC as trade discount. Beach resort placed ord…
How much revenue should be recognised by the Company as on March 31, 2024
(A) ` 2,25,000
(B) ` 2,17,500
(C) ` 2,00,000
(D) ` 2,30,000
Q1Borrowing costs, foreign exchange transactions, and stock va
0 marks easy
Glen Ltd. began construction of a new building on 1st January, 2025. On 1st April, 2025, following two loans were obtained to fund the construction cost:
Q2Revenue recognition in subsequent financial year
2 marks easy
Case: Suman Ltd. is in the business of manufacturing electronics equipment and selling these at its various outlets. It provides installation services for the equipment sold and also provide free 1 year warranty on all the sold products. Beach Resorts are leading resorts in the city. It purchased 5 air conditioners (AC) from Suman Ltd. for its resort. Suman Ltd. sold 5 AC to Beach resort for ` 45,000 each which includes installation fees of ` 1,000 for each AC. The Company also offers 1 year warranty for any repair etc. The Company also offered ` 500 per AC as trade discount. Beach resort placed ord…
How much revenue should be recognised by the Company in the financial year 2024-25
(A) ` 5000
(B) ` 2,20,000
(C) ` 10,000
(D) ` 2,40,000
Q2Investment accounts and branch accounting
0 marks easy
Following information is given by Mr. Happy (stock broker) relating to his holding in 10% Government Bonds:
Q3Trade discount accounting
2 marks easy
Case: Suman Ltd. is in the business of manufacturing electronics equipment and selling these at its various outlets. It provides installation services for the equipment sold and also provide free 1 year warranty on all the sold products. Beach Resorts are leading resorts in the city. It purchased 5 air conditioners (AC) from Suman Ltd. for its resort. Suman Ltd. sold 5 AC to Beach resort for ` 45,000 each which includes installation fees of ` 1,000 for each AC. The Company also offers 1 year warranty for any repair etc. The Company also offered ` 500 per AC as trade discount. Beach resort placed ord…
What will be the accounting for trade discount
(A) The same will be recognised separately in the profit and loss
(B) The trade discounts are deducted in determining the revenue
(C) Trade discount will be recognised after one year, when the warranty will be over
(D) Trade discount will be recognised after installation is complete
Q3Financial statement preparation per Companies Act Schedule I
14 marks very hard
The following is the Trial Balance of Falgun Ltd., as on 31st March, 2025 with various ledger accounts. Additional Information: Authorized Capital divided into 20,000 equity shares of ` 100 each and 10,000 10% preference shares of ` 100 each. Equity shares include 2,500 equity shares issued for consideration other than cash. The company has had land professionally valued at ` 8,50,000. It is proposed to capitalize part of the undistributed profits by making bonus issue to the shareholders by allocating one equity share of ` 100 each for every 5 shares held. Trade Receivables of ` 46,000 are due for more than six months. Depreciation expenses include depreciation of ` 1,10,000 on Plant and Machinery and ` 70,000 on Furniture. Cash-at-Bank includes ` 55,000 with non-scheduled Bank. Miscellaneous expenses include ` 5,000 being audit fees. Bills Receivables for ` 35,000 maturing on 31st July, 2025 has been discounted. Secured loan balance includes ` 36,000 for interest accrued but not due. Director's declared final dividend @ 8% on 6th April, 2025, transferring any amount required from General Reserve. You are required to prepare Balance Sheet as on 31st March, 2025 and Statement of Profit and Loss with Notes to Accounts for the year ending 31st March, 2025 as per Schedule III of the Companies Act, 2013. Ignore previous years' figures and taxation. All workings should form part of the answer.
Q4Warranty provision under AS 29
2 marks easy
Case: Suman Ltd. is in the business of manufacturing electronics equipment and selling these at its various outlets. It provides installation services for the equipment sold and also provide free 1 year warranty on all the sold products. Beach Resorts are leading resorts in the city. It purchased 5 air conditioners (AC) from Suman Ltd. for its resort. Suman Ltd. sold 5 AC to Beach resort for ` 45,000 each which includes installation fees of ` 1,000 for each AC. The Company also offers 1 year warranty for any repair etc. The Company also offered ` 500 per AC as trade discount. Beach resort placed ord…
Is the Company required to do any accounting for 1 year warranty provided by it
(A) No accounting treatment is required till some warranty claim is actually received by the Company
(B) As there exist a present obligation to provide warranty to customers for 1 year, the Company should estimate the amount that it may have to incur considering various factors including past trends and create a provision as per AS 29
(C) Accounting for claims will be done on cash basis i.e. expense will be recognised when expense is made
(D) As the Company is not charging separately for the warranty provided, there is no need to create any provision
Q4Internal reconstruction accounting
14 marks very hard
Following is the Balance Sheet of Tourna Limited as at 31st March, 2025 with details of shareholders' funds, liabilities, and assets. As on 1st April, 2025, the following scheme of Tourna Limited was finalized: Each equity share is to be sub-divided into ten fully paid-up equity shares of ` 10 each. After sub-division, each shareholder shall surrender 40% of holding for reissue to trade payables. Preference shareholders would give up 30% of capital and 12% Debentures shall be issued for balance holdings. The company would issue additional 12% Debentures for ` 4,00,000 for working capital requirement and final settlement of Bank Overdraft at 90%. Existing debenture holders would accept Furniture & Fixture in full settlement. Trade payables claim shall be reduced to 70%, settled by issue of equity shares of ` 10 each from surrendered shares. Shares surrendered and not re-issued shall be cancelled. Taxation liability to be settled at ` 50,000. Investment value to be reduced to market price. Balance of profit and loss account is to be written off. Inventories value is to be increased by ` 32,000 and provision for Doubtful Debts at 5% of Trade Receivables. You are required to: (i) Pass necessary journal entries in the books of account of Tourna Limited. (ii) Prepare Reconstruction Account, and (iii) Prepare Balance Sheet of the company after internal reconstruction.
Q5Related party definition under AS-18
2 marks easy
According to AS-18 Related Party Disclosures, which ONE of the following is not a related party of Skyline Limited?
(A) A shareholder of Skyline Limited owning 30% of the ordinary share capital
(B) An entity providing banking facilities to Skyline Limited in the normal course of business
(C) An associate of Skyline Limited
(D) Key management personnel of Skyline Limited
Q5Consolidated accounting and share buy-back
0 marks easy
Birds Ltd. and its subsidiary Rooster Ltd provided the following information for the year ended 31/03/2025:
Q6Revenue recognition and bad debts under AS 9
2 marks easy
Case: Health India Limited (HIL), incorporated under the Companies Act, 2013, is engaged in the production and distribution of medicines. It has manufacturing plants at Baddi (Himachal Pradesh) and Bhopal (Madhya Pradesh). It also imports medicines from Pharma Inc. New York (United States). On 1st Jan 2024, HIL sold 2,00,000 strips of Medicine to Dee Limited for ` 50 Lakhs on 60 days of credit. Cost per strip of this medicine, was ` 20. (i.e.) total cost ` 40 Lakhs (2,00,000 strips @ ` 20). Dee Ltd. paid 20% of the amount due on 5th January, 2024. In March 2024, Dee Limited is having significant cas…
How the recognition of revenue from sales of medicine to Dee Limited will be done by HIL under AS 9 and what would be the treatment of unrealized amount for the year ended 31st March, 2024?
(A) Revenue will be recognised for ` 50 Lakhs, subsequently unrealized amount ` 50 lakhs will be debited to bad debts A/c
(B) Revenue will be recognised for ` 40 Lakhs, subsequently unrealized amount ` 40 lakhs will be debited to bad debts A/c
(C) Revenue will be recognised for ` 50 Lakhs, subsequently unrealized amount ` 40 lakhs will be debited to bad debts A/c
(D) Revenue will be recognised for ` 40 Lakhs, unrealised amount of ` 40 lakhs will be shown in Sundry Debtors list
Q6AS 24 discontinuing operations disclosure
5 marks medium
Analyse the disclosure and presentation requirements of AS 24 for Discontinuing Operations (any five).
Q6(b)Purchase consideration in amalgamation
0 marks easy
Raman Limited and Naman Limited decided to amalgamate and form a new company Rana Limited as on 31st March, 2026. You are required to compute the purchase consideration for both the companies based on the provided balance sheet information and revalued figures. The purchase consideration is to be satisfied as follows: By issue of 4 Preference Shares of ` 100 each in Rana Limited @ ` 85 paid up and at a premium of ` 30 per share for every 3 preference shares held in both the companies. By issue of 5 Equity shares of ` 10 each in Rana Limited @ 7 paid up and at a premium of ` 5 per share for every 3 equity shares held in both the companies. In addition, necessary cash should be paid to equity shareholders of both the companies as required to adjust the rights of shareholders in accordance with the intrinsic value of the shares of both the companies.
Q6(c)AS 1 disclosure requirements
5 marks medium
Discuss Disclosure requirements in the following cases as per AS 1:
Q6(d)Reportable segments determination under AS 17
4 marks medium
Garnet Limited has 4 operating segments. The total revenue (internal and external) and assets are set out as below: Fan segment (Inter Segment Sales 3,200, External Sales 10,900, Total Assets 23,700). Light segment (Inter Segment Sales 200, External Sales 1,400, Total Assets 13,200). Lamp segment (Inter Segment Sales 0, External Sales 1,500, Total Assets 4,200). Printer segment (Inter Segment Sales 1,100, External Sales 200, Total Assets 3,400). How many reportable segments does Garnet Limited have as per the Revenue and Assets criteria given in AS 17? State Reasons for your answer.
Q7Investment valuation under AS 13
2 marks easy
Case: Health India Limited (HIL), incorporated under the Companies Act, 2013, is engaged in the production and distribution of medicines. On 1st April,2023 HIL has made an investment of ` 200 Lakhs in the equity shares of Rose Limited of which 50% is made in the long-term category i.e. long-term investment and rest as temporary investment i.e. current investment. The realisable value of all such investments on 31st March, 2024 becomes ` 50 Lakhs as Rose Limited lost a copyright. From the given market conditions, it is apparent that the reduction in the value of investment is not temporary in nature.
How will you recognize the reduction in the value of the investments in the financial statements for the year ended 31st March 2024 as per AS 13 (Revised)?
(A) The reduction of ` 50 Lakhs in the carrying value of current investment will be charged to the profit and loss account. There will be no impact on the value of long-term investments
(B) The reduction of ` 75 Lakhs in the carrying value of current investment will be charged to the profit and loss account. There will be no impact on the value of long-term investments
(C) The reduction of ` 75 Lakhs in the carrying value of current investment will be charged to the profit and loss account. The reduction of ` 75 Lakhs in the carrying value of long-term investment will also be charged to the profit and loss account
(D) The reduction of ` 75 Lakhs in the carrying value of current investment will be charged to the profit and loss account. The reduction of ` 75 Lakhs in the carrying value of long-term investment will also be charged to capital reserve account
Q8Foreign exchange transaction accounting under AS 11
2 marks easy
Case: Health India Limited (HIL) imported medicine from Pharma Inc. for a sum of US $ 2,50,000 on 1st January, 2024. HIL released full payment on 17th April, 2024 to Medicine Ltd. The exchange rates are as follows: 1st April, 2023 ` 76, 1st January, 2024 ` 81, 31st March, 2024 ` 80, 17th April, 2024 ` 79
Ascertain the loss/gain due to change in foreign exchange rates to be recognised in the financial statements for the year ended 31st March, 2024 as per AS 11.
(A) ` 2,50,000 Exchange gain should be credited to profit and loss account
(B) ` 5,00,000 Exchange gain should be credited to profit and loss account
(C) ` 5,00,000 Exchange loss should be debited to profit and loss account
(D) ` 2,50,000 Exchange loss should be debited to profit and loss account
Q9Discontinuing operations disclosure under AS 5
2 marks easy
Case: Health India Limited (HIL) is working on a strategic plan to close the production unit of Bhopal due to change in technology. The board of directors approved the closure of Bhopal Plant on 1st March, 2024. The company did a formal announcement regarding closure to the affected parties on 10th March, 2024. The company entered into a binding-sale agreement on 21 April, 2024. Reporting date of the company is 31st March, 2024.
What would be the date of "initial disclosure of event" be considered for Bhopal Plant?
(A) 31st March, 2024
(B) 1st March, 2024
(C) 21st April, 2024
(D) 10th March, 2024
Q10Sale and leaseback accounting
2 marks easy
X Ltd. sold Plant & Machinery having WDV of ` 60 lakhs to Y Ltd. for ` 75 lakhs (Fair value of ` 75 Lakhs) and the same plant was leased back by Y Ltd. to X Ltd. The lease back is in the nature of operating lease. The treatment will be:
(A) X Ltd. should amortize the profit of ` 15 lakhs over the lease term
(B) X Ltd. should recognize the Profit of ` 15 lakhs immediately
(C) No profit/loss, as fair value is equal to sale price
(D) Y Ltd. should recognize the profit of ` 15 lakhs immediately
Q11Capital redemption reserve
2 marks easy
Case: Following information is given by Z Ltd as of 31st March 2025: Share Capital - Equity shares of ` 10 each fully paid up 800 lakhs, 11% Redeemable Preference shares of ` 100 each fully paid up 200 lakhs. Reserve and surplus - Capital redemption Reserve 50 lakhs, Securities Premium 100 lakhs, General Reserve and profit and Loss (Combined balance) 600 lakhs. On 1st April, 2024 Z Ltd redeemed all its preference shares at a premium of 5%. Z Ltd. bought back 8,00,000 equity shares @ ` 20 per share.
What will be the balance of capital redemption reserve as on 31st March 2025?
(A) ` 280 Lakhs
(B) ` 330 Lakhs
(C) ` 250 Lakhs
(D) ` 130 Lakhs
Q12Cash and bank balance calculation
2 marks easy
Case: Following information is given by Z Ltd as of 31st March 2025: Cash at bank 320 lakhs, Investments 95 lakhs. On 1st April, 2024 Z Ltd redeemed all its preference shares at a premium of 5%. Z Ltd. bought back 8,00,000 equity shares @ ` 20 per share. The payment for buy back of shares will be made through available balance in bank account. To finance Redemption of preference shares and buy back of shares, company has decided to sell its investments for ` 98 Lakhs.
What will be the Cash and Bank Balance as on 31st March 2025?
(A) ` 56.40 Lakhs
(B) ` 66.40 Lakhs
(C) ` 59.20 Lakhs
(D) ` 48 Lakhs
Q13Reserves and surplus calculation
2 marks easy
Case: Following information is given by Z Ltd as of 31st March 2025: Securities Premium 100 lakhs, General Reserve and profit and Loss (Combined balance) 600 lakhs. On 1st April, 2024 Z Ltd redeemed all its preference shares at a premium of 5%. Z Ltd. bought back 8,00,000 equity shares @ ` 20 per share. Z Ltd had 80,000 Equity stock options outstanding on the above mentioned date, to the employees @ ` 15 per share when the market price was ` 20 per share. On 1st April, 2024, 70% of the employees exercised their options.
What will be the Balance of Reserves as on 31st March 2025 excluding capital redemption Reserve?
(A) General Reserve and Profit Loss ` 323 Lakhs and securities Premium ` 10 lakhs
(B) General Reserve and Profit Loss ` 243 Lakhs and securities Premium ` 10 lakhs
(C) General Reserve and Profit Loss ` 323 Lakhs and securities Premium ` 15.60 lakhs
(D) General Reserve and Profit Loss ` 243 Lakhs and securities Premium ` 15.60 lakhs
Q14Balance sheet disclosure of reserves and accumulated loss
2 marks easy
Past Ltd. had the following items under the head "Reserves and Surplus" the Balance Sheet as on 31st March 2025: Securities Premium Account 90 lakhs, Capital Reserve 40 lakhs, Revaluation Reserve 70 lakhs. The company had an accumulated loss of ` 280 lakhs on the same date, which was disclosed under the head "Statement of Profit and Loss" as asset in Balance Sheet. What should be disclosed on the face of Balance Sheet as per Schedule III to the Companies Act, 2013?
(A) Reserve and Surplus-Securities premium 90 lakhs; others ` 110 lakh and Accumulated loss ` 280 lakhs in the Asset side
(B) Reserve and Surplus ` 200 lakhs; and Accumulated loss ` 280 lakhs in the Asset side
(C) Reserve and Surplus - ` 200 lakhs only
(D) Reserve and Surplus - ` 80 lakhs only
Q15Investment disposal accounting
2 marks easy
Pratham and Associates is a manufacturer of steel rods. It invests its profits by purchasing shares of listed companies in order to earn dividend income. It had purchased shares of Bharti Airtel Limited in FY 2020-21. However, it sold all the shares of Bharti Airtel Limited during the current year i.e. FY 2025-26. What amount would be disclosed in the profit and loss account for FY 2025-26?
(A) This transaction would not affect the profit and loss account since the primary business of the company is manufacturing, and not investment
(B) The carrying amount net of expenses would be disclosed in the profit and loss account
(C) The disposal proceeds net of expenses would be disclosed in the profit and loss account
(D) The difference between the carrying amount and the disposal proceeds, net of expenses, would be disclosed in the profit and loss account