QunknownCapital Reduction Scheme, Journal Entries, Balance Sheet Pre
0 marks hard
Case: Opening Balance Sheet showing: Non-current liabilities (Long-term borrowings ₹55,000); Current liabilities (Trade Payables ₹60,000, Short-term Borrowings ₹5,00,000); Non-current assets (Property, Plant & Equipment ₹3,30,000, Intangible assets ₹50,000, Long-term investments ₹45,000); Current assets (Inventories ₹30,000, Trade receivables ₹50,000). Equity Share Capital of 2,00,000 shares @ ₹10 each; Preference Share Capital; Reserves and surplus ₹1,50,000; Long-term borrowings. Subsequent to court approval of a capital reduction scheme: (i) Preference shares reduced to ₹7.25 per share, equity sh…
You are required (a) to show the Journal Entries necessary to record the above transactions in the company's books and (b) to prepare the Balance Sheet after completion of the scheme.
Q1Partnership Dissolution
0 marks hard
Case: Dissolution of partnership firm with piecemeal realization of assets and distribution of cash to partners
Dissolution of partnership firm - X, Y and Z are in partnership sharing profits and losses in the ratio of 5:4:4. The Balance Sheet on 31st March, 20XX is as below:
Liabilities | ₹ | Assets | ₹
X's Capital | 60,000 | Factory Building | 96,600
Y's Capital | 40,000 | Plant and Machinery | 65,100
Z's Capital | 50,000 | Trade Receivable | 21,600
Y's Loan | 18,000 | Inventories | 49,500
Bank Overdraft | 22,000 | Bank | 1,300
| | Stock-in-Trade | 500
Total | 1,90,000 | Total | 1,90,000
On Balance Sheet date, all three partners have decided to dissolve their partnership. Upon dissolution of capital assets was distributed. They decided to distribute amounts as and when became available. For this purpose they appointed 2 partners who are to get as their remuneration 1% of the value of their Shares realised other than cash at bank and 10% of the amount realised from investments by the realisation Account.
Assets were realised piecemeal as under:
First instalment | ₹ 74,600
Second instalment | ₹ 63,300
Third instalment | ₹ 41,000
Last Instalment | ₹ 28,000
Dissolution expenses were provided for estimated amount of ₹ 12,000. The creditors were settled finally for ₹ 63,600.
Q1Share Buy Back and Bonus Issue - Journal Entries
0 marks easy
On 29th April, 2020, the company achieved the target of buy back. On 1st May, 2020 the company issued one fully paid up share of ₹10 each by way of bonus for every eight equity shares held by the equity shareholders. Pass the necessary journal Entries for the above transactions.
Q1Government Audit
1 marks easy
Statement 1: Government audit provides public accounting of operational, management programme and policy aspects of public administration as well as accountability of officials.
Statement 2: Government audit is equipped and intended to function as an investigating agency to detect every irregularity or misdemeanor to its utmost.
(a) Only statement 1 is correct
(b) Only statement 2 is correct
(c) Both 1 & 2 are correct
(d) Both 1 & 2 are incorrect
Q1Provisions and Contingent Liabilities
1 marks easy
It is a possible obligation that arises from the past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events
(A) Provisions
(B) Contingent Liabilities
(C) Contingent Liabilities
(D) Liability
Q1Audit Fundamentals
5 marks medium
State with reason (in short) whether the following statements are true or false
Q1Business Process Management Cycles
0 marks easy
Which of the following is a cycle in business process management?
(A) Order to Cash Cycle
(B) Procure/Purchase to Pay Cycle
(C) Financial Management Life Cycle
(D) Accounting Cycle
Q1Strategic Management
0 marks hard
Case: Increasing investment in the share market, mutual funds, and equity/debt investment plans. The company started to explore the fast growing country outside India. First Sringy decided to open its IT firm in Mumbai and has a team of 100+ IT professionals working on building a safe and secure company infrastructure.
The market is saturated. There is more competition and big brands have all jumped in with huge initial investments. Sringy realized that the best way forward is to introduce some unique quality to the young brand.
This was achieved by project Force.
They conducted a secret market a…
Based on the above Case Scenario, answer the Multiple Choice Questions.
Q1Organisational structures
0 marks easy
Sriozzy's major investment in Artificial Intelligence has created an organisational structure to be which of the following structures?
(A) SBU Structure
(B) Flat Structure
(C) Hourglass Structure
(D) Multinational Structure
Q2Limited Liability Partnerships
0 marks easy
Write short note on Designated Partners in a Limited Liability Partnership and what are their liabilities.
Q2Debentures Redemption - Accounts
0 marks easy
The balance of 10% Debentures to be redeemed in the books of Omega Ltd. as on 1-4-2020: (i) 10% Debentures ₹75,00,000 (ii) Balance of DRF ₹2,50,000 (iii) DRR Investment ₹1,25,000 represented by 10% ₹1,25,000 Secured Bonds. Omega Ltd. is an untraded company (other than AIF, Banking company, NBFC and HFC). You are required to prepare Debentures Redemption Reserve Account and Bank Account in the books of Omega Ltd. and also show how Debentures Redemption Investment Account would have appeared for the period ended 31st March 2021.
Q2Limited Liability Partnerships - Designated Partners and Lia
0 marks easy
Limited Liability Partnerships ("LLP") as per the provisions of section 3 of the Limited Liability Partnership Act, 2008, Limited Liability Partnership shall have at least 2 designated Partners who are individuals. Provided that in case of Limited Liability Partnership in which all the partners are bodies corporate or in which one or more partners are individuals and other corporate, at least one of the designated Partner shall be an individual. Accordingly, the bodies corporate shall act as designated partners. Liability of designated partners: As per section 8 of LLP Act, unless expressly provided otherwise in this Act, a designated partner shall be liable to all penalties imposed on the limited liability partnership for any contravention of those provisions.
Q2Government Audit
1 marks easy
Government audit of various programs, schemes, and projects where large financial expenditure have been incurred are to be economically and the padding results expected of them:
(a) Properly audit
(b) Audit against Rules and orders
Q2Types of fraud; misappropriation
2 marks easy
Case: R.S. & Associates have been appointed as the statutory auditors of MNO Ltd. for the Financial Year 2020-21. During the engagement with the management, the auditors have been informed of a fraud committed by an employee. The case scenario involves auditor responsibility regarding detection and prevention of fraud.
The inclusion of dummy workman in the specimen list by the management of MNO Ltd. as noticed by CA Ramesh amounts to
(A) Suppressing cash receipts
(B) Stealing of inventory of goods
(C) Inflating cash payment
(D) Misappropriation of goods
Q2Quality Control
1 marks easy
Internal quality engagement, procedures designed to provide evidence of compliance by engagement teams with the firm's quality control policies and procedures
(A) Monitoring
(B) Inspection
(C) Internal Audit procedures
(D) Compliance procedures
Q2Fraud and Auditor Responsibilities
5 marks medium
The primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. Explain. If there remains a deep-seated fraud in the accounts, which in the normal course of audit may not come to light, it will not be considered as failure of audit. Explain.
Q2Data Processing Systems
0 marks easy
In a study, Databasis collects data from specific originating stations. Data for specific destinations are carried by Databasis in Mumbai Local Train and then delivered to destinations. Based on the above case, where segregation of data is done based on destination station as specified in the source code mentioned at the top of the database, for what method is the best fit to the method adopted by Databasis?
(A) Batch Processing System
(B) Online Processing System
(C) Real time Processing System
(D) Batch Processing System
Q2Strategic management tools
0 marks easy
In future, to fight out uncertainties like geo-political influences, which of the following is used by Sriozzy?
(A) Strategic Audit
(B) Scenario Analysis
(C) SWOT Analysis
(D) ADL Matrix
Q3ESOPs (Employee Stock Option Plans)
0 marks easy
Define the following terms:
Q3Audit against Provision of Funds
1 marks easy
While conducting audit against provision of funds, the statutory auditors, M/s Suresh Rana & Associates must check -
(a) That each item of expenditure is covered by a sanction either general or special of a competent authority
(b) That the expenditure incurred has been on the purpose for which the grant and appropriation has been provided and the amount of expenditure does not exceed the sanctioned limit
(c) That the expenditure conforms to the relevant provision of the constitution
(d) That all expenditure is in accordance with the financial rules, regulations and codes issued by the competent authority
Q3Auditor responsibility; fraud reporting
2 marks easy
Case: R.S. & Associates is the statutory auditor facing a situation where cost accountant has already reported fraud.
With respect to the fraud which has already been reported by The Cost accountant of the company, Mr. Suresh, what is the responsibility of Ms. R.S Associates in this regard?
(A) Since the reporting has been done to the Central Government by the cost accountant of the company, the statutory auditor has no responsibility for such fraud and is not involved
(B) The cost accountant has detected and reported the fraud to the Central Government. The statutory auditor should not interfere in the work of the Cost Accountant
(C) As Ms R.S. Associates, she should report the fraud and if it is not satisfied with such steps, she should request the management to take appropriate procedure to enable her to notify herself that the misstatement is not material
(D) CA Ramesh should obtain written representation from the management that once the matter is appropriately addressed, he will be duly informed by the management
Q3Professional Skepticism
1 marks easy
The approach of Professional Skepticism disallowed by the auditor:
(A) in planning and performing the audit
(B) in evaluating the effect of identified misstatements on the audit
(C) both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit
(D) none of the above
Q3Independence and Ethics
5 marks medium
The Chartered Accountant has a responsibility to remain independent by taking into consideration as per the practice. The threats to independence and the safeguards available to eliminate the threats. Explain the guiding principles in this connection.
Q3Transmission Modes
0 marks easy
PNP use of mobile phones for its application is representative of the way technology is changing the way we do work. Mobile phones are characterized by creating a certain type of transmission mode. Identify the same.
(A) Half Duplex
(B) Half Duplex
(C) Half Simplex
(D) Half Duplex/Half Simplex
Q3Customer segmentation and targeting
0 marks easy
Not all customers can be satisfied, and Sriozzy addressed the same by connecting with the right customers. Arrange the following in the order that Sriozzy followed while pursuing their customer reach out: (I) Market Segmentation (II) Market Target (III) Market Positioning
(A) (I), (II), (III)
(B) (I), (III), (II)
(C) (II), (I), (III)
(D) (III), (I), (II)
Q3bAuditing - Expert's work
0 marks easy
When information to be used as audit evidence has been acquired using the work of a management's expert and having regard to the significance of expert's work for the auditor's purposes, explain the considerations guiding the auditor whether or not to rely on the auditor's expert.
Q4Buy Back of Securities
0 marks hard
Case: Buy back of equity shares - company provides balance sheet information and announces share buyback transaction
Buy Back of Securities - Mrs. Vikash Infra Ltd. (a limited company) provide the following information as on 31.3.2020:
Land and Building | ₹ 21,50,000
Plant and Machinery | ₹ 15,00,000
Furniture and Fixtures | ₹ 2,00,000
Trade Receivables | ₹ 5,50,000
Inventories | ₹ 1,80,000
Cash and Cash Equivalents | ₹ 40,000
Share capital: 10,000 Equity Shares of ₹ 10 each fully paid up | ₹ 1,00,000
General Reserve | ₹ 2,50,000
P&L Account (Surplus) | ₹ 1,50,000
10% Debentures (Secured by floating charge on all assets) | ₹ 20,00,000
Unsecured Loans | ₹ 8,00,000
Trade Payables | ₹ 1,20,000
On 31st April, 2020 the Company announced the buy back of 15,000 of its equity shares @ ₹ 10 per share. For this purpose, it sold as an investment for ₹ 2,50,00,000.
Q4Types of Government Audit
1 marks easy
Which part of government audit covers the scrutiny of the expenditure incurred on the maintenance of assets acquired by the company which is considered as infectious and available by SA Suresh Rana -
(a) Propriety Audit
(b) Audit against Provision of Funds
(c) Audit of sanctions
(d) Performance Audit
Q4Fraud terminology and definitions
2 marks easy
_________________ refers to events or conditions that create an incentive or pressure to commit fraud or provide an opportunity to commit fraud
(A) Fraud
(B) Misappropriation of assets
(C) Incentives / Pressures
(D) Fraud
Q4Sampling Techniques
1 marks easy
in which the auditor selects the sample without following a structured Technique
(A) Nonzoned selection
(B) Monetary Unit Sampling
(C) Haphazard selection
(D) Structured Sampling
Q4Materiality in auditing
0 marks easy
The auditor's determination of materiality is a matter of professional judgment, and is affected by the auditor's perception of the financial information needs of users of the financial statements.
Q4Knowledge Management
0 marks easy
The coding scheme created by Mumbai Databasis is a good example of _______.
(A) Artificial Intelligence
(B) Tacit Knowledge
(C) Business Knowledge
(D) Organizational Knowledge
Q4Generic competitive strategies
0 marks easy
Sanjoy Pharmaceuticals Limited manufactures a cough syrup Zuma. It has recently started focusing on cleaning the Zuma production on the mouth wash category. The consumer will not be satisfied with the quality and the brand. On what basis should Sanjoy Pharmaceuticals Limited found this product as unique. The sales of Zuma cough syrup have increased as a result of its success in the market. Identify the strategy adopted by Sanjoy Pharmaceuticals Limited.
(A) Focus strategy
(B) Differentiation strategy
(C) Differentiation strategy
(D) Cost leadership strategy
Q5Underwriting of Shares
0 marks easy
Write a short note on Firm underwriting and Partial underwriting along with firm underwriting.
Q5Audit against Provision of Funds
1 marks easy
While conducting the audit of receipts of HALS LTD., which of the following area is to be covered under Audit against Provision of Funds?
1. Whether all receipts of other debts due to government have been correctly assessed, realized and credited to government account by the designated authorities of HALS LTD
2. Whether adequate checks are imposed to ensure the prompt detection and recovery of irregularities, double intrude, fraudulent or target fraud vouchers or other loss of revenue through fraud or wilful omission or negligence to levy or collect taxes or to issue refunds
3. Whether the various cheques/deposits are executed and their operations conducted economically and whether they are yielding the results expected of them.
(a) Only 1 is correct
(b) Statements 1 & 2 are correct
Q5Audit risk; fraud detection
2 marks easy
Statement 1: The risk of auditor not detecting a material misstatement resulting from fraud is
Statement 2: The risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting a misstatement resulting from error
(A) Only statement 1 is correct
(B) Only statement 2 is correct
(C) Both 1 & 2 are correct
(D) Both 1 & 2 are not correct
Q5Corporate Governance
1 marks easy
The persons with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity are:
(A) management
(B) internal control governance
(C) audit committee
(D) board of directors
Q5Preparation for audit (Chapter 3)
0 marks easy
Planning is a continuous process that continues throughout the audit engagement and extends beyond the completion of planning.
Q5Data Analytics Applications
0 marks easy
VAS (Value Added Services) wants to take rigorous data of a health care center dealing in all kinds of orthopedic services, with an underlying aim to generate more revenue. Which of the following application area of data analytics will be helpful to them?
(A) Compiling report for weekly cash collection
(B) Mining patient data to evaluate effectiveness of treatment for diseases
(C) Pricing purchase order for procurement of medicines
(D) Recording of financial transactions across various departments
Q5Promotional strategies
0 marks easy
Everyouth Beauty Products Limited, the makers of Feel-Fresh soap have been suffering from the sales volume from the last six months due to stiff competition. To improve the sales turnover, the senior management has been thinking of new strategies such as 'an X phone every hour, scratch cards, buy 1 get 1 free' and contest on social media. This resulted into increase in sales. Which type of promotional activity is being used by Everyouth?
(A) Sales promotion
(B) Advertising
(C) Publicity
(D) Personal selling
Q6Transaction Processing Systems
0 marks easy
E-Mail is a successful brand in the field of retail, manufacturing, runs its business through online mode in response to continuous feedback from stakeholders. The organization wants to follow a comprehensive and innovated approach to improve customer relationship. Discuss the type of transaction processing systems used to provide the services that fit under the current scenario and explain it in detail.
Q6Product life cycle
0 marks easy
ABC Ltd has identified that all three of its new products are at the maturity phase of the product life cycle. Which of the following is ABC Ltd likely to be experiencing due to this?
(A) High, but declining sales
(B) Rising numbers of competitors
(C) Product diversification and differentiation strategies
(D) Adoption of price skimming strategies
Q7Amalgamation of Companies
0 marks hard
Case: A new company Plan Ltd. is formed with authorised share capital of ₹4,00,000 divided into 40,000 Equity Shares of ₹10 each. The new company will acquire the assets and liabilities of Mohan Ltd. on the following terms: (i) The new company will take over the outstanding secured interest on debentures, equity shares of equal amount are issued instead. (ii) Trade payables will be settled at par for 12,500 equity shares at par in full and final settlement. (iii) Equity shareholders are to get equal number of equity shares issued at par. Preference shareholders to forego dividend for two years. (iv)…
Mohan Ltd. gives you the following information as on 31st March, 2020: Equity shares of ₹10 each: 3,00,000; 6,000 9% cumulative preference shares of ₹10 each: 60,000; Profit and Loss Account (Dr. balance): 1,70,000; General Reserve: 1,20,000; Interest payable on Debentures: 20,000; Trade Payables: 1,50,000; Property, Plant and Equipment: 3,40,000; Goodwill: 80,000.
Q7Audit procedures and documentation
0 marks hard
A new team member of GBR & Co., the auditors of Eastern Limited, was of the view that it could not ascertain the future during any phase of Audit.
Q7Business Processing Cycles
0 marks easy
Explain processing cycles like the HR Cycle, Financing Cycle and Revenue Cycle, etc., that are prominent cycles in an organization. Discuss the processing cycle and processing activities about the data to be collected, processed and stored.
Q7Data Processing Cycle in Information Technology
0 marks easy
The Data Processing Cycle consists of following basic steps: process, controls and feedback at each step.
Q7Business portfolio analysis
0 marks easy
A technique that Company X manufactures and evaluates the various businesses that make up a company is termed as...
(A) Value chain analysis
(B) Portfolio analysis
(C) Competition analysis
(D) Strategic analysis
Q7Business Environment / Macro environment analysis
0 marks easy
Assume that you are an entrepreneur who has an intense desire to get into the business. What types of information relating to macro environment would you need for taking business decisions?
Q8Client knowledge and internal control (Chapter 4)
0 marks easy
Without adequate knowledge of client's business, a proper audit is not possible. It is one of the important responsibilities of an auditor.
Q8Understanding Entity and Risk Assessment (SA 315)
0 marks easy
Without adequate knowledge of client's business, a proper audit is not possible. It is one of the important principles in developing an overall audit plan. As per SA 315, identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment is a key requirement of auditing. Answer the following: (a) Relevant industry, regulatory and other external factors including the applicable financial reporting framework. (b) The nature of the entity, including: (i) Its operations; (ii) Its ownership and governance structures; (iii) The types of investments that the entity is making and plans to make, including investments in special purpose entities; and (iv) The way that the entity is structured and how it is financed.
Q8IT Audit Objectives
0 marks easy
The audit group at ANDS Ltd appointed as an auditor. As an auditor, he wants to check the overall design effectiveness of IT controls. Explain the general objectives of auditing in a computerized environment that could include the objectives of audit.
Q8Objectives of Auditing in Computerized Environment
0 marks easy
The general objectives of auditing in a computerized environment that could include the objectives of internal control as well though the extent of coverage could vary on scope and complexity.
Q8Integration strategies
0 marks easy
If capacities are unsuitable or too costly, which of these strategies may be appropriate?
(A) Horizontal integration
(B) Backward integration
(C) Market penetration
Q8Strategic Analysis / Five Forces Analysis
0 marks easy
Explain briefly the competitive forces in any industry as identified by Michael Porter.
Q9Liquidation of Company
0 marks easy
From the following Trial Balance of Ali Rounder Ltd., on 1st January, 2021, prepare Liquidation's Final Statement of account.
Q9Cloud Computing Service Models
0 marks easy
Various service models of Cloud Computing provide one-stop-shop for achieving set targets. Discuss the service models.
Q9Information Technology, Cloud Computing Models
0 marks easy
Discuss whether Computer system used secondly is vital for business objectives and goals.
Q9Strategic Management - Manager Roles and Responsibilities
0 marks hard
Case: Dharam Singh is a functional manager. The scenario emphasizes the importance of managers understanding consequences of actions and maintaining clarity during strategy implementation.
Scenario: Companies provide most of the information that is available for business and corporate level managers to formulate realistic and attainable strategies. This is because functional managers like Dharam Singh are often responsible for the success or failure of these strategies. It is important for the manager to plan and understand the consequences of their actions so that subsequently may become major strategies for the company. Thus, it is important for managers at the operational level is strategy implementation or execution of corporate and business level plan and if they are involved in formulation, the clarity of thoughts while implementation can benefit too. Common practice, in a discussion of PLC has been emphasized. Most of the practitioners and managers both discuss and explain the role of competition and rivalry is particularly in case of supplied firms. An equally great responsibility rests with managers at the operational level is strategy implementation or execution of corporate and business level plan and if they are involved in formulation, the clarity of thoughts while implementation can benefit too.
Q10Financial Statements of Insurance Companies
0 marks easy
From the following information as on 31st March, 2020 from the books of Ocean Insurance Company Limited, which is engaged in Marine Insurance business prepare the Revenue Account.
Q10Bill discounting and accounting treatment
0 marks easy
(i) Calculate the rebate on bills discounted as on 31st March, 2020. Take 365 days
(ii) Pass necessary Journal Entries.
Q10Understanding of information system and control activities
0 marks easy
Explain the understanding that an auditor shall obtain regarding the information system and control activities, with reference to:
Q10Telecommunication Networks
0 marks easy
Explain the classification of telecommunication networks that can be used in any organization based on the criterion of membership.
Q10Business Environment / Leadership and Decision Making
0 marks hard
Case: Dharmi Singh, the procurement department head of Cycle, a mountain biking company, was recently promoted to look after sales function during an initial phase of leadership and she assures that he would ensure the implementation of latest policies to the best of his capacity but has never trained him in decision making for the company
Do you think the right approach? Validate your answer with logical reasoning.
Q10Business Environment - External Perspective and Strategy
0 marks easy
Case: Related to Dharam Singh's company and the relationship between external environment and internal business strategies.
A business organization is a part of overall structure of society and functions within wide spectrum of societal factors. It draws its resources from its external environment and uses its outputs to that environment. Briefly explain what is meant by saying that a business enterprise should focus on external perspective. The organization's internal situation is related to its external factors. What are the opportunities for Dharam Singh's company? What is the operating philosophy in terms of quality, firm's image and self-concept? What are the core competencies and competitive advantages?
Q11Departmental accounting and inter-departmental transfers
0 marks easy
Below balances are taken from the records of Mrs Big Shopping Complex for the year ended 31st March, 2020. From the above information, prepare Departmental Trading Account and Profit & Loss Account for the year ended 31st March 2020, after adjusting the transferred departmental profits, if any.
Additional conditions:
(a) Closing stock of Department O was ₹ 2,00,000 including goods transferred from Department O or F 40,000.
(b) Closing stock of Department Q was ₹ 4,00,000 including goods transferred from Department P ₹ 66,000.
(c) Opening stock of Department P included goods for ₹ 20,000 transferred from Department Q and included goods for ₹ 30,000 transferred from Department P.
(d) Assume that above transfer amounts are cost to the transferee departments and the rate of gross profit is uniform from year to year.
Selling expenses incurred ₹ 2,50,000 for both the departments.
Q11Verification of assets and liabilities (Chapter 5-6)
0 marks easy
In the audit you conducted, identify audit procedures for the following:
Q11Network Characteristics
0 marks easy
Mr. A, a system administrator of XYZ Ltd, suggested to the senior managers about the following characteristics of networks. Explain the characteristics: Performance, flexibility, maintainability, reliability and scalability while considering the company's IT infrastructure management.
Q12Branch accounting and manager's commission calculation
0 marks easy
A branch was started under the supervision of a manager. The rate of gross profit is constant at 25 per cent throughout the year to 31st March, 2020. From the above details, you are required to calculate the commission due to manager for the year ended 31st March, 2020.
Q12Understanding information systems and controls
0 marks easy
The auditor shall obtain an understanding of the information system and control activities relevant to financial reporting.
Q12Transaction Processing Systems and ACID Properties
0 marks easy
A computerized travel agency uses a Transaction Processing System (TPS) to automate and retrieve data for transactions. Most Transaction Processing Systems include certain attributes required to ensure data integrity. Explain the ACID properties available to ensure data integrity.
Q12Strategic Analysis / Product Lifecycle
0 marks hard
Case: The LLI Ltd manufactures and sells air purifier Fresh Breath. The Fresh Breath has captured about 40% of the market share in the last five years. When growth in the previous few years. It is due to new products entering the market is competition with the Fresh Breath. ABC Ltd is therefore considering cutting its prices to be in control. The financial analysis does not support price reduction. The market studies indicate that this will not cause a significant increase in the level of sales- even after lower cost, their cash flow had little effect on these ABC Ltd is also considering some advert…
Identify and explain the stage of the product life cycle in which 'Fresh Breath' falls.
Q12aAnalytical review procedures
0 marks easy
Discuss the Analytical Review procedures that may be useful as a means of obtaining audit evidence regarding various assertions relating to Trade receivables, loans and advances.
Q13Vouching procedures
0 marks easy
List out the steps to be taken by auditor while vouching and verifying transactions.
Q13Artificial Intelligence Applications
0 marks easy
Artificial Intelligence (AI) spans a wide horizon dealing with different techniques of intelligent search and various methods of resolving uncertainty of data and knowledge. Elaborate on commercial application areas of AI.
Q13Strategic Management - Retrenchment Strategy
0 marks hard
The leadership team of Mex-Infotech Ltd decided to calls all the inks making aids, refocus and reorganize the company. The company performed well some of regional content like bangalored houses: Glaubitz Showal, a friend of the MD appreciated the decision saying that the leadership team of Mex-Infotech Ltd. decided to sell the rights and curtail any further content development in these areas.
Q14Qualitative characteristics of financial statements
0 marks easy
(a) With reference to financial statements, state any five qualitative characteristics.
Q14Qualitative Characteristics and Elements of Financial Statem
0 marks easy
Qualitative Characteristics of Financial Statements:
Q14Verification of loans and securities
0 marks easy
Newton Ltd. has made loans and advances on the basis of following securities to various concerns. As an auditor what type of documents can be verified to ensure that the company has taken appropriate security?
Q14Audit of securities held against loans and advances
0 marks easy
Distinguish between the following items in relation to account groupings: (i) Pledge and mortgages, (ii) Life Insurance Policy, (iii) Hypothecation of goods
Q14Strategic Management - Stability Strategies
0 marks easy
Stability Strategies, as name suggests, are intended to safeguard the existing interests and strengths of business. It involves organisations to pursue established and tested objectives, outline on the chosen path, maintain operational efficiency and so on.
Q15Contingencies and events occurring after balance sheet date
0 marks hard
Case: A case is going on between ABCL and Tax department on claims arising the assumption that no law amendment on the interest on 15th April and rejected the claim of the company. Accordingly, company is liable to pay the additional tax. The financial statements were approved on 31st May, 2020.
(a) A case is going on between ABCL and Tax department on claims arising the assumption that no law amendment on the interest on 15th April and rejected the claim of the company. Accordingly, company is liable to pay the additional tax. The financial statements were approved on 31st May, 2020.
Q15AS 9 - Fair Profit or Loss in the Period, Prior Period Items
0 marks easy
FYZ Ltd's tax assessment for assessed year 2017-18 has been completed on 14th March, 2018. The company received a demand of ₹5.45 crore. The company filed an appeal before the ITAT without prejudice to its right of appeal. The company files its appeal before the ITAT. Before the authority wherein the grounds of appeal which were additional made in the demand are confined to those which relate to the years 2012-15, the demand for the year 2012-13 tax adjustment. The company seeks your advice for its account for the year ended 31st March, 2020.
Q15Financial Capital Maintenance and Conditions
0 marks easy
To the question of whether the following statement has been satisfied or not based on the information given: There has to be correspondence before there will have been no net loss in the period ending on reporting date. Both the conditions are satisfied. Court order 2015-2026.
Q15Fraud reporting by auditors
0 marks easy
Where the auditor notices that any fraud by the company or on the company by its officers or employees has been noticed by or reported during the year, the auditor should apart from any other requirements under law or in companies (Auditors Report) Order, 2016 report the nature of fraud and amount involved. Explain the considerations an auditor would keep in mind for reporting under this clause.
Q16Foreign Currency Transactions - Monetary/Non-monetary items
0 marks easy
(a) Trade Payables - Monetary, Dash balance - Monetary (b) Amount of Exchange difference and its Accounting Treatment [with table showing Trade payables US $ 12,500 (₹10,00,000), 1 US $ = ₹80, 10,00,000, Exchange Difference less US $ 12,500 x (₹85-80), 62,500]
Q16Auditor's access rights and company refusal
5 marks medium
During the audit of PQR Ltd, you as an auditor requested copies of the company to have access to secretarial records and correspondence which they refused to provide. Explain the consequences under Companies Act, 2013.
Q17AS 12 - Accounting for Government Grants, Deferred Income, A
0 marks hard
Case: Hygiene Ltd. received a grant of ₹ 50 lakh in 2012 from State Government for installation of pollution control machinery on hire-purchase conditions. The grant was to be refunded after 12 years.
As per the facts of the case, Hygiene Ltd. had received a grant of ₹ 50 lakh in 2012 from a State Government towards installation of pollution control machinery on hire-purchase conditions. However, the amount of grant was to be refunded after a period of 12 years. Show the accounting treatment as required by AS 12 (Accounting for Government Grants).
Q18AS 14 - Borrowing Costs
0 marks easy
Stan Builders Limited has borrowed a sum of US $ 10,00,000 at the beginning of Financial Year 2019-20 for its residential project at 4 %. The interest is payable half-yearly at the end of January and July. They incurred the direct costs of construction for the first month amounting to ₹50,00,000 on 31st March, 2020 at ₹ 62 per US $ 1. If Stan Builders Limited had borrowed the loan in Indian Rupees through loan banks the rate of interest would have been 12%. The weighted average difference for the year ending 31st March, 2020 as per applicable Accounting Standards.
Q18Foreign Currency Loans - Interest and Exchange Difference Ca
0 marks easy
ABC Ltd. should recognize the grants in the following manner. Calculate the following:
Q18Finance Lease Classification and Accounting
8 marks hard
An asset which is classified as finance lease if at the inception of the lease, the present value of minimum lease payments equals or exceeds substantially all of the fair value of leased asset. In the given case, the implicit rate of interest is 15%. The present value of minimum lease segments at 15% is ₹ 13,320 lakhs (if 3 lakhs each year). Identify the accounting treatment required for this finance lease.
Q18Strategy Implementation and Control / Organizational Structu
0 marks hard
Case: Manoj started his telecom business in 2010. Over next five years, he gradually hired fifty people for various activities such as helping in accounts, administration, sell his products in the market, create more customers, provide after sales service, distribute on ventures.
Draw the organization structure Manoj should implement in his organization and name it.
Q19Lease Accounting Treatment - Operating vs Finance Lease
7 marks hard
Equipment is leased for three years. The lease payments over an accounting basis are ₹ 50 lakhs. In finance lease, lease term should be for the major part of the economic life of the asset even if title is not transferred. However, in the given three years the lease term represents only an operating lease. Discuss the accounting treatment and explain why this is classified as an operating lease rather than a finance lease.
Q19Types of audit opinions and reporting
5 marks medium
During the course of audit of a company, the auditor identified that there are several procedures and wants to issue a report without any hesitation. Discuss the type of opinion the auditor may give and state the going concern reasoning.
Q19Strategic Edge / Six Sigma Methodologies
0 marks easy
Distinguish between DMAC and DMADIE Methodology of Six Sigma.
Q20Strategic Edge / Business Process Reengineering
0 marks easy
Explain concept and nature of BPR.
Q25Intangible Assets and Provisions/Contingencies
8 marks very hard
Case: Naresh Ltd. Balance Sheet (Extract relating to intangible asset) as on 31st March 2020 shows: Goodwill (₹ 4,51,200), Patents (₹ 1,60,000), Patterns (₹ 2,10,000) - Total ₹ 8,11,200. Notes to Accounts provide details of goodwill on acquisition of business, trademark, and patents with relevant amortization.
Naresh Ltd. has the following intangible assets as on 31st March 2020: Goodwill ₹ 4,51,200, Patents ₹ 1,60,000, and Patterns ₹ 2,10,000. Working notes detail the acquisition of business with cash consideration, acquisition of trademark, and amortization of patents. Based on this information, identify the accounting treatment for intangible assets and provisions.
Q16.1Auditor's Opinion - Types and Modification
0 marks easy
What type of opinion is appropriate?