Question 1

The summarized Balance Sheets of MPS Limited as on 31-3-2012 and 31-3-2013 are as under:

| Liabilities | 31-3-2012 (₹) | 31-3-2013 (₹) | Assets | 31-3-2012 (₹) | 31-3-2013 (₹) |
|---|---|---|---|---|---|
| Equity share capital | 40.00 | 50.00 | Land & Building | 27.00 | 23.00 |
| Securities Premium | - | - | Plant & Machinery | 25.00 | 34.00 |
| General | 8.00 | 11.00 | Investments (Long Term) | 3.00 | 4.00 |
| Profit & Loss | 10.30 | 12.70 | Stock | 7.50 | 9.80 |
| 10% Debentures | 5.00 | 3.00 | Debtors | 0.25 | 1.15 |
| Sundry Creditors | 4.90 | 6.20 | Cash & Bank Balance | 9.25 | 1.65 |
| Provision for Tax | 5.00 | 7.00 | Preliminary Expenses | 0.80 | 0.62 |
| Proposed Dividend | 4.80 | 6.00 | | | |
| Corporate Dividend Tax | 0.82 | 1.02 | | | |
| Total | 78.82 | 97.92 | Total | 78.82 …

Accepted Answer

**Note:** The sub-part (a) in the question appears incomplete—it restates the balance sheets without specifying the exact requirement. Based on standard CA Intermediate curriculum for 10-mark questions at this level, this is interpreted as a **Fund Flow Statement (Sources and Uses of Funds)** for the year ended 31-3-2013.

**FUND FLOW STATEMENT OF MPS LIMITED FOR THE YEAR ENDED 31-3-2013**

**SOURCES OF FUNDS:**

*1. Funds from Operations:*
- Profit for the year (calculated): ₹2.40 lakhs
- Add: Depreciation on Plant & Machinery: ₹3.30 lakhs
- Add: Depreciation on Land & Building: ₹2.00 lakhs
- Add: Amortization of Preliminary Expenses: ₹0.18 lakhs
- Add: Tax Provision (non-cash): ₹6.80 lakhs
- Less: Gain on sale of machinery: (₹1.50 lakhs)
- **Total Operating Funds: ₹13.18 lakhs**

*2. Other Sources:*
- Issue of Equity Shares (including 10% premium): ₹10.00 lakhs
- Proceeds from sale of machinery (WDV): ₹3.50 lakhs
- Increase in Sundry Creditors: ₹1.30 lakhs
- Increase in Tax Provision (net liability): ₹2.00 lakhs
- Decrease in Cash & Bank Balance: ₹7.60 lakhs

**TOTAL SOURCES: ₹37.58 lakhs**

**USES OF FUNDS:**

*1. Investment in Fixed Assets:*
- Purchase of Plant & Machinery: ₹15.80 lakhs
- Purchase of Investments (Long-term): ₹1.00 lakhs
- Disposal of Land & Building (NBV): ₹2.00 lakhs

*2. Redemption of Debentures:* ₹2.00 lakhs (redeemed on 1-1-2012)

*3. Dividend and Related Payments:*
- Proposed Dividend 2011-12 (paid): ₹4.80 lakhs
- Corporate Dividend Tax 2011-12 (paid…

Question 2

Prepare a Cash Flow Statement after Accounting Standard (AS-3).

Accepted Answer

**Cash Flow Statement as per AS-3 (Revised)**

AS-3 (Revised) issued by the Institute of Chartered Accountants of India deals with Cash Flow Statements. It requires enterprises to present a statement showing inflows and outflows of **cash and cash equivalents** classified into three activities: **Operating, Investing, and Financing Activities**.

**Definition of Cash and Cash Equivalents:** Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments readily convertible to known amounts of cash with insignificant risk of change in value (generally maturity of 3 months or less).

**Format of Cash Flow Statement (Indirect Method for Operating Activities)**

**CASH FLOW STATEMENT**
For the year ended ____________

**A. Cash Flow from Operating Activities**
Net Profit before Tax and Extraordinary Items — ₹ XXX
Adjustments for non-cash/non-operating items:
Add: Depreciation — ₹ XXX
Add: Amortisation of goodwill/intangibles — ₹ XXX
Add: Loss on sale of fixed assets — ₹ XXX
Add: Interest expense (financing) — ₹ XXX
Less: Interest/Dividend received (investing) — ₹ (XXX)
Less: Profit on sale of fixed assets — ₹ (XXX)
**Operating Profit before Working Capital Changes — ₹ XXX**
Changes in Working Capital:
Increase in Current Liabilities — ₹ XXX
Decrease in Current Assets — ₹ XXX
Decrease in Current Liabilities — ₹ (XXX)
Increase in Current Assets — ₹ (XXX)
**Cash Generated from Operations — ₹ XXX**
Less: Income Tax Paid (net of refunds) — ₹…

Question 3

ABX Company Ltd. provides the following information relating to Process B:
(i) Opening Work-in-progress - NIL
(ii) Units introduced - 45000 units @ ₹10 per unit
(iii) Expenses debited to the process: Direct material ₹65,500, Labour ₹90,800, Overhead ₹1,80,700
(iv) Normal loss in the process - 2% of Input

Accepted Answer

**Process Costing — Process B Account of ABX Company Ltd.**

**Step 1 — Identify Input Cost**

Units introduced: 45,000 units at ₹10 per unit = ₹4,50,000. Additional expenses debited: Direct Material ₹65,500 + Labour ₹90,800 + Overhead ₹1,80,700 = ₹3,37,000. **Total cost of Process B = ₹7,87,000.**

**Step 2 — Calculate Normal Loss**

Normal Loss = 2% of Input = 2% × 45,000 = **900 units**. No scrap value is given for normal loss, so its monetary value = ₹NIL. Normal loss units are excluded from cost computation.

**Step 3 — Expected (Net) Output**

Expected Output = 45,000 − 900 = **44,100 units**.

**Step 4 — Cost Per Unit**

Cost per unit = (Total Cost − Scrap Value of Normal Loss) ÷ Expected Output = ₹7,87,000 ÷ 44,100 = **₹17.85 per unit** (rounded to two decimal places).

Since no actual output figure is separately stated, it is assumed that actual output equals expected output (44,100 units), implying no abnormal loss or abnormal gain.

**Step 5 — Process B Account (Format)**

| **Dr**                  | Units  | ₹        | **Cr**                   | Units  | ₹        |
|-------------------------|--------|----------|--------------------------|--------|----------|
| To Materials (Input)    | 45,000 | 4,50,000 | By Normal Loss           | 900    | —        |
| To Direct Material      | —      | 65,500   | By Output (Transfer)     | 44,100 | 7,87,000 |
| To Labour               | —      | 90,800   |                          |        |          |
| To Overhead             …

Question 4

You are required to prepare: (a) Statement of equivalent production; (b) Statement showing the cost of finished goods, abnormal loss and closing balance of work-in-progress; (c) Process B account and abnormal loss account.

Accepted Answer

**Note:** The numerical data for this question (units introduced, costs incurred, normal/actual loss, WIP details and degree of completion) appears to have been omitted from the question. The solution below provides the **complete methodology and proforma** that must be applied once the data is available — this covers the full exam technique for all three parts.

**Key Concepts**

**Equivalent Production (EP)** converts partially completed units into fully completed equivalents for each cost element (Material, Labour, Overhead). The method depends on whether **Normal Loss** or **Abnormal Loss/Gain** exists.

**Treatment of Losses in Process B:**
- **Normal Loss** — expected loss; its units are excluded from EP denominator. If normal loss units have any scrap value, it reduces process cost.
- **Abnormal Loss** — excess loss over normal; treated as a separate output at full equivalent cost. It bears its proportionate share of cost.
- **Closing WIP** — included in EP at its degree of completion for each element.

**(a) Statement of Equivalent Production**

Under the **FIFO method** (or Average Cost method as applicable), the EP statement shows:

| Particulars | Total Units | Material (%) | EP–Mat | Labour (%) | EP–Lab | Overhead (%) | EP–OH |
|---|---|---|---|---|---|---|---|
| Normal Output (Finished Goods) | XX | 100 | XX | 100 | XX | 100 | XX |
| Abnormal Loss | XX | 100 | XX | 100 | XX | 100 | XX |
| Closing WIP | XX | % given | XX | % given | XX | % given | XX |
| **Total E…

Question 5

The following information is provided by the DFS Limited for the year ending 31st March 2013:

Raw material storage period: 55 days
Work-in-progress conversion period: 18 days
Finished Goods storage period: 22 days
Debt collection period: 45 days
Creditors payment period: 60 days
Annual Operating cost: ₹ 21,00,000 (including depreciation of ₹ 2,10,000)
(1 year = 365 days)

You are required to calculate:
(i) Operating Cycle period.
(ii) Number of Operating Cycle in a year.
(iii) Amount of working capital required for the company on a cash cost basis.
(iv) The company is a market leader in its product, there is virtually no competition in the market. Based on a market research it is planning to discontinue sales on credit and deliver products based on pre-payments. Thereby, it can reduce its…

Accepted Answer

**Working Capital Management — DFS Limited (Year ending 31st March 2013)**

**Cash Operating Cost** = Annual Operating Cost − Depreciation = ₹21,00,000 − ₹2,10,000 = **₹18,90,000**

**(i) Operating Cycle Period**

Operating Cycle = Raw Material Storage Period + WIP Conversion Period + Finished Goods Storage Period + Debt Collection Period − Creditors Payment Period
= 55 + 18 + 22 + 45 − 60 = **80 days**

**(ii) Number of Operating Cycles in a Year**

Number of Operating Cycles = 365 ÷ Operating Cycle Period = 365 ÷ 80 = **4.5625 times (≈ 4.56 times)**

**(iii) Working Capital Required (Cash Cost Basis)**

Working Capital = (Cash Operating Cost × Operating Cycle) ÷ 365
= (₹18,90,000 × 80) ÷ 365
= **₹4,14,247 (approx.)**

Alternatively: Cash Operating Cost ÷ Number of Cycles = ₹18,90,000 ÷ 4.5625 = ₹4,14,247

**(iv) Reduction in Working Capital due to Switch to Pre-payment**

If credit sales are discontinued entirely (debt collection period = 0), the revised operating cycle becomes:
Revised Operating Cycle = 55 + 18 + 22 + 0 − 60 = **35 days**

Revised Working Capital = (₹18,90,000 × 35) ÷ 365 = **₹1,81,233 (approx.)**

**Reduction in Working Capital** = ₹4,14,247 − ₹1,81,233 = **₹2,33,014**

This reduction equals the working capital tied up in debtors: (₹18,90,000 ÷ 365) × 45 days = ₹2,33,014, confirming that eliminating the 45-day debt collection period directly frees up ₹2,33,014 of working capital.

Question 6

A company manufactures one main product (M) and two by-products (B₁ and B₂). For the month of January 2013, Total Cost upto Separation point ₹2,12,400 with the following details: Product M - Cost after separation ₹55,000, Units produced 4,000, Selling price per unit ₹100, Estimated net profit 20%, Estimated selling expenses 20%; Product B₁ - Cost after separation ₹24,000, Units produced 1,800, Selling price per unit ₹40, Estimated net profit 20%, Estimated selling expenses 15%; Product B₂ - Units produced 3,000, Selling price per unit ₹50, Estimated net profit 20%, Estimated selling expenses 15%. Prepare statement showing: (i) Allocation of joint cost; and (ii) Profitability and overall profitability of the company for January 2013.

Accepted Answer

**Joint Cost Allocation using Net Realisable Value (NRV) / Reversal Cost Method**

Since B₁ and B₂ are by-products, the joint cost allocated to them equals their **Net Realisable Value at the point of separation** (i.e., Sales Value less post-separation costs, selling expenses, and estimated profit). The balance of joint cost is borne by the main product M.

**Step 1 — NRV of By-products at Separation Point**

For **B₁**: Sales (1,800 × ₹40 = ₹72,000) less Selling Expenses (15% × ₹72,000 = ₹10,800) less Net Profit (20% × ₹72,000 = ₹14,400) less Cost after Separation (₹24,000) = **₹22,800** allocated from joint cost.

For **B₂**: Sales (3,000 × ₹50 = ₹1,50,000) less Selling Expenses (15% × ₹1,50,000 = ₹22,500) less Net Profit (20% × ₹1,50,000 = ₹30,000) less Cost after Separation (₹Nil) = **₹97,500** allocated from joint cost.

**Step 2 — Joint Cost to Main Product M**

Total joint cost = ₹2,12,400. Less: allocated to B₁ (₹22,800) and B₂ (₹97,500) = ₹1,20,300. **Joint cost allocated to M = ₹92,100.**

**(i) Statement of Joint Cost Allocation**

| Product | Joint Cost Allocated (₹) |
|---------|---------------------------|
| M (Main) | 92,100 |
| B₁ | 22,800 |
| B₂ | 97,500 |
| **Total** | **2,12,400** |

**(ii) Profitability Statement for January 2013**

| Particulars | M (₹) | B₁ (₹) | B₂ (₹) | Total (₹) |
|---|---|---|---|---|
| Sales | 4,00,000 | 72,000 | 1,50,000 | 6,22,000 |
| Less: Selling Expenses | (80,000) | (10,800) | (22,500) | (1,13,300) |
| Less: Cost after Separa…

Question 7

Cost of a product or service is required to be expressed in suitable cost unit. State the cost units for the following industries:
(i) Steel
(ii) Automobile
(iii) Transport
(iv) Power

Accepted Answer

A **cost unit** (or output unit) is the unit of measurement in relation to which the cost is computed. The appropriate cost unit differs by industry based on the nature of output and measurement feasibility.

**(i) Steel Industry**: The cost unit is **per tonne** (or per quintal/kg). Steel is a commodity product measured by weight, making weight-based measurement the most practical and relevant cost unit for costing purposes.

**(ii) Automobile Industry**: The cost unit is **per unit** or **per vehicle**. Since each automobile is a distinct, identifiable product with significant individual cost, the cost per finished vehicle is the appropriate cost unit.

**(iii) Transport Industry**: The cost unit is **per tonne-km** (for freight transport) or **per passenger-km** (for passenger transport). Since transport services are provided based on both distance travelled and weight/number of passengers, these distance-based units are most suitable for cost computation and pricing.

**(iv) Power Industry**: The cost unit is **per unit** or **per kWh** (kilowatt-hour). Electricity is generated and distributed in measurable units of energy (kilowatt-hours), making this the standardized cost unit for the power sector.

Question 8

Distinguish between cost allocation and cost absorption.

Accepted Answer

**Cost Allocation** is the process of identifying and assigning both direct and indirect costs to specific cost centers, cost objects, or units of production. It involves tracing costs using cost drivers and is a broad process encompassing allocation, apportionment, and absorption. Direct costs are allocated on a traceable basis, while indirect costs are allocated based on a fair and reasonable apportionment method.

**Cost Absorption** is the specific process of absorbing manufacturing overhead (indirect costs) into the cost of production units using a predetermined overhead absorption rate. It forms part of the cost allocation process and is necessary to arrive at the full/total cost of production under the absorption costing method.

**Key Distinctions:**

**Scope:** Cost allocation is a broader concept covering all methods of assigning costs, whereas cost absorption is narrower and specifically relates to overhead costs.

**Nature of Costs:** Cost allocation includes direct costs (directly traceable) and indirect costs. Cost absorption deals exclusively with indirect manufacturing overheads and fixed costs.

**Method:** Cost allocation may involve direct tracing or apportionment based on logical cost drivers. Cost absorption uses a predetermined overhead absorption rate calculated as: Absorption Rate = Estimated Overhead / Estimated Basis (units, labor hours, machine hours, etc.).

**Application:** Cost allocation is used to assign costs to various cost objects for costin…

Question 9

What is debt securitization? And also state its advantages.

Accepted Answer

**Debt securitization** is a structured finance process wherein illiquid debt obligations (such as loans, mortgages, receivables, bonds) are converted into tradable securities and sold to investors in the capital markets. The originator pools homogeneous debt assets, transfers them to a **Special Purpose Vehicle (SPV)**, which then issues securities backed by the cash flows generated from these underlying assets. Investors receive returns based on principal repayment and interest earned from the pooled debt portfolio.

**Key Advantages of Debt Securitization:**

**1. Liquidity Enhancement** – Converts illiquid assets into liquid, tradable securities, enabling originators to immediately realize value and improve working capital.

**2. Balance Sheet Optimization** – Removal of securitized assets from the balance sheet improves key financial ratios (debt-to-equity, ROA, ROE) and enhances apparent financial health.

**3. Reduced Funding Costs** – Provides access to capital markets at potentially lower yields than traditional borrowing, diversifying funding sources beyond bank credit.

**4. Capital Efficiency** – Frees up regulatory capital (especially for banks) that can be deployed for new lending and business expansion, improving capital adequacy ratios.

**5. Risk Transfer** – Shifts credit risk from the originator to investors, reducing overall risk exposure and concentration risk.

**6. Income Generation** – Originators earn servicing fees, underwriting commissions, and othe…

Question 10

Distinguish between factoring and bill-discounting.

Accepted Answer

**Factoring** and **bill-discounting** are both methods of accelerating cash inflows from receivables, but they differ significantly in their nature, scope, and risk allocation.

**Factoring** is a financial arrangement where a business sells its accounts receivable (invoices) to a specialized financial institution called a **factor** at a discount. The factor assumes the responsibility of collecting payments from the customer and bears the credit risk of non-payment (in non-recourse factoring). The business receives immediate cash, typically 70-80% of the invoice value, and the factor retains the balance minus its commission and interest charges. Factoring is a comprehensive service that often includes credit investigation of customers, maintenance of sales ledger, collection of receivables, and protection against bad debts. The relationship is established directly between the factor and the seller's customers.

**Bill-discounting** refers to the discounting of bills of exchange before their maturity date. A bill of exchange is a negotiable instrument containing an unconditional written order to pay a specified sum. The holder of the bill presents it to a bank or financial institution which discounts it by advancing the amount after deducting interest/discount charges. Critically, bill-discounting is a **recourse arrangement** — if the bill is dishonored on maturity, the discounter has the right to recover the amount from the drawer or endorser who presented the bill.

**Key…

Question 11

Pentex Limited has prepared an expense budget for 20,000 units in its factory for the year 2013 as detailed below:

Direct Materials: ₹ 50 per unit
Direct Labour: ₹ 20 per unit
Variable Overhead: ₹ 15 per unit
Direct Expenses: ₹ 6 per unit
Selling Expenses (20% fixed): ₹ 15 per unit
Factory Expenses (100% fixed): ₹ 7 per unit
Administration expenses (100% fixed): ₹ 8 per unit
Distribution expenses (85% variable): ₹ 12 per unit
Total: ₹ 129 per unit

Prepare an expense budget for the production of 15,000 units and 18,000 units.

Accepted Answer

**EXPENSE BUDGET FOR PENTEX LIMITED**

**Step 1 – Segregate Fixed and Variable Components (Base: 20,000 units)**

All purely variable items (Direct Materials ₹50, Direct Labour ₹20, Variable Overhead ₹15, Direct Expenses ₹6) remain the same per unit at all output levels.

**Selling Expenses** (₹15 × 20,000 = ₹3,00,000): Fixed = 20% = ₹60,000; Variable = 80% = ₹2,40,000 → ₹12 per unit variable.

**Factory Expenses** (₹7 × 20,000 = ₹1,40,000): 100% Fixed = ₹1,40,000.

**Administration Expenses** (₹8 × 20,000 = ₹1,60,000): 100% Fixed = ₹1,60,000.

**Distribution Expenses** (₹12 × 20,000 = ₹2,40,000): Variable = 85% = ₹2,04,000 → ₹10.20 per unit; Fixed = 15% = ₹36,000.

**Step 2 – Expense Budget (₹)**

| Expense Item | 15,000 Units | 18,000 Units | 20,000 Units |
|---|---|---|---|
| Direct Materials (₹50/unit) | 7,50,000 | 9,00,000 | 10,00,000 |
| Direct Labour (₹20/unit) | 3,00,000 | 3,60,000 | 4,00,000 |
| Variable Overhead (₹15/unit) | 2,25,000 | 2,70,000 | 3,00,000 |
| Direct Expenses (₹6/unit) | 90,000 | 1,08,000 | 1,20,000 |
| Selling Expenses (₹12 var + ₹60,000 fixed) | 2,40,000 | 2,76,000 | 3,00,000 |
| Factory Expenses (100% fixed) | 1,40,000 | 1,40,000 | 1,40,000 |
| Administration Expenses (100% fixed) | 1,60,000 | 1,60,000 | 1,60,000 |
| Distribution Expenses (₹10.20 var + ₹36,000 fixed) | 1,89,000 | 2,19,600 | 2,40,000 |
| **Total Cost** | **20,94,000** | **24,33,600** | **25,60,000** |
| **Cost per unit** | **₹139.60** | **₹135.20** | **₹129.00** |

Note: As output …

Question 12

PQR Company Ltd. is considering to select a machine out of two mutually exclusive machines. The company's cost of capital is 12 per cent and corporate tax rate is 30 per cent. Other information relating to both machines is as follows:

| Particulars | Machine-I | Machine-II |
|---|---|---|
| Cost of Machine | ₹ 15,00,000 | ₹ 20,00,000 |
| Expected Life | 5 Yrs. | 5 Yrs. |
| Annual Income (Before Tax and Depreciation) | ₹ 6,25,000 | ₹ 8,75,000 |

Depreciation is to be charged on straight line basis.

You are required to calculate:
(i) Discounted Pay Back Period
(ii) Net Present Value
(iii) Profitability Index

Accepted Answer

**Step 1: Calculation of Annual Cash Flow After Tax (CFAT)**

Depreciation is charged on Straight Line Method (SLM). CFAT = (Income Before Tax & Depreciation − Depreciation) × (1 − Tax Rate) + Depreciation

**Machine-I:**
Depreciation = ₹15,00,000 ÷ 5 = ₹3,00,000
EBT = ₹6,25,000 − ₹3,00,000 = ₹3,25,000
Tax @ 30% = ₹97,500
EAT = ₹2,27,500
CFAT = ₹2,27,500 + ₹3,00,000 = **₹5,27,500 per annum**

**Machine-II:**
Depreciation = ₹20,00,000 ÷ 5 = ₹4,00,000
EBT = ₹8,75,000 − ₹4,00,000 = ₹4,75,000
Tax @ 30% = ₹1,42,500
EAT = ₹3,32,500
CFAT = ₹3,32,500 + ₹4,00,000 = **₹7,32,500 per annum**

PV factors at 12%: Year 1 = 0.893, Year 2 = 0.797, Year 3 = 0.712, Year 4 = 0.636, Year 5 = 0.567; PVIFA(12%, 5) = 3.605

**(i) Discounted Payback Period (DPP)**

For **Machine-I** (Investment = ₹15,00,000): Cumulative DCF reaches ₹12,67,056 at end of Year 3 and ₹16,02,546 at end of Year 4. Remaining balance after Year 3 = ₹15,00,000 − ₹12,67,056 = ₹2,32,944. Fraction = ₹2,32,944 ÷ ₹3,35,490 = 0.694 years. **DPP (Machine-I) = 3.69 years**

For **Machine-II** (Investment = ₹20,00,000): Cumulative DCF reaches ₹17,59,466 at end of Year 3 and ₹22,25,336 at end of Year 4. Remaining balance after Year 3 = ₹20,00,000 − ₹17,59,466 = ₹2,40,534. Fraction = ₹2,40,534 ÷ ₹4,65,870 = 0.516 years. **DPP (Machine-II) = 3.52 years**

**(ii) Net Present Value (NPV)**

**Machine-I:** Total PV of CFAT = ₹5,27,500 × 3.605 = ₹19,01,638. NPV = ₹19,01,638 − ₹15,00,000 = **₹4,01,638**

**Machine-II:** Total PV of CFAT = ₹7,…

Question 13

Answer any four of the following:

Accepted Answer

**(a) Perpetual Inventory System — Bin Card, Stores Ledger, and Continuous Stock Taking**

The statement is **largely correct but requires qualification**. A **Perpetual Inventory System** aims to maintain a continuous record of stock movements so that the balance of each item is available at any point in time without waiting for a periodic physical count.

**Bin Card** is maintained in the stores department and records only quantities (receipts, issues, and balance) for each item stored in a particular bin. **Stores Ledger** is maintained by the cost accounts department and records both quantity and value, serving as a subsidiary ledger to the cost accounts. Together, they form the documentary backbone of the perpetual inventory system.

However, the **efficacy of the system critically depends on continuous stock taking** — a system of physical verification carried out throughout the year on a rotating basis, such that every item is physically counted at least once a year. Without continuous stock taking: (i) discrepancies arising from pilferage, evaporation, breakage, or clerical errors in bin cards/stores ledger would remain undetected; (ii) book balances would diverge from actual physical balances over time; (iii) the system would provide a false sense of accuracy. Continuous stock taking ensures that the book records are periodically reconciled with physical stock, errors are corrected promptly, and responsibility for discrepancies is fixed. Therefore, the Bin Card and S…

CA Inter Taxation

Drill 5 questions from this paper — instant grading

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Dr	Units	₹	Cr	Units	₹
To Materials (Input)	45,000	4,50,000	By Normal Loss	900	—
To Direct Material	—	65,500	By Output (Transfer)	44,100	7,87,000
To Labour	—	90,800
To Overhead	—	1,80,700
Total	45,000	7,87,000	Total	45,000	7,87,000