PROGRAMME Master of Commerce (MCom)
SEMESTER I
COURSE CODE & NAME DCM 6106- FINANCIAL ACCOUNTING & REPORTING
Section A
Multiple Choice Questions (2 Marks each)
[Please answer all the questions]
1. The disclosure convention requires:
a) Full disclosure of all material facts that can affect the financial statement.
b) That profit should be realized.
c) Matching of incomes and expenses for a particular period.
d) The business to avoid being dissolved in the near future.
2. Accounting standard in India are issued by
(a) Government of India
(b) Reserve Bank of India
(c) The Institute of Chartered Accountants of India
(d) The Institute of Accounting Standard of India
3. The fundamental qualitative characteristics of useful financial information are:
a) Comparability and relevance
b) Relevance and reliability
c) Relevance and faithful representation
d) Comparability, relevance and faithful representation
4. Holding company holds more than …………. voting power in subsidiary company.
a) 25%
b) 40%
c) 50%
d) 75%
5. Which of the bodies listed below is responsible for issuing International Financial Reporting Standards
and guidance on their application?
a) IFRS Interpretations Committee
b) International Accounting Standards Board
c) IFRS Advisory Council
d) IFRS Foundation
6. A financial statement that summarizes company revenue and expenses is?
a) Balance sheet
b) Statement of owner equity
c) Income statement
d) Cash flow statement
7. Pre-acquisition profit in subsidiary company is considered as
a) Revenue Profit
b) Capital Profit
c) Good will
d) Extra-ordinary profit
8. Which of the following is not a consideration in selection of accounting policies?
a) Prudence
b) Substance over form
c) Materiality
d) Full disclosure
9. Which of the following could be an indication that an asset may be impaired according to IAS 36
Impairment of Assets?
a) Stagnancy of assets
b) Increase in market value of assets
c) Damaged caused to assets
d) No change on asset value
10. If part, or all, of a grant becomes repayable to the government then
a) The firm should use that amount to set up a subsidiary.
b) An amount equal to repayment should be charged to statement of profit or loss.
c) The repayment should first be matched against any remaining deferred income relating to the grant.
d) The repayment should first be shown as an expense.
Section B
SHORT ANSWERS (5 Marks each)
[Please answer Any Four questions in a separate page answer sheet]
1. List the advantages and limitations of Financial Accounting?
2. What are the elements of Financial Statements?
3. How to assess an asset for impairment?
4. According to IFRS 2, what are the measurement guidelines for share-based payment?
5. On July 01, 2015, Ashok Ltd. purchased a machine for ₹ 1,08,000 and spent ₹ 12,000 on its installation. At
the time of purchase, it was estimated that the effective commercial life of the machine will be 12 years
and after 12 years its salvage value will be ₹ 12,000. Prepare machine account in the books of Ashok Ltd.
for first three years, if depreciation is written off according to straight line method.
6. Explain the procedure for integrated reporting.
Section C
LONG ANSWERS (10 Marks each)
[Please answer Any Three questions in a separate page answer sheet ]
1. What do you understand by the expression “consolidation of financial statements”? State the
advantages and disadvantages of consolidation of financial statements.
2. Silver Ore Co. Ltd was formed on 1st April 2020 with an authorized capital of Rs.600000 in
shares of Rs.10 each. Of these, 52000 shares had been issued and subscribed but there were
calls in arrears on 100 shares. From the following Trial balance as on 31st March 2021, prepare
Income statement and Balance sheet as on that date
Particulars Dr. Amt Rs. Cr. Amt Rs.
Cash at Bank 105500
Share Capital 519750
Plant 40000
Sale of Silver 179500
Mines 220000
Promotional Expenses 6000
Interest on Fixed deposit 3900
Dividend on investment less 22% tax 3200
Royalties paid 10000
Railway track and wagons 17000
Wages of Miners 74220
Advertising 5000
Carriage on Plant 1800
Furniture & Buildings 20900
Administrative Expenses 28000
Repairs 900
Coal & Oil 6500
Cash 530
Investments in shares of tin mines 80000
Brokerage on Purchase of Shares in Tin Mines 1000
6% Fixed deposit on syndicate bank 89000
Total 706350 706350
Additional Information: -
Depreciate Plant & Railway Track and wagons by 10%, Furniture and Building by 5%. Value of silver
on 31st March 2021 was Rs. 15000. On 10th December 2020 the directors forfeited 100 shares of
which only Rs.7.50 per share had been paid. Provide Income Tax Rs.2000 Earnings per share not be
calculated.
3. According to IFRS 2, what are the measurement guidelines for share-based payment?
4. From the two Balance sheets of H ltd. And S Ltd. Prepare a consolidate balance sheet.
Note
Particulars No. H Ltd. S Ltd.
I. Equity and Liabilities
1) Shareholders Funds:
a) Share Capital- Equity share of Rs.10 each 120000 30000
b) Reserves & Surplus- General Reserve 25000 6000
Profit & Loss Account 12000 9000
2) Share Application Money pending allotment:
3) Non-Current Liabilities:
4) Current Liabilities:
a) Short-Term borrowings
b) Trade Payables- Creditors 15000 5000
Total 172000 50000
II. Assets:
1) Non-Current Assets:
a) Fixed assets
i) Tangible assets
Building at Cost 72000 25000
Plant & Machinery (Net) 30000 10000
b) Non-Current Investments- 2000 Equity shares of S
Ltd. of Rs.10 each 25000
2. Current Assets:
a) Current Investments
b) Inventories- Stock 18000 3000
c) Trade Receivables-Debtors 22000 7000
d) cash & cash equivalents- Bank 5000 5000
Total 172000 50000
When H Ltd. Acquired 2000 shares in S Ltd., the latter company had reserves amounting to
Rs.5000- none of which has been distributed since then.
