Paper 5- Financial Accounting – MTP CMA Intermediate Group 1

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Model Test Paper 5 CMA Inter. Syllabus 2016

Paper 5 – Financial  Accounting

Full Marks :100                                                                    Time allowed: 3 hours

The figures in the margin on the right side indicate full marks.
This question paper has two sections.
Both the sections are to be answered subject to instructions given against each.

Section A

1. Answer the following questions

(a) Multiple choice questions:                                   [10×1=10]

(i) Excess of hire purchase price over cash price is known as

(a) Installment

(b) Cash down payment

(c) Interest

(d) Capital value of asset

(ii) Creditors ledger adjustment account is opened in

(a) General Ledger

(b) Debtors Ledger

(c) Creditors Ledger

(d) Either (B) or (C)

(iii)Which of the following is/are revenue expenditure?

(a) Consumable Stores

(b) Taxes and legal expenses

(c) Rent of factory building

(d) All of Above

(iv) AS-9 is related to

(a) Revenue Recognition

(b) Cash Flow Statement

(c) Accounting for Fixed Assets

(d) Disclosure of Accounting policies

(v) The person to whom bill is endorsed is known as __________.

(a) Endorsee

(b) Drawee

(c) Drawer

(d) None of the above

(vi) Ground rent or Surface rent means

(a) (a)Maximum rent

(b) Excess workings

(c) Short workings

(d) None of the above

(vii) The following account has a credit balance

(a) Plant and Equipment A/c

(b) Loans A/c

(c) Purchase A/c

(d) None of the above

(viii) Which of the following is/are feature/features of Income and Expenditure Account

(a) It follows Nominal Account

(b) All Capital incomes and expenditures are excluded

(c) Profit on sale of asset is credited

(d) All of the above

(ix) The debts which are not bad is known as

(a) Good debt

(b) Bad Debt

(c) Doubtful Debt

(d) None of the above

(x)Accounting standards in India are issued by

(a) Comptroller and Auditor general of India

(b) Reserve bank of India

(c) The Institute of Accounting standards of India

(d) The Institute of Chartered Accountants of India

(b)  Match the following:                                                             [5×1=5]

Column ‘A’ Column ‘B’
1. GAAP A Encourages prompt payment by the


2. Cash receipt voucher B Amount owed by business to others
3. Capital Receipt C Generally Accepted Accounting


4. Liabilities D Denotes receipt of cash
5. Cash Discount E It is non-recurring in nature


 (c) Fill in the blanks:                                                                   [5×1=5]

(i) The amount invested by owners into business is called ___________.

(ii) As per _________ _________ concept business is assumed to exist for an indefinite period .

(iii) __________ __________ Cash Book has one amount column on each side.

(iv) In case of departmental accounting each department is considered to be an __________ Centre.

(v) _________ accounting package can suitably match with the organisational structure of the company.

(d) State whether the following statements are true or false:   [5×1=5]

(i) In case of Hire Purchase ownership passes at the time of sale.

(ii) Minimum rent is also called dead rent or fixed rent.

(iii) Revenue expenditure is the outflow of funds to acquire an asset that will benefit the business for not more than one accounting period.

(iv) Dishonour of a Bill means that the acceptor refuses to honour his commitment on due date and payment of the bill on presentation does not take place.

(v) Independent Branches maintain independent accounting records.

Section – B

Answer any five from the following. Each question carries 15 marks (5×15=75)

2. (a) On 1st April, 2014, Om Ltd. purchased a machine for Rs.66,000 and spent Rs. 5,000 on

shipping and forwarding charges, Rs. 7,000 as import duty, Rs. 1,000 for carriage and installation, Rs. 500 as brokerage and Rs. 500 for an iron pad. It was estimated that the machine will have a scrap value of Rs. 5,000 at the end of its useful life which is 15 years.

On 1st January, 2015 repairs and renewals of Rs. 3,000 were carried out. On 1st October,

2016 this machine was sold for Rs. 50,000. Prepare Machinery Account for the 3 years  [7]

(b) VISHAN for mutual accommodation of TITHAN and himself drew upon the latter a three

months bill for Rs. 24,000 on 1st July, 2015, which was duly accepted. Vishan discounted the bill at 6% p.a. on 4th July, 2015 and remitted ½ of the proceeds to Tithan.

On 1st August, 2015, Tithan drew and Vishan accepted a bill at 3 months for Rs. 9,600. On 4th August, 2015, Tithan discounted the bill at 6% p.a. and remitted half the proceeds to Vishan. At maturity Vishan met his acceptance, but Tithan failed to meet his and Vishan had to take up. Vishan drew and Tithan accepted a new bill at two months on 4th November, 2015, for the amount due to Vishan plus Rs. 200 as interest. On 1st January, 2016,

Tithan became insolvent and a first and final dividend of 40 paises in the rupee was received from his estate on 31st March, 2016.

Note: Days of grace for discounting purposes may be ignored.


Pass the necessary Journal Entries in the Books of VISHAN.                                 [3+5=8]

3. The Income & Expenditure Account of Jayashree Sangha Club for the year ended

31.12.2015 as given below:

Expenditure Rs. Income Rs.
To Salaries 20,500 By Subscription 52,000
To Newspaper 1,500 By Sale of Newspaper 2,500
To Audit Fees 2,500 By Admission Fees 12,000
To General Expenses 22,000 By Donation 15,000
To Printing & Stationery 7,500 By Miscellaneous Income 500
To Travelling Expenses 2,000
To Rent 3,500
To Depreciation of Furniture 2,500
To Surplus 20,000
82,000 82,000


The following is the Balance Sheet of the Club as on 31.12.2014

Liabilities Amount (Rs.) Assets Amount (Rs.)
Outstanding salary 2,000 Furniture 15,000
Subscription received in advance 2,500 Sports equipment 20,000
Accumulated fund 45,500 Accrued Subscription 5,000
Cash at Bank 10,000
50,000 50,000


Prepare Receipts & Payments Account for the year ended 31.12.2015 taking into account

the following adjustments:

(i) Subscription received in advance Rs. 1,500

(ii) Salary due for Rs. 1,500 but not paid for the year

(iii) 60% of the admission fee to be capitalized

(iv) Subscription due for 2015 but not received ` 3,000.                                       [15]

4. P, Q, R and T have been carrying on business in partnership sharing profits and losses in the ratio of 4:1:2:3. The following is their Balance Sheet as on 31st March, 2016

Capital Accounts: Premises 2,80,000
P 7,00,000 Furnitures 30,000
T 3,00,000 10,00,000 Stock-in-Trade 2,00,000
Trade Creditors 3,00,000 Trade Debtors 3,50,000
Less: Provision for Bad Debts 50,000 3,00,000
Cash at Bank 1,40,000
Capital Accounts:
Q 2,00,000
R 1,50,000 3,50,000
13,00,000 13,00,000


It has been agreed to dissolve the partnership on 1st April, 2016, on basis of following

points agreed upon:

(i) P is to take over Trade Debtors at 80% of Book Value (Rs. 3,50,000);

(ii) T is to take over the stock in Trade at 95% of the value; and

(iii) R is to discharge Trade Creditors.

(iv) The realisation is : Premises Rs. 2,75,000 and Furnitures Rs. 25,000.

(v) The expenses of realisation come to Rs. 30,000.

(vi) Q is found insolvent and Rs. 21,900 is realised from his estate.

Note: The loss arising out of capital deficiency may be distributed following decision in

Garner vs. Murray.

You are required to Prepare:

(a) Realisation Account

(b) Bank/Cash Account

c)  Capital Accounts of the Partners.                                                           [5+4+5+1=15]

5. (a) A Delhi head office passes one entry at the end of each month to adjust the position arising out of inter-branch transactions during the month. From the following inter- branch transactions in March 2017, make the entries in the books of Delhi Head office.

(a) Kolkata Branch :

(i) Received goods from Patna branch Rs. 18,000 and Ahmedabad branch Rs. 12,000.

(ii) Sent goods to Ahmedabad branch Rs. 30,000 and Patna branch Rs. 24,000.

(iii) Sent acceptances to Patna branch Rs. 12,000 and Ahmedabad branch Rs. 6,000.

(b) Kanpur branch [apart from (a) above] :

(i) Sent goods to Ahmedabad branch Rs. 18,000.

(ii) Recived B/R from Ahmedabad branch Rs. 18,000.

(iii) Recived cash from Ahmedabad branch Rs. 10,000.                                                 [7]

(b) The following details are extracted from the records of M/S BANDHAN & CO, a trader for the year ended March 31, 2016.

(i) Total sales amounted to Rs. 1,80,000 including the sale of old Xerox Machine for Rs. 4,800 (Book value Rs. 8,000). The total Cash sales were 20% of the total Credit sales.

(ii) Collections from debtors amounted to 70% of the aggregate of the opening debtors and Credit sales for the period. Debtors were allowed a cash discount of ` 20,000.

(iii) Bills Receivable drawn during the three months totalled Rs. 30,000 of which bills amounting to Rs. 10,000 were endorsed in favour of suppliers. Out of the endorsed Bills, one bill for Rs. 6,000 was dishonoured for non-payment as the party became insolvent, his estate realised nothing.

(iv) Cheques received from customers Rs. 8,000 were dishonoured, a sum of Rs. 2,000 was irrecoverable. Bad Debt written off in the earlier years was realised Rs. 11,000.

(v) Sundry Debtors as on 01.04.2015 stood of Rs. 50,000.

You are required to draw up the Debtors Ledger Adjustment Account in the General Ledger.                                                                                                                      [8]

6. (a) X Ltd. has taken out a fire policy of Rs. 3,20,000 covering its stock. A fire occurred on 31st March, 2017. The following particulars are available :


Stock as on 31.12.2016                                                                   1,20,000

Purchases to the date of fire                                                         5,20,000

Sales to the date of fire                                                                   3,60,000

Carriage Inwards                                                                             3,200

Commission on purchase to be paid                                           @2%

You are asked to ascertain (i) total loss of stock; (ii) amount of claim to be made against the Insurance Company assuming that the policy was subject to average clause. Stock salvage amounted to Rs. 82,720.                                                                                                   [6]

(b) A Ltd. obtained from P.P Ltd. a lease of some coal-bearing land, the terms being a royalty of Rs. 15 per ton of coal raised subject to a minimum rent of Rs. 75,000 p.a. with a right of recoupment of short-working over the first four years of the lease. From the following details, show (i) Short-working Account and (ii) Royalty Account in the books of A Ltd.                                                                                                                            [9]

Year Sales (Tons)


Closing Stock (Tons)


















  1. (a) Calculate the contract revenue from the following details

Particulars                                                                       Year I                     Year II          Year III

Initial contract revenue                                                6,000                     6,000                    6,000

Revenue increase due to escalation in IInd year     ____                     12,00               ___

Claim                                                                                                                                         600

Incentive Payment                                                                                                                  900

Penalties                                                                                                            300                 ___

(b) Discuss disadvantages of Pre-packaged Accounting Software.                           [8]

8. Write short notes on any three of the following:                               [3×5=15]

(a) Difference between Sale and Consignment;

(b) Difference between Capital and Revenue Expenditure;

(c) Difference between Cash Basis and Accrual Basis of Accounting;

(d) Internal causes of depreciation.