MTP_Intermediate_Syllabus 2016_Dec2023_Set1

PAPER 12 - COMPANY ACCOUNTS & AUDIT

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PAPER 12 - COMPANY ACCOUNTS & AUDIT
Full Marks: 100 Time allowed: 3 hours
Section – A (Company Accounts)
Answer Question No. 1 and any three from Question Nos. 2, 3, 4 and 5.
1. (a) Choose the correct answer from the given four alternatives: [6x1=6]
(i) Segment Reporting is covered under
a. AS 16
b. AS 17
c. AS 18
d. AS 19
(ii) Balance of Interest Accrued on Security Deposit A/c of an Electricity
company should be shown
a. under Current Liability.
b. under Non-current Liability.
c. under Current Asset.
d. under Non-current Asset.
(iii) Which of the following items is not a part of cash flow from operating
activities?
a. Collection from customers
b. Payment of outstanding wages
c. Payment to suppliers of machinery
d. Advances to foreign suppliers for raw materials
(iv) Provision is created for
a. Unknown Liability
b. Known Liability
c. Creation of secret reserve
d. None
(v) Transfer to capital redemption reserve account is not allowed from this
profit:
a. General reserve
b. Reserve fund
c. Dividend equalisation fund
d. Forfeited shares account
(vi) Which of the following is not a mandatory financial statement of a General
Insurance Company as per IRDA regulations?
a. Revenue Account
b. Profit and Loss Account
c. Balance Sheet
d. Fund Flow Statement

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(b) Match the following items in Column 'A' with items shown in Column 'B':[1×4=4]
Column 'A' Column 'B'
1. Accounting for Government Grant A. Capital Redemption Reserve
2. Redemption of Debentures B. AS 15
3. Un-guaranteed Residual Value (GRV) C. AS 12
4. Defined benefit plans D. AS 19

(c) State whether the following statements are True or False: 1x4=4
(i) Except as provided in section 54, a company shall not issue shares at a
premium.
(ii) „Marked‟ applications are those applications which bear the stamp of an
underwriter.
(iii) Interest received by a finance company is a part of cash flow from investing
activities.
(iv) Schedule III deals only with presentation and disclosure requirements.

2. (a) A Ltd. with a Capital of `10 Lakhs divided into Equity Shares of `10 each places
its entire issue on the market and the whole issue has been underwritten as follows
Name of Underwriter S P G M N SA
Number of Shares 30,000 35,000 10,000 15,000 2,000 8,000
All marked forms are to go in relief of the liabilities of the underwriter whose
name they bear. The share underwritten “Firm” are also to be set off against the
liabilities of the underwriters. The application received in Marked Forms is as
follows:
Name of Underwriter S P G M N SA
Number of Shares 25,000 23,500 5,500 1,000 1,000 2,000

Applications for 20,000 Equity Shares are received on Unmarked Forms. In

addition, there is a Firm Underwriting by the Underwriters as under
Name of Underwriter S P G M N SA
Number of Shares 500 1,500 7,000 3,000 1,000 4,000

Calculate the liability of the individual underwriters. [8]

(b) Information relating to five segments of V Ltd. is as under: (` in lakhs)

Segments A B C D E Total
Segment Revenue 100 300 200 100 300 1,000
Segment Result 40 (60) 90 10 (30) 50
Segment Assets 45 55 140 20 40 300
As a cost accountant of this company management wishes to know from you

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which company need to be reported. [4]
3. (a) From the following ledger balances calculate interest earned and interest
expended as per Schedule 13 and 15 respectively (Figure being in thousand of `)
Particulars Amount Particulars Amount
Interest on Term Loans 1,540 Discount on Bills Discounted 200
Interest on Fixed Deposits 1,000 Interest and Dividend on 840
Investments
Interest on Recurring 500 Interest accrued on 40
Deposits Investments
Interest on Saving Bank 600 Interest on balances with RBI 100
Deposits
Interest on Cash Credits 1,820 Interest on Money at call 50
Interest on Borrowings 620 Interest on overdrafts 750

Additional Information:
(i) Interest on NPA is as follows:
Particulars Earned Collected
`000 `000
Term Loans 750 250
Cash Credits 820 400
Overdrafts 450 100

(ii) Rebate on Bills Discounted: Opening Balance `75, Closing Balance `125. [7]

(b) From the following information calculate Cash flow from Operating Activities:
Particulars Closing Opening
Trade Payables 1,65,000 40,000
Intangible Assets (Goodwill) 21,000 10,000
Inventories 1,69,000 54,000
Trade Receivables 3,76,000 4,06,000

During the year, the business of Y Ltd. was purchased for `60,000 payable in fully

paid equity shares of `10 each at 20% premium. The assets included Inventories

`15,000. Trade Receivables `10,000 and machine `30,000. Trade payables of

`15,000 were also taken over. Net Profit before tax for the year was `7,98,000. Tax

paid during the year `10,000. [5]

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A. Net Cash Flow from Operating Activities before tax 8,57,000
B. Less: Tax paid (10,000)
C. Net Cash Inflow From Operating Activities after Tax 8,47,000

4. A Ltd. was formed on 01.04.2022 with an authorized capital of 6,00,000 in shares of `10
each. Of these 52,000 shares had been issued and subscribed but there were calls-in
arrears on 100 shares. From the following Trial Balance as on 31.03.2023 prepare Profit
and Loss A/c and Balance Sheet.
Particulars ` `
Cash at Bank 1,05,500 -
Share Capital - 5,19,750
Plant 40,000 -
Sale of Silver - 17,950
Mines 2,20,000 -
Promotion Interest on Deposit upto Dec 31st 6,000 -
Interest on Deposit upto Dec 31st - 3,900
Dividend on Investment - 3,200
Royalty paid 10,000 -
Trucks & Wagons 17,000 -
Wages 74,220 -
Advertising 5,000 -
Carriage on plant 1,800 -
Furniture & Buildings 20,900 -
Administrative Expenses 28,000 -
Repairs to Factory Plant 900 -
Coal & oil 6,500 -
Cash 530 -
Investment in Shares 80,000 -
Brokerage on above shares 1,000 -
6% F.D. in Bank 01.04.2012 89,000 -
7,06,350 7,06,350

Depreciate Plant & railway wagons by 10%, Furniture & Buildings by 5%. Write off
one-third of the promotion expenses. Value of Silver as on 31.03.2023 was `15,000. The

directors forfeited on December 10th 2022 100 shares of which only `7.50 had been
paid. [12]

5. Write short note (any three): [3×4=12]

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(a) Central Electricity Regulatory Commission (CERC);
(b) Follow on public offer;
(c) Disclosure requirement as per AS 11;
(d) Advantages of buy-back.

Section – B (Auditing)
Answer Question No. 6 and any three from Question Nos. 7, 8, 9 and 10.

6. (a) Choose the correct answer from the given four alternatives: [6x1=6]

(i) The most comprehensive type of audit is the ______________ system audit,
which examines suitability and effectiveness of the system as a whole.
a. Quantity
b. Quality
c. Preliminary
d. Sequentia

(ii) SA 300 stands for

a. Audit Planning‟
b. Audit Sampling
c. Audit Documentation
d. None of these

(iii) Internal Control Questionnaire contains the questions need to be followed by

the-
a. Employer of the organisation
b. Employee of the organsation
c. Auditor of the entity
d. Banker to the organsation

(iv) Secretarial Audit is covered under section:

a. 204
b. 148
c. 139
d. None of the above

(v) Remuneration of auditors is covered under Section ____________ of

Companies Act, 2013.
a. 142
b. 148
c. 139

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d. None of the above
(vi) CAATS stands for
a. Cornwall Air Ambulance Trust
b. Children Air Ambulance Trust
c. Center for alternatives to Animal Testing
d. Computer Assisted Auditing Techniques

(b) Match the following: [4×1=4]

Column ‘A’ Column ‘B’

Cost Audit report by the Auditor
1. Statutory Audit A.
to Company
2. CRA 3 B. Cost Audit
3. Independent Directors C. Tax Audit
4. Sec 148 of the companies Act D. Audit Committee

(c) State whether the following statements are True (or) False. [4×1=4]
(i) An audit report should have a proper title.
(ii) Auditor has right to disclose the client information to a third party.
(iii) An in depth examination to detect a suspected fraud is termed as
Investigation.
(iv) CRA-2 is used to intimate the appointment of Cost Auditor to the Central
Government

Answer any three questions out of the following four questions [3×12=36]

7. (a) List down the needs for Audit Evidence.

(b) State the objectives of Internal Control. [5+7 = 12]

8. (a) Analyses the reporting requirement of frauds by an Auditor. [5]

(b) State the matters relating to the removal, resignation of auditor and giving of
special notice as per section 140 of the companies Act 2013. [7]

9. (a) Who can conduct the secretarial audit and which company have to undergo such?
[5]
(b) Distinguish between clean audit report and qualified audit report. [7]

10. Write short note (any three): [3×4=12]

(a) Joint Audit and its advantages;
(b) Fixed Assets Audit
(c) Audit of trusts.
(d) Statutory Audit vs. Internal Audit.

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