Test Series: March 2023 Mock Test Paper 1 Intermediate: Group - I Paper - 1: Accounting
Test Series: March 2023 Mock Test Paper 1 Intermediate: Group - I Paper - 1: Accounting
Test Series: March 2023 Mock Test Paper 1 Intermediate: Group - I Paper - 1: Accounting
The expected production for the year was 15,000 kg of the finished product. Due to fall in market
demand the sales price for the finished goods was ` 20 per kg and the replacement cost for the
raw material was ` 9.50 per kg on the closing day. You are required to calculate the closing
inventory as on that date.
(d) ABC Ltd. was making provision for non-moving inventories based on no issues for the last 12
months up to 31.3.2021.
The company wants to provide during the year ending 31.3.2022 based on technical evaluation:
Total value of inventory ` 100 lakhs
Provision required based on 12 months issue ` 3.5 lakhs
Provision required based on technical evaluation ` 2.5 lakhs
Does this amount to change in Accounting Policy? Can the company change the method of
provision? (4 parts x 5 Marks = 20 Marks)
2. (a) Sanket had 50,000 Equity shares of XYZ Ltd. on 01.01.2022 at a book value of ` 25 per share
(face value ` 10). On 01.06.2022, he purchased another 10,000 shares of the company at ` 20
per share.
The director of XYZ Ltd. announces a bonus and right issue. No dividend was payable on these
issues. The terms of the issue were as follows:
• Bonus basis 1:6 (Date: 16.08.2022)
• Right basis 3: 7 (Date: 31.08.2022) price `15 per share
• Due date for payment 30.09.2022
• Shareholders can transfer their rights in full or in part.
Accordingly, Sanket sold 33 1/3% of his entitlement in the market for consideration of ` 4 per
share on 31.08.2022 & he procured other entitlement by payment.
Dividends for the year ended 31.03.2022 at the rate of 20% were declared by XYZ Ltd. and
received by Sanket on 31.10.2022. Dividend amount for shares acquired by him on 01.06.2022
are to be adjusted against the cost of purchase.
On 15.11.2022, Sanket sold 25,000 equity shares at premium ` 12 per share.
You are required to prepare in books of Sanket.
(i) Investment Account
(ii) Profit & Loss Account (Extract for Investment)
Books of accounts are closed by Sanket on 31.12.2022 and market price of shares on that date is
` 20 per share.
(b) A fire occurred in the premises of M/s. Raxby & Co. on 30-06-2022. From the salvaged
accounting records, the following particulars were ascertained
`
Stock at cost as on 01-04-2021 1,20,000
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Working Notes:
(1) Bonus Shares = = 10,000 shares
Net transfers of finished goods by
Department X to Y = ` 6,12,500 – ` 1,57,500 = ` 4,55,000
Department Y to X = ` 6,75,000 – ` 1,44,000= ` 5,31,000
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Working Notes:
1. Fixed assets account
` `
To Balance b/d 7,500 By Bank (sale) 1,750
To Bank 5,000 By Loss on sale of fixed asset(2,500- 750
1,750)
By Depreciation (balancing figure) 1,000
_____ By Balance c/d 9,000
12,500 12,500
2. Bank account
` `
To Balance b/d (balancing figure) 62,500 By Creditors 2,80,000
To Debtors 3,40,000 By Expenses 49,250
To Capital 5,000 By Drawings 25,000
To Sale of fixed assets 1,750 By Fixed assets 5,000
_______ By Balance c/d 50,000
4,09,250 4,09,250
3. Debtors account
` `
To Balance b/d 1,02,500 By Bank 3,40,000
To Sales 3,25,000 By Balance c/d 87,500
125 (balancing figure)
(` 2,60,000 )
100 _______ _______
4,27,500 4,27,500
4. Creditors account
` `
To Bank 2,80,000 By Balance b/d (balancing figure) 53,500
To Balance c/d 46,000 By Purchases (from trading account) 2,72,500
3,26,000 3,26,000
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Working notes:
1. 75,000 x 5% x 5/12 = 1,563
2. 60,000 x 5% x 5/12 = 1,251
3. 60,375 – 1,251= 59,124
6 (a) According to AS 10 (Revised), these costs can be capitalised:
1. Cost of the plant ` 10,00,000
2. Initial delivery and handling costs ` 80,000
3. Cost of site preparation ` 2,40,000
4. Consultants’ fees `2,80,000
5. Estimated dismantling costs to be incurred after 7 years ` 1,20,000
` 17,20,000
Note: Operating losses before commercial production amounting to ` 1,60,000 are not
regarded as directly attributable costs and thus cannot be capitalized. They should be written
off to the Statement of Profit and Loss in the period they are incurred.
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(`)
Direct Material 60 per unit
Direct Wages 20 per unit
Variable Overheads 20 per unit
Direct Expenses 12 per unit
Factory Expenses (30% fixed) 16 per unit
Selling and Distribution Exp. (85% variable) 10 per unit
Office and Administrative Exp. (100% fixed) 6 per unit
The company anticipates that the variable costs will go up by 20% and fixed costs will go up by
10%.
You are required to prepare an Expense budget, based on marginal cost for the company at
50%,75% and 100% level of activity and find out the profits at respective levels. (10 Marks)
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PREPARE Process Accounts- X, Y and Z & calculate cost per ton at each process. (10 Marks)
.
(b) Ultra Builders Ltd. has started a contract on 1st April 2021. The Trial balance as on 31st March
2022 showed the following balances:
Particulars Dr. (`) Cr. (`)
Paid up share capital 2,05,75,000
Land and buildings 50,60,000
Machinery at cost (85% at site) 39,60,000
Cash and bank 33,000
Materials at cost 27,78,600
Creditors for materials 11,33,660
Direct wages 14,60,800
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(b) Nero Chemicals Ltd. operates a simple chemical process to convert material RV into three separate
items, such as T, U and V. All three end products are separated simultaneously at a single split-off
point, at which time Product T and Product U are ready for sale without additional costs. Product
V, however, is processed further before being sold. There is no available market price for V at the
split-off point.
The selling prices quoted here are expected to remain the same in the coming year.
During 2021-22, the selling prices of the items and the total units sold were:
T – 1,000 tons sold for ` 6,000 per ton
U – 2500 tons sold for ` 5,000 per ton
V – 3000 tons sold for ` 6,500 per ton
The total joint manufacturing costs for the year were `62,50,000. An additional `9,00,000 was
spent to finish product V.
There were no opening inventories of T, U or V at the end of the year. The following inventories of
complete units were on hand.
T - 900 tons
U - 300 Tons
V - 125 tons
There was no opening or closing work-in-progress.
Required:
COMPUTE the cost of inventories of T, U and V and cost of goods sold for year ended
March 31,2022, using Net realizable value (NRV) method of joint cost allocation. (10 Marks)
6. Answer any four of the following:
(a) STATE the advantages of Zero-based budgeting.
(b) DIFFERENTIATE between Cost Accounting and Management Accounting.
(c) “Is reconciliation of cost accounts and financial accounts necessary in case of integrated
accounting system?” EXPLAIN.
(d) DEFINE cost units? WRITE the cost unit basis against each of the following Industry/Product-
Automobile, Steel, Cement, Chemicals, Power and Transport.
(e) DISTINGUISH clearly between Bin cards and Stores Ledger. (4 × 5 =20 Marks)
2AO
1. (a) (i) Calculation of Economic Order Quantity (EOQ) =
C
2 x14,400 units x `212
= = 233 units
`450 x 25%
(ii) Evaluation of Profitability of Different Options of Order Quantity
(A) When EOQ is ordered (`)
Purchase Cost (14,400 units x Rs. 450) 64,80,000
Ordering Cost [(14,400 units/233 units) x Rs. 212] 13,102
Carrying Cost (233 units x 1/2 x 450 x 25%) 13,106
Total Cost 65,06,208
(B) When Quantity Discount of 8% is accepted
(`)
Purchase Cost (14,400 units x Rs. 414) 59,61,600
Ordering Cost [(14,400 units/5,000 units) x Rs212] 611
Carrying Cost (5,000 units x 1/2 x Rs.414 x 25%) 2,58,750
Total Cost 62,20,961
Advise – The total cost of inventory is lower if quantity discount is accepted.
The company would save Rs. 2,85,247 (Rs. 65,06,208 - Rs. 62,20,961).
Note: Figures may change slightly because of approximation and decimals)
Stardard hour (for actual production)
(b) (i) Efficiency Ratio = x 100
Actual hour works
1,20,000 units x12 hrs
= x 100 = 120%
12,00,000 hrs
Stardard Hour (for actual production)
(ii) Activity Ratio = x 100
Budgeted Hours
14,40,000
= x 100 = = 83.34%
1,44,000 units x12 hours
Actual Hours (worked)
(iii) Capacity Ratio = x100
Budgeted Hours
12,00,000 hrs
= x 100 = 69.45%
1,44,000 units x12 hours
Process Z Accounts
Amount
Particulars Tones Particulars Tones Amount (`)
(`)
To Process Y 611 18332.5 By Weight Loss 16 ---
To Materials 189 2,268 By Scrap 32 224
To Wages 2,540 By Warehouse 752 24,817
To Direct Expenses 1,900
Total 800 25,041 Total 800 25041
Cost per Ton = (25,041-224)/(800-16-32) = ` 33 per ton
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Particulars `
(a) Interest on Fixed Deposits with a company 5,000
(b) Income from specified mutual fund 3,000
(c) Interest on bank fixed deposits of a minor married daughter 3,000
(ix) Contribution to LIC towards premium under section 80CCC ` 1,00,000
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Make suitable assumptions, wherever necessary. All the conditions necessary for availing the ITC have
been fulfilled. Opening balance of the input tax credit for the relevant period is Nil. The annual return
for the previous financial year was filed on 15 th September of the current year. (8 Marks)
2. (a) State with reasons, whether GST is payable in the following independent cases: -
(i) Food supplied by the canteen run by a hospital to the in-patients as advised by the doctors.
(ii) An RWA in a housing society, registered under GST, collects the maintenance charges of
` 6,500 per month per member. (2 x 2 Marks = 4 Marks)
(b) M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in the
State of Karnataka. Its aggregate turnover in the preceding financial year by way of supply of
appliances is ` 120 lakh.
The firm also expects to provide repair and maintenance service of such appliances from the
current financial year.
With reference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section 10(1) and 10(2), for the
current financial year, as the turnover may include supply of both goods and services?
(ii) If yes, up to what amount, the services can be supplied? (6 Marks)
3. (a) Determine the effective date of registration in following cases:
(i) The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the applicable
threshold limit of ` 40 lakh on 1 st September. It submits the application for registration on
20th September. Registration certificate is granted to it on 25 th September.
(ii) Mehta Teleservices is an architect in Lucknow. Its aggregate turnover exceeds ` 20 lakh on
25th October. It submits the application for registration on 27 th November. Registration
certificate is granted to it on 5 th December. (2 x 3 Marks = 6 Marks)
(b) Udai Singh, a registered supplier, has received advance payment with respect to services to be
supplied to Sujamal. His accountant asked him to issue the receipt voucher with respect to such
services to be supplied. However, he is apprehensive as to what would happen in case a receipt
voucher is issued, but subsequently no services are supplied. You are required to advise Udai
Singh regarding the same. (4 Marks)
4. (a) A registered person must pay to the supplier, the value of the goods and/or services along with the
tax within 180 days from the date of issue of invoice. State the exceptions to said rule. (3 Marks)
(b) The goods supplied on hire purchase basis will be treated as supply of services. Examine the
validity of the statement. (2 Marks)
(c) Briefly elaborate the provisions relating to nil GSTR-3B. (5 Marks)
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As per section 2(41)
1
2Actual rent received has been taken as the gross annual the value in absence of other information (i.e. Municipal
value, fair rental value and standard rent) in the question.
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Notes:
(1) Computation of indexed cost of acquisition
Particulars Amount (`) Amount (`)
Cost of acquisition, 10,70,000
Being the higher of
(i) lower of Fair market value i.e., ` 11,85,000 and 10,70,000
Stamp duty value i.e., ` 10,70,000, on April 1,
2001
(ii) Actual cost of acquisition (` 3,24,000 + ` 35,000, 3,59,000
being stamp duty @10% of ` 3,50,000
Less: Advance money taken from Mr. Mohan and
forfeited 1,11,000
Cost of acquisition for indexation 9,59,000
Indexed cost of acquisition (` 9,59,000 x 331/100) 31,74,290
Note: Under Rule 3(7)(viii), while calculating the perquisite value of benefit to the employee arising
from the transfer of any movable asset, the normal wear and tear is to be calculated in respect of each
completed year during which the asset was put to use by the employer. In the given case the third
year of use of car is completed on 15.7.2022 whereas the car was sold to the employee on 14.7.2022.
The solution worked out above provides for wear and tear for only two years.
4. (a) Computation of total income of Mr. Rakesh for A.Y.2023-24
Particulars ` `
Salary from XYZ (P) Ltd. 5,25,000
Less: Standard Deduction u/s 16(ia) 50,000 4,75,000
Income from house property
Income from let out house property 1,20,000
Less: Loss from self-occupied house property to the extent of
` 2 lakhs, allowable as deduction u/s 24(b) in respect of interest on
borrowings 2,00,000
(80,000)
Profits and gains from business or profession
Profit from speculation business Y 45,000
Less: Loss of ` 85,000 from speculation business X set-off against
profit from speculation business Y to the extent of such profit (45,000) Nil
(b) As per section 27(i), an individual who transfers otherwise than for adequate consideration any
house property to his spouse, not being a transfer in connection with an agreement to live apart,
shall be deemed to be the owner of the house property so transferred.
Therefore, in this case, Mr. Om would be the deemed owner of the house property transferred to
his wife Mrs. Uma without consideration.
As per section 64(1)(vi), income arising to the son’s wife from assets transferred, directly or
indirectly, to her by an individual otherwise than for adequate consideration would be included in
the total income of such individual.
Income from let-out property is ` 2,10,000 [i.e., ` 3,00,000, being the actual rent calculated at
` 25,000 per month less ` 90,000, being deduction under section 24@30% of ` 3,00,000]
In this case, income of ` 2,10,000 from let-out property arising to Mrs. Pallavi, being Mr. Om’s
son’s wife, would be included in the income of Mr. Om, applying the provisions of section 27(i)
and section 64(1)(vi). Such income would, therefore, not be taxable in the hands of Mrs. Pallavi.
In case the property was gifted to Mr. Om’s son, the clubbing provisions under section 64 would
not apply, since the son is not a minor child. Therefore, the income of ` 2,10,000 from letting out
of property gifted to the son would be taxable in the hands of the son.
It may be noted that the provisions of section 56(2)(x) would not be attracted in the hands of the
recipient of house property, since the receipt of property in each case was from a “relative” of
such individual. Therefore, the stamp duty value of house property would not be chargeable to
tax in the hands of the recipient of immovable property, even though the house property was
received by her or him without consideration.
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Computation of GST payable on outward supply made by M/s. Flo Pro for the month of July
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Working note – 2
Computation of ITC available with M/s Flow Pro for the month of July
S. Inward supplies ITC (`)
No.
(i) Inputs ‘A’ 90,000
[ITC cannot be taken on missing invoice. The registered person should have
the invoice in its possession to claim ITC.]
(ii) Inputs ‘B’ Nil
[When inputs are received in lots, ITC can be availed only on receipt of last
lot.]
(iii) Capital goods Nil
[Input tax paid on capital goods cannot be availed as ITC, if depreciation has
been claimed on such tax component.]
(iv) Input services 1,75,000
[ITC on an invoice cannot be availed after 30th November following the end of
financial year to which such invoice pertains or the date of filing annual return,
whichever is earlier.
Since the annual return for the previous financial year has been filed on 15 th
September, ITC on the invoice pertaining to previous financial year cannot be
availed after 15 th September.]
Total ITC (IGST) 2,65,000
Note - CGST @ 9% and SGST @ 9% are payable on the outward supplies since they are intra-State
supplies and IGST @ 18% is payable on the inward supplies since they are inter-State supplies.
2. (a) (i) Services by way of health care services by a clinical establishment, an authorised medical
practitioner or para-medics are exempt from GST. Food supplied to the in-patients by a
canteen run by the hospital, as advised by the doctor/nutritionists, is a par t of composite
supply of healthcare and not separately taxable. Thus, said services are exempt from GST.
(ii) Supply of service by a RWA (unincorporated body or a non-profit entity registered under any
law) to its own members by way of reimbursement of charges or share of contribution up to
an amount of ` 7500 per month per member for providing services and goods for the common
use of its members in a housing society/a residential complex are exempt from GST. Hence,
in the given case, services provided by the RWA are exempt from GST since the maintenance
charges collected per month per member do not exceed ` 7500.
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