CapitolHillCollege

Teku, Kathmandu
Pre-Board Examination-2079
Subject: Financial Accounting and Analysis (MGT.211)
Level: BBS/I Year/MGMT Full Marks: 100
Time: 3 hours Pass Marks: 40

Candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.
Attempt ALL questions.
Brief Answer Questions: [10 ×2=20]
1. What is business entity concept of accounting
2. Write about the cash basis of accounting.
3. What are the importance of internal control to a business?
4. Write down the meaning of contingent liabilities.
5. What is long-lived assets?
6. On january1, Ramsharan company borrowed Rs.100,000 from bank by
signing a 3-month,12% notes payable. It paid the principal and interest at
due date.
Required: Journal entries for issue and retirement of note.
7. The balance sheet of shree Ram company for two years are given below:

Assets Year 1 Year 2

Fixed assets 1,090,000 1,630,000
A plant costing Rs.40,000 with an accumulated depreciation of Rs.20,000
has been sold for Rs.35000.
Required: Cash flow from investing activities
8. You are planning to lease a truck on an annual lease rent Rs.45,000 per
year for four years. The current market rate is 12%.
Required: What must be the lease obligation and journal entries of asset
lease?
9. The following information are provided:
Sales Rs.300,000
Wages to staffs Rs.50,000
Interest received Rs.10,000
Income tax Rs.5,000
Cost of bought in material and services Rs.180,000
Opening stock Rs.20,000
Closing stock Rs.30,000
Required: Value added
 10. Working capital Rs.250,000; Account payable Rs.50,000 and other current
liabilities Rs.150,000.
Required: Current ratio

Descriptive Answer Question

Attempt any five questions. [6 ×10=6 0 ]
11. showing operating activities, investing activities, and net change in cash
position. The account Everest Company as on December 31, 2020, shows
accounts receivable Rs.170,000. Allowance for uncollectible accounts
Rs.950 (credit balance), Credit sales Rs.985,000 and sales return and
allowance Rs.12,000.
Required: journal entries to adjust for possible uncollectible accounts under
each of the following assumptions:
Uncollectible accounts are estimated at 1% of net credit sales. [4]
The allowance is to be increased to 3% of accounts receivable. [4]
How accounts receivable are presented in balance sheet according to (b)?[2]
12. The comparative Balance Sheets and Income Statement of a
company are as follows:
Balance Sheet
Liabilities 2019 (Rs.) 2020 (Rs.) Assets 2019(Rs.) 2020(Rs.)
Share capital 1,000,000 12,00,000 Fixed assets 8,00,000 1,000,000
Share premium 1,00,000 1,20,000 Bills receivable 3,00,000 2,50,000
8% Debenture 2,00,000 1,50,000 Stock 1,50,000 1,00,000

Bills payable 50,000 30,000 Investment 2,00,000 2,50,000

Provision for taxation 30,000 50,000 Cash at Bank 50,000 1,30,000
Accumulated 40,000 60,000
Deprecation
Retained earning 80,000 1,20,000
15,00,000 17,30,000 15,00,000 17,30,000

Income Statement for the year 2020

Particulars (Rs.) (Rs.)
Sales revenue 10,00,000
Less: Cost of goods sold 6,00,000
Gross Profit 4,00,000
Less: Operating expenses:
General office expenses 1,50,00
0
Deprecation on fixed assets 60,000
Premium on redemption of debenture 10,000
Interest on debenture 12,000
 Provision for taxation 50,000 2,82,000
Net income before other assets 1,18,000
Add: Profit on sale of fixed assets 20,000
(Depreciated value of fixed assets Rs. 40,000)
Net income 1,38,000
Required: Cash Flow Statement . [10]
13. a. Explain the concept of accounting standard. Why is it needed? [5]
b. The following information is provided :
Net working Rs.600,000 that represents Rs.300,000 inventory value
Current liabilities Rs.200,000 Capital employed Rs.1,000,000
Debentures Rs.400,000 Account receivable Rs.200,000
Operating profit of the year Rs.100,000 being 10% of sales .
Income tax is 25%
Required: Net profit after tax Liquid ratio Debt equity ratio
Stock turnover ratio Average receivable period [1+1+1+1+1= 5]
14. a. A company sign a 4 year capital lease on january1,2019. The lease
required annual payment Rs.20, 000on December 31 of every
year .Interest rate charged on lease is 8% per year. Lease assets are
depreciated by using straight line method.
Required:
Journal entry on January1,2019 for signing lease [2]
Lease amortization Schedule [3]
b. Differentiate periodic and perpetual inventory system. [5]
15. XYZ Company’s Dec.31 2022, unadjusted trial balance appears below
XYZ variety
Unadjusted Trail balance
31thDecember 2022
Account Title Debit Credit
Fixed assets 80,000 -
Stock 20,000 -
Purchase 70,000 -
Sales - 90,000
Office expenses 10,000 -
Salaries 15,000 -
Rent 8000 -
Bills Receivable 12,000 -
 Provision for bad debts - 1,000
Accumulated depreciation - 9,000
Bills Payable - 20,000
Supplies 5,000 -
Share capital - 1,00,000
Total 2,20,000 2,20,000
Adjustments:
a. Depreciation fixed assets by 10%
b. Supplies in hand Rs.2000.
c. Outstanding office expenses Rs.2000
d. Prepaid Salaries Rs.3000
e. Provision for bad debts 5%
Required:
Adjusted trial balance Adjusting entries  closing entry [3+3+2+2=10]
16. Discus in brief about the disclosures required for financial statement under
Nepal Financial Reporting Standard((NFRS) [10]

Analytical Answer Question

Attempt any TWO [3 ×15=45 ]
17. The following transaction is entered into by Nepal Auto service during the
first month of its operation:
a. Received contribution of Rs.350,000 each from two principal owner of
a business in exchange for shares of stock.
b. A bank account was opened with a deposit of Rs.300,000
c. After three months, the company purchased a fixed assets worth
Rs.100,000 and the amount paid by a cheque.
d. Purchased goods costing Rs.150,000 from suppliers on credit.
e. Rent amounting to Rs.50,000 were paid in cheque.
f. Utilities expenses of Rs.60,000 were paid in cheque.
g. Rs.400,000 worth of goods were supplied to customer on credit.
h. Paid supplier Rs.95,000 by a cheque after deducting of discount of 5%.
i. Wage of Rs.30,000 and salaries of Rs.60,000 were paid by cheque.
j. Cheque of Rs.285,000 were received from customer in full settlement
of Rs.300,000
Required:
Pass necessary journal entries [6]
T- Accounts [4]
Cash book with cash bank and discount column [3]
  Trial balance [2]
18. Inventory records of pokhara traders for the month of baishakh given
below.
Date Units Rate/Unit Purchase Rate/Unit Sales Rate/unit
Units Unit
1stBaishakh 500 45 - - - -
4thBaishakh - - 600 42 - -
7thBaishakh - - - - 750 60
13thBaishakh - - 800 44 - -
22th Baishakh - - - - 600 70
24thBaishakh - - 300 50 - -
30thBaishakh - - - - 350 75
50 units were damaged because of fire. Selling and administrative
expenses wasRs 25000 and Depreciation on plant and machinery was Rs
15000 for the month. The tax rate is 30%.
Required:
Calculate the cost of goods sold and value of costing inventory under the
following method assuming perpetual inventory system.
a. FIFO Method [4.5]
b. LIFO Method. [4.5]
Calculate the gross profit and net income under each costing
assumptions. [1]
Under which costing system do the Pokhara Traders pay least tax? Give
your opinion. [2]
 Tabulate the results of each inventory method and explain which
inventory method should the Pokhara Trades adopt. Why? [3]
19. principles, which is enabled the preparation and presentation of financial
statement uniformly.” Discuss. [15]

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