Financial Accounting — DU B.Com. (Hons.) Previous Year Question Papers

1. (a) State with reasons whether the following statements are true or false (any six) (i) Accrual accounting recognizes revenues and expenses when they are earned or incurred, regardless of when the cash is received or paid. (ii) GST input tax credit allows businesses to claim a refund of the GST paid on purchases used for business purposes. (iii) An Expenditure intended to benefit the current period is revenue expenditure. (iv) The consistency principle in accounting allows businesses to change their accounting methods without restriction. (v) Stock is normally valued at cost or NRV whichever is higher. (vi) Change in the useful life of Machinery is a change in Accounting Estimate. (vil) Outstanding salary is a Nominal Account. (vili) Loss due to theft is an example of extraordinary items. (ix) Applying incorrect rate of Depreciation is an example of prior period (6x2=12) (b) Write short on (any three) of the following : (i) Events occurring after Balance sheet date. (ii) Fundamental Accounting Assumptions as per AS-1 (Il) Accounting Estimate. (iv) Impact of Data Analytics on Accounting (c) What is IFRS? Explain the need and benefit of IFRS. (d) Write short notes on (any three) : (i) Fair Value Accounting (ii) Prudence concept (iii) Input Tax Credit (ITC) (3×3=9) (iv) Prior Period Item (e) What is Accounting Standards? Explain the need and importance of (3) Accounting Standards. ( a → 3a (Fair Value Accounting) a fa Prudence Concept) (iv) ga 3а 7 (Prior Period Item) 2. (a) MOJAY Ltd. purchased on Ist October, 2016, a machinery for 74,50,000 and spent 310,000 on freight and transit insurance. On 25th December, 2016, it further spent 740,000 on its erection. The machinery was put to use on 1-1-2017. On Ist July, 2017, it purchased another machine for 71,00,000. During the year 2018, it spent 710,000 for repairs on 1-4-2018. However, on 1-4-2019, a part of the machinery, put to use on 1-1-2017 costing 72,00,000 was sold for 71,50,000. On 1-10-2019 it purchased another machinery for $3,00,000. On 1-7-2020, however, machinery purchased on 1-7-2017 was sold for 765,000. Depreciation was charged by the firm @10% p.a. by straight line method. During the year 2020, MOJAY Ltd. decided to change the method of providing depreciation and adopted the Diminishing balance method of charging depreciation @10% p.a. At the time of change management feels there is no need to review the useful life of machine. (b) From the following information find out the value of stock as on 31-3-2025 (i) Cost of Physical stock on 31-3-2025 was 74,00,000. (i) Cost of stock held as consignee was 780,000. (iii) Stock was expected to realize the normal selling price of 150% of cost except for the following goods: (1) Goods costing $20,000 were damaged and an expenditure of 10% of normal selling price was necessary to realize the cost. (2) Goods costing 740,000 were damaged beyond repair and were expected to realize R10,000 only. (3)