CA INTERMEDIATE
BRIDGE TEST SERIES – MAY 2025 EXAMS
ADVANCED ACCOUNTING
Total Marks: 50 Time Allowed: 90 Mins
PART 1- MULTIPLE CHOICE QUESTIONS
1. Axis limited is manufacturing company. It purchased a machinery costing Rs. 10 Lakhs in
April’23. It paid Rs. 4 Lakhs upfront and paid remaining Rs. 6,00,000 as deferred
payment by paying instalment of Rs. 1,05,000 for next 6 months. During the year, the
company sold a land which was classified as its property, plant and equipment for Rs.
25,00,000 and paid Rs. 1,00,000 as income tax as long term capital gain on such sale.
During the year, the company also received income tax refund along with interest.
(i) As per the requirements of AS 3, Cash flow statement how the amount for purchase
of machinery should be presented.
(a) Rs. 10 lakhs as Cash flow from investing activities and Rs. 30,000 will simply
be booked in P&L with no presentation if Cash flow statement.
(b) Rs. 10.30 lakhs as Cash flow from investing as the whole amount is used for
purchase of machinery.
(c) Rs. 10 lakhs as Cash flow from investing activities and Rs. 30,000 as Cash flow
from Financing activities.
(d) Rs. 10.30 lakhs as Cash floe from financing activities as the machinery has
been purchased on finance
(ii) At what amount, the machinery should be recognized in the financial statement:
(a) 4,00,000
(b) 10,30,000
(c) 6,00,000
(d) 10,00,000
(iii) How should the income tax should be paid on sale of land should cash flow from
operating activities
(a) Cash flow from operating activities
(b) Cash flow from financing activities
(c) Cash flow from investing activities
(d) No disclosure in cash flow statement
(iv) How should the interest on income tax refunds should be disclosed in CFS:
(a) Cash flow from operating activities
(b) Cash flow from financing activities
(c )Cash flow from investing activities
(c) No disclosure in cash flow statement (4 x 2 = 8 Marks)
2. Ash Ltd. wants to prepare its cash flow statement. It old equipment of book value of
Rs.60,000 at a gain of Rs.8,000. The amount to be reported in its cash flow statement under
operating activities is
(a) Nil
(b) Rs.8,000
(c) Rs.68,000
(d) Rs.60,000 (2 MARKS)
3. AS 4 does not apply to
(a) Obligation under retirement benefit plan.
(b) Commitments arising from long term lese contracts.
(c) Liabilities of life assurance and general insurance enterprises arising from policies issued.
(d) All of the above (1 MARK)
4. PQ Company Ltd. had 1,00,000 shares of common stock outstanding on January
1. Additional 50,000 shares were issued on July 1, and 25,000 shares were
Re-acquired on September 1. The weighted average number of shares outstanding
during the year on Dec.31 is
(a) 1,40,000 shares
(b) 1,25,000 shares
(c) 1,16,667 shares
(d) 1,20,000 shares (2 MARKS)
5. When a company purchases its own shares out of free reserves; a sum equal to nominal
value of shares so purchased shall be transferred to
(a) Revenue redemption reserve.
(b) Capital redemption reserve.
(c) Buyback reserve
(d) General reserve. (2 MARKS)
PART 2- DESCRIPTIVE QUESTIONS
QUESTION NO 1 IS COMPULSORY
Attempt any two questions from the remaining three questions
1.
Debit Balance Amount Credit Balances Amount
Purchases 82,95,000 Sales 1,25,87,000
Wages and Salaries 12,72,000 Commission 72,500
Rent 2,20,000 Equity Share Capital 10,00,000
Rates and Taxes 50,000 General Reserve 10,00,000
Selling & 4,36,000 Surplus (P&L A/c) 8,75,000
Distribution 01.04.2023
Expenses
Directors Fees 32,000 Securities Premium 2,50,000
Bad Debts 38,500 Term Loan from 1,02,00,000
Public Sector Bank
Interest on Term 8,05,000 Trade Payables 55,08,875
Loan
Land 24,00,000 Provision for
Depreciation:
Factory Building 36,80,000 On Plant & Machinery 9,37,500
Plant and Machinery 62,50,000 On Furniture and 82,500
Fittings
Furniture and 8,25,000 On Factory Building 1,84,000
Fittings
Trade Receivables 64,75,000 Provision for Doubtful 25,000
Debts
Advance Income Tax 37,500 Bills Payable 1,25,000
Paid
Stock (1st April, 2023) 9,25,00
Bank Balances 9,75,000
Cash on Hand 1,31,875
Total 3,28,47,875 Total 3,28,47,875
Following information is provided:
(1) The Authorized Share Capital of the Company is 2,00,000 Equity Shares of ₹ 10 each. The
Company has issued 1,00,000 Equity Shares of ₹ 10 each.
(2) Rent of ₹ 20,000 and Wages of ₹ 1,56,500 are outstanding as on 31st March, 2024.
(3) Provide Depreciation @ 10% per annum on Plant and Machinery, 10% on Furniture and
Fittings and 5% on Factory Building on written down value basis.
(4) Closing Stock as on 31st March, 2024 is ₹ 11,37,500.
(5) Make a provision for Doubtful Debt @ 5% on Debtors.
(6) Make a provision of 25% for Corporate Income Tax.
(7) Transfer ₹ 1,00,000 to General Reserve.
(8) Term Loan from Public Sector Bank is secured against Hypothecation of Plant and
Machinery. Installment of Term Loan falling due within one year is ₹ 17,00,000.
(9) Trade Receivables of ₹ 85,600 are outstanding for more than six months.
(10) The Board declared a dividend @10% on Paid up Share Capital on 5 th April, 2024.
You are required to prepare Balance Sheet as on 31st March 2024 and Statement of Profit and
Loss with Note to Accounts for the year ending 31st March, 2024 as per Schedule III of the
Companies Act, 2013. Ignore previous years ₹ figures.
(15 MARKS)
2A. The following information is provided by Alpha Limited, for the year ended 31st March,
2022:
(i) Net profit before taking into account income tax and income from law
suits but after
taking into account the following items was ₹ 40 lakhs.
(ii) Depreciation on Fixed Assets ₹ 10 lakhs.
(iii) Discount on issue of Debentures written of ₹ 60,000.
(iv) Interest on Debentures paid ₹ 7,00,000.
(v) Book value of investments ₹ 6 lakhs (Sale of Investments for ₹ 6,40,000).
(vi) Interest received on investments ₹ 1,20,000.
(vii) Compensation received ₹ 1,80,000 by the company in a suit filed.
(viii) Income tax paid ₹ 21,00,000
(ix) Current assets and current liabilities in the beginning and at
the end of the year were as detailed below:
As on 31.3.2021 As on 31.3.2022
₹ ₹
Stock 24,00,000 26,36,000
Sundry Debtors 4,16,000 4,26,200
Cash in hand 3,92,600 70,600
Bills Receivable 1,00,000 80,000
Bills Payable 90,000 80,000
Sundry Creditors 3,32,000 3,42,600
Outstanding Expenses 1,50,000 1,63,600
You are required to prepare Cash Flow Statement from Operating Activities in accordance with
AS-3 (revised) using the indirect method for the year ended 31st March,2022. (5 Marks)
2B. The following was the summarized balance sheet of Bhoomi Ltd. as on 31 st March, 2020:
Equity & liability Rs (in lakhs) Assets Rs (in lakhs)
Authorised Capital: Property, plant
and equipment 1,12,000
Equity shares of Rs 10 each 80,000 Investments 24,000
Issued Capital Cash at Bank 13,200
Equity Shares of Rs10 each Fully Trade Receivables 66,000
Paid up 64,000
10% Redeemable Preference
Shares of 10 each, Fully Paid Up 20,000
Reserves & Surplus:
Capital Redemption Reserve 8,000
Securities Premium 6,400
General Reserve 48,000
Profit & Loss Account 2,400
9% Debentures 40,000
Trade Payables 26,400
2,15,200 2,15,200
On 1st April,2020 the Company redeemed all its Preference Shares at a Premium of 10% and
bought back 25% of its Equity Shares at Rs20 per Share. In order to make Cash available, the
Company sold all the Investments for Rs25,000 Lakhs and raised a Bank Loan amounting to
Rs16,000 lakh on the Security of the Company's Plant. Give the necessary Journal Entries
considering that the buy back is authorised by the articles of company and necessary resolution
is passed by the company for this. The amount of Securities premium may be utilized to the
maximum extent allowed by law. (5 Marks)
3A. In the books of Rani Ltd., closing inventory as on 31.03.2020 amounts to ₹1,75,000 (valued
based on FIFO method). The Company decides to change from FIFO method to weighted
average method for ascertaining the costs of inventory from the year 2019-20. On the basis of
weighted average method, closing inventory as on 31.03.2020 amounts to ₹1,59,000. Realizable
value of the inventory as on 31.03.2020 amounts to ₹2,07 ,000. Discuss disclosure
requirements of change in accounting policy as per AS 1 (5 Marks)
3B. An airline is required by law to overhaul its aircraft once in every five years. The pacific
Airlines which operate aircrafts does not provide any provision as required by law in its final
accounts. You are required to comment on the validity of the treatment done by the company
in line with the provisions of AS 29. (5 Marks)
4A. As per the provision of AS 4, you are required to state with reason whether the following
transactions are adjusting event or non-adjusting event for the year ended 31.03.2021 in the
books of NEW Ltd. (accounts of the company were approved by board of directors on
10.07.2021):
Equity Dividend for the year 2020-21 was declared at the rate of 7% on 15.05.2021.
On 05.03.2021, ₹ 53,000 cash was collected from a customer but not deposited by the cashier.
This fraud was detected on 22.06.2021.
One building got damaged due to occurrence of fire on 23.05.221. Loss was estimated to be
Rs.81,00,000. (5 Marks)
4B. The following information of Meghna Ltd. is provided:
(i) Goods of Rs. 60,000 were sold on 20-3-2019 but at the request of the buyer these
were delivered on 10-4-2019.
(ii) On 15-1-2019 goods of Rs. 1,50,000 were sent on consignment basis of which 20% of
the goods unsold are lying with the consignee as on 31 -3-2019.
(iii) Rs. 1,20,000 worth of goods were sold on approval basis on 1 -12-2018. The period
of approval was 3 months after which they were considered sold. Buyer sent
approval for 75% goods up to 31-1-2019 and no approval or disapproval received for
the remaining goods till 31-3-2019.
(iv) Apart from the above, the company has made cash sales of Rs. 7,80,000
(gross). Trade discount of 5% was allowed on the cash sales.
You are required to advise the accountant of Meghna Ltd., with valid reasons, the
amount to be recognized as revenue in above cases in the context of AS -9.
(5 MARKS)
