Advanced Accounting (Group I) Model Test Paper - 8 (Questions) - CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 8 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
Mr. Vikram took a loan of ` 6,00,000 carrying interest @ 10% p.a. on  
1
st
 August, 2023 to purchase raw material. He purchased 4000 units of raw material 
@ 125 per unit. Replacement cost of raw material as on 31 March, 2024 is 100 per 
unit. Labour charges and variable overheads incurred are ` 1,00,000 to produce 
1000 units of finished goods.  
1000 units of Finished goods are produced with raw material (for every unit of 
finished goods produced, 2 units of raw material are required). Net realizable value 
of finished good is ` 300 per unit. All the finished goods produced are lying in stock 
as on 31 March, 2024. 
There is no opening stock of raw material and finished goods. 
Mr. Vikram used 1500 units of raw material to construct an Asset (Qualifying Asset). 
Labour and other overhead charges incurred on construction of asset are ` 90,000. 
Mr. Vikram also paid `15,000 to install the asset at Factory premises. Mr. Vikram 
used Balance of loan proceeds of ` 1,00,000 to invest in Equity Shares of P. Ltd. 
He purchased 9,000 Equity shares (Face Value ` 10 each) for ` 1,00,000 on 25th 
March, 2024. 
The P. Ltd declared and paid dividend @ 20% on 30th March for the year  
2023-24. 
Based on the information given in above Case Scenario, answer the following 
Question No. 1-4:  
(i)  What would be the value of closing stock of Raw Material X and Finished 
Goods as on 31st March 2024?  
(a) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods ` 3,50,000  
(b) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods` 3,00,000 
(c) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,50,000 
(d) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,00,000 
83
Page 2


MODEL TEST PAPER 8 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
Mr. Vikram took a loan of ` 6,00,000 carrying interest @ 10% p.a. on  
1
st
 August, 2023 to purchase raw material. He purchased 4000 units of raw material 
@ 125 per unit. Replacement cost of raw material as on 31 March, 2024 is 100 per 
unit. Labour charges and variable overheads incurred are ` 1,00,000 to produce 
1000 units of finished goods.  
1000 units of Finished goods are produced with raw material (for every unit of 
finished goods produced, 2 units of raw material are required). Net realizable value 
of finished good is ` 300 per unit. All the finished goods produced are lying in stock 
as on 31 March, 2024. 
There is no opening stock of raw material and finished goods. 
Mr. Vikram used 1500 units of raw material to construct an Asset (Qualifying Asset). 
Labour and other overhead charges incurred on construction of asset are ` 90,000. 
Mr. Vikram also paid `15,000 to install the asset at Factory premises. Mr. Vikram 
used Balance of loan proceeds of ` 1,00,000 to invest in Equity Shares of P. Ltd. 
He purchased 9,000 Equity shares (Face Value ` 10 each) for ` 1,00,000 on 25th 
March, 2024. 
The P. Ltd declared and paid dividend @ 20% on 30th March for the year  
2023-24. 
Based on the information given in above Case Scenario, answer the following 
Question No. 1-4:  
(i)  What would be the value of closing stock of Raw Material X and Finished 
Goods as on 31st March 2024?  
(a) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods ` 3,50,000  
(b) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods` 3,00,000 
(c) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,50,000 
(d) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,00,000 
83
(ii)  Cost of Self Constructed Asset as per AS 10 will be ? 
(a) ` 2,92,500 
(b) ` 2,77,500 
(c) ` 3,05,000 
(d) ` 2,90,000 
(iii)  As per AS 16 what will be the amount of interest to be capitalized and amount 
of interest to be charged to Profit & Loss A/c ? 
(a) ` 12,500 interest to be capitalised and Profit & Loss A/c. ` 27,500 interest 
to be charged to Profit & Loss A/c 
(b) ` 12,500 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(c) ` 19,167 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(d) Whole of `40,000 interest to be charged to Profit & Loss A/c. 
(iv)  What is the carrying amount of investment as on 31
st
 March, 2024 as per AS 
13 and suggest the treatment of dividend received from P. Ltd.? 
(a) Carrying amount of Investment as on 31
st
 March, 2024 is ` 72,000 and 
the dividend is deducted from the nominal value of investment. 
(b) Carrying amount of Investment as on 31
st
 March, 2024 is `90,000 and 
the dividend is credited to Profit & Loss A/c. 
(c) Carrying amount of Investment as on 31
st
 March, 2024 is` 1,00,000 and 
the dividend is credited to Profit & Loss A/c. 
(d) Carrying amount of Investment as on 31
st
 March, 2024 is 82,000 and the 
dividend is deducted from the cost of investment. 
Case Scenario 2 
Kay Ltd. sold goods of ` 22,00,000 to Mr. Ravi Kumar on 1
st
 February, 2024 but at 
the request of the buyer, these goods were delivered on 10th April 2024. 
Kay Ltd. also sold ` 2,00,000 goods on approval basis on 1
st
 January, 2024 to 
Sheetal Enterprises. The period of approvals 3 months after which they were 
considered sold. Buyer sent disapproval for 25% of goods and approval for 50% of 
goods till 31 March, 2024. 
Mr. Ravi Kumar has commenced legal action against Kay Ltd. for supply of faulty 
goods to claim damages. The lawyers of Kay Ltd. have advised that it is not remote 
yet that resources may be required to settle the claim. Legal cost to be incurred 
irrespective of the outcome of the case is ` 45,000. Settlement amount if the claim 
is required to be paid ` 5,00,000, 
Sheetal Enterprises, a trade receivable of Kay Ltd. suffered a heavy loss due to an 
earthquake that occurred on 30th March, 2024. The loss was not covered by any 
insurance policy. In April, 2024, Sheetal Enterprises became bankrupt. The 
Balance due from Sheetal Enterprises as on 31 March, 2024 is ` 75,000. 
Kay Ltd. makes provision for doubtful debts @ 5%. 
84
Page 3


MODEL TEST PAPER 8 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
Mr. Vikram took a loan of ` 6,00,000 carrying interest @ 10% p.a. on  
1
st
 August, 2023 to purchase raw material. He purchased 4000 units of raw material 
@ 125 per unit. Replacement cost of raw material as on 31 March, 2024 is 100 per 
unit. Labour charges and variable overheads incurred are ` 1,00,000 to produce 
1000 units of finished goods.  
1000 units of Finished goods are produced with raw material (for every unit of 
finished goods produced, 2 units of raw material are required). Net realizable value 
of finished good is ` 300 per unit. All the finished goods produced are lying in stock 
as on 31 March, 2024. 
There is no opening stock of raw material and finished goods. 
Mr. Vikram used 1500 units of raw material to construct an Asset (Qualifying Asset). 
Labour and other overhead charges incurred on construction of asset are ` 90,000. 
Mr. Vikram also paid `15,000 to install the asset at Factory premises. Mr. Vikram 
used Balance of loan proceeds of ` 1,00,000 to invest in Equity Shares of P. Ltd. 
He purchased 9,000 Equity shares (Face Value ` 10 each) for ` 1,00,000 on 25th 
March, 2024. 
The P. Ltd declared and paid dividend @ 20% on 30th March for the year  
2023-24. 
Based on the information given in above Case Scenario, answer the following 
Question No. 1-4:  
(i)  What would be the value of closing stock of Raw Material X and Finished 
Goods as on 31st March 2024?  
(a) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods ` 3,50,000  
(b) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods` 3,00,000 
(c) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,50,000 
(d) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,00,000 
83
(ii)  Cost of Self Constructed Asset as per AS 10 will be ? 
(a) ` 2,92,500 
(b) ` 2,77,500 
(c) ` 3,05,000 
(d) ` 2,90,000 
(iii)  As per AS 16 what will be the amount of interest to be capitalized and amount 
of interest to be charged to Profit & Loss A/c ? 
(a) ` 12,500 interest to be capitalised and Profit & Loss A/c. ` 27,500 interest 
to be charged to Profit & Loss A/c 
(b) ` 12,500 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(c) ` 19,167 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(d) Whole of `40,000 interest to be charged to Profit & Loss A/c. 
(iv)  What is the carrying amount of investment as on 31
st
 March, 2024 as per AS 
13 and suggest the treatment of dividend received from P. Ltd.? 
(a) Carrying amount of Investment as on 31
st
 March, 2024 is ` 72,000 and 
the dividend is deducted from the nominal value of investment. 
(b) Carrying amount of Investment as on 31
st
 March, 2024 is `90,000 and 
the dividend is credited to Profit & Loss A/c. 
(c) Carrying amount of Investment as on 31
st
 March, 2024 is` 1,00,000 and 
the dividend is credited to Profit & Loss A/c. 
(d) Carrying amount of Investment as on 31
st
 March, 2024 is 82,000 and the 
dividend is deducted from the cost of investment. 
Case Scenario 2 
Kay Ltd. sold goods of ` 22,00,000 to Mr. Ravi Kumar on 1
st
 February, 2024 but at 
the request of the buyer, these goods were delivered on 10th April 2024. 
Kay Ltd. also sold ` 2,00,000 goods on approval basis on 1
st
 January, 2024 to 
Sheetal Enterprises. The period of approvals 3 months after which they were 
considered sold. Buyer sent disapproval for 25% of goods and approval for 50% of 
goods till 31 March, 2024. 
Mr. Ravi Kumar has commenced legal action against Kay Ltd. for supply of faulty 
goods to claim damages. The lawyers of Kay Ltd. have advised that it is not remote 
yet that resources may be required to settle the claim. Legal cost to be incurred 
irrespective of the outcome of the case is ` 45,000. Settlement amount if the claim 
is required to be paid ` 5,00,000, 
Sheetal Enterprises, a trade receivable of Kay Ltd. suffered a heavy loss due to an 
earthquake that occurred on 30th March, 2024. The loss was not covered by any 
insurance policy. In April, 2024, Sheetal Enterprises became bankrupt. The 
Balance due from Sheetal Enterprises as on 31 March, 2024 is ` 75,000. 
Kay Ltd. makes provision for doubtful debts @ 5%. 
84
Based on the information given in above Case Scenario, answer the following 
Question  
(i)  What is the amount to be recognized as Revenue as per AS 9 in the books of 
Kay Ltd. as on 31 March, 2024? 
(a) ` 23,50,000 
(b) ` 1,50,000 
(c) ` 23,00,000 
(d) ` 1,00,000 
(ii)  What will be the treatment of legal cost and claim for legal action commenced 
by Mr. Ravi Kumar in the Books of Kay Ltd. as on 31 March, 2024 as per AS 
29? 
(a) Create a Provision for ` 5,45,000 
(b) Create a Provision for ` 5,00,000 
(c) Create a Provision for` 45,000 and make a disclosure of contingent 
liability of ` 5,00,000 
(d) Make a disclosure of contingent liability of ` 5,45,000 
(iii)  What is the treatment of insolvency of Sheetal Enterprises in the Books of Kay 
Ltd. as on 31
st
 March, 2024 as per AS 4? 
(a) An Adjusting Event, full provision of ` 75,000 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(b) An Adjusting Event, provision of ` 3,750 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(c) A Non-adjusting event, no provision is required to be made as Sheetal 
Enterprises became bankrupt in April, 2024. 
(d) A Non-adjusting event, only disclosure is required in the Final Accounts 
for the year ended 31st March, 2024. 
3  P Ltd. has 60% voting right in Q Ltd. Q Ltd. has 20% voting right in R Ltd. 
Also, P Ltd. directly enjoys voting right of 14% in R Ltd. R Ltd. is a Listed 
Company and regularly supplies goods to P Ltd. The Management of R Ltd. 
has not disclosed its relationship with P Ltd. While preparing Financial 
Statements of P Ltd., which entities would you disclose as related parties with 
reference to AS-18? 
(a) Q Ltd. 
(b) R Ltd. 
(c) Q Ltd. and R Ltd. 
(d) Neither of Q Ltd. or R Ltd. 
4  A Machinery was giver on 3 years lease by a dealer of the machinery for equal 
annual lease rentals to yield 20% profit margin on cost of the machinery, which 
is Rs.3,00,000. Economic life of the machinery is 5 years, and estimated 
output from the machinery in 5 years is as follows: 
85
Page 4


MODEL TEST PAPER 8 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
Mr. Vikram took a loan of ` 6,00,000 carrying interest @ 10% p.a. on  
1
st
 August, 2023 to purchase raw material. He purchased 4000 units of raw material 
@ 125 per unit. Replacement cost of raw material as on 31 March, 2024 is 100 per 
unit. Labour charges and variable overheads incurred are ` 1,00,000 to produce 
1000 units of finished goods.  
1000 units of Finished goods are produced with raw material (for every unit of 
finished goods produced, 2 units of raw material are required). Net realizable value 
of finished good is ` 300 per unit. All the finished goods produced are lying in stock 
as on 31 March, 2024. 
There is no opening stock of raw material and finished goods. 
Mr. Vikram used 1500 units of raw material to construct an Asset (Qualifying Asset). 
Labour and other overhead charges incurred on construction of asset are ` 90,000. 
Mr. Vikram also paid `15,000 to install the asset at Factory premises. Mr. Vikram 
used Balance of loan proceeds of ` 1,00,000 to invest in Equity Shares of P. Ltd. 
He purchased 9,000 Equity shares (Face Value ` 10 each) for ` 1,00,000 on 25th 
March, 2024. 
The P. Ltd declared and paid dividend @ 20% on 30th March for the year  
2023-24. 
Based on the information given in above Case Scenario, answer the following 
Question No. 1-4:  
(i)  What would be the value of closing stock of Raw Material X and Finished 
Goods as on 31st March 2024?  
(a) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods ` 3,50,000  
(b) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods` 3,00,000 
(c) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,50,000 
(d) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,00,000 
83
(ii)  Cost of Self Constructed Asset as per AS 10 will be ? 
(a) ` 2,92,500 
(b) ` 2,77,500 
(c) ` 3,05,000 
(d) ` 2,90,000 
(iii)  As per AS 16 what will be the amount of interest to be capitalized and amount 
of interest to be charged to Profit & Loss A/c ? 
(a) ` 12,500 interest to be capitalised and Profit & Loss A/c. ` 27,500 interest 
to be charged to Profit & Loss A/c 
(b) ` 12,500 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(c) ` 19,167 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(d) Whole of `40,000 interest to be charged to Profit & Loss A/c. 
(iv)  What is the carrying amount of investment as on 31
st
 March, 2024 as per AS 
13 and suggest the treatment of dividend received from P. Ltd.? 
(a) Carrying amount of Investment as on 31
st
 March, 2024 is ` 72,000 and 
the dividend is deducted from the nominal value of investment. 
(b) Carrying amount of Investment as on 31
st
 March, 2024 is `90,000 and 
the dividend is credited to Profit & Loss A/c. 
(c) Carrying amount of Investment as on 31
st
 March, 2024 is` 1,00,000 and 
the dividend is credited to Profit & Loss A/c. 
(d) Carrying amount of Investment as on 31
st
 March, 2024 is 82,000 and the 
dividend is deducted from the cost of investment. 
Case Scenario 2 
Kay Ltd. sold goods of ` 22,00,000 to Mr. Ravi Kumar on 1
st
 February, 2024 but at 
the request of the buyer, these goods were delivered on 10th April 2024. 
Kay Ltd. also sold ` 2,00,000 goods on approval basis on 1
st
 January, 2024 to 
Sheetal Enterprises. The period of approvals 3 months after which they were 
considered sold. Buyer sent disapproval for 25% of goods and approval for 50% of 
goods till 31 March, 2024. 
Mr. Ravi Kumar has commenced legal action against Kay Ltd. for supply of faulty 
goods to claim damages. The lawyers of Kay Ltd. have advised that it is not remote 
yet that resources may be required to settle the claim. Legal cost to be incurred 
irrespective of the outcome of the case is ` 45,000. Settlement amount if the claim 
is required to be paid ` 5,00,000, 
Sheetal Enterprises, a trade receivable of Kay Ltd. suffered a heavy loss due to an 
earthquake that occurred on 30th March, 2024. The loss was not covered by any 
insurance policy. In April, 2024, Sheetal Enterprises became bankrupt. The 
Balance due from Sheetal Enterprises as on 31 March, 2024 is ` 75,000. 
Kay Ltd. makes provision for doubtful debts @ 5%. 
84
Based on the information given in above Case Scenario, answer the following 
Question  
(i)  What is the amount to be recognized as Revenue as per AS 9 in the books of 
Kay Ltd. as on 31 March, 2024? 
(a) ` 23,50,000 
(b) ` 1,50,000 
(c) ` 23,00,000 
(d) ` 1,00,000 
(ii)  What will be the treatment of legal cost and claim for legal action commenced 
by Mr. Ravi Kumar in the Books of Kay Ltd. as on 31 March, 2024 as per AS 
29? 
(a) Create a Provision for ` 5,45,000 
(b) Create a Provision for ` 5,00,000 
(c) Create a Provision for` 45,000 and make a disclosure of contingent 
liability of ` 5,00,000 
(d) Make a disclosure of contingent liability of ` 5,45,000 
(iii)  What is the treatment of insolvency of Sheetal Enterprises in the Books of Kay 
Ltd. as on 31
st
 March, 2024 as per AS 4? 
(a) An Adjusting Event, full provision of ` 75,000 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(b) An Adjusting Event, provision of ` 3,750 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(c) A Non-adjusting event, no provision is required to be made as Sheetal 
Enterprises became bankrupt in April, 2024. 
(d) A Non-adjusting event, only disclosure is required in the Final Accounts 
for the year ended 31st March, 2024. 
3  P Ltd. has 60% voting right in Q Ltd. Q Ltd. has 20% voting right in R Ltd. 
Also, P Ltd. directly enjoys voting right of 14% in R Ltd. R Ltd. is a Listed 
Company and regularly supplies goods to P Ltd. The Management of R Ltd. 
has not disclosed its relationship with P Ltd. While preparing Financial 
Statements of P Ltd., which entities would you disclose as related parties with 
reference to AS-18? 
(a) Q Ltd. 
(b) R Ltd. 
(c) Q Ltd. and R Ltd. 
(d) Neither of Q Ltd. or R Ltd. 
4  A Machinery was giver on 3 years lease by a dealer of the machinery for equal 
annual lease rentals to yield 20% profit margin on cost of the machinery, which 
is Rs.3,00,000. Economic life of the machinery is 5 years, and estimated 
output from the machinery in 5 years is as follows: 
85
Year I    50,000 units 
Year II  60,000 units 
Year III   40,000 units 
Year IV   65,000 units 
Year V   85,000 units. 
Compute Annual Lease Rent. 
(a) ` 30,000 
(b) ` 60,000 
(c) ` 50,000 
(d) ` 36,000 
5  A Ltd. had 1,50,000 shares of common stock outstanding on 1 April, 2023. 
Additional 50,000 shares were issued on 1 November, 2023 and 32,000 
shares were bought back on 1 February, 2024. Calculate the weighted 
average number of shares outstanding at the year ended on 31 March, 2024 
is: 
(a) 1,34,500 shares 
(b) 1,65,500 shares 
(c) 1,76,167 shares 
(d) 1,23,833 shares 
Case Scenario 3 
6.  Jay Ltd. submits the following data extracted from the Final Accounts as on 
31 March, 2023: 
Equity Share Capital  
Equity shares of ` 10 each 
50,000  
Profit & Loss (Dr. balance) (50,000) 
9% Debentures 2,00,000 
Loan from Bank 3,00,000 
Advance given to suppliers of goods 45,000 
Provision for tax 14,000 
Plant & Machinery 4,50,000 
Furniture & Fixtures  85,000  
Investment in Star Ltd. 
10,000 equity shares of 10 each 
1,25,000 
Sundry Debtors 70,000 
Cash & Bank Balance 65,500 
 
  
86
Page 5


MODEL TEST PAPER 8 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 1 : ADVANCED ACCOUNTING 
Time Allowed – 3 Hours Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II. 
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) 
3. Part II comprises questions which require descriptive type answers. 
PART I – Case Scenario based MCQs (30 Marks) 
Part I is compulsory. 
Case Scenario 1 
Mr. Vikram took a loan of ` 6,00,000 carrying interest @ 10% p.a. on  
1
st
 August, 2023 to purchase raw material. He purchased 4000 units of raw material 
@ 125 per unit. Replacement cost of raw material as on 31 March, 2024 is 100 per 
unit. Labour charges and variable overheads incurred are ` 1,00,000 to produce 
1000 units of finished goods.  
1000 units of Finished goods are produced with raw material (for every unit of 
finished goods produced, 2 units of raw material are required). Net realizable value 
of finished good is ` 300 per unit. All the finished goods produced are lying in stock 
as on 31 March, 2024. 
There is no opening stock of raw material and finished goods. 
Mr. Vikram used 1500 units of raw material to construct an Asset (Qualifying Asset). 
Labour and other overhead charges incurred on construction of asset are ` 90,000. 
Mr. Vikram also paid `15,000 to install the asset at Factory premises. Mr. Vikram 
used Balance of loan proceeds of ` 1,00,000 to invest in Equity Shares of P. Ltd. 
He purchased 9,000 Equity shares (Face Value ` 10 each) for ` 1,00,000 on 25th 
March, 2024. 
The P. Ltd declared and paid dividend @ 20% on 30th March for the year  
2023-24. 
Based on the information given in above Case Scenario, answer the following 
Question No. 1-4:  
(i)  What would be the value of closing stock of Raw Material X and Finished 
Goods as on 31st March 2024?  
(a) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods ` 3,50,000  
(b) Closing Stock of Raw Material X ` 50,000 and closing stock of Finished 
Goods` 3,00,000 
(c) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,50,000 
(d) Closing Stock of Raw Material X ` 62,500 and closing stock of Finished 
Goods ` 3,00,000 
83
(ii)  Cost of Self Constructed Asset as per AS 10 will be ? 
(a) ` 2,92,500 
(b) ` 2,77,500 
(c) ` 3,05,000 
(d) ` 2,90,000 
(iii)  As per AS 16 what will be the amount of interest to be capitalized and amount 
of interest to be charged to Profit & Loss A/c ? 
(a) ` 12,500 interest to be capitalised and Profit & Loss A/c. ` 27,500 interest 
to be charged to Profit & Loss A/c 
(b) ` 12,500 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(c) ` 19,167 interest to be capitalised and ` 20,833 interest to be charged 
to Profit & Loss A/c. 
(d) Whole of `40,000 interest to be charged to Profit & Loss A/c. 
(iv)  What is the carrying amount of investment as on 31
st
 March, 2024 as per AS 
13 and suggest the treatment of dividend received from P. Ltd.? 
(a) Carrying amount of Investment as on 31
st
 March, 2024 is ` 72,000 and 
the dividend is deducted from the nominal value of investment. 
(b) Carrying amount of Investment as on 31
st
 March, 2024 is `90,000 and 
the dividend is credited to Profit & Loss A/c. 
(c) Carrying amount of Investment as on 31
st
 March, 2024 is` 1,00,000 and 
the dividend is credited to Profit & Loss A/c. 
(d) Carrying amount of Investment as on 31
st
 March, 2024 is 82,000 and the 
dividend is deducted from the cost of investment. 
Case Scenario 2 
Kay Ltd. sold goods of ` 22,00,000 to Mr. Ravi Kumar on 1
st
 February, 2024 but at 
the request of the buyer, these goods were delivered on 10th April 2024. 
Kay Ltd. also sold ` 2,00,000 goods on approval basis on 1
st
 January, 2024 to 
Sheetal Enterprises. The period of approvals 3 months after which they were 
considered sold. Buyer sent disapproval for 25% of goods and approval for 50% of 
goods till 31 March, 2024. 
Mr. Ravi Kumar has commenced legal action against Kay Ltd. for supply of faulty 
goods to claim damages. The lawyers of Kay Ltd. have advised that it is not remote 
yet that resources may be required to settle the claim. Legal cost to be incurred 
irrespective of the outcome of the case is ` 45,000. Settlement amount if the claim 
is required to be paid ` 5,00,000, 
Sheetal Enterprises, a trade receivable of Kay Ltd. suffered a heavy loss due to an 
earthquake that occurred on 30th March, 2024. The loss was not covered by any 
insurance policy. In April, 2024, Sheetal Enterprises became bankrupt. The 
Balance due from Sheetal Enterprises as on 31 March, 2024 is ` 75,000. 
Kay Ltd. makes provision for doubtful debts @ 5%. 
84
Based on the information given in above Case Scenario, answer the following 
Question  
(i)  What is the amount to be recognized as Revenue as per AS 9 in the books of 
Kay Ltd. as on 31 March, 2024? 
(a) ` 23,50,000 
(b) ` 1,50,000 
(c) ` 23,00,000 
(d) ` 1,00,000 
(ii)  What will be the treatment of legal cost and claim for legal action commenced 
by Mr. Ravi Kumar in the Books of Kay Ltd. as on 31 March, 2024 as per AS 
29? 
(a) Create a Provision for ` 5,45,000 
(b) Create a Provision for ` 5,00,000 
(c) Create a Provision for` 45,000 and make a disclosure of contingent 
liability of ` 5,00,000 
(d) Make a disclosure of contingent liability of ` 5,45,000 
(iii)  What is the treatment of insolvency of Sheetal Enterprises in the Books of Kay 
Ltd. as on 31
st
 March, 2024 as per AS 4? 
(a) An Adjusting Event, full provision of ` 75,000 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(b) An Adjusting Event, provision of ` 3,750 should be made in the Final 
Accounts for the year ended 31 March, 2024. 
(c) A Non-adjusting event, no provision is required to be made as Sheetal 
Enterprises became bankrupt in April, 2024. 
(d) A Non-adjusting event, only disclosure is required in the Final Accounts 
for the year ended 31st March, 2024. 
3  P Ltd. has 60% voting right in Q Ltd. Q Ltd. has 20% voting right in R Ltd. 
Also, P Ltd. directly enjoys voting right of 14% in R Ltd. R Ltd. is a Listed 
Company and regularly supplies goods to P Ltd. The Management of R Ltd. 
has not disclosed its relationship with P Ltd. While preparing Financial 
Statements of P Ltd., which entities would you disclose as related parties with 
reference to AS-18? 
(a) Q Ltd. 
(b) R Ltd. 
(c) Q Ltd. and R Ltd. 
(d) Neither of Q Ltd. or R Ltd. 
4  A Machinery was giver on 3 years lease by a dealer of the machinery for equal 
annual lease rentals to yield 20% profit margin on cost of the machinery, which 
is Rs.3,00,000. Economic life of the machinery is 5 years, and estimated 
output from the machinery in 5 years is as follows: 
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Year I    50,000 units 
Year II  60,000 units 
Year III   40,000 units 
Year IV   65,000 units 
Year V   85,000 units. 
Compute Annual Lease Rent. 
(a) ` 30,000 
(b) ` 60,000 
(c) ` 50,000 
(d) ` 36,000 
5  A Ltd. had 1,50,000 shares of common stock outstanding on 1 April, 2023. 
Additional 50,000 shares were issued on 1 November, 2023 and 32,000 
shares were bought back on 1 February, 2024. Calculate the weighted 
average number of shares outstanding at the year ended on 31 March, 2024 
is: 
(a) 1,34,500 shares 
(b) 1,65,500 shares 
(c) 1,76,167 shares 
(d) 1,23,833 shares 
Case Scenario 3 
6.  Jay Ltd. submits the following data extracted from the Final Accounts as on 
31 March, 2023: 
Equity Share Capital  
Equity shares of ` 10 each 
50,000  
Profit & Loss (Dr. balance) (50,000) 
9% Debentures 2,00,000 
Loan from Bank 3,00,000 
Advance given to suppliers of goods 45,000 
Provision for tax 14,000 
Plant & Machinery 4,50,000 
Furniture & Fixtures  85,000  
Investment in Star Ltd. 
10,000 equity shares of 10 each 
1,25,000 
Sundry Debtors 70,000 
Cash & Bank Balance 65,500 
 
  
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Additional information given by Jay Ltd.: 
On 31 March, 2023 Jay Ltd. decided to reconstruct the company for which 
necessary resolution was passed. Accordingly, it was decided that: 
(a)  9% Debentures to be settled in full by issuing them 15,000 Equity shares 
of 10 each.  
(b)  Equity shareholders will give up 40% of their capital in exchange for 
allotment of new 11% Debentures of ` 1,00,000. 
(c)  Balance of Profit & Loss to be written off. 
(d)  Equity shares issued for ` 1,00,000. 
In addition to above, following information was also presented by Jay Ltd. on 
1
st
 April, 2023: 
(a)  Interest is received on advances given to suppliers of goods ` 3,000. 
(b)  Taxation liability is settled at ` 14,000. 
(c)  A debtor of ` 40,000 is insolvent, only 40% of his dues are recovered 
from his estate. 
(d)  Dividend is received on Investment in Star Ltd. ` 1 per equity share 
invested. 
(e)  Part of Plant and Machinery is sold at a loss of` 3,000 (book value  
` 15,000) 
Based on the information given in above Case Scenario, answer the following 
Question : 
(i)  The amount of Cash Flow from operating activity is: 
(a) ` 2,000 
(b) ` 5,000 
(c) ` 12,000 
(d) ` 15,000 
(ii)  The amount of Cash Flow from investing Activity is 
(a) ` 28,000 
(b) ` 25,000 
(c) ` 15,000 
(d) ` 22,000 
(iii).  What is the amount of closing Cash and Cash equivalents as on 1 April, 
2023 ? 
(a) `1,92,500 
(b) ` 92,500 
(c) ` 1,27,000 
(d) ` 1,98,500 
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