International Accounting Practices — Summer 2019

Explain the terms

Steeped Fixed Cost

Greenfield Investment

Bad Debts

Preproduction Cost

XBRL

Tax Haven

Authorized Share Capital

Journalize following transactions in the Book of Mr. Poorash for the month of March-2018 March -1 : He started business with Cash of 1,00,000, Stock of Goods of 50,000 and Furniture of 80,000. March -5 : Taken a loan from a friend Chanakya of 50,000. March -10 : Purchased goods of 50,000 from Sikandar at 12% trade discount March-15 : Sold goods to Rashi of 50,000. March-17 : Purchased goods of 40,000 from Bharat Ltd. at a trade discount of 10% and cash discount of 5% and paid half the amount by cheque. March -25 : Paid 42,500 cash to Sikandar to settle his account. And Necessary cash was paid to Bharat Ltd. after deducting discount of 500 to settle the account.

Briefly discuss the scope and importance of International Accounting.

Explain Separate Entity Concept and Going Concern Concept with appropriate Examples.

What do you understand by Tax Neutrality and Tax Equity. Explain the forms of Tax Neutrality in brief.

The following information from the Accounts of M/S Mafatlal and Sons is provided. Particular Sales (in ) Profit (in ) Year 2011 1,20,000 8,000 Year 2012 1,40,000 13,000 Find out: 1. Profit Volume Ratio; 2. Bread Even Point; 3. Profit when sales are 1,80,000 4. Sales required to earn a Profit of 12,000 Page 1 of

Differentiate Financial Accounting and Cost Accounting

From the following annual account of New Horizon Limited you are required to calculate the following ratios and comment on the result. 1. Gross Profit Ratio 2. Net Profit Ratio 3. Debt Collection Period 4. Current Ratio Balance Sheet as on 31st March, 2018 Amount in ‘000 Share Capital 450 Retained Earnings 240 Total (A) 690 12% Debenture 700 Trade Creditors 620 Proposed Dividend 45 Total (B) 1365 Total (A + B) 2055 Fixed Assets (Net of Depreciation) 875 Stocks 310 Debtors 770 Bank Balance 100 Total 2055 Extracts from year’s Profit & Loss Account: Amount in Sales for the year 31,00,000 Gross Profit 17,25,000 Expenses 8,05,000 Depreciation 2,50,000

Apple International Ltd. is manufacturing a product which passes through two process i.e. P-1 and P-2. The following information is obtained from the accounts for the week ending 31st October, 2015: Items P-1 P-2 Direct Material (In ) 26,000 19,800 Direct Wages (In ) 20,000 30,000 Output (in Units) 9,500 8,400 Production overhead are 100% of Direct Wages 10,000 units at 3 each were introduced to P-I. There was no stock of material or work-in-progress at the beginning or at the end of the period. The output of each process passes direct to the next process and finally to finished stock. The following additional data are obtained: Process Normal loss Value Per Unit P-I 5% P-II 10% Prepare Process Accounts along with Abnormal Gain / Loss Accounts. Page 2 of Q-4 (b) The following particulars are obtained from the books of M/S Prerna & Co. for the year 2016. Particular Amount Direct Materials 15,00,000 Direct Wages 8,00,000 Works Overheads 10,00,000 Office Overheads 3,00,000 Selling Overheads 4,00,000 Sales 45,00,000 Workout the price the company should quote for a product in the year 2017, which is estimated will require an expenditure of 2,00,000 in Direct Materials and 1,60,000 in Direct Wages. (Office and Selling overheads are based on works cost, whereas the works overheads are based on the direct wages.) Prepare the cost sheet for the year 2016 and tender cost sheet for the year 2017 showing the price at which the units will be sold so as to earn the same rate of profit on cost as in the year 2016.

Acompany expects to have 37,500 cash in hand on 1st April, and requires to prepare an estimate of cash position during the three months i.e. April to June. The following information is supplied. (Amount in ) Month Sales Purchase Wages Factory Office Selling s Expenses Expenses Expenses February 75,000 45,000 9,000 7,500 6,000 4,500 March 84,000 48,000 9,750 8,250 6,000 4,500 April 90,000 52,500 10,500 9,000 6,000 5,250 May 1,20,000 60,000 13,500 11,250 6,000 6,570 June 1,35,000 60,000 14,250 14,000 7,000 7,000 Other information: 1. Period of Credit allowed by suppliers are 2 months 2. 20% of sales are for cash and period of credit allowed to customers for credit is one month 3. Delay in payment of all expenses is 1 month 4. Income tax of 57,500 is due to be paid on June 15th. 5. The company is to pay dividends to shareholders and bonus to workers of 15,000 and 22,500 respectively in the month of April. 6. Plant has been ordered to be received and paid in May. It will cost 1,20,000. Page 3 of

The annual flexible budget of the Global Manufacturing company is as follows: (Amount in ) Costs At 60% At 80% At 100% Direct Material 90,000 1,20,000 1,50,000 Direct Wages 1,20,000 1,60,000 2,00,000 Factory Overheads 70,000 80,000 90,000 Administrative Overheads 30,000 35,000 40,000 Selling and Distribution Expenses 50,000 58,000 66,000 The company is presently working at 50% capacity. The sales value of production at current prices is 3,20,000. It is anticipated that a 5% discount in the selling price will enable the company to improve its competitive position, thereby enabling it to operate at 75% capacity. Prepare flexible budget for 50% and 75% capacity, find out profit and give your recommendations to management.

The Trial Balance of Balaji Wafers Pvt. Ltd., Rajkot as on 31-3-2010 was as under. Prepare Final Accounts as per companies Act. Particular Debit Particular Credit Opening stock 40,000 Equity Share Capital 12,00,000 Purchases 16,60,000 12% Preference Share 3,00,000 Capital Good Return 80,000 10% Redeemable Debenture 3,00,000 Land and building 10,00,000 Sales 31,00,000 Plant and machinery 6,00,000 Goods return 60,000 Debtors 4,00,000 creditors 1,00,000 Octroi 1,80,000 Loan of director 40,000 Selling and distribution exp. 40,000 Interest of investment 16,000 Carriage outward 16,000 Staff pension fund 16,000 Wages 6,80,000 Bills payable 20,000 Administrative exp. 1,70,000 Fixed deposit 48,000 Vehicles 1,20,000 General reserve 1,40,000 Telephone deposit 20,000 Share forfeiture a/c. 20,000 Director’s fees 20,000 Profit and loss a/c (1-4-2009) 1,60,000 Interest on debenture 12,000 Investments 3,00,000 Discount on debenture 80,000 Loose tools 12,000 Bills receivable 40,000 Cash and bank 50,000 Total 55,20,000 Total 55,20,000 Additional Information: (1) Authorised capital of the company is 13,000 equity shares of 100 each and 12% 3000 preference shares of 100 each. (2) Closing stock is valued at `1,80,000 (3) Depreciate Land and Building by 10%, Plant and Machinery by 20% and vehicles by 30%. (4) Interest receivable on investments is `24,000. (5) Provide bad debts reserve on debtors by 10%. (6) Transfer `50,000 to general reserve. (7) The director have proposed 10% dividend on Equity share capital. Page 4 of