DOW Exam Practise DEC 28 2020

Accounting
What is accounting
1-HOW INVENTORY is valued as per IAS -2
 INVENTORY is valued at the LOWER OF COST AND NRV

2- Examples of INVENTORY
 Raw material
 Finished goods
 WIP
 Stock in transit
3- Inventory vs STOCK
 No difference – alternate word
4- Explain NRV as per IAS -2

 Net selling price in ordinary course of business- estimated cost of completion – cost to make sales
5- Prepare stock card using Perpetual Inventory System based on the following data.
The cost method weighted AVERAGE method ( moving Average )is to be applied.
Date Activity Unit Rate (Rs.) Amount
1-Jan Purchase 8000 20.00
5-Jan Sold 4000 26.00
10-Jan Purchases 9000 21.00
15-Jan Sold 6000 28.00
20-Jan Purchases 7000 22.00
25-Jan Sold 4000 29.00
29-Jan Sold 3000 30.00
ANSWER ------------format ignore sales price

IN OUT Balance
Date QTY Rate Amount QTY Rate Amount QTY Rate Amount
Jan 1 8000 20 160000 8000 20 160000
Jan 5 4000 20 80000 4000 20 80000
Jan 10 9000 21 189000 4000 20 80000
9000 21 189000
13000 20.50 269000
wrong
20.69
Jan 15 6000 20.69 124140 7000 20.69 144830
Jan 20 7000 22 154000 14000 21.34 298830
Jan 25 4000 21.34 85360 10000 21.34 213400
Jan 29 3000 21.34 64020 7000 21.34 149380
6-COMLETE TRIAL BALANCE from the ledger balances given below by inserting figures in correct
column
Answer assets Dr , liab , income , capital -- cr

Debit Credit
Bank 100 100
Creditors liability 200 200
Stocks 300 300
Debtors 200 200
Provision for Bad debts 100 100
Depreciation Expenses 100 100
Building 500 500
Allow for Depreciation 100 100
Short term borrowings 500 500
Capital 400 400
reserves 200 200
Prepaid Insurance 200 200
Bad debt expenses 100 100
conference Expense 200 200
Dividend 300 300
Unearned Service Revenue 200 200
SUSRENSE ac 300
put balancing figure
Total 2000 2000
7- Extracts from TB
Particulars Debit Rs. Credit Rs

Prepaid Rent 40000
Accounts receivable 300,000
Supplies 6,000
Furniture and fixtures 350,000
Accumulated dep. - furniture and
fixtures 80,000
Accounts payable 260,000
Unearned service revenue 50,000
Share Capital 200,000
Service revenues 87,000
Salary expense 180,000
a. Depreciation expense Rs 10 000
Entry : Dep ex p Dr 10000
Allow for Dep Cr 10 000
b. Provision for Bad debts expenses were estimated at 5 % .
Bad debts Exp Dr 15000
Provision for bad debts Cr 15000
c. Out of Rs. 50,000 of unearned Service Revenue 20,000 was unearned
during 2019.
Unearned Dr 20000
Service revenue Cr 20 000
d. Supplies on hand at year end, Rs. 1000.
Supplies exp Dr 5000
Supplies Cr 5000
e. Salaries include Rs. 30,000 which are paid in advance.
Salary advance Rs 30000
Salaries exp Cr 30000
8-Prepare a Statement of Changes in Equity based on following data : ( 2 Marks )
Opening balance January 01, 2010:

Share Capital Rs300 000 ,
Revenue Reserves Rs100 000
Capital Reserves Rs400 000.
During the year following transactions took place:
 Profit for the year is Rs 200 000.

 Cash dividend declared and paid Rs300 000 from revenue reserve
 Bonus Shares issued 20 % from Capital Reserves.
FORMAT for answer - Statement of Changes in Equity
Share capital Revenue Capital Total EQUITY

Reserves Reserves
Opening balance 300000 100000 400000 800000
Profit +200000 +200000
Cash dividend -300000 -300000
Bonus shares +60000 -60000 0
Closing balance 360000 0 340000 700000
9- CASH FLOW STATEMENT Company M Company T
Opening balance 700 700
 Operating activities -500 +600
 Investing activities +100 +100
 Financial activities +600 - 900
Total increase/decrease +200 - 200
Closing balance 900 500
Advise which Company is better and justify it
10-Prepare Vertical and Horizontal Analysis for 2019 only for Marketing expenses
Year 2019 2019 Year 2018 Horizontal %
Vertical %
Salaries 6000 13.6 4 000 2000 50%

Advertisement 20000 45.45 24 000 4000 16.66%
Insurance 18000 40.91 12 000 6000 50%
Total 44 000 100% 40 000 4000 10%
Impairments loss
Defination of Property n equipment
RATIO—operating cycle , liquidity , inventory turn over , debt equity -----------read importance
Verticle n horizontal
11-
machine cost Rs. 700,000
bougt on Jan 01, 2010 for.
useful life of 3 years & salvage value Rs.100, 000.
machine was sold on June 30 ,2011 for Rs. 250,000.
straight line method for depreciation
 Whats Book value at the time of disposal of machine.

Used for 1.5 years --- depreciation pa
DEP = cost – sv / usefule life 700000 -100000 /3 = 200000
Dep for 18 months is 300000
Book value = cost – Acc dep = 700000-300000= 400000
 Entry to record disposal of machine.
Working for loss = BV – sales price = 400000- 250000 = loss 150000

ENTRY
CASH Dr 250 000
Acc dep Dr 300000
Loss 150000
Machine Cr 700000

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Accounting

1-HOW INVENTORY is valued as per IAS -2

 INVENTORY is valued at the LOWER OF COST AND NRV

 No difference – alternate word

4- Explain NRV as per IAS -2

ANSWER ------------format ignore sales price

Answer assets Dr , liab , income , capital -- cr

Total 2000 2000

Particulars Debit Rs. Credit Rs

8-Prepare a Statement of Changes in Equity based on following data : ( 2 Marks )

Opening balance January 01, 2010:

During the year following transactions took place:

 Profit for the year is Rs 200 000.

FORMAT for answer - Statement of Changes in Equity

Share capital Revenue Capital Total EQUITY

9- CASH FLOW STATEMENT Company M Company T

Opening balance 700 700

 Operating activities -500 +600

 Investing activities +100 +100

 Financial activities +600 - 900

Total increase/decrease +200 - 200

Closing balance 900 500

Advise which Company is better and justify it

Salaries 6000 13.6 4 000 2000 50%

 Whats Book value at the time of disposal of machine.

Working for loss = BV – sales price = 400000- 250000 = loss 150000

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