TYBAF Sem V Program Code : 2C00455 Subject Code : 44802

Sub : Financial Accounting – Paper VI

Model Answer Key

Q.1 A) MCQ B) True or False

1 Demand Deposits 6 SEBI B 1 True 6 True

2 3 7 Is not responsible 2 True 7 True
and liable
3 Current Liabilities 8 Trading Assets 3 False 8 False
4 B - PL 9 Intrinsic 4 False 9 True
5 Reserve created by 10 Perpetual Succession 5 False 10 False
revaluation of assets

Q.2 A)
Marking Scheme

B/S 3M (4E-1M) Sch 2,3,8, 9,11 2M (10)

Sch 1,4,5,6 2M Each sch – 1/2 M

HALO BANK
BALANCE SHEET AS AT 31ST MARCH, 2023

PARTICULARS SCH AMT

NO

Capital 1 13,75,000
Reserves 2 22,00,000
Deposits 3 49,50,000
Borrowings 4 88,96,250
Other Liabilities and Provisions 5 30,25,000

TOTAL 2,04,46,250

Cash in Hand and Balance with RBI 6 26,81,250

Balance with Other Banks and Money at Call
And Short Notice 7 30,93,750
Investments 8 36,43,750
Advances 9 79,06,250
Fixed Assets 10 17,18,750
Other Assets 11 14,02,500

TOTAL 2,04,46,250
Contingent Liabilities 12
Bills for Collection 7,00,000

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 SCHEDULES FORMING PART OF BALANCE SHEET

Sch 1 Cap Sch 4 - Borrowings Sch 9 Advances

Bills Purch & Disc 10,31,250
Borrowings from RBI 16,50,000 Overdrafts 20,62,500
Authorised Capital : Borrowings from 72,46,250 Term Loans 34,37,500
Other Banks
4,00,000 shares of 40,00,000 88,96,250 Cash Credits 13,75,000
Rs. 10 each
Issued Capital Sch 5 OL & Provns Total 79,06,250
1,37,500 shares of 13,75,000 Bills Payable 20,62,500
Rs. 10 each
13,75,000 Inter-Office 9,62,500 Sch 10 – Fixed Assets
Adjustments (Cr)
Premises 17,18,750
Sch 2 Reserves Total 30,25,000
Statutory Res 9,62,500 Sch 11 - OA
(687500 + 275000) Sch 6 – CIH & BRBI Stock of Stationary 27,500
P/L A/c Balance 9,62,500 Cash in Hand 9,62,500 Non-Banking Assets 13,75,000
acquired in satisfaction
of claims
Capital Reserve 2,06,250 Balance with RBI 17,18,750 Total 14,02,500
Revenue Reserve 68,750 26,81,250

22,00,000 Sch 7 Bal with…..

Money at Call and 30,93,750
Short Notice
Sch 3 - Deposits
Demand Deposits 16,50,000 Sch 8 Invts
Saving Bank Dep 19,25,000 Investment in Bonds 13,75,000
Term Deposits 10,00,000 Investment in Shares 17,18,750
Recurring Deposits 3,75,000 Invt in Govt Sec 5,50,000

Total 49,50,000 36,43,750

OR

Q.2 B) Marking Scheme

B/S 3 M (4E – 1m) Sch 2,3,9,10, 16 5m (1meach)

P/L 3 M (3E – 1m) Sch 1,4,5,6,7,13, 14, 15 4m (1/2 m)

PUBLIC BANK LTD

BALANCE SHEET AS AT 31ST MARCH, 2023 Rs. in ‘000

PARTICULARS SCH AMT

NO

Capital 1 400
Reserves 2 414
Deposits 3 3,950
Borrowings 4 800
Other Liabilities and Provisions 5 542

TOTAL 6,106

Cash in Hand and Balance with RBI 6 1,464

Balance with Other Banks and Money at Call

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 And Short Notice 7 1,300
Investments 8 480
Advances 9 1,754
Fixed Assets 10 1,108
Other Assets 11 NIL

TOTAL 6,106

Contingent Liabilities 12
Bills for Collection 600

PROFIT AND LOSS A/C FOR THE YEAR ENDED 31ST MARCH, 2018

PARTICULARS SCH AMT

NO

I INCOMES
Interest Earned 13 818
Other Incomes 14 400

TOTAL 1,218

II EXPENSES
Interest Expended 15 600
Operating Expenses 16 498
Provision and Contingencies 6

TOTAL 1,104

III PROFIT/LOSS A/C

Profit/Loss A/c for the Year 114
Profit/Loss A/c (Opening Balance) 160

TOTAL 274

IV APPROPRIATIONS
Transfer to Statutory Reserves 28.50
Transfer to Other Reserves --
Transfer to Government/Proposed Dividend ---
Balance c/f to Balance Sheet 245.50

TOTAL 274.00

SCHEDULES FORMING PART OF BALANCE SHEET

Schedule 1 – Capital
PARTICULARS AMT

Issued and Paid Up

8000 shares of Rs. 100 each, Rs. 50 pd up 400
400

Schedule 2 – Reserves
PARTICULARS AMT

Reserve Fund 140

Statutory Reserve (op) Nil
Add : Additions 28.50 28.50
Profit & Loss A/c Balance 245.50
414.00

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 Schedule 3 – Deposits
PARTICULARS AMT

Current Deposits 1,800

Fixed Deposits 1,200
Saving Deposits 950
3,950

Schedule 4 – Borrowings
PARTICULARS AMT
Borrowings from Lena Bank 800

Schedule 5 – Other Liabilities and Provisions

PARTICULARS AMT

Branch Adjustment A/c 520

Rebate on Bills Discounted 22
542

Schedule 6 – Cash in Hand and Balance with RBI

PARTICULARS AMT

Cash in Hand 396

Cash with RBI 1,068
1,464

Schedule 7 – Balance with Other Banks and Money at Call and Short Notice
PARTICULARS AMT

Cash with Other Bank 1,300

Schedule 8 – Investments
PARTICULARS AMT
Investment at Cost 480

Schedule 9 – Advances
PARTICULARS AMT

Loans, Cash Credit and Overdraft 1,180

Bills Discounted and Purchased 580
Less : Prov for Bad & Doubtful Debts (6)
1,754

Schedule 10 – Fixed Assets

PARTICULARS AMT AMT

Building (At Cost) 1,200

Less : Dep’n (Upto LY) (300)
900
Less : Dep’n 10 % (120) 780
Furniture (At Cost) 400
Less : Dep’n (Upto LY) (52)
348
Less : Dep’n 5 % (20) 328
1,108

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 Schedule 11 – Other Assets

PARTICULARS AMT
Nil

SCHEDULES FORMING PART OF PROFIT AND LOSS A/C

Schedule 13 – Interest Earned

PARTICULARS AMT AMT

Interest and Discount Received 840

Less : Rebate on Bills Discounted (22) 818
818
Schedule 14 – Other Incomes

PARTICULARS AMT
Commission and Exchange 400

Schedule 15 – Interest Expended

PARTICULARS AMT

Interest paid 600

Schedule 16 – Operating Expenses

PARTICULARS AMT

Salaries 250
Law Charges 6
Directors Fees 10
Postage and Telegrams 4
Audit Fees 8
Printing and Stationary 50
Rent and Taxes 30
Dep’n on Building 120
Dep’n on Furniture 20
498

WORKINGS :

Provisions and Contingencies

PARTICULARS AMT

Prov for Bad & Doubful Debts 6

Q.3 A)
Marking Scheme

Rev a/c 3M Sch 2, 3 and 4 6 M (2M each)

Sch 1 3M WN 3M

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 FORM B – RA
JEEVAN GENERAL INSURANCE COMPANY
REVENUE ACCOUNT FOR THE YEAR ENDED 31st March, 2023
PARTICULARS SCH NO AMT

Premium Earned 1 53,44,000

Interest, Rent and Dividend (Gross) ---
Others (To Be Specified) ---

TOTAL (A) 53,44,000

Claims Paid 2 36,20,800

Commission 3 1,17,600
Operating Expenses 4 1,20,000
Others (To Be Specified) ---

TOTAL (B) 38,58,400

OPERATING PROFIT/LOSS (A – B) 14,85,600

Schedules forming part of Revenue A/c

Sch 1. Premium Earned
Particulars Amt
Premium on Direct Business 52,60,000
Add : Premium on Reinsurance Business 7,60,000
accepted
Less : Premium on Reinsurance Business Ceded (3,80,000)

56,40,000

Less : Changes in Provisions (2,96,000)

Net Premium Earned 53,44,000

Sch 2. Claims Paid

Particulars Amt Amt

A CLAIMS ON DIRECT BUSINESS

Claims Paid 34,00,000
Less : Outstanding (Opening Balance) (5,00,000)
Add : Outstanding (Closing Balance) 5,74,400
A 34,74,400
B CLAIMS ON REINSURANCE
BUSINESS ACCEPTED
Claims Paid 4,00,000
Less : Outstanding (opening balance) (69,600)
Add : Outstanding (Closing Balance) 48,000
B 3,78,400
C CLAIMS ON REINSURANCE
BUSINESS CEDED
Claims Received 2,60,000
Less : Outstanding (Op Balance) (52,000)
Add : Outstanding (Closing Balance) 88,000
C (2,96,000)

A+B–C 35,56,800
Add : Expenses Related to Claims
Surveyors Fees 35,000
Legal Expenses 45,000 80,000
NET CLAIMS PAID 45,26,000

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 Sch 3. Commission

Particulars Amt
Commision on Direct Business 1,20,000
Add : Comm on Reinsurance Business Accepted 8,800
Less : Commission on Reinsurance Business Ceded (11,200)

Net Commission Paid 1,17,600

Sch 4. Operating Expenses

Particulars Amt Amt

Expenses of Management 1,80,000
Add : O/s (Cl) 4,000
1,84,000
Less : Exps related to claims included
Surveyors Fees 28,000
Legal Expenses 36,000 (64,000)
Total 1,20,000

Working Note :

1. Calculation of Changes in Provision for Unexpired Risk

Particulars Amt
Reserve for Unexpired Risk (Opening Balance) 19,60,000

Less : Res for Unexpired Risk (Closing Balance) (22,56,000)

5640000 X 40 %
Changes in Provision (2,96,000)

OR
Q.3 B) Marking Scheme

B/S 3m I/E A/C 3M Sch 1,2,3 and 6 6m (1 1/2m each Bal sch 3 m ( 1/4 m)

Statement of Assets and Liabilities as on 31st March, 2023

PARTICULARS SCH AMT AMT

I CONT’N AND LIABILITIES

1 PARTNERS FUND
Contribution 1 4,66,875
2 Liabilities
Creditors/Trade Payables 2 2,72,550

Total 7,39,425

ASSETS
Gross Fixed Assets 2,17,500
Less : Depreciation and Amortization 11,625
Net Fixed Assets 3 2,05,875
Loans and Advances 4 900
Inventories 5 1,80,000
Debtors/Trade Receivables 6 1,90,675
Cash and Cash Equivalents 7 1,56,275

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 Other Assets 8 5,700 5,33,550

Total 7,39,425

Statement of Income and Expenditure for the period from 1/4/2022 to 31/3/2023

PARTICULARS SCH AMT

I Incomes
Net Turnover 9 5,92,500
Increase/Decrease in Stocks 10 (2,20,000)

Total 3,72,500
II Expenses
Purchases 11 3,34,250
Personnel Expenses 12 46,500
Administrative Expenses 13 12,000
Selling Expenses 14 20,425
Insurance Expenses 15 7,850
Depreciation and Amortisation 16 11,625
Other Expenses 17 6,300

Total 4,38,950
Profit/Loss transferred to Partners A/c 18 (66,450)

Notes to Accounts

Note 1 – Contribution

Particulars Amt Amt

Rahul
Opening Balance 3,00,000
Less : Net Loss (33,225)
2,66,775
Less : Drawings (20,000) 2,46,775
Shahul
Opening Balance 2,70,000
Less : Net Loss (33,225)
2,36,775
Less : Drawings (16,675) 2,20,100
Total 4,66,875

Note 2 – Creditors/Trade Payables

Particulars Amt
Bills Payable 60,000
Sundry Creditors 2,07,000
Outstanding Wages 1,500
Outstanding Salaries 3,000
Outstanding Advertisement 1,050
2,72,550

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Note 3 – Fixed Assets

Particulars Gross Dep’n Net

Goodwill 40,000 -- 40,000

Patents 27,500 4,125 23,375
Plant and Machinery 1,50,000 7,500 1,42,500
2,17,500 11,625 2,05,875

Note 4 – Loans and Advances

Particulars Amt
Prepaid Insurance 900

Note 5 – Inventories

Particulars Amt
Inventory 1,80,000

Note 6 – Debtors/Trade Receivables

Particulars Amt Amt

Bills Receivable 12,550

Sundry Debtors 1,87,500
Less : New RDD 5 % (9,375) 1,78,125
1,90,675

Note – 7 Cash and Cash Equivalents

Particulars Amt
Cash in Hand 32,500
Cash at Bank 1,23,775
1,56,275

Note 8 – Other Assets

Particulars Amt
Claim Receivable 5,700

Note 9 – Turnover

Particulars Amt
Sales 6,00,000
Less : Return Inward (7,500) 5,92,500
5,92,500
Note 10 – Increase/Decrease in Stocks

Particulars Amt
Closing Stock 1,80,000
Less : Opening Stock (4,00,000)
TOTAL (2,20,000)

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Note 11 – Purchases

Particulars Amt Amt

Purchases 3,50,000
Less : Return Outward (6,750)
Less : Goods lost by Fire (9,000) 3,34,250
3,34,250

Note 12 – Personnel Exps

Particulars Amt
Wages 22,000
Add : Outstanding 1,500 23,500
Salaries 20,000
Add : Outstanding 3,000 23,000
46,500

Note 13 – Administrative Expenses

Particulars Amt
Office Expenses 10,000
Factory Rent 2,000
12,000

Note 14 – Selling Expenses

Particulars Amt
Advertisement 10,000
Add : Outstanding 1,050 11,050
New RDD 9,375
20,425

Note 15 – Insurance

Particulars Amt
Insurance 8,750
Less : Prepaid (900)
7,850

Note – 16 Depreciation and Amortisation

Particulars Amt

Dep’n on Patents 4,125

Dep’n on P/Machinery 7,500
11,625

Note 17 – Other Expenses

Particulars Amt

General Expenses 3,000

Goods lost by fire 3,300
6,300

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Note 18 – Profit and Loss transferred to Partners Account

Particulars Amt

Rahul 33,225
Shahul 33,225
66,450

Q.4 A) Marking Scheme

AP 3M NP 2M
CE 6M SP & G/W 4M
Q.4 A. SOLUTION

PARTICULARS T LTD V LTD Mks

Valuation of Goodwill
Super Profit Method
AVERAGE PROFIT

2011-12 6,50000 2,25,000

2012-13 6,25,000 2,00,000
2013-14 7,50,000 2,80,000
Total Profit (Before Tax) 20,25,000 7,05,000
Total No of Years 3 3
Average Profit 6,75,000 2,35,000 3m
Add : Undervaluation of Stock 12,000 36,000
Less : Income from NT Invts (18,000) --
300000 X 6 %
Avg Profit (before tax) 6,69,000 2,71,000
Less : Tax 40 % 2,67,600 1,08,400
Avg Profit (After Tax) 4,01,400 1,62,600 2m

CAPITAL EMPLOYED
A ASSETS
Fixed Assets 12,00,000 3,00,000
Stock 6,12,000 4,26,000
Debtors 5,10,000 1,80,000
Cash and Bank Balance 90,000 30,000

A 24,12,000 9,36,000
B LIABILITIES
Creditors 3,00,000 1,50,000
Capital Employed (A – B) 21,12,000 7,86,000 4

Normal Rate of Return 15 % 15 %

Normal Profit
NP = Capital Employed X 21,12,000 X 15 / 7,86,000 X 15 / 100 2
NRR/100 100 = 1,17,900
= 3,16,800

SUPER PROFIT
SP = Avg Profit – Normal Profit SP = 401400 – SP = 162600 – 2
3,16,800 1,17,900
SP = 84,600 SP = 44,700

Goodwill
G/W = Super Profits X No of Yrs 84,600 X 4 44,700 X 4 2
of Purchase = 3,38,400 = 1,78,800

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 T Ltd

2011-12 2012-13 2013-14

PBT 100 ? 6,50,000 ? 6,25,000 ? 7,50,000
Less : Tax 40 % 40
PAT 60 3,90,000 3,75,000 4,50,000

Q.4 B)
Marking Scheme

Step 1 5M Prof ESH 4M

IVPS 2M ERD &YVPS 2 M FVPS 2 M

Q.4 B SOLUTION

VALUATION OF SHARES (INTRINSIC VALUE PER SHARE METHOD)

 NET ASSETS AVAILABLE FOR EQ SHAREHOLDERS (LIABILITY SIDE APPROACH)

PARTICULARS AMT AMT

Equity Share Capital 20,00,000

12 % Preference Share Capital 20,00,000
Reserves and Surplus 3,00,000
Add : Appreciation of Assets 5,00,000 8,00,000

Less : Preliminary Expenses (60,000)

47,40,000

Less : Amt Due to Pref sh Holders (20,00,000)

Net Assets Available for Eq Sh 27,40,000

Holders

 INTRINSIC VALUE PER SHARE (IVPS)

IVPS = NET ASSETS AVAILABLE FOR EQUITY SHARE HOLDERS / NO OF EQUITY

SHARES

IVPS = 27,40,000 / 2,00,000

IVPS = Rs. 13.70

YIELD VALUE PER SHARE METHOD (YVPS)
 PROFIT AVAILABLE FOR EQUITY SHAREHOLDERS

PARTICULARS AMT

Average profits (post tax) 8,20,000

Add : Tax 4,00,000
Average profits (pre tax) 12,20,000
Less : Decrease 20,000
12,00,000
Less : Tax Provision (4,00,000)
8,00,000
Less : Preference Dividend (2,00,000)
20,00,000 X 10 %

Profit Available for Eq Shareholders 6,00,000

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 EXPECTED RATE OF DIVIDEND (ERD)

ERD = PROFIT AVAILABLE FOR EQUITY SHAREHOLDERS / PAID UP EQUITY

SHARE CAPITAL X 100

ERD = 6,00,000 / 20,00,000 X 100

ERD = 30 %

 YIELD VALUE PER SHARE (YVPS)

YVPS = EXPECTED RATE OF DIVIDEND / NORMAL RATE OF RETURN X PAID UP
VALUE PER SHARE
YVPS = 30 / 15 X 10

YVPS = Rs.20

FAIR VALUE PER SHARE METHOD

FVPS = IVPS + YVPS / 2

FVPS = 13.70 + 20 / 2

FVPS = 33.70 / 2

FVPS = Rs. 16.85

Q.5 A. (i) Explain the concept and computation of Net Own Fund in NBFC. (8)
(ii) Explain Reinsurance and Co-insurance in detail. (7)

OR
Q.5 B. Write Short Notes on : (Any 3) (15)
1. Rebate on Bills Discounted
2. Short Note on Marine Insurance
3. Short Note on LLP
4. Objectives of RBI regulations regarding NBFC
5. Factors affecting valuation of shares

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