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Auditing and Cost Accounting

Time: 3 Hours

March – 2002 Marks: 100
 

N.B.:

(1)

Question NO.1 and 6 are compulsory and answer any two questions each from the rest from each section.

 
 

(2)

Figures to the right indicate full marks.

   
 

(3)

Working notes should form part of your answer.

   
 

(4)

Answers of both the sections should be written in the same answer book.

   
       
    Section I --- (Auditing)  
       

Q.1.

a)

 Define & explain the term Auditing.

4
 

b)

What are the principles of Auditing?

6
 

c)

Distinguish between Auditing and Investigation

8
       

Q.2.

a)

What are the objectives of verification?

4
 

b)

How would you verify the following:

i) Cash at Bank          ii) Plant & Machinery       iii)  Public Deposits

12
       

Q.3.

a)

What is Deferred Revenue Expenditure? What are the duties of an auditor as regards Deferred Revenue Expenditure?

8
 

b)

What is the procedure  of physical stock-taking?

8
       

Q.4.

a)

What are the provisions of Company’s Act, 1956 regarding appointment of first & subsequent auditors?

8
 

b)

What  are the duties of an auditor in respect of internal check?

8
       

Q.5.

 

Write short notes on any four

16
   

(i)

Window Dressing

(iv)

Causes of Depreciation

(ii)

Continuous Audit

(v)

Auditing in Computer Environment

(iii)

Statutory Auditor

(vi)

Audit Planning

 
       
       
       
    Section II --- (Costing)  
       

Q.6.

 

Super Vision company furnishes you with the following information about its 1000 TV sets manufactured and sold during the year :-

 

Rs.

 

Rs.

Materials

18,00,000

Office & Administration Expenses

6,80,000

Direct Wages

10,00,000

Selling & Distribution Expenses

1,20,000

Power and Stores

2,40,000

Sale of scrap

40,000

Indirect wages

3,00,000

Sale of 1000 TV sets

62,00,000

Factory Lighting

1,20,000

Repairs and depreciation of Machinery

2,00,000

Cost of rectifying defective work

60,000

   

Prepare the cost sheet for the above year, showing the elements of cost per unit. Prepare also the estimated cost sheet for the next year assuming that:-

  1. Materials cost and direct wages cost will increase by 10% and 15% respectively.
  2. Factory-overheads will be recovered as a percentage of direct wages, as last year.
  3. Office-overheads and selling overheads will be recovered as a percentage of works cost, as last year, and,
  4. 1500 TV sets will be produced and sold at Rs. 6,600/- each in the next year.
20
       

Q.7.

  Reliable construction Ltd. Entered into a contract to construct a building. The contract value is Rs. 13,00,000 to be realized in installments on the basis of the value of work certified by the architect subject to a retention of 10%. The work commenced on 1-4-2000 but it remained incomplete on    31-12-2000 when the final accounts are to be prepared. The facts and figures of the contract are:-
Plant charged to contract at the commencement   64,000
Materials charged to contract 3,60,000
Wages paid 1,74,000
Expenses incurred on the contract  77,500
  Total establishment expenses amounted to Rs. 82,000 out of which 25% is attributable to this contract. Out of the materials issued to the contract, materials costing Rs. 8,000 were sold for Rs. 10,000. A part of the plant (costing Rs. 4,000) was damaged on 1-10-2000 and the scrap realized Rs. 600 only. Plant costing Rs. 6,000 was transferred to another contract site on 31-12-2000.
Plant is to be depreciated @ 10% p.a.
Materials in hand on 31-12-2000 35,000
Cash received from contractee 6,12,000
Cost of work yet to be certified 60,000
Prepare contract account showing there in the amount of profit or loss to be transferred to Profit and Loss account.
15
       

Q.8.

 

A product passes through three processes. In January, 2001 the cost of production were as given below:-

Particulars Processes
  I II III
Direct material 12,000 18,120 20,772
Wages 21,000 25356 30,000

Production overheads

9000 12000 15000
6000 units were issued to Process I @ Rs. 15/- each      
Normal Loss 10% 5% 10%
Wastages realized Rs. 6 per unit Rs. 15 per unit Rs. 18 per unit
Actual production (in units) 5520 5220 4800

Prepare :-

  1. Process account I, II, III.
  2. Normal loss account
  3. Abnormal loss account                                                 
15
       

Q.9. 

  Write short notes on any three of the following:-
  1. Limitations of budgetary control system
  2. Batch costing
  3. Techniques of standard costing
  4. Characteristics of marginal costing
  5. Importance of break-even.
15
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