| Auditing and Cost Accounting |
| Time: 3 Hours |
March – 2004 |
Marks: 100 |
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| N.B.: |
(1) |
Question NO.1 and 6 are compulsory and answer any two questions each from the rest from each section. |
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(2) |
Figures to the right indicate full marks. |
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(3) |
Working notes should form part of your answer. |
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(4) |
Answers of both the sections should be written in the same answer book. |
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Section I --- (Auditing) |
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| Q. 1. |
a) |
Define Auditing. How Auditing is different from Accounting? |
10 |
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b) |
Explain the term fraud. What are the different types of frauds? |
8 |
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| Q. 2. |
a) |
What is test checking in auditing? What precautions an auditor should take while applying test checking? |
8 |
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b) |
What are special considerations which auditor should keep in mind during the course of vouching? |
8 |
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| Q. 3. |
a) |
How would you read, as an auditor, the Jani's ledger A/c in the books of Miss. Bombay & Co.?
| Jani’s A/c |
| Dr. |
Cr. |
| Date |
Particulars |
Rs. |
Date |
Particulars |
Rs. |
| 2002 Jan. 1 |
To Bal b/d. |
6,000 |
2002 Jan. 1 |
By Bills Receivable |
4,000 |
| 2002 May 25 |
To sales |
5,000 |
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By sales return |
1,000 |
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By bank |
950 |
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By discount |
50 |
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2002 June 5 |
By bank |
2,350 |
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By discount |
150 |
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By Bills Receivable |
2,500 |
| Sept. 8 |
To bills receivable |
2,500 |
Sept. 8 |
By bank |
2,000 |
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To interest |
500 |
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By Bills Receivable |
8,000 |
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To sales |
7,000 |
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| Dec. 12 |
To bills receivable |
8,000 |
Dec. 15 |
By bank |
8,400 |
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To interest |
400 |
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| Dec. 15 |
To sales |
5,000 |
Dec. 31 |
By bal c/d. |
5,000 |
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34,400 |
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34,400 |
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8 |
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b) |
What is internal control? Suggest internal control system for credit purchases. |
8 |
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| Q. 4. |
a) |
Explain the provisions of the Companies Act, 1956 for appointment of an auditor of a company. |
8 |
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b) |
What are the rights of a company auditor ? |
8 |
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| Q. 5. |
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Write short notes on any four : |
16 |
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| (i) |
Inspection of Accounts |
(iv) |
Meaning and objects of valuation |
| (ii) |
Audit in Dept. |
(v) |
Essentials of a good Audit Report |
| (iii) |
Meaning of Verification |
(vi) |
Audit Certificate. |
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Section II --- (Costing) |
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| Q. 6. |
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Evershine Industries Ltd. commenced business on 1st April 2002, cost and financial records are maintained for the year ended 31st March 2003. From the following information prepare statements:
| (a) |
Showing the result as per costing records. |
| (b) |
Showing result as per financial records and |
| (c) |
Reconciling these results. |
| Particulars |
As Per costing records |
As per Financial Records |
| Material consumed (20000 Kgs) |
Rs. 28.50 per kg |
Rs. 26 per kg. |
| Direct Wages (3000 man days) |
Rs.80 per man day |
Rs. 85 per man day |
| Factory Overheads |
20% of prime cost |
Rs. 3,60,000 |
| Administrative Overheads |
Rs. 30 per kg. of output produced |
Rs. 4,00,000 |
| Selling Overheads |
Rs. 50 per kg. of output sold |
Rs. 9,60,000 |
| Stock (of output produced) |
At cost of production |
Rs. 1,50,000 |
| as 31-03-2003 (2000 kgs) |
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| Work in progress
as on 31-3-2003 |
Rs. 1,62,000 |
Rs. 1,62,000 |
| Sales (16,000 kgs) |
Rs. 130 per kg. |
Rs. 129.50 per kg. |
| Rent Income |
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Rs.1,20,000 |
| Preliminary Expenses Written off |
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Rs. 30,000 . |
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| Q. 7. |
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The following data have been extracted from the books of Alfa Ltd.
| Year |
Sales Rs. |
Profit Rs. |
| 2002 |
5,00,000 |
50,000 |
| 2003 |
7,50,000 |
1,00,000 |
You are required to calculate :
| (i) |
P/V Ratio |
| (ii) |
Fixed cost |
| (iii) |
Break-even sales |
| (iv) |
Profit on sales of Rs. 4,00,000 |
| (v) |
Sales to earn a profit of Rs. 1,25,000 |
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| Q. 8. |
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The Perfect Construction Company Ltd. has undertaken the construction of a bridge for a value of Rs. 45,00,000 subject to a retention of 20% until one year after the certified completion of the contract. The following information is available for the year ended 31st March 2003 :
| Particulars |
Rs. |
| Labour on site |
11,55,000 |
| Material sent to site |
12,30,000 |
| Material from stores |
2,35,500 |
| Plant hire |
34,800 |
| Direct expenses |
63,000 |
| General overheads allocated to the contract |
1,18,200 |
| Material at site (31.3.2003) |
22,800 |
| Wages accrued on 31.3.2003 |
28,800 |
| Direct expenses accrued on 31.3.2003 |
5,100 |
| Work not yet certified at cost |
43,500 |
| Value of work certified |
39,00,000 |
| Cash received on account |
31,20,000 |
You are required to prepare:
| (i) |
Contract account |
| (ii) |
Contractee's account |
| (iii) |
and show relevant items in the Balance Sheet. |
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| Q.9. |
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In an oil refinery, the product passes through three different processes. viz. crushing, refining and finishing. The following information is available for the month of March 2003 :
| Trial Balance |
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Crushing Process Rs. |
Refining Process Rs. |
Finishing Process Rs. |
| Raw materials (500 tons Copra) |
9,00,000 |
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-- |
| Wages |
32,000 |
23,600 |
23,500 |
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| Power |
4,800 |
4,000 |
6,000 |
| Sundry Materials |
2,000 |
7,600 |
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| Factory expense |
2,400 |
4,000 |
3,800 |
| 200 tons of oil cake was sold for Rs. 60,000 and 275 tons of crude oil was obtained from crushing process. |
| 25 tons of by-product of the crushing process fetched Rs. 3,600. |
| 25 tons of by-product of the refining process was sold for Rs. 3,600 and 250 tons of refined oil was obtained. |
| 10 tons of finished oil were sold for Rs. 4,800 and 240 tons of finished oil was stored in drums. |
| The establishment expenses for the month amounted to Rs. 14,000 which is to be charged to the three processes in proportion of 3:2:2. |
| The cost of drums for storing finished oil was Rs. 84,100. |
| Prepare accounts for all the three processes. |
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| Q.10. |
a) |
Write short notes on (any three) :
| (1) |
Joint Product and By - Product in process costing |
| (2) |
Under and Over absorption of cost. |
| (3) |
Marginal Costing |
| (4) |
Importance of Break - even point analysis. |
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