Auditing and Cost Accounting |
| Time: 3
Hours |
March – 2005 |
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) |
What are the advantages & Limitations of
Auditing? |
10 |
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b) |
What is Interim Audit? What
are its advantages & disadvantages? |
8 |
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| Q. 2. |
a) |
What are the rights of an Auditor under Companies
Act, 1956? |
8 |
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b) |
How would you vouch the following
? (i) Income Tax Refund (ii) Custom Duty Paid |
8 |
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| Q. 3. |
a) |
What is an Audit Programme?
What are its advantages & disadvantages? |
8 |
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b) |
Explain the term “Internal Control”. What are its
objectives? |
8 |
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| Q. 4. |
a) |
Distinguish between Audit of Accounts of a
partnership firm & a Limited Company. |
8 |
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b) |
Scrutinize & give your comments as an Auditor
on the following Ledger Account.
| In the books of M/s Acharya |
| Dr.
Mrs. Vyas Account Cr. |
| Date 2004 |
Particulars |
Rs. |
Date 2004 |
Particulars |
Rs. |
| 14th January |
To Bank |
10,000 |
1st January |
By Bal b/f. |
10,000 |
| 22nd January |
To Purchase Returns |
3,000 |
21st January |
By Purchase |
28,000 |
| 22nd January |
To Bills Payable |
20,000 |
1st February |
By Purchase |
14,000 |
| 23rd January |
To Bank A/c |
4,950 |
25th February |
By Bills Payable |
20,000 |
| 23rd January |
To Discount A/c |
50 |
25th February |
By Interest |
100 |
| 2nd February |
To Bank A/c |
13,860 |
1st March |
By Purchase |
21,000 |
| 2nd February |
To Discount A/c |
140 |
31st March |
By Balance c/fd. |
25,000 |
| 26th February |
To Bills Payable |
20,100 |
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| 30th March |
To Vaishya A/c |
21,000 |
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| 31st March |
To Bank |
25,000 |
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| Total |
1,18,100 |
Total |
1,18,100 |
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8 |
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| Q. 5. |
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Write short notes on any four : |
16 |
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| (i) |
Auditing in Depth |
(iv) |
Essentials of a Good Audit Report |
| (ii) |
Appointment of first Auditor of a Limited
Company |
(v) |
True & Fair view |
| (iii) |
Window Dressing |
(vi) |
Audit Note Book |
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Section
II --- (Costing) |
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| Q. 6. |
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A Company took up a contract of Rs. 10 crore and as per the agreement, it would receive 75% of the work certified each year. The contract was
commenced on 1st April, 2000 and was completed on 1st October,
2003. Further details are as follows : -
| Particulars |
2000-2001 |
2001-2002 |
2002-2003 |
2003-2004 |
| Machinery Purchased |
50,00,000 |
-- |
-- |
-- |
| Materials Purchased |
20,00,000 |
50,00,000 |
1,00,00,000 |
2,00,00,000 |
| Labour |
10,00,000 |
30,00,000 |
50,00,000 |
1,40,00,000 |
| Other Expenses |
5,00,000 |
12,18,000 |
40,00,000 |
90,00,000 |
| Stock of materials at year end |
1,00,000 |
2,00,000 |
3,20,000 |
5,50,000 |
| Work Certified (Cumulative) |
20,00,000 |
2,00,00,000 |
5,00,00,000 |
10,00,00,000 |
| Work Uncertified |
8,00,000 |
10,00,000 |
60,00,000 |
-- |
During 2000-2001, materials costing Rs. 20,000
were returned to stores. During 2002-2003 certain materials costing Rs. 30,000
were found unsuitable & sold at a loss of Rs. 4,000. Materials worth Rs. 8,000
were stolen from site. During 2003-2004 there was an accident site due
to which a worker had to be paid Rs. 50,000 as compensation. This amount is
included in wages. On completion of contract the machinery was sold for Rs. 25,00,000. The company provides depreciation at 20% p.a. on
Machinery on diminishing balance method. The company closes its accounts on 31st March every year. Prepare Contract Account for each of the above years.
Also show Contractee’s Account. |
16 |
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| Q. 7. |
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A product passes through three processes and
40,000 units were introduced in Process A at cost of Rs. 30,000. The
following further information is available :-
| Particulars |
Process A |
Process B |
Process C |
| Sundry Materials |
Rs.
20,000 |
Rs.
4,000 |
Rs.
2,000 |
| Direct labour |
Rs.
6,000 |
Rs.
3,000 |
Rs.
1,500 |
| Direct Expenses |
Rs.
1,920 |
Rs.
5,600 |
Rs.
4,200 |
| Output (Units) |
38,000 |
37,000 |
34,000 |
| Opening Stock (Units) |
6,000 |
3,000 |
4,000 |
| Closing Stock (Units) |
4,000 |
5,000 |
9,500 |
| Opening Stock Valuation (Per Unit) |
Rs.
1.40 |
Rs.
1.80 |
Rs.
2.50 |
| % of
Normal
Wastage |
4% |
5% |
10% |
| Scrap Sale Price (per unit) |
Rs.
0.20 |
Rs.
0.30 |
Rs.
0.40 |
The Closing Stock in each process is valued at respective
Process Cost.. Prepare Process A/cs & Process Stock A/cs. |
15 |
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| Q. 8. |
a) |
The following details are
available for the year ending 2004.
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Rs. |
| Direct wages |
60,000 |
| Purchase of Material |
72,000 |
| Indirect Materials |
3,600 |
| Indirect Wages |
5,400 |
| Office Salaries |
7,200 |
| Employer’s Contribution to Employees
State Insurance |
600 |
| Printing & Stationary |
1,200 |
| Power & Fuel |
5,400 |
| Legal Charges |
864 |
| Office Rent |
1,200 |
| Sales (9000 units) |
1,80,000 |
| Opening Stock : Raw Materials Work in Progress Finished Goods (600 units at the rate of
Rs. 16.25 per unit) |
12,000 2,880 ---- |
| Closing Stock : Raw Materials Work in Progress Finished Goods (1200 units) |
13,344 9,600 ? |
sValue the Finished Stock at
Cost of Production. Prepare a Cost Sheet showing different
elements of Cost. |
10 |
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b) |
For Producing 80 units of a Product 30 kg of Material
X and 20 kg of Material Y is the standard requirement. Standard Price is Rs.
6 per kg of X and Rs. 10 per kg of Y. 80 units were actually produced using 50 kg of Materials X purchased for Rs. 200 and 10 kg of
Material Y purchased at Rs. 8 per kg. Compute :– (1) Material Cost Variance (2) Material Price Variance and (3) Material Usage Variance. |
5 |
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| Q. 9. |
a) |
A Product is sold at Rs. 80 per unit, its variable cost is Rs. 60. Fixed cost is Rs. 6,00,000. Compute the following – (i)P/v
Ratio (ii) Break Even Point (iii) Margin of Safety at a sale of 50,000
units. (iv) At what sales a producer will earn o
profit of 15% on sales? |
8 |
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b) |
From the following particulars, prepare
Reconciliation Statement and Ascertain Costing Profit/ Loss. Net Profit as
per Financial P/L A/c. Rs. 50,000. Opening Stock was overvalued by Rs. 2,000.
In Cost Accounts as compared to Financial Accounts. Administrative overheads
charged in Financial Books Rs. 20,000 but recovered in Rs. Cost Rs. 40,000. Income
Tax Provision Rs. 1,200 Notional
Salary of Proprietor in Cost Rs. 20,000. Interest received Rs. 12,000 Closing Stock as per Financial Books Rs. 16,200 Whereas in Cost Books it was Rs. 19,000. |
7 |
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| Q.10. |
a) |
What are the objectives of Cost Accounting? |
8 |
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b) |
Define Overheads & how would you classify
them? |
7 |
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