March 2004

Section I --- (Auditing)

Q.1.
a) Define Auditing. How Auditing is different from Accounting? (10) b)Explain the term fraud. What are the different types of frauds? (8)

Q.2.
a)What is test checking in auditing? What precautions an auditor should take while applying test checking? (8) b)What are special considerations which auditor should keep in mind during the course of vouching? (8)

Q.3.
a)How would you read, as an auditor,the Jani's ledger A/c in the books of Miss. Bombay & Co.?(8)

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	-	By sales return	1,000
-	-	-	-	By bank	950
-	-	-	-	By discount	50
-	-	-	2002 June 5	By bank	2,350
-	-	-	-	By discount	150
-	-	-	-	By Bills Receivable	2,500
Sept. 8	To bills receivable	2,500	Sept. 8	By bank	2,000
-	To interest	500	-	By Bills Receivable	8,000
-	To sales	7,000	-	-	-
Dec. 12	To bills receivable	8,000	Dec. 15	By bank	8,400
-	To interest	400	-	-	-
Dec. 15	To sales	5,000	Dec. 31	By bal c/d.	5,000
-	-	34,400	-	-	34,400

b) What is internal control? Suggest internal control system for credit purchases.(8)

Q.4.
a) Explain the provisions of the Companies Act, 1956 for appointment of an auditor of a company.(8) b) What are the rights of a company auditor ? (8)
Q.5.
Write short notes on any four :­ (16)
(i)Inspection of Accounts(ii)Audit in Dept.(iii)Meaning of Verification(iv)Meaning and objects of valuation
(v)Essentials of a good Audit Report(vi)Audit Certificate.
Section II --- (Costing)

Q.6.
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: (20)
(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)	-	-
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	-	Rs.1,20,000
Preliminary Expenses Written off	-	Rs. 30,000 .

Q.7.
The following data have been extracted from the books of Alfa Ltd. (15)

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

Q.8.
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.
Q.9.
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 :(15)

Trial Balance
Particulars	Crushing Process Rs.	Refining Process Rs.	Finishing Process Rs.
Raw materials (500 tons Copra)	9,00,000	--	--
Wages	32,000	23,600	23,500
Power	4,800	4,000	6,000
Sundry Materials	2,000	7,600	--
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.
Q.10.
a) Write short notes on (any three) : (15)
(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.