Time: 3 Hours
Marks: 100
NB:
1. Question Nos. 1 and 6 are compulsory and answer any two from the remaining fromeach section.
2. Figures to the right indicate full marks.
3. Working notes should form part of answer.
4. Answer both the sections in the same answer-book.
Q.1.
a) What are the advantages & Limitations of Auditing? (10)
b) What is Interim Audit? What are its advantages & disadvantages? (8)
Q.2.
a) What are the rights of an Auditor under Companies Act, 1956? (8)
b) How would you vouch the following ? (8)
(i) Income Tax Refund
(ii)Custom Duty Paid
Q.3.
a) What is an Audit Programme? What are its advantages & disadvantages? (8)
b) Explain the term “Internal Control”. What are its objectives? (8)
Q.4.
a) Distinguish between Audit of Accounts of a partnership firm & a Limited Company. (8)
b) Scrutinize & give your comments as an Auditor on the following Ledger Account.
| Dr. | 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 | - | - | - |
| 30th March | To Vaishya A/c | 21,000 | - | - | - |
| 31st March | To Bank | 25,000 | - | - | - |
| - | Total | 1,18,100 | - | Total | 1,18,100 |
Q.5.
Write short notes on any four : (16)
(i) Auditing in Depth
(ii) Appointment of first Auditor of a Limited Company
(iii) Window Dressing
(iv) Essentials of a Good Audit Report
(v) True & Fair view
(vi) Audit Note Book
Q.6.(16)
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 asfollows : -
| 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 | -- |
Additional Information:
a. During 2000-2001, materials costing Rs. 20,000 were returned to stores.
b. 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.
c. During 2003-2004 there was an accident site due to which a worker had to be paid Rs. 50,000 as compensation.
d. This amount is included in wages. On completion of contract the machinery was sold for Rs. 25,00,000.
e. 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.
Q.7. (15)
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.
Q.8.(10)
a) The following details are available for the year ending 2004.
| Particulars | 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 | 12,000 |
| Work in Progress | 2,880 |
| Finished Goods (600 units at the rate of Rs. 16.25 per unit | ---- |
| Closing Stock : | - |
| Raw Materials | 13,344 |
| Work in Progress | 9,600 |
| Finished Goods (1200 units) | ? |
Value the Finished Stock at Cost of Production.
Prepare a Cost Sheet showing different elements of Cost.
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 :– (5)
(1) Material Cost Variance
(2) Material Price Variance and
(3) Material Usage Variance.
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 – (8)
(i)P/v Ratio
(ii)Break Even Point
(iii)Margin of Safety at a sale of 50,000 units.
(iv)At what sale the producer will earn profit of 15% on sales?
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. |
Q.10.
a) What are the objectives of Cost Accounting? (8)
b) Define Overheads & how would you classify them? (7)
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