UPSC Mains 2017 Commerce & Accountancy Optional Paper I questions

28 questions from the Civil Services (Main) Examination 2017. Official UPSC paper (PDF) · All Commerce & Accountancy Optional PYQs

1. State the provisions of Indian Accounting Standards regarding Foreign Exchange Transactions.

2. Distinguish between Internal Reconstruction and External Reconstruction of Companies.

3. Define 'Responsibility Centre'. Explain its various types.

4. Write a note on 'Service Tax'.

5. "Verification of Advances is an important function of an auditor of a Bank." Explain.

6. P| The Balance Sheets of Rakesh Ltd. and Lokesh Ltd. as at 3.2.20i3 were as follows: Rakesh Lokesh Rakesh Lokesh Liabilities Ltd. Ltd. {Assets Ltd. Ltd. z x = = Equity Share Capital Fixed Assets (other (Sharesiof exch 6,00,000} 4,00,000 feat 5,00,000| 3,50,000 Profit and Loss A/c 75,000} 60,000,40,000},00,000 Sundry Creditors 37,500 30,000|Cash and Bank,7,500 60,000 Preliminary Expenses 0,000 5,000 |. [5,62500| 590,000 862,500) 5,90,000 Rakesh Ltd. took over and absorbed Lokesh Ltd. as on.7.204. No - balance sheet of Lokesh Ltd. was prepared on the date of takeover, but the following information is made available to you: (i) In the six months ended 30.6.204 Lokesh Ltd. made a net profit of = 60,000 after providing for depreciation at 0% per annum on fixed assets. (Gi) Rakesh Ltd. during that period made a net profit of =,45,000 after providing for depreciation at 0% per annum on the fixed assets. (iii) Both the companies had distributed dividends of 0% on.4.204. (iv) Goodwill of Lokesh Ltd. on the date of takeover was estimated at 25,000 and it was agreed that the stocks of Lokesh Ltd. would. be appreciated by = 5,000 on the date of takeover. (v) Rakesh Ltd. to issue shares to Lokesh Ltd. on the basis of the intrinsic value of the shares on the date of takeover. Prepare the Balance Sheet of Rakesh Ltd. after absorption.

   20 marks

7. How is Differential Cost Analysis helpful in decision-making?

8. "Residential status has its effect on computation of taxable income under the Income Tax Act, 96." Discuss.

9. A company manufacturing two products furnishes the following data for a year: Product Annual Total Machine| Total Number of Total Number roduct Output (units) Hours Purchase Orders of Set-ups 5,000 20,000 60 20 8 60,000 _| _2,20,000 The annual overheads are as under: i Volume related activity costs 5,50,000 Set-up related costs 8,20,000 Purchase related costs 6,8,000 You are required to calculate the cost per unit of each product 'A' and 'B' based on (i) Traditional method of charging overheads (ii) Activity based costing method 6

10. Discuss the provisions of Indian Accounting Standards on Accounting for Depreciation.

11. & Mr. '*X' owns two house properties, 'A' and 'B'. Property 'A' is used by him for his own residential purpose, whereas property 'B' is let out to a tenant for a monthly rent.of = 5,000 throughout the financial year 206-—7. The other particulars in respect of the properties are as under: Municipal Valuation = 30,000 = 50,000 Standard Rent under Rent Control Act ₹ 40,000 =,00,000 Municipal Taxes paid by Mr. ₹ 8,000 ₹ 24,000 Maintenance Charges paid 6,000 ₹ 8,000 Date of completion of construction 3.3.200 3.8.203 Interest on home loans for construction of properties from Nationalised Bank ₹ 70,000 ₹ |,20,000 Fire Insurance Premium Payable = I,500 ₹ 3,000 The following further information is available: (i) Out of interest of =,20,000 on home loan taken for construction of property 'B', an amount of = 30,000 was outstanding payable as at 3.3.207. (ii) Mr. ' was employed by ABC Ltd. on a monthly salary of = 50,000 plus monthly travelling allowance of ¥ 0,000. (iii) He donated during the year =,50,000 to a charitable trust approved under Section 80G of the Income Tax Act, 96]. (iv) Hespent = 7,500 for his health check-up during the year. You are required to compute Total Taxable Income of Mr. 'X' for the Assessment Year 207 - 8.

    20 marks

12. A bank has received an application from a customer for a loan. You have to investigate on behalf of the bank the accounts of the customer. Highlight those points you would like to concentrate upon.

13. Define 'Normal Wastage', 'Abnormal Wastage' and 'Abnormal Effectiveness'. State how these are treated in Process Costing.

14. Mr. 'A' inherited a residential house from his father in January 205. His father had bought the said house in the year 979 at a cost of = 70,000. Mr. 'A' sold the house in June 206 for a sale consideration of 7,00,000 and the registered valuer has valued the said house at =,00,000 as at.4.98. The Cost Inflation Index (CID) is as under: Financial Year CII 98l - 82 00 You are required to compute the income from capital gains for the Assessment Year 20i7 - 8. Also suggest the actions, if any, that may be taken by Mr. 'A' to avoid tax on capital gains.

    20 marks

15. "Profit maximisation is the goal of Financial Management." Critically examine.

16. Discuss the Risk-Return Trade-off in financial decisions.

17. Distinguish between Money Market: and Capital Market.

18. Discuss the various methods of deciding exchange ratio in merger of companies.

19. State the valuation formula put forward by James Walter. Also explain the logic behind it.

20. A company sells 2600 units of 'Mixer' at = 2,000 each, annually. The details of cost per unit are as follows: = Raw and Packing Materials 800 Direct Wages 400° Overhead Expenses 400 Overhead expenses include = 2-60 lakhs on depreciation. Production is evenly maintained over the year, on a weekly basis. All sales are on credit. Materials are introduced at the beginning of the process. The following additional information is also available: Average Period Raw Material and Packing Materials in stock 4 weeks Work-in-Progress (Material 00%, Labour and Overheads 50%) week Finished Goods l week Credit Allowed to Debtors 6 weeks Credit Allowed by Suppliers 4 weeks Cash balance to be maintained is = 60,000. Calculate the Net Working Capital Requirements of the company.

    20 marks

21. Discuss the role of SEBI in regulating the Capital Market.

22. Define Capital Rationing. Explain the factors leading to Capital Rationing and also state the situations of Capital Rationing.

23. The following information is related to 'Alpha Co. Ltd.' for the year ended 3.3.206: 4 Equity Share Capital (= 0 each) 50 lakhs 2% Bonds of =,000 each 37 lakhs Sales 84 lakhs Fixed Cost (excluding interest) 6:96 lakhs Financial Leverage:49 Profit Volume Ratio 27:55% Income Tax Applicable 40% You are required to calculate (i) Operating Leverage (ii) Combined Leverage (iii) Earning Per Share

    20 marks

24. Explain the techniques used by the Credit Manager in monitoring the status and the composition of Accounts Receivables.

25. What is Commercial Paper? Explain its significance and the pre-conditions for the issue of Commercial Paper.

26. The Balance Sheets of 5.8. Ltd. as at 3.3.204 and 3.3.205 are as under: 0 ee ee z = a, The following additional information is available: (i) During the financial year 2014-—5, the company issued equity shares at par. (ii) Debentures were redeemed on.4.204 at a premium of 0%. (iii) 8076 investments were sold at a profit of = 75,000 and the profit was credited to General Reserve Account. (iv) During the year, an old machine costing = 23,50,000 was sold for 6,25,000. Its written down value was = 8,00,000. (v) Depreciation is to be provided on plant and machinery at 20% on the opening balance. (vi) There was no purchase or sale of land and building. (vii) Provision for tax made during the year was = 4,50,000. You are required to prepare a Cash Flow Statement for the year ended

27. Define 'Optimum Capital Structure'. Discuss the major considerations in the Optimum Capital Structure planning of a firm.

28. Explain the significance of the following Accounting Ratios: 6 (i) Debt-Equity Ratio (ii) Acid Test Ratio Gii) Inventory Turnover Ratio (iv) Operating Profit Ratio (v) Current Ratio