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Financial Accounting
Previous Year Question Paper with Solution
B.Com. (Programme) · Sem 1
Jan 2024 Examination
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Mumbai
B.Com. (Programme) Sem 1 Financial Accounting Jan 2024 Question Paper with Solutions
First published on munotes.in on 26 October 2026.
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The question paper reproduced here is the paper as set by University of Delhi at the Jan 2024 examination.
Contents
The questions below are the paper as University of Delhi set it at the Jan 2024 examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the Jan 2024 examination, reproduced as University of Delhi set them, in the order it set them. Nothing has been reworded, added or left out. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 90 · 14 questions answered
Instructions printed on the paper
- N.B. (1) Write your Roll No. on the top immediately on receipt of this question paper. (2) Attempt all questions. (3) All parts of a question to be attempted together. (4) All questions carry equal marks. (5) Use of simple calculator is allowed. (6) Answers may be written either in English or Hindi; but the same medium should be used throughout the paper.
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Q1
a and b · 18 Marks
(a)State with reasons whether the following statements are true or false (any six).[6]
- (i) In a cinema hall the sitting capacity was increased by installing additional chairs and this was recorded as revenue expenditure.
- (ii) Detection of theft of stock related to previous financial year in current year is considered as extraordinary item.
- (iii) Pending lawsuit against a firm is considered as contingent liability and shown in balance sheet under liability head.
- (iv) The financial statements must disclose all the relevant and reliable information in accordance with the full disclosure principle.
- (v) Depreciation is charged on fixed assets as per going concern concept.
- (vi) Input SGST can be utilized to set off the outstanding liability of output IGST, CGST and SGST respectively.
- (vii) Loss due to earthquake is extraordinary item.
- (viii) Accounting concepts are general assumptions which should be followed while recording the transactions.
- (ix) AS-5 deals with prior period items and changes in accounting policies.
Answer
For full marks, cover: any six statements, each with a verdict and a reason in two or three sentences, citing the standard or GST rule where one applies. All nine are answered here.
(i) Additional chairs in a cinema hall recorded as revenue expenditure
False. The additional chairs increase the seating capacity of the hall, and so its earning capacity. Their benefit lasts for many years. Such spending is capital expenditure. It is added to the asset and depreciated, so recording it as revenue expenditure understates both assets and profit.
(ii) Theft of last year's stock found this year is an extraordinary item
False. The theft happened last year but was not recorded then, so last year's stock and profit were overstated. That is an omission in the financial statements of a prior period. Under AS 5 it is a prior period item, disclosed separately in the current Statement of Profit and Loss.
(iii) A pending lawsuit is shown in the balance sheet as a liability
False. A lawsuit that the firm may or may not lose is a contingent liability. Under AS 29 a contingent liability is not recognised in the balance sheet. It is disclosed in the notes to accounts, unless the chance of payment is remote. If the firm will probably lose and the amount can be estimated reliably, a provision is made instead.
(iv) Full disclosure principle
True. The full disclosure principle requires the financial statements to disclose all material information that is relevant and reliable for users. Accounting policies, contingent liabilities and important events after the balance sheet date are given in the notes. Nothing that would change a user's decision is left out.
(v) Depreciation and the going concern concept
True. Under the going concern concept, the business is assumed to continue for the foreseeable future. Fixed assets are therefore not shown at what they would fetch if sold today. Their cost is spread over their useful lives by charging depreciation, and they are shown at cost less depreciation.
(vi) Input SGST is used for IGST, CGST and SGST in that order
False. Under section 49(5)(d) of the CGST Act, 2017, SGST credit is used first to pay SGST. Any balance may then be used to pay IGST, but only where no CGST credit is available for it. SGST credit can never be used to pay CGST. So both the order and the use against CGST are wrong.
(vii) Loss due to an earthquake is an extraordinary item
True. AS 5 defines extraordinary items as incomes or expenses from events clearly distinct from the ordinary activities of the enterprise. They are not expected to recur frequently or regularly. AS 5 itself gives an earthquake as an example. The loss is disclosed separately in the Statement of Profit and Loss.
(viii) Accounting concepts are general assumptions
True. Accounting concepts are the basic assumptions on which accounting rests. Examples are business entity, money measurement, going concern, accrual and dual aspect. They are generally accepted and must be followed in recording transactions, so that accounts are uniform and comparable.
(ix) AS 5 deals with prior period items and changes in accounting policies
True. AS 5 is titled Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies. It deals with extraordinary items and prior period items. It also deals with changes in accounting estimates and in accounting policies, and how each is disclosed.
Conclusion. Statements (iv), (v), (vii), (viii) and (ix) are true. Statements (i), (ii), (iii) and (vi) are false. The reasons rest on the capital and revenue distinction, AS 5, AS 29 and the going concern concept. They also rest on the GST rule for using SGST credit.
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