Q.1

In part (a) the performance was average, however many students had clearly not studied the IAS. Some quoted the conditions necessary for recognition of revenue related to sale of goods instead of services. Part (b) was based on situations discussed in Appendix to IAS 18. Only few students seemed to have studied examples of revenue recognition given in the appendix.                                            

Q.2

This was a straight-forward question on fundamental accounting concepts requiring one word answers. The performance was average. The accounting concepts involved were (a) Matching Principle (b) Historical Cost Principle (c) Consistency (d) Going Concern and (e) Produce.

Q.3

This was another badly attempted question and only 8% secured pass marks. It clearly showed that students lack conceptual knowledge and get stuck up whenever the question involves non-routine steps. The following adjustments were needed:                                                                                

(i)

Purchases were to be reversed by Rs. 56,000/-.

(ii)

(New) Computer was to be debited with Rs. 72,000/- being the cost less trade discount.

(iii)

Cash discount was to be credited to income.

(iv)

Old computer / disposal of computer was to be credited  with Rs.18,000/- being the WDV as on July 1, 2005 {20,000 – (20,000x20/100 x 6/12) }

(v)

Computer diskettes were to be charged off to expenses.

(vi)

Depreciation on old and new computers was to be provided for six months.

(vii)

Loss on trade-in of old computer was to be booked.

Q.4

This question was fairly attempted and many students got full marks. However many students did not know whether a particular item should be adjusted in sales ledger control account, individual debtors accounts or both.

Q.5

This question required passing of journal entries for accepting, discounting and  dishonour of a bill of exchange. The following were some of the common mistakes:                                                                                           

(i)

Quite a few students passed entries in the books of B instead of in C’s books.

(ii)

Bank charges on dishonour of the bill were charged off to expense. These are normally recovered from the acceptor and should have been debited to B's account.                                                                                           

(iii)

Some marks were assigned for proper dates which most students ignored.

Q.6

This question about incomplete accounting records was the best attempted question with 82% securing pass marks. However the following mistakes were generally made:                                                                                       

(i)

Payment to customers of Rs.1,440/- for returned goods was treated as return of goods, by majority. Some included this item under creditors' account.                                                                                             

(ii)

For Rs.2960/- written off in 2004 and collected in 2005, many students mentioned that they would treat this item as other income and ignored the impact of this information on inventory.                       

(iii)

Some calculated gross profit as 35/135 of net sales instead of simple 35% of net sales.                                                                                     

Q.7

This question on partnership was fairly attempted. Common mistakes were :

(i)

In revaluation account, some placed the amounts on the wrong sides.                                                                            

(ii)

While calculating debtors' revaluation amount, gross debtors were considered instead of net.

(iii)

Goodwill adjustments were very poorly done. Some provided for goodwill on C's retirement and not on D's admission. Many debited and credited the same amounts to partners' capital accounts.                                                        

Q.8

In this question on branch accounting the common mistakes were as under:

(i)

Many made profit and loss account instead of a proper branch account with opening and closing balances, cash payments and receipts, accruals and prepayments etc.                                                                                       

(ii)

Adjustments related to mark up on goods were either ignored or done incorrectly/partially.