FINANCIAL ACCOUNTING

Overall performance of the candidates was good due to very straightforward and simple questions tested in this attempt. Question-wise comments are given as under:

Q.1

This was a mark-securing question. Generally the following mistakes were observed in cash flow prepared by the candidates:

·        Requirements of IAS such as proper grouping of items were not met by some candidates.

·        Mostly inadequate and improper working notes were prepared.

·        Quite a large number of candidates could not present correct treatment of deferred costs and provision for bad debts.

Q.2

Reasonable understanding of ratio analysis was demonstrated by the students. Following common mistakes were observed:

·        Some candidates could not prepare the required Balance Sheet.

·        A number of candidates showed their lack of knowledge regarding net worth.

·        Candidates should bear in mind that, whatever the topic may be, profit and loss account and balance sheet should be prepared on standard formats unless specifically mentioned otherwise.

Q.3

Another easy question and well attempted by students. Some candidates, however, applied wrong percentage and while calculating cost of sales, they took it as  of sale instead of  of sale.

Q.4

This was again a good scoring question. However, some students lost marks as after adjusting closing stocks, corresponding adjustment of opening stocks in the years 2002 and 2003 was not made.

Q.5

In this question also majority of the candidates secured good marks. Those who were unable to secure good marks made the mistake of mentioning that fee for preparation of feasibility report is to be capitalized, whereas it was to be expensed out in accordance with IAS.

Q.6

The candidates were able to demonstrate their good knowledge of leasing concept. Requirements (a), (b) and (c) of this question were attempted quite perfectly but in requirement (d) some got confused. They failed to mention that the plant and machinery may be capitalized even if bargain purchase option is not available provided any of the other criteria as mentioned in the IAS is fulfilled. Overall performance of the candidates in this question was quite satisfactory.

Q.7

The students did not show good knowledge of contract accounting. Many were not able to draw the correct contract account and computation of the profit attributable to the period. Students ignored the importance of certified percentage of work completed for computation of attributable profit.

Q.8

It was a simple question. However, students showed total lack of knowledge as most of them did not even know how to calculate the amount of mark-up. Many of them did not know the correct procedure of mark-up calculation. Similarly, many of them did not know the correct meaning of Re.0.23 per rupee thousand per day.