(Paper) IAS Mains Previous Year Paper Commerce & Accountancy (1998)

Paper: IAS Mains Previous Year Paper Commerce & Accountancy (1998)

Paper-I- Commerce & Accoountancy-1998 (Mains)

Time Allowed : Three Hours Maximum Marks : 300

Candidates should attempt Questions 1 and 5 which are compulsory, and any three of the remaining questions selecting at least one question from each Section.
Assume suitable data if considered necessary and indicate the same clearly.All questions carry equal marks.

Section A

1. Answer any three of the following, each in about 200 words :
(a) Distinguish between amalgamation and absorption in regard to joint stock companies.
(b) "Major policy decisions in business are based on cost factors." Comment on the possible used of cost information to management.
(c) What is meant by "perquisites" ? What are tax- free perquisites ?
(d) What are the provisions relating to appointment of an auditor under Companies Act, 1956 ?

2. (a) "Historical cost has been described as one of the fundamental assumptions underlying financial accounting." Elucidate.
(b) The Balance Sheet of S. Co. Ltd. as on 31-12-1997 was as follows :
Liability Rs. Assets Rs.
of Re. 1 each
Sundry Liabilities 2,00,000

40,000 Works &
Liquid Assets
Profit & Loss A/c 1,80,000


2,40,000 2,40,000
T. Co. Ltd. absorbed the S. Co. Ltd. and took over all the assets for Rs. 1,44,000, payable Rs. 1,00,000 in shares of Re. 1 each, and paid Rs. 44,000 in cash in order to enable S. Co. Ltd. to payoff its liabilities and cost of absorption.
Pass entries to close the books of S. Co. Ltd. and prepare Shareholders a/ c, Realisation a/ c and Bank a/ c.

3. (a) "Setting of standard is the most vital and critical step in standard costing technique." Elucidate. Show how the standards are fixed for Direct Material and Direct Labour.
(b) XYZ Co. Ltd has annual fixed cost of Rs. 2,80,000. In 1997, sales amounted to Rs.12,00,000 as compared with Rs. 9,00,000 in 19% and profit in 1997 was Rs. 84,000 higher than that in 1996
(i) At what level of sales does the company break even ?
(ii) Determine profit or loss On a forecast sales volume of Rs. 16,00,000.
(iii) If there is a reduction in selling price by 10% in 1998 and company desires to earn the same amount of profit as in 1997, what would be the required sales volume?

4. (a) Explain briefly the special points to be borne in mind while auditing the account of a charitable society.
(b) Sri Manoj submits the following particulars as to his income and expenditure for the previous year 1997-98 :

Basic Salary 84,000
Special Allowance 16,000
Helper's Allowance @ Rs. 500 P.M. (Salary to helper
paid by Manoj being Rs. 600 P.M.) 6,000
Bonus 40,000
Employer's contribution to recognised providend fund 13,200
Interest on accumulated balance in
P.F. a/c credited on 31-3-98 @ 14.5% 17,400
Reimbursement of education expenses of two children 12,000

Sri Manoj owns two residential houses, one at Hyderabad which is occupied by his parents and the other at Delhi which is let out to a foreign embassy on a rental of Rs. 96,000 per annum. The municipal valuation of the houses is Rs. 72,000 and Rs. 80,000 respectively. Municipal taxes in respect of the first house Rs. 7,200 is borne and paid by him and in regard to the second house, Rs. 16,000, only 50% payment has been made by him during the previous year. The embassy has undertaken to bear the cost of repairs which in the previous year amounted to Rs. 48,000.
On June 1, 1997 Sri Manoj borrowed Rs. 1,00,000 from a financier at 24% to acquire 1000 shares of Rs. 100 each of an Indian Company. No dividend was declared during the year though the share was quoted at BSE at Rs.l60 as on 31st March, 1998.
Other investments made during the year by him include : Contribution to RPF Rs. 30,000; Purchase of National Savings Certificates (VIII) Rs. 30,000; Insurance premium in respect of policy on his own life Rs. 10,000; Donations to recognised institutions Rs. 3,000.
Compute the total income of Sri Manoj for the Assessment year 1998-99.

Section B

5. Answer any three of the following in about 200 words each :
(a) What is meant by financial planning ? How does it differ from financial forecasting ?
(b) Define cost of capital. Explain its significance in financial decision making.
(c) What is the concept of operating cycle ? Give an example to describe the concept.
(d) List out the main deficiencies of Indian Money Market.

6. (a) Explain the scope of financial management. What role should the financial manager play in a modem business enterprise ?
(b) Mr. Ram. an investor, purchases an equity share of a growing company X Ltd. for Rs. 450. He expect the company to pay dividends of Rs. 21, Rs. 22.05 and Rs. 23.15 in years 1,2 and 3 respectively. Mr. Ram proposes to sell the share at a price of Rs. 520 at the end of 3 years.
(i) Determine the growth rate in dividends.
(ii) Calculate the current dividend yield.
(iii) What is the required rate of return of Mr. Ram on his equity investment?

7. (a) Describe the traditional view on the. capital structure. Compare and contrast this view with NOI and NI approach.
(b) ABC Ltd. has an average selling price of Rs. 20 per unit. Its variable units cost are Rs. 14 and fixed costs amount to Rs. 3,40,000. It finances all its assets by equity funds. It pays 50% tax on its income. XYZ Ltd. is identical to ABC Ltd., except in respect of the pattern of financing. The latter finances its assets 50% by equity and 50% by debt, the interest on which amounts to Rs. 40,000. Determine the degree of operating, financial and combined leverages at Rs. 14,00,000 sales for both the firms, and interpret the results.

8. (a) "The Unit Trust of India has emerged as the single largest reservoir of long term savings and an investment agency." Elucidate.
(b) A firm has credit sales amounting to Rs. 64,00,000. The sale price per unit is Rs. 40, the variable cost is Rs. 25 while the average cost per unit is Rs. 32. The average age of accounts receivable of the firm is 72 days.
The firm is considering to tighten the credit standards. It will result in a fall in the sales volume to Rs. 56,00,000 and the average age of accounts receivable to 45 days. Assuming 20% rate or return, is the proposal under consideration feasible ?

Paper-II- Commerce & Accoountancy-1998 (Mains)

Candidates should attempt Questions 1 and 5 which are compulsory, & any three of the remaining questions selecting at least one question from each Section.
All questions carry equal marks.

Section A

1. Write notes on any three of the following in about 200 words on each :
(i) Goal Multiplication
(ii) Informal Organization
(iii) Organizational Culture
(iv) Organizational Control

2. What do you understand by the "management of change" ? How can resistance to change be reduced ? Discuss.

3. Explain any two theories of motivation and their relevance to Indian conditions.

4. What do you understand by leadership style ? How will you secure effective leadership in the management of an organisation ?

Section B

5. Write notes on any three of the following in about 200 words on each :
(a) Migratory nature of Indian labour
(b) Labour Turnover in Indian Industries
(c) National Wage Policy
(d) International Labour Organization

6. "The greatest obstacle to the growth of healthy Trade Union Movement in India is the unhealthy influences of rival political parties." Elucidate.

7. What are the causes of labour unrest in India ? What remedial measures have been taken so far?

8. Explain the role and importance of Personnel Department in the organization.