राष्ट्रीय प्रत्यक्ष कर अकादमी, नागपूर

NATIONAL ACADEMY OF DIRECT TAXES, NAGPUR

HOME TEST –I (1st Module) /होम टे स्ट-I(मॉड्यूल-1) (Sup.)
Assistant Commissioner of Income Tax (Probs.) – 78th Batch of IRS
सहायक आयकर आयुक्त (पररवीक्षाधीन) – 78वााँ बैच
समय/Time : 03:00 pm to 05:00 pm (Duration – 2 hrs.) ददनाांक / Date : 26th May, 2025

ववषय/SUBJECT : PAPER-III – ADVANCED ACCOUNTING & FINANCE

(MAX MARKS: 100)
Please read each of the following instructions carefully before attempting questions:
1. ACIT(Probs) are required to enter Correct Roll Number on the Answer Sheet and also on the
question paper. Please don’t write anything else on the question paper. Supplementary sheets
may be used for doing rough work. You are requested to attach supplementary sheets with
the main sheet taken for this purpose.
2. The number of marks carried by a question/part is indicated against it.
3. Mobile phones, tablets and other electronic gadgets (except simple calculators) are not
allowed to be used during the exam. These must be deposited with the invigilator before the
commencement of the exam.
4. Descriptive questions include optionality — attempt as instructed

Q.1: From the following Trial Balance of Mr. Bharat for the year ending 31.03.2025
and additional information given, prepare Trading and Profit & Loss and Balance
Sheet as on 31.03.2025: (20 Marks)

Trial Balance

Dr. (Rs.) Cr. (Rs.)

Capital -- 4,00,000
Drawings 50,000 --
Opening Stock 75,000 --
Purchases 4,20,000 --
Sundry Creditors -- 75,000
Sundry Debtors 1,20,000 --
Sales -- 8,10,000
Discounts 16,000 18,000
Commissions 12,000 14,000
Returns 16,000 20,000
Salaries 1,20,000 --
Rent, Rates & Taxes 40,000 --
Postage, Telegrams & Telephones 25,000 --
Loan -- 3,10,000
Interest 20,000 --
Furniture 3,50,000 --
Branch Names & Designs (Patents) 60,000 --
Advertisement 1,00,000 --
Cash in Hand 1,50,000 --
Cash at Bank 63,000 --
Freight Inward 20,000 --
Duty Drawbacks (Income) -- 10,000
16,57,000 16,57,000
Other Information:
(i) Closing Stock Rs. 1,70,000.
(ii) Sales included Sales Tax Rs. 50,000.
(iii) Depreciate Furniture @10%.
(iv) Write off Branch Names & Designs @20%.
(v) Advertisement to be written off in 5 years.
(vi) Salaries outstanding Rs. 12,000 and Salaries paid in advance Rs.10,000.

Q.2 : State with reasons whether the following statements are true and false :
(10 Marks)
(i) A Trial balance is prepared after recording transactions in subsidiary books.
(ii) Fixed assets are stated in the balance sheet at their market value.
(iii) Credit purchases of fixed assets in a business are recorded in journal
proper.
(iv) The essence of convention of conservatism is to provide for no losses but to
anticipate all profits.
(v) The agreement of a trial balance is not a conclusive proof as to absolute
accuracy of books of account.

Q.3 : Choose the most appropriate option : (10x2=20 Marks)

i. Agreement of trial balance is affected by :
(a) One sided errors only.
(b) Two sided errors only.
(c) Both a and b.
(d) None of the above.

ii. If wages paid for installation of new machinery is debited to wages

Account, it is :
(a) An error of commission.
(b) An error of principle.
(c) A compensating error.
(d) An error of omission.

iii. Purchase of goods for being sole in the course of the business is a
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Income
(d) None of the above.

iv. Which one of the equation is correct

(a) Total Assets - Liabilities = Capital - Profit
(b) Total Assets - Liabilities = Capital + Profit
(c) Total Assets + Profit = Capital + Liabilities
(d) Total Assets + Liabilities = Capital – Profit
 v. A transaction affects three accounts, one account is debited by Rs.5,000,
another account is credited by Rs.8,000. Third account will be
(a) Credited by Rs.3,000
(b) Debited by Rs.3,000
(c) Credited by Rs.5,000
(d) Debited by Rs.8,000

vi. A concept that a business enterprise will not be sold or liquidated in the
near future is known as :
(a) Going concern
(b) Economic entity
(c) Monetary measurement
(d) None of the above.

vii. Use of common unit of measurement and common format of reporting

promotes :
(a) Reliability
(b) Understandability
(c) Relevance
(d) Comparability

viii. Debit balance of bank column of cash book shows :

(a) Overdraft
(b) Cash deposited in our bank
(c) Cash withdrawn from bank
(d) None of these

ix. On 1st April, 2024, Anoop sold goods for Rs.30,000 to Deepak who gave on
acceptance for Rs.25,000 and a cheque for Rs.5,000. Anoop immediately
discounted @12% this bill from the bank for Rs.24,000. Hence the period
of the bill is :
(a) 3 months
(b) 2 months
(c) 4 months
(d) 5 months

x. Cost of goods sold = Rs.15,00,000, Gross Profit = 20% on sales. Calculate

the amount of Sales.
(a) Rs.18,25,000
(b) Rs.12,00,000
(c) Rs.18,50,000
(d) Rs.18,75,000
Q.4 : On 1st April, 2020, a firm purchased a machinery for Rs.4,00,000. On 1st
October 2020 additional machinery costing Rs.2,00,000 was purchased. On 1st
October, 2021, the Machinery purchased on 1st April 2020 was sold for Rs.1,80,000.
On 1st October, 2022 new machinery was purchased for Rs.5,00,000 while the
machinery purchased on 1st October, 2020 was sold for Rs.1,70,000 on the same day.

The firm provides depreciation on its Machinery @10% per annum on original
cost. It closes its books of accounts on 31st March every year. Show Machinery
account for three accounting years ending 31st March, 2023. (10 Marks)

Q.5 Fill in the blanks : (10 Marks)

i) Returned damaged office stationery and received Rs.50,000. The account to be

credited is ___________.

ii) The ___________ concept states that if straight line method of depreciation is
used in one year, then it should also be used in the next year.

iii) If a firm receives an order for goods, it would not be included in the sales figure
owing to the ___________.

iv) Accounting measures the business transactions in terms of ___________ units.

v) Identified and measured economic events should be recording in ___________

order.

vi) Outstanding rent account is a ___________ account.

vii) Trading discount is deducted from the ___________ price.

viii) Real account usually shows a ___________ balance.

ix) When an asset is shown at its original cost till its disposal, the annual
depreciation is recorded by credit to ___________ account.

x) While preparing final accounts, all the ___________ accounts are transferred to
the trading and profit & loss account.
Q. 6: Based on the following ledger account answer the given questions:
(10 marks)
SHYAM ENTERPRISES
Date Particulars Amount Date Particulars Amount
10/04/2023 To Sales 25,00,000 01/04/2023 To Opening 2,50,000
balance
15/04/2023 To Sales 12,00,000 20/04/2023 To Bank 25,00,000
20/04/2023 To Cash 3,00,000
20/04/2023 To Sales 1,50,000
20/04/2023 To Discount 75,000
30/04/2023 To Balance C/d 4,25,000

Total 37,00,000 Total 37,00,000

i. What is the opening balance?

ii. What is the nature of Account?
iii. What is the value of Net Sales?
iv. What is the closing balance?
v. Highlight one thing from the ledger, which is restricted as per the Income Tax
Act.

Q.7 : Write Short Notes on any 4 of the following : (4 x 5 Marks each = 20 Marks)

(i) Various types of errors in accounting

(ii) Causes of Depreciation
(iii) Accrual Concept
(iv) Types of Accounts
(v) Revenue Expenditure and Capital Expenditure