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Commerce and Accountancy – 2014: Answer Writing Challenge – 18


03 November 2014

1) What IS revaluation reserve and how it is created? Discuss also the merits and demerits of such action.

2) Discuss contingent liabilities with examples. Where would these items feature in the financial statements of a firm ? What happens when bills are discounted by a firm ? Show the journal entries for such transactions.

3) Discuss how the following streams of revenues are recognised in an IT service company:
(i) Software services
(ii) Time and materials contracts
(iii) Sale of user’s licenses.