Purchases book is overcast by Rs. 10,000. The present gross profit is Rs. 90,000.

What would be
the correct amount of gross profit after rectification of the error?
a. Rs. 80,000
b. Rs. 90,000
c. Rs. 1,00,000
d. Rs. 1,10,000
By investing Rs. 1620 in 8% stock, Michael earns Rs. 135. The stock is then quoted at:
a. Rs. 80
b. Rs. 96
c. Rs. 106
d. Rs. 108
An asset cost Rs. 16,00,000/- has residual value of Rs. 1,00,000/-, and is expected to last 5 years.
Calculate the depreciation for 1st year using sum of the digits Method.
a. Rs. 100000
b. Rs. 300000
c. Rs. 500000
d. Rs. 700000
Purchases book is overcast by Rs. 10,000. The present gross profit is Rs. 90,000. What would be
the correct amount of gross profit after rectification of the error?
a. Rs. 80,000
b. Rs. 90,000
c. Rs. 1,00,000
d. Rs. 1,10,000
If compound interest for 2 Years at the rate of 4% of some money is Rs. 102, find the simple interest
at the same rate for 2 years.
Rs. 100
Rs. 110
Rs. 120
Rs. 130
A truck cost Rs 1,05,000 with a residual value of Rs. 1,00,000. it has an estimated useful life of 5
years. If the truck was bought on july 9, what would be the book value at the end of year 1?

a. Rs. 1,00,000
b. Rs. 85,000
c. Rs. 80,000
d. Rs. 25,000
A capital equipment costing Rs 200,000 today has Rs 50000 salvage value at the end of 5 years.if
the straight line depreciation method us used ,what is the book value of the equipment at the end of
2years?
A....rs 200000
B...rs 170000
C....rs 140000
D.....rs 50000
An asset cost Rs. 3,30,000/- has residual value of Rs. 30,000/-, and is expected to last 4 years.
Calculate the depreciation for 2nd year using double declining Method.
a. Rs. 72,500/b. Rs. 72,250/c. Rs. 82,250/d. Rs. 82,500/ACCOUNTS NUMERICALS MODULE A
-----------------------------------------------------<YTM CALCULATION> <BONDS>
22. A 10%, 6-years bond, with face value of Rs. 1000 has been purchased by Mr. X for Rs. 900.
What is his YTM (Yield Till Maturity)?
Solution:
Given:
FV (Face Value) = 1000
CR (Coupon Rate) = 10%
So, Coupon = FV CR = 100
T (Time) = 6 years
R (YTM) = ?
I am going to solve the question using 4 methods / formulas.
1) YTM Formula 1 -

{Coupon + (Face Value - Market Value) Time} ( 0.36 X Face Value + 0.64 X Market Value)
Simple and Easy to use <USE IT TO GET EXACT YTM)
2) YTM Alternate Formula 2 X {Coupon + (Face Value - Market Price) T} (Face Value + Market Price)
Simplest and Easiest to use <use it to get YTM very close to the exact value)
3) Trial & Error (or, Hit & Trial) Method Lengthy Method as solved in the book. (Avoid this method, but DO LEARN) <use to get fairly correct
YTM>
4) Using Cheat (using given 4 options in the exam)
Let's solve one by one using each method:
--------------------------1) YTM Formula 1
--------------------------YTM = {Coupon + (Face Value - Market Value) Time} ( 0.36 X Face Value + 0.64 X Market
Value)
= {100 + (1000 - 900) 6} (0.36 X 1000 + 0.64 X 900)
= (100 + 16.67) (360 + 576)
= 116.66 936
= 0.1246
= 12.46% Ans.
Note:
In above formula, 0.36 & 0.64 are Special Constants and this formula is well applicable in semi or
quarterly compounding too.
---------------------------------------------------------VERIFICATION OF ABOVE FORMULA:
---------------------------------------------------------Putting YTM = 12.46% or 0.1246 in Bond's Price formula gives a value equal to 900 (Which is given
market price). So, it proves 12.46% is the correct YTM. (We can verify if options not given, and we
have to calculate YTM).
--------------------------------------2) YTM Alternate Formula
--------------------------------------YTM = 2 X {Coupon + (Face Value - Market Price) T} (Face Value + Market Price)
= 2 X {100 + (1000 - 900) 6} (1000 + 900)

= 2 X (100 + 16.67) (1900)

= 233.333 1900
= 0.1228
= 12.28% Ans.
---------------------------------------------------------VERIFICATION OF ABOVE FORMULA:
---------------------------------------------------------Putting YTM = 12.28% or 0.1228 in Bond's Price formula gives a value equal to 907 (Which is
CLOSE to given market price). So, better avoid this formula too.
-------------------------------------------------------3) Trial & Error (or, Hit & Trial) Method -------------------------------------------------------OBSERVATION: Since Face Value (1000) > Bonds Price (900), it means YTM must be > Coupon
rate.
So, RULE HERE: To use trial and error method, we have to start with a value of YTM > Coupon Rate
and for each assumed YTM, we fill the YTM in bond's price formula and find the price until we get a
value < 900.
Since CR = 10%, and YTM must be > 10% (see observation), so,
Step 1:
If YTM = 11%, bond's price =957.69 (> 900, so keep guessing)
At 11% YTM, price comes 957.69 which is > given market price (900), so we have to assume
another value more than 11.
Step 2:
Let's YTM = 12%, bond's price = 917.78 (> 900, so keep guessing)
At 12% YTM, price comes 917.78 which is > given market price (900), so we have to assume
another value more than 12.
Step 3:
If YTM = 13%, price = 880.06 (< 900, so stop)
At 13% YTM, price comes 880.06 which is < given market price (900), so we have to STOP NOW.
Step 2 & Step 3 reveals that YTM must lie between 12% and 13%.
So, using INTERPOLATION TECHNIQUE,

YTM = 12 + (917.78 900) (917.78 880.06)

= 12 + 17.78 37.72
= 12.47% Ans
(Verification: Putting R = 12.47% in bonds price formula leads to value of 899.80 which is closest to
900, so YTM = 12.47% is the right answer).
Now METHOD 4 and the Last One to find YTM.
4) Using Cheat (using given 4 options in the exam)
Simply fill one of the values from the options in bond's price formula and see, if the price comes to
900, then that value is the correct YTM.
Purchases book is overcast by Rs. 10,000. The present gross profit is Rs. 90,000. What would be
the correct amount of gross profit after rectification of the error?
a. Rs. 80,000
b. Rs. 90,000
c. Rs. 1,00,000
d. Rs. 1,10,000