QUESTION BANK XII ACCOUNTANCY 1. ACCOUNTING FOR NOT‐FOR PROFIT ORGANIZATION 10 Marks 1 MARK QUESTIONS 1.
2.
3.
4.
What do you mean by Not _ for Profit Organisations? What is receipts & Payments Account? What is income & Expenditure Account? What is the treatment of ‘Life membership fees’ while preparing financial statement of Not for‐ profit organizations? 5. What is the treatment of ‘legacies’ while preparing the financial statement of Not‐
for‐profit organization? 6. Give any two examples of restricted funds. 7. What is the term used for excess of income over expenditure in income & expenditure account. 8. What is term used for excess of expenditure over income in income & expenditure account. 9. Show the accounting treatment of 'Legacy'. 10. Give two examples of Not for Profit Organisations. 11.Give two examples of Not for Profit Organisations. 12. Give any two examples of unrestricted funds. 13. Distinguish between receipts & payments account and cash account. 14. Distinguish between profit making organisations and not for profit making organisations. 15.Give the meaning of consumable items. 3 MARK QUESTIONS 1. Distinguish between receipts & payments A/c and Income & expenditure A/c. 2. Show the following information in the balance sheet of star Cricket Club as on 31st December. Particulars Cr. (Rs.) Tournament Fund ‐
4,00,00 Tournament Found Investment 4,00,000 ‐ Income From Tournament Fund ‐ 50,000 Investment Tournament Expenses 20,00 ‐ Dr. (Rs.)
Additional Information: Interest Accrued on tournament fund Investment Rs. 15,000. 3. On the basis of the following information. Calculate the amount of stationery to be shown in income & expenditure Account for the year ended 31st March. 2007: Stock of stationery on 1.4.2006 Stock of stationery on 31.3.2007 Creditors for stationery on 1.4.2006 Creditor for stationery on 31.3.2007 Advance paid for stationery on 1.4.2006 Advance paid for stationery on 31.3.2007 Total amount paid for stationery during the year Rs. 20,000 30,000 25,000 35,000 12,000 8,000 80,000 4. Show how you would deal with the following items in the final accounts of a club: Particulars Dr. (Rs.) ‐
50,000
‐ ‐ 14,000 Cr. (Rs.) 50,000 ‐ 20,000 6,000 ‐ Dr. (Rs.) ‐
‐ ‐ 60,000
‐ 25,000 Cr. (Rs.) Prize fund Prize fund Investment Donation for prize fund Interest on Prize fund investment Prizes awarded during the year 5. Show the following items in the balance sheet of a not‐for‐profit organization: Particulars Capital fund (opening Life membership fees Donation for building Construction of building Subscription for tournaments Tournament expenses Surplus (excess of income over expenditure) 2,50,000 50,000 1,00,000 40,000 ‐ 35,000 6. Show the following information in financial statement of a Not‐for‐profit organization for the year ended 31st March, 2007: Particulars Dr. Cr. (Rs.) (Rs.) Match fund (1.4.2006) ‐
60,000 10% Match fund investment ( 1.4.2006) 60,000 ‐ Donation for match fund ‐ 20,000 Investment in 10% match fund investment 10,000 ‐ (1.10.2006) ‐ 6,000 Interest on match fund investment 10,000 ‐ Match expenses 7. From the following extract of receipts & payments account and the additional information give calculate the amount of income from subscription and how they would appear income & expenditure account and balance sheet as on 31st March, 2007. Receipts & Payments Account For the year ended 31st March. 2007 Rs. Payments Rs. Receipts To Subscription 2005‐06 6,000 2006‐07 45,000 2007‐08 8,000 Additional information: 59,000 There are 500 Members in the club each paying annual subscription of Rs. 100. Subscription‐in‐arrear in the beginning of current year were Rs. 9,000. 8. From the following information of a club, calculate the amount of subscription to be shown in income & expenditure account for the year ended 31stDec, 2007 by preparing subscription Account: Rs. Total subscription received during the year 1,20,000 Sub
bscription‐‐in‐arrear (31‐12‐20
006) Sub
bscription‐‐in‐arrear (31‐12‐20
000) Sub
bscription‐‐in‐arrear (31‐12‐20
006) Sub
bscription in advancce (31‐12‐2
2007) 1
12,00 2
20,000 8
8,000 1
10,000 9. From the folllowing exxtract of receipts aand payments acco
ount and tthe additional inform
mation giveen below, compute the amou
unt of inco
ome from subscriptiions and sshow as how
w they wo
ould appeaar in the in
ncome and Expendiiture acco
ount for th
he year ending march
h 31, 2007 and the b
balance sheet on thaat date: Receeipts & Payyments Acccount For the year endin
ng March 31, 2006 Rs. P
Payments Rs. Receiipts Subsccription 20
005‐06 7,000
0 20
006‐07 42,000 30,00
00 20
007‐08 5,000
0 Add
ditional in
nformation
n: R
Rs: I.. Subscrriptions ou
utstandingg on march
h 31, 2006
6 8
8,500 II.. Total ssubscriptio
on outstan
nding on M
March 31, 2007 1
18,500 III.. Subscrriptions reeceived in advance aas on Marcch 31, 200
06 4
4,000 10. Fro
om the folllowing paarticulars o
of Delhi Sp
ports club,, Calculatee the amount of salaaries to be sshown inccome & exxpendituree account ffor the year ended 3
31st March
h, 2007: Rs. Tottal salariess paid during the yeear 2006‐0
07 1
1,50,000
Outstanding salaries o
on 1.4.2006
6 1
16,000 Preepaid salarries on 1.4
4.2006 1
12,000 Outstanding salaries o
on 1.4.2006
6 2
20,000 Preepaid salarries on 31‐‐3‐2007 1
13,000 QUESTION
NS 4 MARK Q
ween geneeral donattions and sspecific do
onations. 1. . Distinguish betw
2. Show hhow woulld you deaal with the followingg items by preparingg final
account of
o non-proffit organissation in reespect of Sachin
S
Criicket Clubb for the
year endinng on
D
Decemberr, 2009:
Rs.
Particulaars
Tournameent Fund aas on Jaanuary, 20009
1,80,,000
12% Tourrnament F
Fund Invesstments as on Januuary, 20099
1,80,,000
Contributtion Colleccted for Toournamennt during thhe year 20009
90,0000
Expendituure incurreed during the year 22009 on coonducting T
Tournameents 1,05,,000
Interest reeceived onn Tournam
ment Fund Investmennts duringg the year 22009 15,6000
w you deeal with thee followinng in the inncome andd expendituure accounnt and
3. How will
balance sheet
ment club for the yeear 2000
of shimla entertainm
Subscription receeived duriing the yeaar 2000
Subscription o/s on 31.12.1999
Subscription on o/s
o on 31.12.2000
Subscription receeived in addvance as on 31.12.1999
Subscription receeived in addvance as on 31.12.2000
4 How will
w you deeal with thhe followinng in the inncome andd expenditture
account and
a balancce sheet
of shimlaa entertainnment clubb for the year 2000
Rent paaid duringg the year 22000
R
Rs 2500000
Rent oo/s on 31.12.1999
R
Rs 5000
Rent o//s on 31.122.2000
R
Rs 10000
Rent paaid in advaance as onn 31.12.19999
R
Rs 7000
Rent paaid in advvance as onn 31.12.20000
R
Rs 22000
5. List the features of non prrofit organnisations.
5 MA
ARK QUESTTIONS on calcullate the amount of
1. On the bassis of folllowing informatio
enditure A
Account ffor the ye
ear
stationarry to be sshown in Income and Expe
st
ended 31
1 march
h 2007.
Rs
2500000
Rs
50000
Rs
100000
Rs
70000
Rs
220000
Stock of Stationery on 1.4.2006
Stock of stationery on 31.03.2007
Amount paid for stationery during the year
Creditors for stationery on 1.4.2006
Creditors for stationery on 1.4.2007
Rs.
50000
40000
200000
20000
10000
2. What is the difference between cash book and receipt and payment account.
3. Give a specimen of receipt and payment account. 4. Give a specimen of income and expenditure account. 5. Give a specimen of Balance Sheet. 6 MARK QUESTIONS 1. From the following receipts and payments account, Prepare final accounts of a unity club for year ended march 31, 2007. Receipts Rs. Payments Rs. Balance B/d 18,000 15,000
Furniture Sale of old furniture 10,000 4,000 Library books (costing Rs. 6,000) 72,000 Salaries Subscription 18,000 General expenses 2005‐06 12,000 Electric charges 18,000 33,000 Newspaper 2006‐07 3,000 90,000 Postage 60,000 40,000 10,800 Stationery 2007‐08 8,000 44,000 Audit fee 12,000 33,000 84,000 Balance c/d Sale of old Newspaper 2,47,800 2,47,800
Profit from Entertainment rent Balance sheet As on March 31, 2006 Receipts Rs. Payments Rs. Outstanding Salary 6,000
Cash 15,000 Capital Fund 6,94,000 Outstanding 18,000 subscription 30,000 Library book 37,000 Furniture 6,00,000 7,00,000 land and building
7,00,000
Additional information: The club had 500 Members each paying an annual subscription of rs. 150. On 31.3.2007, salaries outstanding amounted to Rs. 1,200 and salaries paid included rs.6,000 for the year 2005‐06. Provide 5% depreciation on land and building. 2. Following is the receipts and payments account of woman’s welfare club for the year ended December 31, 2007: Receipts and payments A/c For the year ending December 31st, 2007 Dr. Cr. Receipts Rs. Payments Rs. 12,000
Balance b/d 7,250
Salaries 1,700 Subscriptions 81,750 Stationery 9,000 Donations 3,000 Electricity charges 7,000 Grant from government 15,000 Insurance 30,000 Sale of newspaper 300 Equipment 500 Proceeds of charity show 16,500 Petty expenses Interest on 10% investments Expenses on charity 12,000 1,000 @ 10% for full year 7,000 show 16,000 Sundries income 400 Newspapers 12,000 Lectures fee Honorarium to 27,050 1,31,200 secretary Balance c/d Additional information: 1.1.2007 31.12.2007 Outstanding salaries 1,200
1,800
Insurance prepaid 700 300 Subscription outstanding 3,750 2,500 Subscription received in advance 1,750 1,000 Electricity charges outstanding ‐ 1,250 Stock of stationery 2,250 700 Equipments 25,600 50,200 Building 1,20,000 1,14,000 3. Following is the information of Agrasen society Particulars Rs. Subscription received during the year‐2007
36,000 st
O/S subscription on 31 Dec. 2007(including Rs. 300 for 2006) 1,400 st
O/S subscription on 1 Jan.2007 2,000 st
Subscription received in advance on 31 Dec. 2007 for 2008 1,000 st
Subscription received in advance on 31 Dec. 2006 for 2007 1,800 Calculate the amount of subscription to be shown in receipts and payments account. 4. Explain the various ledger accounts of non profit organisations. 5. Distinguish between statement of affairs and balance sheet. 2. ACCOUNTING FOR PARTNERSHIP 5 Marks FIRMS – FUNDAMENTALS 1 MARK QUESTIONS 1.
2.
3.
4.
Define partnership Define partnership deed. Why is it considered better to have partnership agreement in writing? Current accounts are maintained by partners in fixed capital method or fluctuating capital method? 5. Enumerate the circumstances under which partners’ Fixed capitals may change. 6. What is profit & loss appropriation A/c 7. A,B and C are partner in a firm. A withdrew Rs. 1,000 in the beginning of each month of the year. Calculate interest on A’s Drawings @ 6% P.a. 8. A, B and C are partners in a firm. C withdrew Rs. 10,000 during the year. Calculate interest on C’s drawing @ 6% p.a. 9. List the features of partnership. 10. Distinguish between fixed capital and fluctuating capitals. 11.What is hidden goodwill? 12. X and Y are partners sharing profits in the ratio of 3:2. Z is admitted with1/4th share in profits which he acquires equally from X and Y. Calculate the new ratio. 13.What is the other name of Revaluation Account? 14.What Journal entry will you pass when an asset is given away to any of the firm creditors towards partial payment of dues 15.What Journal entry will you pass when a partner agrees to pay the realization expenses on behalf of the firm. 3 MARK QUESTIONS 1. Distinguish between fixed Capital Method and Fluctuating Capital Method. 2. State the main provision of Partnership Act in the absence of partnership deed. 3. Ajay, Vijay and Sanjay are partners sharing profit in the ratio 3;2;1. Sanjay’s Share of profit is guaranteed to be not less than Rs. 20,000 in any year. And deficiency arising out of Sanjay’s Guaranteed share will be borne by Ajay and Vijay in the Ratio 3:1. The net profit for the year ended March 31, 2007 was Rs. 96,000. Pass journal entries to show distribution of profits among partners. 4. A,B and C are partners with capitals of Rs. 1,00,000, Rs. 80,000 and Rs. 60,000 respectively. They share profits in the ratio 2:2:1, after allowing interest on Capital @ 10% p.a. However A and B Guaranteed that C’s share in profit shall not be less than Rs. 9,000 in any year. The net profit for the year ended march 31, 2007 is Rs. 60,000 before charging interest on capital. Prepare profit & Loss Appropriation. 5. X and Y are partners in a firm sharing profits in the ratio 3:2. Their fixed capital are Rs. 2.00.000 and Rs. 1,00,000 respectively. After the accounts for the year ended 31st March 2007 have been closed it was discovered that interest on Capital @ 10% P.A. as provided in their partnership deed le out of consideration. Pass adjustment entry to rectify the error. 6. A,B and c Are partners sharing profits in the ratio of 3:2:1. Their fixed capitals were Rs. 4,00,000, Rs. 3,00,000 and Rs. 2,00,000 respectively for the year ended 31st Dec., 2007. Interest on capital was record necessary adjustment entry. 7. Pappu and Munna are partners in a firm sharing profits in the ratio of 3:22. The partnership provided that Pappu was to be paid salary of Rs. 2,500 per month and Munna was to get a commission of Rs. 10,000 per year. Interest on capital was to be allowed @ 5% per annum and interest on drawings was to charged @ 6% per annum. Interest on Pappu’s drawings was Rs. 1,250 and on Munna drawing Rs.425. Capital of the partners were Rs. 2,00,000 and Rs. 1,50,000 respectively and were fixed. The firm earned a profit of Rs. 90,575 for the year ended on 31.3.2004. prepare profit and loss Appropriation Account of the firm. 8. The Partnership agreement between Maneesh and Grish and provides that: i. Profit will be shared equally; ii. Maneesh will be allowed a salary of Rs. 400P.M: iii.
iv.
v.
vi.
Grish who manages the sales department will be allowed a commission equal to 10% of the net profits, after allowing Maneesh’s salary; 7% interest will be allowed partner’s fixed capital; 5% interest will be charged on partner’s annual drawings; The fixed capitals of Maneesh and Grish are rs.1,00,00 and Rs. 80,000, respectively. Their annual drawing were Rs. 16,000 and 14,000, respectively. The net profit for the year ending March 31, 2006 amounted to Rs. 40,000. Prepare firm’s profit and loss Appropriation Account. 9. Give specimen of partners fixed capital account. 10. Give specimen of partners fluctuating capital account. 4 MARK QUESTIONS 1. C and D are partners in a firm; C has introduced 10,000 as capital and D 6,000 Interest is payable @ 6% and D is entitled to a salary of 300 per month. In 2011‐12 the profits were 8,000 before interest and salary. Divide the amount between C and D. 2. Bat and Ball are partners sharing the profits in the ratio of 2:3 with capitals of 1,20,000 and 60,000 respectively. Bat and Ball granted loans of 2,40,000 and 1,20,000 respectively to the firm. The losses for the year ended 31st March 2012 before any interest amounted to 9,000. Show the distribution of profit or loss. 3. Profit earned by a partnership firm for the year ended 31st March 2012 were distributed equally between the partners‐ Pankaj and Anu‐ without allowing interest on capital (3000 due to Pankaj and 1000 due to Anu). Pass the necessary journal entries. 4. A, B and C were in partnership sharing profits and losses in the ratio of 4:2:1. It was provided that in no case C share in profits should be less than 7,500. The profits for the year 2012 amounted to 31,500. You are required to show the appropriation among the partners. 5. A and B started business on 1st April,2011 with capitals of 15,00,000 and 9,00,000 respectively. On 1st October 2011, they decided that their capitals should be 12,00,000 each. The necessary adjustments in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @8% p.a. compute the interest on capital on 31st March,2012. 3. RECONSTITUTION OF A PARTNERSHIP FIRM 20 Marks 1 MARK QUESTIONS 1. What do you mean by sacrificing ratio? 2. State two occasions when sacrificing ratio may be applied. 3. What is revaluation account? 4. Why is necessary to revalue assets and reassess liabilities at the time of admission of new partner 5. A and B partner in a firm sharing profits in the ratio 3:2 they admit C as a new partner for 1/7th share in future profits. What is the sacrificing ratio of A and B? 6. X and y are partner In a firm sharing profits in the ratio 5:3. Z is admitted as a new partner for 1/6th share in future profit which he acquires as 3/2th from X and 1/24th from y. what is sacrificing ratio? 7. what do you mean by gaining ratio? 8. State any two circumstance in which gaining ratio may be applied. 9. Why assets and liabilities are revalued at the time of retirement of a partner? 10. P and Q are partners sharing profits and losses in the ratio 3:2. They admit R as a new partner and decide to share future profits in the ratio 3:3:2. Calculate sacrificing ratio. 11.Give the formula to calculate Gaining ratio. 12.Give the formula to calculate Sacrificing ratio. 13.Distinguish between gaining ratio and sacrificing ratio. 14.Give the formula to calculate hidden goodwill of the firm. 15.State the essential features of a company. 3 MARK QUESTIONS 1. 1.Karan and Deepak are partners in a firm Sharing profits in The Ratio 5:3. They admit Sampat as a new partner for 1/3rd share in future profits sharing ratio and sacrificing ratio. 2. A and b are partners in a firm sharing profits in the ratio 3:2. C is admitted as a new partner for 1/4th share in Profits. A and B Decide to share future profits equally. Calculate new profit sharing ratio and sacrificing ratio. 3. A and B are partner sharing profit in the Ratio of 3:2. C is admitted into the firm for 1/5th Share in the profit which he acquires equally from A and B. Calculate the new profit sharing ratio. 4. P, Q and R are partners in the ratio of 3:2:1. S is admitted with 1/6th share in profits. R would retain his original share. Calculate new profit sharing ratio and sacrificing ratio. 5. E and F are two partner Sharing profits in the ratio of 3:2. They admit g into partnership. E gives 1/3rd of his share while f gives 1/10th from his share. Calculate new profit sharing ratio and sacrificing ratio. 6. Om and shanty are partners sharing profits and losses in the ratio of 3:2. They admit Karan in partnership for 1/4th share. Karan bring in Rs. 60,000 as capital and Rs. 20,000 as his share goodwill. Om and shanty withdrew their share of goodwill. Give the necessary journal entries. 7. A and B were partners sharing profits and losses in the ratio of 3:2. They admitted into partnership for 1/5th share in profits. C brought Rs. 50,000 as capital and Rs. 10,000 as his share of goodwill at the time of admission. Goodwill was appearing in the books at Rs. 3,000 A and B withdrew half of their share of goodwill from the firm. Partners decided to share future profits in the ratio of 5:3:2 pass necessary journal entries. 8. X and Y are partners sharing profits in the ratio 3:2 goodwill appears in their books at Rs. 5,000. They admit Z into partnership for 1/5th share of future profits. Z brings Rs. 20,000 as his Capital but was unable to bring his share of goodwill Rs.4,000 X and Y decide to share future profits equally. Pass journal entries 9. A and B are partners sharing profits in the ratio of 3:2. They admit C into the firm for 3/7th share in profit of which he takes from A and B in the ratio 3:1. C brings Rs. 20,000 as capital and Rs. 3,000 as premium out of his share of rs. 4,500. Give the necessary journal entries. 10.Kavya and prachi are partners with capital of Rs. 30,000 each. They admit karishma as a partner with 1/4th share in the profits of the firm. Karishma brings Rs. 48,000 as her share of capital. The profit & loss A/c Showed a credit balance of Rs. 24,000 as on date of admission of Karishma. Give the necessary journal entries for the treatment of profit & loss A/c and goodwill. 4 MARK QUESTIONS 1. Hari, Ravi and Kavi Were partners in a firm sharing profits in theratio of 3:2:1. They admitted Give as a new partner for 1/7th share in the profits. The new profit sharing ratio will be 2:2:2:1 respectively. Guru brought Rs. 3,00,000 for his capital and Rs. 45,000 for his 1/7th share of goodwill showing your working clearly, pass necessary journal entries in the books of the firm for the above mentioned transactions. 2. X,Y and Z were partners in firm sharing profits and losses in the ratio 3:2:1 the profit of the firm for the year ended 31st March, 2007 was Rs. 3,00,000. Y dies on 1st July, 2007. 3. Calculate Y’s share of profit upto date of death assuming that profit in the year 2007‐08 have been accrued on the same scale as in the year 2006‐07 and pass necessary journal entry. 4. P,Q and Were partners in a firm sharing profits in the ratio 5:3:1. Q dies five months after the last balance sheet date. It was decided that Q’s share of profit in the current accounting year upto the date of his death is to be calculated on the basis the last three year’s average profits. The profits for last three years were Rs. 95,000 Rs. 1,08,00 and Rs. 1,09,000 respectively. Calculate Q’s Share of profit Upto date of death and pass necessary journal entry. 5. A,B and c were partners in a firm sharing profits in the ratio 2:2:1. C dies on 31st July, 2007. Sales during the previous year upto 31st march, 2007 were Rs. 6,00,000 and profits were Rs. 1,50,000. Sales for the current year upto 31st July were rs. 2,50,000. Calculate C’s share of profits upto the date of his death and pass necessary journal entry 6 MARK QUESTIONS 1. A, B And C are equal partner in a firm. Their balance sheet as on31st March, 2007 was as follows: On that date they agree to take d as equal partner on the following terms: i. D should bring in Rs. 2,10,000 as his capital and goodwill. His share of goodwill is valued at Rs. 60,000. ii. Goodwill appearing in the books must be written off. iii. Provision for loss on stock and provision for doubtful debts is to be made at 10% and 5% respectively. iv. The value of building is to be taken at Rs. 2,00,000 v. The total capital of the new firm has been fixed at Rs. 6,00,000 and the partners’ capital account are to be adjusted in the profit sharing ratio. Any excess is to be transferred to current account and any deficit is to be brought in cash. Prepare the revaluation Account, partner’s capital Account and the balance sheet of the new firm. 2. Ravi and Suny are partners in a firm sharing profits and losses in the ratio of 2:1. Respectively. Their firm was dissolved and following adjustments were made: i) Ravi agreed to pay off her brother looan 15,000 ii) Debtors realized 12,000 iii) Suny took over investment at 18,000 iv) Sundry creditors of 25,000 were paid off at a discount of 10% v) Realisation expenses 2000 vi) Realisation profit was 3,000. BALANCE SHEET LIABILITIES Creditors General reserve Investment fluctuation Fund X’s Loan Capital account X y As on 31st March 2012 RS.
ASSETS
60,000
Cash
20,000 Stock Investment 2,000 Debtors 10,000 Plant 20,000 20,000 1,32,000
RS. 26,000
10,000 20,000 36,000 40,000 1,32,000
Firm was dissolved on 31st March 2012 with the following terms: i) X took over stock at 8,000 and promised to pay X’s loan. ii) Assets were realized as under: Plant 50,000; Investment 19,000; Debtors 38,000 iii) Creditors payable after one month were paid at 6% discount. iv) Realisation expenses 2,000 was paid by X Prepare necessary ledger accounts. 3. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3:2:1. Z retires from the firm on 31st March 2012. On the date of Z’s retirement, the following : General Reserve 1,80,000 Profit and Loss‐Dr. 30,000 Workmen’s compensation 24,000 which was no more required. Pass the necessary journal entries for the adjustment of these items on Z’s retirement. 4. A and B are partners sharing profits and losses in the ratio of 3:1. They agree to admit C into the business. C is to get 1/4th share of the future profits. At the time C’s admission there was a General Reserve of 4,000 appearing in the Balance Sheet of A and B. Revaluation of assets and liabilities resulted in gain of 2,000. Pass the necessary journal entries on C’s admission. 5. A,B and C were partners sharing profits and losses in the ratio of 2:2:1. C died on Died on 31st March ,2012. Profits and Sales for the calendar year 2011 were 1,00,000 and 10,00,000 respectively. Sales during January and March 2012 were 1,50,000. You are required to calculate the share of profit of C up to the date of death. MARK QUEESTIONS 8 M
1. X, Y aand Z werre in partnership shaaring profits and lossses equallyy. X died oon
October, 2009. Thhe Balancee Sheet of the firm as
a at
M
March, 20099 was as uunder:
Liabilitiees
(Rs)
Assets
(Rs)
31,200 Cash at B
Sundry C
Creditors
Bank
8,000
12,000 Debtors
General R
Reserve
Debtors
56,000
Investmennt Fluctuaation Fundd 4,100 Inventoryy
Provisionn for Doubbtful Debtss 3,700 Investmennts (Cost) 16,000
Capital A
Accounts:
Freehold Property 60,000
27,000
60,000 Goodwilll
X
50,000
Y
42,000
Z
2,03,000 Total
Total
2,03,000
On the daate of deathh it was foound that:
a. Freehold Propertty was worrth Rs.80,0000.
b. Debtorrs were all good.
c. Stock w
were valueed at Rs.488,000
d. Investm
ments weree valued aat Rs.15,0000 and werre taken over by Y aat that valuue.
e. A liabillity for Workmen's C
Compensaation for Rs.4,000
R
w
was to be pprovided foor.
f. Goodw
will was to be valuedd at 2 yearss purchasee of averagge profits oof last 5 yeears.
g. X's shaare of proffit upto thee date of ddeath was tto be calcuulated on tthe basis of
o last three
year's aveerage profi
fit.
h. The proofits of thee last five years werre as follow
ws: 2004-005 - Rs.211,000; 2005-06 Rs.27,0000; 2006-077 - Rs.23,0000; 2007--08 - Rs.222,000 andd 2008-09 - Rs.27,0000.
Prepare R
Revaluatiion Accou
unt, Partn
ners Capittal Account and Baalance Sheeet of the
remainin
ng partnerrs.
2. The foollowing iis the balannce sheet of A and B on
Assets
Liabilitiees
Rs
Cash inn hand
Sundry crreditors
30000
Bills payaable
Cash att bank
8000
5000
Mrs. A looan
Stock iin trade
10000
Mrs. B looan
Investm
ment
10000
General rreserve
Debtorrs 20000
Salaries ooutstandingg 1000
(-)provv 2000
A's capittal Plant
A's capitaal
Buildinng
B's capitaal
10000
Rs
500
8000
5000
10000
18000
20000
15000
D
December,2008:
84000
Total
The firm was dissolved on
Buildinng
15000
4000
Goodw
will
Profit aand loss a//c 3500
84000
Total
ms: 6marks
Decembber,2008 oon the folloowing term
mised to paay off Mrss. A 's loann and tookk away stock in tradee at Rs 40000.
a) A prom
b) B tookk away half the invesstment at 110% discoount.
c) Debtorrs realised Rs.190000.
d) Creditoors and billls payablee were duee on an average basiis one monnth after 31st
Decembeer, but theyy were paid immediaately on
Decembber, at a diiscount off 6% per
annum.
e) Plant reealised Rss.25000, buuilding Rss40000,gooodwill Rs6000 and remainingg investmeents
at Rs 45000.
w an oldd typewriteer in the fiirm which had been written offf complettely from tthe
f) There was
books of tthe firm. It
I was now
w estimatedd to realised Rs300.. Ti was taaken away by Bat thhis
estimatedd price.
g) Realisaation expeenses weree Rs.1000.
You are rrequired too give neceessary ledgger accounnts to closse the bookks of the firm
fi
3. The B
Balance Shheet of A, B and C who
w are paartners in a firm sharring profitts and lossses
in proporttion to theeir capitalss stood as on 31st Deecember, 22009 was as under:
Liabilitiees
Assets
Rs.
Rs.
Capital A
Account:
Goodwiill
20,0000
A
80,000 Land annd Buildinng 1,20,000
B
60,000 Plant annd Machinnery 42,0000
C
47,8000
60,000 Inventorry
Trade Creeditors
40,000 Debtorss 45,000
Bills Payaable
25,000 Less: Prrovision 2,800 42,2000
30,000 Bills Reeceivable
Reserve F
Fund
26,0000
Workmenn Compensation Funnd 10,000 Typewrriter
7,0000
3,05,0000 Total
Total
3,05,000
o the aboove date annd the folllowing adjjustments were to bee made:
B retires on
e. Plant annd Machinnery and S
Stock deprreciated byy 10% andd Land andd Buildinggs appreciaated
by 20%.
f. Provisioon for legaal chargess to be madde at Rs.3,,320.
g. Provisiion for douubtful debbts to be raaised to 100% on debttors
h. Goodw
will of the ffirm is fixxed at Rs.660,000 at thhe time off retiremennt of B.
i. B will be
b paid Rss.15,000 inn cash andd balance w
will be trannsferred too his Loann Account. j.
The capittals of the new firm to be fixedd at Rs.2,440,000. A and C deccided to keeep new
capitals inn their new
w profit shharing ratioo which iss 2 : 1. Adjjustment will be m
made by
opening ccurrent acccount.
Prepare R
Revaluatiion Accou
unt, Partn
ners Capittal Account and Baalance Sheeet after
retiremen
nt of B.
4. Amarr, Uday and Sagar w
were partneers, sharingg profits inn the ratioo of 5 : 3 : 2. Their
Balance S
Sheet on 31.3.2009 w
was as follows:
Asseets
Rs.
Liabilitiees
Rs.
Capital A
Account
Plannt & Machiinery
72,000
….
12,000
Amar
60,0000 Furnniture
46,000
Uday
75,0000 Debttors
Sagar
37,5500 Jointt life Policcy (surrendder value) 36.000
29,000
Bank Oveerdraft
39,0000 Billss Receivabble
42,000
Mrs. Amaar's Loan
20,0000 Stock
20,000
Creditors
38,0000 Loann to Sagar
25,000
Bills Payaable
18,5500 Investments
16,000
Profit andd Loss Acccount 10,0000 Cashh in hand
2,98,000
Total
2,988,000 Totaal
The firm was dissolved on
March, 22005 on thhe followiing terms:
a. The Joiint Life Poolicy is Suurrender att book valuue.
b. Investm
ments are ttaken overr by Uday at 10% diiscount.
c. Other A
Assets are realised as
a follows: Plant andd Machinery Rs.48,0000; Debtoors and Biills
Receivable at 15% less; Furnniture Rs.77,800 and S
Stock at 10% less.
d. Creditoors agreed to accept Rs.35,0000 for full ssettlement.
e. Expensses on reallisation am
mounted too Rs.2,0000.
Prepare R
Realisatioon Accoun
nt, Partneers Capitaal Accoun
nt and Cassh Accoun
nt.
5. A andd B are parrtners sharring profits and losses in the ratio of 3:22 with capiitals
of Rs 6000000 and
Rs 3000000 respectiively. Show
w the distrribution off profits inn each of tthe followiing
alternativves cases:
Case(i) Iff the partneership deeed is silentt as to the interest onn capital annd the proofits
for the yeear are Rs
150000.
Case (ii) If
I the partnnership deeed providdes for inteerest on caapital @8%
% P.a. andd the
losses forr the year
are Rs 50000.
marks
6m
A. ACCOUNTING FOR SHARE CAPITAL 18 Marks 1 MARK QUESTIONS 1. What do mean by the term ‘share’? 2. What is meant by authorized capital of a company? 3. What is minimum subscription? 4. What is meant by forfeiture of shares? 5. What is meant by securities premium? 6. Give the meaning of calls‐in‐arrears. 7. Give the meaning of calls‐in‐advance. 8. What is sweat equity? 9. When does a company forfeit it shares? 10.What is preferential allotment of shares? 11.What is meant by reserve capital? 12.What is meant by capital reserve? 13.Give one point of difference between capital reserve and reserve capital. 14.What is Sweat Equity? 15.What is meant by Buy‐Back of Shares. 3 MARK QUESTIONS 1. Distinguish between preference share and equity share. 2. Give any four points of difference between reserve capital and capital reserve. 3. Distinguish between over subscription under subscription. 4. A company issued 2,50,000 equity shares of 10 each to the public. All amounts have been received in lump sum. Pass the necessary journal entries in the books of the company. 5. ABC L td. Invited applications for issuing 20,000 equity shares of 20 each at a discount of 10%. The whole amount due on allotment was received. Pass the necessary journal entries. 6. Goodluck Ltd. purchased machinery costing 10,00,000 from Ayer Ltd. and 50% of the payment was made by cheque and for the remaining 50% the company issued equity shares of 100 each at a premium of 25%. Pass the necessary journal entries in the books of account. 7. X Ltd. forfeited 100 shares of 10 each at a discount of 10% to Mahesh on which he had paid 2 per share. Out of these 80 shares were reissued @ 6 per share to Suresh as 8 paid up. Pass the necessary journal entries. 8. Distinguish between equity shares and preference shares. 9. List the different kinds of preference shares. 10. Distinguish between reserve capital and capital reserve. 4 MARK QUESTIONS 1. What conditions must a company comply with before the issue of shares at a discount? 2. state various purposes for which securities premium money can be used. 3. 2,000 equity shares of 10 each were issued to X Limited from whom assets of 25,000 were acquired. Pass the journal entries. 4. Ghosh Ltd. made the second and final call on its 50,000 equity shares of 2 per share on 1st January 2012. The whole amount was received on 15th January except on 100 shares allotted to venkat. Pass the necessary Journal entries for the call money due and received by opening Calls‐in‐Arrear Account. 5. Distinguish between over‐subscription of shares and under‐subscription of shares. 6 MARK QUESTIONS 1. AB Ltd. Invited applications for 1,00,000 equity shares of Rs. 10 each, payable as Rs. 2 on application Rs. 3 on allotment and the balance on first and final call. Application were received for 3,00,000 shares and the shares were allotted on a pro‐rata basis. The excess application money was to adjusted against allotment only. M, a shareholder, who had applied for 3,000 shares, failed to pay call money and his shares were accordingly forfeited and reissued at Rs. 8 per share as fully paid pass necessary journal entries. 2. Z Ltd. Invited application for issuing 40,000 equity shares of Rs. 10 each at a premium of Rs.2 per share. The amount was payable as follows: On application. 6 (including premium) and balance on allotment. Applications for 50,000 shares were received. Prof‐rata allotment was made to all applications. Excess money received on application was adjusted towards sums due on allotment. A shareholder to whom 8,000 shares were allotted failed to play the allotment money and therefore, his shares were forfeited. Later on the forfeited shares were re‐issued for Rs. 70,000 as fully paid up. Pass necessary journal entries in the books of Z ltd. 3. 100 shares of 100 each issued at a discount of 10% were forfeited for non‐payment of allotment money of 50 per share. The first and final call on these shares at 20 per share was not made. The forfeited shares were reissued for Rs.7000 as fully paid‐up. 4. How will you show Share Capital in the Balance Sheet of a Joint Stock Company. 5. Explain, in brief, the main categories in which the share capital of a company is divided. 8 MARKS QUESTIONS 1. A company invited applications for the issue of 30,000 equity shares of Rs. 10 each at a discount of 1 per share. Applications were received for 40,000 shares. 10% of the total applications were rejected and the balance were allotted shares on pro rata basis. The amount per share was payable as follows: 2 on application, 3 on allotment and balance on the first and final call. M who applied for 2,400 shares failed to pay the allotment money and his shares were forfeited immediately. S who was allotted 1,500 shares paid only Rs.3,000 on allotment. On the failure to pay the first and final call. S’s shares were also forfeited. Pass the journal entries to record the above transactions. 2. Wye Ltd. issued 8,000 equity shares of Rs.10 each, Rs.5 was called, payable Rs.2 on application, Rs.1 on allotment, Rs.1 on first call and Rs.1 on final call. All the money was duly received with the following exceptions. A who holds 250 shares paid nothing after application. B who holds 500 shares paid nothing after allotment. C who holds 1250 shares paid nothing after first call. Prepare the journal and the Balance Sheet. 3. A company made an issue of 1,00,000 equity shares of 10 each at a premium of 20% payable as follows: On application 2.50 per share On allotment 4.50 per share On 1st and final call balance Applications were received for 2,00,000 equity shares and the directors made pro rata allotment. Ranu who had applied 800 shares did not pay the allotment and final call money. As a result his shares were forfeited. Later on 80%of the forfeited shares were reissued at 8 per share fully paid up. Pass the necessary journal entries in the books of the company. 4. Show the reissue and forfeiture entries in the following cases: i) X Ltd. forfeited 300 shares of 10 each, 8 called‐up held by Mr. A for non‐payment of second call money of 3 per share. These shares were reissued to Mr. Z for 10 per share as fully paid up. ii)Y Ltd. forfeited 400 shares of 10 each, fully called up, held by Mr.B for non payment of final call money of 4 per share. These shares were reissued to Mr. T as 12 per share as fully paid‐up. 5. A Co. Ltd. was registered with a nominal capital of Rs.1,00,000 equity shares of Rs.10 each. It offered to the public 6,000 shares for subscription. The applications were, however, received for 8,000 shares. The Directors had to reject the applications for 1,000 shares and to return the money received thereon. The application money received on the other 1,000 shares was adjusted to allotment account. The amount payable on shares was Rs.2 on application. Rs.4 per share on allotment and the balance on final call. One shareholder holding 100 shares failed to pau the first call money and as a result his shares were forfeited. Pass the necessary Journal and Cash Book entries in the books of the company. ACCOUNTING FOR DEBENTURES 7 MARKS 1 MARK QUESTIONS 1. Define the term debenture. 2. What do you mean by debentures issued as collateral security? 3. What is a bearer debentures ? 4. What is a registered debentures ? 5. What is a convertible debentures ? 6. Distinguish between shares and debentures. 7. What do you mean by redemption of debentures? 8. Enumerate the methods of redemption of non‐convertible debentures. 9. What is the provision of the companies (Amendment) Act, 200 regarding creation of debenture redemption reserve? 10.In which method of redemption companies are not required to create debenture redemption reserve? 11. What is a charge? 12. What is meant by Registered Debentures. 13. What is meant by Redemption by Conversion. 14. What is meant by Redemption of Debentures in Lump sum. 15. What is meant by Redemption by Drawings of Lots. 3 MARK QUESTIONS 1. Distinguish between a share and a debenture. 2. Sanjana Udyog Ltd. Issued 2,00,000, 15% debentures of Rs. 100 each redeemable at a premium of 5% after 4 years. Pass journal entries for issue of debentures. 3. A company issued Rs. 10,00,000, 13% debentures at a discount of 5 per cent redeemable after 5 year at a premium of 10% pass journal entries for the issue of debentures. 4. Delhi agrotech Ltd. Issued 1,00,000, 12% debentures of Rs. 100 each at a discount of 10% payable Rs. 50with application and balance on allotment. These debentures are repayable at a premium of Rs. 10 per debentures after 5 years. Pass journal entries for issue of debentures. 5.. On April 1st, 2001 Sahara Ltd. Issued 1,00,000, 9% debentures of Rs. 100 each at par redeemable at 5% premium on March 31st, 2005. The directors decide to transfer out of profits Rs. 20,00,000 to debenture redemption Reserve on March 31, 2002 Rs. 10,00,000 on March 31, 2003 and balance on March 31, 2004. Pass journal entries for issue and redemption of debentures. 6.E Ltd. Redeemed 4,000, 14% debentures of Rs. 100 each which were issued at a discount of 5% by converting them into equity shares of Rs. 10 each at a premium of 25% journalise 7. Anirudh Ltd. Has 4,000, 8% debentures of Rs. 100 each due for redemption on March 31st, 2005. The company has a debenture redemption reserve of Rs. 1,50,000 on that date. Assuming that no interest is due record the necessary journal entries at the time of redemption of debentures. 8 State the exception to the creditors of Debenture Redemption Reserve as per
SEBI Guideline.
9.Distinguish between shares and debentures.
10 List different kind of debentures..
4 MARK QUESTIONS 1. Dow Ltd. issued 2,00,0000; 8% Debentures of Rs.10 Debentures of Rs.10 each at a
premium of 8% on 30th June,2011 redeemable on 30th December 2012. How much
amount of debenture redemption reserve is to be created before redemption of
debentures?
2. Times Sports Ltd. issued 15,000 10% Debenrtures of Rs.100 each on 1st April 2011.
The issue was fully subscribed. According to the terms of issue, interest is payable on
half yearly basis. Pass the journal entries.
3. SKS Ltd. issued 1,00,000 8% Debentures of Rs.10 each at Rs.12 on 1st April 2011.
The issue was fully subscribed. In terms of the issue of debentures, interest was
payable at the end of the financial year. Pass the journal entries for the above
transactions.
4. Green Ltd. issued 5,000 6% debentures of Rs.100 each at a discount of 5% repayable
after 5 years at a premium of 5%. You are required to show the journal entries at the
time of issue and redemption of debentures and loss on issue of debentures account
over the period.
5. Adarsh Cosmetics Ltd. issued 5,000 9% debentures of Rs.100 each on 1st April 2012
redeemable at a premium of 8% after 10 years. According to the terms of prospectus
Rs.40 is payable on application and balance on allotment of debentures. Record the
necessary entries regarding issue of debentures.
6 MARK QUESTIONS 1. AB ltd. Issued 5,00,000, 7% debentures of Rs. 50 each. Pass necessary journal entries in the books of the company for the issue of debentures were: i.
ii.
iii.
Issued at par, redeemable at 8% premium. Issued at 4% premium, redeemable at 5% premium Issued at 5% premium, redeemable at par. 2. M ltd. Issued 10,000, 8% debentures of Rs. 100 each at a premium of 10% on 1.1.2004. it purchase sundry assets of the value of Rs. 2,50,000 and took over the liabilities of Rs. 60,000 and is 8% debentures at a discount of 5% to the vendor. On the same date, it took loan from the balance Rs. 1,00,000 and issued 8% debentures as collateral security. Record the relevant journal entry en the books of M Ltd. And prepare the extract of balance sheet on 31.12.2004. Ignore interest. 3. Diwakar enterprises ltd. Issued Rs. 10,00,000, 6% debentures on April 1st, 2002. Interest is paid on September 30,2002 and March 31, 2003. Record necessary Journal entries assuming that income tax is deducted @ 30% of the amount of interest. 4. Record necessary journal entries in the books of the company in following cases for redemption of 1,000, 12% debentures of Rs. 10 each issued at par: Debentures redeemed at par by conversion into 12% preference shares of Rs. 100 each, Debentures redeemed at a premium of 10% by conversion into equity shares issued at par, Debentures redeemed at a premium of 10% by conversion into equity shares issued at a premium of 25% 5. Best Barcode Ltd. took a loan of 5,00,000 from a bank giving 6,00,000, 9% debentures as a collateral security. Pass the journal entries regarding issue of debentures and show its effect in the balance sheet of the company. 6. B Ltd., redeemed 6,000 9% Debentures of 100 each which were issued at a discount of 5% by converting them into equity shares of 10 each issued at a discount of 5%. Journalise. 7. B Ltd., redeemed 6,000 9% Debentures of 100 each which were issued at a discount of 5% by converting them into equity shares of 10 each issued at apremium of 5%. Journalise. 8. PQ Ltd. issued 10,000 debentures of 100 each at par with the condition that they will be redeemed at a premium of 5% after the expiry of three years. 9. Explain three methods for redemption of debentures. 10. Give six characteristics of debentures. 5. ANALYSIS OF FINANCIAL STATEMENT OF COMPANY 12 Marks 1 MARK QUESTIONS 1.Give the format of the balance sheet of a company (main heading only) as per the requirement of schedule VI of the companies Act, 1956. 1.
2.
3.
4.
Give any two examples of current assets and current liabilities. Give two examples each of non‐current Assets and Non‐Current liabilities. What are contingent liabilities? Mention any tow examples. The following balance have been extracted from the books of sahara ltd.: share capital Rs. 10,00,000; proposed dividend Rs. 50,00,000; Freehold property Rs. 9,00,000; shares of Reliance industries Rs. 4,00,000; work‐in‐progress Rs. 4,00,000: discount on issue of debentures Rs. 1,00,000. 5. Prepare the balance sheet of the company as per schedule VI, Part I of the companies ACT. 1956. 6.Enumerate any two tools of analysis of financial statements. 7. What is horizontal analysis? 8.What is vertical analysis? 9.How analysis of financial statement is suffered from the limitation of window dressing? 10.Distinguish between horizontal analysis and vertical analysis of financial statement. 11.Explain briefly any three advantages of analysis of financial statements. 12. State any one limitation of financial statement analysis. 13. How ratio analysis is affected by window dressing? 14. What level of Debt Equity ratio is considered satisfactory? 15. What level of Liquid ratio is considered satisfactory? 3 MARKS QUESTIONS 1. Prepare a comparative income statement from the following information: March 31st, March 31st, 2001
2000 Rs. Rs. Sales 5,00,000
8,00,000 Cost of goods sold 3,00,000 5,00,000 Direct expenses 40,000 20,000 Indirect expenses 30,000 40,000 Income tax 40% 50% 2. From the following information prepare a common size income statement: Particulars March 31st, March 31st, 2006
2005 Rs. Rs. Sales 6,00,000
8,00,000 Gross Profit Ratio 30% 40% Administrative Expenses 40,000 1,00,000 Income tax 50% 50% 3. From the following information prepare a common size income statement: Particulars Particulars March 31st, 2000 Rs. 10,00,000
6,00,000 2,00,000 40,000 1,20,000 Sales Cost of goods sold Administrative, selling & distribution expenses Other income Income tax 4.. From the given information, calculate stock turnover Ratio: March 31st, 2001
Rs. 8,00,000
4,00,000 1,40,000 20,000 1,40,000 Sales: Rs.5,00,000: gross profit: 25% on cost: opening stock was 1/3rd of the value of closing stock. Closing stock was 30% of sales. II). A business has a current ratio of 3:1 and a quick ratio of 1.8:1. If the working capital is Rs.1,60,000, Calculate the total current assets and stock. 5.On the basis of the following information, calculate any two of the following ratios: a. Operating Ratio b. Liquid Ratio c. proprietary Ratio Information: Cash Sales Rs.4,00,000: Credit Sales Rs.2,75,000: sales returns Rs.27,000: Cost of goods sold Rs. 3,90,000: selling and distribution Expenses Rs. 7,000: administration Expenses Rs. 3,000; current liabilities Rs. 1,95,000; current Assets Rs. 3,94,000; closing stock Rs. 23,000: Equity share capital Rs. 4,37,000; 6% preference share capital Rs. 1,74,000: fixed assets Rs. 4,30,000. 6.Calculate the debtors turnover ratio from the following figures: Total sales Cash sales Sales Return Opening debtors Opening B/R Closing Debtors Closing B/R 5,00,000 1,00,000 50,000 35,000 5,000 45,000 15,000 7 .Calculate current assets of a company from the following information: i.
ii.
iii.
iv.
v.
vi.
Stock turnover : 4 times: Stock at the end is Rs. 20,000 more than stock in the beginning: Sales Rs. 3,00,000; Gross profit ratio 25% Current liabilities Rs. 40,0000: Quick ratio 3/4. 8. From the following particulars of a company, calculate total assets to debt ratio and current Ratio. b. Share capital RS. 25,00,000 b. General Reserve Rs. 5,00,000 c. Total debt. Rs. 16,00,000 d. Current liabilities Rs. 6,00,000 e. Fixed Assets Rs. 34,00,000. 9. What do you mean by accounting ratios? 10. Enumerate the categories under which accounting ratios are grouped. 4 MARKS QUESTIONS 1. X Ltd. has a debt equity ratio at 3:1. According to the management it should be maintained at 1:1. What are the two choices to do so? 2. Calculate the following ratios from the details given
below:
(i) Current ratio
(ii) Liquid ratio
(iii) Operating ratio
(iv) Gross profit ratio
Details:
Current assets = Rs 70000
sales =Rs 140000
Net working capital= Rs
cost of goods sold= Rs
30000
68000
Inventories = Rs 30000
3. From the following information, calculate (a) cost of goods sold, (b) opening stock
and closing stock, ( c ) quick assets and current assets,if
i) Stock turnover raio 5 times
ii) Stock at the end is Rs 10000 more than the stock in the beginning.
iii) Sales Rs 300000
iv) Gross profit ratio 25%
v) Current liabilities Rs 40000
vi) Quick ratio 0.75
4. . Show the major headings into which the assets side of company’s Balance
Sheet is organized and presented as per Schedule VI of I of the companies Act
1956.
5. State limitations of Financial Statement Analysis.
6. How the solvency of a business is assessed by Financial Statement Analysis.
7. Distinguish between Inter-firm analysis and Intra-firm analysis.
8. Prepare a format of comparative Balance-Sheet.
9. Prepare a format of common -size Balance-Sheet.
10. Prepare a format of comparative income statement.
6. CASH FLOW STATEMENT 8 Marks 1 MARK QUESTIONS 1.
2.
3.
4.
5.
6.
7.
What is a cash flow statement? Enumerate the activities in which cash flow statement is classified. What is the main objective of preparation of cash flow statement? Define cash equivalents. Give any two examples of cash equivalents. Give any two examples of operating activities. Interest received by a finance company is classified under which kind of activity while preparing cash flow statement? 8. Dividend paid by a trading company is classified under which type of activity in a case of preparing cash flow statement. 9. Dividend received by a trading company is classified under which type of activity in a case of preparing cash flow statement. 10.Dividend paid by a financing company is classified under which type of activity in a case of preparing cash flow statement. 11.State any two outflow of cash from Investing Activities. 12.Give the meaning of operating activities. 13.Give the meaning of financing activities. 14.Give the meaning of investing activities. 15.Dividend paid by a trading company is classified under which kind of activity while preparing cash flow statement. 6 MARK QUESTIONS 1. X Ltd. Made a profit of Rs. 1,00,000 after charging depreciation of Rs. 20,000 on assets and a transfer to general reserve of Rs. 30,000. The goodwill written off was Rs. 7,000 and the gain on sale of Machinery was Rs. 3,000. The other information available to you (changes in the value of current assets and current liabilities) is as follows: 2. At the end of the year debtors showed an increase of R. 6,000; Creditors an increase of Rs. 10,000; prepaid expenses an increase of Rs. 200; bills receivable a decrease of Rs. 3,000; Bills payable a decrease of Rs. 4,000 and outstanding expenses a decrease of Rs. 2,000. Ascertain the cash flow from operation activities. Cash flow from operating Activities. 3. The following balance appeared in Plant account and accumulated depreciation Account in the books of Bharat ltd.: Balance at 31, 2004 Plant Accumulated Depreciation March 31, 2003 Rs. 7,50,000 1,80,000 March Rs. 9,70,000 3,40.000 Additional information: Plant costing Rs. 1,45,000, Accumulated depreciation thereon Rs. 70,000, was sold for Rs. 35,000. You are required to: 1. Compute the amount of plant purchased, depreciation charged for the year and loss on sale of plant. 2. Show how each of the items related to the plant will be shown in cash flow statement. 4. From the following balance sheet of Mohan ltd., prepare cash flow statement: Balance sheet of Rajeshwar limited. As on….. Liabilities 2005
2006
Assets
2005 2006
Rs. Rs. Rs. Rs. Equity share capital 2,00,000 3,00,000 Fixed Assets. 4,00,000 6,00,000
Profit & loss 1,60,000 2,00,000 Stock 1,30,000 1,50,000
Bank loan 1,00,000 80000 Debtors 1,00,000 60,000 Creditors 80,000 1,00,000 Bills Receivable 20,000 30,000 Proposed dividend 1,40,000 1,20,000 Bank 90,000 30,000 60,000 70,000 7,40,000 8,70,000
7,40,000 8,70,000
Additional information: Machine Costing Rs. 80,000 on which accumulated depreciation was Rs. 50,000 was sold for rs. 20,000. 5. From the following information, prepare cash flow statement for Yogeta Ltd. Liabilities 2007
2006
Assets
2007 2006
Rs. Rs. Rs. Rs. Equity share capital 2,00,000 3,00,000 Bank 45,000 ‐
Preference share ‐ 1,00,000 Cash 5,000 ‐ capital 1,00,000 2,00,000 Stock 1,00,000 1,70,000
Profit and loss 2,00,000
‐ Bills receivable 50,000 1,00,000
account 30,000 50,000 Fixed Assets 4,00,000 7,00,000
Loan 50,000 70,000 Provision for ‐ 1,00,000
taxation 20,000 1,50,000
Bills payable 6,00,000 9,70,000
6,00,000 9,70,000
Bank overdraft Loan for rahul Additional information: Net profit for the year after charging Rs. 50,000 as depreciation was Rs. 1,50,000. Dividend paid on share was Rs. 50,000.