21 Feb
Model Question Papers
20 Sep
Revised Balance Sheet Schedule VI
Revised Balance Sheet , Schedule VI of Companies Act, 1956
Reference Sources
Revised Schedule VI print disabled (1)
Presentation_on_Revised_Schedule_VI
Format-of-Revised-Schedule-VI-to-the-Companies-Act-1956-in-excel
9 Feb
CBSE XII BOARD TIME TABLE MARCH 2011
Class XII -, MARCH 2011
(Download Class XII Date Sheet)
Exam Timings: 10:30 AM
| 1 March, Tuesday Time Left: 19 days, 18 hours |
PHYSICS PERSIAN OFFCE PROC.& PRAC. LENDING OPERATIONS ELECTRIC MACHINES RADIO ENG.&AUD.SYS M PROD TPT &M COOP POST HARV TECH&PRD OPTICS CLINICAL BIO-CHEM. COMM. HEALTH NURII RADIOGRAPHY-I GENL ESTB & MGMT OF FSU DESG & PAT MAKING DYEING & PRINTING ACCOMODAT.SERVICES TRAVEL TRADE MGMT CONFECTIONERY DTP CAD & MULTIMED CLSFN.&CATALOGUING POULTRY PDTS& TECH H EDN & PUB HELATH C HEALTH NURSING |
| 3 March, Thursday Time Left: 21 days, 18 hours |
Business Studies |
| 4 March, Friday Time Left: 22 days, 18 hours |
Fashion Studies |
| 5 March, Saturday Time Left: 23 days, 18 hours |
HISTORY 027 FINANCIAL ACCNTG CASH MGMT & H-KEEP ELECT APPLIANCES AUTOSHOP REP& PRAC AC & REFRGTN-III ELN.DEV.& CIRCUITS ACTG FOR BUSINESS MIDWIFERY |
| 7 March, Monday Time Left: 25 days, 18 hours |
CHEMISTRY OFF. COMMUNICATION SHORTHAND HINDI CONS BEHV & PROTCN MGMT OF BANK OFFCE APPLIED PHYSICS FABRICATN.TECH-III TV & VIDEO SYSTEMS ELECTRICAL ENGG. MILK & MILK PRODS. VEGETABLE CULTURE B THERAPY &H DR-II BIOLOGY-OPTHALMIC LAB. MEDICINE FUND OF NURSING II RADIATION PHYSICS ADVANCE FOOD PREP CLOTHING CONST BASIC DESIGN FOOD PREPARATION INDIA-TOURIST DEST FOOD SCI.& HYGIENE I T SYSTEMS LIB. ADMN & MGMT. PRIN &PRA-LIFE INS POULTRY NUTR & PHY INT TO FINANCL MKT B CONCEPT-H &MED T |
| 8 March, Tuesday Time Left: 26 days, 18 hours |
PUNJABI |
| 9 March, Wednesday Time Left: 27 days, 18 hours |
BIOTECHNOLOGY ACCOUNTANCY CR WRTNG TR STUDY HERITAGE CRAFTS STORE ACCOUNTING ENGINEERING SCI. DAIRY PLANT INSTRU FOOD& BEV SERVICES |
| 11 March, Friday Time Left: 29 days, 18 hours |
ENGLISH ELECTIVE FUNCTIONAL ENGLISH ENGLISH CORE |
| 14 March, Monday Time Left: 32 days, 18 hours |
BIOLOGY GRAPHIC DESIGNS SINDHI GUJARATI ASSAMESE PORTUGUESE RUSSIAN SPANISH KASHMIRI SHORTHAND ENGLISH TYPOGRAPHY &CA HIN ELE.COST A/C & AUD SALESMANSHIP MECH. ENGINEERING AUTO ENGINEERING AC & REFRGTN-IV YOGA ANATOMY &PHYS MEAL PLNG & SERVIC TOUR MGMT & MP PLN BUSINESS DATA PROC REFERENCE SERVICE B P O SKILLS |
| 16 March, Wednesday Time Left: 34 days, 18 hours |
Economics |
| 18 March, Friday Time Left: 36 days, 18 hours |
HINDI ELECTIVE MANIPURI TIBETAN HINDI CORE |
| 22 March, Tuesday Time Left: 40 days, 18 hours |
MATHEMATICS SECT PRAC & ACCNTG CIVIL ENGINEERING FABRICATN.TECH-II FLORICULTURE COSMETIC CHEMISTRY OPHTHALMIC TECH. MICROBIOLOGY MAT.&CHILD H.NURII RADIOGRAPHY-II SPL TEXTILE SCIENCE BAKERY SCIENCE COMPUTER& LIFE I A TPT. SYSTEMS &MGMT POULTRY DISE & CNT FIRST AID &MEDCL C HEALTH CENTRE MGMT |
| 25 March, Friday Time Left: 43 days, 18 hours |
POLITICAL SCIENCE |
| 26 March, Saturday Time Left: 44 days, 18 hours |
PAINTING GRAPHICS SCULPTURE APP-COMMERCIAL ART |
| 28 March, Monday Time Left: 46 days, 18 hours |
PHYSICAL EDUCATION MARATHI KANNADA MIZO |
| 30 March, Wednesday Time Left: 48 days, 18 hours |
INFORMATICS PRAC. COMPUTER SCIENCE |
| 31 March, Thursday Time Left: 49 days, 18 hours |
PHILOSOPHY DANCE-KATHAK DANCE-KUCHIPUDI DANCE-ODISSI DANCE-MANIPURI DANCE-KATHAKALI DANCE-MOHINIYATTAM MULTIMEDIA & WEB T TYPOGRAPHY &CA ENG |
| 1 April, Friday Time Left: 50 days, 18 hours |
MUSIC CAR.VOCAL MUSIC CAR.INS.MEL. MUSIC CAR.INS.PER. MUSIC HIND.VOCAL MUSIC HIND.INS.MEL MUSIC HIND.INS.PER ENGG. GRAPHICS TELUGU MALAYALAM ORIYA GERMAN NEPALI LIMBOO LEPCHA BHUTIA |
| 2 April, Saturday Time Left: 51 days, 18 hours |
ENTREPRENEURSHIP |
| 5 April, Tuesday Time Left: 54 days, 18 hours |
GEOGRAPHY MARKETING |
| 7 April, Thursday Time Left: 56 days, 18 hours |
PSYCHOLOGY ARABIC |
| 9 April, Saturday Time Left: 58 days, 18 hours |
HOME SCIENCE |
| 11 April, Monday Time Left: 60 days, 18 hours |
URDU ELECTIVE SANSKRIT ELECTIVE BENGALI TAMIL FRENCH URDU CORE SANSKRIT CORE |
| 13 April, Wednesday Time Left: 62 days, 18 hours |
SOCIOLOGY DANCE-BHARATNATYAM AGRICULTURE |
21 Jan
ACCOUNTING RATIOS
Accounting Ratios
for Financial Statement Analysis
| Liquidity Analysis Ratios |
| Current Ratio |
| Current Assets | ||
| Current Ratio = | ———————— | |
| Current Liabilities | ||
| Quick Ratio |
| Quick Assets | ||
| Quick Ratio = | ———————- | |
| Current Liabilities | ||
| Quick Assets = Current Assets – Inventories |
| Net Working Capital Ratio |
| Net Working Capital | ||
| Net Working Capital Ratio = | ————————– | |
| Total Assets | ||
| Net Working Capital = Current Assets – Current Liabilities |
| Profitability Analysis Ratios |
| Return on Assets (ROA) |
| Net Income | ||
| Return on Assets (ROA) = | ———————————- | |
| Average Total Assets | ||
| Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 |
| Return on Equity (ROE) |
| Net Income | ||
| Return on Equity (ROE) = | ——————————————– | |
| Average Stockholders’ Equity | ||
| Average Stockholders’ Equity = (Beginning Stockholders’ Equity + Ending Stockholders’ Equity) / 2 |
| Return on Common Equity (ROCE) |
| Net Income | ||
| Return on Common Equity (ROCE) = | ——————————————– | |
| Average Common Stockholders’ Equity | ||
| Average Common Stockholders’ Equity = (Beginning Common Stockholders’ Equity + Ending Common Stockholders’ Equity) / 2 |
| Profit Margin |
| Net Income | ||
| Profit Margin = | —————– | |
| Sales | ||
| Earnings Per Share (EPS) |
| Net Income | ||
| Earnings Per Share (EPS) = | ——————————————— | |
| Number of Common Shares Outstanding | ||
| Activity Analysis Ratios |
| Assets Turnover Ratio |
| Sales | ||
| Assets Turnover Ratio = | —————————- | |
| Average Total Assets | ||
| Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 |
| Accounts Receivable Turnover Ratio |
| Sales | ||
| Accounts Receivable Turnover Ratio = | ———————————– | |
| Average Accounts Receivable | ||
| Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 |
| Inventory Turnover Ratio |
| Cost of Goods Sold | ||
| Inventory Turnover Ratio = | ————————— | |
| Average Inventories | ||
| Average Inventories = (Beginning Inventories + Ending Inventories) / 2 |
| Capital Structure Analysis Ratios |
| Debt to Equity Ratio |
| Total Liabilities | ||
| Debt to Equity Ratio = | ———————————- | |
| Total Stockholders’ Equity | ||
| Interest Coverage Ratio |
| Income Before Interest and Income Tax Expenses | ||
| Interest Coverage Ratio = | ——————————————————- | |
| Interest Expense | ||
| Income Before Interest and Income Tax Expenses = Income Before Income Taxes + Interest Expense |
| Capital Market Analysis Ratios |
| Price Earnings (PE) Ratio |
| Market Price of Common Stock Per Share | ||
| Price Earnings (PE) Ratio = | —————————————————— | |
| Earnings Per Share | ||
| Market to Book Ratio |
| Market Price of Common Stock Per Share | ||
| Market to Book Ratio = | ——————————————————- | |
| Book Value of Equity Per Common Share | ||
| Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares |
| Dividend Yield |
| Annual Dividends Per Common Share | ||
| Dividend Yield = | ———————————————— | |
| Market Price of Common Stock Per Share | ||
| Book Value of Equity Per Common Share = Book Value of Equity for Common Stock / Number of Common Shares |
| Dividend Payout Ratio |
| Cash Dividends | ||
| Dividend Payout Ratio = | ——————– | |
| Net Income | ||
| ROA = Profit Margin X Assets Turnover Ratio |
| ROA = Profit Margin X Assets Turnover Ratio |
| Net Income | Net Income | Sales | ||
| ROA = | ———————— = | ————– X | ———————— | |
| Average Total Assets | Sales | Average Total Assets | ||
| Profit Margin = Net Income / Sales Assets Turnover Ratio = Sales / Averages Total Assets |
Financial statement analysis includes financial ratios. Here are three financial ratios that are based solely on current asset and current liability amounts appearing on a company’s balance sheet:
| Financial Ratio | How to Calculate It | What It Tells You | |
| Working Capital | =
= = |
Current Assets – Current Liabilities
$89,000 – $61,000 $28,000 |
An indicator of whether the company will be able to meet its current obligations (pay its bills, meet its payroll, make a loan payment, etc.) If a company has current assets exactly equal to current liabilities, it has no working capital. The greater the amount of working capital the more likely it will be able to make its payments on time. |
| Current Ratio | =
= = |
Current Assets ÷ Current Liabilities
$89,000 ÷ $61,000 1.46 |
This tells you the relationship of current assets to current liabilities. A ratio of 3:1 is better than 2:1. A 1:1 ratio means there is no working capital. |
| Quick Ratio (Acid Test Ratio) |
=
= = = |
[(Cash + Temp. Investments + Accounts Receivable) ÷ Current Liabilities] : 1
[($2,100 + $100 + $10,000 + $40,500) ÷ $61,000] : 1 [$52,700 ÷ $61,000] : 1 0.86 : 1 |
This ratio is similar to the current ratio except that Inventory, Supplies, and Prepaid Expenses are excluded. This indicates the relationship between the amount of assets that can quickly be turned into cash versus the amount of current liabilities. |
Four financial ratios relate balance sheet amounts for Accounts Receivable and Inventory to income statement amounts. To illustrate these financial ratios we will use the following income statement information:
|
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| Financial Ratio | How to Calculate It | What It Tells You | |
| Accounts Receivable Turnover | =
= = |
Net Credit Sales for the Year ÷ Average Accounts Receivable for the Year
$500,000 ÷ $42,000 (a computed average) 11.90 |
The number of times per year that the accounts receivables turn over. Keep in mind that the result is an average, since credit sales and accounts receivable are likely to fluctuate during the year. It is important to use the average balance of accounts receivable during the year. |
| Days’ Sales in Accounts Receivable | =
= = |
365 days in Year ÷ Accounts Receivable Turnover in Year
365 days ÷ 11.90 30.67 days |
The average number of days that it took to collect the average amount of accounts receivable during the year. This statistic is only as good as the Accounts Receivable Turnover figure. |
| Inventory Turnover | =
= = |
Cost of Goods Sold for the Year ÷ Average Inventory for the Year
$380,000 ÷ $30,000 (a computed average) 12.67 |
The number of times per year that Inventory turns over. Keep in mind that the result is an average, since sales and inventory levels are likely to fluctuate during the year. Since inventory is at cost (not sales value), it is important to use the Cost of Goods Sold. Also be sure to use the average balance of inventory during the year. |
| Days’ Sales in Inventory | =
= = |
365 days in Year ÷ Inventory Turnover in Year
365 days ÷ 12.67 28.81 |
The average number of days that it took to sell the average inventory during the year. This statistic is only as good as the Inventory Turnover figure. |
The next financial ratio involves the relationship between two amounts from the balance sheet: total liabilities and total stockholders’ equity:
| Financial Ratio | How to Calculate It | What It Tells You | |
| Debt to Equity | =
= = |
(Total liabilities ÷ Total Stockholders’ Equity) : 1
( $481,000 ÷ $289,000) : 1 1.66 : 1 |
The proportion of a company’s assets supplied by the company’s creditors versus the amount supplied the owner or stockholders. In this example the creditors have supplied $1.66 for each $1.00 supplied by the stockholders. |
19 Jan
CASH FLOW STATEMENT
HIGH ORDER THINKING SKILLS QUESTIONS
CASH FLOW STATEMENT
1. Arvind, an industrialist purchased a machinery worth Rs.5 crores on hire purchase basis. Categories the (i) payment of installment and (ii) interest into operating/investing or financing activity as per cash flow statement.
Ans.: (i) The purchase of machinery is categorized as on investing activity and
(ii) Interest payable on installments is a financing activity.
2. Give two examples of movements of cash and cash equivalents, which are not recorded in the Cash Flow Statement.
Ans.: Certain transactions as per Accounting Standards – 3 (revised) though involve movement of cash or cash equivalent are not recorded in cash flow statement as they just involve cash management of cash of an enterprise.
Examples (any two) of such transactions are –
(a) Cash deposited into bank out of cash in hand.
(b) Cash withdrawn from bank from business purposes.
(c) Sale/purchase of cash equivalents, like marketable securities.
3. Give one example each of an extra ordinary item under operating, investing and financing activity.
Examples of extraordinary items under:-
(a) Operating activity – claim received from insurance company against loss of stock.
(b) Investing activity – amount of compensation received against acquisition of land belonging to the enterprise.
(c) Financing activity – payment for buy-back of equity shares of the company.
4. M/s.Lakshmi Electrical Appliances furnish the following information –
Calculate net cash flow from financing activities:-
Particulars |
31.12.2007 | 31.12.2008 |
| Equity share capital | 2,00,000 | 4,50,000 |
| 10% debentures | 1,00,000 | – |
| 6% preference shares | – | 3,00,000 |
Additional information –
(a) Interest paid on debentures Rs.5,000/-.
(b) Dividend paid on equity shares Rs.40,000/-.
(c) Bonus shares were issued to existing shareholders in the ratio of 4:1 during the year.
Ans.: CALCULATION OF NET CASH FLOW FROM FINANCING ACTIVITIES
Particulars |
Rs. |
| Cash proceeds from issue of | 3,00,000 |
| Pref. Shares + equity shares | 2,50,000 |
| Redemption of 10% debentures | (1,00,000) |
| Interest paid | (5,000) |
| Dividend paid on equity shares | (40,000) |
Net cash flow from financing activity |
4,05,000 |
Bonus share is not shown in cash flow statement, as there is no cash flow.
5. P.Ltd. purchased a business premises for Rs.6,60,000 from Z.Ltd. Half the payment was made in cash and the remaining half by issue of equity shares of Rs.100 each at a premium of 10% in favour of Z.Ltd. How will this transaction be shown in the cash flow statement.
Cash payment of Rs.6,60,000 X ½ = Rs.3,30,000 will be shown under investing activities as an outflow.
Issue of equity shares is not depicted in cash flow statement as there is no flow of cash.
6. The Board of Directors of M/s.Elite Industries require your advice regarding categorization of payment of various taxes in a cash flow statement – advice him based on information given below:-
(i) Income tax on capital gains which have arisen out of sale of land – Rs.40,00,000.
(ii) Income tax – 70,00,000.
(iii) Dividend tax – 10,00,000.
(a) Income tax on capital gains – investing activities.
(b) Income tax – operating activity
(c) Dividend tax – financing activity.
7. From the following information, calculate cash flow from investing and financing activities:-
Particulars |
Opening | Closing |
| Furniture (cost) | 2,00,000 | 2,80,000 |
| Accumulated depreciation on furniture | 60,000 | 90,000 |
| Capital | 10,00,000 | 4,00,000 |
| Loan from bank | 2,50,000 | 1,50,000 |
During the year, furniture costing Rs.40,000 was sold at a profit of Rs.30,000. Depreciation charged on furniture amounted to Rs.50,000.
Cash Flow from investing activities –
Particulars |
Rs. |
| Inflow from fresh issue of capital | 4,00,000 |
| Outflow from repayment of bank loan | (50,000) |
| Net cash flow financing activities | 3,50,000 |
Cash Flow from investing activities –
Particulars |
Rs. |
| Inflow from sale of furniture | 50,000 |
| Outflow from purchased of furniture | (1,20,000) |
| Net cash flow from investing activities (outflow) | (70,000) |
Furniture Account
| To balance b/d | 2,00,000 | By Bank | 50,000 |
| To profit on sale | 30,000 | By Accum. Dept. | 20,000 |
| To Bank (balancing figure being furniture purchased | 1,20,000 | By balanace c/d. | 2,80,000 |
| 3,50,000 | 3,50,000 |
Accumulated Depreciation
| To Furniture A/c.
(Balancing figure being accumulated dep. on furniture sold) |
20,000 | By balanace b/d. | 60,000 |
| To balance c/d. | 90,000 | By depreciation | 50,000 |
| 1,10,000 | 1,10,000 |
Sale price = cost – accumulated dep. + Profit on sale
40,000 – 20,000 + 30,000 = 50,000
8. A company had the following balance –
Particulars |
Rs. |
| Investment at the beginning of the period | 3,40,000 |
| Investment at the end of the period | 2,80,000 |
During the year, the company sold 40% of investments at the beginning at a profit of 84,000. Calculate cash fro, investing activities –
Particulars |
Rs. |
| Inflow from sale of investment
Cost of investment Gold (40% of Rs.340000) = 136000 Add profit on sale = 84000 |
2,20,000 |
| Out flow on purchase of investment | (76,000) |
| Net cash flow from investing activities | 1,44,000 |
Investment A/c.
| To balance b/d. | 3,40,000 | By Cash sale of investment | 2,20,000 |
| To profit on sale | 84,000 | ||
| To bank a/c. (purchase) | 76,000 | By balance c/d. | 2,80,000 |
| 5,00,000 | 5,00,000 |
9. Apoorv Ltd. incurred as loss of Rs.7000 during the year 2008-09.
The following is the position of current assets and current liabilities of the firm:-
Particulars |
2008 | 2009 |
| Pre-paid insurance | 5,000 | 8,000 |
| Commission received in advance | 2,000 | 3,000 |
| Stock | 10,000 | 15,000 |
| B/P | 15,000 | 18,000 |
(a) Calculate cash flow from operating activities.
(b) Prepare cash flow statement from following information.
Opening cash balance Rs.15,000, closing cash balance Rs.19,000. Increase in creditors Rs.13,000, decrease in debtors Rs.17,000. Fixed assets purchased Rs.30,000. Redemption of 12% debentures Rs.14,000. Profit during the year 18,000.
10. M/s.Sukriti traders suffered loss of their buildings to the tune of Rs.50 lacs due to an earthquake. However, only Rs.25,00,000 was received as insurance claim. How will you depict it in a cash flow statement.
19 Jan
FINANCIAL STATEMENTS AND RATIO ANALYSIS
Analysis of finical statement
VERY SHORT ANSWER AND SHORT ANSWER QUESTIONS
Q.1 Under What heads will you classify the followings:
1) Proposed Dividends
2) Interest Accrued and due on secured loans
3) Interest Accrued and due on unsecured Loans
4) Provision for Taxation
5) Arrears of fixed accumulative dividends
6) Security premium Account
7) Share Forfeiture account.
(Answer any four) – 2 Marks
Q.2 Under What headings will you show the following items in the Balance sheet of a company
1) Securities Premium account
2) Preliminary Expenses
3) Bills Receivable
4) Goodwill
5) Authorised share Capital
(Answer any four) – 2 Marks
Q.3 Prepare a Comparative Income statement with the help of the following information
| Particulars | 2005 | 2006 |
| Sales | 2000000 | 3000000 |
| Gross Profit | 40% | 30% |
| Indirect Expenses | 50% | 40% |
| Income Tax | 50% | 50% |
4 Marks
Q.4 Explain three purposes or objectives of Financial Analysis. 2 Marks.
Q.5 Mention three limitations of financial statement Analysis. 2 Marks
Q.6 From the following Balance Sheets U.K Ltd. on 31st Dec 2006 & 2007.Prepare comparative Balance Sheet.
Balance Sheet
As on 31st Dec 2006 & 2007
| Liabilities | 2006 | 2007 | Assets | 2006 | 2007 |
| Current Liabilities | 200000 | 400000 | Current Assets | 500000 | 900000 |
| Reserves | 300000 | 200000 | Fixed Assets | 1000000 | 1500000 |
| 12% Loan | 500000 | 800000 | |||
| Share Capital | 500000 | 1000000 | |||
| 1500000 | 2400000 | 1500000 | 2400000 |
Long Answer Questions 4 Marks
Q.7 (a) The ratio of current Assets (Rs. 600000) to current Liabilities ( Rs. 400000) is 1.5:1.The Accountant of the firm is interested in maintaining a current Ratio be 2:1 by paying off a part of Liabilities. Calculate the amount of Current Liabilities that should be paid.
(b) The Current Assets to Current Liability of a firm is Rs. 800000 to Rs. 300000. The Accountant of the firm wishes that current Ratio be 2:1 by acquiring current assets on credit. Calculate the amount of current Assets.
(3+3) = 6 Marks
Q.8 (a) A business has current Ratio of 4:1 & a Quick Ratio of 1.2:1 . If working capital is Rs. 180000. Calculate total current Assets and Stock
(b) Calculate current Ratio and Quick Ratio from the followings:
Working capital Rs. 150000, Total Debts Rs.400000, Long term debts Rs. 310000, Stock Rs. 110000, Prepaid Expenses Rs. 10000
Q.9 (a) Calculate current Ratio and Quick Ratio from the following information:
Total Assets Rs. 350000
Fixed Assets Rs. 175000
Investment Rs. 70000
Fictitious Assets Rs. 5000
Share holders fund Rs. 200000
Long term Debts Rs. 100000
Inventory Rs. 45000
(b) From the following information calculate the stock turnover ratio.
Sales Rs. 200000, G.P 25% on cost, Opening Stock was 1/3rd of the value of closing stock
Closing stock was 30% of sales
(3 + 3)=6 Marks
Q.10 (a) Determine the amount of gross profit and sales from the followings:
Debtors Turnover Ratio = 4 Times
Loss of goods sold = Rs. 640000
Gross Profit Ratio = 20%
Closing Debtors were Rs. 20000 more than at the beginning.
Cash sales being 33 1/3 % of credit sales.
(3 + 3)=6 Marks
Q.11 (a) If Current Ratio is 2:1 state giving reason of the following transaction would
(i) Improve (ii) Reduce or (iii) Not change Current Ratio
(1) Bills Receivable drawn
(2) Bills Receivable Dishonoured
(3) Bills Receivable endorsed to Creditors
(4) Sales of Goods for cash at par
(5) Sales of Goods for cash at Profit
(6) Sales of Assets for Cash
(7) Bills Payable given to creditors
(Answer any 4 Questions) 2 Marks
(b) If the Liquid ratio is 1:1, find whether the following transactions would
(ii) Improve (ii) Reduce or (iii) Not change Liquid Ratio
1) Purchase of goods for cash
2) Purchase of goods on credit
3) Payment of Tax Provision
4) Sales of short term investment at par
5) Sales of Investment at profit
(Answer any 4 Questions) 2 Marks
Q.12 (a) Calculate and Closing stock from the following information:-
Total sales Rs 600000
Gross Profit 25% on Sales
Stock Turnover Ratio = 5 times
Closing stock is Rs. 12000 more than opening stock
(b) Gross Profit Ratio of a company was 25%. Its cash sales were Rs. 200000 and its credit Sales was 90% of the total sales. If the indirect expenses of the Company were Rs. 20000. Calculate net Profit ratio.
(3 + 3)=6 Marks
Q.13 With the help of the following information. Prepare Comparative Income Statement of XYZ Ltd.
2007 2008
Sales 50000 80000
Cash of Goods Sold 60% of Sales 70% of Sales
Indirect Expenses 10% of Gross profit
Rate of Income Tax 50% of Net profit before tax
4 Marks
Q.14 (a) Calculate Return on Investment from the following
Gross Profit Rs.100000, Office Expenses Rs. 10000, Selling and Distribution expenses Rs. 25000, Interest on Bank Loan Rs. 8000, Income tax Rs. 12000, Fixed Assets Rs. 300000, Current Assets Rs. 150000 & Current Liabilities Rs. 125000
(b) Calculate the earning per share from the following data
15000 Equity Share of Rs. 10 each 150000
10 % Preference Share Capital 100000
Net Profit before Tax 55000
Q.15 The Debt-equity ratio of a company is 1:2, state giving reasons which of the following would improve, reduce or no change the ratio:-
1) Debenture redeemed for cash
2) Issue new equity shares
3) Payment of Proposed dividends
4) Goods Purchased on Credit
5) Goods Purchased on Cash
6) Redemption of Debentures against the Purchase of a Fixed Assets
(Answer any four ) – 2 Marks
CBSE HOTS SOLUTION
Ans 1
1) Provisions :- Proposed Dividend
2) Secured Loans : – Interest Accrued and due on Secured Loans
3) Unsecured Loans:- Interest Accrued and due on unsecured Loans
4) Provision : Provision for Taxation
5) Contingent Liabilities :- Arrears of Fixed Cumulative dividend
6) Reserves & Surplus :- Security Premium Account
7) Share Capital Account: – Share forfeiture Account.
Ans 2
1) Securities Premium Account :- Under Reserves & Surplus, Liabilities side
2) Preliminary Expenses :- Under Miscellaneous Expenditures, Assets side
3) Bills Receivables :- Under Loans & Advance on assets side.
4) Goodwill :- Under Fixed Assets, Assets side
5) Authorised Capital :- Under Share Capital, Liabilities side
Ans 3
Comparative Income Statement
For the year ended 31st Dec, 2006
| Particulars | Absolute Change | Change in Percentage | ||
| 2005 2006 | Rs. % Changes | |||
| Sales
Less: Cost of Goods sold |
2000000
1200000 |
3000000
2100000 |
1000000
900000 |
50%
75% |
| Gross Profit
Less : Indirect Exp. |
800000
400000 |
900000
360000 |
100000
(40000) |
12.5%
10% |
| Profit before tax
Less: Tax 50% |
400000
200000 |
540000
270000 |
140000
70000 |
35%
35% |
| Net Profit after tax | 200000 | 270000 | 70000 | 35% |
Ans.4 Following are the purposes of Financial Analysis:
1) Judging earning capacity of business
2) Judging managerial efficiency of business
3) Judging short term long term Solvency
Ans 5 Following are the Limitation of Financial statement Analysis
1) Historical Analysis
2) Ignore price level changes
3) Quantities aspect ignored
Ans.6 Comparative Balance Sheet
For the year ended 31st Dec, 2006 & 2007
| Particulars | 2006 | 2007 | Increase or
Decreases |
% Increase or
Decrease |
| Fixed Assets
Working Capital (C.A-C.L) |
1000000
300000 |
1500000
500000 |
500000
200000 |
50%
66.7% |
| Capital Employed
Less 12% Loan |
1300000
500000 |
2000000
800000 |
700000
300000 |
53.8%
60% |
| Shareholders fund | 800000 | 1200000 | 400000 | 50% |
| Represented by share capital
Reserves |
500000
300000 |
1000000
200000 |
500000
(-) 100000 |
100%
-33.3% |
| 800000 | 1200000 | 400000 | 50% |
Ans 7 A)
a) Let Current Liabilities = X
b)
Current Ratio after making payment of x is 2:1
Current Ratio = Current Assets / Current Liabilities
2 = 6000000-x
1 400000 – x
Rs. 800000-2 x= Rs600000 – x
Rs. 800000-600000=2x-x
Rs. 200000=x
Current Liabilities paid off Rs. 200000
B) Let amount of Current Assets Purchased on credit is = x
Current Ratio = Current Assets
Current Liabilities
2 = 800000+x
1 300000 + x
Rs. 600000 + 2x = Rs 800000 + x
2x-x=800000-600000
X= 200000
Current Assets be purchased Rs. 200000
Ans. 8 A) Current Ratio = Current Assets = 4
Current Liabilities 1
Let C.L = x
C.A= 4x
Working Capital = C.A- C.L
180000= 4x-x
180000=3x
X= 180000 = 60000
3
Current Assets = 4x = 4 * 60000 = Rs. 240000
Quick Ratio = Q.A = 1.2
C.L 1
Since Current Liabilities are = X
Liquid Assets = 1.2x
Liquid Assets = 1.2* 60000= Rs. 72000
Stock = C.A – Q.A
=240000-72000 = Rs. 168000
B) C.R = C.A
C.L
C.L = Total Debts – Long term debts
= 400000-310000= Rs. 90000
Working Capital = C.A – C.L
Rs. 150000 = C.A – 900000
C.A = 150000+ 90000
C.A = 240000
C.R = 240000 = 2.66:1
90000
Q.R = Q.A
C.L
Q.A= C.A – (Stock + Prepaid Expenses)
= 240000 – ( 110000 + 10000)
= 120000
Q.R = 120000 = 1.30:1
900000
Ans.9 A) Total Assets = Fixed Assets + Investment + Current Assets + Fictitious Assets
350000 = 175000+70000+Current Assets +5000
Current Assets = 350000-250000
Current Assets = 100000
Liquid Assets = Current Assets – Inventory
= 100000 – 45000 = 55000
Total Assets = Total Liabilities
Total Assets = Shareholders Fund + Long Term Debts +Current Liabilities
350000 = 200000+100000+Current Liabilities
Current Liabilities = 350000- 300000
Current Liabilities = 50000
Current Ratio = Current Assets
Current Liabilities
= 100000 = 2:1
50000
Quick Ratio = Quick Assets Current Liabilities
= 55000 = 1.1:1
50000
B) Stock Turnover Ratio = Cost of Sale
Average Stock
Sales = 200000
G.P = 25% on Cost
Let Cost of Sale = Rs. 100
G.P = 25
Sales 125
G.P = 200000 * 25 = 40000
125
Cost of Sales= Sales – G.P
= 200000-40000
= 160000
Closing Stock = 30 % of Sale
= 200000 * 30/100 = 60000
Opening Stock = 1/3 of Closing Stock
= 1/3 * 60000
= 20000
Average Stock = Opening Stock + Closing Stock
2
= 20000 + 60000/ 2
= 80000/2 = 40000
Stock Turnover Ratio = 160000 = 4 Times
40000
Ans 10 A) Inventory Turnover Ratio = Cost of Sales
Average Stock
6/1 = Cost of Sales
60000
Cost of Sales = 60000 * 6 = 360000
Case 1)
Let Cost of Sale = 100
G.P = 25 % above Cost
Sales = 125
If Cost of Sale 100 Sale = 125
If Cost of Sale 1 Sale = 125/100
If Cost of Sale 360000 = 125/100 * 360000
= 450000
Gross Profit = 450000 – 360000
= 90000
Case 2)
Let Sales= 100
G.P = -25/75
If Cost of Sale 75 Sales = 100
If Cost of Sale 1 Sale = 100/75
If Cost of Sales 360000 Sales = 100/75 * 360000
= 480000
Gross Profit = 480000 – 360000 = 120000
B) 1) Sales = Cost of Goods Sold – Gross Profit
Let Sales = 100
G.P = -20
Cost of Goods Sold = 80
If Cost of Good Sold 80 G.P = 20
If Cost of Goods Sold 1 G.P = 20/80
If Cost of Goods Sold 640000 G.P = 20/80*640000
= 160000
Thus Sales = 640000-160000 = 800000
2) Let Credit Sale = 100
Cash Sale = 33 1/3 = 100/3
Total Sale = 100 + 100/3 = 400/3
If Sales 400/3 Credit Sales = 100
If Sales 1 Credit Sales = 100* 3/400 = ¾
If Sale 800000 Credit Sales = ¾ * 80000 = 600000
Debtors Turnover Ratio = Net Credit Sales
Average Debtors
4/1= 600000
Average Debtors
Average Debtors = 600000*1 =150000
4
150000 = 2x+20000
2
2x = 300000-20000
X = 280000 = 140000
2
Hence Opening Debtors = 140000
Closing Debtors = 140000 + 20000
= 160000
Ans 11 A) B)
1) Not Change 1) Reduce
2) Not Change 2) Reduce
3) Improve 3) Improve
4) Not Change 4) Not Change
5) Improve 5) Improve
6) Improve
7) Not Change
Ans. 12 A) Sales = 600000
G.P = 600000*25/100 = 150000
Cost of Goods Sold = Sales – G.P
= 600000-150000 = 450000
Stock Turnover Ratio = Cost of Goods Sold
Average Stock
5/1 = 450000
Average Stock
Average Stock = 450000/5 = 90000
Opening Stock = Average Stock – ½ of Rs. 12000
= 90000-6000= 840000
Closing Stock = Average Stock + ½ of Rs 12000
= 90000 + 6000 = 960000
B) Net Profit Ratio = Net Profit * 100
Sales
Let Total Sales = 100
Credit Sales = 90 %
Cash Sales 10 % or 200000
Total Sales = 100/10* 200000
= 20000
G.P = 20000*25/100
= 500000
Net Profit = G.P – Indirect Expenses
= 500000 – 20000 = 480000
Net Profit Ratio = 480000 * 100
2000000
= 24 %
Ans 13 Comparative Income Statement of XYZ Ltd.
For the year ended 31st, Dec 1997 & 1998
| Particulars | 1997 | 1998 | Absolute
Change |
Percentage
Change |
| A Sales | 50000 | 80000 | 30000 | 60% |
| B Less Cost of Goods Sold | 30000 | 56000 | 26000 | 86.67% |
| C Gross Profit (A-B) | 20000 | 24000 | 4000 | 20% |
| D Less Indirect Expenses | 2000 | 2400 | 400 | 20% |
| E Profit Before Tax (C-D) | 18000 | 21600 | 3600 | 20% |
| F Less Income Tax | 9000 | 10800 | 1800 | 20% |
| 9000 | 10800 | 1800 | 20% |
Ans. 14 A)
Return on Investment = Profit before Interest & Tax * 100
Capital Employed
Profit before Interest & Tax = 100000-10000-25000= 65000
Capital Employed = 300000+150000-125000= 325000
ROI = 65000 * 100
325000
= 20%
B) E.P.S = Net Profit – Preferential Dividend
No. of Equity Shares
55000 – 10000
15000
45000 = 3 per Share
15000
Ans 15
1) Reduce
2) Increase
3) Decrease
4) Increase
5) Not Change
6) Increase
7) Increase
19 Jan
ISSUE AND REDEMPTION OF DEBENTURES
Issue and Redemption of debentures
Q1. Anirudh Ltd. Has 4000, 8% debentures of Rs. 100 each due for redemption on March 31,2005. The company has 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.
Q2. The company allots 1,000 12% debentures of Rs. 100 each at issue prices of Rs. 96 per debenture redeemable at a premium of Rs. 8 per debenture. The liability of premium is also to be recorded at the time of issue of debentures.
Q3. What is meant by issue of debentures as “Purchase Consideration”.
Q4. Vijaya Ltd. Acquired assets of Rs. 40 lakhs and took over creditors of Rs. 4 lakhs from Sunil Enterprises. Vijaya Ltd. Issued 12% Debentures of Rs. 10% as purchase consideration. Record necessary Journal entries in the books of Vijaya Ltd.
Q 5. Blank Enterprises issued 30,000 12% debentures of Rs. 10 each at par to be redeemed out of profits after 5 years at par. Debentures are callable after 3 years at an exercise price of Rs. 11 per debenture. After 4 years the company invoked the call option and holders of the nominal value of Rs. 50,000 responded to the call option. Record the necessary Journal entries.
Q6. What is meant by issue of debentures as collateral Security?
Q7. On 1.1.2005, Fast computers Ltd. Issued 20,00,000 6% debentures of Rs. 100 each at a discount of 4% redeemable at a premium of 5% after three years. The amount was payable as follows:
On application Rs. 50 per debenture balance on allotment.
Record the necessary Journal entries for issue of debentures.
Q8. What do you mean by “Trust Deed” in context of debenture?
Q9. Promising Company Ltd. Took a loan of Rs. 10,00,00,000 from a bank giving Rs. 12,00,00,000 9% debentures as collateral security. Pass the necessary Journal entries regarding issue of debentures, if any, and show this loan in the Balance Sheet of the Company.
Q10. Pass the necessary Journal entries in the books of A B Ltd. for the following transactions:
(i) Issued 5,00,000 12% debentures of Rs. 100 each at a discount of 6% repayable at a premium of 6%.
(ii) Converted 100, 12% debentures of s. 100 each into 9% preference shares of Rs. 100 each issued at a premium of 25%.
(iii) Converted 100, 12% debentures of Rs. 100 each issued at a discount of Rs. 10 each.
Q11. Gopalan Ltd. purchased 5,000 of its own 8% debentures of Rs. 1000 each at Rs. 987 per debentures. It also purchased another lot of 600 debentures of the same services at Rs. 986. Record necessary Journal entries in the books of the company.
Q 12. Ganga Ltd. issued 18,00,000 9% debentures of Rs. 500 each. The board of directors decided to purchase 80,000 debentures at a price of Rs. 485 each for investment purpose. After few months, they decided to sell these debentures @ Rs. 510 each in the market.
Record the necessary entries to show the above transactions.
Q13. A Company redeemed 1000, 15% debentures of Rs. 100 each by converting them to 12% preference shares of Rs. 100 each at 25% premium and 500, 15% debentures of Rs. 100 each by purchasing from market for immediate cancellation at Rs. 95 a debenture. Give Journal entries.
14. Pass the necessary Journal entries for the following transactions in the book of P Ltd.
(i) Issued Rs. 2,00,000 12% debentures as collateral security.
(ii) Converted 1000 12% debentures of Rs. 100 each into 10% preferences shares of Rs. 100 each. The preference shares were issued at a premium of 25%.
(iii) Redeemed 1000 12% debentures of Rs. 100 each at a premium of 10% by draw of lots.
(iv) Paid half yearly interest on Rs. 360,000 12% debentures.
Q 15. Exe. Ltd. purchased assets of the book value of Rs. 4,00,000 and took over the liabilities of Rs. 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at Rs. 3,80,000, be paid by issuing debentures of Rs. 100 each.
What Journal entries will be made in the following three cases if debentures are issued.
(a) at par
(b) at a discount of 10%
(c) at a premium of 10%?
It was agreed that any fraction of debentures be paid in cash.
Q16. X Ltd. purchased assets of Y ltd. as under.
Plant and Machinery Rs. 8,00,000
Land and Building Rs. 72,00,000
The purchase consideration was Rs. 80,00,000. Rs 20,00,000 were paid though cheque and the remaining amount by issue of 6% debentures of Rs. 100 each at a premium of 20%.
Pass the necessary Journal entries in the books of X ltd.
Q 17. On 1st April, 2004 Mode Ltd. issued Rs. 4, 00,000 8% debentures of Rs. 100 each at a discount of 5% and redeemable at 10% premium after 4 years and offered the holders option to convert their holding into equity shares of Rs. 10 each after 31st March, 2006. On 1st April, 2006, 25%n holders exercised their options. Give the necessary journal entries both at the time of issue and at the time of options. Give the necessary journal entries both at the time of conversion under the alternative cases.
Case: 1 If equity shares of Rs 10 each are issued at par.
Case: 2 If equity shares of Rs 10 each are a premium of Rs 2.50 per share.
Case: 3 If equity shares of Rs 10 each are a discount of 95%.
19 Jan
DEBENTURES HOTS ANSWER
Debentures
Hot question solution
Q1 2005
1.) March 31 p/e Appropriation A/C Dr 50000
To Deb. Red.. Res 50000
(for D.R.R. created)
2.) March 31 8 % Debenture A/C Dr 400000
To Debenture holder’s A/C 400000
(for Amount due to debenture holders)
3.) March 31 Debenture holder’s A/C Dr 400000
To Bank A/C 400000
(for Amount paid to Debenture holders)
4.) March 31 Deb. Red. Reserve A/C Dr 200000
To General Reserve A/C 200000
(for balance in D.R.R. tras to G.R.)
Q2 Sol.
1.) Bank A/C Dr 96000
To Debenture App. A/C 96000
(for application money received)
2.) Debenture App. A/C Dr 96000
loss on issue of Deb. A/C Dr 12000
To 12% Debenture A/C 100000
To pre. On red. A/C 8000
(for App money tras to Deb. A/C and premium on red. provided)
Q3 Sol.
Debenture can be issued to vendors against purchase of assets or for purchase of a business. This is called issue of debenture as purchase consideration or for consideration other than cash.
Q4 Sol.
1.) Sundry Assets A/C Dr 4000000
To Sundry Liabilities 400000
To Sunil Enterprises A/C 3600000
(for Assets and liabilities acquired)
2.) Sunil Enterprises A/C Dr 3600000
Dis. On issue of Deb. A/C Dr 400000
To 12% Debenture A/C 40000
(for Debenture issued at 10% discount to Sunil Enterprises)
No. of Dib. = 3600000/(100-10)= 40000
Q5 Sol.
1.) Bank A/C Dr 300000
To 12% Deb. App A/C 300000
(for app. Money rece. On deb. Issued at per)
2.) 12% Debenture App. A/C Dr. 300000
To 12% Debenture A/C 300000
(for Deb. App money tras to debenture A/C)
3.) 12 % Deb. A/C Dr 50000
loss on Red.of Deb A/C Dr 5000
To Bank A/C 55000
(being redeemed under call option at Rs 11/-)
4.) p / e A/C Dr 5000
To loss on Red. Of Deb. A/C 5000
(Being loss on Redemption of debentures transferred to p/e A/C)
Qno.6
Sol Issue of debenture as collateral security means, security provided to the lender
Over and above the principal security. The debenture issued as collateral
Security does not carry any right as long as the terms of the loan are not
Contended.
Qno.7
Sol 1) 1.1.2005
Bank A/c Dr 10, 00, 00000
To 6% DLB App. A/C 10, 00, 00000
(Bring app. Money rec.)
2) 6% Debenture App. A/C Dr 10,00,00000
To 6% Debenture A/C 10, 00, 00000
(Bring app. Money tars. To 6% Deb. A/C)
3) 6% Debenture Allotment A/C Dr. 9, 20, 00000
Loss on issued of DLB A/C Dr. 1, 80, 00000
To 6% DLB A/C 10, 00, 00000
To pre on red A/C 1, 00, 00000
(Bring allo. Money due)
4) Bank A/C Dr. 9, 20, 00000
To 6% DLB Allo. A/C 9, 20, 00000
(Bring allo. Money recc.)
Qno.8
Sol Debenture Trust dead is a document created by the company whereby trusts are appointed to protect the interest of debenture holders before they are offered for public subscription.
Qno.9
Sol
1) Bank A/C Dr. 10,00,00,000
To Bank loan A/C 10, 00, 00,000
(Bring loan taken from bank)
2) Debenture suspense A/C Dr 12,00,00,000
To 9% DLB A/C 12, 00,00,000
(Bring deb. Issued as collateral sec.)
Sec. loan B/S MIS exp
9% Deb. A/C 12, 00, 00, 000 DLB. Sus A/C 12,00,0000
Bank loan 10, 00, 00, 000 C.A(bank) 10,00,00,000
Q.sol. For issue of debenture
1). Bank A\c Dr 380000
To 8% Deb.App. A/C 380000
(being 4000 deb. Of Rs 100 each at a discount of a 5%
2). 8% deb.App.A/C Dr 380000
loss on issue of Deb.A/C Dr 40000
Discount on issue of to 8% Debenture A/C 400000
To pre. On red .A/C 40000
(being app. Money tras. To deb. A/C and pre. On redemption provided)
for redemption
3). 8% Deb.A/C Dr. 400000
to Dis. On issue of Seb A/C 380000
(being amt due to debentureholders)
CASE I
No. of shares =380000\10 =38000
Debentureholders A/C Dr 380000
To equity share cap. A/C 380000
(being 380000 eq. shares are issued at par)
CASE 2
No. of sh =380000/12.50 = 30400
Debentureholders A/C Dr 380000
To equity Sh. Cap. 30400
To security Pre. A\C 76000
(being 30400 eq. sh. Issued at a premium)
CASE 3
No. of sh. = 38000/9.50 =40000
Debentureholder A/C Dr 380000
Dis. On issued of sh AC/Dr 20000
To eq. sh. Cap A/C 400000
(being 40000 sh @ 10/- issued at a discount of 5%)
Q14Sol- Journal entries
(I) Debenture suspense A/c Dr 200000
To 12% Debenture A/C 200000
( being debenture issued as collateral security)
(II) (a) 12% debenture A/c Dr 100000
To debentureholders A/C 100000
(being amt due to debentureholder)
(b) Debetureholders A/c Dr 100000
To 10% pref. Sh. Cap A/c 80000
To security premium A/c 20000
( being pref. shares issued at 25% premium )
No. of shares = 100000/125=800shares
(III)(a) P/e App. A/C dr 50000
To determine Red. Reserve A/C 50000
(being profit transferred to create debenture redemption Reserve)
(b) 12% debenture A/c Dr 100000
Pre. on red A/c Dr 10000
To debentureholders A/c 110000
(being the amt. due on redemption )
(c) Debentureholders A/c Dr 110000
To bank A/c 110000
(being the amt. due on red. Paid)
(d)deb. Red. Reserve A/c dr 50000
To General reserve A/c 50000
(being DRR tras. To genral reserve )
(IV)(a)Int. on debenture A/c Dr 21600
To Debenture A/c 21600
(being the Int. on debenturemade due)
(b)Debentureholders A/c Dr 21600
To Bank A/c 21600
(being the payment of debenture interest )
(c)P/e A/c Dr 21600
To Int. on Deb. A/c 21600
(being Int on Deb. Tras. To P/e A/c)
Q15 Sol-
1. Sundry Assets A/c Dr 400000
Goodwill A/c Dr 30000
To Sundry liabilities A/c 50000
To Mohan Bros. 380000
(for business purchased from Mohan Bros.)
(a) Mohan Bros. Dr 380000
To Debenture A/c 380000
(being 3800 deb. Issued at par to Mohan Bros)
(b ) No. of debenture = 380000/90=4222
Mohan Bros A/c Dr 380000
Dis. On issue of Deb A/c Dr 42220
To Debenture A/c 42220
To Bank A/c 20
(being 4222 deb. Issued at 10% dis. And balance is paid in cash to Mohan Bros)
(c) No. of debenture = 380000/110=3454
Mohan Bros A/c Dr 380000
To Debenture A/c 345400
To Security Premium A/c 34540
To Bank A/c 60
(being 3454 debentures of Rs. 100 each issued at 10% premium and balance is paid in cash to Mohan Bros )
Q16 Sol-
1. Plants and Mac. A/c Dr 800000
Land and Building A/c Dr 7200000
To Y Ltd. 8000000
(being assers parchased from Y Ltd.)
2. Y Ltd. A/c Dr 2000000
To Bank A/c 2000000
(being amt. paid by cheque)
3. No. of Deb. = 6000000/120 = 50000
Y Ltd A/c Dr 6000000
To 6% debenture A/c 5000000
To Security Pre. A/c 1000000
(being 50000 deb. Of Rs. 100 each issued at a pre. of 20 /- to Y Ltd.)
K.Ramasamy's blog for CBSE ACCOUNTANCY XII 
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