Model Question Papers

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Revised Balance Sheet Schedule VI

Revised Balance Sheet , Schedule VI of Companies Act, 1956

Reference Sources

26885cajournal_june2012-16

SeminarScheduleVI_16.06.2012

schedule+VI+revised+checklist

Revised Schedule VI print disabled (1)

Presentation_on_Revised_Schedule_VI

Meaning

Guidance_Note_Rev_ScheduleVI

Format-of-Revised-Schedule-VI-to-the-Companies-Act-1956-in-excel

Format-of-Revised-Schedule-VI-to-Companies-Act-1956

110878_982522_revised_schedule_vi

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
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Fashion Studies
5 March, Saturday
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HISTORY 027
FINANCIAL ACCNTG
CASH MGMT & H-KEEP
ELECT APPLIANCES
AUTOSHOP REP& PRAC
AC & REFRGTN-III
ELN.DEV.& CIRCUITS
ACTG FOR BUSINESS
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7 March, Monday
Time Left: 25 days, 18 hours
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SHORTHAND HINDI
CONS BEHV & PROTCN
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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
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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
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CR WRTNG TR STUDY
HERITAGE CRAFTS
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11 March, Friday
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FUNCTIONAL ENGLISH
ENGLISH CORE
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GRAPHIC DESIGNS
SINDHI
GUJARATI
ASSAMESE
PORTUGUESE
RUSSIAN
SPANISH
KASHMIRI
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TYPOGRAPHY &CA HIN
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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
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Economics
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HINDI ELECTIVE
MANIPURI
TIBETAN
HINDI CORE
22 March, Tuesday
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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
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COMPUTER SCIENCE
31 March, Thursday
Time Left: 49 days, 18 hours
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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

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:

Example Corporation
Income Statement
For the year ended December 31, 2009

 

Sales (all on credit) $500,000
Cost of Goods Sold   380,000
  Gross Profit   120,000
 
Operating Expenses  
  Selling Expenses 35,000
  Administrative Expenses    45,000
    Total Operating Expenses    80,000
 
Operating Income 40,000
  Interest Expense    12,000
 
Income before Taxes 28,000
  Income Tax Expense     5,000
 
Net Income after Taxes $ 23,000
 
       

 

 

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.

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.

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

ISSUE OF SHARES HOTS – SOLUTION

Solutions To Questions

ISSUE OF SHARES

  1. Employees stock option plan as introduced by companies (Amendment) Act, 2000 means an option (right and not an obligation). Given to the whole time directors and employees right to purchase shares of a company at a pre-determined price, which usually is lower than the market price.

 

  1. Issued capital is that part of Authorised capital which is actually offered to the public for subscription. Issued Capital may or may not be different from Authorised Capital depending upon whether the whole amount is offered to the public or not.

 

  1. 3.      Reserve capital

Only at the time of winding up of the Company.

Capital Reserve

To write off capital losses any time during the life of the Company

  1. Private placement of shares means raising capital through private sources and contacts. In such a case shares are issued to promoters, their friends and relatives, share holders of group companies, mutual funds, NRI’s, Financial Institutions etc.

 

Options:

a)      Sweat Equity Shares

b)      Employees Stock Option Plan

  1. At the rate of 5% p.a.

 

  1. 6.      JOURNAL

 

  Rs. Rs.
Share Capital A/C       Dr To Share Discount   A/C

To Share Allotment  A/C

To Share Forfeiture   A/C

(Being forfeiture of 10 shares, Rs. 6 called up)

Bank A/C                  Dr

To Share premium A/C

To Share Premium A/C

(Being reissue of 8 shares @ Rs. 9 each, Rs. 8 called up)

Share Forfeiture A/C Dr

To Capital Reserve

(Being reissue of 8 shares)

60

72

24

 

10

20

30

64

8

24

 

  1. 7.      Journal

 

Sundry Assets A/C                         Dr

       To Bhwnesh Ind. Corp.

(Being Assets purchased)

41,80,000  

41,80,000

 

a) Bhwnesh Ind. Corp A/C          Dr

To Equity Share Capital              A/C

(Being issue of 41,800 shares of Rs. 100 each)

b) Bhwnesh Ind. Corp. A/C        Dr

To Equity Share Capital A/C

To share Premium A/C

(Being issue of shares of Rs. 100 each at a premium of 10%)

c) Bhwnesh Ind. Corp.       A/C      Dr

Discount on issue of shares   A/C  Dr

To Equity share capital

(Being issue of 44,000 shares of Rs. 100 each at a discount of 5%)

 

41,80,000

41,80,000

41,80,000

2,20,000

 

41,80,000

38,00,000

3,80,000

44,00,000

 

  1. Journal

 

Authorised Capital

(1,00,000 shares of Rs. 10 each)

Issued Capital

(90,000 shares of Rs. 10 each)

Subscribed Capital:

(85,000 shares of Rs. 10 each) called-up capital:

(85,000 shares, Rs. 6 per share)

Paid-up capital:

Share Capital:5,10,000

Less: Calls-in-arrears 1,000 5,09,000

Rs.

10,00,000

9,00,000

8,50,000

5,10,000

 

  1. Journal

 

(i) Assets A/C          Dr

To Kailash

(Being Assets purchased)

(ii) Kailash A/C        Dr

To share Capital       A/C

To Share Premium   A/C

To Cash

(Being payment by issue of 15,000 shares of Rs. 10 each at a premium of 10% and balance in cash)

(iii)Bank A/C      Dr.

To share Application A/C

(Being issue of 20,000 shares of Rs. 10 each at per)

(iv)Share Application A/C      Dr

To Share Capital A/C

(Being transfer of applications money to share capital)

(v) Incorporation Cost A/C  Dr

Discount  A/C  Dr

To Equity Share Capital A/C

(Being issue of 400 shares of Rs. 10 each at a discount of 5% to promoters.

Rs.

2,00,000

2,00,000

2,00,000

2,00,000

3,800

200

RS.

2,00,000

1,50,000

15,000

35,000

2,00,000

2,00,000

4,000

 

10.  CASH BOOK

Dr  

Date

 

Particulars

 

Amount

 

Date

 

Particulars

Cr

Amount

Rs.

    To Share Application A/C

To Share Allotment A/C

To Share First Call A/C

To Share Final Call A/C

64,000

31,000

29,000

24,000

1,48,000

  By Balance c/d 1,48,000

1,48,000

 

JOURNAL

  Rs Rs
Building A/C                               Dr

To Vendors A/C

(Being building purchased)

Endor’s A/C                                Dr

To share capital          A/C

(Being payment made by issue of 8000 shares of Rs. 20 each)

Share Application A/C Dr.

To Share Capital A/C

(Being the transfer of application money to share capital)

Share Allotment A/C     Dr

To share Capital  A/C

(Being Rs. 2 due on allotment in respect of 16,000 shares)

Calls-in-Arrears A/c    Dr

To share Allotment  A/C

(Being arrears on Allotment received)

Share First  call A/c    Dr

To share capital A/C

(Being amount due on First Call-16000 shares @ Rs. 2 each)

Calls-in-arrears A/C    Dr

To share First Call    A/C

(Being arrears on First call amount received)

Share Final call A/C    Dr

To share capital A/C

(Being amount due on Final Call)

Calls in Arrears A/C Dr

To share Final call A/C

(Being arrears on Final call amount received)

Share capital A/C   Dr

To share Allotment  A/C

To share First call A/C

To share Final call A/C

To share Forfeiture A/C

(Being the forfeiture of 1500 shares on which less than Rs. 8 per share has been received.)

1,60,000

1,60,000

64,000

32,000

1000

32,000

3,000

32,000

8,000

15,000

 

1,60,000

1,60,000

64,000

32,000

1000

32,000

3,000

32,000

8,000

1,000

3,000

3,000

8,000

 

11.

X ltd.

Journal

Bank A/C                                              Dr

To share Application A/C

(Being Application money received on 3000 share @ Rs. 2 each)

Share Application A/C   Dr

        To share Capital  A/C

        To share Allotment A/C

        To Bank A/C

(Being the transfer of application money on allotment)

Share allotment A/C   Dr

       To share Capital A/C

       To share Premium A/C

(Being Allotment amount due)

Bank A/C

Calls-in-arrears A/C

      To share allotment

(Being amount received)

Share First Call A/C  Dr

      To share Capital A/C

(being amount due on First call)

      Bank A/C  Dr

Calls-in-arrears A/C

      To share First call A/C

(Being amount received on First call of Rs. 3)

Share Final call A/C  Dr

       To share capital A/c

(Being amount due on Final call)

Bank A/C                          Dr

Calls-in-arrears A/C           Dr

      To share Final Call A/C

(Being amount received on final call @ Rs. 2)

Working Notes:

Applies for 3000 shares

Alloted to 2400 applicants

        2400:2,000

Pro-vata         6:5

Ramesh:- Allotted 40 share.

Therefore, Applied 40/5*6=48 shares.

Application money     =48*2=Rs 96

Less: To share capital =40*2=Rs 80

Surplus                                   = 16

Allotment due=40*5=200

Therefore arrears on allotment=Rs 184

Arrars on 1st call

40+60=100*3=Rs. 300

Arrears on inal call

40+60=100*2=Rs 200

6,000

6,000

10,000

9,016

184

6,000

5,700

300

4,000

3,800

200

 

6000

4,000

800

1,200

6,000

4,000

9,200

6,000

6,000

4,000

4,000

 

12                JOURNAL

a) Share Capital  A/C  Dr

         To share application & allotment a/C

         To share forfeited A/c

(Being 200 shares forfeited)

Bank A/c                   Dr

Share Forfeited A/C    Dr

        To share capital A/C

(Being reissue of 50 shares)

Share Foreited  A/c   Dr

To capital Reserve

(Being gain on reissue of 50 shares)

b) Share Capital A/C Dr

     To share First call A/C

     To share Forfeiture A/C

(Being forfeiture of 300 shares of Rs. 10 each (Rs. 8 called up)

Bank A/C      Dr

     To share capital  A/C

(being reissue  of 75 shares @ Rs. 8 each)

Share forfeiture A/C Dr

     To capital Reserve

(Being gain on reissue of 75 shares)

c)      Share Capital A/C Dr 20,000

       To share Final call A/C

       To share forfeiture A/C

(Being forfeiture of 2000 shares of Rs. 10 each)

Bank A/C  Dr

Share Foreiture A/C Dr

    To share  capital A/C

(Being reissue of 1800 shares @ Rs. 6 each)

Share Forfeiture A/C   Dr

To Capital Reserve

(Being gain on reissue)

d) Share Capital A/C   Dr

To share first cal  A/C

To share final call A/C

To share forfeiture A/C

( Being 100 shares forfeited for non payment of first call Rs. 30 and final call of Rs. 20)

Bank A/C   Dr

Share forfeiture A/C  Dr

To share capital A/C

(Being reissue of 40 shares @ Rs. 90 each)

Share forfeiture A/C  Dr

To capital Reserve

(Being gain on reissue)

e) Share Capital A/C    Dr

To Discount  A/C

To share allotment A/C

To share forfeiture A/C

(Being forfeiture of 10 shares on which Rs. 2 are paid Rs 6 called-up)

Bank A/C              Dr

To share capital A/C

To share premium A/C

(Being 8 shares reissued @ Rs. 9 each)

Share forfeiture A/C  Dr

To capital Reserve

(Being gain on reissue)

1600

400

100

150

2400

600

375

20,000

10800

7,200

6,300

10,000

3600

400

1600

60

72

16

 

600

1000

500

150

900

600

375

5,000

15,000

18,000

6,300

3,000

2,000

5,000

4,000

1600

10

30

20

64

8

16

 

13.                                                       Shashi Ltd.

Journal

Bank A/C              Dr

     To share Application A/C

(Being application money received on 1,25,000 shares @ Rs. 4.50 each)

Share application A/C    Dr

      To share capital     A/C

      To share allotment A/C

      To Bank A/c

(Being transfer of application money on allotment)

Share allotment A/c Dr. 7,50,00

    To share capital A/C

    To share premium A/C

(Being allotment amount Rs 750

On 1,00,000 shares due)

Bank a/c

Calls-in-arrears A/C

   To share Allotment A/C

(Being amount received on allotment)

Share First call A/C   Dr

   To share Capital  A/C

(Being Rs. 2 on 1,00,000 shares due)

Bank A/C  Dr

Calls in arrears A/C  Dr

  To share First Call A/C

(Being amount receive)

Share Capital A/C  Dr

Share Premium   A/C

  To share allotment  A/C

  To share first call A/C

  To share forfeited A/c

(Being 2000 shares forfeited on non payment)

Share final call A/C Dr

  To share capital A/C

(Being final call @ rs. 1 due

On 98,000 shares)

Bank A/C  Dr

Calls-in-arrears A/C Dr

  To share final call A/c

(Being amount received)

Share capital A/C Dr

  To share first call A/c

  To share final call A/c

To share forfeiture A/C

(Being forfeiture of 3000 shares)

Bank A/c  Dr

Share forfeiture A/C  Dr

  To share capital A/C

(Being reissue of 5,000 shares @ Rs. 8 per share)

Share forfeiture A/C  Dr

  To capital reserve

(Being gain on reissue of share transferred to capital reserve)

5,62,500

5,62,500

7,50,000

6,46,800

13,200

2,00,000

1,90,000

10,000

18,000

10,000

98,000

95,000

3,000

30,000

40,000

10,000

Dr 21,800

 

5,62,500

4,50,000

90,000

22,500

2,50,000

5,00,000

6,60,000

2,00,000

2,00,000

13,200

4,000

10,800

98,000

6,000

3,000

21,000

50,000

21,800