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2015

Find
0.1. Find
Q.1. the sales of Group A
igures of A. Ltd. the base
; period and other
Year missing data from the
following
Sales000): 2010 2011
Trend (%)
1980 ? 2012 2013 2014
110 2805 3140
Solution: (a) Sales for
the
130
?
3798
year 2010 is
So. sales of base year is 1980 which is
980 110% of sales of base
(b) Sales for 2011 is 110% 1800 yeal
1800 x
130%
(c) Trend
=
2,340
percentage for 2012
is 2850 100
1800X 100 =
=158
(d) Trend percentage for 2013 is
x 100 =
174
(e) Trend
percentage for 2014 is
0.2. Distinguish x
1800 100 211
Financial Statement. between Comparative Financial Statement and
Ans. See Q. No. 4
of 2012. Common Size
Q. 3. You are given the
(in ) : following particulars relating to the
Sources year ended 31.03.2015
Operating Expenses Applications
92,000 Operating Revenue
Book value of assets sold
43,000 Issue of | 1,52,000
Purchase of assets
66,000 Payment of
shares 56,000
Loss on sale of assets Dividend
8,000 Depreciation (included 15,000
in expenses)
Redemption of Debentures 24,000
88,000 Payment of tax
Prepare the Fund Flow Statement for the year ended 31.03.2015.
14,000
Solution : Fund Flow Statement for
the ended year 31.03.2015.
Sources
Issue of Shares Applications
56,000| Payment of Dividend 15,000
Fund from Operation
92,000 Payment of Tax 14,000
Sale of Assets 35,000 Purchase of Assets 66,000
(43,000 8,000) Redemption of Debentures 88,000
1,83,000 1,83,000
[191]
STATEMENT
ANAl NALYSIS
CU.QUESTIONS &ANSWERS-
FINANCIAL

AND
REPORT
INANCIAL

192 Operation 8 193


from Assels
Fund 1,52.000
Statement
showing
92,000 Non-Current Assets
Workings Operating Revenue

60,000 Fixed Assets :


Less: Operating expenses (a)
24,000 Land & Buildings
Add: Depreciation S,000 Plant& Machinery 2.718
00

Loss on
sale of
assets
92,000 Furniture & Fittings
00
4,905 4,900
features. J0
State its b) Non-current Investments 1,845
theory ? 586
04(a) what doyou mean by
accounting

Accounting
theory
1s a
systematic

phenomena."
tatement
statement
ot the
rule
Shares in Sour Ltd.

Ans. Accounting
thecory : a set of 2. CurrentAssets 3,000
or govem delined as "logical
pnciples
which
underlines

Hendniksen
accounting
theory may
provide
de
a general frame of asonin Stock
to that (a) develonm.rence
,949 00
ACcording principles (D) guide
the Debtors 1,956
torm of a set of broad and

the practice
evaluated

can
be new Cash& Cash Equivalents 2,600 .363 0
which accounting that branch of acco 1,490
Theory is Whi Bills Receivable 204
practice and procedures. 'Accounting as distinct f 360
S. Most and methodology
Sundry Advances 199
to
Kenneth
of principles Practic
According

consists
of the systematic
statement

Theory:
Following
are the
features
ccounting Theory
of Accoune
Total
520
Features of Accounting

rules or principles. The


following informationalso provided
are
21.387
9,208 0
0
() It is set of
(1) It is set of
methodology.
.
Honey Ltd.
purchased 180 lakhs shares in Sour Ltd. on 1st April, 2013 when the
branch of accounting easier and comparable. c t1OGeneral
o
)Reserve and Profit &
General
Loss Account of Sour Ltd. stood at 7
(i1) It is a scientific, halances
3,000 Lakhs
(V) It makes
accounting practice (some
times a good accounting praclice
good accountim.
and 1,200 Lakhs respectively,

is followed by
accounting
practices
gndOn 4th July,
(b)
2013, Sour Ltd. declard a dividend
20% for the ended
(V) It
of a theory)
J1.03.2013 Honey Ltd. cr credited dividend received by it to its Profit & Lossyear
leads to formation
for
accountants.

c On Ist January, 2014 Sour Ltd. issued 3 fully Account.


(Vi) It acts as a guideline
Historic Cost
Accounting. paid-up shares for every 5 shares
of b o n u s shares out of balances to its
(6)State four limitations held as General Reserve as on 31.03.2013.
2000. Sour Ltd. as on 310a
31.03.2014 On 31.03.2014 all Bills Payable in Sour Ltd.'s Balance
Q. No. 3(b) of subsidiary (d) Sheet were acceptances
Ans. See Ltd. and its
Balance Sheets
of Honey wor of Honey Ltd. But on that date, Honey Ltd. held only 45 Lakh
favou these of
Q. 5. The fances in hand, the rest having been endorsed in favour of its creditors.
stood as follow (Figures in Lakhs c
Honey Ltd. Sour Ld (
On 31.03.2014 Sour Ltd.'s stock included goods which it had purchased for
Lakh from Honey Lid. which made a profit 25% on cost.
I. EQUITY& LIABILITY:
nare a Consolidated Balance Sheet of Honey Ltd. and its subsidiary Sour Ltd. as
P'repa
12,000 March, 2014.
1. Shareholders'Fund 4,800 at 31st
(a) Equity
Shares of 10 fully paid Solution: Ratio of Control
(b) Reserves & Surplus 2,784 1,380
General Reserve 2,715 1,620 No. of shares of Sour Ltd. at present =
480
Profit &Loss Account

372
2. Current Liabilities: 1,461
160 Less: No. ofbonus sharesissued 480 x 180
Bills Payable 854
Sundry Creditors 855 394 No. of shares of S. Ltd. as on 1.4.2013 300
Provision for Taxation 1,200
by H. Ltd. 180
No. of shares purchased
Proposed dividend
21,387 9,208 So, ratio of control = 180: (300-180) =180: 120 =3:2
Total f13
STATEMENI
ATEMENI ANALY SIS
F I N A N C I A L

AND
REPORT

F I N A N C I A L

Share of
194
-

revenue profit 1020x 408

I1.CapitalProfit 1.4.2013 3,000


G.R.
balance as

b a l a n c e as
on

on
1.4. 2013 L200 Share ofrevenuereserve18 72 D00
00
PL
3,360

l1. Goodwill/
CapitalReserve
purchased
= 180 x 10
800
OO

value of shares Less: vidend received 3,000 x 20% x 240


Face

4,200 x 2520 3,120


Capital profit
Add:
4300 Consolidated Balance Sheet of Honey Ltd
00
Net worth
Less: PurchaseConsideration 3,000 and its subsidiary Sour Ltd as on 31.03.2004 00

Capital Reserve
1 Particulars
Note Prev. Current o o ol 00
00
No. Year Year Hold. Subs.
IV. Revenue Profit X
20
1.620-(1,200-
Div. 5,000 [00 1020 Co. Co.
Increase in P/L EQUITY AND LIABILITIES
Fund
V.Consolidated P/L 31.3.14. 2,715 1.Share holders
Sh. ofR 10 cach 100%
00
P/L balance
as on
(a) Eq. 12,000
00

Add: Share of Revenue


Profit (1,020
x
612 (b) Reserve & Surplus
Consolidated P/L 100%
00
2,947
3,327 100% 00
Consolidated G.R 2,892

Dividend
received for pre-acq.
period (600 360 Capital Reserve 1.320
Less:
2,967 2. Current Liabilities
Bill payable
20 (372+ 160- contra 45) 487
Less: Stock Reserve 1005 2,315
S.Crs. (1,46l +854)
2941 394) 1,249
Prov. for Taxation (855
+

1,200 100%
VI. RevenueG.R. Prov. Div
100%
G.R.[1,380-(3000-Bonus Sh. 3,000 x
) 180 Minority Interest 3,120
Increase in 27,530
TOTAL
VIL. Consolidated G.R.31.3.14 2,184 Il. Assets
G.R. balance as on
(1) Non-Curent Assets
108 (a) Fixed Asset
Add: Share ofrevenue G.R. (180x 2,718
2,892 Land &Building 9,805
Plant&Machinery
VIIL. Minority interest Furniture & Fittings 2,431

bonus) 3000 x 1,200 2) Current Assets


Face value of shares held (except Stock (3,949 + 1,956-20) 5,885
3,963
1,680 Debtors (2,600+ 1,363)
Add: Share
of Capital profit 4,200x
ANALYSIS
FINANCIAL STATEMENT
C.U.
96 - FINANCIAL
REPORT
AND
QUESTIONS & ANSWE 8 197
deem the Debentures at 7 105.
alents 1.694
Cash & Cash Equiv some
Investments
514 d) Sold at
profit which
1400-204)

520 () ecided
Deci to write-off the fixed
assets
credited to Capital Reserve.
was

BR60-199-4S5)
Deecided to value (fully depreciated) costing
27,530
( opening stock at 20,000 00
Sundn Adiances
0. opening
the opening stock according to books
cost
was
which
7
was valued previously at cost less 00
TOTAL discounted R 115. valucd at cost. 63,000. The closing stock
bill was correctiy )00
ote Contingent liability for on 31st March 2013 and
2013 and 2014
2014 are statement
Prepare statement of
ot
The Balance S h c e t s
of Boom Ltd. as
given sources and
application
On of
of funds
for the vear
9.6. wing changes
showi
in
working capital year ended 31.03.2014
31.03.2013
below
31.03.2014 Solution
Statement Showing
Changes in Working Capital 00
00
31.03.2013 31.03.2014
1. Equity & Liabilities CurrentAssets

00
ess : Curent Liabilities (S. Crs.) 3.27.000o 4.50,000 00
1Shareholders Fund 4,00,000
Shares Capital 5,00,000 Working Capital 1.30,000 1,20,000

Capital Reserve 1,80,000 20,000 So. Change in W.Cap. (increase) 1,97,000 3.30,000
Generall Reserve 70,000
2,10,000 1,33,000
Profit & Loss Account
(30,000)
90,000 3,30.000 3.30.000
Preliminary Expenses (20,000) Fund Flow Statement for the
year ended 31.03.2014
Non-Curent Liabilities O0
3,00,000
Debentures 2,00,000
S o u r c e s

Sh
Applicaitons
IsueofEq. 1,00,000 Redemption of Debentures
Current Liabilities
1,30,000 Sale o f I n v e s t m e n t s
40,000 at 5% premium
Creditors 1,20,000 Sale o f M a c h i n e
40,000 Dividend paid
1.05.000
80,000
Provision for Income Tax 60,000 Fund from Operation 2,78,000| Income tax paid
40,000
40,000 80,000
Proposed Dividend 50,000 Purchase of Fixed Assets
TOTAL 11.70,000o 12,30,000 Increase in W. Cap.
I,00,000
1.33,000
II. ASSETS 4.58,000 4.58.000o
I. Non-Current AssetsS Fixed Assets Account
at cost
10,00,000o 10,00,000
(a) Fixed Assets To. Balance b/d
(2,60,000) 10,00,000 By, Asset Disposal A/c 80.000
Less: Depreciation (3,10,000)
1.10,000 90,000
Bank Alc Purchasc)
1,00,000.Balance c/d 10,00,000
(b) Investments Prov. for Dep. (written oft) 20,000
2. Current Assets
3,20.000 1.00.000 l1.00.000
Current Assets (al) 4,50,000 Asset. Disposal Account
TOTAL 11,70,000 12,30,000
31st March 2014, the company To. Fixed Assets A/c 80,000 By, Prov. for Dep 30,000
During the year ended
(a) Sold one machine for7 40,000, the cost of which was 80,000 and the , Bank A/c (Sale) 40,000

depreciation provided o n it was 30,000. .. P/L Alc (Less) 10,000


(b) Provide 1.00,000 as depreciation. 80,000 80.000
-

S T A T E M E N T
ANALYSIC
IS C.U.QUESTIONS &ANSWERS- 8199
FINANCIAL

AND Trade Creditors

REPORT

6,50,000 8,00,000)
Provision for kation
F I N A N C I A L

198
-
Account

for Dep 1,25.000 I1,00,000


Prov.

30,000 By,Balance
b/d
2.50,000 rovision
for Depreciation (Equipments) 3,00,000 2.00,000

To. Asset Disposal A/c


20,000.P/LAWC 1,00,000 Provison for Depreciation (Buildings) 6,00,000 5,00,000
Ac TOTAL

86,65,000 87,80,000
3,60.000
3,10,000

.
Fixed Assets

Balance cld
3.60.000
. Assels:

I n v e s t m e n tAccount
(Sold) 15,00,000 18,00,000
Bank A/e
40,000
L a n d

1,10.000 By.
25,00,000 25,00,000
20,000.Balancecld 90,000
Buildings

To. Balance b/d


1,30.000 20,00,000 16,00,000
E q u i p m e n t s

Capital Reserve (Prolit) 1.30,000


Inventory 14,00,000 15,50,000
P/L Statement Trade Debtors
8,00,000 6,50,000
90 ,000 Cash& Bank Balances
4,00,000 6,00,000
Closing
balance of P/L 1,00,000 Prepaid Expenses 65.000 80,000
Add: Depreciation 30,000 TOTAL 86.65,000 87,80,000
Transfer to G.R.
10,000 diional Tformation

sale of machines 60,000


Loss on
a n d was sold for cash at a profit of 7 50,000
for tax
Provision made
50,000 Dividend paid during the year 7 4,50,000.
for
Dividend b
Provision made
10,000 ic) Net Profit for thhe year ? 1,60,000.
Prel.Exp. written off
of
debentures 5,000 ) Equipmet costing R 6,00,000 was purchased and costing 2,00,000 with a book
Premium on
redemption
3,55,000 (d)
A0,000
ulue o f .
was sold for 30,000.
70,000 ic) Debentures were redeemed at face value by issuing shares al par.
balance of P/L 1,60,000.
Less: Opening
0 Amount transterred to provision for taxation during the year
10 7,000
stock (63,000x 90 statement ol Cash Flow as AS-3 for the yeur ended March 31, 2011.
Under valuation of opening Prepare a

Prov. for Taxation Account


2,78,000 Solution:

1,00,000
Fund from Operation 3,20,000 To. Bank A/e
1.35,000 By, Balance b/d
I,60,000
Current Assets Balance c/d 1,25,000 PALMc
Note : Opening 2,60,000
7,000 2,60,000
Add: Under value ofOpg. 63,000x90
st.
Land Acount
3,27,000
al 3Ist March 201 and
To, Balance b/d 18,00,000 By,Bank A/c 3,50,000

Sheets of Joy Lid. as


50,000 Balance cld 15,00,000
Presented below are
the Balance PA.Ac(prelit)
Q.7. 18,50,000o 18,50,000
2010 2011 2010
Equipments Account
Alc 2,00,000
To, Balance b/d 16,00,000 By, Equipments Disposal
6,00,000 Balance cld 20,00,000
& Liabilities Bank A/
I. Equity 43,00,000 40,00,000 22,00,000
Equity Share Capital 6,40,000 9,80,000 22,00,000
Reserves & Surplus 20,50,000 22,00,000
Debentures
FLNANCIAL
S T A T E S M E N T
ANALYSte CU.QUESTIONS& ANSWERS R 201

REPORT
AND from
CCshfron Einancingactivitic
ANTAL

200 - FIN Equipments Disposal A/c Shares


of Eq
Issue

A/c 3.00.000
Prov for Dep LsEq Dv.paid
2.00.000By.
Bank Alc 1,50553 Redemption of Debentures
4 50.000

T Equrne nts P L A C (loss) 30000 Net Cash Flow 150,000 6.00.000 (3.00.000)
10,900 dd Cash & Cash Equivalenm (1 4.10)
(2.00.000)

200 000 6.00.000


Cash&Cash Equivalenton 31.3.11
Account

Dep
on
E q u i p m e n t s

4.00.000

TEqupmen:Dusp Ac
Prov.
for
1.60.000 By.
3.00.000- PL AC
Balance
b/d

250559 Q.8.
(a)
From the follor
From the following
as many details as possible-
informaiton. prepare a Statement of Proprietors Fund
shouin
io = 25%;
Balance cid 4.60.000 00
Reserve & Surplus
G.P ratio =
1.6;
Current

To. DrvTdend paid


450.000

2.60.000
By. Balanceb/d
Profitfor
the year
9.300
5 905%0
Liquid
k
Sto
ratio
turnover (based
1.35
on Cost of goods sold) ratio = 9 times
00

on sale
of land turnover = 146 days
1,00,000. Profit
Debtors
Dep on Equip Bank
overdraft= nil;
.Dep on Blde 10,000 C e d Assets to Net Wornh = 0.90
Loss on Equp 1.60.000 GP 3,75,000;

Prov for Taxaton 6,40.000


Long-term
Loan to Current Liabilities =
0.40:
Balance c/d 16.20.000 I620.000 Reserve to Share Capital =0.25.
or,.P 25
from
Operations
(a) G.P. Ratio = 25g
Statement
Showing
Cash
solution: O Sales 100
5,90,000 3.75.000 25 or, Sales = 3,75,000 x = 15.00,000
Particulas 1,50,000
of.
Sales 100
the year days
Net Profit for tumover 146
=

15,000 b) Debtors
Add Decrease in Stock
Exp.
7,55,000 erage Debtors x 365 146 days
Decrease in Prepaid
1,50,000 of Net Credit Sales
Less
Decrease in creditors
1,50,000 15,00,000x =6,000
4,55.000
=
Increase in Debtors or.
Debtors 365
15,00,000 3,75,000 = 11,25.000
ended 31.3.11. of goods sold =

for the year (c) Cost


125ono
Statement
Flow
Cash AS-3 (Indirect method)
turnover
= 9 Stock =

9
0
Stock

ratio = 1.35 Debtors +Cash = 135


or,
(d) Liquid Creditors
Cash from Operat1ng Activities
4,55,000
A 3,20,000 Debtors Cash 1.35 Creditors
Cash from Operation 1,35.000 or.

tax paid 3,20.000 CA-Slock + (Debtors


+ Cash)
Les:Income reccived
(e)
Current ratio =

CL S.Crs.
Add Govt subsidy
Actuvitics 3,50,000 1,25,000+ 1.35 Creditors
BCash from Investung
Assets: Land 3,80,000
: 1.6
30,000 or, Creditors
Sale of Fixed 1.6 Creditors
Equipments
6,00,000
(2,20.0) or,
1,25,000 1.35 Creditors =

of Equipments
Less: Purchase
202 INANCIAL REPORT AND INANCIML STATEMENT ANAL V
YSIS
Or, 0.25 Creditors 25,000
or, Creditors = 1,25,00DO
5,00,000
0.25
() So, 6,00,000 + Cash = 1.35 Creditors
ash =
(5,00.000 x 1.35) 6,00,000 = 75,000
L o n g - t e r m loan = 5,00,000 x 0.40 = 2,00,000

(h) Fixcd Assets to Net worth= 0.90 or, F.A.=0.90


N.W.

O F.A. = 0.90
F.A. + CA -

CL -

LTL
or, F.A. = 0.90
**F.A. + 8,00,000 5.00,000 -2,00,000
or, FA =
0.90 (FA + 1,00,000) or, 0.10 FA = 90,000
or, F.A. = 9,00,000.
() Net Worth - 9,00,000 = 10,00,000
0.90
G) Reserve + Share Capital = 10,00,000
or, Reserve = 10,00,000 Sh. Cap. -

Reserve
Sh. Capital
h . Capital
=
0.25 or, 10,00,000-Sh.
0,00,000-Sh. Cap.
Sh. Capital
Cap. =
0.25
or,
10,00,000 Sh. Cap. = 0.25 Sh. Cap.
or, 10,00,000 =
1.25 Sh. Cap. or Sh. Cap. 8,00,000 =

Statement Showing Proprietor's Fund


Fixed Assets
C.A. 9,00,000
Stock
Debtors 1,25,000
Cash 6,00,000
TOTAL ASSETSS 75,000
Less : Outside Liabilities 17,00,0000
Long-term Liabilities 2,00,000
Current Liabilities
Proprietor's fund 5,00,000 7,00,000
10,00,000
(Represented by Sh. Cap. 8,00,000 + Reserve 2,00,000)
(b) State the Limitations of Ratio Analysis:
Ans. See Q. No. 3(a) of 2003

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