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    Acc Unit Test 2023-24 Solution

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    Kashish Kathuria

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    Acc Unit Test 2023-24 Solution

    Uploaded by

    Kashish Kathuria
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    1687253035_acc_unit_test_2023-24_solution

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    Acc Unit Test 2023-24 Solution

    Uploaded by

    Kashish Kathuria

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    DELHI PUBLIC SCHOOL, BANGALORE SOUTH

    SOLUTION - UNIT TEST [2023-24]


    SUBJECT: ACCOUNTANCY; XII
    1] The first two items under ‘Expenses’:
    a) Cost of Materials Consumed and b) Purchases of Stock-in-Trade. [1/2 + 1/2]

    2] Long-term provisions are the provisions against which liability will arise after 12
    months of the date of Balance sheet or after the period of Operating cycle. For example,
    Provision for Gratuity; Provision for Warranty Claims. [1/2+1/2]

    3] Employees are interested in better emoluments, bonus, better working conditions and
    security of their jobs. So, they are always interested in profitability, operating sustainability
    and financial strength of the business. [1]

    4] Objectives of ratio analysis:


    a) To determine liquidity and solvency of the business
    b) To assess the operating efficiency of the business [1/2+1/2]

    5] Analysis of financial statements is a systematic process of analysing the financial


    information in the financial statements to understand and take economic decisions. [1]

    6]
    Advantages of financial analysis [uses]: [1 ½]

    a) Securities Analysis: It is a process by which the investor comes to know whether the firm
    is fulfilling expectations with regard to payment of dividend, capital appreciation and
    security of money. Such analysis is done by a securities analyst who is interested in cash-
    generating ability, dividend payout policy and the behaviour of share prices.

    b) Credit Analysis: Such analysis is useful when a firm offers credit to a new customer or a
    dealer. The manager of the firm would like to know whether to allow or extend credit to
    them or not. Such analysis is also useful for a bank before granting loan.

    Limitations of financial analysis: [1 ½]

    a) Historical Analysis: Financial statement analysis is a historical analysis. It analyses what


    has happened till date. It does not reflect the future. Persons like shareholders, investors,
    etc., are more interested in knowing the likely position in future.

    b) Ignores Price Level Changes: Price level changes and purchasing power of money are
    inversely related. A change in the price level makes analysis of financial statements of

    1
    different accounting years invalid because accounting records ignore change in value of
    money.

    7] Comparative Statement of Profit and Loss for the year ended 31st March, 2019 [3]

    Particulars Note 31/3/2018 31/3/2019 Absolute Percentage


    No. (Rs.) (Rs.) change Change
    (Rs.) (%)
    I] Revenue from
    Operations 8,00,000 10,00,000 2,00,000 25.00
    II] Other Income 1,50,000 2,20,000 70,000 46.67
    III] Total Revenue 9,50,000 12,20,000 2,70,000 28.42
    IV] Expenses:
    a) Cost of Materials
    Consumed 3,00,000 4,00,000 1,00,000 33.33
    b) Change in Inventories of
    Finished Goods, Work-in-
    Progress 1,00,000 2,00,000 1,00,000 100.00
    c) Other Expenses 40,000 90,000 50,000 125.00
    Total Expenses 4,40,000 6,90,000 2,50,000 56.82
    V] Profit Before Tax 5,10,000 5,30,000 20,000 3.92
    VI] Less: Tax (1,53,000) (1,59,000) 6,000 3.92
    VII] Profit After Tax 3,57,000 3,71,000 14,000 3.92

    8A] The term ‘Current Liabilities’ is defined in Schedule III of the Companies Act, 2013 as
    follows: [1/2]
    Current Liability is that liability which is:
    (i) expected to be settled in company’s normal operating cycle; or
    (ii) due to be settled within 12 months after the reporting date, i.e., Balance sheet date; or
    (iii) held primarily for the purpose of being traded; or
    (iv) there is no unconditional right to defer settlement for at least 12 months after the
    reporting date. [1]
    If a liability meets any of the above conditions, it is classified or shown as current liability.
    [1/2]

    8B] Inventory Turnover Ratio = Cost of Revenue from Operations/Average Inventory


    CRFO= 20,000+1,60,000-60,000 = Rs.1,20,000
    Average Inventory = 20,000+60,000/2 = Rs.40,000
    Inventory Turnover Ratio = 1,20,000/40,000 = 3 times. [1]

    (i) CRFO = Rs.1,36,000 and Average Inventory = Rs.32,000


    Hence, Inventory Turnover Ratio = 1,36,000/32,000 = 4.25 times
    Therefore, ratio will increase. [1/2]

    2
    (ii) CRFO = Rs.1,00,000 and Average Inventory = Rs.50,000
    Hence, Inventory Turnover Ratio = 1,00,000/50,000 = 2 times
    Therefore, ratio will decrease. [1/2]

    9] Common Size Balance sheets as at 31st March, 2018 and 2019 [4]

    Particulars Note Absolute Amounts Percentage of


    No. Balance Sheet Total
    31/3/2018 31/3/2019 31/3/20 31/3/20
    (Rs.) (Rs.) 18 (%) 19 (%)
    I] Equity and Liabilities
    1] Shareholders’ Funds
    (a) Share Capital 10,00,000 15,00,000 66.67 62.50
    (b) Reserves and Surplus 1,00,000 3,00,000 6.67 12.50
    2] Non-Current Liabilities
    (a) Long-Term
    Borrowings 2,00,000 2,50,000 13.33 10.42
    3] Current Liabilities
    (a) Trade Payables 70,000 1,00,000 4.67 4.16
    (b) Other Current
    Liabilities 80,000 1,30,000 5.33 5.42
    (c) Short-term Provisions 50,000 1,20,000 3.33 5.00
    TOTAL 15,00,000 24,00,000 100.00 100.00
    II] Assets
    1] Non-Current Assets
    (a) Property, Plant and
    Equipment and Intangible
    Assets 7,00,000 10,00,000 46.67 41.66
    (b) Non-Current
    Investments 3,50,000 6,00,000 23.33 25.00
    2] Current Assets
    (a) Inventories 2,50,000 3,00,000 16.67 12.50
    (b) Trade Receivables 1,50,000 2,50,000 10.00 10.42
    (c) Cash and Cash
    Equivalents 50,000 2,50,000 3.33 10.42
    TOTAL 15,00,000 24,00,000 100.00 100.00

    10A] Current Liabilities = 25,00,000-5,00,000 = Rs.20,00,000


    Long term debt = 60,00,000-20,00,000 = Rs.40,00,000
    Total Assets = 50,00,000+20,00,000 = Rs.70,00,000
    Proprietor’s Funds = 70,00,000-60,00,000 = Rs.10,00,000

    (i) Debt to Equity Ratio = Long term Debt/Shareholders’ Funds


    = 40,00,000/10,00,000 = 4:1 [1]

    3
    (ii) Total Assets to Debt Ratio = Total Assets/Long term Debt = 70,00,000/40,00,000 =
    1.75:1 [1]

    (iii) Proprietary Ratio = Shareholders’ Funds/Total Assets = 10,00,000/70,00,000 = 0.14:1


    [1]

    10B] Current Ratio = Current Assets/Current Liabilities = 2/1


    Current Liabilities = 2,00,000/2 = Rs.1,00,000 [1/2]
    Liquid Ratio = Liquid Assets/Current Liabilities = 1.5/1
    Inventories = 2,00,000-1,50,000 = Rs.50,000 [1/2]
    Inventory Turnover Ratio = CRFO/Average Inventory = 6
    Cost of Revenue from Operations = 50,000 x 6 = Rs.3,00,000 [1/2]
    Revenue from Operations = CRFO + Gross Profit = 3,50,000 + 75,000 (3,00,000 x 25%) =
    Rs.3,75,000 [1/2]

    10C] Operating Profit Ratio = 100 – Operating Ratio = 100-90 = 10%


    Operating Profit = 8,00,000 x10% = Rs.80,000
    Net Profit = 80,000 + 44,000 – 4,000 = Rs.1,20,000
    Net Profit Ratio = Net Profit/Revenue from Operations x 100 = 1,20,000/8,00,000 x 100 =
    15% [1]

    ***********************************************************************

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