FR & Fsa Sem-6 GKJ (Final File) - 02!03!24 (Final)

Calcutta University
B.Com (3rd Year)
Semester - VI
Honours & General
Question & Answers
on
Financial Reporting
&
Financial Statement
Analysis
By
Gobind Kumar Jha
Ca (F). L.L.B(H)., M. Com (H)
Contents
ACCOUNTING STANDARDS 1 to 36
Ratio Analysis Important Questions: - 8 - 36
B. Com (Hons. & General) 2017 12 - 17
Chapter No. Chapter Name Page No.
1 Introduction to FSA [10 Marks] 37 - 42
2 Holding Company [15 Marks] 43 - 50
3 Fund Flow Analysis [15 + 5 = 20 Marks] 51 - 58
4 Cash Flow Analysis [15 + 5 = 20 Marks] 59 - 62
5 Accounting Ratios [15 + 5 = 20 Marks] 63 - 68
Helpfull Tips
Gobind Kumar Jha / 9874411552
GOBIND KUMAR JHA

Accounting Standards
FINANCIAL REPORTING AND FINANCIAL STATEMENT
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ANALYSIS
Accounting Standards
1. What is Conceptual Framework?
A conceptual framework can be defined as a system of ideas and objectives that lead to the creation of a
consistent set of rules and standards. Specifically in accounting, the rule and standards set the nature, function
and limits of financial accounting and financial statements. The main reasons for developing an agreed
conceptual framework are that it provides:
1. a framework for setting accounting standards;
2. a basis for resolving accounting disputes;
3. fundamental principles which then do not have to be repeated in accounting standards.
2. What are the purposes of Conceptual Framework?
This Framework sets out the concepts that underlie the preparation and presentation of financial statements in
accordance with the Indian Accounting Standards for external users. The purpose of the Framework is to:
(a) Assist in the development of future Indian Accounting Standards and in its review of existing Indian
Accounting Standards.
(b) Assist in promoting harmonisation of regulations, accounting standards and procedures relating to the
presentation of financial statements by providing a basis for reducing the number of alternative accounting
treatments permitted by Indian Accounting Standards;
(c) Assist preparers of financial statements in applying Indian Accounting Standards and in dealing with
topics that have yet to form the subject of an Indian Accounting Standard;
(d) Assist auditors in forming an opinion as to whether financial statements conform with Indian Accounting
Standards;
(e) Assist users of financial statements in interpreting the information contained in financial statements
prepared in conformity with Indian Accounting Standards; and
(f) Provide those who are interested in Indian Accounting Standards with information about approach to their
formulation.
Note:
• This Framework is not an Indian Accounting Standard and hence does not define standards for
any particular measurement or disclosure issue. Nothing in this Framework overrides any specific
Indian Accounting Standard.
• In those cases where there is a conflict, the requirements of the Indian Accounting Standard
prevail over those of the Framework
3. What are the scope of Conceptual Framework?
The Framework deals with:

(a) the objective of financial statements;
(b) the qualitative characteristics that determine the usefulness of information in financial statements;
(c) the definition, recognition and measurement of the elements from which financial statements are
constructed; and
(d) concepts of capital and capital maintenance.
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Financial Reporting and REPORTING AND FINANCIAL STATEMENT
Financial Statement Analysis
ANALYSIS
4. What are the objective of financial statements?
The objective of financial statements

(a) The objective of financial statements is to provide information about the financial position, performance
and cash flows of an entity that is useful to a wide range of users in making economic decisions.
(b) Financial statements prepared for this purpose meet the common needs of most users. However, financial
statements do not provide all the information that users may need to make economic decisions since they
largely portray the financial effects of past events and do not necessarily provide non-financial
information.
(c) Financial statements also show the results of the stewardship of management, or the accountability of
management for the resources entrusted to it. Those users who wish to assess the stewardship or
accountability of management do so in order that they may make economic decisions; these decisions may
include, for example, whether to hold or sell their investment in the entity or whether to reappoint or
replace the management.
5. What are the Fundamental Accounting Assumptions?
Fundamental Accounting Assumptions

Certain assumptions are used in the preparation of financial statements. They are usually not specifically
stated because they are assumed to be followed. Disclosure is necessary only if they are not followed. The
following have been generally accepted as fundamental accounting assumptions:
1. Going Concern: The organisation is normally viewed as a going concern, that is to say, it will be in
continuing operations for the foreseeable future. It is assumed that the organisation has neither the
intention, nor the necessity of shutting down or reducing the scale of operations.
2. Consistency: It is assumed that accounting policies are consistently followed from one period to another.
No frequent changes are expected.
3. Accrual: Revenues and costs are recorded when they are earned or incurred (and not as money is received
or paid) in the periods to which they relate.
6. What are the objectives of Indian accounting standard 1?
IND AS 1 describes financial statements as a structured representation of the financial position and financial
performance of an entity.
Objective of the financial statement is to provide useful information about the:
1. Financial Position (Assets, Liabilities & equity)
2. Financial Performance (Income, Expenses including gains and Losses)
3. Cash Flows (Including Cash Equivalents)
7. What are the scope of Indian accounting standard 1?
Scope
(a) IND AS 1 applies in preparing and presenting general purpose financial statement
(b) Other IND AS set out recognition, measurement and disclosure requirements of specific transactions and
events
(c) IND AS 1 prescribes the basis for presentation of financial statements to ensure comparability both with:
• Entity’s own financial statements of previous periods;
• and Financial Statements of other entities
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8. What are the key principles of Indian AS 1?
IAS 1 also elaborates on the following features of the financial statements:

1. Presentation of True and Fair View and compliance with Indian Accounting Standards: Financial
statements shall present a true and fair view of the financial position, financial performance and cash
flows of an entity. The application of Indian Accounting Standards, with additional disclosure, when
necessary, is presumed to result in financial statements that present a true and fair view.
2. Prepared on a going concern basis: When preparing financial statements, management shall make an
assessment of an entity ‘s ability to continue as a going concern. When an entity does not prepare financial
statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared
the financial statements and the reason why the entity is not regarded as a going concern.
3. Prepared using the accrual basis of accounting: An entity shall prepare its financial statements, except
for cash flow information, using the accrual basis of accounting. When the accrual basis of accounting is
used, an entity recognises items as assets, liabilities, equity, income and expenses (the elements of
financial statements) when they satisfy the definitions and recognition criteria for those elements in the
Framework.
4. Has material classes presented separately: An entity shall present separately each material class of
similar items. An entity shall present separately items of a dissimilar nature or function unless they are
immaterial except when required by law.
5. Does not offset assets and liabilities: An entity shall not offset assets and liabilities or income and
expenses, unless required or permitted by an Indian AS.
6. Frequency of reporting (Should be prepared least annually): An entity shall present a complete set of
financial statements (including comparative information) at least annually. When an entity changes the
end of its reporting period and presents financial statements for a period longer or shorter than one year,
an entity shall disclose, in addition to the period covered by the financial statements:
(a) the reason for using a longer or shorter period, and
(b) the fact that amounts presented in the financial statements are not entirely comparable.
7. Comprehensive statement (includes comparison with previous periods): An entity shall present
comparative information in respect of the preceding period for all amounts reported in the current period
‘s financial statements. An entity shall present, as a minimum, two balance sheets, two statements of profit
and loss, two statements of cash flows and two statements of changes in equity, and related notes.
8. Consistency of presentation (presented consistently across period) An entity shall retain the
presentation and classification of items in the financial statements from one period to the next unless:
(a) it is apparent, following a significant change in the nature of the entity ‘s operations or a review of its
financial statements, that another presentation or classification would be more appropriate or
(b) an Indian AS requires a change in presentation.
9. What are the Objective of Indian AS 16?
One fundamental problem in financial reporting is how to account periodically for performance when many of
the expenditures an entity incurs in the current period also contribute to future accounting periods.
Expenditure on property, plant and equipment ('PP&E') is the best example of this difficulty. Indian AS-16
deals with accounting and depreciation of property, plant and equipment, which are covered by Corresponding
AS-10. The objective of this Standard is to prescribe the accounting treatment for property, plant and
equipment so that users of the financial statements can discern information about an entity ‘s investment in its
property, plant and equipment and the changes in such investment.
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Financial Reporting and Financial Statement Analysis
10. What are the Scope of Indian AS 16?
This Standard shall be applied in accounting for property, plant and equipment except when another Standard
requires or permits a different accounting treatment. All property, plant and equipment are within the scope of
Indian AS 16 except as follows:
(a) Property, plant and equipment classified as held for sale in accordance with Indian AS 105, Non-current
Assets Held for Sale and Discontinued Operations.
(b) Biological assets related to agricultural activity other than bearer plants (covered by Indian AS 41,
Agriculture). This Standard applies to bearer plants but it does not apply to the produce on bearer plants.
(c) The recognition and measurement of exploration and evaluation assets (covered by Indian AS 106
Exploration for and Evaluation of Mineral Resources).
(d) Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative resources.
However, this Standard applies to property, plant and equipment used to develop or maintain the assets
described in (b)–(d).
11. Define the following terms as per Indian AS 16.
Depreciation: Depreciation is systematic allocation of depreciable asset over a useful life of asset.
Meaning of Plant, Property and Equipment (PPE): Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative
purposes; and
(b) are expected to be used during more than one period.
Depreciable amount: Depreciable amount is the cost of an asset, or other amount substituted for cost, less its
residual value.
Entity-specific value: Entity-specific value is the present value of the cash flows an entity expects to arise
from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when
settling a liability.
Fair value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Carrying amount: Carrying amount is the amount at which an asset is recognised after deducting any
accumulated depreciation and accumulated impairment losses.
Cost: Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to
acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that
asset when initially recognised in accordance with the specific requirements of other Indian Accounting
Standards.
Impairment loss: An impairment loss is the amount by which the carrying amount of an asset exceeds its
recoverable amount
Recoverable amount: Recoverable amount is the higher of an asset ‘s fair value less costs to sell and its value
in use.
Residual value: The residual value of an asset is the estimated amount that an entity would currently obtain
from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age
and in the condition expected at the end of its useful life.
The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of
the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the
condition expected at the end of its useful life.
Useful life: Useful life is:-
(a) the period over which an asset is expected to be available for use by an entity; or
(b) the number of production or similar units expected to be obtained from the asset by an entity.
Bearer plant: A bearer plant is a living plant that:-
(a) is used in the production or supply of agricultural produce;
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(b) is expected to bear produce for more than one period; and
(c) has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
Recognition Principle: The cost of an item of property, plant and equipment shall be recognised as an asset
if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
Items such as spare parts, stand-by equipment and servicing equipment are recognised in accordance with this
Ind AS when they meet the definition of property, plant and equipment. Otherwise, such items are classified as
inventory.
This Standard does not prescribe the unit of measure for recognition, i.e. what constitutes an item of property,
plant and equipment. Thus, judgement is required in applying the recognition criteria to an entity ‘s specific
circumstances.
An entity evaluates under this recognition principle all its property, plant and equipment costs at the time they
are incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and
equipment and costs incurred subsequently to add to, replace part of, or service it.
Initial Cost for Recognition: Initial Cost for Recognition Plant, Property and Equipment (PPE) shall be
measured at cost, which includes:
Purchase Price
+ Import Duty
+ Non-Refundable Taxes
+ Costs directly attributable
+ Initial Cost of dismantling and removing the item, if entity has an obligation that it Incurs on
acquisition of asset
- Discounts and Rebates
Subsequent Cost: Subsequent Cost In case of regular Repair & Maintenance of PPE or day-to-day servicing
of item, cost shall be recognized in Statement of Profit & Loss.
However, some parts of asset may require replacement at regular intervals. Also, items may be procured to
make less frequently recurring replacement. Cost of such replacing part may be recognized as asset if
recognition principle is met.
Carrying amount of part that is replaced shall be de-recognized.
Cost of any major inspection is recognized in the carrying amount of item of PPE as a replacement if
recognition criterion is satisfied.
12. What is the objective of Indian AS 33 - Earning per share?
What is EPS: Earnings per share is a method used to review the performance of an entity. As the term itself
denotes it simply means determining the profit attributable to each share. Such information is required to
understand the return on investment for the shareholders and prospective investors.
Objective: The objective of this Standard is to prescribe principles for the determination and presentation of
earnings per share, so as to improve performance comparisons between different entities in the same reporting
period and between different reporting periods for the same entity. The focus of this Standard is on the
denominator of the earnings per share calculation.
13. What is the Scope of Indian AS 33- Earning per share?
Scope:
(a) This Indian Accounting Standard shall apply to companies that have issued ordinary shares1 to which
Indian Accounting Standards notified under Part I of the Companies (Accounting Standards) Rules _____-
apply
(b) This standard requires that if an entity computes earnings per share then it must calculate and disclose the
same as per this standard.
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Financial Reporting and REPORTING AND FINANCIAL STATEMENT
ANALYSIS
(c) Further, this standard requires that if an entity presents both Consolidated financial statements and
Separate financial statements as per the standards then it must present the earnings per share in both the
statements separately
(d) The standard prescribes two methods for measurement of earnings per share:
• Basic earnings per share
• Diluted earnings per share
14. Definitions under Indian AS-33.
(a) Dilution: Dilution is the reduction in the earnings per share or increase in the loss per share that results
from the assumption that convertible instruments are converted, options or warrants exercised or that
ordinary share are issued upon the satisfaction of specified conditions.
(b) Anti-Dilution: Anti-Dilution is the increase in the earnings per share or reduction in the loss per share that
results from the assumption that convertible instruments are converted, options or warrants exercised or
that ordinary share are issued upon the satisfaction of specified conditions.
(c) Options: Options, warrants and their equivalents are financial instruments that give the holder the right to
purchase ordinary shares.
(d) Ordinary share: An ordinary share is an equity instrument that is subordinate to all other classes of
equity instruments.
(e) Potential ordinary share: A potential ordinary share is a financial instrument or other contract that may
entitle its holder to ordinary shares.
(f) Put options: Put options on ordinary shares are contracts that give the holder the right to sell ordinary
shares at a specified price for a given period.
15. Write Short Notes on: Basic earnings per share.
(a) Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity
holders of the parent entity (the numerator) by the weighted average number of ordinary shares
outstanding (the denominator) during the period.
(b) The objective of basic earnings per share information is to provide a measure of the interests of each
ordinary share of a parent entity in the performance of the entity over the reporting period.
(c) For the purpose of calculating basic earnings per share, the number of ordinary shares shall be the
weighted average number of ordinary shares outstanding during the period.
(d) Example: Apple Ltd has a profit of Rs. 5 crores the number of ordinary shares outstanding is 10 lakhs. So,
the EPS will be 5 crores /10 lakhs = Rs. 50.
16. Write Short Notes on: Diluted earnings per share.
(a) For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss attributable to
ordinary equity holders of the parent entity, and the weighted average number of shares outstanding, for
the effects of all dilutive potential ordinary shares.
(b) The objective of diluted earnings per share is consistent with that of basic earnings per share—to provide a
measure of the interest of each ordinary share in the performance of an entity—while giving effect to all
dilutive potential ordinary shares outstanding during the period.
(c) For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be the
weighted average number of ordinary shares calculated in accordance with paragraphs 19 and 26, plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
(d) Dilutive potential ordinary shares shall be deemed to have been converted into ordinary shares at the
beginning of the period or, if later, the date of the issue of the potential ordinary shares.
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(e) Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary
shares would decrease earnings per share or increase loss per share from continuing operations.
(f) For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of dilutive
options and warrants of the entity.
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Ratio Analysis
Ratio Analysis Important Questions: -
1. From the following information relating of Mas Private Limited prepare a Balance Sheet as on
31.03.2004:
Current Ratio 2.5
Liquid Ratio 1.5
Net Working capital (25% of shareholder’s fund) ₹ 3,00,000
Cost of Sales/Closing stock 6 times
Gross profit Ratio 25%
Debt Collection period 1 month
1
Reserve/shareholder’s Fund 33 %
3
No Bank overdraft
[Current assets ₹ 5,00,000; Current liabilities ₹ 2,00,000; stock 2,00,000; cost of sales 12,00,000; Gross
profit 4,00,000; Sales 16,00,000; Debtors 1,33,333; Shareholders fund 12,00,000; Reserve 4,00,000;
Equity share capital 8,00,000; Fixed assets (balancing figure) 9,00,000; Balance Sheet total ₹
14,00,000]
2. From the following financial data make out a statement of Proprietor ‘s Fund with as many details as
possible:
Proprietary ratio (Fixed Assets to Proprietor ‘s Equity) 0.75
Current Ratio 2.50
Liquid Ratio 1.50
Capital Gearing (Equity Capital to Preference Capital) 2:1
Reserve & Surplus to Equity Capital 0.30
Working Capital ₹ 90,000
Bank Overdraft ₹ 20,000
There is no long-term loan & fictitious assets.
[Current liabilities 60,000; Current Assets 1,50,000; Stock 90,000; Proprietary fund 3,60,000; Fixed
assets 2,70,000; Proprietary fund 3,60,000; Preference share capital 1,00,000; Equity share capital
2,00,000; Reserve & surplus 60,000]
3. The financial information of Good Luck Ltd. for the year 2004 are given below:
Ratio of Current Assets to Current Liabilities 1.75 to 1
Liquidity Ratio 1.25 to 1
(Debtors and Bank Balance to Current Liabilities)
Issued Capital (Equity Shares of ₹ 10 each) ₹ 1,20,000
Net Current Assets (as over Current Liabilities) 60,000
Fixed Assets (net block) percentage of Shareholders 60 %
as on the closing date
Gross Profit (percentage of turnover) 20%
Annual rate of turnover of stock (based on cost on 31.12.2004) 5.26 times
Average age of outstanding debtors for the year 2004 2 months
Net Profit (percentage on issued share capital) 16%
On 31st December Current Assets consisted of Stocks, Debtors and Bank balance You are required prepare
Trading and Profit and Loss Account and Balance sheet for the year ending on 31st December 2004.
[Current assets 1,40,000; current liabilities 80,000; Stock 40,000 Cost of goods sold 2,10,400; Gross
profit 52,600; Sales 2,63,000; Debtors 43,833; Net profit 19,200; Fixed assets 90,000; Proprietary fund
1,50,000 Reserve 30,000; Balance sheet 2,30,000; Bank (Balancing Figure) 56,167]
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ANALYSIS
4. From the following information, prepare a Statement of Proprietors’ Fund showing as many details
as possible –
• G.P. ratio = 25%
• Current ratio = 1.6
• Liquid ratio = 1.35
• Stock turnover (based on Cost of goods sold) ratio = 9 times
• Debtors’ turnover = 146 days
• Bank overdraft = nil
• Fixed assets to Net Worth = 0.90
• GP = ₹ 3,75,000
• Long term Loan to Current Liability = 0.40
• Reserve to Share Capital = 0.25
5. From the following information of S Ltd. prepare its Trading, Profit & Loss A/c and Balance Sheet:
Sales ₹ 7,30,000 Quick Ratio 1.3
Working Capital ₹ 120,000 Current Ratio 2.5
Bank Overdraft ₹ 15,000 Proprietary Ratio 0.6
(Fixed Assets/ Proprietary Fund)
Share Capital ₹ 2,50,000 Gross Profit Ratio 10%
Net profit is equal to 10% of Proprietary Fund. There are no long-term liabilities and fictitious assets. Closing
Stock is 10 % more than opening stock.
[Current liabilities 80,000; Current assets 2,00,000; Closing Stock=1,15,500; Gross profit 73,000;
proprietary fund 3,00,000; Fixed assets 1,80,000; Reserve 50,000; Net profit 30,000; Op stock 1,05,000; B/S:
3,80,000]
6. From the following information, prepare the Projected Statement of Profit and Loss for the next
financial year ending December 31,2015 and the Projected Balance Sheet as on that date:
Rate of Gross Profit 25%
Net profit to Equity Capital 10%
Stock Turnover Ratio 5 times
Average Debt Collection period 3 months
Creditor Velocity 3 months
Current Ratio 2
Proprietary ratio (Fixed Assets to Capital Employed) 80%
Capital Gearing Ratio (Preference Shares and Debentures to Equity) 3:7
General Reserves and Profit and Loss to
Issued Equity Capital 25%
Preference share Capital to Debentures 2
Cost of sales, consist of 40% for materials and balance for wages and overheads. Gross Profit Rs.6,00,000.
Working notes should be shown clearly. (Here, Schedule III is not mandatory for the preparation of projected
Statement of Profit and Loss and Projected Balance Sheet)
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ANALYSIS
7. The following are abridged accounting reports prepared by Y Ltd.:
Statement of Profit and Loss for the year ended on 31.3.2018
Particulars Rs (‘000)
i. Income: 600
Revenue from operations (sales): 600
ii. Expenses:
i. Cost of Goods Sold 450
ii. Other Expenses (Operating Expenses) 114
564
Profit before tax (I-II) 36
Less: Provision for taxation 16
Profit after tax 20
Statement of Assets and Liabilities:
Particulars (‘000)
I. Equity and Liabilities
1. Shareholders’ Funds:
a) Share Capital 160
b) Reserve and Surplus 90
2. Non – current liabilities
Loan on mortgage 50
3. Current Liabilities:
a) Trade Payable (Accounts Payable) 174
b) Other current liabilities (Accrued Expenses) 10
c) Cash & Cash Equivalent (Cash) 60
500
Name and calculate the ratios which indicate:
a) The rapidity with which accounts receivable are collected.

b) The ability of the company to meet its current obligation.
c) What probability on capital invested has been attained.
d) The efficiency with which funds represented by inventories are being utilised and
managed.
e) The ability of the company to meet quickly demands for payment of amounts due.
f) The relative importance of proprietorship and liabilities as sources of funds.
8. With the following ratios and further information given below, prepare a Trading Account, Profit &
Loss Account for the year ended on 31.12.17 and a Balance Sheet of Mrs. Banerjee as on that date.
1
a) Gross Profit = 33 %
3
b) Net Profit = 25% of Turnover
c) Stock Turnover Ratio = 10 times
1
d) Current liabilities / External liabilities =
4
5
e) Fixed Assets / Closing Capital = 4
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f) Closing capital / External liabilities = 2
5
g) Fixed Assets / Current Assets =
7
h) Fixed Assets = Rs. 20,00,000
i) Closing stock = Rs. 2,20,000 which is 10% more than the opening stock.
9. The current ratio of a company is 2:1. State whether the current ratio will increase or decrease or
remain same as a result of each of the following separate and independent situations:
a) The firm pays any current liabilities
b) Company sells its motor car in cash
c) Company purchases goods in cash
d) The Company issues shares in cash
e) The Company issues bonus shares
f) The debtors of the company pay debt in cash.
10. Gross Profit is 25% of cost of goods sold.

The credit sales are twice the Cash Sales.
If credit sales is ₹ 3, 00,000, calculate Gross Profit Ratio.
11. Calculate (a) Stock Turnover Ratio and (b) Purchases from the following information: Opening Stock –
Rs. 58,000, Closing Stock – Rs. 62,000, Sales- Rs. 6,40,000; Gross Profit Ratio – 25% on sales.
12. Calculate: (i) Sales and (ii) Gross profit from the following information:
Opening stock ₹ 40,000

Closing stock ₹ 80,000
Stock – Turnover Ratio 6 times
Selling price 25% above cost.
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B.Com
2017
(Hons. & &General)
B. Com (Hons. General) 2017
1. From the trend % supplied below prepare a comparative statement of current assets in absolute value
taking 2013 as the base year:
Trend Percentage Corresponding Value of Current Assets
2014 2015 2016 2016
(₹)
120 130 150 7200- Debtors
130 140 200 13600- Raw Materials
160 220 250 8000- WIP
175 250 300 9000- Cash at Bank
110 150 175 3500- Finished Goods
2. State the need for Financial Statement Analysis.
3. Calculate cash from Operation before tax from the information given below:
Sales ₹ 80,000
Less: Cost of goods sold ₹ 30,000
Less: Cash operation expenses ₹ 14,000
Less: Depreciation ₹ 10,000
Profit before tax ₹ 26,000
Balance relating to current items are –
Opening Closing
Debtors ₹ 12,000 ₹ 10,000
Inventory ₹ 11,000 ₹ 14,000
Creditors ₹ 9,000 ₹ 7,000
4. (a) What do you mean by Accounting Theory? How is it related with practice?
(b) Write a note on GAAP.
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5. The following are the statements of assets and liabilities of Ambani Ltd. and Adani Ltd. as on
31.03.2017:
Particulars Note Ambani Adani

No. Ltd. Ltd.
(₹) (₹)
I. Equity and Liabilities :
1. Shareholders’ Funds :
(a) Share Capital 30,00,000 10,00,000
(b) Reserve and Surplus 1 35,00,000 7,60,000
2. Current Liabilities
Trade Payables 2 3,00,000 3,22,000
Total 68,00,000 20,82,000
II. Assets
1. Non-current assets:
(a) Fixed Assets- Tangible Assets 3 26,60,000 12,62,000
(b) Non-current Investments 4 18,60,000 70,000
2. Current Assets
(a) Inventories (Stock) 6,80,000 4,04,000
(b) Trade Receivables 5 12,00,000 3,16,000
(c) Cash and Cash Equivalents 4,00,000 30,000
(Cash at Bank)
Total 68,00,000 20,82,000
Notes to Accounts:
Particulars Ambani Ltd. Adani Ltd.
(₹) (₹)
1. Reserve and Surplus
(a) Reserve 19,00,000 40,000
(b) Balance in the statement of profit
and loss 16,00,000 7,20,000
35,00,000 7,60,000
2. Trade Payables:
(a) Current A/c with Adani Ltd. 36,000 --
(b) Sundry Creditors 2,64,000 3,22,000
3,00,000 3,22,000
3. Fixed Assets – Tangible Assets
(a) Land and Buildings 20,60,000 7,20,000
(b) Machinery 6,00,000 5,42,000
26,60,000 12,62,000
4. Non-current Investments:
(a) Investments in shares of Adani Ltd. 16,00,000 --
(b) Other Investments 2,60,000 70,000
18,60,000 70,000
5. Trade Receivables:
(a) Sundry Debtors 12,00,000 2,76,000
(b) Current A/c with Ambani Ltd. -- 40,000
12,00,000 3,16,000
13
9874411552
ANALYSIS
Other Particulars:
(a) Ambani Ltd. Acquired 80% shares of Adani Ltd. On 1.7.16. On 1.4.2016, the Reserve and Statement of
Profit and Loss of Adani Ltd. Were 20,000 and 4,00,000 respectively.
(b) Land and Buildings standing in the books of Adani Ltd. At 8,00,000 on 1.4.2016 were revalued at
7,60,000 at date of acquisition, but it was not passed in the books.
(c) Adani Ltd: declared and paid 20% dividend for the year 2015-16 in July 2016 and Ambani Ltd. credited
the entire amount of dividend received from Adani Ltd. to its statement of Profit and Loss.
(d) Stock of Ambani Ltd. Includes 60,000 goods purchased from Adani Ltd.
(e) Sundry Creditors of Ambani Ltd. Includes 1,20,000 purchased from Adani Ltd. on which Adani Ltd.
made a profit of 30,000.
(f) On 31.3.2017, Ambani Ltd. remitted a cheque 4,000 on Current A/c to Adani Ltd. From the above
information prepare a Consolidated Balance Sheet of Ambani Ltd. and its subsidiary Adani Ltd. as on
31.03.2017.
6. Following are the liabilities and assets of Flow Ltd. As on 31-03-15 and 31-03-2016.
31-3-15(₹) 31-3-16(₹)
I. Equity and Liability:
1. Shareholders’ Fund:
(a) Equity Share 10 each fully paid 3,00,000 5,00,000
9% Preference shares of 10 each
fully paid 2,00,000 3,00,000
(b) Reserves and Surplus:
Securities Premium 40,000 70,000
Revaluation Reserve (on Land) - 80,000
General reserve 1,20,000 1,80,000
Profit and Loss Balance 2,30,000 3,90,000
2. Non- current Liabilities:
8% Debentures 2,00,000 -
Trade Payable 90,000 90,000
Provision for Tax 60,000 90,000
Total 12,40,000 17,00,000
II. Assets
1. Non-current Assets:
(a) Fixed Assets: Tangible Land 5,00,000 5,80,000
Other Fixed Assets 3,50,000 4,80,000
(b) Non-current Investment 70,000 1,10,000
2. Current Assets:
Inventory 90,000 70,000
Trade Receivables 1,40,000 3,30,000
Cash and Cash equivalents 90,00 1,30,000
Total 12,40,000 17,00,000
Following further particulars for the year 2015-16 are also given:
(a) Interim Dividend on equity shares ₹50,000 and Preference dividend ₹ 18,000 were paid during the year.
Dividend distribution tax paid during the year ₹ 10,000.
14
GOBIND KUMAR JHA
9874411552
ANALYSIS
(b) Debentures were redeemed at. 10% premium, premium on redemption charged to Profit & Loss for the year.
Debenture interest ₹ 12,000 were also paid during the year.
(c) The company sold one fixed asset for ₹24,000 (W.D.V. 35,000). Fixed assets of ₹ 2,00,000 were
acquired by issue of 8,000 equity shares at 25% premium and balance by Issue of preference shares at par.
Other equity shares were issued for cash during the year at a premium.
(d) Interest on Investment received 8,000. Investment having book value ₹20,000 were taken over by a creditor
against ₹20,000 due to him.
(e) Income tax paid during the year ₹68,000.
You are required to prepare the Fund Flow Statement of Flow Ltd. For the year ended 31- 03-2016
7. (a) Assuming 360 days in a year, calculate the Average collection period from the following:
Average Inventory ₹ 1,80,000

Debtors ₹ 1,20,000
Inventory Turnover ₹ 6 times
G.P. Ratio ₹ 10%
Credit sales to total sales ₹ 20%
(b) The following are the abridged accounting reports prepared by Ltd.:

Particulars ₹
I. Income: 600
Revenue from Operation (sales) 600
II. Expenses:
(i) Cost of Goods sold 450
(ii) Other Expenses (Operating Expenses) 114
564

Less: Provision before taxation 16
Profit after tax 20
Statement of Assets and Liabilities
Particulars (₹ ‘000)
(a) Share Capital 60
(b) Reserve and Surplus 90
2. Non-current Liabilities
Loan on mortgage 50
(a) Trade Payables (Accounts payables) 174
(b) Other Current Liabilities (Accrues Expense) 10
(c) Short Term Provision (Provision for Taxes) 16
500
15
GOBIND KUMAR JHA
9874411552
ANALYSIS
II. Assets:
1. Non-Current Assets: 160

Fixed Assets
2. Current Assets:
(a) Inventories 160
(b) Trade Receivables (Account Receivables) 120
(c) Cash and Cash Equivalents (Cash) 60
500
Name and calculate the ratio in which indicate:
(a) The rapidity in which accounts receivables are collected.
(b) The ability of the company to meet its receivables are collected.
(c) What profitability on capital invested has been attained?
(d) The efficiency with which funds represented by inventories are being and managed.
(e) The ability of the company to meet quickly demands for payment of amounts due.
(f) The relative importance of proprietorship and liabilities as sources of funds.
8. The following are the summarised Balance Sheets of XY Ltd. As on 31.1.2016 and 31.3.2017:
Particulars Note No. 31.3.2016 31.3.2017
(₹) (₹)
I. Equity and Liabilities:

(a) Share Capital 9,20,000 9,20,000
(b) Reserve and Surplus 3,04,000 3,32000
2. Non-current Liabilities:
Long Term borrowings 3,60,000 2,80,000
(8% Debentures)
(a) Trade Payables (Creditors) 4,12,000 3,84,000
(b) Other current liabilities 52,000 48,000
(Outstanding Expenses)
20,48,000 19,64,000
B. Assets:
(a) Fixes Assets Tangible Assets 2 6,48,000 7,04,000
(b) Non-current Investments 4,40,000 2,96,000
(Investments)
2. Current Assets:
16
GOBIND KUMAR JHA
9874411552
ANALYSIS
(a) Inventories (Stock) 3,28,000 4,24,000
(b) Trade Receivables (Debtors) 2,68,000 1,72,000
(c) Cash and Cash Equivalents
(Cash at Bank) 3,60,000 3,60,000
(d) Other Current Assets
(Prepaid Expenses) 4,000 8,000
20,48,000 19,64,000
Notes to accounts: 31.3.16 31.3.17

(a) Reserve 2,40,000 2,40,000
(b) Balance in the Statement of
Profit and Loss 64,000 92,000
3,04,000 3,32,000
Fixed Assets-Tangible Assets:

(a) Land and Building 6,00,000 6,00,000
(b) Machinery 2,08,000 2,80,000
Less: Depreciation (Accumulated) 1,60,000 1,76,000
48,000 1,04,000
Total (a + b) 6,48,000 7,04,000
Additional Information:
(a) 10% dividend was paid during 2016-17.
(b) Machinery for ₹ 1,20,000 was purchased and old machinery costing ₹ 48,000 (accumulated) depreciation ₹
24,000 was sold for ₹ 16,000.
(c) ₹ 80,000, 8% Debentures were redeemed by purchase from open market at ₹ 96 for a debenture of ₹ 100, at
the beginning of the year.
(d) Investment worth ₹ 1,44,000 were sold at book value.
(e) Bad debts written off during the year ₹ 20,000.
Prepare a statement of Cash Flow as AS-3 for the year ended on 31.3.17.
17
Financial Reporting and Financial Statement Analysis GOBIND KUMAR JHA
9874411552
ANALYSIS
B.Com
2018
(Hons. && General)
1. With the help of the following information for the year ended 31.03.2017, prepare a Common-size
Income Statement.
Particulars Small Bros.

Office and Selling and Distribution Expenses ₹ 60,000
Other Income ₹ 20,000
Total Cost of Sales: 75% of Net Sales -
Net Profit before Tax ₹ 1,20,000
2. Briefly mention the names of three parties interested in Financial Statement Analysis with their
information need.
3. Calculate Fund from Operation before tax from the information given below:
Cash from operation before Tax ₹ 92,000

Depreciation charged ₹ 17,000
Interest paid ₹ 10,000
Balance relating to current assets and liabilities are –
Opening Closing
Debtors ₹ 15,000 ₹ 13,000

Inventory ₹ 11,000 ₹ 14,000
Accrued Expense ₹ 4,000 ₹ 3,000
Creditors ₹ 3,000 ₹ 7,000
Cash and Bank ₹ 12,000 ₹ 9,000
4. (a) Explain in brief, the capital maintenance concept in accounting.

(b) Write a note on Fair Value Accounting.
5. The statement and liabilities of H. Ltd. And its subsidiary S. Ld. As at 31.03.2017 stood as follows:
Particulars H. Ltd. (₹) S. Ltd. (₹)

I. Equity and Liability
(a) Equity Share Capital
(₹ 10 each full paid) 5,00,000 1,50,000
(b) Reserve and Surplus:
General Reserve 2,00,000 1,30,000
P & L Balance 2,50,000 1,00,000
2. Non-current Liabilities
Trade Payable 2,80,000 1,70,000
Total 12,30,000 5,50,000
18
GOBIND KUMAR JHA
9874411552
ANALYSIS
II. Assets:
(a) Fixed Assets:
Tangible: Land and Building 5,00,000 2,20,000
Plant and Machinery 2,00,000 1,00,000
(b) Non-current Investment
Investment in shares
(including shares in S. Ltd.)
2. Current Assets:
Inventory 1,60,000 1,40,000
Trade Receivables 1,60,000 80,000
Cash and Cash equivalents 30,000 10,000
Total 12,30,000 5,50,000
The following information is also available:
H. Ltd acquired 12,000 Equity Shares of S. Ltd on 01.07.16 at a cost of ₹1,50,000 and immediately after
acquisition, H. Ltd. Received dividend on equity shares @ 20% for the year 2015-16. H. Ltd credited its
share of dividend to Profit and Loss A/c.
On 01.04.2016 balance of General Reserves of s. Ltd was ₹70,000 and the balance of Profit & Loss was ₹
40,000.
Debtors of H. Ltd. Include ₹ 20,000 for goods sold to S. Ltd. At cost plus 25%; half the goods are still in
stock. S. Ltd. Remitted ₹ 5,000 to H. Ltd. which H. Ltd. received on 11.04.2017.
You are required to prepare the Consolidated Balance Sheet of H. Ltd. with its subsidiary S. ltd. as at
31.03.2017.
6. Prepare a Find Statement of X Ltd. from the following:
Particulars 31.12.2016 31.12.2017

(₹) (₹)
1. Shareholders’ Fund
(a) Share Capital 12,00,000 16,00,000
(b) Reserve and Surplus 8,40,000 11,00,000
(a) Long Term borrowings 8,00,000 5,60,000
(Debentures)
(a) Trade Payables
(Sundry Creditors) 4,80,000 5,36,000
(b) Short-term Provision
(Provision for tax) 4,80,000 4,84,000
Total 38,00,000 42,80,000
II. Assets:
(a) Fixed Assets:
Tangible Assets 22,80,000 26,40,000
(b) Non-current Investment 4,00,000 3,20,000
(Trade Investment)
2. Current Assets: 11,20,000 13,20,000
(Including Inventory) 38,00,000 42,80,000
19
GOBIND KUMAR JHA
9874411552
FINANCIAL REPORTING
Financial Reporting and AND FINANCIAL STATEMENT
ANALYSIS
Notes to Accounts: 31.12.16 31.12.17
₹ ₹
(a) Capital Reserve - 40,000
(b) General Reserve 6,80,000 8,00,000
(c) Balance in Statement of
Profit & Loss 1,60,000 2,60,000
8,40,000 11,00,000
2. Fixed Assets: Tangible Assets
(a) At cost 32,00,000 38,00,000
Less: Depreciation 9,20,000 11,60,000
22,80,000 26,40,000
(a) Sold one machine for ₹ 1.00,000; the cost of the machine was ₹ 2,56,000 and the depreciation provided
for it amounted to ₹ 12,40,000.
(b) Provide ₹ 3,80,000 on depreciation.
(c) Redeemed 305, Debentures @ 103.
(d) Some Trade Investment sold at profit and the profit and the profit was credited to capital reserve.
(e) Decided to value the stock at cost, whereas previously the practice was to value stock at cost less 10%.
The stock according to books on 31.12.16 was ₹ 2,16,000; the stock on 31.12.17 ₹ 3,00,000 was correctly
valued at cost.
7.(a) From he following Summary Cash A/c of Torsha Ltd. prepare Cash Flow Statement for the year
ended 31.03.2018 in accordance with AS-3 (Revised) using the direct method. The company does not
have any cash equivalents.
Summary Cash A/c for the year ended 31.3.18
Particular ₹ ’000 Particular ₹ ’000

Balance (1.4.17) 50 Payment to Suppliers 2,000
Issue of Equity 200 Purchase of 200
Shares 100 Computers 200
Issue of Preference 2,800 Overhead Expenses 100
Shares 100 Wages and Salaries 250
Receipts from Taxation 50
customers Dividend 300
Sale of Furniture Repayment of Bank 150
Loan
Balance (31.03.18)
3,250 3,250
(b). Distinguish between Fund Flow Statement and Cash Flow Statement.
8. With the following ratios and further information given below, prepare Trading Account, Profit $
loss account for the year ended on 31.12.17 and a Balance Sheet of Mrs. Banerjee as on that date.
1
(a) Gross Profit ratio = 33 %
3
(b) Net Profit = 25% of Turnover
(c) Stock Turnover ratio = 10 times
1
(d) Current Liabilities/External Liabilities =
4
20
GOBIND KUMAR JHA
9874411552
ANALYSIS
5
(e) Fixed Assets/Closing Capital =
4
1
(f) Closing Capital/External Liabilities = 2
5
(g) Fixed Assets/current Assets =
7
(h) Fixed Assets = ₹ 20,00,000
(i) Closing Stock = ₹ 3,20,000 which is 10% more than the opening stock.
21
2019
Financial Reporting and Financial Statement Analysis GOBIND KUMAR JHA
9874411552
ANALYSIS
B.Com
2019
(Hons. && General)
1. With the help of following information prepare a Comparative Income Statement.
Particulars Year ended Year ended

31.03.2017(₹) 31.03.2018(₹)
Sales 15,00,000 18,00,000
Cost of Goods sold 9,60,000 10,80,000
Gross Profit 5,40,000 7,20,000
Operation Expenses 3,00,000 3,36,000
Profit before Tax 2,40,000 3,84,000
2. Briefly mention the needs of Financial Statement Analysis.
3. Calculate Fund from operation from the information given below (figures in ₹)
Profit as per Profit & Loss Statement 1,82,000

Other items in Profit & Loss Statement:
Depreciation charged 25,000
Profit on sale of Asset 12,000
Interest paid 10,000
Salary for the year 87,000
4. (a) State the limitation of historical cost accounting.

(b) Write a note on GAAP.
5. H. Ltd. acquired 1,200 equity shares in S. Ltd. on 01.04.2017. The statement of assets and liabilities
of H. Ltd. and its subsidiary S. Ltd. as on 31.03.2018 as follows:
H. Ltd. (₹) S. Ltd. (₹)

(a) Share Capital
Preferences Share Capital (₹ 10 1,00,000 -
fully paid) 5,00,000 1,50,000
Equity Share Capital (₹ 100 fully 3,40,000 6,000
paid) 3,60,000 1,08,000
(b) Reserve and Surplus:
General Reserve
P & L Balance - 24,000
2. Noncurrent liabilities:
6% Debentures (secured) 1,00,000 44,300
Trade Payable
Total 14,00,000 3,32,300
II. Assets:
1. Non-current Assets;
(a) Fixed Assets:
Tangible: Land and Building 3,56,000 70,000
22
GOBIND KUMAR JHA
9874411552
ANALYSIS
Plant and Machinery 1,40,000 91,300
Furniture and Fixture 3,76,000 40,000
(b) Non-current Investment:
Investment in S. Ltd. (Shares of S 1,80,000 -
Ltd)
2. Current Assets: 1,36,000 50,600
Inventory 2,00,000 70,000
Trade Receivables 12,000 10,400
Cash & Cash Equivalents
Total 14,00,000 3,32,300
The other information given are:
(a) On 01.04.2017 P & L of S. Ltd. stood at ₹ 77,500 and General Reserve at ₹ 3,000.
(b) H. Ltd. revalued plant and machinery of S. Ltd., at the time of purchase of shares by ₹ 20,000 more than
its book value (Ignore Depreciation).
(c) Trade receivables of S. Ltd., includes ₹ 24,000 for sales to H. Ltd., on which S. Ltd. made a profit of ₹
6,000.
(d) Inventory of H. Ltd., includes ₹ 8,000 of stock purchased from S. Ltd.
(e) S. Ltd. made a Bonus Issue during the year out of pre-acquisition profit for ₹60,000 not recorded in the
books.
You are required to prepare the Consolidated Balance Sheet of H. Ltd. with its subsidiary S. Ltd. as at on
31.03.2018.
6. Following are the Liabilities and Assets of Andhra Ltd. as on 31.03.2017 and 31.03.2018:
31.03.2017(₹) 31.03.2018(₹)
(a) Equity Share of 10 each 8,00,000 10,00,000
fully paid
(b) Reserves and Surplus: 1,00,000 1,20,000
Securities Premium 3,60,000 4,40,000
Profit and Loss balance
2. Non-current Liabilities: 4,20,000 4,60,000
Bank Loan
3. Current Liabilities: 1,66,000 2,16,000
Trade Payable 2,00,000 2,10,000
Provision for Tax
Total 22,66,000 27,42,000
II. Assets:
(a) Fixed Assets: Tangible 17,00,000 20,60,000
(b) Non-current Investment 96,000 1,24,000
2. Current Assets:
Inventories 2,40,000 2,80,000
Cash & Cash Equivalents 70,000 88,000
Total 22,66,000 27,42,000
23
9874411552
ANALYSIS
(i) Dividend paid during the year ₹ 75,000.
(ii) The company sold part of the fixed asset for ₹ 24,000(W.D.V. ₹ 20,000). Depreciation charged on fixed
assets during the year ₹ 1,40,000.
(iii) Investment costing ₹ 16,000 were sold during the year ₹ 19,000.
(iv) Interest on Investment received ₹ 7,000 and credited to Profit & Loss Account.
(v) Interest accrued and paid during the year on Bank Loan ₹ 24,000.
(vi) Income tax provided during the year ₹1,98,000.
You are required to prepare:

(a) The Schedule of changes in working capital from 31.03.2017 to 31.03.2018, and
(b) The Fund flow Statement of Andhra Ltd. for the year ended 31.03.2018.
7. Following are the liabilities and assets of Nico Ltd. as on 31.03.2017 and 31.03.2018.
31.03.2017(₹) 31.03.2018(₹)
(a) Equity Share of ₹ 4,00,000 5,00,000
each fully paid
(b) Reserves and 50,000 60,000
Surplus: 1,80,000 2,20,000
General Reserves
Profit & Loss 2,10,000 2,40,000
Balance
2. Non-current Liabilities: 83,000 1,08,000
Bank Loan 1,00,000 1,05,000
Trade Payable
Provision for Tax
Total 13,81,000 13,81,000
II. Assets:
Fixed Assets: Tangible 8,98,000 10,92,000
2. Current Assets:
Inventories 1,20,000 1,40,000
Trade Receivables 80,000 95,000
Cash & Cash 35,000 54,000
Equivalents
Total 11,33,000 13,81,000
(i) Dividend paid during the year ₹ 40,000.
(ii) The company sold [art of the fixed asset fort ₹ 32,000(W.D.V. V 20,000). Depreciation charged on
fixed assets during the year ₹76,000.
(iii) Interest accrued and paid during the year on Bank Loan ₹ 24,000.
24
GOBIND KUMAR JHA
9874411552
ANALYSIS
(iv) Income Tax paid during the year ₹1,16,000.
You are required to prepare the Cash Flow Statement of Nico Ltd. for the year ended 31.03.2018.
8. (a) From the following particulars, prepare a summarised Balance Sheet as at 31.03.2019.
Fixed assets to Net Worth = 0.8:1

Current Ratio = 3:1
Fixed assets = ₹16,00,000
Reserve included in Proprietor’s Fund = 25%
Acid Test Ratio = 3:2
Cash at Bank = ₹ 30,000
Long Term Loan =?
Bank Overdraft = Nil
(b) Calculate the average collection period from the following details assuming 360 effective days in a
year.
Average Inventory = ₹ 7,20,000, Receivables = 4,80,000

1
Cost of goods sold is 5 times the inventory, G.P. ratio = and credit sales to total sales = 80%.
6
25
GOBIND KUMAR JHA
9874411552
ANALYSIS
B.Com
2020 B. Com (Hons. & General) 2020
(Hons. & General)
1. What are included in a complete set of financial statements as per Ind as 1?
2. Briefly describe different concepts of Fund.
3. Given, Current Ratio = 2.8; Quick ratio = 1.9; Stock turnover (on sales) = 3 months and
Sales = ₹ 36,00,000. Find the value of current liabilities assuming no overdraft and prepayments.
4. From the following information, prepare a comparative income statement:

31.03.2019 31.03.2020
Particulars (₹) (₹)
Revenue from operations (sales) 3,75,000 5,25,000
Other Income 20,000 30,000
Administrative Expenses 1,25,000 15,000
Selling and Distribution Expenses 10,000 15,000
Income Tax 30% 30%
5. (a) Differentiate between Traditional and Modern Approaches to financial statement analysis.
(b) From the trend percentages supplied below, prepare a comparative statement of Current Assets in
absolute value taking 2016 as the base year.
Trend Percentage Corresponding Value of Current Assets

2017 2018 2019 2019(₹)
120 130 150 7200 - Cash at Bank
130 140 200 13600 - Debtors
160 220 250 8000 - Finished Goods
175 250 300 9000 - W.I.P.
110 150 175 3500 - Raw Materials
6. From the balance Sheets of H. Ltd. and S. Ltd. and the Notes as at 31.03.2020, following balances
and information are available:
Particulars H. Ltd. (₹) S. Ltd.(₹)

Equity Share Capital (₹ 10 each fully 8,00,000 3,00,000
paid) 2,00,000 80,000
General Reserve 2,80,000 70,000
Trade Payables 2,50,000 1,00,000
Balance of Profit & Loss Statement
Land and Building 6,00,000 3,20,000
Investment (24,000 shares in S. Ltd.) 2,80,000 -
Trade Receivables 1,60,000 80,000
Stock 60,000 40,000
Cash and Bank 30,000 10,000
26
GOBIND KUMAR JHA
9874411552
ANALYSIS
Additional information:
(a) H. Ltd. acquired 24,000 Equity Shares of S. Ltd. on 01.04.2019 at a cost of ₹ 2,80,000 and immediately
after acquisition H. Ltd. received dividend from S. Ltd. on Equity Shares @ 20% for the year 2018-19 and
credited the amount to its profit and loss A/c.
(b) On 01.04.2019 S. Ltd. had ₹ 50,000in General Reserve and ₹ 80,000 in Profit and Loss Statement.
(c) Goods were sold by H. Ltd. to S. Ltd. at cost plus 25% and stock of S. Ltd. includes ₹ 10,000 of such
goods.
You are required to prepare the Consolidated Balance Sheet of H. Ltd with its subsidiary S. Ltd. as at
31.03.2020.
7. Given below is a summary of Assets and Liabilities of Speed Ltd. as at 31.03.2019 and 31.03.2020
(in ₹):
Liabilities and Equities 31.03.2019 31.03.2020

(₹) (₹)
Equity Share Capital (₹ each fully paid) 4,00,000 4,80,000
Balance of Statement of Profit & Loss 3,00,000 3,90,000
Long-term Borrowing 3,80,000 3,40,000
Total 13,00,000 13,90,000
Assets 31.03.2019 31.03.2020

(₹) (₹)
Plant, Property and Equipment: Tangible 7,00,000 8,00,000
Stock in Trade 2,20,000 1,40,000
Cash and Bank 1,50,000 1,70,000
Total 13,00,000 13,90,000
(a) Tangible asset costing ₹ 1,00,000 (accumulated depreciation ₹70,000) was sold for ₹ 42,000 and the
profit or loss transferred to Profit & Loss A/c. Depreciation charged during the year on tangible assets was
₹1,10,000.
(b) Income Tax and Dividend paid during the year were ₹ 58,000 and ₹ 66,000 respectively.
You are required to prepare the Fund Flow Statement of Speed Ltd. for the year ended 31.03.2020.
8. From the following information of a company, prepare a Cash Flow Statement as per AS-3 for the
year ending 31.03.2019.
Particulars 31.03.2018 31.03.2019

(₹) (₹)
1. Shareholder’s Fund
(a) Share Capital (Equity Shares of ₹ 100 each) 15,00,000 15,00,000
(b) Reserve and Surplus 13,00,000 15,00,000
(Statement of Profit & Loss)
2. Current Liabilities 10,00,000 6,00,000
38,00,000 36,00,000
II. Assets:
1. Non-current Assets
Property, Plant and Equipment 15,00,000 18,00,000
27
GOBIND KUMAR JHA
9874411552
FINANCIAL REPORTING
ANALYSIS
2. Current Assets
Inventories 6,00,000 3,00,000
Cash and Cash Equivalents 2,00,000 5,00,000
38,00,000 36,00,000
(a) During the year the company paid ₹ 2,00,000 as dividend.
(b) During the year one plant, whose book value was sold at a loss of ₹ 25,000 and the company purchased
plant for ₹ 6,00,000.
9. From the following information, prepare a Statement of Proprietors’ Fund with as many details as
possible:
GP ratio = 25%
Current ratio = 1.5
1
Stock to Current Liabilities –
2
Stock turnover ratio (based on cost) = 73 days [assumes, 1 year = 365 days]
Fixed assets to Net Worth = 0.80
Debtor’s turnover- 4 times
Gross Profit = 3,00,000
1
Reserve to Share Capital =
3
10. (a) What do you mean by Financial Statement Analysis. Discuss three objectives of Financial
Statement Analysis.
(b) State the limitation of Ratio Analysis.
28
GOBIND KUMAR JHA
9874411552
ANALYSIS
B.Com
2021
(Hons. & General)
B. Com (Hons. & General) 2021
1. From the following data relating to two companies: Prepare a Common Size Income Statements for
the year ended 31.03.2021 and sate which of the companies is having (i) relatively lower ‘cost of
goods sold’ and (ii) relatively lower ‘cash operating expenses’.
(figures are in ‘000 ₹)
Sika Ltd. Zika Ltd.

Sales 16,000 9,500
Other Income 300 200
Total(A) 16,300 9,700
Cost of Goods sold 11,520 6,500
Cash Operating Expenses 2,400 1,700
Total(B) 13,920 8,200
EBDIT [C = (A-B)] 2,380 1,500
2. Following particulars are made available to you:
• EBIT for the year 2020-21 ₹ 92,000 and Rate of Income Tax 25%.
• 12% Debenture ₹ 1,00,000.
• Share Capital on 31.03.2021
10% Cumulative Preferences Shares of ₹ 80,000 and 10,000 Equity Shares of ₹ 10 each fully paid.
Calculate EPS when –
(a) No equity shares were issued during the year.
(b) 2,400 equity shares were issued on 30.11.2020.
3. Complete the following Statement showing increase or decrease in working capital:
Balance of Current Assets 31.03.2020 31.03.2021 Effect on Working

& Current Liabilities Capital
₹ ₹ ₹
Inventory 50,000 ? 8,000(increase)
Trade receivable ? 28,600 7,900(decrease)
Prepaid expenses ? 3,900 3,600(increase)
Advance to suppliers 12,000 ? 2,700(increase)
Cash & Bank 21,700 18,300 ?
Trade Payables ? 15,300 2,700(increase)
Outstanding Expenses 4,900 ? 400(decrease)
Advance from Customers 7,600 Nil ?
Working Capital ? ? -
4. What do you mean by Financial Statement Analysis? Why such analysis is required? Mention five
parties who are interested in such analysis.
5. Calculate the average collection period from following details taking 365 days in a year.
Average Inventory- ₹ 2,73,750
Balance of Receivables: Opening ₹ 2,80,000 and closing ₹ 3,04,000
29
GOBIND KUMAR JHA
9874411552
FINANCIAL REPORTING
ANALYSIS
Inventory turnover ratio (based on cost) = 2 months
G.P. Ratio = 10% and Credit sales to Total sales = 80%
6. What do you mean by Accounting Ratio? What are its limitations?
7. Find the sales of the base year and other missing data from the following figures of Zap. Ltd.
Year 2016 2017 2018 2019 2020

Sales (₹’000) 47,200 ? 63,200 72,800 ?
Trend (%) 118 134 ? ? 213
8. (a) State the assets to which Ind AS 16: Property, Plant and Equipment does not apply.
(b) What are the conditions need to be satisfied in order to recognise the cost of an item of Property,
Plant and Equipment as an asset?
(c) Define Carrying Amount and Depreciable Amount as per Ind AS 16.
9. Following are the liabilities and assets Amrapali Ltd. as on 31.03.2020 and 31.03.2021:
31.03.2020 31.03.2021
(₹) (₹)
(a) Equity share ₹ 10 each fully 8,00,000 10,00,000
paid
(b) Reserves and Surplus: 1,00,000 1,20,000
Profit & Loss Balance
2. Non-Current Liabilities: 4,20,000 4,60,000
Bank Loan
Trade Payable 2,00,000 2,10,000
Provision for Tax
Total 22,66,000 27,42,000
II. Assets:
1. Non-Current Assets:
(a) PPE: Tangible 17,00,000 20,60,000
(b) Non-Current Investment 96,000 1,24,000
2.. Current Assets:
Inventory 2,40,000 2,30,000
Cash and Cash Equivalents 70,000 88,000
Total 22,66,000 27,42,000
(a) Dividend paid during the year ₹ 75,000
(b) The company sold part of the fixed assets for ₹ 24,000(WDV ₹ 20,000). Depreciation charged on fixed
assets during the year ₹ 1,40,000
(c) Interest on Bank Loan accrued and paid during the year ₹ 24,000
(d) Income Tax provided during the year ₹ 1,98,000.
You are required to prepare the Cash Flow Statement of Amrapali Ltd. for the year ended 31.03.2021.
30
GOBIND KUMAR JHA
9874411552
ANALYSIS
10. From the following information of Mr. Talapatra, prepare a Trading A/c, Profit & Loss A/c for the
year ended on 31.12.20:
1
Gross Profit Ratio 33 %
3
Net profit 25% of Turnover
Stock Turnover Ratio 10 times
Current Liabilities/External Liabilities ¼
Fixed Assets/Closing Capital 5/4
Closing Capital/External Liabilities ½
Fixed Assets/Current Assets 5/7
Fixed Assets ₹ 40,00,000
Closing stock is ₹ 4,40,000 which is 10% more than the opening stock.
11. From the Balance Sheets of H. Ltd and S. Ltd as at 31.03.2021, and the Notes on accounts thereon,
following information are made available to you:
Particulars H. Ltd. (₹) S. Ltd. (₹)

Equity Share Capital (of ₹ 10 each fully 10,00,000 5,00,000
paid) 2,00,000 3,00,000
Balance in Statement of Profit & Loss 5,00,000 6,00,000
Trade Payables
24,00,000 19,00,000
Investment (30,000 equity shares in S. 4,00,000 -
Ltd.)
Inventories 3,00,000 4,00,000
Cash and Bank 2,00,000 1,00,000
24,00,000 19,00,000
(a) H. Ltd. acquired 30,000 equity shares of S. Ltd. on 01.04.2020 at a cost of ₹ 4,75,000. On September 15,
2020, S. Ltd. declared 25% dividend for the year 2019-20 and H. Ltd. credited the receipt of dividend to its
Investment Account.
(b) On 01.04.200 S. Ltd. had ₹ 2,00,000 in General Reserve and ₹ 3,25,000 in Profit and Loss(Cr.).
(c) Trade payables of S. Ltd. include ₹ 1,20,000 for purchase of goods from H. Ltd. on which H. Ltd. made a
profit of ₹ 30,000. Inventories of S. Ltd. include ₹ 40,000 of such goods.
You are required to prepare the Consolidated Balance Sheet of H Ltd. with subsidiary S. Ltd. as at
31.03.2021.
12. The summarized Balance Sheets of KPC Ltd. as at 31.03.2020 and 31.03.2021 were as follows:
Equity and Liabilities 31.03.2020 31.03.2021

(₹) (₹)
Equity Share Capital (₹ 10 each) 3,00,000 4,00,000
Balance in Statement of Profit & Loss 80,000 1,50,000
31
GOBIND KUMAR JHA
9874411552
FINANCIAL REPORTING
ANALYSIS
12% Term Loan 1,00,000 -
Total 8,00,000 9,80,000
Assets 31.03.2020 31.03.2021
(₹) (₹)
Investment 75,000 40,000
Inventories 1,46,000 2,16,000
Prepaid Expenses 15,000 32,000
Cash and Bank 19,000 40,000
Total 8,00,000 9,80,000
(a) Investment costing ₹ 35,000 were sold at a loss ₹7,000 (the loss is transferred to Profit & Loss Account).
(b) Interest received on investment during current year amounted to ₹ 10,000.
(c) Income Tax and dividend paid during the year were ₹ 85,000 and ₹ 10,000.
(d) 12% Term Loan was repaid in full at the beginning of the year 2020-21.
(e) Depreciation charged during the year on land and building and plant and machinery were ₹ 20,000 and ₹
25,000 respectively.
You are required to prepare the Fund Flow Statement of KPC Ltd. for the year ended 31.03.2021 showing
the changes in the working capital.
32
GOBIND
Gobind Kumar KUMAR JHA
Jha / 9874411552
9874411552
ANALYSIS
B.Com
2021
(Hons. && General)
1. Specify three purposes of conceptual framework for preparation and presentation of financial
statements of a company.
2. Explain ‘understandability’ and ‘comparability’ qualitative characteristics of Financial Statement.
3. From the following information, calculate fund from operation of Exe Ltd. –
Profit before tax (PBT) ₹ 2,40,000; Bad debt written off ₹ 12,000; Office expenses charged ₹ 37,000;
Depreciation charged ₹32,000, Provision for tax debited to Statement of Profit & Loss ₹ 44,000;
Dividend paid ₹ 20,000; Profit on sale of Asset credited ₹ 15,000 and Goodwill amortised ₹ 25,000.
4. From the following calculate ROCE and Return on Net Worth: Share Capital ₹ 30,00,000; General
Reserve ₹ 15,00,000; Balance of Statement of Profit & Loss ₹ 5,00,000; Long Term Loan ₹ 30,00,000
PBT ₹ 17,50,000. Ignore tax.
5. Name the ratio that would calculate in each of the following cases to indicate:
(a) The ability of the company to meet its current obligations.
(b) The rapidity with which accounts receivables are collected.
(c) The ability to meet interest (and other fixed charges) obligations.
(d) The profitability of equity funds invested in the firm.
(e) The dividend paid in relation to earnings per share.
6. From the following information relating to Simples Ltd. Calculate Basic EPS and Diluted EPS as
per Ind AS 33:
Net profit (after tax) for the current year - ₹ 3,00,00,000
No. of outstanding equity shares - 50,00,000 shares of ₹ 10 each
No. of 10% Fully Convertible Debentures - 50,000 debentures of ₹ 100 each
12% Cumulative Preference Shares - 50,000 shares of ₹ 100 each
Corporate tax rate - 30%
Each fully Convertible Debenture will be converted into 8 equity shares of ₹ each.
7. From the following information prepare a ‘Common Size Income Statement’ for the year ended 31st
March 2022:
Office, Selling and Distribution Expenses ₹ 1,20,000
Total Cost of Sales 75% of Net Sales
Net profit before tax ₹ 2,40,0 00
Other income ₹ 40,000
8. Find the sales of the base period and other missing data from the following figures of S Ltd.
Year 2017 2018 2019 2020 2021
Sales (₹ in ‘000) 1980 ? 2805 3140 3798
Trend (%) 110 130 ? ? ?
9. The statement of Assets and Liabilities of H Ltd. and its subsidiary S Ltd. as on 31.03.2022 stored as
follows:
Equity and Liabilities H Ltd. (₹) S Ltd. (₹)

Equity share Capital (₹10) 10,00,000 3,00,000
33
GOBIND KUMAR JHA
9874411552
ANALYSIS
Balance of Profit& Loss (Cr.) 5,00,000 2,00,000
Trade Payables (Creditors) 5,60,000 3,40,000
𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔 𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔
Assets
Investment in S Ltd. 3,00,000 -
Inventories 3,80,000 2,80,000
Trade Receivables (Debtors) 3,20,000 1,60,000
Cash and Cash Equivalents 60,000 20,000
𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔 𝟏𝟏𝟏𝟏𝟏𝟏𝟏𝟏, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔, 𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔𝟔

(a) H Ltd. acquired 24,000 shares of S Ltd. on 01.07.2021 at a cost of ₹ 3,00,000 and immediately after
acquisition H Ltd. received dividend on equity shares @ 20% for the year 2020-21. H Ltd. credited its share
of dividend to Profit & Loss A/c.
(b) On 02.04.2021, the balance of General Reserve was ₹ 1,40,000 and the balance of Profit & Loss was ₹
80,000.
(c) Debtors of H Ltd. includes ₹ 40,000 for goods sold to S Ltd at a cost plus 25%, half of the goods are still
in stock.
Prepare Consolidated Balance Sheet of H. Ltd with its subsidiary S Ltd. as on 31.03.2022.
10. Balance Sheet of Pixel Ltd. as at 31.03.2021 and 31.03.2022 were as follows:
Particulars 31.03.2021 31.03.2022

₹ ₹
1. Shareholders’ Fund
(a) Share capital (Equity Shares of ₹ 10 40,00,000 50,00,000
each)
(b) Reserves and Surplus (Balance in 15,00,000 21,00,000
Statement of Profit & Loss)
2. Non-Current Liabilities 15,00,000 10,00,000
Long term borrowing – Term Loan
3. Current Liabilities 8,00,000 5,00,000
(a) Trade payables 2,80,000 3,50,000
(b) Provision for Tax
80,80,000 89,50,000
II. Assets
1. Non-Current Assets
2. Current Assets
(a) Inventories 10,00,000 12,00,000
(b) Trade Receivables 23,00,000 19,00,000
(c) Cash and Cash Equivalent 2,80,000 6,50,000
80,80,000 89,50,000
(a) During the year the company paid income tax ₹ 3,20,000, Dividend ₹ 4,00,000 and repayment of term
loan of ₹ 5,00,000. The company also paid interest on term loan for the year 2021-22 ₹1,80,000.
(b) Depreciation charged on property, plant and equipment during the year is ₹ 5,00,000.
34
GOBIND KUMAR JHA
9874411552
ANALYSIS
Prepare a Cash Flow Statement as per AS-3 for the year ended 31.03.2022.
11. Prepare a Fund Flow Statement of Y Ltd. from the following statement of Assets and Liabilities
after taking into consideration the additional information.
Particulars 31.03.2021 31.03.2022

₹ ₹
Share Capital (₹ 10) 12,00,000 16,00,000
Capital Reserve - 40,000
Balance in Statement of Profit & Loss 8,40,000 10,60,000
Debentures 8,00,000 5,60,000
Sundry Creditors 4,80,000 5,36,000
Provision for Tax 4,80,000 4,84,000
38,00,000 42,80,000
II. Assets
Trade Investment 4,00,000 3,20,000
Current Assets including Inventories 11,20,000 13,20,000
38,00,000 42,80,000
(a) Sold one machine for ₹ 1,00,000 the cost of the machine was ₹ 2,56,000 and the depreciation provided
for it amounted to ₹ 1,40,000.
(b) Provided ₹ 3,80,000 on depreciation.
(c) Redeemed 30% debentures @₹103.
(d) Sold trade investment at profit and the profit was credited to capital reserve.
(e) Decided to value the stock at cost, whereas the previous practice was to value the stock at cost less 10%.
The cost according to books on 31.03.2021 was ₹ 2,16,000, stock on 31.03.2022 ₹ 3,00,000 was correctly
valued at cost.
12. From the following information, prepare a Statement of Proprietors’ Fund with as many details as
possible:
GP ratio = 25%
Current ratio = 1.5
1
Stock to Current Liabilities =
2
Stock turnover ratio (based on cost) = 73 days
Fixed assets to Net worth = 0.80
Debtors turnover = 4 times
Gross profit = ₹ 3,00,000
Reserve to Share Capital = 0.25
Non-trade investment = ₹ 70,000
There is no borrowing.
13. With the following ratios and further information given below, prepare a Trading Account, Profit
& Loss Account for the year ended 31.03.2022 and a Balance Sheet of Mr. Kapoor as on that date.
1
Gross profit ratio = 33 %
3
Net profit ratio = 25% of turnover
Stock turnover ratio = 10 times
1
Current Liabilities / External Liabilities =
4
5
Fixed Assets / Closing Capital = 4
35
GOBIND KUMAR JHA
9874411552
ANALYSIS
1
Closing Capital / External Liabilities =
2
5
Fixed Assets / Current Assets =
7
Fixed Assets = ₹ 40,00,000
Closing Stock = ₹ 4,40,000 which is 10% more than the Opening Stock.
36
1 Introduction to |FSA
GOBIND KUMAR JHA 9874411552
Chapter-1 [10 Marks]
Introduction to FSA [10 Marks]

1. Comparative Income Statement
From the following information given below prepare a comparative Income statement:
2004 2005
₹ ₹
Sales 4,00,000 5,00,000
Operating expenses 1,20,000 1,80,000
Particulars 2004 2005 Absolute Change %
Change
Sales 4,00,000 5,00,000 1,00,000 25%
Less: Cost of goods sold 2,40,000 3,50,000 1,10,000 45.83%
Gross Profit 1,60,000 1,50,000 (-) 10,000 (-) 6.25%
Less: Operating Expenses 1,20,000 1,80,000 60,000 50%
40,000 (-) 30,000 (-) 70,000 (-) 175%
Prepare a Comparative Income Statement from the following information:

Particulars 2009 (₹ ) 2010 (₹ )
Gross Sales 1, 20,200 1, 35,800
Sales Returns 5,200 3,800
Cost of Goods Sold 80,000 84,000
Operating Expenses 12,000 9,000
Income Tax 50% 50%
From the following information, prepare a comparative income statement:

2014-15 2013-14
₹ ₹
Revenue from operations 22,00,000 16,00,000
Cost of goods sold 15,00,000 10,00,000
Employee benefits expense 1,80,000 1,28,000
Finance costs 2,40,000 86,000
Depreciation 30,000 25,000
Other expenses 70,000 60,000
Income tax 60,000 50,000
37
GOBIND KUMAR JHA | 9874411552
4. Common Size Income Statement

Summarized income statements of two firms in the same industry are given below:
Small Co. Big Co.
₹ ₹
Revenue from operations 300000 9800000
Cost of goods sold 160000 42,00,000
Employee benefits expenses 25,000 800000
Finance costs 15,000 600000
Depreciation 10,000 18,00,000
Other expenses 12,000 12,00,000
Profit 78,000 12,00,000
Prepare common-size income statements for the two firms.
Solution
Small Co. Big Co.
% %
Revenue from operations 100.00 100.00
Cost of goods sold 53.33 42.86
Employee benefits expenses 8.33 8.16
Finance costs 5.00 6.12
Depreciation 3.34 18.37
Other expenses 4.00 12.25
Total expenses 74.00 87.76
Profit 26.00 12.24
5. Common Size Income Statement

Following data are available from M & Co for 2006 & 2007. You are required to prepare a Common – Size
Statement of Income:
2006 2007
Sales 10,00,000 12,50,000
Add: Commission Received 50,000 75,000
Add: Discount Received 1,00,000 1,25,000
11,50,000 14,50,000
Operating Expenses 2,00,000 3,00,000
Non-operating expenses 50,000 75,000
10,50,000 12,75,000
Profit 1,00,000 1,75,000
38
12
6. Comparative & Common size Balance Sheet

31.3.15 31.3.14
₹ ₹
Share capital 400000 300000
Reserve and surplus 150000 100000
Long-term borrowings 50,000 90,000
Trade payable 70,000 60,000
670000 550000
Fixed assets 240000 200000

Non-current investments 200000 180000
Inventories 90,000 70,000
Trade receivable 110000 60,000
Cash and cash equivalent 30,000 40,000
670000 550000
7. Comparative Balance Sheet
From the following figures of the Balance Sheet of X & Co., prepare a comparative Balance Sheet.
Particulars 1.1.2007 1.1.2008
₹ ₹
Equity Share Capital 4,00,000 5,00,000
Preference Share Capital 2,00,000 1,00,000
10 % Debenture 1,50,000 1,00,000
Reserve & Surplus 40,000 70,000
Long Term Loans 2,00,000 3,00,000
Investment 2,20,000 2,50,000
Fixed Assets 5,70,000 6,30,000
Current Assets 2,80,000 3,10,000
Current liabilities 80,000 1,20,000
8. Comparative Balance Sheet
From the following Balance Sheet of New India Ltd. prepare a Comparative Balance Sheet :
Liabilities 2004 2005 Assets 2004 2005
₹ ₹ ₹ ₹
Share Capital 30,000 60,000 Fixed Assets 80,000 1,02,000
Reserves 12,000 10,000 Debtors 10,000 20,000
Debentures 60,000 60,000 Bank 12,000 8,000
1,02,000 1,30,000 1,02,000 1,30,000
39
13
9.Trend Ratios
From the following figures the trend percentage taking 2009-10 as the base year:
Year Sales Cost of goods sold Gross Profit
₹ ₹ ₹
2009-10 5,00,000 4,00,000 1,00,000
2010-11 6,00,000 4,75,000 1,25,000
2011-12 7,20,000 5,80,000 1,40,000
2012-13 8,50,000 6,90,000 1,60,000
2013-14 9,00,000 7,15,000 1,85,000
2014-15 10,00,000 8,05,000 1,95,000
10.Trend Ratios
From the trend % supplied below, prepare a comparative statement of current asset in absolute value
taking2003 as the base year.
Trend % Correspondence value of C/Assets
2004 2005 2006 2006
120 130 150 3,600- Cash & Bank
130 140 200 6,800 – Debtors
160 220 250 4,000 – Finished Goods
175 250 300 4,500 – Work in Progress
110 150 175 1,750 – Raw Materials
11.Trend Ratio
Find the sales of the base period and other missing data from the following figures of A Ltd.
Year 2010 2011 2012 2013 2014
Sales (₹ ‘000) 1980 ? 2805 3140 3798
Trend (%) 110 130 ? ? ?
12.Comparative Income Statement
From the following information prepare a Comparative Income Statement.

Particulars 2014 2015
₹ ₹
Sales 3,75,000 5,25,000
Cost of goods sold 3,00,000 3,75,000
Administrative, Selling
and Distribution Expenses 22,500 30,000
Other Income 7,500 3,00,000
Income Tax 50% 50%
40
14

13.Common Size Income Statement
With the help of following information for the year ended 31.03.2017, prepare a Common size Income
Statement.
Particular Small Bros.
Office and Selling and Distribution Expenses Rs. 60,000
Other Income Rs. 20,000
Total Cost of Sales: 75% of Net Sales ----
Net Profit before Tax Rs. 1,20,000
14.Common Size Balance Sheet
From the following information, prepare a common-size Balance Sheet for the year 2012 and 2013.
Liabilities 2012 2013 Assets 2012 2013
₹ ₹ ₹ ₹
Equity Share Capital 2,00,000 2,00,000 Fixed Assets 3,00,000 4,00,000

10% Preference Investments 2,00,000 2,00,000
Share Capital 1,00,000 1,00,000 Current Assets 5,00,000 6,00,000
Reserve & Surplus 3,00,000 4,00,000
Secured Loan 2,00,000 2,00,000
Unsecured Loan 1,00,000 1,00,000
Current Liabilities 1,00,000 2,00,000
10,00,000 12,00,000 10,00,000 12,00,000
41
15
NOTE
42
2 Holding Company
Chapter-2 [15 Marks]
Holding Company [15 Marks]

1. Holding Company
From the balance sheet given below, prepare the consolidated balance sheet of X Ltd. and its
subsidiarycompany Y Ltd. The interest in minority shareholders in Y Ltd. is to be shown as separate
item in the consolidated balance sheet.
Balance sheet as on 31st March 2015
X Ltd Y Ltd
Equity and liability ₹ ₹
Shareholders fund :
Share capital 1,20,000 30,000
(authorized issued, subscribed and fully paid shares of ₹ 10 each)
General reserve (1.4.14) 25,000 6,000
Profit & Loss account 12,000 9,000
Current Liabilities:
1,72,000 50,000
Assets: ₹ ₹
Non-current Assets :
Fixed assets 1,10,000 35,000
Investments (2000 shares in Y Ltd) 25,000 -
Current assets :
Trade receivable 22,000 7,000
Bank balance 5,000 5,000
172000 50000
On 1.4.14 when X Ltd acquired its holding of 2000 shares in Y Ltd the later company had ₹ 6000 in its surplus
account.
2. Holding Company
Following are Balance Sheets of H. Ltd. And S Ltd. As on 31.12.2012.
H Ltd. S Ltd. H Ltd. S Ltd.
Share Capital 15, 00,000 5, 00,000 Sundry Assets 14, 00,000 7, 50,000
P/L A/c 2, 00,000 75,000 Investment 5, 60,000 -
Creditors 2, 60,000 1, 75,000 (4000 shares in S Ltd.)
19, 60,000 7, 50,000 19, 60,000 7, 50,000
H Ltd. Acquired shares of S Ltd. On 01.01.2012. Calculate ‘cost of control’.
43

3. Holding Company
Following are the balance sheet of X Ltd and Y Ltd as on 31.3.15:

X Ltd Y Ltd
Share-holders funds :
Share capital ( shares of ₹ 10 each, fully) 2,50,000 1,00,000
General reserve 75,000 30,000
Profit & loss account 80,000 50,000
450000 212000
Assets ₹ ₹
Fixed assets
Tangible 2,00,000 1,20,000
Intangible (goodwill) 20,000 10,000
Investments (6000 shares of Y Ltd) 70,000 -
Current assets :
Cash 20,000 2, 000
4,50,000 2,12,000
When shares of Y Ltd were acquired by X Ltd on 1.4.14, Y Ltd had ₹ 18,000 in general reserve and ₹
22,000 in Profit & Loss account. Included in the trade payable on Y Ltd is ₹ 10,000 for goods supplied by X
Ltd. Included in the inventories of Y Ltd are goods of value of ₹ 6000 which were supplied by X Ltd at
profit of 20% on cost.
Prepare the consolidated balance sheet as on 31.3.15.
4. Holding Company
The following are the balance sheet of H Ltd and S Ltd as at 31st March 2015:
H Ltd S Ltd
Share-holders funds :
Share capital ( shares of ₹ 10 each, fully) 50,000 40,000
General reserve 12,000 4,000
Other current liabilities (due to H Ltd)-------------------------------------------- 2,900
83,000 57,900
44
1

Assets ₹ ₹
Fixed assets 20,000 30,000
3000 Shares of S Ltd at cost 32,000 -
Other investments 8,900 12,000
Current assets :
Cash and bank 5,500 1,900
Other current assets (due from S Ltd) 3,600 -
83,000 57,900
The deficit on Profit & Loss accounts of S Ltd at the date of H Ltd bought its share was ₹ 2,000 and the
general reserve stood at nil. At 31st March 2015 there were goods in transit from H Ltd ₹ 600 and cash in
transit ₹ 100 from S Ltd to H Ltd. These had been entered only in the books of the sending companies.
Prepare a consolidated balance sheet of H Ltd and its subsidiary as at 31st March 2015.
5. Holding Company
Following is the balance sheet of X Ltd. And Y. Ltd. As on 31.12.2014:

X Ltd. Y Ltd. X Ltd. Y Ltd.
Share Capital of ₹ Goodwill 20,000 10,000

10 each 2,00,000 1,00,000 Fixed assets 1,50,000 1,20,000
General Reserve 80,000 40,000 Stock 50,000 40,000
P/L Account 50,000 30,000 Debtors 60,000 50,000
Sundry Creditors 60,000 50,000 Investment of 6,000
Bills Payable 10,000 20,000 shares of Y Ltd. 85,000 -
Cash 35,000 20,000
4,00,000 2,40,000 4,00,000 2,40,000
X Ltd. acquired the shares in Y Ltd. On 1st July 2014, Y Ltd. had ₹ 20,000 in General Reserve and ₹
30,000 in Profit and Loss A/C. Included in the creditors of Y Ltd. Is ₹ 15,000 for goods supplied by X Ltd.
Included in the stock of Y Ltd. are goods to the value of ₹ 8,000 which are supplied by X Ltd. at a profit of
25% on cost. Prepare a consolidated Balance Sheet as at 31.12.14.
45
18

6. Holding Company
The following are the Summarised Balance Sheets of H. Ltd and its subsidiary S. Ltd as at 30th November,
1987:
Liabilities H. Ltd S. Ltd. Assets H. Ltd. S. Ltd.
₹ ₹ ₹ ₹
Authorised & Issued Freehold Premises 2,20,000 89,000
Capital Plant & Machinery 1,15,000 32,000
Shares of ₹ Furniture 61,000 18,000
10 each fully paid 4,00,000 1,50,000 Stock in Trade 1,02,000 68,050
General Reserve 2,10,000 13,000 Sundry Debtors 97,000 82,200
Profit & Loss A/c 1,50,000 80,000 Investment in S. Ltd.
Sundry Creditors 40,000 59,450 10,000 Shares 1,80,000 —
Cash Balance 25,000 13,200
8,00,000 3,02,450 8,00,000 3,02,450
You are to prepare a Consolidated Balance Sheet as at 30.11.87. Showing in detail necessary
adjustments andtaking into consideration the following information:—
(a) H. Ltd acquired shares of S. Ltd on 1.12.86 when the balances on their Profit and loss Account
andGeneral Reserve were ₹ 66,000 and ₹ 9,000 respectively.
(b) Sundry Creditors of ₹ 40,000 in the books of H. Ltd on 30.11.87 included a sum of ₹ 24,000 payable
toS Ltd for credit purchase on which the latter company made a profit of ₹ 6,000 in 1986-87.
(c) S. Ltd declared and paid interim dividend of 8% per annum on 2.6. 87.
(d) Stock of ₹ 1,02,000 of H. Ltd on 30.11.87 included goods purchased from S Ltd at ₹ 18,000.
7. Holding Company
H Ltd S Ltd
1. Share-holders funds :
a) Equity shares of Rs. 10 fully paid 10,00,000 4,00,000
b) Reserves and Surplus:
General Reserves (1.4.14) 4,80,000 2,00,000
Profit and Loss Balance 1,14,400 1,64,000
2. Non-current Liabilities: ------ -----
Short term borrowings 2,00,000 -----
Bills Payable ------ 26,000
Sundry Creditors 1,39,600 40,000
Total 19,34,000 8,30,000
46
19

Assets H₹ S₹
(a) Fixed assets
Land and Buildings 3,60,000 3,80,000
(b) Non-current Investment
Investment in equity shares of S Ltd. 6,45,500 -----
Other non-current investment 74,500 -----
(c) Current Assets
Inventors 2,20,000 80,000
Sundry Debtors 96,000 84,000
Bills Receivables 27,600 -----
Cash and Cash equivalents 30,400 16,000
Total 19,34,000 8,30,000
The following informations are also available:

a) H Ltd. acquired 32,000 equity shares of Rs. 10 each in S Ltd.. on October 1, 2014 for Rs. 6,45,500.
b) The statement of Profit and Loss of S Ltd. showed a profit of Rs. 60,000 on 01.04.2014, out of
which adividend of 10% was paid on November 1,2014 for the year 2013-14.
c) The Plant and Machinery of S Ltd. which stood at Rs. 3,00,000 on 1.4.2014 was considered
worth Rs.3,60,000 on the date of acquisition by H Ltd.
d) Sundry debtors of S Ltd. include loan to H Ltd. Rs. 14,000. H Ltd. remitted a cheque of Rs. 14,000
to S.Ltd. in April 2015.
Prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on 31 st March 2015.
8. Holding Company
The following are the statements of assets and liabilities of Ambani Ltd. and Adani Ltd. as on 31.03.2017:
Particulars Note Ambani Ltd. Adani Ltd.
no.
(a) Share Capital 30,00,000 10,00,000
(b) Reserve and Surplus 1 35,00,000 7,60,000
Trade Payables 2 3,00,000 3,22,000
Total
II. Assets: 68,00,000 20,82,000
(a) Fixed Assets Tangible Assets 3 26,60,000 12,62,000
(b) Non-current Investments 4 18,60,000 70,000
2. Current Assets:
47
20

(a) Inventories (stock)
6,80,000 4,04,000
(b) Trade Receivables 5
12,00,000 3,16,000
(c) Cash and Cash Equivalents (Cash at Bank)
4,00,000 30,000
Total
68,00,000 20,82,000
Notes to Accounts:
Particulars Ambani Ltd. Adani Ltd.
1. Reserve and Surplus:
(a) Reserve 19,00,000 40,000
(b) Balance in the statement of profit and loss 16,00,000 7,20,000
35,00,000 7,60,000
2. Trade Payables: 36,000 ---

(a) Current A/c with Adani Ltd. 2,64,00 3,22,000
(b) Sundry Creditors 3,22,000
3,00,000
20,60,000 7,20,000
3. Fixed Assets – Tangibles Assets:
6,00,000 5,42,000
(a) Land and Buildings
26,60,000 12,62,000
(b) Machinery
4. Non-current Investments: 16,00,000 ---
(a) Investment in shares of Adani Ltd. 2,60,000 70,000
(b) Other Investments
18,60,000 70,000
5. Trade Receivables:
(a) Sundry Debtors 12,00,000 2,76,000

(b) Current A/c with Ambani Ltd. --- 40,000
12,00,000 3,16,000
Other Particulars:
a) Ambani Ltd. acquired 80% shares of Adani Ltd. on 1.7.16. On 1.4.16, the Reserve and Statement
ofProfit and Loss of Adani Ltd. were Rs. 20,000 and Rs. 4,00,000 respectively.
b) Land and Buildings standing in the books of Adani Ltd. at Rs. 8,00,000 on 1.4.2016 were
revalued atRs. 7,60,000 at the date of acquisition, but it was not passed in the books.
c) Adani Ltd. declared and paid 20% dividend for the year 2015-16 in July 2016 and Ambani
Ltd.credited the entire amount of dividend received from Adani Ltd. to its statement of Profit and
Loss.
d) Stock of Ambani Ltd. includes Rs. 60,000 goods purchased from Adani Ltd.
e) Sundry Creditors of Ambani Ltd. includes Rs. 1,20,000 purchased from Adani Ltd. on which Adani
Ltd.on which Adani Ltd. made a profit Rs. 30,000.
f) On 31.3.2017, Ambani Ltd. remitted a cheque Rs. 4,000 on current A/c to Adani Ltd.
From the above information prepare a Consolidated Balance Sheet of Ambani Ltd. and its subsidiary
AdaniLtd. as on 31.3.2017.
48
21

9. Holding Company
The Statement of assets and liabilities of H. Ltd and its subsidiary S. Ltd as at 31.03.2017 stood as follows:
H. Ltd (Rs.) S. Ltd (Rs.)

a) Equity Share Capital (Rs. 10 each fully 5,00,000 1,50,000
paid)
P & L Balance 2,50,000 1,00,000
2. Non-current Liabilities: --- ---
3. Current Liabilities
Trade Payable 2,80,000 1,70,000
Total 12,30,000 5,50,000
II. Assets:
a) Fixed Assets: 5,00,000 2,20,000
Tangible: Land and Building 2,00,000 1,00,000
Plant and Machinery
b) Non-current Investment 1,80,000 ---
Investment in Shares (including shares in S.
Ltd.)
2. Current Assets: 1,60,000 1,40,000
Inventory
1,60,000 80,000
Trade Receivables
30,000 10,000
Cash and Cash Equivalent
Total 12,30,000 5,50,000

 H Ltd. acquired 12,000 Equity Shares of S. Ltd on 01.07.16 at a cost of Rs. 1,50,000 and
immediately after acquisition, H. Ltd received dividend on equity shares @ 20% for the
year2015-16. H. Ltd credited its share of dividend to Profit & Loss A/c.
 On 01.04.2016, balance of General Reserve of S. Ltd. was Rs. 70,000 and the balance of
Profit& Loss was Rs. 40,000.
 Debtors of H. Ltd include Rs. 20,000 for goods sold to S Ltd at cost plus 25%; half the
goodsare still in stock. S Ltd remitted Rs. 5,000 to H. Ltd. which H. Ltd received on
11.04.2017.
You are required to prepare the Consolidated Balance Sheet of H. Ltd with its subsidiary S. Ltd. as at
31.03.2017.
49
22
NOTE
50
3 FundGOBIND
Flow Analysis
KUMAR JHA | 9874411552
Chapter-3 [15 + 5 = 20 Marks]
Fund Flow Analysis [15 + 5 = 20 Marks]

1. Fund Flow Statement
Calculate funds from operation from the information given below as on 31st Dec. 2005.
(a) Net profit for the year ended 31st December, 2005 Rs, 8,00,000.
(b) Gain on sale of machinery ₹ 30,000.
(c) Goodwill written off during the year ₹ 25,000.
(d) Old furniture having book value ₹ 10,000 has been sold at ₹ 8,000.
(e) Depreciation provided during the year ₹ 50,000.
(f) Advertisement suspense written off during the year ₹ 15,000.
(g) ₹ 2,00,000 was transferred to General Reserve.
(h) Dividend received during the year ₹ 10,000.
Compute fund from operations Extract from the Balance Sheets:

Particulars 31.3.04 31.3.05
Balance of Profit and Loss A/c 2,00,000 2,50,000
Additional Information :
Depreciation charged on assets 20,000
Preliminary expenses written off 10,000
Amount transferred to general reserve 50,000
A plant having a book value of ₹ 60,000 was sold for 70,000
Interim dividend paid during the year 20,000
Interest received 5,000

From the following particulars calculate Fund from Operations:
P&L A/c: as on 01.04.06 1,60,000
: as on 31.03.07 2,00,000
Transactions during the year :
Transfer to Revenue Reserve 40,000
Depreciation on fixed assets 16,000
Underwriting Commission Written off 8,000
Interest Received 4,000
Interim Dividend paid 16,000
Sale of old Machinery (Book value ₹ 48,000) 56,000
Salary Paid 40,000
Rent Paid 60,000
51

From the following information prepare the Fund Flow statement:

Liabilities 31.12.11 31.12.12 Assets 31.12.11 31.12.12
₹ ₹ ₹ ₹
Share capital 6,00,000 7,00,000 Fixed assets (net) 11,40,000 12,20,000

Profit & Loss A/C 4,60,000 5,70,000 Current assets 7,60,000 8,20,000
Debenture 4,00,000 2,80,000 Preliminary 40,000 20,000
Trade creditors 2,40,000 2,60,000 Expenses
Provision for tax 2,40,000 2,50,000
19,40,000 20,60,000 19,40,000 20,60,000
(i) Depreciation charged ₹ 2, 90,000 for the year.

(ii) Tax paid ₹ 2,30,000
(iii) During 2012 a machine was sold for ₹ 50,000 (cost ₹ 1,28,000 and accumulated depreciation. ₹ 70,000)

The summarized balance sheet of APMC Ltd. as on 31st March, 2014 and 2015 are given below:
31.3.14 31.3.15
Share-holders funds:
Share capital 4,50,000 4,50,000
General reserve 3,00,000 3,10,000
Non-current liabilities
Long term borrowings (mortgage loan) - 2,70,000
Trade payable 1,68,000 1,34,000
Short term provision (provision for taxation) 75,000 10,000
10,49,000 12,42,000
Assets ₹ ₹
Non-current Assets:
Fixed assets 4,00,000 3,20,000
Investments 50,000 60,000
Current assets:
Inventories 2,40,000 2,10,000
Trade receivable 2,10,000 4,55,000
Bank 1,49,000 1,97,000
10,49,000 12,42,000
a) Investments costing ₹ 8,000 were sold during the year 2014-15 for ₹ 8,500.
b) Provision for tax made during the year was ₹ 9,000.
c) During the year part of the fixed assets costing ₹ 10,000 was sold for ₹ 12,000 and the profit was included in
the profit and loss statement.
d) Dividend paid during the year amounted to ₹ 40,000.
You are required to prepare a statement of sources and applications of funds and statement of changes in
workingcapital.
52
24

6.Fund Flow Statement
From the following information prepare: (i) A statement of changes in working capital and (ii) Fund Flow
Statement.
Balance Sheet
Liabilities 31.03.11 31.03.12 Assets 31.03.11 31.03.12
(₹ ) (₹ ) (₹ ) (₹ )
Share Capital 10,00,000 11,00,000 Goodwill 50,000 40,000
Debentures 5,00,000 3,00,000 Land 4,20,000 6,60,000
General Reserve 2,00,000 2,00,000 Machinery 6,00,000 8,00,000
Profit & Loss A/c 1,10,000 1,90,000 Stock 2,50,000 2,10,000
Prov. For I. Tax 40,000 1,10,000 Debtors 3,00,000 2,40,000
Creditors 50,000 40,000 Preliminary Expenses 30,000 20,000
Bills Payable 20,000 30,000 Cash 3,00,000 24,000
Prov. for D. Debts 30,000 24,000
19,50,000 19,94,000 19,50,000 19,94,000
(a) During the year, a part of machine costing ₹ 7,500 (accumulated depreciation thereon being ₹ 2,500)
was sold for ₹ 3,000.
(b) Income Tax of 2010-11 paid during 2011-12 was ₹ 40,000.
(c) Depreciation on machinery provided for 2011-12 was ₹ 50,000.
7.Fund flow Statement

Calculate Fund from Operation before tax from the information given below:
Cash from operation before tax Rs. 92,000
Depreciation charged Rs. 17,000
Interest paid Rs. 10,000
Balances relating to current assets and liabilities are-
Opening Closing
Debtors Rs. 15,000 Rs. 13,000
Inventory Rs. 11,000 Rs. 14,000
Accrued Expenses Rs. 4,000 Rs. 3,000
Creditors Rs. 3,000 Rs. 7,000
Cash and Bank Rs. 12,000 Rs. 9,000
53
25

From the following balance sheets of PM Ltd. make out: i) a statement of changes in working capital; and ii) a
funds flow statement for the year 2014-15.
Balance Sheets
₹ (in lakhs) ₹ (in lakhs)
Equity and liability 31.3.14 31.3.15
Equity share shares of ₹ 100 each, fully paid 10.00 15.00
Preference share of ₹ 100 each, ₹ 50 paid 5.00 Nil
Security premium 0.25 Nil
Capital redemption reserve Nil 5.00
General reserve 10.00 7.00
Profit & Loss account 2.75 3.00
Trade payable 10.00 6.00
38.00 36.00
Assets ₹ ₹
Non-current Assets:
Fixed assets (plant and equipment) 15.00 18.00
Current assets:
Inventories 6.00 3.00
Trade receivable 15.00 10.00
Cash 2.00 5.00
38.00 36.00
(a) During the year 2014-15 the company paid ₹ 2,00,000 as equity dividend and ₹ 56,250 as preference
dividend.
(b) The company redeemed the preference shares at a premium of 5% after making a call of ₹ 50 per share
to make the shares fully paid.
(c) During the year 2014-15 one plant, whose book value was ₹ 1,00,000 was sold at a loss of ₹ 20,000
andthe company purchased a plant for ₹ 6,00,000.
54
26

Prepare a Fund Flow Statement of X Ltd from the following

31.12.2016 31.12.2017
Rs. Rs.
a) Share Capital 12,00,000 16,00,000
b) Reserve and Surplus
8,40,000 11,00,000
a) Long-term borrowings (Debentures)
a) Trade Payables (Sundry Creditors)
b) Short-term Provisions (Provision for tax) 4,80,000 5,36,000
4,80,000 4,84,000
Total
38,00,000 42,80,000
II. Assets:
22,80,000 26,40,000
a) Fixed Assets: Tangible Assets
b) Non-current Investment (Trade Investment) 4,00,000 3,20,000
2. Current Assets: (including inventory) 11,20,000 13,20,000
38,00,000 42,80,000
Notes to Accounts: 31.12.16 31.12.16
Rs. Rs.
a) Capital Reserve
b) General Reserve --- 40,000
c) Balance in Statement of Profit and Loss 6,80,000 8,00,000
1,60,000 2,60,000
8,40,000 11,00,000
32,00,000 38,00,000
2. Fixed Assets: Tangible Assets
a) At Cost 9,20,000 11,60,000
Less Depreciation 22,80,000 26,40,000
a) Sold one machine for Rs. 1,00,000; the cost of the machine was Rs. 2,56,000 and the
depreciationprovided for it amounted to Rs. 1,40,000.
b) Provide Rs. 3,80,000 on depreciation.
c) Redeemed 30% Debentures @ Rs. 103.
d) Some Trade Investments sold at profit and the profit was credited to Capital Reserve.
e) Decide to value the stock at cost, whereas previously the practice was to value stock at cost less
10%.The stock according to books on 31.12.16 was Rs. 2,16,000; the stock on 31.12.17 Rs.
3,00,000 was correctly valued at cost.
55

Following are the liabilities and assets of Flow Ltd. as on 31.3.2015 and 31.3.2016:
31-3-15 31-3-16
Rs. Rs.
I. Equity and liabilities :
a) Equity Share 10 each fully paid 3,00,000 5,00,000
9% Preference shares of Rs. 10 each fully paid 2,00,000
3,00,000
b) Reserves and surplus:
40,000 90,000
Securities Premium
--- 80,000
Revaluation Reserve (on Land)
1,20,000 1,80,000
General Reserves 2,30,000
Profit and Loss Account 3,90,000
2. Non-Current Liabilities: 2,00,000 ------

8% Debentures
Trade Payable: 70,000
Provision for tax 90,000
60,000 90,000
Total
12,40,000 17,00,000
II. Assets
1. Non-current Assets
a) Fixed Assets: Tangible (other than Land) 5,00,000 5,80,000
Land 3,50,000 4,80,000
Other fixed Assets 70,000 1,10,000
2. Current Assets: 90,000 70,000
Inventories 1,40,000 3,30,000
Cash and Cash Equivalents 90,000 1,30,000
Total
12,40,000 17,00,000
a) Interim Dividend on equity shares Rs. 50,000 and Preference dividend Rs. 18,000 were paid
during the year. Dividend distribution tax paid during the year Rs. 10,000.
b) Debentures were redeemed at 10% premium, premium on redemption charged to
Profit &Loss for the year. Debenture interests Rs. 12,000 were also paid during the year.
c) The company sold one fixed assets for Rs. 24,000 (W.D.V. Rs. 35,000). Fixed assets of Rs.
2,00,000 were acquired by issue of 8,000 equity shares at 25% premium and balance by
issue of preference shares at par. Other equity shares were issued for cash during the year
at a premium.
d) Interest on investment received Rs. 8,000. Investments having book value Rs. 20,000 were
taken over by a creditor against Rs. 20,000 due to him.
e) Income tax paid during the year Rs. 68,000.
You are required to prepare the Fund Flow Statement of Flow Ltd. for the year ended 31.3.2016.
56
28
GOBIND KUMAR JHA| 9874411552

From the following statement of assets and liabilities of X. Ltd as at 31st December, 2015 and 31st
December,2016 respectively, prepare:
a) A Statement of changes in Working Capital during the Calendar year 2016, and
b) A statement showing sources and application of funds during the same period.
Liabilities 2015 (Rs.) 2016 (Rs.) Assets 2015 (Rs.) 2016 (Rs.)
Equity share capital 30,00,000 40,00,000 Land 4,60,000 4,60,000
Securities Premium -- 1,00,000 Building (at cost less 12,80,000 12,20,000
General Reserve 12,00,000 14,00,000 depn.)
Profit & Loss A/c 7,20,600 9,81,280 Plant & Machinery (at 36,70,000 44,40,800
Secured Loan 17,20,000 17,20,000 cost less depn.)
Proposal Dividend 2,00,000 3,00,000 Investments 1,00,000 1,51,200
Sundry Creditors 23,59,400 24,78,720 Stock 16,80,860 18,32,680
Book Debts 19,70,740 27,37,300
Cash & Bank Balances 38,400 1,38,020
92,00,000 1,09,80,000 92,00,000 1,09,80,000
(a) During 2016 Depreciation provided on assets were: Building Rs. 60,000 and Plant & Machinery
Rs. 4,81,000
(b) Final dividend of Rs. 2,00,000 for the year 2015 was paid during 2016.
57
29

From the following information, prepare a Fund Flow Statement for the year ended on 31.03.2013.
Particulars 31.03.2012 31.03.2013

₹ ₹
I. EQUITY AND LIABILITIES:
a) Share Capital (Equity share Capital) 6,00,000 7,50,000
[Statement of Profit and Loss (Credit) 60,000 1,98,000
2. Non – Current Liabilities:
1,20,000 1,80,000
a) Long – term Borrowings (10% Debenture)
3. Current Liabilities: 48,000 1,20,000
a) Trade Payables (Creditors)
b) Short term Provisions: 12,000 30,000
i. Provision for Taxation 24,000 36,000
ii. Proposed Dividend
Total 8,64,000 13,14,000
II. ASSETS:
1. Non – current Assets:
a) Fixed Assets 3,00,000 3,60,000
b) Non – Current Investments 2,40,000 4,20,000
(Investments)
2. Current Assets:
1,80,000 3,00,000
a) Inventories (Stock)
60,000 1,20,000
b) Trade Receivables (Debtors)
84,000 1,14,000
c) Cash and Cash Equivalents
Total 8,64,000 13,14,000
Other information:
i. Depreciation charged on fixed assets amounted to ₹ 25,000 during the year 2012 – 13.
ii. Income tax paid during the year 2012 – 13was ₹ 15,000
iii. Dividend for the year 2011 – 12 was paid during 2013 – 13 amounted to ₹ 24,000.
58
30
4 CashGOBIND
Flow Analysis
KUMAR JHA| 9874411552
Chapter-4
[15 + 5 = 20 Marks]
Cash Flow Analysis [15 + 5 = 20 Marks]

1. Cash flow Statement
From the following information given below, calculate ‘Cash Flows from Operating Activities’:
(a) Operating profit before changes in Operating assets 57,500
(b) Debtors (Decrease) 5,000
(c) Stock (Increase) 2,000
(d) Bills Payable (Decrease) 4,500
(e) Creditors (Increase) 3,200
(f) Cash at bank (increase) 20,000
2.Cash flow Statement
From the following Summary Cash Account of- X Ltd. prepare a Cash Flow Statement for the year
ended31.3.2001 in accordance with AS-3 using direct Method. The Company does not have any cash
equivalents.
₹ ₹
To Balance b/d on 1/4/2000 50,000 By Payment to Creditors 20,00,000
,, Issue of Equity Shares 3,00,000 ,, Purchase of Fixed Assets 2,00,000
,, Collection from Debtors 28,00,000 ,, Overhead Expenses 2,00,000
,, Sale of Fixed Assets 1,00,000 ,, Wages & Salaries 1,00,000
,, Taxation Paid 2,50,000
,, Dividend Paid 50,000
,, Repayment of Bank Loan 3,00,000
,, Balance c/d 1,50,000
32,50,000 32,50,000
3. Cash flow Statement
From following particulars, Ascertain Cash from Operation for the year 2013-14.
a) Total sales ₹ 4,23,000
b) Cost of goods sold ₹ 2,12,000
c) Expenses for the year ₹ 35,000
d) Position of current assets and liabilities:
31-03-2013 31-03-2014
Debtors 1,24,000 89,000
Inventory 1,03,000 1,19,000
Prepaid Expenses 21,000 15,000
94,000 Creditors 1,65,000
59

The following are the summarized balance sheets of CCD Ltd. as on 31st March 2014 and 2015:
31.3.14 31.3.15
Share capital 4,60,000 4,60,000
Profit & Loss 32,000 46,000
Non-current Liabilities:
Long-term borrowings (8% debentures) 1,80,000 1,40,000
Trade payable 2,06,000 1,92,000
Other current liabilities (outstanding expenses 26,000 24,000
10,24,000 9,82,000
Assets ₹ ₹
Non-current Assets:
Land and building 3,00,000 3,00,000
Machinery 1,04,000 1,40,000
Provision for depreciation (80,000) (88,000)
Investments 2,20,000 1,48,000
Current assets:
Inventories 1,64,000 2,12,000
Trade receivable 1,34,000 86,000
Cash and cash equivalents 1,80,000 1,80,000
Other current assets (prepaid expenses) 2,000 4,000
10,24,000 9,82,000
a) 10% dividend was paid during 2014– 15.
b) Machinery for ₹ 60,000 was purchased and old machinery costing ₹ 24,000
(accumulateddepreciation ₹ 12,000) was sold for ₹ 8,000.
c) 40,000 8% debentures were redeemed by purchase from open market at ₹ 96 for a debenture of ₹
100.
d) Investments worth ₹ 72,000 were sold at book value.
e) Bad debts written off during the year ₹ 10,000.
Prepare a statement of cash flow as per AS – 3 for the year ended 31st March, 2015.
60
32

The following are the summarized Balance Sheets of XY Ltd. as on 31.3.2016 and 31.3.2017:
Note 31-3-16 31-3-17
I. Equity and liabilities :
a) Share Capital 9,20,000 9,20,000
b) Reserve and Surplus 1 3,04,000 3,32,000
2. Non-Current Liabilities:
Long-term Borrowings
8% Debentures 3,60,000 2,80,000
Trade Payable (Creditors) 4,12,000 3,84,000
Other current liabilities (Outstanding Expenses) 52,000 48,000
20,48,000 19,64,000
II. Assets
1. Non-current Assets 6,48,000 7,04,000
a) Fixed Assets: Tangible Assets 4,40,000 2,96,000
b) Non-current investments (Investments)
2. Current Assets:
a) Inventories (Stock) 3,28,000 4,24,000
b) Trade Receivables (Debtors) 2,68,000 1,72,000
c) Cash and Cash Equivalents (Cash at Bank) 3,60,000 3,60,000
d) Other current assets (Prepaid expenses) 4,000 8,000
Total 20,48,000 19,64,000
Notes to Accounts:
31.3.16 31.3.17
1. Reserves and Surplus
a) Reserves 2,40,000 2,40,000
b) Balance in the statement of Profit and Loss 64,000 92,000
3,04,000 3,32,000
2. Fixed Assets - Tangible Assets:
a) Land and Building 6,00,000 6,00,000
b) Machinery 2,08,000 2,80,000
Less: Depreciation (Accumulated) 1,60,000 1,76,000
48,000 1,04,000
Total (a + b) 6,48,000 7,04,000
a) 10% dividend was paid during 2016-17.
b) Machinery for Rs. 1,20,000 was purchased and old machinery costing Rs. 48,000
(accumulateddepreciation Rs. 24,000) was sold for Rs. 16,000.
c) Rs. 80,000, 8% Debentures were redeemed by purchase from open market at Rs. 96 for a debenture
of Rs. 100, at the beginning of the year.
d) Investments worth Rs. 1,44,000 were sold at the book value.
e) Bad debts written off during the year Rs.
20,000.Prepare Cash Flow Statement as Per AS -3.
61
33

From the following Summary Cash A/c of Torsha Ltd. prepare Cash Flow Statement for the year ended 31.3.18
in accordance with AS 3(Revised) using the direct method. The company does not have any cash equivalents.
Rs. ‘000 Rs. ‘000
Balance (1.4.17) 50 Payment to Suppliers 2,000

Issue of equity shares 200 Purchase of computers 200
Issue of Preference Share 100 Overhead expenses 200
Receipt from customers 2,800 Wages and Salaries 100
Sale of furniture 100 Taxation 250
Dividend 50
Repayment of Bank Loan 300
Balance (31.3.18) 150
3,250 3,250
Calculate Cash from Operation before tax from the information given below:
Cash from operation before tax Rs. 92,000
Depreciation charged Rs. 17,000
Interest paid Rs. 10,000
Balances relating to current assets and liabilities are-
Opening Closing
Debtors Rs. 15,000 Rs. 13,000
Inventory Rs. 11,000 Rs. 14,000
Accrued Expenses Rs. 4,000 Rs. 3,000
Creditors Rs. 3,000 Rs. 7,000
Cash and Bank Rs. 12,000 Rs. 9,000
62
34
5
Accounting Ratios
Chapter-5
[15 + 5 = 20 Marks]
Accounting Ratios [15 + 5 = 20 Marks]
1. Liquidity ratio �
�
�
a. Current ratio= 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
�
𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑞𝑞𝑞𝑞𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑑𝑑𝑑𝑑�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
b. Liquid ratio/Quick ratio/Acid test ratio= 𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑞𝑞𝑞𝑞𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑑𝑑𝑑𝑑�𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
= 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎−𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠−𝑝𝑝𝑝𝑝𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑝𝑝𝑝𝑝𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎�𝑐𝑐𝑐𝑐𝑒𝑒𝑒𝑒𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝�
𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎−𝑏𝑏𝑏𝑏𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�𝑠𝑠𝑠𝑠𝑣𝑣𝑣𝑣𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐 −𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎ℎ�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐��
Or
𝑑𝑑𝑑𝑑𝑐𝑐𝑐𝑐𝑏𝑏𝑏𝑏𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑣𝑣𝑣𝑣𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐 �𝑏𝑏𝑏𝑏𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎ℎ�𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑�𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑚𝑚𝑚𝑚𝑐𝑐𝑐𝑐�
=
𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎�𝑝𝑝𝑝𝑝𝑎𝑎𝑎𝑎𝑦𝑦𝑦𝑦𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐�𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑐𝑐𝑐𝑐𝑒𝑒𝑒𝑒𝑝𝑝𝑝𝑝𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�
�
Note: if no information is given prepaid expenses, bank overdraft, cash credit will be assumed to be nil.
2. Turnover ratio
𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐�𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑎𝑎𝑎𝑎�𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑑𝑑𝑑𝑑��𝐶𝐶𝐶𝐶�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂�𝐺𝐺𝐺𝐺�𝑆𝑆𝑆𝑆��
a. Stock turnover ratio=
𝑎𝑎𝑎𝑎𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�
�
C.O.G.S=sales-G.P
Or
Opening stock +purchases+ direct expenses – closing stock Average
𝑠𝑠𝑠𝑠𝑝𝑝𝑝𝑝𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�

Average stock= ��
(if Opending stock is not given:- opening stock=average stock=closing stock)
�
Average holding period (stock velocity): �
��
In month= 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠��𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙� , in Days = 𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑠𝑠𝑠𝑠�
�
b. Debtors turnover ratio= 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
��
𝑎𝑎𝑎𝑎𝑣𝑣𝑣𝑣𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐�𝑑𝑑𝑑𝑑𝑐𝑐𝑐𝑐𝑏𝑏𝑏𝑏𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎��𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑎𝑎𝑎𝑎𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑣𝑣𝑣𝑣𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐�
�
𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑐𝑐𝑐𝑐�𝑝𝑝𝑝𝑝𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐ℎ𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐�
c. Creditors turnover ratio=
𝑎𝑎𝑎𝑎𝑣𝑣𝑣𝑣𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐�𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎��𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠� 𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑎𝑎𝑎𝑎�𝑝𝑝𝑝𝑝𝑎𝑎𝑎𝑎𝑦𝑦𝑦𝑦𝑎𝑎𝑎𝑎𝑏𝑏𝑏𝑏𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐 ��
�
�
𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑅𝑅𝑅𝑅�𝐶𝐶𝐶𝐶𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝐺𝐺𝐺𝐺𝑆𝑆𝑆𝑆�
d. Capital turnover ratio=
𝑎𝑎𝑎𝑎𝑣𝑣𝑣𝑣𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑐𝑐𝑐𝑐�𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎𝑙𝑙𝑙𝑙� 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑝𝑝𝑝𝑝𝑙𝑙𝑙𝑙𝑠𝑠𝑠𝑠𝑦𝑦𝑦𝑦𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐�
�
𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑅𝑅𝑅𝑅�
e. Fixed assets turnover ratio= 𝐶𝐶𝐶𝐶�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂�𝐺𝐺𝐺𝐺��
𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑒𝑒𝑒𝑒𝑐𝑐𝑐𝑐𝑑𝑑𝑑𝑑�𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑎𝑎𝑎𝑎�
63
�
35
� �
� �
� �
𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑅𝑅𝑅𝑅�𝐶𝐶𝐶𝐶�𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂 �𝐺𝐺𝐺𝐺�𝑆𝑆𝑆𝑆�
f. Assets turnover ratio= 𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�
�
Where total assets = fixed assets + investment + current assets, loans & advances
3. Capital structure ratio:

𝑑𝑑𝑑𝑑𝑒𝑒𝑒𝑒𝑑𝑑𝑑𝑑𝑡𝑡𝑡𝑡�
a. Debt equity ratio= 𝑒𝑒𝑒𝑒𝑞𝑞𝑞𝑞𝑢𝑢𝑢𝑢𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑡𝑡𝑦𝑦𝑦𝑦�
Debt= long term loan + debenture
Equity shareholder’s fund/ net worth/ proprietors' fund=equity share capital + preference share
capital + reserve & surplus-profit & loss (Dr. Bal.)- fictitious assets (Preliminary Expenses etc)
[Fictitious assets = discount on issue of share/ debenture, preliminary expenses share issue
expenses, underwriting commission, deferred expenses]
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑥𝑥𝑥𝑥𝑒𝑒𝑒𝑒𝑑𝑑𝑑𝑑�𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑛𝑛𝑛𝑛𝑡𝑡𝑡𝑡𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠𝑡𝑡𝑡𝑡�𝑑𝑑𝑑𝑑𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑛𝑛𝑛𝑛𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡�𝑠𝑠𝑠𝑠𝑒𝑒𝑒𝑒𝑐𝑐𝑐𝑐𝑢𝑢𝑢𝑢𝑟𝑟𝑟𝑟𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠�
b. Capital gearing ratio=
𝑒𝑒𝑒𝑒𝑞𝑞𝑞𝑞𝑢𝑢𝑢𝑢𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑡𝑡𝑦𝑦𝑦𝑦�𝑠𝑠𝑠𝑠ℎ𝑠𝑠𝑠𝑠𝑟𝑟𝑟𝑟𝑒𝑒𝑒𝑒ℎ𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑑𝑑𝑑𝑑𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑠𝑠𝑠𝑠�𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑢𝑢𝑢𝑢𝑛𝑛𝑛𝑛𝑑𝑑𝑑𝑑�
Fixed interest bearing securities=long term loan + debenture + preference share capital
Equity shareholder’s fund=shareholders fund - preference share capital
𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑒𝑒𝑒𝑒𝑡𝑡𝑡𝑡𝑠𝑠𝑠𝑠𝑟𝑟𝑟𝑟𝑦𝑦𝑦𝑦�𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑢𝑢𝑢𝑢𝑛𝑛𝑛𝑛𝑑𝑑𝑑𝑑�
c. Proprietary ratio=
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�
Total assets= fixed assets + investment + current assets , loans & advances
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡�𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠�
d. Fixed assets proprietary ratio = 𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑒𝑒𝑒𝑒𝑡𝑡𝑡𝑡𝑠𝑠𝑠𝑠𝑟𝑟𝑟𝑟𝑦𝑦𝑦𝑦 𝘍𝘍𝘍𝘍𝑠𝑠𝑠𝑠�𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑢𝑢𝑢𝑢𝑛𝑛𝑛𝑛𝑑𝑑𝑑𝑑�
4. Profitability ratio
𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡�
𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙� (20% on cost=20/120 on sales)
a. Gross profit ratio=
𝑛𝑛𝑛𝑛𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒�𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑠𝑠𝑠𝑠�
𝑛𝑛𝑛𝑛𝑒𝑒𝑒𝑒𝑡𝑡𝑡𝑡�𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑡𝑡�𝑠𝑠𝑠𝑠𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟�𝑡𝑡𝑡𝑡𝑠𝑠𝑠𝑠𝑥𝑥𝑥𝑥�
b. Net profit ratio=
�
𝑡𝑡𝑡𝑡𝑝𝑝𝑝𝑝𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑠𝑠𝑠𝑠𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑛𝑛𝑛𝑛𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡� 𝑝𝑝𝑝𝑝𝑟𝑟𝑟𝑟𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑡𝑡�
c. Operating profit ratio=
[Operating Profit = GP + Operating Income - Operating Expenses
5. Other ratio
𝑡𝑡𝑡𝑡𝑝𝑝𝑝𝑝𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑠𝑠𝑠𝑠𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑛𝑛𝑛𝑛𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡�𝑒𝑒𝑒𝑒𝑥𝑥𝑥𝑥𝑝𝑝𝑝𝑝𝑒𝑒𝑒𝑒𝑛𝑛𝑛𝑛𝑠𝑠𝑠𝑠𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠�
a. Operating expenses ratio=
�
Operating expenses=office & administration expenses + selling & distribution expenses.
𝑡𝑡𝑡𝑡𝑝𝑝𝑝𝑝𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑠𝑠𝑠𝑠𝑡𝑡𝑡𝑡𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑛𝑛𝑛𝑛𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡� 𝑐𝑐𝑐𝑐𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡�
b. Operating ratio=
Operating cost=C.O.G.S + operating expenses
64
�
3

1. Ratio Analysis
From the following summarized balance sheet, calculate: i) current ratio, ii) Liquid ratio, iii) debt-equity ratio,
and iv)capital gearing ratio:
Balance sheet as on…
Equity and
liabilities
Equity share capital 2,00,000
6% preference share capital 1,00,000
8% debentures 1,00,000
Reserve and surplus 1,00,000
Long-term loan 50,000
Trade payable 1,00,000
Bank overdraft 50,000
7,00,000
Assets
Plant and machinery 2,00,000
Land and building 2,00,000
Inventories 1,50,000
Trade receivables 50,000
Cash and cash equivalents 1,00,000
7,00,000
2. Ratio
Following is the balance sheet of M/s Weldone. Ltd. as on 30th June, 2012:
Liabilities ₹ Assets ₹
Equity share capital 3, 00,000 Land 50,000

Preference share capital 4, 00,000 Building 3, 00,000
Reserves 50,000 Plant and machinery 3, 00,000
Profit and loss account 50,000 Furniture 40,000
12% debentures 2, 00,000 Debtors 2, 00,000
Trade creditors 60,000 Stock 1, 50,000
Outstanding expenses 15,000 Cash 40,000
Provision for taxation 20,000 Prepaid expenses 10,000
Proposed dividend 30,000 Preliminary expenses 35,000
11, 25,000 11, 25,000
You are required to calculate: (a) Current Ratio, (b) Liquid Ratio, (c) Debt-Equity Ratio, and (d) Capital
Gearing Ratio.
65
37

3. Ratio Analysis
Treveni Ltd. has the following earning last year:

₹
Profit before Tax 26,50,000
Tax Rate 40 %
Proposed Equity Dividend 25 %
Capital employed
10% Preference share Capital 15,00,000
80,000 Equity Share of ₹ 50/- each 40,00,000
Current market Price per Equity ₹ 125/-
Calculate (i) Earning per share (ii) Price earning ratio (iii) Dividend Payout ratio;
4. Ratio Analysis
(a) From the following information, compute gross profit ratio:

Opening Stock ₹ 50,000
Closing Stock 1.2 times of opening stock
Stock turnover 4 times
Sales ₹ 2, 50,000
(b) From the following information, compute current assets and current liabilities:
Current Ratio 3: 1
Quick Ratio 1: 1
Closing Stock ₹ 60,000
Bank Overdraft Nil
5.Ratio Analysis
From the following information prepare a summarised Balance Sheet in the books of X Ltd. as at 31st
December, 1998
Liquid Ratio 1.5
Current Ratio 2.5
Asset (Fixed) Proprietorship Fund Ratio 0.75
Working Capital ₹ 1,20,000
Reserve & Surplus ₹ 60,000
Bank Overdraft ₹ 20,000
66
38

6.Ratio Analysis
From the following information, prepare a Statement of Proprietors’ Fund showing as many details as
possible –
 G.P. ratio = 25% ;
 Current ratio = 1.6 ;
 Liquid ratio = 1.35 ;
 Stock turnover (based on Cost of goods sold) ratio = 9 times ;
 Debtors turnover = 146 days ;
 Bank overdraft = nil ;
 Fixed assets to Net Worth = 0.90 ;
 GP = ₹ 3,75,000 ;
 Long term Loan to Current Liability = 0.40 ;
 Reserve to Share Capital = 0.25 ;
7. Ratio Analysis
The following are abridged accounting reports prepared by Y Ltd.:
Particulars Rs. (‘000)
I. Income: 600
Revenue from operations (sales) 600
II. Expenses:
i. Cost of Goods sold 450
ii. Other Expenses (Operating Expenses) 114
564
Less: Provision for taxation 16
Profit after tax 20
Statement of Assets and Liabilities
Particulars (Rs. ‘000)
a) Share capital 160
b) Reserve and Surplus 90
2. Non-current liabilities
Loan on mortgage 50
3. Current liabilities:
a) Trade Payables (Accounts payables) 174
b) Other current liabilities (Accrued Expenses) 10
c) Short-term provision (Provision for taxes) 16
500
67
39
Financial Reporting and Financial Statement AnalysisGOBIND KUMAR JHA| 9874411552
II. Assets:
2. Fixed Assets 160
3. Current Assets:
a) Inventories 160
b) Trade Receivables (accounts Receivables) 120
c) Cash and Cash Equivalent (cash) 60
500
Name and calculate the ratios which indicate:
a) The rapidity with which accounts receivable are collected.
b) The ability of the company to meet its current obligation.

c) What probability on capital invested has been attained.
The efficiency with which funds represented by inventories are being utilised and managed.
a) The ability of the company to meet quickly demands for payment of amounts due.
b) The relative importance of proprietorship and liabilities as sources of funds.
8.Ratio Analysis
With the following ratios and further information given below, prepare a Trading Account, Profit & Loss
Account for the year ended on 31.12.17 and a Balance Sheet of Mrs. Banerjee as on that date.
a) Gross Profit Ratio = 331%
3
b) Net Profit = 25% of Turnover
c) Stock Turnover ratio = 10 times
d) Current liabilities /External liabilities =1
4
e) Fixed Assets/Closing capital = 5
4
f) Closing capital/External liabilities =1
2
g) Fixed Assets/Current Assets =5
7
h) Fixed Assets = Rs. 20,00,000
i) Closing stock = Rs. 2,20,000 which is 10% more than the opening stock.
68

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Calcutta University

B.Com (3rd Year)

Question & Answers

Ratio Analysis Important Questions: - 8 - 36

B. Com (Hons. & General) 2017 12 - 17

B. Com (Hons. & General) 2018 18 - 21

B. Com (Hons. & General) 2019 22 - 25

B. Com (Hons. & General) 2020 26 - 28

B. Com (Hons. & General) 2021 29 - 32

B. Com (Hons. & General) 2021 33 - 36

Chapter No. Chapter Name Page No.

1 Introduction to FSA [10 Marks] 37 - 42

2 Holding Company [15 Marks] 43 - 50

3 Fund Flow Analysis [15 + 5 = 20 Marks] 51 - 58

4 Cash Flow Analysis [15 + 5 = 20 Marks] 59 - 62

5 Accounting Ratios [15 + 5 = 20 Marks] 63 - 68

GOBIND KUMAR JHA

1. What is Conceptual Framework?

2. What are the purposes of Conceptual Framework?

3. What are the scope of Conceptual Framework?

The Framework deals with:

The objective of financial statements

5. What are the Fundamental Accounting Assumptions?

Fundamental Accounting Assumptions

6. What are the objectives of Indian accounting standard 1?

7. What are the scope of Indian accounting standard 1?

8. What are the key principles of Indian AS 1?

IAS 1 also elaborates on the following features of the financial statements:

9. What are the Objective of Indian AS 16?

10. What are the Scope of Indian AS 16?

11. Define the following terms as per Indian AS 16.

12. What is the objective of Indian AS 33 - Earning per share?

13. What is the Scope of Indian AS 33- Earning per share?

14. Definitions under Indian AS-33.

15. Write Short Notes on: Basic earnings per share.

16. Write Short Notes on: Diluted earnings per share.

7. The following are abridged accounting reports prepared by Y Ltd.:

Statement of Profit and Loss for the year ended on 31.3.2018

Statement of Assets and Liabilities:

a) The rapidity with which accounts receivable are collected.

10. Gross Profit is 25% of cost of goods sold.

Opening stock ₹ 40,000

Trend Percentage Corresponding Value of Current Assets

2014 2015 2016 2016

130 140 200 13600- Raw Materials

160 220 250 8000- WIP

175 250 300 9000- Cash at Bank

110 150 175 3500- Finished Goods

2. State the need for Financial Statement Analysis.

Less: Cost of goods sold ₹ 30,000

Less: Cash operation expenses ₹ 14,000

Less: Depreciation ₹ 10,000

Profit before tax ₹ 26,000

Balance relating to current items are –

Debtors ₹ 12,000 ₹ 10,000

Inventory ₹ 11,000 ₹ 14,000

Creditors ₹ 9,000 ₹ 7,000

(b) Write a note on GAAP.

Particulars Note Ambani Adani