LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
UG DEGREE EXAMINATION
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FOURTH SEMESTER – APRIL 2006
CO 4201/3101 – FINANCIAL A/C AND FINANCIAL STATEMENT ANALSYIS
Date & Time : 22-04-06/1.00 – 4.00 p.m. Dept. No. Max. : 100 Marks
SECTION – A
Answer all questions. (10 x 2 = 20 marks)
- What is the basic Accounting Equation?
- Name the parties interested in Accounting information.
- Fill in the blanks by choosing the right world
- Long term loan from bank _______ liability (Fixed/current)
- Plant and machinery in _______ Asset (Fixed/current)
- How is Accounting related to Statistics?
- State the rules for Debiting and Crediting.
- Distinguish between Reserves and Provisions.
- Calculate the stock at the end.
Opening stock Rs.10,000, Sales Rs.50,000, Purchases Rs.35,000, Profit on cost 1/3
- Calculate price earning ratio:
Net profit after Tax and preference dividend Rs.2,50,000; No. of Equity shares 40,000;
market price per share Rs.50.
- What is cash flow statement?
- What is error of principle?
SECTION – B
Answer any FIVE questions. (5 x 8 = 40 marks)
- What is double entry system? Explain the concepts of double entry system.
- Distinguish between single entry and double entry.
- Enumerate the advantages of Cash Flow Analysis.
- Mr. Ram keeps his books by Single entry. He gives the following information from
which he requires you to ascertain his profit or loss during the year ended 31.12.97.- 12.97
(Rs.) (Rs.)
Bank balance 740 (Cr) 400 (Dr.)
Cash in hand —- 10
Debtors 5100 8800
Sundry creditors 1300 1950
Stock 1700 1900
Plant 2140 2140
Mr. Ram had withdrawn Rs.250 per month and introduced fresh capital of Rs.600 on
1st July, 97. A provision of 5% on debtors is necessary. Write off depreciation on plant
at 5%. Interest on capital is to be allowed at 5% p.a.
- A Ltd. purchased on 1.1.93 a second hand plant for Rs.12000, and spend immediately
Rs.8000 on its overhauling. On 1.7.93, additional plant costing Rs.10000 is purchased.
On 1.7.95 the plant purchased on 1.1.93 having become obsolete is sold for Rs.4000 and
on the same date fresh plant is purchased at a cost of Rs.24000. Depreciation is provided
at 10% per annum on original cost on 31st December every year. Show plant A/C as it
would appear at the end of each year from 1993 to 1995. - Give rectifying journal entries wherever relevant assuming the difference in trial balance
has been placed to suspense account.
- purchase of motor car for Rs.15,000 has been debited to Repairs account.
(ii) A sale of Rs.5,000 to Mr. Ram has been wrongly entered in sales book as Rs.500.
(iii) An entry in the purchase returns book of Rs.2,000 has been omitted to be posted
in the account of Mr. Ramji
(iv) An amount of Rs.2,000 received from Shrikant has been posted to credit of
Shriram as Rs.200.
- The Ratios relating to a Company are given below.
Gross profit 15%
Stock velocity – 6 months; Debtors velocity – 3months
Creditors velocity – 3 months; Gross profit of the year ending amounts to Rs.60,000.
Closing stock is equal to opening stock. Find out:
(a) Sales (b) Closing stock (c) Debtors (d) Creditors
- Rule the three-column cash book of a merchant.
1998
July 1 Commenced business with Rs.10,000
2 Paid into bank Rs.8,000
7 Purchased goods by cheque Rs.3,000
- Paid Rent Rs.210
12 Purchased furniture by cheque Rs.180
15 Cash sales Rs.750
- Gave Mr. Gopal a cheque for Rs.970, Discount received from him Rs.25
18 Received from Narayan a cheque for Rs. 1500 and he was allowed to
discount of Rs.30.
- Paid into bank Rs.1500
- Drew for office use Rs.400
31 Withdrew for personal use by cheque Rs.150.
SECTION – C
Answer any TWO questions. (2 x 20 = 40 marks)
- The following is the Trial balance of Arun as on 31.12.97 is given to you. Prepare final
accounts.
Debit balances Rs. Credit balances Rs.
Opening stock 15,500 Capital 90,000
Land and building 35,000 Sundry Creditors 9,600
Machinery 50,000 Purchase Returns 2,100
Furniture 5,000 Sundry incomes 1,200
Purchases 1,06,000 Reserve for bad debts 300
General expenses 19,200 Sales 2,07,000
Wages 26,000
Freight on purchases 2,800
Carriage on sales 8,500
Sundry debtors 30,000
Bad debts 600
Cash in hand 100
Cash at bank 6,400
Sales Returns 5,100
———– ————
3,10,200 3,10,200
———– ————-
Adjustments:
- wages outstanding Rs.2100
- Included in General Expenses an insurance premium Rs.600 paid for the year ending 31st March 1998.
- Provision of 5% on Debtors for bad debts required.
- Depreciate : Land and building 2% ; machinery 10% and Furniture 15%.
- Closing stock Rs.14,900.
- Given below is the sumarised balance sheet and profit and loss A/c of metals Ltd.
Balance Sheet
| Liabilities | Rs. | Assets | Rs. |
| 4,000 shares of Rs. 100 each | 40,00,000 | Land and building | 30,00,000 |
| Reserves and Surplus | 18,00,000 | Plant | 16,00,000 |
| Sundry creditors | 26,00,0000 | Stock | 29,60,000 |
| Profit and Loss A/c | 6,00,000 | Debtors | 14,20,000 |
| 6% Debentures | 6,00,000 | Cash at bank | 6,20,000 |
| 96,00,000 | 96,00,000 |
Profit and Loss A/c
| To opening stock | 19,90,000 | By Sales | 1,70,00,000 |
| To Purchases | 1,09,05000 | By closing stock | 29,80,000 |
| To direct Expenses | 2,85,000 | ||
| To Gross profit | 68,00,000 | ||
| 1,99,80,000 | 1,99,80,000 |
| To Administration Expenses | 30,00,000 | By Gross profit | 68,00,000 |
| To selling Expenses | 600,000 | By non-operating incomes | 1,80,000 |
| To interest | 300,000 | ||
| To other non-operating expenses | 80,000 | ||
| To net profit | 30,00,000 | ||
| 69,80,000 | 69,80,000 |
Calculate
- Current Ratio 6. Stock Turnover Ratio
- Quick Ratio 7. Fixed Assets Turnover Ratio
- Fixed Assets Ratio 8. Debtors Turnover Ratio
- Debt Equity Ratio 9. Operating Ratio
- Proprietory Ratio 10. Creditors Turnover Ratio
- The balancesheet of XYZ Ltd. for the years 1989 and 1990 were as follows:
| Liabilities | 1989 | 1990 | Assets | 1989 | 1990 |
| Rs. | Rs. | ||||
| Share capital | 1,50,000 | 1,75,000 | Building | 1,10,000 | 1,50,000 |
| Profit and Loss A/c | 20,000 | 80,000 | Plant | 2,00,000 | 1,40,000 |
| Loan from bank | 1,40,000 | 20,000 | Stock | 50,000 | 45,000 |
| Creditors | 85,000 | 93,000 | Debtors | 70,000 | 80,000 |
| Outstanding Expenses | 5,000 | 7,000 | Cash | 15,000 | 22,000 |
| Bills payable | 50,000 | 40,000 | Prepaid expenses | 5000 | 3,000 |
| Loan from IFCI Bank | – | 25,000 | |||
| 4,50,000 | 4,40,000 | 450000 | 44,0000 | ||
Additional information:
- Net profit for the year 1990 Rs. 60,000
- During the year plant costing Rs. 25000 was sold for Rs.13000 (accumulate depreciation Rs.10,000)
- Depreciation for the year 1990 Rs.45000
You are required to prepare cash flow statement.