Course: Financial Accounting and Analysis

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NMIMS Global Access
School for Continuing Education (NGA-SCE)

Course: Financial Accounting and Analysis

Internal Assignment Applicable for December 2015 Examination


Assignment Marks: 30


Question 1.  The following is the Trial Balance of Mrs. Rashi as at 31st March, 2014. You are required to prepare the Profit & Loss Account and Balance Sheet as at that date. (Marks 15)



Particulars

Debit(Rs)

Credit(Rs)

Capital Account


8,000

Plant & Machinery

10,000


Office Furniture & Fittings

520


Opening Stock

9,600


Motor Vans

2,400


Sundry Debtors

9,600


Cash in hand

80


Cash at Bank

1,300






Wages : Factory

30,000


Wages : Office

2,800


Purchases

42,700


Sales


96,000

Bills Receivable

1,440


Bills Payable


1,120

Sundry Creditors


10,400

Returns Inwards

1,860


Provision for Doubtful Debts


500

Drawings

1,400


Return Outwards


1,100

Rent

1,200


Factory Lighting & Heating

160


Telephone

70


Insurance

60


Advertising

1,130


General Expenses

200


Bad Debts

500


Discount Allowed

840


Discount Received


740

TOTAL(Rs)

117,860

117,860


The following adjustments are to be made:
1. Closing Stock Rs. 10,400
2. Rent due but not paid upto 31st March 2014 Rs. 400
3. Three months factory lightings & heatings are due but not paid Rs.60
4. Insurance paid in advance Rs. 20
5. Depreciate plant & machinery by 10%, furniture by 5% and motor vans by 25%.
6. Write off further bad debts Rs.140 and increase the provision for doubtful debts by Rs. 600.Discounts @ 2 1/2% on debtors & creditors are to be anticipated.


Answer : In the books of Mrs. Rashi.

Profit & Loss Account

Dr.




Cr.
DATE
             PARTICULARS
AMOUNT
     (Rs)
DATE
                   PARTICULARS
AMOUNT
     (Rs)

To Opening stock
9600

By Sales                                                              96000
Less: Ret Inward                               1860
94140

To Purchases                  42700                     
 Less: Ret Outward          1100       
41600

By Closing stock
10400

To Wages
30000







Question 2 (Marks 15)


a) What are the main aspects of Accounting Standard 1 (AS 1)
Answer: There are general rules and concepts that govern the field of accounting. These general rules–referred to as basic accounting principles and guidelines–form the groundwork on which more detailed, complicated, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards.




b) Calculate the net cash flow from financing activities based on the below data:

1. Cash from issue of new equity shares – Rs.50,00,000
2. Cash from issue of 12% debentures – Rs.30,00,000
3. Interim dividend paid – Rs.10,00,000
4. Buy-back of existing shares – Rs.15,00,000
5. Repayment of long term loan – Rs.10,00,000

Answer:

Cash flow from Financing Activities

Cash from issue of new equity shares
Cash from issue of 12% Debentures
Interim Dividend paid




50,00,000
30,00,000
(10,00,000)
(3,60,000)



















c) Discuss in brief the treatment of following items in Cash Flow Statement as per AS-3.

1. Taxes on Income
Taxes may be income tax (tax on normal profit), capital gains tax (tax on capital profits), dividend tax (tax on the amount distributed as dividend to shareholders).AS-3 requires that cash flows arising from taxes on income should be separately disclosed and should be classified as cash flows from operating activities unless they can be specifically identified with financing and investing activities. This clearly implies that:


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