Accountancy : Company Accounts and Analysis of Financial Statements 2007 CBSE [ Delhi ] Set III
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List four items which can be credited to the Capital Account of a partner when the Capital Account is fluctuating.Marks:2
The four items which can be credited to the Capital Account of a partner when the Capital Account is fluctuating are: s Salary s Commission s Interest on capital s Cash/Bank A/c
State the conditions according to Sec. 79 of Company Act, 1956 for the issue of shares at discount.Marks:2
Issue of shares at discount is governed by Section 79 of the companies Act 1956.It prescribes the following conditions: The shares are of a class already issued: s It is authorised by a resolution passed by the company in its general meeting and sanctioned by the central government. s The resolution specifies the maximum rate of discount at which the shares are to be issued s Not less than one year has, at the date of issue, elapsed since the date on which the company was entitled to commence the business. s The shares are issued within two months of the date on which the issue is sanctioned by the central government or within such extended time as the central government may allow.
What is meant by ‘Preferential Allotment of Shares’?Marks:2
A preferential allotment is one that is made at a predetermined price to the preidentified people who are having a strategic stake in the company such as promoters, venture capitalists, financial institutions, buyers of companies products or its suppliers.
Give the meaning of Debenture.Marks:2
Debenture is a written instrument of principal amount and repaid after a specified period or at intervals or at the option of the company and for payment of interest at a fixed rate payable usually either half-yearly or yearly on fixed dates. OR “A debenture is a document under company’s seal which provides for the repayment” (E. Thomas) OR
“Debenture is a document given by a company as evidence of debt to the holder usually arising out of a loan and most commonly secured by a charge”.
State any two objectives of preparing a cash flow statement.Marks:2
The primary objective of cash flow statement is s To provide useful information about cash flows of an enterprise during a particular period under various heads. s To facilitate formulation of financial policies such as dividend policy
Fine Garments Ltd. is engaged in the export of readymade garments. The company purchased a machinery of Rs 10, 00,000 for the use in packaging of such garments. State giving reason whether the cash flow due to the purchase of machinery will be cash flow from operating activities, investing activities or financial activities?Marks:2
Ram and Shyam were partners in a firm sharing profits in the ratio of 3:5. Their Fixed Capitals were: Ram Rs. 5, 00,000 and Shyam Rs. 9, 00,000. After the accounts of the year had been closed, it was found that interest on capital at 10% per annum as provided in the partnership agreement has not been credited to the Capital Accounts of the partners. Pass a necessary entry to rectify the error.Marks:3
JOURNAL Date Particulars L.F. Dr. (Rs.) Cr. (Rs.) Ram’s Capital A/c To Shyam Capital A/c (Being required adjustment to rectify the errors) 2,500 2,500 Working Note: Partner Adjustment Difference Dr (Rs.) Cr.(Rs.) Dr (Rs.) Cr (Rs.) Ram Shyam 52,500 87,500 1,40,000 50,000 90,000 1,40,000 2,500 -------- 2,500 -----------
A& B Ltd. issued 5, 00,000, 7% debentures of Rs. 50 each. Pass necessary journal entries in the books of the company for the issue of debentures when debentures were:
Issued at par, redeemable at 8% premium. Issued at 4% premium redeemable at 5% premium. iii. Issued at 5% premium redeemable at par.
JOURNAL Date Particula L.F. Dr. (Rs) Cr. (Rs) At the time of issue (i)Bank A/c Loss on issue of Debenture A/c To 7% Debenture A/c To premium on redemption of debenture A/c (Being money due on debentures issued at par but redeemable at premium) 5,00,000 40,000 (ii)Bank A/c Loss on issue on Debenture A/c To 7% Debenture A/c To premium on redemption of debenture A/c To Security Premium A/c ( Being the issue of Debenture at 4% premium but redeemable at 5% premium ) 5,20,000 25,000
25,000 20,000 (iii) Bank A/c To 7% Debenture A/c To Security Premium A/c (Being the issue of debenture at 5% premium but redeemable at par) 5,25,000 5,00,000 25,000
AKANKSHA LTD. Profit & Loss accounts for the years ended 31st March, 2005 and 2006: 2005 Rs. 2006 Rs. Sales Revenue
Less Cost of Goods Sold
Less Indirect Expenses
Profit before Tax
Less Tax 50%
_ Compute percentage changes from 2005 to 2006.Marks:3
Particulars Amount Change
Less: Cost of goods sold Gross Profit Less: Indirect expenses Profit before Tax Less: Income Tax 2005 1,00,000 52,600 4,600 48,000 24,000 24,000 2006 1,30,000 66,360
44,000 22,000 22,000 Absolute 30,000
(4,000) (2,000) (2,000) % 30 40
(8.3) (8.3) (8.3)
Explain briefly any three advantages of analysis of financial statements.Marks:3
There are three advantages of Financial Statement: (1) Disclosure of the fact : With the help of financial analysis, all facts relating to liquidity position, financing of fixed assets, credit policy, quantam of working capital, valuation of assets are made available. (2) Measuring operating Efficiency: The management and the owners are interested in knowing about the operational efficiency of different activities of the concern. (3) Comparative Study: With the help of financial analysis, business information and facts can be presented comparatively.