Financial Accounting Question Banks

Financial Accounting

bbasemester 2

This course contains conceptual and theoretical foundation of financial accounting; processingand recording business transactions; accrual accounting concept; adjusting entries, closingentries,; preparation of basic financial statements like profit and loss account, balance sheet andcash flow statement and their analysis.

The KK Company's Statement of Profit and Loss account and Statement of Financial Position for two years have been Below :

Statement of Profit and Loss for the year 2023
Particulars	Amount (Rs)
Revenue from operation	1,200,000
Less: Cost of sales	(800,000)
Gross margin	400,000
Add Other income (including dividend received Rs 10,000)	60,000
Total	460,000
Less: Distribution expenses	(100,000)
Less: Administrative expenses (write-off of goodwill Rs 10,000 and depreciation of Rs 90,000)	(260,000)
Operating Profit	100,000
Less: Finance cost	(25,000)
Net profit before tax	75,000
Less: Provision for tax	(18,750)
Net profit after tax	56,250
Less: Dividend paid	(6,000)
Retained Earnings	50,250

Statement of Financial Position of a company for 2022 and 2023
Assets	2022	2023
Non-Current Assets:
Property, plant and equipment	500,000	600,000
Intangible assets (Goodwill)	40,000	30,000
Investments	160,000	220,000
Total Non-Current Assets	700,000	850,000
Current Assets:
Inventories/Stock	40,000	50,000
Cash and cash equivalents	50,000	60,000
Account receivables	60,000	50,000
Trade and Other receivables	50,000	40,000
Total Current Assets	200,000	200,000
Fictitious Assets	-	-
Total Assets (Total Non-current and Current Assets)	900,000	1,050,000
Equity:
Share capital @Rs.100 each	500,000	600,000
Reserve/Retained earnings	30,000	80,250
Non-controlling interests	-	-
Total Equity	530,000	680,250
Liabilities
Non-Current Liabilities:
10% Loans and borrowings	250,000	351,000
Total Non-Current Liabilities	250,000	351,000
Current Liabilities:
Trade and other payable	50,000	-
Income tax liabilities	-	18,750
Provisions	70,000	-
Total Current-Liabilities	120,000	18,750
Total Liabilities (Total Non-current and Current)	370,000	369,750
Total Equity and Total Liabilities	900,000	1,050,000

Required: Statement of Cash Flow under NFRS

The XYZ Company's Statement of Profit and Loss account and Statement of Financial Position for two years have been given below:

Statement of Profit and Loss for the year 2080
Particulars	Amount (Rs.)
Revenue from operation	6,00,000
Cost of sales	(400,000)
Gross profit	200,000
Other income	20,000
Total	220,000
Distribution expenses	(60,000)
Administrative expenses	(115,000)
Operating profit	45,000
Financial cost	(7,500)
Net Profit	37,500

Statement of the financial position of a company for 2079 and 2080
Assets	2079	2080
Non-current assets:
Property, plant, and equipment	200,000	250,000
Intangible assets	10,000	7,500
Investment (long-term)	45,000	55,000
Total Non-current Assets:	255,000	312,500
Current Assets:
Inventories / Stock	20,000	30,000
Cash and cash equivalents	25,000	30,000
Account receivable	20,000	15,000
Trade and Other receivable	15,000	20,000
Total current assets	80,000	95,000
Fictitious assets	-	-
Total assets	335,000	407,500
Equity:
Share capital @Rs.100 each	200,000	225,000
Reserve/Retained earnings	45,000	82,500
Non-controlling interest	-	-
Total Equity	245,000	307,500
Liabilities:
Non-current liabilities:
10% Loan and Borrowing	60,000	75,000
Total non-current liabilities	60,000	75,000
Current liabilities:
Trade and Other payable	15,000	25,000
Income tax payable	-	-
Provision	15,000	-
Total current liabilities	30,000	25,000
Total liabilities	90,000	100,000
Total Equity and Liabilities	335,000	407,500

Required: Financial analysis for 2080:

a) Current ratio (2:1)

b) Acid test ratio (1:1)

c) Debt to total capital ratio (less than 40%)

d) Stock turnover ratio (at least 8 times)

e) Total assets turnover ratio (more than 1 time)

f) Net profit margin (at least 12%)

g) Return on assets (at least 5%)

h) Return on equity (at least 7%)

i) Average sales period (45 days or less than 45 days)

j) Account receivable turnover ratio (at least 8 times)

k) Comment on the above result.

Particulars	Amount Rs.
5000 equity shares of Rs.100 per share	500,000
Share premium	150,000
Retained earnings	200,000
Total shareholder's equity	750,000

Particulars	Year 1
Sales	10,000
Cost of Sales	6,000
Gross Profit	4,000
Expenses	1,500
Depreciation	500
Interest on Working Capital	800
Interest on loan	400
Profit before tax	800
Provision for Tax	200

Tax paid	70,000
Dividend paid	30,000
Office supplies	90,000
Dividend received	30,000
Sales	1,200,000
Sundry debtors	180,000
Raw material purchase	550,000
Factory overheads	100,000
Manpower cost	250,000
Selling overhead	50,000
Capital employed	600,000
Depreciation expenses	60,000
Interest expenses	20,000
Motive power	10,000

Particulars	Debit (Rs.)	Credit (Rs.)
Equity share capital	-	300,000
Building	200,000	-
Copyright	20,000	-
10% Debenture	-	100,000
Interest on Debenture	5,000	-
Revenue from operation	-	470,000
Purchases	250,000	-
Salaries & wages	35,000	-
Cash at bank	40,000	-
8% Investment	100,000	-
Account payable	-	76,000
Account receivable	40,000	-
Commission received	-	18,000
Prepaid insurance	24,000	-
Office rent	26,000	-
Plant & Equipment	200,000	-
Marketing expenses	30,000	-
Interest on investment	-	6,000
Total	970,000	970,000

Financial Accounting

Faculty of Management