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Financial
Accounting & Analysis
Jun
2025 Examination
Q1. A small
manufacturing company, Horizon Industries, has experienced rapid growth and
needs to organize its accounting records. The company currently tracks
transactions informally using spreadsheets. The owner has hired you as a
consultant to implement proper accounting procedures. Describe the sequential
steps Horizon
Industries should
follow to establish a formal accounting system. Explain the purpose and role in generating financial
statements. Additionally, identify which source documents should be maintained
for different types of transactions. (10 Marks)
Q2. Meera Sharma
recently decided to pursue her passion for landscaping by starting Green Valley
Landscaping Services in Pune, Maharashtra. After years of working for a large
landscaping company, she's using her expertise and savings to establish her own
business in a growing residential area. The company offers residential and
commercial landscaping services including lawn maintenance, garden design,
irrigation system installation, and seasonal clean-up. Meera has rented a small
office space with an attached storage area for equipment and supplies near
Koregaon Park. As she begins operations, she needs to properly track all
business transactions to understand her financial position and plan for future
growth.
Explain the accounting
equation and its fundamental importance in financial accounting. Analyze the
following six transactions for Green Valley Landscaping Services and show how
each affects the accounting equation:
1. Meera invested
Rs.15,00,000 cash to start the business
2. Purchased equipment
worth Rs.5,00,000, paying Rs.2,00,000 in cash and financing the remainder
3. Provided landscaping
services for Rs.2,75,000, receiving cash immediately
4. Paid Rs.75,000 for
monthly rent
5. Purchased supplies
for Rs.45,000 on account from Ganesh Garden Supplies
6. Paid Rs.30,000
toward the equipment loan to State Bank of India (10 Marks)
Q3 (A) Vindhya
Technologies Ltd, a mid-sized software development company based in Bangalore,
specializes in enterprise solutions and mobile applications. Below are selected
items from the company's financial statements for the years ended March 31, 2024
and 2023 (all figures in Rs. lakhs):
Balance Sheet Items:
- Current Assets
(2024): Rs.480; (2023): Rs.360
- Cash and Cash
Equivalents (2024): Rs.180; (2023): Rs.140
- Current Liabilities
(2024): Rs.220; (2023): Rs.190
- Total Assets (2024):
Rs.1,200; (2023): Rs.950
- Total Liabilities
(2024): Rs.500; (2023): Rs.400
- Inventory (2024):
Rs.60; (2023): Rs.45
Income Statement Items:
- Net Sales (2024):
Rs.1,500; (2023): Rs.1,250
- Net Profit After Tax
(2024): Rs.225; (2023): Rs.170
- Cost of Goods Sold
(2024): Rs.900; (2023): Rs.780
Additional Information:
- Average Total Assets
for 2024: Rs.1,075
- Average Inventory for
2024: Rs.52.5
- Shareholders' Equity
(2024): Rs.700; (2023): Rs.550
Analyze Vindhya
Technologies Ltd's financial performance by calculating and interpreting the
Profitability and Liquidity categories
of financial ratios. Calculate and
interpret two ratios for each category. (5 Marks)
Q3(B) Analyze Vindhya
Technologies Ltd's financial performance by calculating and interpreting the
Solvency and Efficiency categories of
financial ratios. Calculate and interpret two ratios for each category. (5
Marks)
Dear Students,
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