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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