FR and FSA (Bhalotia)

Preface to New Edition
Dear Students,
We feel pleasure in presenting before you our Revised Edition. The present edition has been
thoroughly revised in the light of latest trend of CU Examination papers.
The authors have included almost all the questions in this material according to the syllabus of
CU.
Some of the exclusive features of the books are:
 Language is simple and clear so to enable the students to understand all the topics
prescribed in the syllabus.
 At the end of each book Mock Test papers are given so that students can practice them.
 Almost 100% questions where common in previous years from our mat.
 Star marks have been given after every question according to their importance.
 Efforts have been made to make the book error free however suggestion and criticisms are
needed to make the book more utility oriented.
Thanking You
Yours as ever,
Ravi Kant Bhalotia
©Ravi Kant Bhalotia – All rights reserved.

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Price: ₹ 100/-
i
Year 3:
6th Semester: Honours & General: DSE 6.1 A
FINANCIAL REPORTING AND FINANCIAL STATEMENT
ANALYSIS
Internal Assessment: 20 marks
Semester-end Examinations: 80 marks
Total 100 marks
Unit-1: Holding Company [15 Marks] [1 Question of 15 Marks]
Meaning of Holding Company & Subsidiary Company; relevant standard; Consolidation of Balance
Sheets of Parent & Subsidiary (only one); Minority Interest – Basic principles and preparation of CBS;
CBS with loss balance of Subsidiary Treatment for: Revaluation of Assets of Subsidiary, Intra- group
Transactions, Holding of different securities. Consideration of dividend paid or proposed by Subsidiary
in CBS; Bonus Shares issued or proposed to be issued by Subsidiary (excluding shares acquired on
different dates by the Parent company, chain and cross holding)
Unit-2: Accounting Standards [15 Marks] [10 + 5 = 15 Marks]

Conceptual Framework, Presentation of Financial Statements (Indian AS 1), Property, Plant and
Equipment (Indian AS 16), Earnings per share (Indian AS 33), [Basic Definitions & Theoretical
Concepts, Scope]
Unit-3: Fund Flow & Cash Flow Statement [20 Marks] [15 + 5 = 20 Marks]
Fund flow statement:
Concept of fund, meaning, nature, various sources And applications, advantages & limitations of Fund
Flow Statement.
Cash Flow Statement
Meaning, objectives, difference with Fund Flow Statement; activity classification and preparation and
presentation as per relevant Accounting Standard.
Unit-4: Introduction to Financial Statements Analysis [10 Marks]

 Nature and Component of Financial Statement; Meaning and Need for FSA, Traditional & Modern
approaches to FSA, Parties interested in FSA.
 Comparative Statement – meaning, preparation, uses, merits and demerits
 Common -size Statement – meaning, preparation, uses, merits and demerits
 Trend Analysis – meaning, determination, uses, merits and demerits
Unit-6: Accounting Ratios for FSA [20 Marks] [15 + 5 = 20 Marks]

Meaning, objective, Classification of Accounting Ratios, Advantages & Limitations Preparation of
Classified Financial Statements and Statement of Proprietor’s Fund from the given Ratios.
Computation, Analysis and Interpretation of important ratios for measuring –Liquidity, Solvency,
Capital Structure, Profitability and Managerial Effectiveness.
Course fees for Regular course:
FR & FSA / FM ₹ 3,000
Both Subjects ₹ 5,000
ii
(9883034569/9330960172)
Financial accounting [For B.com 6th Semester Hons/Pass]
Contents
S. No. Chapters Page Number
1. Holding Company [15 Marks] 01 – 23
2. Fund flow & Cash Flow Statement [15 + 5 = 20 Marks]
Fund Flow Statement 24 – 41
Cash Flow Statement 42 – 56
3. Introduction to Financial Statements Analysis [10 Marks] 57 – 61
4. Accounting Ratio for FSA [15 + 5 = 20 Marks] 58 – 71
5. Accounting Standard [Compulsory Theory] [10 + 5 = 15 Marks] 72 – 80
6. Introduction to FSA [Theory] 81 – 89
7. Ratio Analysis [Theory] 90 – 94
8. Cash Flow & Fund flow [Theory] 95 – 99
9. Holding Company [Theory] 100 –100
10. Mock Test Paper Honours [Set 1 & Set 2] 101 – 110
11. Mock Test Paper Pass [Set 1 & Set 2] 111 – 116

FR & FSA / FM ₹ 3,000
Batch Timings
Batch 1: 8.30 to 11 am [4 to 5 Days in a week]
Batch 2: 2 pm to 4.30 pm [4 to 5 Days in a week]
Batch 3: 4.30 pm to 6.30 pm [May be conducted on Demand] [4 Days in a week]
Batch 4: 11 am to 1 pm [May be conducted on Demand] [4 Days in a week]
Batch 5: Saturday & Sunday Batch May be conducted on Demand]
iii
Expected Question Pattern: FR & FSA
Group A (3 Questions of 5 Marks each)
(2 Questions with Alternative):
Question 1:
Fund Flow/Cash Flow [Practical] [With Option] [Theory May be in option]
Question 2:
Ratio [Practical] [With Option] [Theory May be in option]
Question 3:
Accounting Standard [Theory] [No Option]
Group B (2 Questions of 10 marks)

(1 Question with alternative):
Question 4:
Introduction to FSA [Practical] [Theory May be in option]
Question 5:
Accounting Standard [Theory] [No Option]
Group C (3 Question of 15 marks)

Question 6:
Holding Company [Practical] [No Option] [In Pass course, theory may come in option]
Question 7:
Fund Flow/Cash Flow [Practical] [Fund Flow & Cash flow may be in option]
Question 8:
Ratio [Practical] [With option] [One More Practical from Ratio may be in option]
Expected Theory:
Compulsory Theory from Accounting Standards: 15 marks
Optional Theory: Fund Flow [5 Marks], Ratio [5 Marks], Intro to FSA [10 Marks]
iv
Bhalotia Classes (9883034569): FR & FSA (6th Sem Hons & Pass)
Holding Company [15 Marks]

If H Ltd holds more than 50 % shares in S Ltd
H Ltd. - Holding Company
S Ltd. - Subsidiary company
Prepare a consolidated Balance sheet / combined balance sheet in the books of H Ltd.
Working note
1. Degree of control
2. Control chart
3. Cost of control
4. Consolidated P/L
5. Consolidated G/R
Type of question
Year end date of acquisition of share
1. Without mid year 31.3.12 1/4/2011 or 31/12/12
2. With mid year 31.3.12 shares acquired in between (1/10/11), (1/7/11)
Adjustments
a. Inter company debtors
Creditors A/c ____________________Dr. (less)
To debtors A/c (less)
b. Inter company acceptance

Bills payable A/c __________________Dr. (less)
To bills receivable A/c (less)
(if provided such bills are not discounted)
c. Unrealised profit on stock / assets

H (seller) Ltd. Sold goods to S (buyer) Ltd.
Unrealised profit=Gross profit on sale X Stock/assets (purchased from H Ltd. & still unsold)
Consolidated P/L A/c_________________Dr. (less)
To stock / assets A/c (less)
d. Interim dividend paid by subsidiary company

a. No effect on pre acquired profit & post acquired profit
b. Holding company receive interim dividend
Interim dividend receive= dividend paid X degree of control
Assume holding company had correctly credited, dividend receive to its P/L A/c, hence no
adjustment to be made.
e. Revaluation of assets:-
f. Dividend for last year paid by subsidiary company
g. Proposed Dividend
h. Bonus Share
- 1 –Admission Going on for Regular/Crash Course for B.com. Call for details
1. Holding Company [Without Mid year] [For Pass course]
From the balance sheet given below, prepare the consolidated balance sheet of X Ltd. and its subsidiary
company Y Ltd. The interest in minority shareholders in Y Ltd. is to be shown as separate item in the
consolidated balance sheet.
Balance sheet as on 31st March 2015
X Ltd Y Ltd
Equity and liability ₹ ₹
Shareholders fund :
Share capital 1,20,000 30,000
(authorized issued, subscribed and fully paid shares of ₹ 10 each)
General reserve (1.4.14) 25,000 6,000
Profit & Loss account 12,000 9,000
Current Liabilities:
Trade payable 15,000 5,000
1,72,000 50,000
Assets: ₹ ₹
Non-current Assets :
Fixed assets 1,10,000 35,000
Investments (2000 shares in Y Ltd) 25,000 -
Current assets :
Inventories 10,000 3,000
Trade receivable 22,000 7,000
Bank balance 5,000 5,000
172000 50000
On 1.4.14 when X Ltd acquired its holding of 2000 shares in Y Ltd the later company had ₹ 6000 in its surplus
account.
[Answer: Capital reserve (arising on consolidation) ₹ 3000. Group surplus account ₹ 14000. Minority
interest ₹ 15000. Balance sheet total ₹ 197000.]
2. Holding Company [B.com 2013 Pass] [Without Mid year] [For Pass course]
Following are Balance Sheets of H. Ltd. And S Ltd. As on 31.12.2012.
H Ltd. S Ltd. H Ltd. S Ltd.
Share Capital 15, 00,000 5, 00,000 Sundry Assets 14, 00,000 7, 50,000
P/L A/c 2, 00,000 75,000 Investment 5, 60,000 -
Creditors 2, 60,000 1, 75,000 (4000 shares in S Ltd.)
19, 60,000 7, 50,000 19, 60,000 7, 50,000
H Ltd. Acquired shares of S Ltd. On 01.01.2012. Calculate ‗cost of control‘.
[Goodwill ₹ 1,60,000]
3. Holding Company [Without Mid year] [1st Important For Pass course]
Following are the balance sheet of X Ltd and Y Ltd as on 31.3.15:
X Ltd Y Ltd
Share-holders funds :
Share capital ( shares of ₹ 10 each, fully) 2,50,000 1,00,000
General reserve 75,000 30,000
Profit & loss account 80,000 50,000
450000 212000
Assets ₹ ₹
Fixed assets
Tangible 2,00,000 1,20,000
Intangible (goodwill) 20,000 10,000
Investments (6000 shares of Y Ltd) 70,000 -
Current assets :
Cash 20,000 2, 000
4,50,000 2,12,000
When shares of Y Ltd were acquired by X Ltd on 1.4.14, Y Ltd had ₹ 18,000 in general reserve and ₹ 22,000
in Profit & Loss account. Included in the trade payable on Y Ltd is ₹ 10,000 for goods supplied by X Ltd.
Included in the inventories of Y Ltd are goods of value of ₹ 6000 which were supplied by X Ltd at profit of
20% on cost.
Prepare the consolidated balance sheet as on 31.3.15.
[Answer: Capital reserve (arising on consolidation) ₹ 14,000. Group general reserve ₹ 82,200. Group
Profit & Loss account ₹ 95,800. Minority interest ₹ 72,000. Balance sheet total ₹ 581000 (without
adjusting capital reserve against goodwill).]
4. Holding Company [Without Mid year] [2nd Important For Pass course]
The following are the balance sheet of H Ltd and S Ltd as at 31st March 2015:
H Ltd S Ltd
Share capital ( shares of ₹ 10 each, fully) 50,000 40,000
Other current liabilities (due to H Ltd) -------- 2,900
83,000 57,900
Assets ₹ ₹
Fixed assets 20,000 30,000
3000 Shares of S Ltd at cost 32,000 -
Other investments 8,900 12,000
Current assets :
Cash and bank 5,500 1,900
Other current assets (due from S Ltd) 3,600 -
83,000 57,900
The deficit on Profit & Loss accounts of S Ltd at the date of H Ltd bought its share was ₹ 2,000 and the
general reserve stood at nil. At 31st March 2015 there were goods in transit from H Ltd ₹ 600 and cash in
transit ₹ 100 from S Ltd to H Ltd. These had been entered only in the books of the sending companies.
Prepare a consolidated balance sheet of H Ltd and its subsidiary as at 31st March 2015.
[Answer: Goodwill (arising in consolidated) ₹ 3500. Minority interest ₹ 12,500. Balance sheet total
109500]
5. Holding Company [3rd Important For Pass course]

The following are the condensed balance sheets of A Ltd. and its subsidiary B Ltd.:
A Ltd. B Ltd. A Ltd. B Ltd.
Liabilities ₹ ₹ Assets ₹ ₹
Capital, shares of Land and buildings 21,000 15,000
₹ 10 each 1, 32,000 48,000 Plant and Machinery 42,000 23,400
Securities premium 15,600 _ Furniture 7,200 3,000
General reserve _ 12,000 Stock 24,000 16,200
Profit and loss account 16,800 3,600 Sundry debtors 30,000 18,600
Sundry creditors 11,400 18,000 Due from B Ltd. 4,200 _
Investments:
4,320 shares in B Ltd.,
at cost 46,800 _
Cash at bank 600 5,400
1, 75,800 81,600 1, 75,800 81,600
You are required to prepare a consolidated balance sheet having regard to the following:
1. On the date when A Ltd. acquired the shares in B Ltd., the latter had a reserve of ₹ 3,000 and a debit
balance of profit and loss account of ₹ 600.
2. In determining the value of shares of B Ltd., plant and machinery which then stood in the books at ₹
27,000 was revalued at ₹ 32,400 and furniture standing in the books at ₹ 3,600 was revalued at ₹ 2,160.
The new values were not incorporated in the books.
3. B Ltd. has purchased goods from A Ltd. of which ₹ 8,400 are still in stock. A Ltd. sells to B Ltd. at cost
plus 25 per cent.
[Unrealized profit on inter-company stock ₹ 1,680. Capital reserve ₹ 2,124. Minority interest ₹ 6,708.
Balance sheet total ₹ 2,08,200.]
6. Holding Company [B.com 2015 Pass] [With Mid year] [1st Imp For Pass]
Following is the balance sheet of X Ltd. And Y. Ltd. As on 31.12.2014:
X Ltd. Y Ltd. X Ltd. Y Ltd.
Share Capital of ₹ Goodwill 20,000 10,000

10 each 2,00,000 1,00,000 Fixed assets 1,50,000 1,20,000
General Reserve 80,000 40,000 Stock 50,000 40,000
P/L Account 50,000 30,000 Debtors 60,000 50,000
Sundry Creditors 60,000 50,000 Investment of 6,000
Bills Payable 10,000 20,000 shares of Y Ltd. 85,000 -
Cash 35,000 20,000
4,00,000 2,40,000 4,00,000 2,40,000
X Ltd. acquired the shares in Y Ltd. On 1st July 2014, Y Ltd. had ₹ 20,000 in General Reserve and ₹ 30,000
in Profit and Loss A/C. Included in the creditors of Y Ltd. Is ₹ 15,000 for goods supplied by X Ltd. Included
in the stock of Y Ltd. are goods to the value of ₹ 8,000 which are supplied by X Ltd. at a profit of 25% on
cost. Prepare a consolidated Balance Sheet as at 31.12.14.
7. Holding Company [1988 H] [Without Mid year] [1st Imp For Pass]
The following are the Summarised Balance Sheets of H. Ltd and its subsidiary S. Ltd as at 30th November,
1987:
Liabilities H. Ltd S. Ltd. Assets H. Ltd. S. Ltd.
₹ ₹ ₹ ₹
Authorised & Issued Freehold Premises 2,20,000 89,000
Capital Plant & Machinery 1,15,000 32,000
Shares of ₹ Furniture 61,000 18,000
10 each fully paid 4,00,000 1,50,000 Stock in Trade 1,02,000 68,050
General Reserve 2,10,000 13,000 Sundry Debtors 97,000 82,200
Profit & Loss A/c 1,50,000 80,000 Investment in S. Ltd.
Sundry Creditors 40,000 59,450 10,000 Shares 1,80,000 —
Cash Balance 25,000 13,200
8,00,000 3,02,450 8,00,000 3,02,450
You are to prepare a Consolidated Balance Sheet as at 30.11.87. Showing in detail necessary adjustments and
taking into consideration the following information:—
(a) H. Ltd acquired shares of S. Ltd on 1.12.86 when the balances on their Profit and loss Account and
General Reserve were ₹ 66,000 and ₹ 9,000 respectively.
(b) Sundry Creditors of ₹ 40,000 in the books of H. Ltd on 30.11.87 included a sum of ₹ 24,000 payable to
S Ltd for credit purchase on which the latter company made a profit of ₹ 6,000 in 1986-87.
(c) S. Ltd declared and paid interim dividend of 8% per annum on 2.6. 87.
(d) Stock of ₹ 1,02,000 of H. Ltd on 30.11.87 included goods purchased from S Ltd at ₹ 18,000.
[Minority Interest ₹ 81000; Goodwill ₹ 30000; Consolidated P/L 154833 Consolidated reserve: 212667;
Balance sheet 923950]
8. Holding Company [2014 Pass] [Without Mid year] [3rd Imp For Pass]
The following are Balance Sheet of P Ltd. and Q Ltd. as at 31.12.2013:
P Ltd. Q Ltd. P Ltd. Q Ltd.
Share Capital : Fixed Assets 40,000 60,000

Shares of ₹ 10 each 1,00,000 80,000 Debtors 18,000 10,000
Profit & Loss A/c 20,000 12,000 Cash at Bank 11,000 4,000
Creditors 22,000 10,000 Share in Q Ltd.
(6000 shares) 65,000 -----------
Other investments 24,000 18,000
1,66,000 1,10,000 1,66,000 1,10,000
The credit balance of the Profit & Loss A/c. of Q Ltd. at the date P Ltd. bought its shares was ₹ 4,000 and the
General Reserve stood at nil. Prepare a Consolidated Balance Sheet of P Ltd. and its Subsidiary Q Ltd. as at
31st December 2013.
[Goodwill ₹ 2,000; Minority Interest ₹ 25,000; Balance sheet ₹ 2,13,000]
9. Holding Company [1993H] [Without Mid year]* [2nd Imp For Pass]
The following are the summarised balance sheets of H Ltd. and its subsidiary S Ltd. as at 31.3.05.
Balance Sheets
Share capital: Buildings 1,10,000 44,500
Shares of ₹ 10 Machinery 57,500 16,000
each 2,00,000 75,000 Furniture 30,500 9,000
General reserve 1,05,000 6,500 Stock 51,000 34,000
Profit and loss account 75,000 40,000 Debtors 48,500 41,100
Proposed dividend 20,000 7,500 Investment
Sundry creditors 20,000 29,700 (5,000 shares in S Ltd.) 90,000 —
Bank 32,500 14,100
4,20,000 1,58,700 4,20,000 1,58,700
You are to prepare a consolidated balance sheet as at 31.3.05 showing in detail the necessary adjustments and
taking into consideration the following information :
(a) H Ltd. acquired shares of S Ltd. on 1.4.04 when the balances on the profit and loss account and general
reserve of S Ltd. were ₹ 33,000 and ₹ 4,500 respectively.
(b) Sundry creditors of ₹ 20,000 in the books of H Ltd. on 31.3.05 included a sum of ₹ 12,000 payable to S
Ltd. for credit purchases on which the latter company made a profit of ₹ 3,000 in 2004-05.
(c) In June, 2004, S Ltd. paid a dividend of 12% in respect of 2003-04. The company also paid an interim
dividend of 4% in December, 2004.
(d) Stock of Rs, 51,000 of H Ltd. included unsold goods purchased from S Ltd. at a cost of ₹ 9,000.
[Minority Ltd. 43000; Goodwill 21000; Consolidated P/L 88417; Consolidated G/R 106333;
Consolidated balance sheet 495450]
10. Holding Company [2002H,1984H] [Without Mid year] [4th Imp For Pass]
When O Ltd purchased 24000 equity shares in P Ltd on 1.4.14 P Ltd had ₹ 22,500 in general reserve and a
deficit of ₹ 37,500 in Profit & Loss account. From the balance sheet on 31.3.15 as below, prepare a
consolidated balance sheet:
Balances Sheet as on 31.3.15
Equity and Liability O Ltd P Ltd
₹ ₹
Share capital ( shares of ₹ 10 each, fully paid) 7,50,000 3,00,000
Profit & Loss account 60,000 (67,500)
Trade payable 1,05,000 31,500
10,05,000 2,71,500
Assets ₹ ₹
Fixed assets 6,75,000 1,50,000
Investments (shares in P Ltd at cost) 2,10,000 -
Current assets :
10,05,000 2,71,500
Fixed standing in the books of P Ltd at ₹ 90,000 were considered worth ₹ 75,000 on the date of purchase of
control for the purpose of determining the value of shares. 20% depreciation has been written off since
acquisition. Investors of O Ltd include ₹ 30,000 at cost purchased from P Ltd made ₹ 7500 profit.
[Answer: Capital reserve (arising on consolidation) ₹ 6000. Minority interest ₹ 45,600. Group Profit &
Loss account ₹ 18,900. Balance sheet total ₹ 10,47,000.]
11. Holding Company [Without Mid year] [2007H] [4th Imp For Pass & Hons]
The balance sheet of Howrah Ltd and Sibpur Ltd as on 31.3.15 were as follows:
Howrah Ltd Sibpur Ltd
Share capital ( shares of ₹ 100 each) 6,00,000 2,50,000
General reserve 1,00,000 60,000
Profit & Loss account 1,50,000 90,000
Short-term provision (provision for taxation) 60,000 70,000
9,80,000 5,30,000
Assets ₹ ₹
Machinery 1,50,000 1,08,000
Vehicle 1,30,000 50,000
Furniture 50,000 30,000
Goodwill 60,000 40,000
Investments (shares in s Ltd at cost) 3,80,000 -
Current assets :
Inventories 70,000 1,40,000
Trade receivable 60,000 1,00,000
Bank 80,000 62,000
9,80,000 5,30,000
Additional information:
(a) Howrah Ltd acquires 2,000 shares of Sibpur Ltd on 1.4.14.
(b) The Profit & Loss accounts of Sibpur Ltd had balances of ₹ 30,000 and general reserve of ₹ 50,000 on the
date of acquisition.
(c) On 1.6.14 Sibpur Ltd declared a dividend out of pre-acquisition profits @ 12% on its share capital.
Howrah Ltd created the same to its profit and loss statement.
(d) Sibpur Ltd owed ₹ 20,000 for purchase of stock from Howrah Ltd. The entire stock is held on 31.3.15.
Howrah Ltd made its profit of 25% on cost.
(e) Machinery standing in the books of Sibpur Ltd at ₹ 1,20,000 on the date of acquisition of shares, were
revalued at ₹ 1,44,000.
[Answer: Goodwill (arising on consolidation) ₹ 96,800. Total goodwill ₹ 1,96,800. Unrealized profit on
stock ₹ 4,000. Profit revaluation of machinery ₹ 24,000. Under depreciation on machinery ₹ 2,400.
Minority interest ₹ 84,320. Group Profit & Loss account ₹ 1,92,080. Group general reserve Profit &
Loss ₹ 1,08,000. Balance sheet total 12,24,400]
12. Holding Company [Without mid year] [ 2009H] [6th Imp For Pass & Hons]
The summarised Balance Sheet of Vipul Ltd. and its subsidiaries Vedika Limited are as follows:
Liabilities Vipul Ltd Vedika Ltd Assets Vipul Ltd Vedika Ltd
₹ ₹ ₹ ₹
Equity Share capital 6,00,000 4,00,000 Goodwill --------- 20,000
6 % Preference Shares --------- 1,00,000 Fixed Assets 3,50,000 2,50,000
General Reserve 1,60,000 80,000 Investments 3,60,000 90,000
Profit & Loss Account 1,30,000 1,20,000 Stock 2,20,000 3,60,000
Bills Payable 20,000 25,000 Debtors 2,10,000 2,50,000
Creditors 2,30,000 2,85,000 Bills Receivable 40,000 35,000
Proposed Dividend 60,000 40,000 Cash 20,000 45,000
12,00,000 10,50,000 12,00,000 10,50,000
Vipul Ltd purchased interest in Vedika Ltd by acquiring its 3/4th equity share capital al a premium of 20 % on
1st April 2007. Prepare a consolidated Balance sheet in the books or Vipul Ltd. as on 31st March 2008. The
following further information is to be taken into account:
(a) Profit & Loss A/c of Vedika Ltd. includes an amount of ₹ 20,000 brought forward from the year 2006-
07.
(b) Creditors of Vipul Ltd. include an amount of ₹ 12,000 for purchases from Vedika Ltd which are still
unsold. Vedika Ltd. sells goods at 20% above cost.
(c) Vedika Ltd. remitted a cheque for ₹ 10 000 on 31st March 2008 which was received by Vipul Ltd. in the
month of April 20O8.
(d) The directors of Vipul Ltd. and Vedika Ltd. have proposed a dividend of 10 % on equity share capital for
the year 2007-08.
[Minority Ltd. 160000; Capital reserve 15000; Consolidated P/L 233000; Consolidated G/R 160000
Consolidated balance sheet 1876000]
13. Holding Company [2013 Pass] [With Mid year] [2nd Imp For Pass]
Following is the balance sheet of H Ltd. And S Ltd. As on 31.03.2013:
Share Capital (₹ 10 each) 1,00,000 50,000 Goodwill 10,000 10,000
General Reserve 60,000 40,000 Other fixed assets 1,00,000 1,20,000
P/L Account 40,000 30,000 Stock 50,000 38,000
Sundry Creditors 70,000 62,000 Debtors 50,000 30,000
Bills Payable 13,000 20,000 Investment:
4000 shares of S Ltd. 68,000 -
Cash 5,000 4,000
2,83,000 2,02,000
2,83,000 2,02,000
H Ltd. acquired the shares in S Ltd. On 01.07.2012. On 01.04.2012 balances of Reserve and P/L Account in the
books of S Ltd. Stood at ₹ 20,000 and ₹ 10,000 respectively. Prepare a Consolidated Balance Sheet as on
31.03.13.
[Capital reserve ₹ 4,000. Minority interest ₹ 24,000. P/L ₹ 52,000; G/R ₹ 72,000; Balance sheet
₹ 4,17,000]
14. Holding Company [1982H] [With Mid year] [4th Imp For Pass & Hons]
Jupiter Ltd purchased control of Neptune Ltd on 1.10.14. Following are the balance sheet of the two
companies as at 31.3.15:
Jupiter Ltd Neptune Ltd
Creditors for goods 60,000 42,000
Bills payable (In favor of Jupiter Ltd) - 6,000
5,16,000 3,18,000
Assets ₹ ₹
Land and building 60,000 60,000
Plant and machinery 1,20,000 1,08,000
Goodwill 6,000 24,000
Investments (13500 shares of Neptune Ltd) 2,02,500 -
Current assets :
5,16,000 3,18,000
Contingent liability for bills discounted 9000 -
(a) Neptune Ltd had on 1.4.14 ₹ 30,000 in general reserve and ₹ 36,000 in Profit & Loss account. 10%
dividend was received by Jupiter Ltd in October from Neptune Ltd for 2013-14 and this amount was
included in profit and loss.
(b) Plant and machinery standing in the books of Neptune Ltd at ₹ 1,20,000 on the date of purchase was
revalued at ₹ 1,44,000.
(c) Inventories of Neptune Ltd included ₹ 9,600 on which Jupiter Ltd made a profit of 25% on cost.
Prepare a consolidated balance sheet.
[Answer: Unrealized profit of inter-company stock ₹ 1,920. Profit on revaluation of plant and
machinery₹ 30,000. Under depreciation of plant and machinery ₹ 1,500. Capital reserve (arising on
consolidation) ₹ 20,250. Minority interest ₹ 74,625. Group Profit & Loss account ₹ 59,205. Balance
sheet total ₹ 6,58,080 (without adjusting capital reserve against goodwill). Contingent liability for bills
receivable discounted ₹ 3000]
Note:
On 1.10.14 the plant and machinery stood in the books at ₹ 1,20,000 and assuming no purchase or sale from
1.4.14, the balance was the same on 1.4.14. This means that a depreciation of 10% per annum has been
charged. Depreciated value of plant and machinery on 1.10.14 is ₹ 1,20,000 less depreciation for six months ₹
6,000 = ₹ 1,14,000. Hence profit on revaluation is ₹ (1,44,000 – 114000) or ₹ 30,000.]
15. Holding Company [1989H] [With Mid year]*** [3rd Important for Hons]
Following are the Balance Sheets of Calcutta Ltd. and Howrah Ltd. as at 31st December 1988.
Liabilities Calcutta Ltd Howrah Ltd Assets Calcutta Ltd Howrah Ltd
₹ ₹ ₹ ₹
Share Capital: Goodwill 1,20,000 90,000
Sh of ₹ 100 each 15,00,000 6,00,000 Land & Building 6,00,000 3,90,000
General Reserve Plant & Machinery 4,80,000 2,70,000
on 1.1.1988 3,00,000 1,80,000 Stock in Trade 3,00,000 2,70,000
Profit & Loss A/c 4,20,000 2.70,000 Due from Calcutta Ltd. — 15,000
Bills Payable — 1,20,000 Debtors 60,000 2,25,000
Due to Howrah Ltd. 9,000 — 4,500 Shares in
Creditors 2,31,000 1,50,000 Howrah Ltd. at cost 7,20,000 —
Cash at Bank 1,80,000 60,000
24,60,000 13,20,000 24,60,000 13,20,000
Other particulars:
(a) The Profit & Loss Account of Howrah Ltd. showed a balance of ₹ 1,50,000 on 1st January, 1988. A
dividend of 15% was paid on October, 1988 for the year 1987. This dividend was credited to Profit &
Loss Account by Calcutta Ltd . Calcutta Ltd acquired the shares in Howrah Ltd. on 1st July, 1988.
(b) The Bills payable by Howrah Ltd. were all issued in Favour of Calcutta Ltd. which company got the bills
discounted.
(c) The Creditors of Howrah Ltd . included ₹ 60,000 for goods supplied by Calcutta Ltd.
(d) Included in the Stock of Howrah Ltd. are goods to the value of ₹ 24,000 which are supplied by Calcutta
Ltd. at profit of 33 1/3% on cost.
(e) At the date of acquisition of shares, Plant and Machinery standing at ₹ 3,00,000 in Howrah Ltd.'s books
were revalued at ₹ 4,50,000 but no adjustment was made in the books.
(f) Calcutta Ltd., remitted ₹ 6,000 on December 30, 1988, but it was received by Howrah Ltd. on 4th
January, 1989.
You are required to draw up a Consolidated Balance Sheet of Calcutta Ltd. and its Subsidiary Howrah Ltd.
[Minority interest 301687; Capital reserve 180000; Consolidated P/L 419063; Consolidated Balance
Sheet 3141750]
16. Holding Company [1994H] [With Mid year] [1st Important for Hons]****
The following are the balance sheets of Casters Ltd. and Tica Ltd. as at 31.03.15:
Balance Sheets
Casters Ltd Tica Ltd
Share-holders funds:
Share capital (shares of ₹ 10 each, fully paid) 15,00,000 5,00,000
Profit & Loss account 8,00,000 3,60,000
Trade payable 1,32,000 1,61,000
Other current liabilities (Current A/c with Tica Limited ) 18,000 -
34,00,000 10,41,000
Assets ₹ ₹
Non-current Assets:
Land and building 10,30,000 3,60,000
Shares in Tica Ltd 8,00,000 -
Other investments 1,30,000 35,000
Current assets :
Inventories 3,40,000 2,02,000
Trade receivable 6,00,000 1,38,000
Cash at bank 2,00,000 15,000
Other current assets (current account with Caster Ltd) ---------- 20,000
34,00,000 10,41,000
(a) Casters Ltd acquired 80% shares of Tica Ltd on 1.7.14. On 1.4.14, the reserve and Profit & Loss account
of Tica Ltd were ₹ 10,000 and ₹ 120000 respectively.
(b) Land and building of Tica Ltd., whose book value on 1.4.14 was ₹ 4,00,000 were revalued at ₹ 3,80,000
at the date of acquisition, but it was not passed in the books.
(c) Tica Ltd declared 16% dividend for the year 2013-14 and paid on 1.9.14 and Casters Ltd. included the
entire amount of dividend received from Tica Ltd in its profit and loss statement.
(d) Inventories of Casters Ltd include ₹ 30,000 goods purchased from Tica Ltd.
(e) Trade payable of Casters Ltd ₹ 60,000 purchased from Tica Ltd. on which Tica Ltd made profits of ₹
15,000.
(f) On 31.3.15, Casters Ltd remitted cash ₹ 2,000 on current account to Tica Ltd.
From the above information prepare a consolidated balance sheet of Casters Ltd and its subsidiary Tica Ltd as
at 31.3.15.
[Answer: Unrealized profit on inter company stock ₹ 7,500. Loss on revaluation of land and building
₹10,000. Over-depreciation on the same 9 months ₹ 750. Pre-acquisition reserve ₹ 12,500 . Post-
𝟗
acquisition Profit & Loss account ₹ 2,40,000 (i.e., 𝟏𝟐 x ₹ 320000). Goodwill (arising on consolidation) ₹
2,38,000. Minority interest ₹ 1,74,150. Group reserve ₹ 9,56,000. Group Profit & Loss account ₹
9,21,100. Balance sheet total ₹ 37,84,250]
17. Holding Company [1998H] [With Mid year] [5th Important for Hons]
From the following balance sheet of A Ltd and its subsidiary B Ltd., prepare a consolidated balance sheet as at
31.3.15.
Balance sheet as on 31.3.15
A Ltd B Ltd
Share capital ( shares of ₹ 10 each, fully paid) 4,00,000 2,00,000
Creditors for goods 40,000 25,000
Bills payable 45,000 15,000
Other current liabilities (outstanding expenses) 5,000 -
6,30,000 3,20,000
Assets ₹ ₹
Fixed assets
Tangible 1,60,000 1,80,000
Investments (15000 shares in B Ltd) 1,61,000 -
Current assets :
Debtors for goods 59,000 25,000

Bills receivable 80,000 10,000
Cash 20,000 4,000
6,30,000 3,20,000
Notes: Contingent Liability of A Ltd for bills discounted ₹ 5000
(a) A Ltd purchased the shares in B Ltd on 1.10.14.
(b) On 1.4.14 B Ltd had₹ 10,000 in general reserve and ₹ 30,000 in Profit & Loss account.
(c) In October 2014, a dividend was paid by B Ltd for the year 2013-14 and A Ltd received ₹ 15,000 as
dividend and credited the same to its profit and loss statement.
(d) Bills accepted by B Ltd are in all favour of A Ltd.
(e) Trade payables of B Ltd include ₹ 12,000 for goods supplied by A Ltd at a profit of 25% on sales. One-
third of the goods were still in stock on 31.3.15.
*Answer: Unrealized profit on inter company stock ₹ 1000. Capital reserve (arising on consolidation)
₹ 41,500.Minority interest ₹ 70,000. Group general reserve ₹ 63,750. Group Profit & Loss account ₹ 82,750.
Balance sheet total ₹ 761000 (without adjusting capital reserve against goodwill)+
18. Holding Company [With Mid year] [2005H] [3rd Important for Hons]**
U Ltd purchased 6000 equity shares of P Ltd on 1.7.14 for ₹ 81,000. Their balance sheets on 31.3.15 are given
below :
U Ltd P Ltd
4,10,000 1,91,000
Assets ₹ ₹
Fixed assets 2,70,000 1,50,000
Investments (6000 shares of P Ltd) 75,000 -
Current assets :
4,10,000 1,91,000
Contingent liability for bills discounted by U Ltd ₹ 9,000 (including ₹ 5,000 for bills received from P Ltd).
Additional Information:
(a) P Ltd had the following balances on 1.4.14 :
Profit & Loss account ₹ 25,000
General reserve ₹ 20,000
(b) Dividend paid by P Ltd on 15.7.14 for the years 2013-14 @ 10%.
(c) Trade payable of U Ltd include ₹ 10,000 payable to P Ltd.
(d) The trade payables on (c) above arose from sale of goods costing ₹ 25,000 by P Ltd. to U Ltd. at profit of
20% on cost 60% of such goods are yet to be sold by U Ltd.
Prepare the consolidated balance sheet on 31.3.15.
[Answer: Capital reserve (arising on consolidation) ₹ 10,500. Unrealized profit on stock ₹ 3,000.
Minority interest ₹ 66,000. Group Profit & Loss accounts to ₹ 66,000. Group general reserve ₹ 44,500.
Balance sheet total ₹ 5,13,000]
Notes:
(a) Shares in P Ltd were acquired at cost of ₹ 81,000 and the balance sheet of U Ltd on 31.3.15 shows ₹
75,000 as investment. From that it is clear that dividend of ₹ 6,000 received from P Ltd out of pre-
acquisition profit has been correctly treated in the books of U Ltd (i.e., it has been credited to
investment A/C)
(b) In the group balance sheet ₹ 4,000 will appear as a foot note for contingent liability in respect of bills
receivable discounted.
19. Holding Company [With Mid Year] [2008H] [4th Important for Hons]******
Prepare a consolidated Balance Sheet of Neptune Ltd. and its subsidiary Pluto Ltd. from the following
Balance Sheets as on 31/3/2007 and given information :
Liabilities N Ltd. P Ltd. Assets N Ltd. P Ltd.
₹ ₹ ₹ ₹
Preference share capital of Land & Building 3,00,000 1,60,000
₹ 10 each 4,00,000 40,000 Plant & Machinery 4,20,000 1,80,000
Equity Share Capital of Furniture & Fixtures 80,000 1,60,000
₹ 100 each 6,00,000 4,00,000 Debtors 1,40,000 1,50,000
General Reserve Stock 1,90,000 1,70,000
as on 1.4.06 3,00,000 1,20,000 3,000 shares in
Profit & loss Account 2,60,000 1,80,000 Pluto Ltd
Creditors 1,90,000 1,10,000 (pur on 30/9/06) 4,80,000
Bills Payable 40,000 50,000 Cash at Bank 1,80,000 60,000
Preliminary Expenses ------- 20,000
17,90,000 9,00,000 17,90,000 9,00,000
Other information:
(a) Plant & Machinery of Pluto Ltd. were revalued at ₹ 3,00,000 which stood in the books at ₹ 2,00,000 at
the beginning.
(b) Profit & Loss Account of Pluto Ltd. showed a credit balance of ₹ 1,20,000 on 1st April, 2006.
(c) Included in creditors of Pluto ₹ 50,000 for goods supplied by Neptune Ltd. Also included in the stock of
Pluto Ltd. are goods worth ₹ 20,000 which were supplied by Neptune Ltd. at a profit of 25% on cost.
(d) A dividend of 10% was paid by Pluto Ltd. in October, 2006 for the year ended 31st March,
2006 and the same was credited to Profit and Loss Account of Neptune Ltd.
[M. interest 1,96,125; Capital Reserve 1,05,000; Consolidated G/R 30000 Consolidated P/L 259375
Consolidated Balance Sheet 2240500]
20. Holding Company [B.com Honours 2013] [2nd Important for Hons]***
H. Ltd. Purchased 13,500 shares of S Ltd. On 01.07.12 at a cost of ₹ 2, 10,000. Following are the Balance
Sheets of two companies as at 31.03.13.
Liabilities H Ltd. S Ltd. Assets H Ltd. S Ltd.
₹ ₹ ₹ ₹
Equity Share Capital of Land & Building 60,000 60,000
₹ 10 each 3,60,000 1,80,000 Plant & Machinery 1,20,000 1,08,000
General Reserve 36,000 30,000 Stock-in-trade 60,000 60,000
Profit & Loss A/c 60,000 60,000 Debtors 53,000 44,000
Creditors 60,000 42,000 Investments 2,30,000 52,000
Bills payable to H Ltd. 6,000 Cash at Bank 20,000 12,000
Proposed Dividend 27,000 18,000
5,43,000 3,36,000 5,43,000 3,36,000
Other Information:
(a) S. Ltd. Had on 1.4.12 ₹ 18,000 in General Reserve and ₹ 36,000 (Cr.) in Profit & Loss A/c.
(b) In September, 2012 S. Ltd. paid a dividend for the year 2011-12. H. Ltd. Received ₹ 15,000 of such
dividend and credited the same to its Investment A/c.
(c) Plant & Machinery standing in the books of S Ltd. At ₹ 1, 20,000 on 01.04.12 was revalued at ₹ 1,
40,000 on the date of acquisition of shares. No addition or sale of machinery was made during the year.
(d) Stock of S Ltd. Included ₹ 9,600 purchased from H Ltd. On which H. Ltd. made a profit of 20% on cost.
Prepare Consolidated Balance Sheet of H. Ltd. With its subsidiary S. Ltd. As 31.03.13.
[Minority Interest ₹ 77,319; Goodwill ₹ 3,375; Consolidated P/L ₹ 92,981; Balance Sheet Total ₹
7,07,275]
21. Holding Company [C.U. B.com Honours] [3rd Important for Hons]***
On 1st July 2014 H Ltd acquired 24,000 shares of ₹ 10 each in S Ltd at cost of ₹ 3,40,000. The balance sheet
of the two companies as on 31st March 2015 were as follows:
H Ltd S Ltd
General reserve (1.4.14) 6,00,000 3,00,000
Creditors for goods 3,60,000 84,000
Bills payable 1,40,000 1,20,000
30,00,000 10,74,000
Assets ₹ ₹
Fixed assets
Tangible 12,50,000 4,00,000
Intangible (goodwill) 5,00,000 1,40,000
Investments (24000 shares in B Ltd) 3,40,000 -
Current assets :
Inventories 3,00,000 80,000
Debtors for goods 3,50,000 2,70,000
Bills receivable 1,20,000 60,000
Cash and bank 1,40,000 1,24,000
30,00,000 10,74,000
(a) On 1st April 2014, the Profit & Loss account of S Ltd., had a balance of ₹ 80,000 out of which a dividend
of 15% was paid in September 2014.
(b) The bills payable of S Ltd., represented bills issue in favour of H Ltd. which company still is held ₹
80,000 of the bills accepted by S Ltd.
(c) Half of the closing inventory of S Ltd. represents goods supplied by H Ltd at cost plus 25%.
Prepare the consolidated balance sheet as on 31st March, 2015.
[Answer: Profit on inter company stock ₹ 8,000. Capital reserve (arising on consolidation) ₹1,50,500.
Minority interest ₹ 3,48,000. Group Profit & Loss account ₹ 4,23,500. Balance sheet total ₹ 36,46,000
(without adjusting capital reserve against goodwill).]
Notes:
Shares in S Ltd were acquired at cost of ₹3,40,000 and the balance sheet of H Ltd on 31.3.15 shows the same
figure as investment. From this it is clear that dividend of ₹ 36,000 received from S Ltd out of pre-acquisition
profit has not been correctly been treated in the books of H Ltd (i.e., it has been credited to profit and loss
statement and not to investment A/c). Hence adjustment for this should be made in the profit and loss
statement and investment A/c of H Ltd.
The summarized balance sheet of Big Ltd. and Small Ltd. as on 31st March 2015 were as under:
Balance sheet
Big Ltd Small Ltd
Equities & Liabilities: ₹ ₹
Equity Share capital (₹ 10) 9,00,000 3,00,000
Trade payable 1,00,000 1,70,000
21,00,000 7,00,000
Assets ₹ ₹
Fixed assets 9,00,000 4,00,000
Investments 6,00,000 -
Inventories 2,10,000 1,20,000
Trade receivable 1,60,000 90,000
Cash and bank 2,30,000 90,000
21,00,000 7,00,000
Big Ltd. has acquired 75% of Small Ltd. is shares ₹ 600000 on 1st July 2014. The Profit & Loss account of
Small Ltd. had an opening balance of ₹ 100000 from which it paid dividend for 2013-14 @ 20% on 30th
September, 2014. The dividend received by Big Ltd. is included in its profit and loss statement.
Inventories of Big Ltd. include ₹ 20,000 out of purchase of ₹ 50,000 made from small Ltd. in January, 2015
and no payment on this account has been made by Big Ltd. to Small Ltd. till March, 2015. Small Ltd. had sold
these items at a margin of 25% on cost. There has been no change in the general reserve account of Small Ltd.
during 2014-15.
Prepare a consolidated balance sheet as on 31st March, 2015.
[Answer: Goodwill (cost of control) ₹ 247500. Minority interest ₹ 132500. Group Profit & Loss account
₹ 641000. Balance sheet total ₹ 23,93,500]
23. Holding Company [1996H] [Without Mid year] [2nd Important for Hons]***
The following are the balance sheets of Hero Ltd. and Sarin Ltd. as at 31st March, 2015.
Equity and liabilities Hero Ltd Sarin Ltd
₹ ₹
Shareholders’ funds:
Share capital (equity shares ₹ 10 each, fully paid) 6,00,000 4,00,000
General reserve 2,00,000 3,20,000
Non –current liabilities:
Long-term borrowings (10% debentures) - 1,50,000
Current liabilities:
Trade payables 3,00,000 2,50,000
Other current liabilities (current account with H Ltd.) - 50,000
13,50,000 13,50,000
Assets
Non- current assets:
Fixed assets 4,80,000 6,00,000
24,000 shares in Sarin Ltd. 3,50,000 -
10% debentures in Sarin Ltd. (nominal ₹ 80,000) 85,000 -
Current assets
Inventories 1,00,000 2,50,000
Trade receivables 2,50,000 4,50,000
Cash 25,000 50,000
Other current assets (current account with S Ltd.) 60,000 -
13,50,000 13,50,000
The following further information is furnished:
(a) Hero Ltd. acquired shares in Sarin Ltd. on 1st April, 2014 when Sarin Ltd. had ₹ 4,00,000 in the general
reserve and ₹ 2,00,000 in the Profit & Loss account.
(b) On 1st January, 2015, Sarin Ltd. issued one share for every four shares held, as bonus shares at a face
value of ₹ 10 each. No entry is made in the books of Hero Ltd. for the receipt of these bonus shares.
(c) On 30th June, 2014 Sarin Ltd. declared a dividend out of its pre-acquisition profits, of 25% on its then
capital. Hero Ltd. credited the dividend received to its profit and loss statement.
(d) A remittance of ₹ 10,000 by Sarin Ltd. to Hero Ltd. has not yet been adjusted in the books of Hero Ltd.
(e) Trade payables of Sarin Ltd. include ₹ 1,00,000 goods supplied by Hero Ltd. on which Hero Ltd. made a
profit of ₹ 10,000. Half of the goods are still in stock of Sarin Ltd. on 31st March, 2015.
Prepare a consolidated balance sheet on 31st March, 2015.
[Answer: Unrealized profit on inter-company stock ₹ 5,000. Capital reserve (arising on consolidation)
₹ 335000. Minority interest ₹ 225000. Group profit and loss Profit & Loss ₹ 230000. Consolidated
balance sheet total ₹ 21,10,000.]
24. Holding Company [B.com Honours 2015] [5th Important for Hons]***
The Balance Sheets of Honey Ltd. and its subsidiary Sour Ltd. as on 31.03.2014 stood as follows :
(Figures in ₹ Lakhs)
Honey Ltd. Sour Ltd.
EQUITY & LIABILITY :
Shareholders Fund
Equity Shares of ₹ 10 fully paid 12,000 4,800
Reserves & Profit & Loss :
General Reserve 2,784 1,380
Profit & Loss Account 2,715 1,620
Current Liabilities
Bills Payable 372 160
Sundry Creditors 1,461 854
Provision for taxation 855 394
Proposed Dividend 1,200 -
Total 21,387 9,208
ASSETS :
Non – Current Assets
Fixed Assets :
2,718 -
Land & Buildings
4,905 4,900
Plant & Machinery
1,845 586
Furniture & Fittings
3,000 -
Non -current Investments : Shares in Sour Ltd.
Current Assets :
3,949 1,956
Stock
2,600 1,363
Debtors
1,490 204
Cash & Cash Equivalents
360 199
Bills Receivable
520 -
Sundry Advances
Total 21,387 9,208
The following information’s are also provided:
(a) Honey Ltd. purchased 180 lakhs shares in Sour Ltd. on 1st April, 2013 when the balances to General
Reserve and P/L A/c of Sour Ltd. stood at ₹ 3,000 Lakhs and ₹ 1,200 Lakhs respectively.
(b) On 4th July, 2013, Sour Ltd. declared a dividend @ 20 % for the year ended 31.03.2013. Honey Ltd.
credited dividend received by it to its Profit & Loss Account.
(c) On 1st January, 2014 Sour Ltd. issued 3 fully paid – up shares for every 5 shares held as bonus shares out
of balances to its general Reserve as on 31.03.2013.
(d) On 31.03.2014 all Bills Payable in Sour Ltd.’s Balance Sheet were acceptance in favour of Honey Ltd. But
on that date, Honey Ltd. held only ₹ 45 Lakh of these acceptances in hand, the rest having been
endorsed in favour of its Creditors.
(e) On 31.03.2014 Sour Ltd.’ stock included goods which it had purchased for ₹ 100 Lakh from Honey Ltd.
which made a profit @ 25% on cost.
Prepare a Consolidated Balance Sheet of Honey Ltd. and its subsidiary Sour Ltd. as at 31st March, 2014.
[MI ₹ 3120; CR ₹ 1,320; P/L ₹ 2947; ₹ 2892; B/S ₹ 27530]
The statement of assets and liabilities of H Ltd. and its subsidiary S Ltd. as on 31.03.15 stood as follows.
H Ltd S Ltd
1. Share-holders funds :
a) Equity shares of Rs. 10 fully paid 10,00,000 4,00,000
b) Reserves and Surplus:
General Reserves (1.4.14) 4,80,000 2,00,000
Profit and Loss Balance 1,14,400 1,64,000
2. Non-current Liabilities: ------ -----
3. Current Liabilities:
Short term borrowings 2,00,000 -----
Bills Payable ------ 26,000
Sundry Creditors 1,39,600 40,000
Total 19,34,000 8,30,000
Assets H₹ S₹
(a) Fixed assets
Land and Buildings 3,60,000 3,80,000
Plant and Machinery 4,80,000 2,70,000
(b) Non-current Investment
Investment in equity shares of S Ltd. 6,45,500 -----
Other non-current investment 74,500 -----
(c) Current Assets
Inventors 2,20,000 80,000
Sundry Debtors 96,000 84,000
Bills Receivables 27,600 -----
Cash and Cash equivalents 30,400 16,000
Total 19,34,000 8,30,000
The following informations are also available:

a) H Ltd. acquired 32,000 equity shares of Rs. 10 each in S Ltd.. on October 1, 2014 for Rs. 6,45,500.
b) The statement of Profit and Loss of S Ltd. showed a profit of Rs. 60,000 on 01.04.2014, out of which a
dividend of 10% was paid on November 1,2014 for the year 2013-14.
c) The Plant and Machinery of S Ltd. which stood at Rs. 3,00,000 on 1.4.2014 was considered worth Rs.
3,60,000 on the date of acquisition by H Ltd.
d) Sundry debtors of S Ltd. include loan to H Ltd. Rs. 14,000. H Ltd. remitted a cheque of Rs. 14,000 to S.
Ltd. in April 2015.
Prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on 31st March 2015.
26. Holding Company [B.com Honours 2017] [5th Important for Hons]***
The following are the statements of assets and liabilities of Ambani Ltd. and Adani Ltd. as on 31.03.2017:
Particulars Note Ambani Ltd. Adani Ltd.
no.
I. Equity and Liabilities:
1. Shareholders’ Funds:
(a) Share Capital 30,00,000 10,00,000
(b) Reserve and Surplus 1 35,00,000 7,60,000
Trade Payables
2 3,00,000 3,22,000
Total
II. Assets: 68,00,000 20,82,000
1. Non-current Assets:
(a) Fixed Assets Tangible Assets 3 26,60,000 12,62,000
(b) Non-current Investments 4
18,60,000 70,000
2. Current Assets:
(a) Inventories (stock) 6,80,000 4,04,000
(b) Trade Receivables 5
12,00,000 3,16,000
(c) Cash and Cash Equivalents (Cash at Bank) 4,00,000 30,000
Total
68,00,000 20,82,000
Notes to Accounts:
Particulars Ambani Ltd. Adani Ltd.
1. Reserve and Surplus:
(a) Reserve 19,00,000 40,000
(b) Balance in the statement of profit and loss 16,00,000 7,20,000
35,00,000 7,60,000
2. Trade Payables: 36,000 ---
(a) Current A/c with Adani Ltd. 2,64,00 3,22,000
(b) Sundry Creditors 3,22,000
3,00,000
20,60,000 7,20,000
3. Fixed Assets – Tangibles Assets:
6,00,000 5,42,000
(a) Land and Buildings
(b) Machinery 26,60,000 12,62,000
4. Non-current Investments:
16,00,000 ---
(a) Investment in shares of Adani Ltd. 2,60,000 70,000
(b) Other Investments
18,60,000 70,000
5. Trade Receivables:
(a) Sundry Debtors 12,00,000 2,76,000
(b) Current A/c with Ambani Ltd. --- 40,000
12,00,000 3,16,000
Other Particulars:
a) Ambani Ltd. acquired 80% shares of Adani Ltd. on 1.7.16. On 1.4.16, the Reserve and Statement of
Profit and Loss of Adani Ltd. were Rs. 20,000 and Rs. 4,00,000 respectively.
b) Land and Buildings standing in the books of Adani Ltd. at Rs. 8,00,000 on 1.4.2016 were revalued at
Rs. 7,60,000 at the date of acquisition, but it was not passed in the books.
c) Adani Ltd. declared and paid 20% dividend for the year 2015-16 in July 2016 and Ambani Ltd.
credited the entire amount of dividend received from Adani Ltd. to its statement of Profit and Loss.
d) Stock of Ambani Ltd. includes Rs. 60,000 goods purchased from Adani Ltd.
e) Sundry Creditors of Ambani Ltd. includes Rs. 1,20,000 purchased from Adani Ltd. on which Adani Ltd.
on which Adani Ltd. made a profit Rs. 30,000.
f) On 31.3.2017, Ambani Ltd. remitted a cheque Rs. 4,000 on current A/c to Adani Ltd.
From the above information prepare a Consolidated Balance Sheet of Ambani Ltd. and its subsidiary Adani
Ltd. as on 31.3.2017.
27. Holding Company [B.com Honours 2018] [3rd Important for Hons]***
The Statement of assets and liabilities of H. Ltd and its subsidiary S. Ltd as at 31.03.2017 stood as follows:
H. Ltd (Rs.) S. Ltd (Rs.)
I. Equity and Liability:

1. Shareholders’ Fund:
a) Equity Share Capital (Rs. 10 each fully 5,00,000 1,50,000
paid)
General Reserve 2,00,000 1,30,000
P & L Balance 2,50,000 1,00,000
2. Non-current Liabilities: --- ---
3. Current Liabilities
Trade Payable 2,80,000 1,70,000
Total 12,30,000 5,50,000
II. Assets:
a) Fixed Assets: 5,00,000 2,20,000
Tangible: Land and Building 2,00,000 1,00,000
Plant and Machinery
b) Non-current Investment 1,80,000 ---
Investment in Shares (including shares in S.
Ltd.)
2. Current Assets: 1,60,000 1,40,000
Inventory
1,60,000 80,000
Trade Receivables
30,000 10,000
Cash and Cash Equivalent
Total 12,30,000 5,50,000
The following information is also available:
 H Ltd. acquired 12,000 Equity Shares of S. Ltd on 01.07.16 at a cost of Rs. 1,50,000 and
immediately after acquisition, H. Ltd received dividend on equity shares @ 20% for the year
2015-16. H. Ltd credited its share of dividend to Profit & Loss A/c.
 On 01.04.2016, balance of General Reserve of S. Ltd. was Rs. 70,000 and the balance of Profit
& Loss was Rs. 40,000.
 Debtors of H. Ltd include Rs. 20,000 for goods sold to S Ltd at cost plus 25%; half the goods
are still in stock. S Ltd remitted Rs. 5,000 to H. Ltd. which H. Ltd received on 11.04.2017.
You are required to prepare the Consolidated Balance Sheet of H. Ltd with its subsidiary S. Ltd. as at
31.03.2017.

FR & FSA / FM ₹ 3,000
Batch Timings
Batch 3: 4.30 pm to 6.30 pm [May be conducted on Demand] [4 Days in a week]
Batch 4: 11 am to 1 pm [May be conducted on Demand] [4 Days in a week]
Batch 5: Saturday & Sunday Batch May be conducted on Demand]
Faculty:
Ravi Kant Bhalotia [CA/CMA Finalist]
CA Shruti Chamaria [For Theoretical concept]
Fund Flow Analysis [15 + 5 = 20 Marks]

Fund flow statement
Sources of fund ₹ Application of fund ₹
Decrease in working capital Increase in working capital (CA-CL)
Issue of equity share/ preference share Redemption of preference
/Debenture at par etc. share/debenture at par
Sale of assets Buyback of equity share
Loan taken Purchase of assets
Interest & dividend received Repayment of loan
Fund flow operation Interest & dividend paid
(fund from trading activities) Interim dividend
Tax paid
Working note:
i) Statement showing change in working capital
Particulars 31.12.2010 31.12.2011
Current assets: (A)

:- stock & stores
:-Debtors (less provision)
:-bills receivable
:-cash
:-bank
:-prepaid expenses
:-accrued income
:-short term investment (marketable securities)
:-loan & advances
Current liabilities : (B) (Excluding provision)
:-creditors
:-bills payable
:-bank overdraft
:outstanding expenses
:-advance income
Working capital (A-B)
ii) Computation of fund flow operation
Particulars amount Amount
P/L:- closing balance

(-) opening balance
Profit carried over to balance sheet
(+) proposed dividend
(+) interim dividend
(+) transfer to reserve:
(+) provision for tax
Net profit before tax
(+) Non-cash & non-operating expenses
:- depreciation
:-goodwill written off
:-preliminary expenses written off
:- loss on issue of share/debenture
:-premium on redemption of share/debenture
:-loss on sale of assets
:-deferred expenses written off
:-interest paid
Less: non-operating income
:-interest & dividend received
:-profit on sale of assets
FUND FLOW OPERATION
1. Fund Flow Statement [5 Marks] [2nd Important for Hons & Pass Both]***
Calculate funds from operation from the information given below as on 31st Dec. 2005.
(a) Net profit for the year ended 31st December, 2005 Rs, 8,00,000.
(b) Gain on sale of machinery ₹ 30,000.
(c) Goodwill written off during the year ₹ 25,000.
(d) Old furniture having book value ₹ 10,000 has been sold at ₹ 8,000.
(e) Depreciation provided during the year ₹ 50,000.
(f) Advertisement suspense written off during the year ₹ 15,000.
(g) ₹ 2,00,000 was transferred to General Reserve.
(h) Dividend received during the year ₹ 10,000.
Solution (Qn.1)
Particulars Amount Amount
Net profit 800000
Add: goodwill written off 25000
Loss on sale of furniture (10000-8000) 2000
Depreciation 50000
Advance suspense 15000 92000
8,92,000
Less: gain on sale of machinery 30000
Dividend Received 10,000 40,000
Fund from operation 852000
2. Fund Flow Statement [5 Marks] [[2nd Important for Hons & Pass Both]***
Compute fund from operations Extract from the Balance Sheets:
Particulars 31.3.04 31.305
Balance of Profit and Loss A/c 2,00,000 2,50,000
Additional Information :
Depreciation charged on assets 20,000
Preliminary expenses written off 10,000
Amount transferred to general reserve 50,000
A plant having a book value of ₹ 60,000 was sold for 70,000
Interim dividend paid during the year 20,000
Interest received 5,000
[Fund from operations ₹ 1,35,000]
3. Fund Flow Statement [5 Marks] [1st Important for Hons & Pass Both]***
From the following particulars calculate Fund from Operations:
P&L A/c: as on 01.04.06 1,60,000
: as on 31.03.07 2,00,000
Transactions during the year :
Transfer to Revenue Reserve 40,000
Depreciation on fixed assets 16,000
Underwriting Commission Written off 8,000
Interest Received 4,000
Interim Dividend paid 16,000
Sale of old Machinery (Book value ₹ 48,000) 56,000
Salary Paid 40,000
Rent Paid 60,000
[Fund from operation ₹ 1,08,000]
4. Fund Flow Statement [5 Marks] [4th Important for Hons & Pass Both]***
The statement of change in Working Capital of K Ltd for the year ended 31 st December 2005 showed the
following information:
On 31.12.2005 Effect on Working Capital
₹ ₹
Debtors 40,000 15,000 Increase
Stock 60,000 Nil ---------
Bills Receivable 55,000 10,000 Decrease
Creditors 47,000 12,000 Increase
Bills Payable 16,000 5,000 Decrease
Calculate the value of aforesaid current assets and current liabilities on 31.12.2004.
5. Fund Flow Statement [5 Marks] [2nd Important for Hons & Pass Both]***
Operating Expenses 92,000 Operating Revenue 1,52,000
Book value of assets sold 43,000 Issue of share 56,000
Purchase of assets 66,000 Payment of Dividend 15,000
Loss on sale of assets 8000 Depreciation (included in
Redemption of Debenture 88,000 expenses) 24,000
Payment of tax 14,000
Prepare the Fund flow Statement for the year ended 31.03.2015
6. Fund Flow Statement [5th Important for Hons & Pass Both]***
The following figures were extracted from the books of BBR Ltd:
31.3.14 31.3.15
₹ ₹
Fixed assets at cost 9,80,000 11,90,000
Accumulated depreciation 2,80,000 2,10,000
Depreciation from the year 2014-15 was ₹ 70,000. Machinery costing ₹ 1,40,000 (fully depreciated in the books)
had been condemned and scrapped.
Find out the effect of the above information on sources and application of funds of the company for the year 2014-
15.
[Answer: Purchase of fixed assets ₹ 350000 (source of funds). Depreciation charged for the year ₹70,000
will be added to net profit to find out funds from operations.]
7. Fund Flow Statement [B.com 2013] [3rd Important for Pass]***
From the following information prepare the Fund Flow statement:
Liabilities 31.12.11 31.12.12 Assets 31.12.11 31.12.12
₹ ₹ ₹ ₹
Share capital 6,00,000 7,00,000 Fixed assets (net) 11,40,000 12,20,000

Profit & Loss A/C 4,60,000 5,70,000 Current assets 7,60,000 8,20,000
Debenture 4,00,000 2,80,000 Preliminary 40,000 20,000
Trade creditors 2,40,000 2,60,000 expenses
Provision for tax 2,40,000 2,50,000
19,40,000 20,60,000 19,40,000 20,60,000
(i) Depreciation charged ₹ 2, 90,000 for the year.

(ii) Tax paid ₹ 2,30,000
(iii) During 2012 a machine was sold for ₹ 50,000 (cost ₹ 1,28,000 and accumulated depre. ₹ 70,000)
[Increase in working capital ₹ 40,000; Fund from Operation ₹ 6,68,000, Fund flow Statement ₹ 8,18,000]
8. Fund Flow Statement [C.U. B.com (Gen.) 2003] [2nd Important for Pass]***
The summarized balance sheet of APMC Ltd. as on 31st March, 2014 and 2015 are given below:
31.3.14 31.3.15
Share capital 4,50,000 4,50,000
Non-current liabilities
Long term borrowings (mortgage loan) - 2,70,000
Trade payable 1,68,000 1,34,000
Short term provision (provision for taxation) 75,000 10,000
10,49,000 12,42,000
Assets ₹ ₹
Non-current Assets:
Fixed assets 4,00,000 3,20,000
Investments 50,000 60,000
Current assets:
Inventories 2,40,000 2,10,000
Bank 1,49,000 1,97,000
10,49,000 12,42,000
a) Investments costing ₹ 8,000 were sold during the year 2014-15 for ₹ 8,500.
b) Provision for tax made during the year was ₹ 9,000.
c) During the year part of the fixed assets costing ₹ 10,000 was sold for ₹ 12,000 and the profit was included in
the profit and loss statement.
d) Dividend paid during the year amounted to ₹ 40,000.
You are required to prepare a statement of sources and applications of funds and statement of changes in working
capital.
[Answer: Increase in working capital ₹ 297000. Sources: Funds from operations ₹ 138500 + Mortgage loan
₹ 270000 + sale of fixed assets ₹ 12,000 + sale of investments ₹ 8500 =₹ 429000. Application: Purchase of
investment ₹ 18,000 + payment of dividend ₹ 40,000 + Payment of tax ₹ 74,000 = ₹ 132000.]
9. Fund Flow Statement [B.com 2006,1988] [3rd Important for Hons & Pass]***
From the following Balance Sheet of Mother India Limited and additional information prepare a Statement of
Changes in Working Capital and fund flow statement for the year ended 31.12.2005:
2004 2005 2004 2005
Equity share Capital 3,00,000 4,00,000 Goodwill 1,00,000 80,000
13% preference share capital 1,50,000 1,00,000 Building 2,00,000 1,70,000
Capital reserve --------- 20,000 Plant 80,000 2,00,000
General reserve 40,000 50,000 Investment 20,000 30,000
P/L A/c 30,000 48,000 Sundry debtors 1,40,000 1,70,000
Proposed dividend 42,000 50,000 Stock 77,000 1,09,000
Sundry Creditors 25,000 47,000 Bills receivable 20,000 30,000
Bills payable 20,000 16,000 Cash in hand 15,000 10,000
Liabilities for expenses 30,000 36,000 Cash at bank 10,000 8,000
Provision for taxation 40,000 50,000 Preliminary expenses 15,000 10,000
6,77,000 8,17,000 6,77,000 8,17,000
Additional Information :—
(a) A building has been sold out in 2005 and the profit on sales has been credited to capital reserve.
(b) An interim dividend of ₹ 20,000 has been paid in 2005.
(c) Plant has been sold for ₹ 10,000. The written down value of the plant was ₹ 12,000. Depreciation of ₹
10,000 is charged to plant account in 2005.
(d) ₹ 3,000 by way of dividend is received on trade investment. This includes ₹ 1,000 from pre-acquisition
profit which has been credited to investment account.
[Increase in working capital ₹ 41,000; Total of fund flow ₹ 3,46,000; Fund from operation ₹ 1,83,000]
10.Fund Flow Statement [2013H] [3rd Important for Hons & Pass]***
From the following information prepare: (i) A statement of changes in working capital and (ii) Fund Flow
Statement.
Balance Sheet
(₹ ) (₹ ) (₹ ) (₹ )
Share Capital 10,00,000 11,00,000 Goodwill 50,000 40,000
Debentures 5,00,000 3,00,000 Land 4,20,000 6,60,000
General Reserve 2,00,000 2,00,000 Machinery 6,00,000 8,00,000
Profit & Loss A/c 1,10,000 1,90,000 Stock 2,50,000 2,10,000
Prov. For I. Tax 40,000 1,10,000 Debtors 3,00,000 2,40,000
Creditors 50,000 40,000 Preliminary Expenses 30,000 20,000
Bills Payable 20,000 30,000 Cash 3,00,000 24,000
Prov. for D. Debts 30,000 24,000
19,50,000 19,94,000 19,50,000 19,94,000
(a) During the year, a part of machine costing ₹ 7,500 (accumulated depreciation thereon being ₹ 2,500)
was sold for ₹ 3,000.
(b) Income Tax of 2010-11 paid during 2011-12 was ₹ 40,000.
(c) Depreciation on machinery provided for 2011-12 was ₹ 50,000.
[Decrease in working capital ₹ 3,70,000; Fund from operation ₹ 2,62,000; Fund flow statement ₹
7,35,000]
11.Fund Flow Statement [B.com 1999] [4th Important for Hons & Pass]***
From the following balance sheets of PM Ltd. make out: i) a statement of changes in working capital; and ii) a
funds flow statement for the year 2014-15.
Balance Sheets
₹ (in lakhs) ₹ (in lakhs)
Equity and liability 31.3.14 31.3.15
Equity share shares of ₹ 100 each, fully paid 10.00 15.00
Preference share of ₹ 100 each, ₹ 50 paid 5.00 Nil
Security premium 0.25 Nil
Capital redemption reserve Nil 5.00
General reserve 10.00 7.00
Profit & Loss account 2.75 3.00
Trade payable 10.00 6.00
38.00 36.00
Assets ₹ ₹
Non-current Assets:
Fixed assets (plant and equipment) 15.00 18.00
Current assets:
Inventories 6.00 3.00
Trade receivable 15.00 10.00
Cash 2.00 5.00
38.00 36.00
(a) During the year 2014-15 the company paid ₹ 2,00,000 as equity dividend and ₹ 56,250 as preference
dividend.
(b) The company redeemed the preference shares at a premium of 5% after making a call of ₹ 50 per share
to make the shares fully paid.
(c) During the year 2014-15 one plant, whose book value was ₹ 1,00,000 was sold at a loss of ₹ 20,000 and
the company purchased a plant for ₹ 6,00,000.
[Answer: Decrease in working capital ₹ 1,00,000. Sources: funds from operations ₹ 7,26,250 + Issue of
equity shares ₹ 5,00,000 + call money on preference shares ₹ 5,00,000 + sale of plant ₹ 80,000 =
₹ 18,06,250. Application: Payment of dividend ₹ 2,56,250 (equity ₹ 2,00,000 and preference ₹ 56,250) +
Redemption of preference shares ₹ 10,50,000 + Purchase of plant ₹ 6,00,000 = ₹ 19,06,250]
12.Fund Flow Statement [2008 H] [1st Important for Hons]***
The Summarised Balance Sheets of B Ltd. as on 31.3.2004 and on 31.3.2005 are as follows :
₹ ₹ ₹ ₹
Share Capital 6,00,000 7,00,000 Fixed Assets (at Cost) 16,00,000 19,00,000
Capital Reserve  20,000 Less : Depreciation 4,60,000 6,80,000
General Reserve 3,40,000 4,00,000 11,40,000 12,20,000
Profit & Loss A/c 1,20,000 1,50,000 Trade Investments 2,00,000 1,60,000
Debentures 4,00,000 2,80,000 Current Assets 5,60,000 6,60,000
Trade Creditors 2,40,000 2,60,000 Preliminary Expenses 40,000 20,000
Provision for Income Tax 1,80,000 1,70,000
Unclaimed Dividend  8,000
19,40,000 20,60,000 19,40,000 20,60,000
During the year ended 31st March, 2005 the Company:
(a) Sold one machine for ₹ 50,000; The cost of the machine was ₹ 1,28,000 and the depreciation provided for it
was ₹ 70,000.
(b) Provided ₹ 2,90,000 as depreciation.
(c) Redeemed 30% of debenture @ ₹ 103.
(d) Sold some trade investments at a profit which was credited to Capital Reserve.
(e) Decided to value the stock at cost, whereas previously the practice was to value stock at cost less 10%. The
stock according to books on 31.03.04 was ₹ 1,08,000; the stock on 31.03.05 was correctly valued at cost.
You are required to prepare a Fund Flow Statement for 2005. Working should form part of your answer.
[Increase in Working Capital ₹ 68,000; Total of fund flow statement ₹ 8,51,600; Fund from operation ₹
6,41,600; Sale of Fixed Assets ₹ 50,000; Sale of Trade Investment ₹ 60,000; Purchase of fixed assets ₹
4,28,000; Redemption of debenture ₹ 1,23,600; Dividend paid ₹ 52,000; Tax paid ₹ 1,80,000;
Redemption of debenture ₹ 1,23,600; Current assets & Profit increase by ₹ 12,000]
13.Fund Flow Statement [15 Marks] [B.com 2007] [2nd Important for Hons]***
Prepare ‗Fund Flow Statement‘ of DG & Sons Limited from the following:
Balance Sheet of DG & Sons Ltd. as on 31st Dec 2005 & 31st Dec. 2006
₹ (‘000) ₹ (‘000) ₹ (‘000) ₹ (‘000)
Equity Sh. Cap @ ₹ 10 300 320 Fixed Assets at Cost 600 680
7 % Pref. Sh. Cap @ ₹ 100 each 100 50 Less: Accumulated Dep. (140) (180)
Securities Premium 20 17 460 500
Capital Redemption reserve ---- 30 Trade Investment 140 200
General Reserve 80 60 Inventories 110 100
P/L Account 60 75 Loan & Advances 20 30
Current Liabilities 160 250 Receivables 40 35
Provision for taxation 30 40 Cash at Bank 10 20
Proposed Dividend 50 58 Preliminary Expenses 20 15
800 900 800 900
Additional Information available during the year:
(a) Furniture costing ₹ 16,000 (fully depreciated) was written off
(b) Tax due on profit estimated to be ₹ 34,000
(c) Old Machine costing ₹ 25,000 (30 % depreciated) sold for ₹ 20,000.
(d) Preference dividend along with 12 % dividend on equity were paid for 2005.
(e) 500 preference shares were redeemed at 10 % premium, 2000 equity shares were issued at 10 % premium
and general reserve was utilised for redemption purpose.
[Fixed assets purchase 121000; Machinery disposal Account profit 2500; Investment purchase 60000;
fund from operation 176000 Decrease in working capital=-20000-65000=-85000 Fund flow statement
303000]
14.Fund Flow Statement [B.com 1985] [4th Important for Hons]***

From the following summarised financial statements of Exwye Ltd, as at 31st December, 2004 and 31st
December, 2005 respectively. Prepare: (1) A statement of changes in working capital during the year 2005 and
(2) A statement showing sources and applications of fund during the same period.
Share Capital : Land at Cost 2,00,000 2,00,000
10% Redeemable Pref. Sh. Building 3,00,000 2,75,000
of ₹ 100 each fully paid 10,00,000 5,00,000 (at cost less depreciation)
Equity Shares Capital of Plant and Machinery 27,00,000 30,00,000
₹ 10 each fully paid 30,00,000 32,00,000 (at cost less Depreciation)
Share Premium 3,00,000 2,70,000 Investments (at cost) 8,00,000 8,50,000
Capital Redemption Reserve  3,00,000 Stock-in-Trade 16,00,000 26,00,000
General Reserve 5,00,000 3,00,000 Book Debts 20,00,000 18,75,000
Profit and Loss A/c 3,20,000 4,30,000 Loans and Advances 3,50,000 1,75,000
Secured Loan 8,80,000 9,70,000 Cash and Bank Balances 50,000 25,000
Proposed Dividend 4,00,000 5,30,000
Sundry Creditors 16,00,000 25,00,000
80,00,000 90,00,000 80,00,000 90,00,000
Additional Informations:
(a) During the year 5,000 Redeemable Preference Shares of ₹ 100 each were redeemed at a premium of 10%.
The premium was paid out of Share Premium A/c. For this purpose 20,000 Equity shares were issued as fully
paid for cash at a premium of 10%. The Capital Redemption. Reserve was created out of transfers from
General Reserve.
(b) Depreciation Provided during the year were On Buildings ₹ 25,000 On Plant and Machinery ₹ 3,00,000
(c) Plant (original cost ₹ 95,000. Depreciation provided till 31.12.04 ₹ 78,000) was sold for ₹ 35,000 and the
profit on sale transferred to Profit and Loss A/c.
(d) Dividend proposed for 2004 paid in 2005.
[Decrease in W. Capital ₹ 2,25,000; Total of fund flow ₹ 16,17,000; Fund from operation ₹ 10,47,000]
15.Fund Flow Statement [B.com 2001] [3rd Important for Hons]***
The balance sheets of symphony Ltd. as on 31st March, 2014 and 31st March 2015 are given below.
31.3.14 31.3.15
Equity share shares of ₹ 10each, fully paid 5,00,000 6,50,000
Preference share of ₹ 10 each, fully paid 1,00,000 50,000
Profit on sale of investment - 10000
Long term borrowings (8% debentures) 3,00,000 2,00,000
Trade payable 1,60,000 2,50,000
Other current liabilities (outstanding expenses) 10,000 12,000
Provision for taxation 70,000 75,000
Proposed dividend 30,000 35,000
14,70,000 17,32,000
Assets ₹ ₹
Non-current Assets:
Fixed assets: At cost 10,00,000 12,00,000
less: Provision for depreciation (2,00,000) (2,50,000)
Investment at cost 1,80,000 1,80,000
Current assets:
Inventories 2,00,000 2,50,000
Cash 10,000 10,000
Prepaid expenses 2,000 5,000
Unamortized preliminary expenses 15,000 10,000
14,70,000 17,32,000
Other information:
(a) During 14-15 fixed assets (present book value ₹ 10,000, depreciation written off ₹ 30,000) was sold ₹
8,000.
(b) The dividend proposed in last year was paid in 2014-15.
(c) During 2014-15 investments costing ₹ 80,000 were sold and investments of the same cost were
purchased.
(d) Preference shares were redeemed at 5% premium by issuing new equity shares and debentures were
redeemed at 10% premium.
(e) Taxation liability for 2013-14 was settled at ₹ 55,000.
(f) On the basis of the above information, prepare a fund flow statement of symphony Ltd. for the year
ended 31st March, 2015.
[Answer: Increase in working capital ₹ 25,000. Sources: Funds from operations ₹ 3,44,500 + Issue of
equity shares ₹ 1,50,000 + sale of investment ₹ 90,000 + sale of fixed assets ₹ 8,000 = ₹ 5,93,500.
Application: Redemption of preference shares ₹ 52,500 +Purchase of investments ₹ 80,000 +
Redemption of debentures ₹ 1,10,000 + purchase of fixed assets ₹ 2,40,000 + payment of dividend
₹ 30,000 + payment of tax ₹ 55,000 = ₹ 5,92,500]
16.Fund Flow Statement [B.com 2009] [3rd Important for Hons]***
The following is the consolidated balance sheet of B Ltd as on 31st March of 2014 and 2015:
31.3.14 31.3.15
Share capital 2,50,000 3,50,000
Reserve and surplus 1,50,000 1,40,000
Long term borrowings (6% debentures) 50,000 20,000
Other current liabilities ( outstanding expenses) 7,000 15,000
6,03,500 6,85,500
Assets ₹ ₹
Non-current Assets:
Land and building at costs 1,25,000 1,25,000
Plant and machinery at cost 2,40,000 3,60,000
Provision for depreciation on Machinery (80,000) (1,00,000)
Current assets:
Inventories 1,90,000 1,93,000
Debtor for goods 86,000 1,05,000
Less: Provision for bad debts (13,000) (18,000)
Cash in hand and at bank 30,500 5,500
Debenture issue expenses 10,000 3000
Preliminary expenses 15,000 12,000
6,03,500 6,85,500
(a) Income tax paid in 2014-15 was ₹ 35,000.
(b) An old machine was sold for 44,000, the cost and written down value of which were ₹ 60,000 and
₹ 40,000 respectively.
(c) Bonus shares at 2 for every 5 equity shares were issued out of accumulated reserves and surplus.
(d) Out of the proposed dividend for 2013-14 only ₹ 30,000 were paid in 2014-15 and in addition to that
an interim dividend of ₹ 25,000 was paid in the same year.
Prepare a fund flow statement and statement of changes in working capital of the year ending 31.3.15.
Solution
[Answer: Decrease in working capital ₹ 20,000 (taking trade receivables at Net figures). Sources: Funds
from operation ₹ 2,36,000 + sale of plant and machinery ₹ 44,000; Application: Purchase of plant and
machinery 1,80,000 + Payment of dividend ₹ 55,000 + redemption of debentures ₹ 30,000 + Payment of
income tax ₹ 35,000]
17.Fund Flow Statement [B.com 2004] [2nd Important for Hons]***
Following are summarized balance sheets of Sonar Bangla Ltd. as on 31.3.14 and 31.3.15
31.3.14 31.3.15
Share capital 4,00,000 6,00,000
Security premium 50,000 60,000
6% debentures 1,00,000 1,50,000
Bank Loan 1,10,000 1,30,000
11,33,000 13,71,000
Assets ₹ ₹
Non-current Assets:
Current assets:
Inventories 1,20,000 1,40,000
Cash at bank 35,000 44,000
Discount on issue of Debenture 8,000 12,000
11,33,000 13,71,000
(a) Depreciation on land and building for the year 2014-15 was ₹ 20,000.
(b) Accumulated depreciation on plant and machinery on 31.3.14 was ₹ 150000 and on 31.3.15 was ₹
1,70,000.
(c) Machinery costing ₹ 50,000 (written down value ₹ 10,000) was sold for ₹ 12,000.
(d) 6% debentures were issued at 10% discount.
(e) Bonus shares were issued at the rate of one share for every four shares held on 31.3.14 out of general
reserve.
(f) Interim dividend paid during the year ₹ 20,000
You are required to prepare: a) A statement showing the changes in working capital; and b) A fund flow
statement for the year ended 3.3.15.
[Answer: Sources: funds from operations ₹ 2,42,000 + Issue of shares ₹ 1,10,000 + sale of machinery ₹
12,000 + Issue of debentures ₹ 45,000 + Bank loan ₹ 20,000 = ₹ 4,29,000. Application: Increase in
working capital ₹ 29,000 + Purchase of building ₹ 1,20,000 + Purchase of machinery ₹ 1,50,000 +
Purchase of investments ₹ 10,000 + Payment of dividend ₹ (40,000 + 20,000) or ₹ 60,000 + Payment of
tax ₹ 60,000 = ₹ 4,29,000]
18.Fund Flow Statement [B.com 2014 Honours] [2nd Important for Hons]***
Following are the summarized balance sheets of popular Ltd as on 31st March, 2014 and 2015.
31.3.14 31.3.15
Share capital 2,00,000 2,50,000
Surplus in profit and loss statement 30,500 30,600
Bank Loan (long term) 70,000 -
Trade payable 1,50,000 1,35,200
5,30,500 5,10,800
Assets ₹ ₹
Machinery 1,50,000 1,69,000
Cash 500 600
Bank - 8,000
Goodwill - 5,000
5,30,500 5,10,800
Additional information: During the year ended 31.03.15:
a. Dividend of ₹ 23,000 was paid
b. Assets of another company were purchased for a consideration of ₹ 50,000 payable in shares. The
following assets were purchased for: Stock ₹ 20,000; Machinery ₹ 25,000 and Goodwill ₹ 5,000.
c. Machinery was further purchased for ₹ 8,000.
d. Depreciation written off on Machinery ₹ 12,000.
e. Income Tax provided during the year ₹ 33,000.
f. Loss on sale of Machine of ₹ 200 was written off to general reserve.
You are required to prepare (i) Statement of working Capital. (ii) Statement of Fund Flow.
19.Fund Flow Statement [2015H] [Same as Qn 11] [1st Important for Hons]***
The Balance Sheets of Boom Ltd. As on 31st March 2013 and 2014 are given below:
31.03.2013 31.03.2014
₹ ₹
I. Equity & Liabilities :

1. Shareholders’ Fund
Shares Capital 4,00,000 5,00,000
Capital Reserve - 20,000
Preliminary Expenses (30,000) (20,000)
2. Non – Current Liabilities
Debentures 3,00,000 2,00,000
Creditors 1,30,000 1,20,000
Provision for Income Tax 80,000 60,000
Total 11,70,000 12,30,000

II. Assets:
1. Non – Current Assets:
10,00,000 10,00,000
(a) Fixed Assets at cost
(2,60,000) (3,10,000)
Less : Depreciation
1,10,000 90,000
(b) Investments
2. Current Assets
3,20,000 4,50,000
Current Assets (all)
Total 11,70,000 12,30,000
During the year ended 31st March, 2014, the company:

(a) Sold one machine for ₹ 40,000, the cost of which was ₹ 80,000 and the depreciation provided on it
was ₹ 30,000.
(b) Provide ₹ 1, 00,000 as depreciation.
(c) Redeem the debentures at ₹ 105.
(d) Sold some investments at a profit which was credited to Capital Reserve.
(e) Decided to write – off the fixed assets (fully depreciated) costing ₹ 20,000.
(f) Decided to value opening stock at cost which was valued previously at cost less 10%. The opening
stock according to books was ₹ 63,000. The closing stock was correctly valued at cost.
Prepare statement of sources and application of funds for the year ended 31.03.2014 showing changes in
working capital.
20.Fund Flow Statement [2018H] [Same as Qn 11] [1st Important for Hons]***
Prepare a Fund Flow Statement of X Ltd from the following:
31.12.2016 31.12.2017
Rs. Rs.
I. Equity and Liabilities:
1. Shareholder’s Fund
a) Share Capital 12,00,000 16,00,000
b) Reserve and Surplus
8,40,000 11,00,000
2. Non-current Liabilities:
a) Long-term borrowings (Debentures)
3. Current Liabilities: 8,00,000 5,60,000
a) Trade Payables (Sundry Creditors)
b) Short-term Provisions (Provision for tax) 4,80,000 5,36,000
4,80,000 4,84,000
Total 38,00,000 42,80,000
II. Assets:
22,80,000 26,40,000
a) Fixed Assets: Tangible Assets
b) Non-current Investment (Trade Investment) 4,00,000 3,20,000
2. Current Assets: (including inventory) 11,20,000 13,20,000
38,00,000 42,80,000
Notes to Accounts: 31.12.16 31.12.16
1. Reserve and Surplus
Rs. Rs.
a) Capital Reserve
b) General Reserve --- 40,000
c) Balance in Statement of Profit and Loss 6,80,000 8,00,000
1,60,000 2,60,000
8,40,000 11,00,000
32,00,000 38,00,000
2. Fixed Assets: Tangible Assets
a) At Cost 9,20,000 11,60,000
Less Depreciation 22,80,000 26,40,000
a) Sold one machine for Rs. 1,00,000; the cost of the machine was Rs. 2,56,000 and the depreciation
provided for it amounted to Rs. 1,40,000.
b) Provide Rs. 3,80,000 on depreciation.
c) Redeemed 30% Debentures @ Rs. 103.
d) Some Trade Investments sold at profit and the profit was credited to Capital Reserve.
e) Decide to value the stock at cost, whereas previously the practice was to value stock at cost less 10%.
The stock according to books on 31.12.16 was Rs. 2,16,000; the stock on 31.12.17 Rs. 3,00,000 was
correctly valued at cost.
21.Fund Flow Statement [2016H] [1st Important for Hons]***
The Balance Sheets of XY Ltd. as on 31st December 2014 and 2015 are as under:
31.3.14 31.3.15
I. Equity and liability ₹ ₹
(a) Equity Share Capital 3,00,000 5,00,000
10% Redeemable Preference Shares 3,00,000 2,00,000
(b) Reserves and Surplus
Capital Reserves ---- 50,000
Profit and Loss Balance 36,000 54,000
2. Non- Current Liabilities: ---- ----
Trade Payable 88,000 1,30,000
Provisions for Taxations 56,000 64,000
8,74,000 11,24,000
II. Assets
1. Non- Current Assets:
(i) Fixed Assets
(a) Tangible:
Land and Building 2,00,000 1,50,000
(b) Intangible:
Goodwill 1,20,000 94,000
(ii) Non-Current Investment 20,000 70,000
2. Current Assets
Inventory 1,70,000 1,56,000
Trade Receivables 1,50,000 2,16,000
Cash and Cash Equivalent 34,000 56,000
8,74,000 11,24,000
The following further particulars are given:
(a) In 2015, Rs. 36,000 depreciation has been written off Plant and Machinery and no depreciation has been
charged on Land and Building.
(b) A piece of land has been sold out and profit on such sale has been transferred to Capital Reserve.
(c) A plant was sold for Rs. 24,000 (W.D.V Rs. 30,000).
(d) Dividend received amounted to Rs. 4,200 which included pre acquisition dividend of Rs. 1,200.
(e) An interim dividend of Rs. 20,000 has been paid in 2015.
You are required to prepare:

(a) Statement of Sources and Application of Funds, and
(b) Statement of Changes in Working Capital for the year 2015.
22.Fund Flow Statement [2017H] [1st Important for Hons]***
Following are the liabilities and assets of Flow Ltd. as on 31.3.2015 and 31.3.2016:
31-3-15 31-3-16
Rs. Rs.
I. Equity and liabilities :
a) Equity Share 10 each fully paid 3,00,000 5,00,000
9% Preference shares of Rs. 10 each fully paid 2,00,000
3,00,000
b) Reserves and surplus:
40,000 90,000
Securities Premium
--- 80,000
Revaluation Reserve (on Land)
1,20,000 1,80,000
General Reserves 2,30,000
Profit and Loss Account 3,90,000
2. Non-Current Liabilities: 2,00,000 ------

8% Debentures
Trade Payable: 70,000
Provision for tax 90,000
60,000 90,000
Total
12,40,000 17,00,000
II. Assets
1. Non-current Assets
a) Fixed Assets: Tangible (other than Land) 5,00,000 5,80,000
Land 3,50,000 4,80,000
Other fixed Assets 70,000 1,10,000
2. Current Assets: 90,000 70,000
Inventories 1,40,000 3,30,000
Cash and Cash Equivalents 90,000 1,30,000
Total
12,40,000 17,00,000
Following further particulars for the year 2015-16 are also given:
a) Interim Dividend on equity shares Rs. 50,000 and Preference dividend Rs. 18,000 were paid
during the year. Dividend distribution tax paid during the year Rs. 10,000.
b) Debentures were redeemed at 10% premium, premium on redemption charged to Profit &
Loss for the year. Debenture interests Rs. 12,000 were also paid during the year.
c) The company sold one fixed assets for Rs. 24,000 (W.D.V. Rs. 35,000). Fixed assets of Rs.
2,00,000 were acquired by issue of 8,000 equity shares at 25% premium and balance by issue
of preference shares at par. Other equity shares were issued for cash during the year at a
premium.
d) Interest on investment received Rs. 8,000. Investments having book value Rs. 20,000 were
taken over by a creditor against Rs. 20,000 due to him.
e) Income tax paid during the year Rs. 68,000.
You are required to prepare the Fund Flow Statement of Flow Ltd. for the year ended 31.3.2016.
23.Fund flow Statement [2018H] [2nd Imp For Hons & Pass]****
Calculate Fund from Operation before tax from the information given below:
Cash from operation before tax Rs. 92,000
Depreciation charged Rs. 17,000
Interest paid Rs. 10,000
Balances relating to current assets and liabilities are-
Opening Closing
Debtors Rs. 15,000 Rs. 13,000
Inventory Rs. 11,000 Rs. 14,000
Accrued Expenses Rs. 4,000 Rs. 3,000
Creditors Rs. 3,000 Rs. 7,000
Cash and Bank Rs. 12,000 Rs. 9,000
24.Fund flow Statement [2018 Pass] [2nd Imp For Pass]****

From the following statement of assets and liabilities of X. Ltd as at 31st December, 2015 and 31st December,
2016 respectively, prepare:
a) A Statement of changes in Working Capital during the Calendar year 2016, and
b) A statement showing sources and application of funds during the same period.
Liabilities 2015 (Rs.) 2016 (Rs.) Assets 2015 (Rs.) 2016 (Rs.)
Equity share capital 30,00,000 40,00,000 Land 4,60,000 4,60,000
Securities Premium -- 1,00,000 Building (at cost less 12,80,000 12,20,000
General Reserve 12,00,000 14,00,000 depn.)
Profit & Loss A/c 7,20,600 9,81,280 Plant & Machinery (at 36,70,000 44,40,800
Secured Loan 17,20,000 17,20,000 cost less depn.)
Proposal Dividend 2,00,000 3,00,000 Investments 1,00,000 1,51,200
Sundry Creditors 23,59,400 24,78,720 Stock 16,80,860 18,32,680
Book Debts 19,70,740 27,37,300
Cash & Bank Balances 38,400 1,38,020
92,00,000 1,09,80,000 92,00,000 1,09,80,000
(a) During 2016 Depreciation provided on assets were: Building Rs. 60,000 and Plant & Machinery Rs.
4,81,000
(b) Final dividend of Rs. 2,00,000 for the year 2015 was paid during 2016.
25.Fund flow Statement [2015 Pass] [2nd Imp For Pass]****
From the following information, prepare a Fund Flow Statement for the year ended on 31.03.2013.
Particulars 31.03.2012 31.03.2013

₹ ₹
I. EQUITY AND LIABILITIES:
a) Share Capital (Equity share Capital) 6,00,000 7,50,000
[Statement of Profit and Loss (Credit) 60,000 1,98,000
2. Non – Current Liabilities:
1,20,000 1,80,000
a) Long – term Borrowings (10% Debenture)
3. Current Liabilities: 48,000 1,20,000
a) Trade Payables (Creditors)
b) Short term Provisions: 12,000 30,000
i. Provision for Taxation 24,000 36,000
ii. Proposed Dividend
Total 8,64,000 13,14,000
II. ASSETS:
1. Non – current Assets:
a) Fixed Assets 3,00,000 3,60,000
b) Non – Current Investments 2,40,000 4,20,000
(Investments)
2. Current Assets:
1,80,000 3,00,000
a) Inventories (Stock)
60,000 1,20,000
b) Trade Receivables (Debtors) 84,000 1,14,000
c) Cash and Cash Equivalents
Total 8,64,000 13,14,000
Other information:
i. Depreciation charged on fixed assets amounted to ₹ 25,000 during the year 2012 – 13.
ii. Income tax paid during the year 2012 – 13was ₹ 15,000
iii. Dividend for the year 2011 – 12 was paid during 2013 – 13 amounted to ₹ 24,000.

FR & FSA / FM ₹ 3,000
Batch Timings
Cash Flow Analysis [15 + 5 = 20 Marks]

[In Option of Fund flow Statement]
1. Cash flow Statement [5 Marks] [B.com 2006]** [4th Imp For Hons & Pass]
From the following information given below, calculate ‗Cash Flows from Operating Activities‘:
(a) Operating profit before changes in Operating assets 57,500
(b) Debtors (Decrease) 5,000
(c) Stock (Increase) 2,000
(d) Bills Payable (Decrease) 4,500
(e) Creditors (Increase) 3,200
(f) Cash at bank (increase) 20,000
[Ans: Net cash from operating activities ₹ 59,200]
2. Cash flow Statement [5 Marks] [2014 H] [1st Imp For Hons & Pass Both]****
From following particulars, Ascertain Cash from Operation for the year 2013-14.
a) Total sales ₹ 4,23,000
b) Cost of goods sold ₹ 2,12,000
c) Expenses for the year ₹ 35,000
d) Position of current assets and liabilities:
31-03-2013 31-03-2014
Debtors 1,24,000 89,000
Inventory 1,03,000 1,19,000
Prepaid Expenses 21,000 15,000
Creditors 94,000 1,65,000
[Ans: Net cash from operating activities ₹ 2,72,000]
3. Cash flow Statement [5 Marks] [1st Imp For Hons & Pass Both]*****
Compute Net Cash Flow from Operating Activities from the following:
P/L as on 31.03.11 – ₹ 2, 30,000
And as on 31.03.12 – ₹ 1, 60,000
Other transactions during the year:
Bad debt written off ₹ 15,000; Depreciation ₹ 30,000; Dividend on Investment ₹ 6,000; Debenture Interest
Paid ₹ 4,000; Preliminary Expenses written off ₹ 2,000; Tax paid ₹ 14,000; Interim dividend paid ₹ 8,000;
Transfer to Reserve ₹ 40,000; Old Machinery (W.D.V. 18,000) sold for ₹ 20,000; Increase in Working
Capital ₹ 12,000. [Ans: Net cash from operating activities ₹ (6,000)]
4. Cash flow Statement [2011H] [5th Imp For Hons & Pass Both]*****
From the following informations calculate net cash flow from investing activities:
31.3.04 31.305
Machinery (at cost) 8,00,000 8,40,000
Accumulated Depreciation 2,00,000 2,20,000
Patents 5,60,000 3,20,000
The following additional informations are given:
(a) A machine costing ₹ 80,000 (with an accumulated depreciation of ₹ 48,000) has been sold at ₹ 40,000.
(b) Patents were written off to the extent of ₹ 80,000 and some patents were sold at a profit of ₹ 40,000.
Find out Cash from investing Activities.
[Ans: Net cash from Investing activities ₹ 1,20,000]
5. Cash flow Statement [5 Marks] [B.com 2009] [3rd Imp For Hons & Pass]***
Redraft the given traditional cash flow of 31.12.2008, as per AS- 3 provisions.
Sources ₹ Rs Uses ₹
(in Lakh) (in Lakh)
Opening Cash Balance 225 Purchase of fixed assets 100
Cash from operation: Closing Cash Balance 194
Cash from Sales 909
Less: Cash paid for purchases 588
Less: Cash paid for Expenses 255 66
Dividend Received 3
294 294
[Net Cash Flow from Operating Activities ₹ 66 Lakhs; Net Cash used in Investing Activities ₹ 97
Lakhs; Net Decrease in cash and cash Equivalent ₹ 31 Lakhs.]
6. Cash flow Statement [5 Marks] [2nd Imp For Hons & Pass]***
From the following Summary Cash Account of- X Ltd. prepare a Cash Flow Statement for the year ended
31.3.2001 in accordance with AS-3 using direct Method. The Company does not have any cash equivalents.
Summary Cash A/c for the year ended 31.3.2001
₹ ₹
To Balance b/d on 1/4/2000 50,000 By Payment to Creditors 20,00,000
,, Issue of Equity Shares 3,00,000 ,, Purchase of Fixed Assets 2,00,000
,, Collection from Debtors 28,00,000 ,, Overhead Expenses 2,00,000
,, Sale of Fixed Assets 1,00,000 ,, Wages & Salaries 1,00,000
,, Taxation Paid 2,50,000
,, Dividend Paid 50,000
,, Repayment of Bank Loan 3,00,000
,, Balance c/d 1,50,000
32,50,000 32,50,000
Solution:
X Ltd.
Cash Flow Statement
For the year ended 31.3.2001 (Using Direct Method)
₹ ₹
Opening Cash Balance (1.4.2000) 50,000
Cash from Operating Activities:
(i) Collection from Debtors 28,00,000
(ii) Payment to Creditors (20,00,000)
(iii) Cash paid to employees (1,00,000)
(iv) Cash Payment for Overheads (2,00,000)
Cash generated from Operations 5,00,000
(v) Income tax Paid (2,50,000) 2,50,000
Cash used for Investing Activities:
(i) Purchase of Fixed Assets (2,00,000)
(ii) Sale of Fixed Assets 1,00,000
1,00,000
Cash used for Financing Activities:
(i) Issue of Equity Shares
3,00,000
(ii) Bank Loan Repaid
(3,00,000) (50,000)
(iii) Dividend Paid (50,000)
Closing Cash Balance
1,50,000
7. Cash Flow Statement [4th Imp For Hons & Pass]***
Classify the following activities as (i) Operating Activities; (ii) Investing Activities; (iii) Financing Activities:
(i) Purchase of machinery (ii) Sale of land (iii) Payment of income tax (iv) Refund of income tax (v) Payment
of dividend (vi) Receipt of dividend (vii) Payment of interest (viii) Receipt of Dividend (ix) Issue of
debentures (x) Buy-back of Equity Shares
Solution
(i) Investing Activities; (ii) Investing Activities; (iii) Operating Activities; (iv) Operating Activities; (v)
Financing Activities; (vi) Investing Activities; (vii) Financing Activities; (viii) Investing Activities; (ix)
Financing Activities; (x) Financing Activities
8. Cash Flow Statement [B.com 2013] [2nd Imp For Hons & Pass]***
From the following information prepare the Cash Flow statement:
₹ ₹ ₹ ₹
Share capital 6,00,000 7,00,000 Fixed assets (net) 11,40,000 12,20,000

Profit & Loss A/C 4,60,000 5,70,000 Current assets 7,60,000 8,20,000
Debenture 4,00,000 2,80,000 Preliminary 40,000 20,000
Trade creditors 2,40,000 2,60,000 expenses
Provision for tax 2,40,000 2,50,000
19,40,000 20,60,000 19,40,000 20,60,000
a) Depreciation charged ₹ 2, 90,000 for the year.

b) Tax paid ₹ 2,30,000
c) During 2012 a machine was sold for ₹ 50,000 (cost ₹ 1,28,000 and accumulated depreciation ₹
70,000)
[₹ 3,98,000; 3,78,000; (20,000)]
9. Cash flow Statement [B.com 2006] [2nd Imp For Hons & Pass]***
Balance Sheet of young India Limited as on 31.03.06 and 31.03.2005 (figures in ₹ ‗000)
₹ (‘000) ₹ (‘000) ₹ (‘000) ₹ (‘000)
Equity Shares (₹ 10/- each) 4,300 4,000 Building 2,500 2,500
Profit & Loss A/c 640 980 Machinery 2,000 1,600
10 % Debenture 2,050 2,200 Land 1,500 1,800
Trade Creditors 650 800 Prepaid Expenses 65 80
Provision for Taxation 125 100 Inventory 1,400 1,550
Depreciation on Building 600 500 Debtors 800 650
Depreciation on Machinery 300 200 Cash & Bank 400 600
8,665 8,780 8,665 8,780
(a) Dividend paid during the year ₹ 4,50,000.
(b) Land was sold for cash at a profit of ₹ 50,000.
(c) Machinery costing ₹ 2,00,000 (W.D.V. ₹ 40,000/-) was sold for ₹ 30,000/-. Also machinery costing
₹ 6,00,000 was purchased.
(d) Amount transferred to provision for taxation during the year ₹ 1,60,000.
Prepare a Cash Flow Statement for the year ended 31.03.06 as per AS - 3.
[Ans. Net Cash Flow from Operating Activities: ₹ 5,40,000; Net Cash Flow from Investing Activities (-)
₹ 2,20,000; Financing Activities (-) ₹ 5,20,000; Operating Profit before Working Capital ₹ 8,10,000]
10.Cash flow Statement [B.com 2008] [4th Imp For Hons & Pass]***
Balance Sheet of R Limited (₹ 000)
Equity Shares Capital 1,000 800 Machinery 700 500
Reserve 200 150 Building 600 400
P/L Account 100 60 Investment 100 ------
Debentures 200 ------ Debtors 500 700
Tax Provision 100 70 Stock 400 200
Proposed Dividend 200 100 Cash & Bank 200 200
Sundry Creditors 700 820
2,500 2,000 2,500 2,000
Additional Details:
(a) Building is still under constructions and no depreciation was charged.
(b) Depreciation was charge @ 25% on the opening value of machinery
(c) An old machine costing ₹ 50,000 was sold for ₹ 35,000/- (W.D. V. ₹ 20,000/-)
(d) Income Tax paid during the year ₹ 50.000/-
Prepare a Cash Flow Statement as per AS-3.
[Net flow cash flow from operating Activities ₹ 3,10,000; Net cash used in Investing Activities ₹ 6,10,000
Net cash from Financing Activities ₹ 3,00,000]
11.Cash Flow Statement [10 Marks] [B.com 2014] [1st Imp For Pass]***
From the following financial statements, prepare a Cash Flow Statement for the year ended 31.03.2013.
Particulars 31.03.2012 31.03.2013 Particulars 31.03.2012 31.03.2013
₹ ₹ ₹ ₹
Share capital 1,35,000 1,35,000 Goodwill 13,950 4,950
Profit & loss 40,500 54,000 Building 32,400 45,000

Account
Loans 1,12,950 89,010 Plant & 1,13,400 85,050
Machinery
Creditors 71,640 43,920 Furniture - 40,500
Proposed 13,500 16,200 Investments 40,500 49,500

Dividend
Provision for 10,800 12,600 Debtors 94,500 1,14,120
Taxation
Bank 89,640 11,610
3,84,390 3,50,730 3,84,390 3,50,730
Other information:
(a) Depreciation is provided @ 10% on furniture
(b) Depreciation on building is ₹ 5,000
(c) Dividend paid during the year was ₹ 12,000
(d) Tax of ₹ 13,000 was paid for the year ended 31.03.2012.
12.Cash Flow Statement [C.U. B.com (Gen.) 2003] [1st Imp For Pass]***
The summarized balance sheets of APMC Ltd. as at 2010 and 2011 are given below:
2010 2011 2010 2011
Share Capital 4, 50,000 4, 50,000 Fixed assets 4, 00,000 3, 20,000
General reserve 3, 00,000 3, 10,000 Investments 50,000 60,000
Profit and loss account 56,000 68,000 Stock 2, 40,000 2, 10,000
Creditors 1, 68,000 1, 34,000 Debtors 2, 10,000 4, 55,000
Mortgage loan _ 2, 70,000 Bank 1, 49,000 1, 97,000
10, 49,000 12, 42,000 10, 49,000 12, 42,000
Additional Information:—
(a) Investments costing ₹ 8,000 were sold during the year 2011 for ₹ 8,500.
(b) Provision for tax made during the year was ₹ 9,000.
(c) During the year part of the fixed assets costing ₹ 10,000 was sold for ₹ 12,000 and the profit was
included in the profit and loss account.
(d) Dividend paid during the year amounted to ₹ 40,000.
You are required to prepare a Cash follow statement
[₹ (184500); 2500; 230000]
13.Cash flow Statement [15 Marks] [Not Important]
From the following information, prepare a cash flow statement for the year ended 31.3.15
Balance sheet
31.3.14 31.3.15
Liabilities ₹ ₹
Capital 3,00,000 3,50,000
Bank overdraft 3,20,000 2,00,000
Creditors 1,80,000 2,50,000
Bills payable 1,00,000 80,000
9,00,000 8,80,000
Asset
Machinery 4,00,000 2,80,000
Stock 1,00,000 90,000
Debtors 1,40,000 1,60,000
Cash 40,000 50,000
9,00,000 8,80,000
a) Net profit for the year 2014-15 amounted to ₹ 1,20,000.
b) During the year the machinery costing ₹ 50,000 (accumulated depreciation ₹ 20,000) was sold for ₹
26,000. The provision for depreciation on machinery as on 31.3.14 was ₹ 100000 and on 31.3.15
₹1,70,000.
[Answer: Cash inflow from operating activities ₹ 2,54,000 (i.e., cash generated from operations). Cash
out flow from investing activities ₹ 54,000 [i.e., proceeds from sales of machinery (+) ₹ 26,000, purchase
of land and building (-) ₹ 80,000]. Cash out flow from finance activities ₹ 70,000 (i.e., drawings).
Note: Drawings during the year will come out as a balancing figure from capital account]
14.Cash flow Statement [B.com (Honours 2014) ] [4th Imp For Hons]
Sundarban Ltd. furnishes the following Balance Sheets for the year ended 31st March, 2012 and 31st March
2013, you are requested to prepare a Cash Flow Statement (as per AS-3) for the year ended 31.3.2013.
Balance Sheet
₹ ₹ ₹ ₹
Share Capital 3,00,000 3,30,000 Plant & Machinery 2,80,000 3,75,000
General Reserve 1,00,000 1,20,000 Furniture & Fixture 60,000 45,000
Capital Reserve ___ 15,000 Investments 1,00,000 1,40,000
Profit & Loss Stock 80,000 1,25,000
Account 75,000 95,000 Debtors 1,40,000 85,000
Securities Bills receivable 15,000 18,000
Premium ___ 6,000 Unexpired Rent 12,000 9,000
10% Debentures 1,25,000 75,000 Cash at Bank 81,000 38,000
Sundry creditors 90,000 80,000
Bills payable 20,000 35,000
Provision for
Taxation 28,000 34,000
7,68,000 8,35,000 7,68,000 8,35,000
a) Accumulated Depreciation
31-03-12 31-03-13
Plant and Machinery-(₹ ) 90,000 1,15,000
Furniture & Fixture-(₹ ) 16,000 18,000
b) Plant Costing ₹ 50,000 (accumulated depreciation ₹ 30,000) was sold for ₹ 25,000.
c) 10% Debentures were redeemed at a premium of 15% and the premium was debited to General
Reserve.
d) Besides paying the proposed dividend in 2012-13, an interim dividend @ 7.5% on share capital at the
beginning of this year was also paid.
e) The Income-Tax was paid ₹ 30,000 in 2012-13.
f) Furniture purchased on 31st March, 2012 was not up to the requirement. This was sold on 1.4.12 and
the profit was transferred capital reserve. No depreciation was charged on this furniture for the year
2011-12.
15.Cash flow Statement [B.com Hons. 2011] [2nd Imp For Hons]****
The following are the summarized balance sheets of CCD Ltd. as on 31st March 2014 and 2015:
31.3.14 31.3.15
Share capital 4,60,000 4,60,000
Profit & Loss 32,000 46,000
Non-current Liabilities:
Long-term borrowings (8% debentures) 1,80,000 1,40,000
Trade payable 2,06,000 1,92,000
Other current liabilities (outstanding expenses 26,000 24,000
10,24,000 9,82,000
Assets ₹ ₹
Non-current Assets:
Machinery 1,04,000 1,40,000
Provision for depreciation (80,000) (88,000)
Investments 2,20,000 1,48,000
Current assets:
Inventories 1,64,000 2,12,000
Trade receivable 1,34,000 86,000
Cash and cash equivalents 1,80,000 1,80,000
Other current assets (prepaid expenses) 2,000 4,000
10,24,000 9,82,000
a) 10% dividend was paid during 2014– 15.
b) Machinery for ₹ 60,000 was purchased and old machinery costing ₹ 24,000 (accumulated
depreciation ₹ 12,000) was sold for ₹ 8,000.
c) 40,000 8% debentures were redeemed by purchase from open market at ₹ 96 for a debenture of ₹
100.
d) Investments worth ₹ 72,000 were sold at book value.
e) Bad debts written off during the year ₹ 10,000.
Prepare a statement of cash flow as per AS – 3 for the year ended 31st March, 2015.
[Cash from operating activities ₹ 78,800. Cash from investing activities ₹ 20,000. Cash used in
financing activities ₹ 98,800]
16.Cash flow Statement [5 Marks] [B.com 2009] [4h Imp For Hons]****
From the following information provided prepare a cash flow as per AS- 3and comment on the financial
position of the company.
Rs Rs Rs Rs
Equity share capital 1,00,000 1,50,000 Land & Building 1,10,000 1,30,000
Share Premium 15,000 35,000 Plant & Machinery 1,20,000 1,51,000
Profit & Loss Account 28,000 70,000 Furniture 24,000 29,000
10 % Debenture 70,000 30,000 Stock 37,000 51,000
Bank Overdraft 14,000 -------- Debtors 43,000 44,000
Creditors 34,000 48,000 Bank -------- 16,000
Proposed Dividend 15,000 20,000 Premium on redemption
Provision for Dep on: Of debenture -------- 1,000
Plant 45,000 54,000
Furniture 13,000 15,000
3,34,000 4,22,000 3,34,000 4,22,000
(a) There had been no disposal of freehold property in the year.
(b) The machine which had cost ₹ 8,000 and in respect of which ₹ 6,000 depreciation had been provided was
sold for ₹ 3,000 and furniture which had cost ₹ 5,000 in respect of which depreciation of ₹ 2,000 had
been provided were sold for ₹ 1,000. The profits and losses on these transactions had been dealt with
through Profit and Loss A/c.
(c) The actual premium on the redemption of debenture was ₹ 2,000 of which ₹ 1,000 had been written off to
the Profit and Loss A/c.
(d) No interim dividend has been paid,
[Ans. Net Cash from Operating Activities ₹ 89,000; Net Cash used in investing Activities ₹
65,000; Net Cash from Financing Activities ₹ 6,000; Net increase in cash and cash Equivalent
₹ 30,000; Fund from operation ₹ 90,000]
17.Cash flow Statement [B.com (Honours 2013) ] [1st Imp For Hons]****
The Balance Sheet of Steady Growth Ltd. For the year ended 31st March, 2011 and 2012 are as follows:
(₹ ) (₹ ) (₹ ) (₹ )
Equity Share Capital 12,00,000 16,00,000 Fixed Assets (Cost) 32,00,000 38,00,000
10% Pref. Share Capital 4,00,000 2,80,000 Accumulated Depreciation
Capital Reserve - 40,000 (9,20,000) (11,60,000)
General Reserve 6,80,000 8,00,000 22,80,000 26,40,000
Profit & Loss A/c 2,40,000 3,00,000 Investments 4,00,000 3,20,000
9% Debentures 4,00,000 2,80,000 Cash 10,000 10,000
Current Liabilities 4,80,000 5,20,000 Other Current Assets 11,10,000 13,10,000
Proposed Dividend 1,20,000 1,44,000 Preliminary Expenses 80,000 40,000
Provision for Tax 3,60,000 3,40,000
Unpaid Dividend - 16,000
38,80,000 43,20,000 38,80,000 43,20,000
(a) The Company sold one fixed asset for ₹ 1, 00,000, the cost of which was ₹ 2, 00,000 and the
depreciation of ₹ 80,000 was provided on it.
(b) Depreciation on Fixed Assets provided ₹ 3, 20,000.
(c) Company sold some investments at a profit of ₹ 40,000, which was credited to Capital Reserve.
(d) Debentures and Preferences shares were redeemed at 5% premium.
(e) Company decided to value stock at cost, whereas previously, the practice was to value stock at cost less
10%. The stock according to books on 31.03.11 was ₹ 2, 16,000. The stock on 31.03.12 was correctly
valued at ₹ 3, 00,000.
Prepare Cash Flow Statement as per revised AS – 3.
18.Cash flow Statement [15 Marks] [B.com 2007] [2nd Imp For Hons]****
From the following Balance Sheets prepare a Cash Flow Statement for the year ended 31.12.06 as per AS-3.
Liabilities 2005 2006 Assets 2005 2006
₹ (‘000) ₹ (‘000) ₹ (‘000) ₹ (‘000)
Equity Share Capital 150 350 Goodwill 75 60
Redeemable Preference Fixed Assets 355 620
Share Capital 100 150 Inventories 110 70
Debenture 150 100 Debtors 120 75
Long term loan 100 50 Bank NIL 25
Reserves & Surplus 40 50 Prepaid Expenses 30 20
Bank overdraft 60 — Miscellaneous Expenditure 40 30
Sundry Creditors 80 100
Proposed Dividend 30 60
Provision for Taxation 20 40
730 900 730 900
Additional Information available on 31.12.2006:
(a) Accumulated depreciation on Fixed Assets amounted to ₹ 1,60,000 and ₹ 1,85,000 as on 31.12.05 &
31.12.06 respectively ; and a plant costing ₹ 30,000 (25% depreciated) was sold for ₹ 50,000.
(b) Land of ₹ 1,50,000 and Stock of ₹ 40,000 were purchased for a consideration of ₹ 2,00,000, paid for in
shares.
(c) Dividend for 2005 was paid along with an interim dividend of 5% on opening Equity capital.
(d) Tax liabilities for 2005 was settled at ₹ 28,000.
[Ans. Net Cash Flow from Operating Activities: ₹ 2,92,500; Net Cash Flow from Investing Activities ₹
(-) 1,20,000; Net Cash Flow from Financing Activities ₹ (-) 87,500; Net Increase in cash and cash
Equivalent ₹ 85,000, operating ptofit before working capital changes ₹ 1,65,500]
19.Cash flow Statement [15 Marks] [B.com 2005] [2nd Imp For Hons]****
From the following summarized balance sheets of the Sunshine Ltd. and other relevant information, prepare a
cash flow statement for the ended 31st March, 2015.
Share capital 5,00,000 7,00,000
Capital reserve - 15,000
Profit & Loss 70,000 67,500
Non-current Liabilities:
Long-term borrowings (8% debentures) 1,00,000 85,000
Other current liabilities (outstanding expenses) 10,200 12,700
9,83,200 11,56,300
Assets ₹ ₹
Non-current Assets:
Current assets:
Cash and cash equivalents 62,500 68,700
Other current assets (prepaid expenses) 15,700 8,900
9,83,200 11,56,300
Additional Informations -.
(a) A plant costing ₹ 50,000 (W.D.V. ₹ 35,200) has been sold during 2014 -15 for ₹ 40,000. Profit on sale has
been transferred to Capital Reserve Account.
(b) A piece of land has been sold for ₹ 70,000 during the year 2014 -15. The Profit on sale of such land has also
been transferred to Capital Reserve Account,
(c) Balance of Capital Reserve on 31.3.15 consists of profit on sale of plant and land only;
(d) During the year 2003-04 bonus share of ₹ 1,00,000 has been issued out of general reserve,
(e) Debentures were redeemed at a premium of 10%.
(f) Amount appropriated during 2014 -15 for proposed Dividend ₹ 70,000; For Taxation ₹ 40,000
(g) Depreciation provided during 2014 -15: On Plant & Machinery ₹ 32,800; On Building ₹ 22,500
[Net cash from operating activities ₹ 1,71,500; Net Cash from Investing activities ₹ (-) 2,00,800; Net Cash
from financing activities ₹ (-) 35,500]
20.Cash flow Statement [15 Marks] [B.com 1992] [1st Imp For Hons]****
From the following information, prepare a cash flow statement for the year ended 31.3.15.
31.3.14 31.3.15
Share capital 2,00,000 2,50,000
Trade payable 1,50,000 1,35,200
5,30,500 5,10,800
Assets ₹ ₹
Machinery 1,50,000 1,69,000
Cash 500 600
Bank - 8,000
Goodwill - 5,000
5,30,500 5,10,800
(a) Net Profit for the year was ₹ 66,100.
(b) Dividend of ₹ 23,000 was paid.
(c) The following assets of another company were purchased for a consideration of ₹ 50,000 paid for in shares.
Stock—₹ 20,000. Machinery—₹ 25,000.
(d) Further machinery was purchased ₹ 25,000 during the year.
(e) Depreciations written off on Building ₹ 10,000; Machinery ₹ 14,000.
(f) Income tax paid during the year ₹ 28,000.
[Answer: Cash inflow from operating activities ₹ 109100. Cash out flow from investing activities ₹
8,000. Cash outflow from financing activities ₹ 93,000]
Notes:
a. Decrease in inventories will be calculated after making adjustment for inventories purchased by issue of
shares ₹ (100000 + 20,000 – 74,000) = ₹ 46,000.
b. The difference in plant and machinery account ₹ 17,000 has been treated as book value of machinery
discarded. An alternative view is to consider the same as sale of machinery at book value. Under such as
assumption, the result will be under:
Cash inflow from operating activities ₹ 109100. Cash outflow from investing activities ₹ 8000. Cash
outflow from financing activities ₹ 93,000.
21.Cash flow Statement [15 Marks] [2015 Honours] [1st Imp For Hons]****
Presented below are the Balance Sheets of Joy Ltd. as at 31st March 2010 and 2011.
2011 2010
₹ ₹
I. Equity & Liabilities :
Equity Share Capital 43,00,000 40,00,000
Reserve & Surplus 6,40,000 9,80,000
Debentures 20,50,000 22,00,000
Trade Creditors 6,50,000 8,00,000
Provision for Taxation 1,25,000 1,00,000
Provision for Depreciation (Equipments) 3,00,000 2,00,000
Provision for Depreciation (Buildings) 6,00,000 5,00,000
Total 86,65,000 87,80,000
II. Assets :
Land 15,00,000 18,00,000
Buildings 25,00,000 25,00,000
Equipments 20,00,000 16,00,000
Inventory 14,00,000 15,50,000
Trade Debtors 8,00,000 6,50,000
Cash & Bank Balances 4,00,000 6,00,000
Total 86,65,000 87,80,000

Additional Information :-
(a) Land was sold for cash at a profit of ₹ 50,000.
(b) Dividend paid during the year ₹ 4, 50,000.
(c) Net Profit for the year ₹ 1,60,000
(d) Equipment costing ₹ 6, 00,000 was purchased and costing ₹ 2, 00,000 with a book value of ₹ 40,000
(e) Debentures were redeemed at face value by issuing shares at par.
(f) Amount transferred to provision for taxation during the year ₹ 1, 60,000.
Prepare a statement of Cash Flow as AS – 3 for the year ended March 31, 2011.
22.Cash flow Statement [2017H] [Same as Qn 15] [1st Imp For Hons]****
The following are the summarized Balance Sheets of XY Ltd. as on 31.3.2016 and 31.3.2017:
Note 31-3-16 31-3-17
I. Equity and liabilities :
a) Share Capital 9,20,000 9,20,000
b) Reserve and Surplus 1 3,04,000 3,32,000
2. Non-Current Liabilities:
Long-term Borrowings
8% Debentures
3,60,000 2,80,000
Trade Payable (Creditors) 4,12,000 3,84,000
Other current liabilities (Outstanding Expenses) 52,000 48,000
20,48,000 19,64,000
II. Assets
1. Non-current Assets 6,48,000 7,04,000
a) Fixed Assets: Tangible Assets 4,40,000 2,96,000
b) Non-current investments (Investments)
2. Current Assets:
a) Inventories (Stock) 3,28,000 4,24,000
b) Trade Receivables (Debtors) 2,68,000 1,72,000
c) Cash and Cash Equivalents (Cash at Bank) 3,60,000 3,60,000
d) Other current assets (Prepaid expenses) 4,000 8,000
Total 20,48,000 19,64,000
Notes to Accounts:
31.3.16 31.3.17
1. Reserves and Surplus
a) Reserves 2,40,000 2,40,000
b) Balance in the statement of Profit and Loss 64,000 92,000
3,04,000 3,32,000
2. Fixed Assets - Tangible Assets:
a) Land and Building 6,00,000 6,00,000
b) Machinery 2,08,000 2,80,000
Less: Depreciation (Accumulated) 1,60,000 1,76,000
48,000 1,04,000
Total (a + b) 6,48,000 7,04,000
a) 10% dividend was paid during 2016-17.
b) Machinery for Rs. 1,20,000 was purchased and old machinery costing Rs. 48,000 (accumulated
depreciation Rs. 24,000) was sold for Rs. 16,000.
c) Rs. 80,000, 8% Debentures were redeemed by purchase from open market at Rs. 96 for a debenture
of Rs. 100, at the beginning of the year.
d) Investments worth Rs. 1,44,000 were sold at the book value.
e) Bad debts written off during the year Rs. 20,000.
Prepare Cash Flow Statement as Per AS -3.
23.Cash flow Statement [2018H] [3rd Imp For Hons & Pass]****
From the following Summary Cash A/c of Torsha Ltd. prepare Cash Flow Statement for the year ended 31.3.18
in accordance with AS 3(Revised) using the direct method. The company does not have any cash equivalents.
Summary Cash A/c for the year ended 31.3.18
Rs. ‘000 Rs. ‘000
Balance (1.4.17) 50 Payment to Suppliers 2,000

Issue of equity shares 200 Purchase of computers 200
Issue of Preference Share 100 Overhead expenses 200
Receipt from customers 2,800 Wages and Salaries 100
Sale of furniture 100 Taxation 250
Dividend 50
Repayment of Bank Loan 300
Balance (31.3.18) 150
3,250 3,250
Operating Cash and Cash equivalents = Rs. 20,000 (1.4.2014)
Net Profit after depreciation = Rs. 1,75,000
Profit on Sale of machinery = Rs. 10,000
Increase in Current Assets = Rs. 1,25,000
Increase in Current Liabilities = Rs. 1,50,000
Sale of Machine = Rs. 1,70,000
Purchase of Machine = Rs. 2,50,000
Payment of Bank Loan = Rs. 1,60,000
Redemption of Debenture = Rs. 1,00,000
With the help of above information prepare a Cash Flow Statement as per AS-3 for the year 2014-15.
Calculate Cash from Operation before tax from the information given below:
Sales Rs. 80,000
Less: Cost of goods sold Rs. 30,000
Less: Cash operating expenses Rs. 14,000
Less: Depreciation Rs. 10,000
Profit before tax Rs. 26,000
Balance relating to current items are-
Opening Closing
Debtors Rs. 12,000 Rs. 10,000
26.Cash flow Statement [2016H] [Same as Qn 7] [3rd Imp For Hons & Pass]****
Classify the following transactions according to ‗Operating‘, Investing‘ and ‗Financing‘ activities:
i. Profit on sale of fixed assets Rs. 25,000.
ii. 5000 Preference shares of Rs. 100 each were redeemed.
iii. Payment of Income Tax Rs. 60,000.
iv. Dividend paid Rs. 1,00,000 on equity shares.
v. Dividend received on shares Rs. 12,000.
27.Cash flow Statement [2018H] [2nd Imp For Hons & Pass]****
Opening Closing
Debtors Rs. 15,000 Rs. 13,000
28.Cash flow Statement [2018 Pass] [1st Imp For Pass]****

Following are the Balance Sheet of PQR Ltd. on 31.12.16 and 31.12.17:
Rs. Rs. Rs. Rs.
Equity Share Capital 80,000 1,00,000 Fixed Assets 1,20,000 1,50,000

10% Pref. Share Capital 40,000 24,000 Investments 14,000 18,000
Securities Premium --- 10,000 Stock 40,000 46,000
General Reserve 32,000 36,000 Debtors 38,000 48,000
P/L A/c 8,000 14,000 Cash and Bank 12,000 18,000
Provision for Taxation 24,000 46,000
2,36,000 2,88,000 2,36,000 2,88,000
a) Depreciation charged during the year Rs. 20,000
b) A fixed asset where book value was Rs. 30,000 was sold for Rs. 36,000
c) During the year, income tax and divided was paid for R. 28,000 and Rs. 30,000 respectively.
Prepare a Cash flow Statement.
Introduction to FSA [10 Marks]

1. Comparative Income Statement [B.com 2006]**
From the following information given below prepare a comparative Income statement:
2004 2005
₹ ₹
Sales 4,00,000 5,00,000
Cost of Goods sold 2,40,000 3,50,000
Operating expenses 1,20,000 1,80,000
[Net Sales Less COGS = Gross Profit; Gross Profit – Operating Expenses = Operating Profit; Operating
Profit for 2004 ₹ 40,000; Operating Profit for 2005 (-) ₹ 30,000; Absolute Change (-) ₹ 70,000; %
Change (-) 175 %]
Particulars 2004 2005 Absolute Change %
Change
Sales 4,00,000 5,00,000 1,00,000 25%
Less: Cost of goods sold 2,40,000 3,50,000 1,10,000 45.83%
Gross Profit 1,60,000 1,50,000 (-) 10,000 (-) 6.25%
Less: Operating Expenses 1,20,000 1,80,000 60,000 50%
40,000 (-) 30,000 (-) 70,000 (-) 175%
2. Comparative Income Statement [2013H] [1st Imp For Hons & Pass Both]****
Prepare a Comparative Income Statement from the following information:
Particulars 2009 (₹ ) 2010 (₹ )
Gross Sales 1, 20,200 1, 35,800
Sales Returns 5,200 3,800
Cost of Goods Sold 80,000 84,000
Operating Expenses 12,000 9,000
Income Tax 50% 50%
3. Comparative Income Statement

From the following information, prepare a comparative income statement:
2014-15 2013-14
₹ ₹
Revenue from operations 22,00,000 16,00,000
Cost of goods sold 15,00,000 10,00,000
Employee benefits expense 1,80,000 1,28,000
Finance costs 2,40,000 86,000
Depreciation 30,000 25,000
Other expenses 70,000 60,000
Income tax 60,000 50,000
[Answer: Percentage increase (decrease) : Revenue from operations 37.5% ; Cost of goods sold 50% ;
Employee benefits expense 40-63% ; Finance costs 179.07% ; Depreciation 20% ; Other expenses 16.67%
; Total expenses 55.50% ; Profit before tax (40.20%); Tax 20% ; Profit after tax (52.19%).]
4. Common Size Income Statement
Summarized income statements of two firms in the same industry are given below:
Small Co. Big Co.
₹ ₹
Revenue from operations 300000 9800000
Cost of goods sold 160000 42,00,000
Employee benefits expenses 25,000 800000
Finance costs 15,000 600000
Depreciation 10,000 18,00,000
Other expenses 12,000 12,00,000
Profit 78,000 12,00,000
Prepare common-size income statements for the two firms.
Solution
Small Co. Big Co.
% %
Revenue from operations 100.00 100.00
Cost of goods sold 53.33 42.86
Employee benefits expenses 8.33 8.16
Finance costs 5.00 6.12
Depreciation 3.34 18.37
Other expenses 4.00 12.25
Total expenses 74.00 87.76
Profit 26.00 12.24
5. Common size Income Statement [B.com 2008]

From the following information make comparable P/L of A Ltd. and B Ltd. in terms of percentages only:
A Ltd B Ltd
₹ In Lac ₹ in Lac
Sales 15 80
Cost of Goods Sold 12 60
Administrative Expenses 0.7 5
Selling Expenses 0.8 7
Financial Charges 0.2 2
6. Common Size Income Statement [2009H] [1st Imp For Hons & Pass Both]****
Following data are available from M & Co for 2006 & 2007. You are required to prepare a Common – Size
Statement of Income:
2006 2007
Sales 10,00,000 12,50,000
Add: Commission Received 50,000 75,000
Add: Discount Received 1,00,000 1,25,000
11,50,000 14,50,000
Cost of Goods sold 8,00,000 9,00,000
Operating Expenses 2,00,000 3,00,000
Non-operating expenses 50,000 75,000
10,50,000 12,75,000
Profit 1,00,000 1,75,000
7. Comparative & Common size Balance Sheet
From the following balance sheet of QMS Ltd.,
31.3.15 31.3.14
₹ ₹
Share capital 400000 300000
Reserve and surplus 150000 100000
Long-term borrowings 50,000 90,000
670000 550000
Fixed assets 240000 200000

Non-current investments 200000 180000
Trade receivable 110000 60,000
Cash and cash equivalent 30,000 40,000
670000 550000
Solution
Comparative balance sheets:
Percentage increase (decrease): shareholder‘s fund – Share capital 33.33% Reserve and surplus 50% ; Total
shareholder‘s funds 27.27%. Non-current liabilities – Long term borrowings (44.44%). Current liabilities – Trade
payables 16.67% ; Total equity and liabilities 21.82%. Non-current assets – Fixed assets 20% Investments
11.11% ; Total non-current assets 15.79%. current assets – Inventories 28.57% trade receivables 83.33% ; Cash
and cash equivalents (25%) ; Total current assets 40%. Total assets 21.82%.
8. Comparative Balance Sheet [2009H] [2nd Imp For Hons & Pass Both]****
From the following figures of the Balance Sheet of X & Co., prepare a comparative Balance Sheet.
Particulars 1.1.2007 1.1.2008
₹ ₹
Preference Share Capital 2,00,000 1,00,000
10 % Debenture 1,50,000 1,00,000
Reserve & Surplus 40,000 70,000
Long Term Loans 2,00,000 3,00,000
Investment 2,20,000 2,50,000
Fixed Assets 5,70,000 6,30,000
Current Assets 2,80,000 3,10,000
Current liabilities 80,000 1,20,000
9. Comparative Balance Sheet [B.com 2007]

From the following Balance Sheet of New India Ltd. prepare a Comparative Balance Sheet :
₹ ₹ ₹ ₹
Share Capital 30,000 60,000 Fixed Assets 80,000 1,02,000
Reserves 12,000 10,000 Debtors 10,000 20,000
Debentures 60,000 60,000 Bank 12,000 8,000
1,02,000 1,30,000 1,02,000 1,30,000
10.Trend Ratios [Compiled by Ravi Bhalotia]
From the following figures the trend percentage taking 2009-10 as the base year:
Year Sales Cost of goods sold Gross Profit
₹ ₹ ₹
2009-10 5,00,000 4,00,000 1,00,000
2010-11 6,00,000 4,75,000 1,25,000
2011-12 7,20,000 5,80,000 1,40,000
2012-13 8,50,000 6,90,000 1,60,000
2013-14 9,00,000 7,15,000 1,85,000
2014-15 10,00,000 8,05,000 1,95,000
Answer:
Trend percentages
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Sales 100 120 144 170 180 200
Cost of goods sold 100 118.75 145 147.50 178.75 201.25
Gross profit 100 125 140 160 185 195
11.Trend Ratios [B.com 2007] [2nd Imp For Hons & Pass Both]****
From the trend % supplied below, prepare a comparative statement of current asset in absolute value taking
2003 as the base year.
Trend % Correspondence value of C/Assets
2004 2005 2006 2006
120 130 150 3,600- Cash & Bank
130 140 200 6,800 – Debtors
160 220 250 4,000 – Finished Goods
175 250 300 4,500 – Work in Progress
110 150 175 1,750 – Raw Materials
12.Trend Ratio [B.com 2015 Honours] [3rd Imp For Hons & Pass Both]****
Find the sales of the base period and other missing data from the following figures of A Ltd.
year 2010 2011 2012 2013 2014
Sales (₹ ‗000) 1980 ? 2805 3140 3798
Trend (%) 110 130 ? ? ?
13.Comparative Income Statement [2016H] [1st Imp For Hons & Pass]****
From the following information prepare a Comparative Income Statement.
Particulars 2014 2015
₹ ₹
Sales 3,75,000 5,25,000
Administrative, Selling
and Distribution Expenses 22,500 30,000
Other Income 7,500 3,00,000
Income Tax 50% 50%
14.Common Size Income Statement [2018H] [1st Imp For Hons & Pass]****
With the help of following information for the year ended 31.03.2017, prepare a Common size Income
Statement.
Particular Small Bros.
Office and Selling and Distribution Expenses Rs. 60,000
Other Income Rs. 20,000
Total Cost of Sales: 75% of Net Sales ----
Net Profit before Tax Rs. 1,20,000
15.Common Size Balance Sheet [2014H] [2nd Imp For Hons & Pass]****
From the following information, prepare a common-size Balance Sheet for the year 2012 and 2013.
₹ ₹ ₹ ₹
Equity Share Capital 2,00,000 2,00,000 Fixed Assets 3,00,000 4,00,000

10% Preference Investments 2,00,000 2,00,000
Share Capital 1,00,000 1,00,000 Current Assets 5,00,000 6,00,000
Secured Loan 2,00,000 2,00,000
Unsecured Loan 1,00,000 1,00,000
Current Liabilities 1,00,000 2,00,000
10,00,000 12,00,000 10,00,000 12,00,000

FR & FSA / FM ₹ 3,000

Batch Timings

Accounting Ratios [15 + 5 = 20 Marks]

1. Liquidity ratio
𝑐𝑢𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
a. Current ratio=𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑙𝑖𝑞𝑢𝑖𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
b. Liquid ratio/Quick ratio/Acid test ratio=𝑙𝑖𝑞𝑢𝑖𝑑 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 −𝑠𝑡𝑜𝑐𝑘 −𝑝𝑟𝑒𝑝𝑎𝑖𝑑 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
=𝑐𝑢𝑟𝑟𝑒𝑛 𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 −𝑏𝑎𝑛𝑘 𝑜𝑣𝑒𝑟𝑑𝑟𝑎𝑓𝑡 −𝑐𝑎𝑠 𝑕 𝑐𝑟𝑒𝑑𝑖𝑡
Or
𝑑𝑒𝑏𝑡𝑜𝑟𝑠 +𝑏𝑖𝑙𝑙𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 +𝑏𝑎𝑛𝑘 +𝑐𝑎𝑠 𝑕+𝑎𝑐𝑐𝑟𝑢𝑒𝑑 𝑖𝑛𝑐𝑜𝑚𝑒
= 𝑐𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠 +𝑏𝑖𝑙𝑙𝑠 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 +𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠 𝑒𝑠
Note: if no information is given prepaid expenses, bank overdraft, cash credit will be assumed to be nil.
2. Turnover ratio
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑛𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 (𝐶.𝑂.𝐺.𝑆)
a. Stock turnover ratio= 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑡𝑜𝑐𝑘
C.O.G.S=sales-G.P
Or
Opening stock +purchases+ direct expenses – closing stock Average
𝑜𝑝𝑒𝑛𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘 +𝑐𝑙𝑜𝑠𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘

Average stock=
2
(if Opending stock is not given:- opening stock=average stock=closing stock)
Average holding period (stock velocity):

12 365
In month=𝑠𝑡𝑜𝑐𝑘 𝑡𝑢𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜
, in Days =𝑠𝑡𝑜𝑐𝑘 𝑡𝑢𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜
𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠
b. Debtors turnover ratio=𝑎𝑣𝑒𝑟𝑎𝑔𝑒
𝑑𝑒𝑏𝑡𝑜𝑟𝑠 𝑖𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑠𝑖𝑙𝑙𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
𝑐𝑟𝑒𝑑𝑖𝑡 𝑝𝑢𝑟𝑐 𝑕𝑎𝑠𝑒

c. Creditors turnover ratio=𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑟𝑒𝑑𝑖𝑡𝑜𝑟𝑠 𝑖𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑏𝑖𝑙𝑙𝑠 𝑝𝑎𝑦𝑎𝑏𝑙𝑒
𝑠𝑎𝑙𝑒𝑠 𝑂𝑅 𝐶𝑂𝐺𝑆
d. Capital turnover ratio=𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑
𝑠𝑎𝑙𝑒𝑠 𝑂𝑅 𝐶.𝑂.𝐺.𝑆
e. Fixed assets turnover ratio=
𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑡𝑒𝑠
𝑠𝑎𝑙𝑒𝑠 𝑂𝑅 𝐶.𝑂.𝐺.𝑆
f. Assets turnover ratio= 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Where total assets = fixed assets + investment + current assets, loans & advances
3. Capital structure ratio:
𝑑𝑒𝑏𝑡
a. Debt equity ratio=
𝑒𝑞𝑢𝑖𝑡𝑦
Debt= long term loan + debenture
Equity shareholder’s fund/ net worth/ proprietors' fund=equity share capital + preference share
capital + reserve & surplus-profit & loss (Dr. Bal.)- fictitious assets (Preliminary Expenses etc)
[Fictitious assets = discount on issue of share/ debenture, preliminary expenses share issue
expenses, underwriting commission, deferred expenses]
𝑓𝑖𝑥𝑒𝑑 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑏𝑒𝑎𝑟𝑖𝑛𝑔 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠

b. Capital gearing ratio=
𝑒𝑞𝑢𝑖𝑡𝑦 𝑠𝑕𝑎𝑟𝑒 𝑕𝑜𝑙𝑑𝑒𝑟 𝑠 𝑓𝑢𝑛𝑑
Fixed interest bearing securities=long term loan + debenture + preference share capital
Equity shareholder’s fund=shareholders fund - preference share capital
𝑝𝑟𝑜𝑝𝑟𝑖𝑒𝑡𝑎𝑟𝑦 𝑓𝑢𝑛𝑑
c. Proprietary ratio= 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Total assets= fixed assets + investment + current assets , loans & advances
𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
d. Fixed assets proprietary ratio = 𝑝𝑟𝑜𝑝𝑟𝑖𝑒𝑡𝑎𝑟 𝑦 ′ 𝑠 𝑓𝑢𝑛𝑑
4. Profitability ratio
𝑔𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
a. Gross profit ratio= 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
(20% on cost=20/120 on sales)
𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥

b. Net profit ratio=
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡
c. Operating profit ratio= 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
[Operating Profit = GP + Operating Income - Operating Expenses
5. Other ratio
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
a. Operating expenses ratio= 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Operating expenses=office & administration expenses + selling & distribution expenses.
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
b. Operating ratio= 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
Operating cost=C.O.G.S + operating expenses
1. Ratio Analysis [5 Marks] [2001] [2nd Imp For Pass]****
From the following summarized balance sheet, calculate: i) current ratio, ii) Liquid ratio, iii) debt-equity ratio,
and iv)capital gearing ratio:
Balance sheet as on…
Equity and liabilities
Equity share capital 2,00,000
6% preference share capital 1,00,000
8% debentures 1,00,000
Reserve and surplus 1,00,000
Long-term loan 50,000
Trade payable 1,00,000
Bank overdraft 50,000
7,00,000
Assets
Plant and machinery 2,00,000
Land and building 2,00,000
Inventories 1,50,000
Trade receivables 50,000
Cash and cash equivalents 1,00,000
7,00,000
[Answer (i) 2; (ii) 1.5; (iii) 0.375 ; (iv) 0.83]
2. Ratio [5 Marks] [2nd Imp For Pass]****

Following is the balance sheet of M/s Weldone. Ltd. as on 30th June, 2012:
Liabilities ₹ Assets ₹
Equity share capital 3, 00,000 Land 50,000

Preference share capital 4, 00,000 Building 3, 00,000
Reserves 50,000 Plant and machinery 3, 00,000
Profit and loss account 50,000 Furniture 40,000
12% debentures 2, 00,000 Debtors 2, 00,000
Trade creditors 60,000 Stock 1, 50,000
Outstanding expenses 15,000 Cash 40,000
Provision for taxation 20,000 Prepaid expenses 10,000
Proposed dividend 30,000 Preliminary expenses 35,000
11, 25,000 11, 25,000
You are required to calculate: (a) Current Ratio, (b) Liquid Ratio, (c) Debt-Equity Ratio, and (d) Capital
Gearing Ratio [(a) 3.2; (b) 1.92; (c) 0.26; (d) 1.64]
3. Ratio Analysis [C.U., B.Com. (Gen.) 2013] [5 Marks] [3rd Imp For Pass]****
Calculate current and Quick Ratio and also give your comment with the help of the following information:
₹
Cash ₹ 10,000
Bills receivables ₹ 28,000
Sundry debtors ₹ 1, 70,000
Stock ₹ 2, 80,000
Prepaid Expenses ₹ 30,000
Land and building ₹ 4, 00,000
Goodwill ₹ 1, 00,000
Bank overdraft ₹ 80,000
Bills payable ₹ 30,000
Sundry creditors ₹ 1, 70,000
10% Debentures ₹ 50,000
[Answer: 1.85: 1]
4. Ratio Analysis [5 Marks] [5th Imp For Pass & Honours Both]****
Treveni Ltd. has the following earning last year:
₹
Profit before Tax 26,50,000
Tax Rate 40 %
Proposed Equity Dividend 25 %
Capital employed
10% Preference share Capital 15,00,000
80,000 Equity Share of ₹ 50/- each 40,00,000
Current market Price per Equity ₹ 125/-
Calculate (i) Earning per share (ii) Price earning ratio (iii) Dividend Payout ratio;
[(i) ₹ 18 ; (ii) 6.94 times (iii) 69 %]
5. Ratio Analysis [C.U., B.Com. (Gen.) 2001] [5 Marks] [2nd Imp For Pass]****
Prepare a trading account from the following information:
Gross Profit ₹ 30,000
Rate of gross profit on sales 25%
Average Stock ₹ 15,000
Opening stock: Closing stock 1:2
[Opening Stock ₹ 10,000; Closing stock ₹ 20,000; Purchases ₹ 1, 00,000; Sales ₹ 1, 20,000]
Prepare a Trading Account from the following information:
Gross Profit ₹ 30,000
Rate of gross profit on sales 25%
Average Stock ₹ 15,000
Closing stock is ₹ 10,000 higher than the opening stock.
Trade receivables' velocity = 3 months
Inventory turnover ratio = 8
Fixed asset turnover ratio = 8
Gross profit ratio = 25%
Gross profit = ₹ 80,000
Calculate: (i) revenue from operations; (ii) trade receivables, (iii) Closing inventory and (iv) Fixed Assets.
[(i) ₹ 3, 20,000, (ii) ₹ 80,000, (iii) ₹ 30,000, (iv) ₹ 40,000]
8. Ratio Analysis [Honours 2004] [5 Marks] [2nd Imp For Pass]****
(a) From the following information, compute gross profit ratio:
Opening Stock ₹ 50,000
Closing Stock 1.2 times of opening stock
Stock turnover 4 times
Sales ₹ 2, 50,000
(b) From the following information, compute current assets and current liabilities:
Current Ratio 3: 1
Quick Ratio 1: 1
Closing Stock ₹ 60,000
Bank Overdraft Nil
[(i) 12%, (ii) Current assets ₹ 90,000, Current liabilities ₹ 30,000]
9. Ratio Analysis [2014 H] [5 Marks] [1st Imp For Hons & Pass Both]****
Calculate the Average Collection Period from the following details assuming 360 effective days in a year:
Average Inventory—₹ 3, 60,000
Receivables—₹ 2, 40,000
Cost of Goods sold is 5 times the inventory
G.P. Ratio=1/6 and credit sales to Total Sales = 80 %.
[COGS ₹ 18,00,000; GP ₹ 3,60,000; Sales ₹ 21,60,000; Collection Period 50 Days]
10.Ratio Analysis [15 Marks] [4th Imp For Hons & Pass Both]****
Following are the ratios relating to the trading activities of NPS Ltd.:
Debtors‘ velocity 3 months
Stock velocity 8 months
Creditors‘ velocity 2 months
Gross profit ratio 25%
Gross profit for the year ended 31st March, 2012 amounted to ₹ 4, 00,000. Closing stock of the year is ₹
10,000 more than the opening stock. Bills receivable amounts to ₹ 25,000 and bills payable amounts to ₹
10,000.
Find out: (a) Sales, (b) Sundry Debtors, (c) Closing Stock, and (d) Sundry Creditors.
[(a) ₹ 16, 00,000, (b) ₹ 3, 75,000, (c) ₹ 8, 05,000, (d) ₹ 1, 91,667]
11.Ratio Analysis [1981H] [15 Marks] [Balance Sheet] [1st Imp For Pass]****
From the following details available, prepare a summarised Balance Sheet of ABC limited as at 31/12/1980:
Fixed Assets to Net worth 0.75: 1
Current Ratio 5: 2
Acid Test Ratio 3: 2
Reserves included in Proprietors' Funds 1: 4
Current Liabilities ₹ 2,00,000
Cash and Bank Balances ₹ 10,000
Fixed Assets ₹ 6,00,000
[Balance Sheet ₹ 11,00,000; Share capital ₹ 6,00,000; Reserves ₹ 2,00,000; Loan ₹ 1,00,000]
12.Ratio Analysis [1984 H] [15 Marks] [Balance Sheet] [1st Imp For Pass]****
From the following information prepare a summarised Balance Sheet in the books of X Ltd. as at 31st
December, 1998
Liquid Ratio 1.5
Current Ratio 2.5
Asset (Fixed) Proprietorship Fund Ratio 0.75
Working Capital ₹ 1,20,000
Reserve & Surplus ₹ 60,000
Bank Overdraft ₹ 20,000
[Current Assets ₹ 200000, Current Liabilities ₹ 80,000; Stock 110000; Fixed assets 360000; Share
capital 420000; Balance Sheet ₹ 5,60,000]
13.Ratio Analysis [ 2000] [15 Marks] [Balance Sheet] [4th Imp For Hons & Pass]
From the following information prepare a Balance Sheet of Moon Ltd. as on 31.12.99.
Current Ratio 2:1
Liquidity Ratio 1.25:1
Fixed Assets to Proprietorship Ratio 0.75:1
Gearing Ratio 5:1
Working Capital ₹ 8,000
Reserves & Surplus ₹ 2,000
Long-term Loan Nil
[Current assets 16000, Current Liabilities ₹ 8,000; Stock=8500; Fixed assets 24000, proprietary fund
32000, Equity share capital 3333, Preference share capital 26667; Balance sheet 40000]
14.Ratio Analysis [2014H] [Balance Sheet] [3rd Imp For Hons & Pass]***
From the following information, prepare a Balance Sheet of Mumbai Ltd. as on 31.03.2014
Current Ration—2:1
Liquidity Ratio—1.25:1
Fixed Assets to Proprietorship Ratio—0.75:1
Gearing Ratio (Preference Share Capital to Equity Share Capital)—5:1
Working Capital—₹ 8,000
Reserve & Surplus – ₹ 2,000
Bank Overdraft (not payable immediately) – ₹ 2,000
Long Term Loan—NIL
*₹ 40,000+
15.Ratio Analysis [2013 H] [Balance Sheet] [3rd Imp For Hons & Pass]***
From the following particulars prepare a summarized Balance Sheet in detail as at 31st March, 2012.
Fixed Assets to Net Worth = 0.8:1;
Current Ratio = 3:1;
Fixed Assets = ₹ 8, 00,000;
Reserve included in Proprietor‘s Fund = 25%;
Acid Test Ratio = 3:2;
Cash & Bank = ₹ 15,000;
Long Term Loan = ?
Bank Overdraft = Nil.
*₹ 11,00,000]
16.Ratio Analysis [2006] [15 Marks] [Balance Sheet] [3rd Imp For Hons & Pass]*
From the following information relating of MN Limited prepare a Balance Sheet as on 31.03.2005:
Current Ratio 2.5
Liquid Ratio 1.5
Net working capital (25 % of shareholder‘s fund) ₹ 3,00,000
Cost of Sales/Closing stock 6 times
Gross profit Ratio 25 %
Debt Collection period 1 month
Reserve/Shareholder‘s Fund 33 1/3 %
No Bank overdraft.
[Current assets ₹ 5,00,000; Current liabilities ₹ 2,00,000; stock 200000; Cost of sales 1200000; Gross
profit 400000; Sales 1600000; Debtors 133333; Shareholders fund 1200000; Reserve 400000, Equity
share capital 800000; Fixed assets (balancing figure) 900000; Balance Sheet total ₹ 14,00,000;]
17.Ratio Analysis [2007] [15 Marks] [proprietor’s fund] [1st Imp For Hons]
From the following financial data make out a statement of ‗Proprietor‘s Fund‘ with as many details as
possible:
Proprietary ratio (Fixed Assets to Proprietor‘s Equity) 0.75
Current Ratio 2. 5
Liquid Ratio 1. 5
Capital Gearing (Equity Capital to Preference Capital) 2:1
Reserve & Surplus to Equity Capital 0. 30
Working Capital ₹ 90,000
There is no long term loan & fictitious assets.
[Current liabilities 60000; Current Assets 150000; Stock=90000; Proprietary fund 360000; Fixed assets
270000; Proprietary fund 360000; Preference share capital 100000; Equity share capital 200000; Reserve
& surplus 60000]
18.Ratio Analysis [2002] [15 Marks] [Trading, P/L & B/S] [4th Imp For Hons]
The financial information of Good Luck Ltd. for the year 2004 are given below :
Ratio of Current Assets to Current Liabilities 1.75 to 1
Liquidity Ratio 1.25 to 1
(Debtors and Bank Balance to Current Liabilities)
Issued Capital (Equity Shares of ₹ 10 each) ₹ 1,20,000
Net Current Assets (as over Current Liabilities) 60,000
Fixed Assets (net block) percentage of Shareholders 60 %
as on the closing date
Gross Profit (percentage of turnover) 20%
Annual rate of turnover of stock (based on cost on 31.12.2004) 5.26 times
Average age of outstanding debtors for the year 2004 2 months
Net Profit (percentage on issued share capital) 16%
On 31st December Current Assets consisted of Stocks, Debtors and Bank balance You are required prepare
Trading and Profit and Loss Account and Balance sheet for the year ending on 31st December 2004.
[Current assets 140000; current liabilities 80000; Stock 40000 Cost of goods sold 210400; Gross profit
52600; Sales 263000; Debtors 43833; Net profit 19200; Fixed assets 90000; Proprietary fund 150000
Reserve 30000; Balance sheet 230000; Bank (Balancing Figure) 56167]
19.Ratio Analysis [2015H] [Proprietor’s fund] [1st Imp For Hons]
From the following information, prepare a Statement of Proprietors’ Fund showing as many details as
possible –
 G.P. ratio = 25% ;
 Current ratio = 1.6 ;
 Liquid ratio = 1.35 ;
 Stock turnover (based on Cost of goods sold) ratio = 9 times ;
 Debtors turnover = 146 days ;
 Bank overdraft = nil ;
 Fixed assets to Net Worth = 0.90 ;
 GP = ₹ 3,75,000 ;
 Long term Loan to Current Liability = 0.40 ;
 Reserve to Share Capital = 0.25 ;
20.Ratio Analysis [2008] [15 Marks] [Trading, P/L & B/S] [2nd Imp For Hons]
From the following information of S Ltd. prepare its Trading, Profit & Loss A/c and Balance Sheet:
Sales ₹ 7,30,000 Quick Ratio 1.3
Working Capital ₹ 120,000 Current Ratio 2.5
Bank Overdraft ₹ 15,000 Proprietary Ratio 0.6
(Fixed Assets/ Proprietary Fund)
Share Capital ₹ 2,50,000 Gross Profit Ratio 10%
Net profit is equal to 10% of Proprietary Fund. There are no long term liabilities and fictitious assets. Closing
Stock is 10 % more than opening stock.
[Current liabilities 80000; Current assets 200000; Closing Stock=115500; Gross profit 73000;
proprietary fund 300000; Fixed assets 180000; Reserve 50000; Net profit 30000; Op stock 105000; B/S:
380000]
21.Ratio Analysis [2016H] [P/L & Balance Sheet] [Not So Much Important]
From the following information, prepare the Projected Statement of Profit and Loss for the next financial year
ending December 31,2015 and the Projected Balance Sheet as on that date:
Rate of Gross Profit 25%
Net profit to Equity Capital 10%
Stock Turnover Ratio 5 times
Average Debt Collection period 3 months
Creditor Velocity 3 months
Current Ratio 2
Proprietary ratio (Fixed Assets to Capital Employed) 80%
Capital Gearing Ratio (Preference Shares and
Debentures to Equity) 3:7
General Reserves and Profit and Loss to
Issued Equity Capital 25%
Preference share Capital to Debentures 2
Cost of sales, consist of 40% for materials and balance for wages and overheads. Gross Profit Rs.6,00,000.
Working notes should be shown clearly.
(Here, Schedule III is not mandatory for the preparation of projected Statement of Profit and Loss and Projected
Balance Sheet)
22.Ratio Analysis [2017H] [P/L & Balance Sheet] [2nd Important for Honours]
(b) The following are abridged accounting reports prepared by Y Ltd.:
Statement of Profit and Loss for the year ended on 31.3.2017
Particulars Rs. (‘000)
I. Income: 600
Revenue from operations (sales) 600
II. Expenses:
i. Cost of Goods sold 450
ii. Other Expenses (Operating Expenses) 114
564
Profit before tax (I-II) 36
Less: Provision for taxation 16
Profit after tax 20
Statement of Assets and Liabilities
Particulars (Rs. ‗000)
I. Equity and Liabilities
a) Share capital 160
b) Reserve and Surplus 90
2. Non-current liabilities
Loan on mortgage 50
3. Current liabilities:
a) Trade Payables (Accounts payables) 174
b) Other current liabilities (Accrued Expenses) 10
c) Short-term provision (Provision for taxes) 16
500
II. Assets:
Fixed Assets 160
2. Current Assets:
a) Inventories 160
b) Trade Receivables (accounts Receivables) 120
c) Cash and Cash Equivalent (cash) 60
500
Name and calculate the ratios which indicate:
a) The rapidity with which accounts receivable are collected.
b) The ability of the company to meet its current obligation.
c) What probability on capital invested has been attained.
d) The efficiency with which funds represented by inventories are being utilised and managed.
e) The ability of the company to meet quickly demands for payment of amounts due.
f) The relative importance of proprietorship and liabilities as sources of funds.
23.Ratio Analysis [2018H] [P/L & Balance Sheet] [2nd Important for Honours]
With the following ratios and further information given below, prepare a Trading Account, Profit & Loss
Account for the year ended on 31.12.17 and a Balance Sheet of Mrs. Banerjee as on that date.
1
a) Gross Profit Ratio = 333%
b) Net Profit = 25% of Turnover
c) Stock Turnover ratio = 10 times
1
d) Current liabilities /External liabilities =4
5
e) Fixed Assets/Closing capital = 4
1
f) Closing capital/External liabilities =
2
5
g) Fixed Assets/Current Assets =7
h) Fixed Assets = Rs. 20,00,000
i) Closing stock = Rs. 2,20,000 which is 10% more than the opening stock.
24.Ratio Analysis [5 marks] [2nd Important for Honours & Pass Both]
The current ratio of a company is 2:1. State whether the current ratio will increase or decrease or remain
same as a result of each of the following separate and independent situations:
a) The firm pays any current liabilities
b) Company sells its motor car in cash
c) Company purchases goods in cash
d) The Company issues shares in cash
e) The Company issues bonus shares
f) The debtors of the company pay debt in cash.
25.Ratio Analysis [5 marks] [3rd Important for Honours & Pass Both]
Gross Profit is 25% of cost of goods sold.
The credit sales are twice the Cash Sales.
If credit sales is ₹ 3, 00,000, calculate Gross Profit Ratio.
Calculate (a) Stock Turnover Ratio and (b) Purchases from the following information:
Opening Stock – Rs. 58,000, Closing Stock – Rs. 62,000, Sales- Rs. 6,,40,000; Gross Profit Ratio – 25% on
sales.
Calculate : (i) Sales and (ii) Gross profit from the following information:
Opening stock ₹ 40,000
Closing stock ₹ 80,000
Stock – Turnover Ratio 6 times
Selling price 25% above cost.
Accounting Standards [10 + 5 = 15 Marks]

Conceptual Framework, Presentation of Financial Statements (Indian AS 1), Property, Plant and Equipment (Indian
AS 16), Earnings per share (Indian AS 33), [Basic Definitions & Theoretical Concepts, Scope]
1. What is Conceptual Framework ? [Important]***

A conceptual framework can be defined as a system of ideas and objectives that lead to the creation
of a consistent set of rules and standards. Specifically in accounting, the rule and standards set the
nature, function and limits of financial accounting and financial statements.
The main reasons for developing an agreed conceptual framework are that it provides:
1. a framework for setting accounting standards;
2. a basis for resolving accounting disputes;
3. fundamental principles which then do not have to be repeated in accounting standards.
2. What are the purposes of Conceptual Framework ? [Very

Important]*****
This Framework sets out the concepts that underlie the preparation and presentation of financial
statements in accordance with the Indian Accounting Standards for external users. The purpose of the
Framework is to:
(a) Assist in the development of future Indian Accounting Standards and in its review of existing
Indian Accounting Standards.
(b) Assist in promoting harmonisation of regulations, accounting standards and procedures relating
to the presentation of financial statements by providing a basis for reducing the number of
alternative accounting treatments permitted by Indian Accounting Standards;
(c) Assist preparers of financial statements in applying Indian Accounting Standards and in dealing
with topics that have yet to form the subject of an Indian Accounting Standard;
(d) Assist auditors in forming an opinion as to whether financial statements conform with Indian
Accounting Standards;
(e) Assist users of financial statements in interpreting the information contained in financial
statements prepared in conformity with Indian Accounting Standards; and
(f) Provide those who are interested in Indian Accounting Standards with information about
approach to their formulation.
Note:
 This Framework is not an Indian Accounting Standard and hence does not define standards for
any particular measurement or disclosure issue. Nothing in this Framework overrides any
specific Indian Accounting Standard.
 In those cases where there is a conflict, the requirements of the Indian Accounting Standard
prevail over those of the Framework
3. What are the scope of Conceptual Framework ?**
The Framework deals with:
(a) the objective of financial statements;
(b) the qualitative characteristics that determine the usefulness of information in financial
statements;
(c) the definition, recognition and measurement of the elements from which financial statements
are constructed; and
(d) concepts of capital and capital maintenance.
4. What are the objective of financial statements?**

The objective of financial statements
(a) The objective of financial statements is to provide information about the financial position,
performance and cash flows of an entity that is useful to a wide range of users in making
economic decisions.
(b) Financial statements prepared for this purpose meet the common needs of most users.
However, financial statements do not provide all the information that users may need to
make economic decisions since they largely portray the financial effects of past events and do
not necessarily provide non-financial information.
(c) Financial statements also show the results of the stewardship of management, or the
accountability of management for the resources entrusted to it. Those users who wish to
assess the stewardship or accountability of management do so in order that they may make
economic decisions; these decisions may include, for example, whether to hold or sell their
investment in the entity or whether to reappoint or replace the management.
5. What are the Fundamental Accounting Assumptions*****

Fundamental Accounting Assumptions
Certain assumptions are used in the preparation of financial statements. They are usually not
specifically stated because they are assumed to be followed. Disclosure is necessary only if they are
not followed.
The following have been generally accepted as fundamental accounting assumptions:
1. Going Concern
The organisation is normally viewed as a going concern, that is to say, it will be in continuing
operations for the foreseeable future. It is assumed that the organisation has neither the intention, nor
the necessity of shutting down or reducing the scale of operations.
2. Consistency
It is assumed that accounting policies are consistently followed from one period to another. No
frequent changes are expected.
3. Accrual
Revenues and costs are recorded when they are earned or incurred (and not as money is received or
paid) in the periods to which they relate.
6. What are the objectives of Indian accounting standard 1
(Indian AS 1).
IND AS 1 describes financial statements as a structured representation of the financial position and
financial performance of an entity.
Objective of the financial statement is to provide useful information about the:
1. Financial Position (Assets, Liabilities & equity)
2. Financial Performance (Income, Expenses including gains and Losses)
3. Cash Flows (Including Cash Equivalents)
7. What are the scope of Indian accounting standard 1 (Indian

AS 1).
Scope
(a) IND AS 1 applies in preparing and presenting general purpose financial statement
(b) Other IND AS set out recognition, measurement and disclosure requirements of specific
transactions and events
(c) IND AS 1 prescribes the basis for presentation of financial statements to ensure comparability
both with:
 Entity’s own financial statements of previous periods;
 and Financial Statements of other entities
8. What are the general features of Indian AS 1? [Very

Important]****
OR
What are the key principles of Indian AS 1
IAS 1 also elaborates on the following features of the financial statements:
1. Presentation of True and Fair View and compliance with Indian Accounting Standards:
Financial statements shall present a true and fair view of the financial position, financial performance
and cash flows of an entity. The application of Indian Accounting Standards, with additional
disclosure when necessary, is presumed to result in financial statements that present a true and fair
view.
2. Prepared on a going concern basis;

When preparing financial statements, management shall make an assessment of an entity‘s ability to
continue as a going concern. When an entity does not prepare financial statements on a going concern
basis, it shall disclose that fact, together with the basis on which it prepared the financial statements
and the reason why the entity is not regarded as a going concern.
.
3. Prepared using the accrual basis of accounting;
An entity shall prepare its financial statements, except for cash flow information, using the accrual
basis of accounting. When the accrual basis of accounting is used, an entity recognises items as
assets, liabilities, equity, income and expenses (the elements of financial statements) when they
satisfy the definitions and recognition criteria for those elements in the Framework.
4. Has material classes presented separately;

An entity shall present separately each material class of similar items. An entity shall present
separately items of a dissimilar nature or function unless they are immaterial except when required by
law.
5. Does not offset assets and liabilities;

An entity shall not offset assets and liabilities or income and expenses, unless required or permitted
by an Indian AS.
6. Frequency of reporting (Should be prepared least annually)

An entity shall present a complete set of financial statements (including comparative information) at
least annually.
When an entity changes the end of its reporting period and presents financial statements for a period
longer or shorter than one year, an entity shall disclose, in addition to the period covered by the
financial statements:
(a) the reason for using a longer or shorter period, and
(b) the fact that amounts presented in the financial statements are not entirely comparable.
7. Comprehensive statement (includes comparison with previous periods)-

An entity shall present comparative information in respect of the preceding period for all amounts
reported in the current period‘s financial statements.
An entity shall present, as a minimum, two balance sheets , two statements of profit and loss, two
statements of cash flows and two statements of changes in equity, and related notes.
8. Consistency of presentation (presented consistently across period)

An entity shall retain the presentation and classification of items in the financial statements from one
period to the next unless:
(a) it is apparent, following a significant change in the nature of the entity‘s operations or a review
of its financial statements, that another presentation or classification would be more appropriate
or
(b) an Indian AS requires a change in presentation.
9. What are the Objective of Indian AS 16?**
One fundamental problem in financial reporting is how to account periodically for performance when many of
the expenditures an entity incurs in the current period also contribute to future accounting periods. Expenditure
on property, plant and equipment ('PP&E') is the best example of this difficulty.
Indian AS-16 deals with Accounting and depreciation of property, plant and equipment, which are covered by
Corresponding AS-10.
The objective of this Standard is to prescribe the accounting treatment for property, plant and equipment so
that users of the financial statements can discern information about an entity‘s investment in its property, plant
and equipment and the changes in such investment.
10. What are the Scope of Indian AS 16? [Very Important]*****

This Standard shall be applied in accounting for property, plant and equipment except when another
Standard requires or permits a different accounting treatment. All property, plant and equipment are
within the scope of Indian AS 16 except as follows:
(a) Property, plant and equipment classified as held for sale in accordance with Indian AS 105, Non-
current Assets Held for Sale and Discontinued Operations.
(b) Biological assets related to agricultural activity other than bearer plants (covered by Indian AS
41, Agriculture). This Standard applies to bearer plants but it does not apply to the produce on
bearer plants.
(c) The recognition and measurement of exploration and evaluation assets (covered by Indian AS
106 Exploration for and Evaluation of Mineral Resources).
(d) Mineral rights and mineral reserves such as oil, natural gas, and similar non-regenerative
resources.
However, this Standard applies to property, plant and equipment used to develop or maintain the
assets described in (b)–(d).
11. Define the following terms as per Indian AS 16?

Depreciation
Depreciation is systematic allocation of depreciable asset over a useful life of asset.
Meaning of Plant, Property and Equipment (PPE)

Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes; and
(b) are expected to be used during more than one period.
Depreciable amount
Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual
value.
Entity-specific value
Entity-specific value is the present value of the cash flows an entity expects to arise from the
continuing use of an asset and from its disposal at the end of its useful life or expects to incur when
settling a liability.
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Carrying amount
Carrying amount is the amount at which an asset is recognised after deducting any accumulated
depreciation and accumulated impairment losses.
Cost
Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given
to acquire an asset at the time of its acquisition or construction or, where applicable, the amount
attributed to that asset when initially recognised in accordance with the specific requirements of other
Indian Accounting Standards.
Impairment loss
An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable
amount
Recoverable amount
Recoverable amount is the higher of an asset‘s fair value less costs to sell and its value in use.
Residual value
The residual value of an asset is the estimated amount that an entity would currently obtain from
disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the
age and in the condition expected at the end of its useful life.
Useful life
Useful life is:
(a) the period over which an asset is expected to be available for use by an entity; or
(b) the number of production or similar units expected to be obtained from the asset by an entity.
Bearer plant
A bearer plant is a living plant that:
(a) is used in the production or supply of agricultural produce;
(b) is expected to bear produce for more than one period; and
(c) has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
Recognition Principle
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
Items such as spare parts, stand-by equipment and servicing equipment are recognised in accordance
with this Ind AS when they meet the definition of property, plant and equipment. Otherwise, such
items are classified as inventory.
This Standard does not prescribe the unit of measure for recognition, i.e. what constitutes an item of
property, plant and equipment. Thus, judgement is required in applying the recognition criteria to an
entity‘s specific circumstances
An entity evaluates under this recognition principle all its property, plant and equipment costs at the
time they are incurred. These costs include costs incurred initially to acquire or construct an item of
property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it.
Initial Cost for Recognition

Initial Cost for Recognition Plant, Property and Equipment (PPE) shall be measured at cost, which
includes:
Purchase Price
+ Import Duty
+ Non-Refundable Taxes
+ Costs directly attributable
+ Initial Cost of dismantling and removing the item, if entity has an obligation that it Incurs on
acquisition of asset
(-) Discounts and Rebates
Subsequent Cost
Subsequent Cost In case of regular Repair & Maintenance of PPE or day-to-day servicing of item,
cost shall be recognized in Statement of Profit & Loss.
However, some parts of asset may require replacement at regular intervals. Also, items may be
procured to make less frequently recurring replacement. Cost of such replacing part may be
recognized as asset if recognition principle is met.
Carrying amount of part that is replaced shall be de-recognized.
Cost of any major inspection is recognized in the carrying amount of item of PPE as a replacement if
recognition criterion is satisfied.
12. What is the objective of Indian AS 33- Earning per share?
What is EPS:
Earnings per share is a method used to review the performance of an entity. As the term itself denotes
it simply means determining the profit attributable to each share. Such information is required to
understand the return on investment for the shareholders and prospective investors.
Objective:
The objective of this Standard is to prescribe principles for the determination and presentation of
earnings per share, so as to improve performance comparisons between different entities in the same
reporting period and between different reporting periods for the same entity. The focus of this
Standard is on the denominator of the earnings per share calculation.
13. What is the Scope of Indian AS 33- Earning per share?**

Scope:
(a) This Indian Accounting Standard shall apply to companies that have issued ordinary shares1 to
which Indian Accounting Standards notified under Part I of the Companies (Accounting
Standards) Rules _____- apply
(b) This standard requires that if an entity computes earnings per share then it must calculate and
disclose the same as per this standard.
(c) Further, this standard requires that if an entity presents both Consolidated financial statements
and Separate financial statements as per the standards then it must present the earnings per share
in both the statements separately
(d) The standard prescribes two methods for measurement of earnings per share:
 Basic earnings per share
 Diluted earnings per share
14. Definitions under Indian AS-33

(a) Dilution: Dilution is the reduction in the earnings per share or increase in the loss per share that
results from the assumption that convertible instruments are converted, options or warrants
exercised or that ordinary share are issued upon the satisfaction of specified conditions.
(b) Anti Dilution : Anti Dilution is the increase in the earnings per share or reduction in the loss per
share that results from the assumption that convertible instruments are converted, options or
warrants exercised or that ordinary share are issued upon the satisfaction of specified conditions.
(c) Options: Options, warrants and their equivalents are financial instruments that give the holder
the right to purchase ordinary shares.
(d) Ordinary share: An ordinary share is an equity instrument that is subordinate to all other classes
of equity instruments.
(e) potential ordinary share: A potential ordinary share is a financial instrument or other contract
that may entitle its holder to ordinary shares.
(f) Put options: Put options on ordinary shares are contracts that give the holder the right to sell
ordinary shares at a specified price for a given period.
15. Write Short Notes on: Basic earnings per share**
(a) Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary
equity holders of the parent entity (the numerator) by the weighted average number of ordinary
shares outstanding (the denominator) during the period.
(b) The objective of basic earnings per share information is to provide a measure of the interests of
each ordinary share of a parent entity in the performance of the entity over the reporting period.
(c) For the purpose of calculating basic earnings per share, the number of ordinary shares shall be
the weighted average number of ordinary shares outstanding during the period.
(d) Example: Apple Ltd has a profit of Rs. 5 crores The number of ordinary shares outstanding is
10 lakhs. So the EPS will be 5 crores /10 lakhs = Rs. 50.
16. Write Short Notes on: Diluted earnings per share**

(a) For the purpose of calculating diluted earnings per share, an entity shall adjust profit or loss attributable
to ordinary equity holders of the parent entity, and the weighted average number of shares outstanding,
for the effects of all dilutive potential ordinary shares.
(b) The objective of diluted earnings per share is consistent with that of basic earnings per share—to
provide a measure of the interest of each ordinary share in the performance of an entity—while
giving effect to all dilutive potential ordinary shares outstanding during the period.
(c) For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be
the weighted average number of ordinary shares calculated in accordance with paragraphs 19 and
26, plus the weighted average number of ordinary shares that would be issued on the conversion
of all the dilutive potential ordinary shares into ordinary shares
(d) Dilutive potential ordinary shares shall be deemed to have been converted into ordinary shares at
the beginning of the period or, if later, the date of the issue of the potential ordinary shares.
(e) Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to
ordinary shares would decrease earnings per share or increase loss per share from continuing
operations.
(f) For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of
dilutive options and warrants of the entity
Introduction to FSA: Theory

17. What do you understand by financial statement analysis? ***
Financial Statements convey different pieces of information to different but specific users. They
need these mainly for decision making. The users analyse and interpret the statements in their own
prospective and according to their own needs. In the accounting process interpretation of the
reported date is the ultimate step. The data conveyed through Financial Statements need proper
analysis and interpretation for being usable for decision making. So, Financial Statements Analysis
implies analysis and interpretation of the Financial Statements for facilitating the drawing of valid
conclusions from the reported facts and figures. It helps to understand the past performance of a firm
based on the particular prediction to be made and the overall risk involved for the firm. A financial
statement analyst applies different tools of analysis to gauge the financial strength or weakness of a
firm. Thereafter, he can proceed to predict about the future of the business and decide the future
course of action needed for the general development or improvement.
At present, Financial Statement Analysis does not remain confined within the periphery of financial
statements only. It also examines and covers the interval environment in which the firm operates and
also the external environment surrounding such firm. The financial statements invariably fail to
project all details needed for proper decision making. So the users of information have to look
beyond financial statements also. The efficiency level of the management, the nature of the product
and its diversification, employees‘ morale etc. can never be reported by financial statements.
Thus, in the current perspective, Financial Statement Analysis may be defined as the analysis of
relevant financial data collected from financial statements and also non – financial factors that affect
the running and growth of a firm.
18. Define financial statements Analysis? Explain the objectives for such
analysis?****
In July, 1989, the International Accounting Standard Board (IASB) brought out the objectives of financial
statements. In its study titled ―Framework for the preparation and presentation of Financial Statements.‖ The
Board described such objective as – ―to provide information about the financial position, performance and
changes in financial position of an enterprise that is useful to a wide range of users in making economic
decisions.‖
Now, this may be clarified and expanded as –
1. To convey information to various present and prospective owners regarding the result of the business
from time or time or at regular intervals.
2. To assist the investors and creditors with information about the liquidity and cash flows of the related
concern.
3. To give a picture of the financial performance of an enterprise during a particular accounting period.
4. To disclose the procurement made of sources and uses of funds made from that.
5. To help also the outsiders of a business to understand the affairs of an enterprise.
6. To give proper message about the financial resources and claims against such resources in an
enterprise.
7. To help the management to take decision.
8. To monitor the changes in financial position.
19. Discuss the need for financial statement analysis.****
(a) Investment decision of owners and lenders : It helps to assess the risk of return on equity investment, its
growth potentiality and risk involved with the loan to firm i.e., the solvency of the firm. Accordingly, they
can take appropriate investment decisions.
(b) Liquidity assessment : By conducting regular liquidity analysis the management endeavours to obviate
liquidity crisis. The suppliers can take credit decision most rationally and judiciously.
(c) Assessment of profitability : The survival and growth of the firm ultimately depend upon its profitability.
By means of various techniques, e.g. ratio analysis, EVA analysis etc. it makes assessment of the
profitability to determine whether profit earned by the firm is sufficient as compared with the bench mark
figure such as industry's average profitability and competitor's profitability.
(d) Performance evaluation : Financial statement analysis ascertains the competitiveness of the firm by
regrouping and analysing the figures contained in financial statements. It pinpoints the strength and
weakness of the business as compared with its competitor and suggest measures for its sustainable
development.
(e) Forecasting : Financial statements become relevant only when they can be used for prediction of the
future prospect and growth potential of the business. It is the financial statement analysis which make the
accounting data amenable to forecasting of future profitability and cash flow.
(f) Managerial decisions : Financial statement analysis has a significant role in this regard. By analysing and
interpreting various financial and non-financial data and information suitably, the financial analysts help
the management to take those decisions most rationally and judiciously.
(g) Signalling of corporate sickness : The role of financial statement analysis in this regard is very
significant. By analysing various financial and non-financial data, the financial analysts can develop model
for signalling impending sickness of the firms.
20. What are the Limitations for financial statement analysis.***

Although financial statements render ample information service to the stakeholders of a business as well as to
its outsiders, such statement suffer from certain limitations. These are:
1. These statements report quantitative facts only. The qualitative aspects are not properly hinted upon.
2. Only some major and important pieces of information are transmitted. An overall picture cannot be
reflected by the traditional financial statements. As a result, decision – making may become partial
and biased.
3. Personal observations and intuitions are not allowed proper lee way to bring out complete material
facts.
4. Change of socio – economic scenario and political surroundings find no place in financial statements.
But pre – dominantly these factors are governing the development of business.
21. What are the tools & Techniques of financial analysis?***

Analysis of Financial Statements may be done by applying a number of techniques. But as any particular
technique is not self – sufficient or equally applicable for any purpose, the financial analyst has to choose and
combine more than one technique for an effective analysis and proper interpretation.
The techniques normally used are –
1. Comparative Statements (Analysis)
2. Common – Size Statements (Analysis)
3. Trends Analysis
4. Ratio Analysis
There are other forms of analysis like –
Fund Flow Analysis, Cash Flow Analysis, Cost Volume Profit Analysis, Balanced Score Card, Multivariate
Analysis and calculation of scores like Z score, A score and H score.
22. Briefly mention the names of three parties interested in
Financial Statement Analysis with their information need. [Very
Important]*********
The users of financial statements include present and potential investors, employees, lenders,
suppliers and other trade creditors, customers, governments and their agencies and the public. They
use financial statements in order to satisfy some of their different needs for information. These needs
include the following:
(a) Investors. The providers of risk capital and their advisers are concerned with the risk inherent
in, and return provided by, their investments. They need information to help them determine
whether they should buy, hold or sell. Shareholders are also interested in information which
enables them to assess the ability of the entity to pay dividends.
(b) Employees. Employees and their representative groups are interested in information about the
stability and profitability of their employers. They are also interested in information which
enables them to assess the ability of the entity to provide remuneration, retirement benefits and
employment opportunities.
(c) Lenders. Lenders are interested in information that enables them to determine whether their
loans, and the interest attaching to them, will be paid when due.
(d) Suppliers and other trade creditors. Suppliers and other creditors are interested in
information that enables them to determine whether amounts owing to them will be paid when
due. Trade creditors are likely to be interested in an entity over a shorter period than lenders
unless they are dependent upon the continuation of the entity as a major customer.
(e) Customers. Customers have an interest in information about the continuance of an entity,
especially when they have a long-term involvement with, or are dependent on, the entity.
(f) Governments and their agencies. Governments and their agencies are interested in the
allocation of resources and, therefore, the activities of entities. They also require information in
order to regulate the activities of entities, determine taxation policies and as the basis for
national income and similar statistics.
(g) Public. Entities affect members of the public in a variety of ways. For example, entities may
make a substantial contribution to the local economy in many ways including the number of
people they employ and their patronage of local suppliers. Financial statements may assist the
public by providing information about the trends and recent developments in the prosperity of
the entity and the range of its activities.
23. What are the components of financial Statements? [Imp]**
OR
What are the structure content of financial Statements?
A complete set of financial statements comprises:
(a) a balance sheet as at the end of the period ;
(b) a statement of profit and loss for the period;
(c) Statement of changes in equity for the period;
(d) a statement of cash flows for the period;
(e) notes, comprising a summary of significant accounting policies and other explanatory information; and
(f) comparative information in respect of the preceding period and
(g) a balance sheet as at the beginning of the preceding period
(h) An entity shall present a single statement of profit and loss, with profit or loss and other comprehensive
income presented in two sections. The sections shall be presented together, with the profit or loss
section presented first followed directly by the other comprehensive income section.
(i) An entity shall present with equal prominence all of the financial statements in a complete set of
financial statements.
24. Distinguish between traditional and modern approaches to financial statement
analysis [Very Important]*********
There are certain differences between the traditional and modern approaches to financial statement analysis.
The major differences between these two are discussed below:
Traditional Approach:
(a) Scope : The analysis is based on only information from published financial statement. It is essentially an
analysis of financial data.
(b) Focus : As the analysis is restricted to only financial data extracted from historical records it is backward
looking. Prediction of future of the firm can not be made with the help of the traditional approach.
(c) Techniques of Analysis : Techniques like ratio analysis, common sizing of financial statements, trend
analysis etc. are generally applied for analysis. No advanced statistical or mathematical tool is generally
used in the analysis.
(d) Testing of Decision Rules : Decision rules are made in a normative way. No market testing is done to the
principles developed.
(e) Relation with other Branches of Knowledge : The analysis is generally done in isolation of other
branches of knowledge.
(f) Time Horizon : The analysis emphasizes on profitability and financial position of the firm from short-
term point of view.
Modern Approach:
(a) Scope : The modern approach to financial statement analysis is not confined to only information from
conventional financial statements. It also considers various non-financial information.
(b) Focus : The main thrust of the modern approach to financial statement analysis is on future. It processes
all types of information relevant for making prediction about the future of the firm. Thus, it is forward
looking.
(c) Techniques of Analysis : The analysis resorts to sophisticated statistical and mathematical approach.
(d) Testing of Decision Rules : Decision rules are framed after empirical verification.
(e) Relation with other Branches of Knowledge : The modern approach attempts to integrate financial
statement analysis with other branches of knowledge specially with economics and advanced finance
theories.
(f) Time Horizon : The modern approach emphasises on profitability and financial position of the firm both
from short-term and long-term point of view.
25. What do you mean by common-size income statement? What are its Merits,
Demerits & Uses?
A common – size financial statement is one where all the components of a financial statement are
expressed on a common basis. The items or components are stated in absolute figures. But different
companies have different volumes of capital investments, profit margins, assets, sales and costs. For a
meaningful comparison among different components of two or more different companies, their
Balance Sheets and Income Statements are common – sized.
Common – sizing of Balance Sheet means expressing all its items as a percentage of total assets or
equities. Similarly, all items of the Income Statement are expressed as a percentage of total sales. The
relative proportion of each item is found out as a percentage. If an analysis of Financial Statements is
made after these have been common – sized, it is called Common – size Financial Statement
Analysis. The analysis of item is made from top to bottom. So, it is also called a Vertical Analysis.
Here common – size refers to the proportional relationship in terms of percentage between the total
assets, total liabilities, total sales and equities. It is the first step of an enquiry which reveals the
differences between comparable items or issue. It shows the areas which require further analysis as
regards the causes behind the differences located.
 Advantages / Merits of Common – size Analysis
1. Comparisons between two firms or inter – firm comparisons become meaningful and
effective.
2. The relative importance of each items s brought to light.
3. It gives an insight into the asset structure of a company.
4. Better interpretation of all the items becomes possible.
5. It helps in analyzing structural relationship within an enterprise. The analysis reveals how the
different proportions related to sales or total assets change over the period under study.
6. It is suitable for further analysis like time series analysis.
7. It is also applicable for comparisons between multi – national firms where statements are
prepared at different currencies.
 Limitations or Demerits of Common – size Analysis

1. Use of this analysis for making comparisons becomes ineffective unless absolutely uniform
accounting policies and principles are pursued in the different years under study or different
concerns under review.
2. Where inter – firm comparisons are to be made with the help of this analysis, it fails to reflect
the actual size of companies under review. But in reality, size of a business plays a vital role
in determining the gamut of its activities or financial performance.
3. Through this approach of analysis, proper into – period comparison cannot be made. The
proportional relation among the components of the statement within a year cannot reflect the
entire situation. Even the examination of the Income Statement and the Balance Sheet are
made separately.
4. It can only raise questions without giving any guidance regarding the causes or their effects.
 Use of Common – size Financial Statement Analysis

This analysis is used for –
1. Comparing the financial performance and structure of asset and liabilities of a concern for
the period under study with similar components of the same concern in the preceding or
base year [Intra – firm Comparison] or [Inter – period Comparison].
2. To compare and contrast the components of the Income Statement and Balance Sheet of a
company with similar items of another company or with the Industry Average, that is, for
Inter – firm comparisons.
26. Distinguish between Comparative Statement and Common size statement.
[Very Important]*********
Points of differences Comparative Statement Common – size Statement

1. Nature It is a Horizontal or Dynamic It is a vertical Analysis. Here
Analysis where the financial figures are written with sales
numbers are written in on the top and other items one
columns placed side by side. by one towards the bottom.
2. Features Beside the two columns All items for a year are
prepared to write figures side expressed in percentages. The
by side, the third and the forthinternal composition or
column are used to write the structure is disclosed if
absolute change and the Balance Sheets are common –
percentage change in the sized. The common – size
figures. Income Statement or Profit &
Loss Account discloses the
individual relation of each
item to sales.
3. Objectives Its main objective is to Its objective is to reveal the
indicate the trend of operating internal composition of
result. It also shows the trend Capital structure, Assets etc.
of the financial position of a
business over the period of
study.
27. What are the steps involved in common-size statement.

Steps followed for Common – sizing
For Common – sizing the procedure followed is stated below:
(i) Total sales or total revenue is to be taken as 100.
(ii) The absolute figure of each item of expense is to be calculated as a percentage of (i) above.
Profit or Loss should also be calculated as a percentage like above.
For Common – sizing the Balance Sheet –
(i) Total of the Asset side or of the liabilities side should be taken as 100.
(ii) Each item of assets and each item of liabilities is to be expressed as a percentage of (i)
above.
From the Income Statements or Profit & Loss Accounts of two years, the year – wise amounts
(figures in rupees) are to be written in two columns. A third column is to be prepared to show the
Absolute change. The 4th column should be prepared to show the percentage change. Similar steps
are to be followed for preparing Common – sized balance Sheet.
28. What are the steps involved in comparative income statement analysis.
To analyse and interpret Comparative Income Statement certain steps should be followed. These are–
1. Analysis of the change in Gross Profit: At first change in sales should be compared with the
change in cost of goods sold. It will help to know why there has been a change in Gross Profit.
If increase in sales becomes more than the increase in cost of goods sold, the change in gross
profit becomes positive.
2. Analysis of the trend of operating profit: The trend of operating profits over the period of
study should be properly watched. Operating Profit is derived by deducting all operating
expenses (which may be office and administrative expenses, selling and distribution expenses
etc.) from the Gross Profit. So, each item of operating expenses needs to be studied. The
operating profit suffers unless the increases in Gross Profit become equal or more than the
increase in operating expenses. Each of these expenses are normally controllable. Their
increase may result from increased operating activities or lack of managerial efficiency. The
analyst has to diagnose the exact behind their changes.
3. Analysis of the change in Net Profit: The ultimate profitability of a business depends upon its
net profit. Non – operating expenses are deducted from operating Profit to arrive at Net Profit.
Such non – operating expenses may be abnormal loss, interests, treatment made for tax etc.
there may also be some non – operating income like profit on revaluation or sale of asset,
interest received on investments etc. such incomes enhance the net profit. If the Net Profit
increases, a business may be called ‗placed in the right back‘.
4. Conclusion: The analyst can form his opinion or judgement about the profitability of a concern
only after his observations are complete from the first three steps.
29. What do you mean by comparative statement?

It is the historical summary of the same item or group of items related to consecutive income
statements or balance sheets of a concern. It is a tool that indicates change in each item of the
financial statement. It helps to review changes in individual account balance over years.
This statement may show –
(i) Absolute figure [ in items of Rupee Amount]
(ii) Change in absolute figures [ in terms of Rupee]
(iii) Percentage of absolute figures
(iv) Percentage Increase / Decrease in absolute figures.
From the financial statements information is received about the financial position of a business and
the value of its different assets, liabilities and capital. So, their comparative study reflects the trend of
same items taken from two or more financial statements of the same enterprise on different dates.
Comparative statements may be sub – divided into –
(i) Comparative Balance Sheet
(ii) Comparative Income Statements
(iii) Comparative Fund Flow Statement
(iv) Comparative Cash Flow Statement
30. What do you mean by comparative income statement? What are its
merits.
COMPARATIVE INCOME STATEMENT
An Income Statement is prepared to show the operating results of an enterprise during a particular accounting
period. Whereas a comparative Income Statement is prepared to reveal the trend of financial performance over
successive accounting periods.
It gives information about sales, cost of goods sold, different types of operating expenses, non – operating
expenses and the ultimate net profit over the period of study along with the changes in these items in
comparison to the figures of the preceding or base year. Such changes or variations in the different items
(recorded usually in the Income Statement) are expressed in absolute figures and in percentages. It provides
useful information regarding –
(a) The profitability position of a business;
(b) Changes in every item involved in the determination of profits; and
(c) The weakness or success of the areas contributing towards profits.
Merits of Comparative Income Statement
(i) It helps to know the trend of profitability.
(ii) It identifies the strong and weak areas in the structure of costs and other factors determining profit.
(iii) It guides to locate the areas which need exercise of control.
31. Distinguish between comparative statement & Common size statement

[Very Important]*********
S.N. Comparative Statement Common-Size Statement

1. It is a very common tool for analysis of financial It is not very commonly used tool for analysis of
Statements. Financial statements.
2. It is a form of horizontal analysis. It is a form of vertical analysis.
3. It does not exhibit the relative importance of It exhibits the relative importance of each item
Each item of the financial statement as compared of the financial statement as compared to total.
To total.
4. It is suitable for both inter-firm and intra-firm It is suitable for inter-firm comparison.
Comparisons.
5. It is useful for segment-wise analysis. It is not useful for segment-wise analysis.
6. It is not suitable for comparison of firms of It is very useful for comparison of firms of
different sizes. Different sizes.
Ratio Analysis: Theory

32. What are the advantages/importance of ratios in interpreting financial
statements.**
Importance of Ratio Analysis
(a) Forecasting and planning. The trend in costs, sales, profits and other facts can be known by constructing
ratios of relevant accounting figures of last few years. This trend analysis with the help of ratios is very
much helpful in business forecasting and planning.
(b) Budgeting. While preparing budgets of different functions, past ratios can be used as guide for
harmonisation among them. For example, with the help of last year's material consumption to sales ratio,
current year's purchase budget can be prepared with respect to forecasted sales.
(c) Evaluation of departmental activities. Activities of various departments can be evaluated with the help
of ratios. For example, actual input-output ratio of a manufacturing department can be compared with its
budgeted input-output ratio to judge its efficiency.
(d) Communication. Pertinent informations of the organisation can be more meaningfully communicated to
outsiders with the help of ratios.
(e) Indication of liquidity position. With the help of ratio analysis, conclusion can be drawn regarding
liquidity position i.e. short term debt paying ability of the firm. This ability is reflected in the various
liquidity ratios. Creditors, Bankers and other suppliers of short term loan are particularly interested in the
liquidity ratios.
(f) Measurement of efficiency in utilisation of assets. The technique of ratio analysis throws light on the
degree of managerial efficiency in utilisation of various assets.
(g) Indication of long term solvency position. Ratio analysis is also helpful in assessing" the long term
solvency position i.e., long term debt paying capacity of a firm. So long term creditors, security analysts
and existing and prospective owners of a firm can take their investment decisions rationally and
judiciously based on ratios measuring long term solvency of the firm.
(h) Signal of corporate sickness. Proper ratio analysis can give signal of corporate sickness in advance.
Accordingly, measures can be taken timely to prevent the occurrence of such eventuality.
(i) Formulation of governmental plans and policies. The government takes various plans and policies
based on industrial performance of the country. Ratios are generally used as indicators of performance of
various industries.
33. What are the objectives of Ratio Analysis.**

Objectives of Ratio Analysis:
(a) Forecasting and planning.
(b) Budgeting
(c) Evaluation of departmental activities.
(d) Communication.
(e) Measurement of efficiency in utilisation of assets.
(f) Inter-firm comparison
(g) Indication of liquidity position
(h) Signal of corporate sickness.
(i) Formulation of governmental plans and policies.
34. What are the limitations of ratios Analysis. [Very Important]*********
Limitations of Ratio Analysis :
Ratio analysis is a widely used technique for assessing the operating performance and financial position of
affirm. But it has got some inherent problems which must not be lost sight of before undertaking such analysis.
Some of these problems or limitations are as follows :
(a) Dependence on correct data: The efficacy of ratio analysis depends upon the sanctity of accounting data.
If accounting data are fabricated, the ratio analysis will only give misleading conclusion.
(b) Comparability: Inter-firm comparison with the help of ratios becomes meaningful only when firms in
question adopt uniform accounting principles and procedures. But it is quite unlikely that two firms will
follow uniform accounting principles. For example, one firm may follow reducing balance method of
depreciation while another may follow straight line method. In this case comparison of their asset turnover
ratio will only be misleading.
(c) Price level changes: The price level changes very often distort trend analysis done with the help of ratios.
For example fixed assets turnover ratio in 2005 will be higher than in 2000 even if there is no change in
fixed assets and efficiency in utilisation of assets remains same. This is due to price level increase.
(d) Ratios account for one variable only: Since ratios account for only one variable, they can not always
give correct picture. It may so happen that there is general increase in earnings of all firms in the economy
and the increase in earnings of the firm in question is relatively lower than the average increase of earning
in the economy. So several variables such as government policy, economic condition, availability of
resources etc. should be kept in mind while interpreting ratios.
(e) Presentation of misleading picture: Ratio analysis often gives misleading picture. The absolute figures
should also be considered.
(f) Historical: Ratios are generally computed from past financial statements and are not true indicators of the
future.
(g) Lack of standards: One of the ways of ratio analysis is comparison of actual ratios with the standard
ratios. But fixation of standard ratios is not an easy task. Moreover standard ratio of two related items may
vary from industry to industry. For example, standard fixed assets turnover ratio of electricity industry and
the same for wagon industry must not be same for obvious reason that the latter is less capital intensive.
(h) Solution of real problem not possible: Ratio analysis may only identify the problem but can not solve
the same. It is only the starting point and for solving the problem, further investigation is required. For
example, if sales margin ratio of current year is lower than that of last year, it can only be understood that
profitability has been deteriorated. But to know the real causes of deterioration and for their removal,
further investigations and action are required to be taken.
35. Explanations of some important ratios:

(A) Current Ratio / Working Capital Ratio :
It is the ratio of current assets to current liabilities Current assets include cash and those assets which are
expected to be converted into cash shortly, generally within the year like debtors (net of provision), B/R,
Stock, marketable securities, prepaid expenses etc.. Current liabilities are those liabilities which are supposed
to be paid within a year such as creditors, B/P, Proposed dividend, provision for taxation, outstanding
expenses, long term debt maturing within the year etc.
Significance and Interpretation: Current ratio measures short term solvency or liquidity position of the firm.
It indicates how much current assets in rupees are being held by the company for each rupee of current
liabilities. As a convention, current ratio 2 : 1 is taken as standard which means that each rupee of current
liabilities should be backed by current assets valued two rupees. The logic behind this is that even if actual
value of current assets is reduced to half, the firm will not face any problem in meeting its current liabilities.
However, current ratio should not be blindly followed in measuring the liquidity position of the firm in as
much as it does not consider quality of current assets. For example, if current assets of a firm include huge
amount of old and doubtful debts and obsolete inventory, its debt paying capacity will be deteriorated. Hence
too much emphasis should not be placed on current ratio to measure liquidity position. Further investigation
should be made about quality of current assets. Current ratio only provides a crude measure of liquidity
position.
(B) Acid Test Ratio or Quick Ratio or Liquid Ratio :
It is the ratio of quick assets to quick liabilities. It is a measure for judging immediate solvency position of a
firm.
Thus Quick ratio = Quick assets/Quick Liabilities. Quick assets include cash and those assets which are
immediately convertible into cash like debtors, B/R and marketable securities. Inventory is not considered as
quick asset as it generally takes long period for realisation. Similarly prepaid expense is excluded from Quick
assets since no cash will be realised from it. Bank overdraft is also excluded from Quick liabilities as it is
generally used as a permanent source of financing by the firm.
Significance and Interpretation :
Acid test ratio or Quick ratio is a refinement over current ratio. As it excludes inventory from current assets, it
can more effectively measure the short term debt paying ability. As a convention, acid test ratio 1:1 is taken as
standard indicating that each rupee of quick liabilities should be backed by quick assets of equal value.
However, although acid test ratio is the more penetrating test of liquidity than current ratio, it should be used
cautiously. It may be seen that a firm with very satisfactory acid test ratio is failing to meet its debt obligation
simply because of huge amount of old and doubtful debts. Again a firm with poor acid test ratio may be found
to be meeting its debt obligation very promptly by way of efficient inventory management with continuous
salability. Nevertheless, acid-test ratio is widely used as indicator of firm's liquidity.
(C) Debt-Equity Ratio :
This ratio expresses the relationship between debt capital and shareholders, fund of the company. There are
different approaches to calculation of this ratio as below :
Debt Equity Ratio = Long Term Debt/Shareholder‘s Fund
= (Long term debt + Short term debt)/Shareholder‘s Fund
Shareholders' fund = Equity share capital + Pref. Share capital + Reserves & Surplus - Fictitious assets, if any
Significance and interpretation:
Debt equity ratio indicates the respective claim of outsiders Owner i.e., equity shareholders in the assets of the
firm. So it reflects the financial soundness of the firm. A high D/E ratio indicates that dependence of firm on
outside fund is high. In this case the firm is exposed to greater financial risk. This is because if the firm does
not perform well for some reason or other, it will face problem in raiment of interest and repayment of
principal in time. The debt holders will then interfere in the management of the firm. On the other hand, a
firm with low D/E ratio will provide a nigh margin of safety to outside suppliers of capital. They become sure
about return of their capital in time. The hardship to be faced by the management in payment of interest in
difficult situation is also relatively lesser. However, debt capital is generally cheaper. In favorable market
condition, a firm with high D/E ratio can enhance the return of equity shareholders. So D/E ratio to be
maintained should be carefully planned keeping in view the market condition, profitability of the firm and
other related factors.
(D) Capital Gearing Ratio :
This ratio expresses the relation between fixed income bearing capital and equity shareholders'
fund in the capital structure of the firm. Thus, Capital gearing ratio =
Pref. Share Capital + Debenture + Long term debt
Equity Shareholders fund
[Equity Shareholders' fund = Equity Share Capital + reserves & Surplus - fictitious assets, if any]
Significance and interpretation :
A firm with capital gearing ratio more than 1 is called highly geared firm while a firm with capital gearing
ratio less than 1 is called low geared firm. The firm with gearing ratio 1 is called evenly geared company.
The implication of gearing ratio may be considered from the viewpoint of (i) long term solvency of the firm
and (ii) return of equity shareholders. A high gearing ratio means greater dependence of the firm on debt and
preference capital. It indicates that the firm has assumed a high degree of financial risk. It has to redeem this
capital as per stipulated schedule. It has to pay interest on debt at fixed rate regardless of profit and pay
dividend on preference capital at fixed rate, of course, subject to availability of profit. So a too high gearing
ratio is not preferable from solvency point of view.
(E) Proprietary Ratio :
It is the ratio of proprietary fund to total assets and is generally expressed as percentage. Thus, Proprietary
ratio = Proprietary Fund
Total Assets
Proprietary ratio indicates how much of the total assets have been procured with .ownership fund. It is the test
of solvency position of the firm. Higher this ratio, lower is the dependence on external fund and hence, greater
is the solvency of the firm. Therefore, a high proprietary ratio is desirable from solvency point of view.
However, a too high proprietary ratio also indicates that the firm is conservative in using debt capital. In that
case it can not reap the benefit of trading on equity.
(F) Inventory Turnover Ratio :
Inventory turnover-ratio is calculated by dividing cost of goods sold by the average inventory. Thus,
Inventory turnover ratio = Cost of goods sold /Average inventory
Significance and interpretaton:
Inventory turnover ratio throws light at the degree of efficiency in inventory management..
A high inventory turnover ratio is the indicator of sound inventory management. A low inventory turnover
ratio implies excessive inventory levels than warranted by volume of operation. It may also result from slow-
moving and obsolete stock. A high level of idle or obsolete inventory means blockage or loss of capital. This
will cause high interest and other carrying cost. The ultimate impact is impairment of profitability. So higher
inventory turnover ratio is always preferable.
However, a vary high inventory turnover ratio should be examined very cautiously. A high inventory turnover
ratio may be due to maintaining an inadequate level of inventory which may cause frequent stock out and
disruption of production and sales. So inventory turnover ratio should not be too high or too low. It should be
kept at the level which will not cause idle investment in inventory and at the same time will not lead to any
disruption in operation. The study of industry average of inventory turnover ratio may be considered in this
respect along with other factor
(G) Debtors Turnover Ratio :
Debtors turnover ratio is the ratio of credit sales to average receivables. Thus, Debtors turnover ratio =
Credit sales/ Average receivables
When a firm sells goods on credit, book debt is created. The book debt should be realised shortly because so
long it is not realised, firm's fund remains blocked outside the business. The firm is unable 10 utilise the same
in meeting its short term obligations like payment to suppliers, employees etc. So firm's liquidity i.e. the
degree of ability to meet short term obligation is related, among other factors, to quality of debtors. Debtors
turnover ratio indicates the quality of debtors. reduces, profitability of the firm can not be maintained. To
judge the credit policy of the firm, debtors turnover ratio or average collection period may be compared with
industry average. If a very high variance is noticed, it should be investigated. The investigation may reveal
that firm's credit policy is too liberal or too restrictive. So it may call for changing the firm's credit policy.
(H) Creditors Turnover Ratio :
Creditors turnover ratio is found out by dividing the annual credit purchase by the average payables Thus
Credit turnover ratio = Annual credit purchase/Average Payable
The creditors turnover ratio indicates number of times average creditors turnover in relation to purchase
during the year. It reflects firm's ability to avail of credit facility from suppliers. A low creditors turnover ratio
is apparently favourable as in that case firm enjoys lengthy credit, period. Strain on working capital will be
relatively lower then. On the other hand a high creditors turnover ratio indicates that the firm is to pay its
suppliers immediately after purchase. Therefore, the firm has to invest more in working capital,
However, a low creditors turnover ratio or in otherwords, a lengthier payment period may not always be
desirable. It may be at the cost of exorbitant price of material or inferior quality of material. It may also result
from failure of the firm to meet its obligation to suppliers in time. This eventuality will not only damage the
goodwill of the firm but also create uncertainty in future supply of material.
So, creditors turnover ratio should be neither too high nor too low. To judge its reasonableness, it should be
compared with industry average. If there is significant deviation, action should be taken to make it conform to
industry average ratio.
(J) Gross Profit Ratio :
This is the ratio of gross profit to net sales and is expressed in percentage.
A high gross profit ratio is the indication of good management. It can be achieved by (a) increasing the selling
price, cost of goods sold remaining constant (b) reducing cost of goods sold, selling price remaining constant,
(c) increasing selling price and reducing cost of goods sold simultaneously and by (e) altering product-mix
with a view to increasing proportion of sales of the items with high margin. Considering all these factors the
management will plan to improve gross profit ratio.
A low gross profit ratio may indicate higher cost of production. Higher cost of production results from
inefficient purchase, inept manpower utilisation or under utilisation of capacity. A low gross profit ratio may
also be due to fall in selling price beyond the control of management. Again to increase the volume of sales,
the selling price may be intentionally kept low resulting in low margin. The management must detect the
causes of fall in G. P. ratio and initiate action for its improvement. Otherwise operating expenses may not be
fully recovered and ultimately. There may be loss to the firm.
(K) Net Profit Ratio :
This is the ratio of net profit to sales 'and is usually expressed in percentage.
This ratio indicates the efficiency of management in manufacturing, administering and selling the product.
This ratio is of special interest to the owners as it states how much of sales is left for them after meeting all
expenses. So higher this ratio, more is the return to shareholders. It needs no mention that the main aim of the
management should be to maintain this ratio as high as possible. A high net profit ratio will enable the firm to
withstand the hardship in adverse situation like falling selling price, increasing raw-material cost or decline in
demand etc. A low net profit ratio is the danger signal for the firm. As return to owners is poor, the firm will
find it difficult to raise further capital for expansion. It will, therefore, remain stagnant. Even a mild adversity
will then lead the company to disaster. So management must try to improve the net profit ratio by
streamlining its manufacturing, administering and selling operation.
Fund flow & Cash Flow statement: Theory

36. What do you mean by fund flow statement? What are the objectives,
advantages & limitations of fund flow statement****
FUND FLOW STATEMENT
It is a statement that shows the ‗inflows‘ and ‗outflows‘ of funds during a period. The inflows indicate from
which source how much fund has come into the business. The outflows show for what purpose how much fund
has been expended or applied. The period normally indicates the span of time between two consecutive
Balance Sheet dates. Fund normally means working capital. So, Fund Flow Statement is a presentation that
explains the change of working capital position during a period.
OBJECTIVES OF FUND FLOW STATEMENT
1. To show the items that affected the sources and applications of funds;
2. To ascertain the quantum of fund generated and utilised due to operations that take place during a
periods.
3. To show the impact of such operations on the net working capital;
4. To bring out material information not disclosed by conventional accounting.
5. To point out the nature of change that has taken place during the period.
The two broad objectives of Fund Flow Statements advocated by ABP opinion 19 are:
1. To summarise the financing and investing activities of an entity, including the extent to which the
enterprise has generated funds from operations during the period.
2. To complete the disclosure of changes in financial position during the period.
ADVANTAGES OF FUND FLOW STATEMENT
1. It makes a complete analysis of financial statements and brings out the net impact on the fund
position.
2. The changes in the assets and liabilities are recorded and their effect on the net working capital is
diagnosed.
3. Fund Flow Statement can be projected for future years and the management can take important
decisions regarding dividend policies, allocation of resources and future course of action.
4. It gives a dynamic picture of changes by disclosing sources of raising funds and their applications.
5. It links up the current year‘s Profit & Loss Account with the opening and closing balance sheets.
6. It helps to exercise control over working capital.
7. It also helps outsiders to take decisions regarding investing in the company as such outsiders can
get proper idea regarding generation of funds and their utilizations in the company.
LIMITATIONS OF FUND FLOW STATEMENT
1. It is not an original document. It is prepared on the basis of the information provided by the Profit and
Loss Account and Balance Sheets.
2. It is a supplementary document. It cannot be prepared independently.
3. It inherits the incorrectness that has already crept into the financial accounts. It is not free from
manipulations / falsifications.
4. The analysis made here is not full – proof and sufficiently reliable. Cash Flow Statements are
considered much better. Even the revision of AS – 3 speaks for that.
5. It cannot convey correct information to the management for taking correct managerial decisions. For
example, if debtors enjoy credit for unusually long periods, the working capital increases but the
position does not become satisfactory.
If the credit allowed to debtors is more than the lag in payment to creditors, the solvency of the
business becomes affected. But these aspects are not identified by a Fund Flow Statement.
37. Discuss the different meaning of the term ‘fund’? Which concept of fund
is mostly used in preparing the fund flow statement? *
Different meaning of the term ‘fund’
The term 'fund' has different connotations or meanings. The concepts of fund which are common to the
accounting world are discussed below:
1. ‗Fund’ in general sense: ‗Fund‘ is considered literarily as equivalent to cash available. It
consists of cash in hand and demand deposits with banks [Term deposits are not readily
available]. Cash is required to acquire assets and to pay off liabilities.
In a broader sense, assets which are readily convertible into cash [like Debtors, marketable
short – term securities etc.] are included within ‗Fund‘.
Some others prefer to consider ‗net monetary assets‘ as fund. The latter represents the excess
of short – term monetary assets over quick liabilities [which are readily payable].
2. ‘Fund’ under working Capital concept: Working Capital is the excess of current assets
over current liabilities. Fund Flows are concerned with material transactions which cause
changes in the Working capital. The sources of the applications of working capital and their
net impact on the net working capital of the concerned period are analysed.
3. Fund as Short Term Monetary Assets: According to this concept ‗Fund‘ is equivalent to
the total of cash all assets which are readily convertible into cash. As such, short – term
marketable securities or quickly realisable debtors are included within Fund.
4. Fund as Net Monetary Assets: Net Monetary assets = short-term monetary assets (-) readily
payable short – term debts. A particular group / school of accountants think that ‗Fund‘ does
not imply short – term monetary assets. Rather it implies short – term net monetary assets.
5. ‗Fund’ under modern concept: ‗All financial resources‘ that have been used in the concern
are considered as Fund. Under the working capital concept if any asset is acquired by issue of
shares and there is no outflow of cash, the Fund Flow Statement does not reveal that. But
under the modern concept the two aspects of the transaction, namely (a) acquisition of assets;
and (b) issue of shares are recorded side by side. It is a broader view of all financial
transactions. Under this concept fund includes all resources used in the business including
human resources. So, the form in which the asset is used does not matter. All aspects of
financing and investing activities are shown in the Fund Flow Statement. As a result such a
statement carries all information.
It is not believed to be a very clear concept. As assets acquired by issue of shares or
debentures are treated at par with assets acquired by payment of cash, the analysis made
became vague and unreliable in most cases.
38. Is depreciation a source of fund? Justify your view.

A great deal of controversy has always been persisting over whether depreciation a is a source of fund or not.
On this issue accountants and academics are sharply divided into two schools of thought. One school of
thought recognises depreciation as a source of fund while the other does not.
Arguments in favour:
Those who consider it as a source of fund present the following arguments in support of their claim:
(a) Depreciation is added back to profit to ascertain the amount of fund from operations. This is done because
depreciation is treated as a source of fund.
(b) Depreciation on fixed assets is definitely included in the cost of production of goods sold. Thus, as a part
of expired cost, depreciation is also included in the sales revenue realised from customers. If a fixed asset
is sold either fully or partially, it is treated as a source of fund. Similarly, the recovered value of
depreciation being a small part of fixed assets should be recognised as a source of fund.
(c) Charging of depreciation reduces net profit of the company which ultimately results in reduction in its tax
liability and dividend obligation. Thus, depreciation definitely saves fund. So, it is claimed to be a major
source of internal fund.
Arguments in against:
But a large section of accountants and academics do not accept the above arguments. Their opinions are as
follows:
(a) Depreciation is an expense like salary, rent etc. So, if depreciation is claimed to be a source of fund, all
other expenses should also be recognised as sources of fund. It is absolutely an unrealistic proposition.
(b) If depreciation is considered as a source of fund, the problem in connection, with scarcity of fund can
easily be solved by charging more depreciation. But it is not possible in reality. Thus, depreciation cannot
be a source of fund.
(c) Depreciation is the allocation of cost of a fixed asset over its useful life. It may indicate an outflow but
not an inflow. So, it should not be treated as a source of fund.
(d) Fund from operation can also be ascertained by charging cash expenses against revenue earned. So, in
computing fund from operations it is not compulsory to add back depreciation to the net profit. In this
respect, depreciation cannot be recognised as a source of fund.
39. What do you mean by cash flow statement? What are its objectives &
characteristics?*
A cash flow statement is an analytical information mechanism that reports the details of inflows and outflows
of cash of a business / enterprise during a particular period of time. It shows the impact of periodical business
transactions on the cash position. It shows the causes for the difference in cash positions between two
consecutive Balance Sheets. It reveals the generation of cash from different sources, their absorption for
different purposes and the ultimate net impact on the cash position.
According to Financial Accounting Standard (FAS) 95 issued by the Financial Accounting Standard Board
(FASB) of USA, a cash flow statement shows the net cash used or generated by an enterprise from its (1)
Operating activities; (2) Investing activities, and (3) Financing activities. In India, a Cash Flow Statement is to
be prepared as per Accounting Standard 3 (AS – 3) showing the above activities. Operating activities are the
main revenue producing activities resulting from operational aspects. Investing activities denote the acquiring
and disposing off long – term assets and Investments (other than current investments). Financing activities
result in the change in the capital structure and borrowings of a business.
OBJECTIVES OF CASH FLOW STATEMENT
The main objectives of Cash Flow Statements may be summarized as follows:
1. To make the cash generating capacity of a firm distinct / clear.
2. To classify activities as operating activities, investing activities and financing activities so that the
impact of each group of activities on the cash position can be located separately.
3. To help the management in cash planning.
4. To show the sources of collection of cash and its utilization for various purposes.
5. To establish uniformity in reporting of operating performance by different concerns and to pave the
way for proper comparability.
6. To help the outside users related to the business to assess the liquidity and solvency position of the
business concerned.
7. To enable the management to take rational and pragmatic decision regarding capital budgeting.
CHARACTERISTICS OF CASH FLOW STATEMENT

1. It is prepared periodically.
2. It shows movement of Cash. Its nature is dynamic.
3. It links up two balance sheets. It shows the connection between annual profit and change in cash
position of a concern.
4. It supplies information to evaluate changes in the net assets.
5. It helps to plan and co – ordinate future financial operations.
6. It is an indicator of profitability and liquidity.
7. It is a tool for performance evaluation.
40. What are the advantages & limitations of cash flow statement?**
Advantages of cash flow statement
Cash flow statement is useful for short-term planning. A business enterprise needs sufficient cash to meet its
various obligations in the near future such as payment for purchase of fixed assets, payment of debts maturing
in the near future, expenses of the business, etc. A historical analysis of the different sources and applications
of cash will enable the management to make reliable cash flow projections for the immediate future. It may
then plan out for investment of surplus or meeting the deficit, if any. Thus, a cash flow analysis is an
important financial tool for the management. Its chief advantages are as follows:
♦ Helps in efficient cash management.
♦ Helps in internal financial management.
♦ Discloses the movements of cash.
♦ Discloses the success or failure of cash planning.
Limitations of cash flow analysis
Cash flow analysis is a useful tool of financial analysis. However, it has its own limitations. These limitations
are as under:
(a) Cash flow statement cannot be equated with the Income Statement. An Income Statement takes into
account both cash as well as non-cash items and, therefore, net cash flow does not necessarily mean net
income of the business.
(b) The cash balance as disclosed by the cash flow statement may not represent the real liquid position of the
business since it can be easily influenced by postponing purchases and other payments.
(c) Cash flow statement cannot replace the Income Statement or the Funds Flow Statement. Each of them has
a separate function to perform.
(d) Cash position may be manipulated by withholding payments and exaggerating receipts. These cannot be
brought to light by a Cash Flow Statement.
(e) Change in Working Capital is not reported here.
(f) Based on historical figures, it may not be relevant for future or estimated analysis.
(g) The impact of accrued incomes and outstanding expenses is not properly revealed.
41. Distinguish between fund flow statement & cash flow statement [Very
Important]*********
Cash Flow Statement is more significant than Fund Flow Statement for the purpose of financial statement
analysis.
Under Fund Flow Statements, there are different interpretations of the term ‗Fund‘. These create
controversies. Whereas the liquidity position can be analysed much better from a Cash Flow Statement.
The term ‗Cash‘ and ‗Cash equivalents‘ are defined in the accounting standard.
Cash Flow Statement is more user – friendly as the users are generally much more concerned about the
liquidity of a business.
Cash Flow Statement can point out sickness much better than Fund Flow Statement.
Difference between Cash flow & Fund flow Statement:
Serial Differences due to Cash Flow Statement Fund Flow Statement.
No.
1. Nature It shows the effects of different It shows the sources and
activities of a concern over its application of funds during
cash position during period. a period.
2. Basis of Accounting It is based on cash basis. It is based on accrual basis.
3. Aim Its aim is to show the effect of Its aim is to indicate the
cash on the different activities. change in working capital
as well.
4. Users It is used mainly for short – term It is use for intermediate
planning. and long range financial
planning.
5. Available The focal points, ―Cash‘ and ‗Fund‘ is interpreted
Interpretations ‗Cash equivalents‘ have been indifferent ways under
interpreted by AS – 3 in India. different concepts. Any
International Accounting uniform method of its
Standard 7 and Financial preparation cannot be
Accounting Standards (FAS) 95, advocated.
102 and 104 contain the
definitions.
6. Opening and It usually starts with the Opening It shows the sources and
Closing Cash / Bank balances and end applications of funds. The
with the Closing stock cash/bank two should tally. But no
balances. balance is exhibited by it.
Holding Company
42. What do you mean by Consolidated Balance Sheet? What are its advantages
& limitations? [Important for Pass only]
CONSOLIDATED BALANCE SHEET
It is a combined balance sheet of the holding company and its subsidiary company or companies. It shows the
assets and liabilities of both the companies and allocation of interest in the subsidiary company or companies.
This Balance Sheet is also called Family Balance Sheet or a Group Balance Sheet. Because it makes no
difference of entities among companies belonging to the same group and shows the financial position of the
group as a whole.
When shareholder‘s funds of a company are invested to acquire and enjoy a controlling interest in another
company or companies, it becomes a moral obligation on the part of the directors of the investing company to
convey the position of the other company as well. The fundamental principle behind preparing a Consolidation
Balance Sheet is to aggregate Pm70.exel etc and liabilities of the group after eliminating intercompany
investments and making necessary adjustments for inter company profits, intercompany debts etc.
ADVANTAGES AND LIMITATIONS OF CONSOLIDATIONS
Advantages
I. The consolidated financial results serve the purpose of a single source accounting
information. The users of such information get a total view of the group. The total
profitability of the group (after making necessary adjustments for unrealized inter company
profits, etc) is disclosed by the consolidated Profit and Loss Account. The Consolidated
Balance Sheet brings to light the consolidated state of affairs of the group.
II. The benefits of merger can be fully enjoyed but separate existence is not hampered.
III. If the holding company has subsidiaries that perform functions at different stages of
production, the group can become self-sufficient regarding procurement of materials and
marketability of the product.
IV. It becomes easy to compute the intrinsic value of the shares of the holding company from
the Consolidated Balance Sheet.
V. Decentralization of works can be made possible by having subsidiaries over different places.
VI. The financial strength of the group can be assessed. Prospective investors in the holding
company become benefited.
VII. Consolidation occurs between companies which are dissimilar in existence but similar in
essence. Without consolidation a member cannot judge the financial picture of the group as
a whole.
VIII. Total liquidity and solvency of the group can be ascertained. This is very much required in the
concept of the National Balance Sheet or Social Accounting concept.
Limitations
I. If the profitability and accounting performance varies largely among the group, inconsistency
is allowed to lurk dangerously behind the consolidated statements.
II. Shareholders often fail to make a micro-analysis of the performance of the company to
which their respective financial interests are attached.
III. Non- disclosure of material facts, creation of secret reserves and falsification of accounts
become easier through consolidation if the central management becomes unscrupulous.
FR & FSA Honours: Mock Test Paper Set 1

Question 1 [Fund Flow Question 22]:
Calculate Fund from Operation before tax from the information given below:
Opening Closing
Debtors Rs. 15,000 Rs. 13,000
OR
Distinguish between fund flow statement & cash flow statement [Question 41]
Question 2 [Ratio Qn 9]:
OR
What are the limitations of ratios in interpreting financial statements. [Question 34]
Question 3 [Accounting Standard]:
What are the purposes of Conceptual Framework? [Question 2]

Question 4 [Intro to FSA Qn 11]:
From the trend % supplied below, prepare a comparative statement of current asset in absolute value taking
2003 as the base year.
Trend % Correspondence value of C/Assets
2017 2018 2019 2019
120 130 150 3,600- Cash & Bank
130 140 200 6,800 – Debtors
160 220 250 4,000 – Finished Goods
175 250 300 4,500 – Work in Progress
110 150 175 1,750 – Raw Materials
OR
Distinguish between
(a) traditional and modern approaches to financial statement
(b) Comparative Statement and Common size statement.
Question 5 Accounting Standard [Theory]:
(a) What are the general features of Indian AS 1? [Question 8]
(b) What are the Scope of Indian AS 16? [Question 10]

Question 6 [Holding Company Qn 16]:
The following are the balance sheets of Casters Ltd. and Tica Ltd. as at 31.03.15:
Balance Sheets
Casters Ltd Tica Ltd
Share capital (shares of ₹ 10 each, fully paid) 15,00,000 5,00,000
Trade payable 1,32,000 1,61,000
Other current liabilities (Current A/c with Tica Limited ) 18,000 -
34,00,000 10,41,000
Assets ₹ ₹
Non-current Assets:
Shares in Tica Ltd 8,00,000 -
Other investments 1,30,000 35,000
Current assets :
Inventories 3,40,000 2,02,000
Cash at bank 2,00,000 15,000
Other current assets (current account with Caster Ltd) ---------- 20,000
34,00,000 10,41,000
(a) Casters Ltd acquired 80% shares of Tica Ltd on 1.7.14. On 1.4.14, the reserve and Profit & Loss account
of Tica Ltd were ₹ 10,000 and ₹ 120000 respectively.
(b) Land and building of Tica Ltd., whose book value on 1.4.14 was ₹ 4,00,000 were revalued at ₹ 3,80,000
at the date of acquisition, but it was not passed in the books.
(c) Tica Ltd declared 16% dividend for the year 2013-14 and paid on 1.9.14 and Casters Ltd. included the
entire amount of dividend received from Tica Ltd in its profit and loss statement.
(d) Inventories of Casters Ltd include ₹ 30,000 goods purchased from Tica Ltd.
(e) Trade payable of Casters Ltd ₹ 60,000 purchased from Tica Ltd. on which Tica Ltd made profits of ₹
15,000.
(f) On 31.3.15, Casters Ltd remitted cash ₹ 2,000 on current account to Tica Ltd.
From the above information prepare a consolidated balance sheet of Casters Ltd and its subsidiary Tica Ltd as
at 31.3.15.
Question 7 [Fund flow Question 18 OR Cash Flow Qn 21]:
The Balance Sheets of Boom Ltd. As on 31st March 2013 and 2014 are given below:
31.03.2013 31.03.2014
₹ ₹
III. Equity & Liabilities :

4. Shareholders’ Fund
Shares Capital 4,00,000 5,00,000
Capital Reserve - 20,000
Preliminary Expenses (30,000) (20,000)
5. Non – Current Liabilities
Debentures 3,00,000 2,00,000
Creditors 1,30,000 1,20,000
Provision for Income Tax 80,000 60,000
Total 11,70,000 12,30,000

IV. Assets:
3. Non – Current Assets:
10,00,000 10,00,000
(c) Fixed Assets at cost
(2,60,000) (3,10,000)
Less : Depreciation
1,10,000 90,000
(d) Investments
4. Current Assets
3,20,000 4,50,000
Current Assets (all)
Total 11,70,000 12,30,000
During the year ended 31st March, 2014, the company:

(a) Sold one machine for ₹ 40,000, the cost of which was ₹ 80,000 and the depreciation provided on it
was ₹ 30,000.
(b) Provide ₹ 1, 00,000 as depreciation.
(c) Redeem the debentures at ₹ 105.
(d) Sold some investments at a profit which was credited to Capital Reserve.
(e) Decided to write – off the fixed assets (fully depreciated) costing ₹ 20,000.
(f) Decided to value opening stock at cost which was valued previously at cost less 10%. The opening
stock according to books was ₹ 63,000. The closing stock was correctly valued at cost.
Prepare statement of sources and application of funds for the year ended 31.03.2014 showing changes in
working capital.
OR
Presented below are the Balance Sheets of Joy Ltd. as at 31st March 2010 and 2011.
2011 2010
₹ ₹
III. Equity & Liabilities :
Debentures 20,50,000 22,00,000
Trade Creditors 6,50,000 8,00,000
Provision for Taxation 1,25,000 1,00,000
Provision for Depreciation (Equipments) 3,00,000 2,00,000
Provision for Depreciation (Buildings) 6,00,000 5,00,000
Total 86,65,000 87,80,000
IV. Assets :
Land 15,00,000 18,00,000
Buildings 25,00,000 25,00,000
Equipments
20,00,000 16,00,000
Inventory 14,00,000 15,50,000
Trade Debtors 8,00,000 6,50,000
Cash & Bank Balances 4,00,000 6,00,000
Total 86,65,000 87,80,000

Additional Information :-
(a) Land was sold for cash at a profit of ₹ 50,000.
(b) Dividend paid during the year ₹ 4, 50,000.
(c) Net Profit for the year ₹ 1,60,000
(d) Equipment costing ₹ 6, 00,000 was purchased and costing ₹ 2, 00,000 with a book value of ₹ 40,000
(e) Debentures were redeemed at face value by issuing shares at par.
(f) Amount transferred to provision for taxation during the year ₹ 1, 60,000.
Prepare a statement of Cash Flow as AS – 3 for the year ended March 31, 2011.
Question 8 [Ratio Qn 23 OR 22]:
With the following ratios and further information given below, prepare a Trading Account, Profit & Loss
Account for the year ended on 31.12.17 and a Balance Sheet of Mrs. Banerjee as on that date.
1
a) Gross Profit Ratio = 333%
b) Net Profit = 25% of Turnover
c) Stock Turnover ratio = 10 times
1
d) Current liabilities /External liabilities =4
5
e) Fixed Assets/Closing capital = 4
1
f) Closing capital/External liabilities =2
5
g) Fixed Assets/Current Assets =7
h) Fixed Assets = Rs. 20,00,000
i) Closing stock = Rs. 2,20,000 which is 10% more than the opening stock.
OR
(b) The following are abridged accounting reports prepared by Y Ltd.:
Statement of Profit and Loss for the year ended on 31.3.2017
Particulars Rs. (‘000)
I. Income: 600
Revenue from operations (sales) 600
II. Expenses:
iii. Cost of Goods sold 450
iv. Other Expenses (Operating Expenses) 114
564
Profit before tax (I-II) 36
Less: Provision for taxation 16
Profit after tax 20
Statement of Assets and Liabilities
Particulars (Rs. ‗000)
III. Equity and Liabilities
c) Share capital 160
d) Reserve and Surplus 90
5. Non-current liabilities
Loan on mortgage 50
6. Current liabilities:
d) Trade Payables (Accounts payables) 174
e) Other current liabilities (Accrued Expenses) 10
f) Short-term provision (Provision for taxes) 16
500
IV. Assets:
Fixed Assets 160
4. Current Assets:
d) Inventories 160
e) Trade Receivables (accounts Receivables) 120
f) Cash and Cash Equivalent (cash) 60
500
Name and calculate the ratios which indicate:
a) The rapidity with which accounts receivable are collected.
b) The ability of the company to meet its current obligation.
c) What probability on capital invested has been attained.
d) The efficiency with which funds represented by inventories are being utilised and managed.
e) The ability of the company to meet quickly demands for payment of amounts due.
f) The relative importance of proprietorship and liabilities as sources of funds.

Question 1 [Cash Flow Question 25]:
Sales Rs. 80,000
Less: Cost of goods sold Rs. 30,000
Less: Cash operating expenses Rs. 14,000
Less: Depreciation Rs. 10,000
Profit before tax Rs.
26,000
Balance relating to current items are-
Opening Closing
Debtors Rs. 12,000 Rs. 10,000
OR
What are the Advantages & limitations of fund flow statement. [Question 36]

OR
What are the objectives of Ratio Analysis [Question 33]

What is Conceptual Framework ? Discuss the scope of Conceptual Framework. [Question 1 + 3]

(a) With the help of following information for the year ended 31.03.2017, prepare a Common size Income
Statement.
Particular Small Bros.
Office and Selling and Distribution Expenses Rs. 60,000
Other Income Rs. 20,000
Total Cost of Sales: 75% of Net Sales ----
Net Profit before Tax Rs. 1,20,000
(b) From the following information prepare a Comparative Income Statement and comment
₹ ₹
Sales 3,75,000 5,25,000
Administrative, Selling
and Distribution Expenses 22,500 30,000
Income Tax 50% 50%
OR
(a) Briefly mention the names of three parties interested in Financial Statement Analysis with their
information need. [Question 22]
(b) What are the components of financial Statements? [Question 23]

(a) What are the Fundamental Accounting Assumptions as per AS 1. [Question 5]
(b) What is the Scope of Indian AS 33- Earning per share? [Question 33]

H Ltd S Ltd
1. Share-holders funds :
a) Equity shares of Rs. 10 fully paid 10,00,000 4,00,000
General Reserves (1.4.14) 4,80,000 2,00,000
Profit and Loss Balance 1,14,400 1,64,000
2. Non-current Liabilities: ------ -----
Short term borrowings 2,00,000 -----
Bills Payable ------ 26,000
Sundry Creditors 1,39,600 40,000
Total 19,34,000 8,30,000
Assets H₹ S₹
(a) Fixed assets
Land and Buildings 3,60,000 3,80,000
(b) Non-current Investment
Investment in equity shares of S Ltd. 6,45,500 -----
Other non-current investment 74,500 -----
(c) Current Assets
Inventors 2,20,000 80,000
Sundry Debtors 96,000 84,000
Bills Receivables 27,600 -----
Cash and Cash equivalents 30,400 16,000
Total 19,34,000 8,30,000
The following informations are also available:
a) H Ltd. acquired 32,000 equity shares of Rs. 10 each in S Ltd.. on October 1, 2014 for Rs. 6,45,500.
b) The statement of Profit and Loss of S Ltd. showed a profit of Rs. 60,000 on 01.04.2014, out of which a
dividend of 10% was paid on November 1,2014 for the year 2013-14.
c) The Plant and Machinery of S Ltd. which stood at Rs. 3,00,000 on 1.4.2014 was considered worth Rs.
3,60,000 on the date of acquisition by H Ltd.
d) Sundry debtors of S Ltd. include loan to H Ltd. Rs. 14,000. H Ltd. remitted a cheque of Rs. 14,000 to S.
Ltd. in April 2015.
Prepare a Consolidated Balance Sheet of H Ltd. and its subsidiary S Ltd. as on 31st March 2015.
Following are summarized balance sheets of Sonar Bangla Ltd. as on 31.3.14 and 31.3.15
31.3.14 31.3.15
Share capital 4,00,000 6,00,000
6% debentures 1,00,000 1,50,000
Bank Loan 1,10,000 1,30,000
11,33,000 13,71,000
Assets ₹ ₹
Non-current Assets:
Current assets:
Inventories 1,20,000 1,40,000
Cash at bank 35,000 44,000
Discount on issue of Debenture 8,000 12,000
11,33,000 13,71,000
(a) Depreciation on land and building for the year 2014-15 was ₹ 20,000.
(b) Accumulated depreciation on plant and machinery on 31.3.14 was ₹ 150000 and on 31.3.15 was ₹
1,70,000.
(c) Machinery costing ₹ 50,000 (written down value ₹ 10,000) was sold for ₹ 12,000.
(d) 6% debentures were issued at 10% discount.
(e) Bonus shares were issued at the rate of one share for every four shares held on 31.3.14 out of general
reserve.
(f) Interim dividend paid during the year ₹ 20,000
You are required to prepare: a) A statement showing the changes in working capital; and b) A fund flow
statement for the year ended 3.3.15.
OR
From the following information, prepare a cash flow statement for the year ended 31.3.15.
31.3.14 31.3.15
Share capital 2,00,000 2,50,000
Trade payable 1,50,000 1,35,200
5,30,500 5,10,800
Assets ₹ ₹
Machinery 1,50,000 1,69,000
Cash 500 600
Bank - 8,000
Goodwill - 5,000
5,30,500 5,10,800
(a) Net Profit for the year was ₹ 66,100.
(b) Dividend of ₹ 23,000 was paid.
(c) The following assets of another company were purchased for a consideration of ₹ 50,000 paid for in shares.
Stock—₹ 20,000. Machinery—₹ 25,000.
(d) Further machinery was purchased ₹ 25,000 during the year.
(e) Depreciations written off on Building ₹ 10,000; Machinery ₹ 14,000.
(f) Income tax paid during the year ₹ 28,000.
Question 8 [Ratio Qn 19 OR 20]:
From the following information, prepare a Statement of Proprietors‘ Fund showing as many details as possible
 G.P. ratio = 25% ;
 Current ratio = 1.6 ;
 Liquid ratio = 1.35 ;
 Stock turnover (based on Cost of goods sold) ratio = 9 times ;
 Debtors turnover = 146 days ;
 Bank overdraft = nil ;
 Fixed assets to Net Worth = 0.90 ;
 GP = ₹ 3,75,000 ;
 Long term Loan to Current Liability = 0.40 ;
 Reserve to Share Capital = 0.25 ;
OR
From the following information of S Ltd. prepare its Trading, Profit & Loss A/c and Balance Sheet:
Sales ₹ 7,30,000 Quick Ratio 1.3
Working Capital ₹ 120,000 Current Ratio 2.5
Bank Overdraft ₹ 15,000 Proprietary Ratio 0.6
(Fixed Assets/ Proprietary Fund)
Share Capital ₹ 2,50,000 Gross Profit Ratio 10%
Net profit is equal to 10% of Proprietary Fund. There are no long term liabilities and fictitious assets. Closing
Stock is 10 % more than opening stock.
FR & FSA Pass: Mock Test Paper Set 1

Question 1 [Fund Flow Question 3]:
From the following particulars calculate Fund from Operations:
P&L A/c: as on 01.04.06 1,60,000
: as on 31.03.07 2,00,000
Transactions during the year :
Transfer to Revenue Reserve 40,000
Depreciation on fixed assets 16,000
Underwriting Commission Written off 8,000
Interest Received 4,000
Interim Dividend paid 16,000
Sale of old Machinery (Book value ₹ 48,000) 56,000
Salary Paid 40,000
Rent Paid 60,000
OR
Distinguish between fund flow statement & cash flow statement [Question 41]
OR
What are the limitations of ratios in interpreting financial statements. [Question 34]
What are the purposes of Conceptual Framework? [Question 2]

Prepare a Comparative Income Statement from the following information and comment.
Particulars 2009 (₹ ) 2010 (₹ )
Gross Sales 1, 20,200 1, 35,800
Sales Returns 5,200 3,800
Cost of Goods Sold 80,000 84,000
Income Tax 50% 50%
OR
Distinguish between
(a) traditional and modern approaches to financial statement
(b) Comparative Statement and Common size statement.
(a) What are the general features of Indian AS 1? [Question 8]
(b) What are the Scope of Indian AS 16? [Question 10]

Following are the balance sheet of X Ltd and Y Ltd as on 31.3.15:
X Ltd Y Ltd
Profit & loss account 80,000 50,000
450000 212000
Assets ₹ ₹
Fixed assets
Tangible 2,00,000 1,20,000
Investments (6000 shares of Y Ltd) 70,000 -
Current assets :
Cash 20,000 2, 000
4,50,000 2,12,000
When shares of Y Ltd were acquired by X Ltd on 1.4.14, Y Ltd had ₹ 18,000 in general reserve and ₹ 22,000
in Profit & Loss account. Included in the trade payable on Y Ltd is ₹ 10,000 for goods supplied by X Ltd.
Included in the inventories of Y Ltd are goods of value of ₹ 6000 which were supplied by X Ltd at profit of
20% on cost.
Prepare the consolidated balance sheet as on 31.3.15.
OR
Why it is necessary to prepare Consolidated Balance Sheet in case of Holding Company? What do you mean
by Minority Interest? How would you treat unrealized profit on transfer of goods from holding company to
subsidiary company? [Question 42]

From the following information prepare a summarised Balance Sheet in the books of X Ltd. as at 31st
December, 1998
Liquid Ratio 1.5
Current Ratio 2.5
Asset (Fixed) Proprietorship Fund Ratio 0.75
Working Capital ₹ 1,20,000
Reserve & Surplus ₹ 60,000
From the following statement of assets and liabilities of X. Ltd as at 31st December, 2015 and 31st December,
2016 respectively, prepare:
a) A Statement of changes in Working Capital during the Calendar year 2016, and
b) A statement showing sources and application of funds during the same period.
Liabilities 2015 (Rs.) 2016 (Rs.) Assets 2015 (Rs.) 2016 (Rs.)
Equity share capital 30,00,000 40,00,000 Land 4,60,000 4,60,000
Securities Premium -- 1,00,000 Building (at cost less 12,80,000 12,20,000
General Reserve 12,00,000 14,00,000 depn.)
Profit & Loss A/c 7,20,600 9,81,280 Plant & Machinery (at 36,70,000 44,40,800
Secured Loan 17,20,000 17,20,000 cost less depn.)
Proposal Dividend 2,00,000 3,00,000 Investments 1,00,000 1,51,200
Sundry Creditors 23,59,400 24,78,720 Stock 16,80,860 18,32,680
Book Debts 19,70,740 27,37,300
Cash & Bank Balances 38,400 1,38,020
92,00,000 1,09,80,000 92,00,000 1,09,80,000
(a) During 2016 Depreciation provided on assets were: Building Rs. 60,000 and Plant & Machinery Rs.
4,81,000
(b) Final dividend of Rs. 2,00,000 for the year 2015 was paid during 2016.
OR
Following are the Balance Sheet of PQR Ltd. on 31.12.16 and 31.12.17:
Rs. Rs. Rs. Rs.
Equity Share Capital 80,000 1,00,000 Fixed Assets 1,20,000 1,50,000

10% Pref. Share Capital 40,000 24,000 Investments 14,000 18,000
Securities Premium --- 10,000 Stock 40,000 46,000
General Reserve 32,000 36,000 Debtors 38,000 48,000
P/L A/c 8,000 14,000 Cash and Bank 12,000 18,000
Provision for Taxation 24,000 46,000
2,36,000 2,88,000 2,36,000 2,88,000
a) Depreciation charged during the year Rs. 20,000
b) A fixed asset where book value was Rs. 30,000 was sold for Rs. 36,000
c) During the year, income tax and divided was paid for R. 28,000 and Rs. 30,000 respectively.
Prepare a Cash flow Statement.

Question 1 [Cash Flow Question 26]:
Classify the following transactions according to ‗Operating‘, Investing‘ and ‗Financing‘ activities:
i. Profit on sale of fixed assets Rs. 25,000.
ii. 5000 Preference shares of Rs. 100 each were redeemed.
iii. Payment of Income Tax Rs. 60,000.
iv. Dividend paid Rs. 1,00,000 on equity shares.
v. Dividend received on shares Rs. 12,000.
OR
What are the Advantages & limitations of fund flow statement. [Question 36]
OR
What are the objectives of Ratio Analysis [Question 33]
What is Conceptual Framework ? Discuss the scope of Conceptual Framework. [Question 1 + 3]

(b) From the following information prepare a Comparative Income Statement.
₹ ₹
Sales 3,75,000 5,25,000
Income Tax 50% 50%
OR
(a) Briefly mention the names of three parties interested in Financial Statement Analysis. [Question 22]
(b) What are the components of financial Statements? [Question 23]
(a) What are the Fundamental Accounting Assumptions as per AS 1. [Question 5]
(b) What is the Scope of Indian AS 33- Earning per share? [Question 33]

Following is the balance sheet of X Ltd. And Y. Ltd. As on 31.12.2014:
X Ltd. Y Ltd. X Ltd. Y Ltd.
Share Capital of ₹ Goodwill 20,000 10,000

10 each 2,00,000 1,00,000 Fixed assets 1,50,000 1,20,000
P/L Account 50,000 30,000 Debtors 60,000 50,000
Sundry Creditors 60,000 50,000 Investment of 6,000
Bills Payable 10,000 20,000 shares of Y Ltd. 85,000 -
Cash 35,000 20,000
4,00,000 2,40,000 4,00,000 2,40,000
X Ltd. acquired the shares in Y Ltd. On 1st July 2014, Y Ltd. had ₹ 20,000 in General Reserve and ₹ 30,000
in Profit and Loss A/C. Included in the creditors of Y Ltd. Is ₹ 15,000 for goods supplied by X Ltd. Included
in the stock of Y Ltd. are goods to the value of ₹ 8,000 which are supplied by X Ltd. at a profit of 25% on
cost. Prepare a consolidated Balance Sheet as at 31.12.14.
From the following financial statements, prepare a Cash Flow Statement for the year ended 31.03.2013.
Particulars 31.03.2012 31.03.2013 Particulars 31.03.2012 31.03.2013
₹ ₹ ₹ ₹
Share capital 1,35,000 1,35,000 Goodwill 13,950 4,950
Profit & loss 40,500 54,000 Building 32,400 45,000

Account
Loans 1,12,950 89,010 Plant & 1,13,400 85,050
Machinery
Creditors 71,640 43,920 Furniture - 40,500
Proposed 13,500 16,200 Investments 40,500 49,500

Dividend
Provision for 10,800 12,600 Debtors 94,500 1,14,120
Taxation
Bank 89,640 11,610
3,84,390 3,50,730 3,84,390 3,50,730
Other information:
(a) Depreciation is provided @ 10% on furniture
(b) Depreciation on building is ₹ 5,000
(c) Dividend paid during the year was ₹ 12,000
(d) Tax of ₹ 13,000 was paid for the year ended 31.03.2012.
OR
From the following information, prepare a Fund Flow Statement for the year ended on 31.03.2013.
Particulars 31.03.2012 31.03.2013
₹ ₹
EQUITY AND LIABILITIES:
c) Share Capital (Equity share Capital) 6,00,000 7,50,000
d) Reserves and Surplus:
[Statement of Profit and Loss (Credit) 60,000 1,98,000
2. Non – Current Liabilities:
1,20,000 1,80,000
b) Long – term Borrowings (10% Debenture)
3. Current Liabilities: 48,000 1,20,000
c) Trade Payables (Creditors)
d) Short term Provisions: 12,000 30,000
i. Provision for Taxation 24,000 36,000
ii. Proposed Dividend
Total 8,64,000 13,14,000
ASSETS:
3. Non – current Assets:
a) Fixed Assets 3,00,000 3,60,000
b) Non – Current Investments 2,40,000 4,20,000
(Investments)
4. Current Assets:
1,80,000 3,00,000
a) Inventories (Stock)
60,000 1,20,000
b) Trade Receivables (Debtors) 84,000 1,14,000
c) Cash and Cash Equivalents
Total 8,64,000 13,14,000
Other information:
i. Depreciation charged on fixed assets amounted to ₹ 25,000 during the year 2012 – 13.
ii. Income tax paid during the year 2012 – 13was ₹ 15,000
iii. Dividend for the year 2011 – 12 was paid during 2013 – 13 amounted to ₹ 24,000.
Following are the ratios relating to the trading activities of NPS Ltd.:
Debtors‘ velocity 3 months
Stock velocity 8 months
Creditors‘ velocity 2 months
Gross profit ratio 25%
Gross profit for the year ended 31st March, 2012 amounted to ₹ 4, 00,000. Closing stock of the year is ₹
10,000 more than the opening stock. Bills receivable amounts to ₹ 25,000 and bills payable amounts to ₹
10,000.
Find out: (a) Sales, (b) Sundry Debtors, (c) Closing Stock, and (d) Sundry Creditors.
OR
What do you mean by Ratio Analysis? Discuss the advantages & Limitations of Ratio Analysis. [Qn 32 + 34]

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Preface to New Edition

Ravi Kant Bhalotia

©Ravi Kant Bhalotia – All rights reserved.

Unit-2: Accounting Standards [15 Marks] [10 + 5 = 15 Marks]

Unit-4: Introduction to Financial Statements Analysis [10 Marks]

Unit-6: Accounting Ratios for FSA [20 Marks] [15 + 5 = 20 Marks]

Both Subjects ₹ 5,000

Course fees for Regular course:

Both Subjects ₹ 5,000

Batch 2: 2 pm to 4.30 pm [4 to 5 Days in a week]

Batch 3: 4.30 pm to 6.30 pm [May be conducted on Demand] [4 Days in a week]

Batch 4: 11 am to 1 pm [May be conducted on Demand] [4 Days in a week]

Batch 5: Saturday & Sunday Batch May be conducted on Demand]

Group B (2 Questions of 10 marks)

Group C (3 Question of 15 marks)

Holding Company [15 Marks]

b. Inter company acceptance

c. Unrealised profit on stock / assets

d. Interim dividend paid by subsidiary company

5. Holding Company [3rd Important For Pass course]

Share Capital of ₹ Goodwill 20,000 10,000

4,00,000 2,40,000 4,00,000 2,40,000

Share Capital : Fixed Assets 40,000 60,000

1,66,000 1,10,000 1,66,000 1,10,000

Debtors for goods 59,000 25,000

The following informations are also available:

I. Equity and Liability:

Total 12,30,000 5,50,000

Course fees for Regular course:

Both Subjects ₹ 5,000

Batch 2: 2 pm to 4.30 pm [4 to 5 Days in a week]

Batch 3: 4.30 pm to 6.30 pm [May be conducted on Demand] [4 Days in a week]

Batch 4: 11 am to 1 pm [May be conducted on Demand] [4 Days in a week]

Batch 5: Saturday & Sunday Batch May be conducted on Demand]

CA Shruti Chamaria [For Theoretical concept]

Fund Flow Analysis [15 + 5 = 20 Marks]

Current assets: (A)

P/L:- closing balance

Share capital 6,00,000 7,00,000 Fixed assets (net) 11,40,000 12,20,000

(i) Depreciation charged ₹ 2, 90,000 for the year.

14.Fund Flow Statement [B.com 1985] [4th Important for Hons]***

I. Equity & Liabilities :

Total 11,70,000 12,30,000

During the year ended 31st March, 2014, the company:

You are required to prepare:

2. Non-Current Liabilities: 2,00,000 ------

24.Fund flow Statement [2018 Pass] [2nd Imp For Pass]****

Particulars 31.03.2012 31.03.2013

Course fees for Regular course:

Both Subjects ₹ 5,000

Batch 2: 2 pm to 4.30 pm [4 to 5 Days in a week]

Cash Flow Analysis [15 + 5 = 20 Marks]

Share capital 6,00,000 7,00,000 Fixed assets (net) 11,40,000 12,20,000

a) Depreciation charged ₹ 2, 90,000 for the year.

Profit & loss 40,500 54,000 Building 32,400 45,000

Proposed 13,500 16,200 Investments 40,500 49,500

3,84,390 3,50,730 3,84,390 3,50,730

7,68,000 8,35,000 7,68,000 8,35,000

Total 86,65,000 87,80,000

Balance (1.4.17) 50 Payment to Suppliers 2,000