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Brief Answer Questions
[10 × 2 = 20]Write any two objectives of financial accounting.
Explain in brief about money measurement concept.
What do you mean by personal account?
What are different types of bank account?
Define current assets with example.
The following transactions are provided to you:
2079-4-1 Started business with Rs 250,000 in cash and Rs 50,000 bank balance.
2079-4-5 Paid Rs 25,000 to house owner as rent, Rs 10,000 is still outstanding.
Required: Accounting equation
ABC Company purchased a car at the cost of Rs 3,010,000 on 1st January 2021. The estimated life of the car is 300,000 kilometers with salvage value of Rs 10,000. During the year 2021 and 2023, the car was run for 50,000 kilometers and 60,000 kilometers respectively.
Required: Depreciation for the year 2021 and 2023.
A company purchased a plant worth Rs 400,000 on 1st January 2021. The company further paid a transportation charge of Rs 20,000 and installation cost of Rs 30,000. The life of the plant is 10 years and scrap value will be Rs 40,000. Depreciation is charged on this plant using straight line method.
Required: Amount of profit or loss from the sales of plant.
The following information is provided to you:
Gain on sale of investment nbsp; Rs 40,000
Loss on revaluation of loose tools Rs 20,000
Gain on cash flow hedges Rs 80,000
Actuarial loss on pension schemes Rs 50,000
Required: Statement of other comprehensive income as per NFRS.
The following transactions are provided to you:
➢ Carriage cost on goods purchased is Rs 20,000
➢ Custom duty of Rs 25,000 was paid for imported equipment.
➢ Repair and maintenance cost of a car was Rs 80,000.
➢ Cost of white washing of new building was Rs 80,000.
Required: Classify the above expenditures into capital expenditure and revenue expenditure.
Short Answer Questions: (Attempt any SIX Questions)
[6 × 5 = 30]Explain about the users of accounting information.
What do you mean by International Accounting Standards (IASs)?
Demonstrate the impact of depreciation on profit measurement.
The following information is provided to you:
Sales revenue Rs 800,000
Purchase of materials Rs 220,000
Other supplies Rs 40,000
Fuel and power Rs 12,000
Manufacturing overheads Rs 48,000
Administrative and selling overheads Rs 120,000
Income from investment Rs 25,000
Salary and wages Rs 50,000
Interest on bank loan Rs 10,000
Dividend distributed Rs 40,000
Depreciation on fixed assets Rs 15,000
Income tax Rs 60,000
Required: Value added statement showing net profit after tax.
Following comparative financial statements of a company are provided to you:
| Details | 2077 (Rs) | 2078 (Rs) |
|---|---|---|
| Assets | ||
| Property, plant and equipment | 200,000 | 280,000 |
| Inventories | 50,000 | 60,000 |
| Trade and other receivables | 80,000 | 40,000 |
| Cash and cash equivalent | 70,000 | 91,000 |
| Total | 400,000 | 471,000 |
| Equity and Liabilities | ||
| Equity share | 250,000 | 290,000 |
| Reserves | 20,000 | 30,000 |
| Long term debt | 100,000 | 112,000 |
| Trade and other payables | 30,000 | 39,000 |
| Total | 400,000 | 471,000 |
Required: Comparative or Horizontal analysis.
The bank statement of Everest Company shows a balance of Rs 230,000 on 31st December, 2023. On this date, the balance of cash book of the company is Rs 231,400. On investigation, the following differences were noticed:
➢ Outstanding cheque (issued on 29th December): Rs 40,000.
➢ Deposit in transit (sent on 30th December): Rs 50,000.
➢ Actual payment of Rs 4,200 made by bank but only Rs 2,400 was debited in cash book.
➢ Account receivable worth Rs 32,000 was collected directly by bank.
➢ Collection charge of Rs 200 was debited.
➢ Bank debit- no sufficient fund (NSF) cheque for Rs 25,000.
Required: Bank reconciliation statement showing adjusted balance of both books.
The following information are given:
➢ Started business with cash of Rs 100,000.
➢ Sold goods for Rs 200,000 on account.
➢ Purchased goods for Rs 150,000 and partial payment was done for cash of Rs 100,000.
➢ Received cash from customer Rs 195,000 for full settlement of his account.
➢ Paid to creditor after deducting 10% discount.
Required: Journal entries.
Long Answer Questions: (Attempt any THREE Questions)
[3 × 10 = 30]“Accounting is the language of business.” Explain.
Describe the rules for Journalizing on the basis of ‘types of account’ and on the basis of ‘accounting equation’.
Manashu Ltd. provides the following statement of profit and loss for the year ending on 31st December, 2023 and following statement of financial position on 31st December, 2021 and 2023.
| Particulars | Rs. |
|---|---|
| Revenue from operation | 10,00,000 |
| Less: Cost of sales | 4,50,000 |
| Gross Margin | 5,50,000 |
| Add: Other income | 80,000 |
| Less: Distribution expenses | (1,20,000) |
| Less: Administrative expenses (including depreciation on plant Rs.30,000 and bad debts Rs. 5,000) | (3,60,000) |
| Operating profit | 1,50,000 |
| Less: Finance cost | 18,000 |
| Net profit before tax | 1,32,000 |
| Less: Provision for tax | 33,000 |
| Net profit after tax | 99,000 |
| Less: Dividend paid | 45,000 |
| Addition to retained earnings | 54,000 |
The trial balance of Annapurna Company as on 31st Ashad, 2079 is given below:
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| Machinery | 250,000 | Share Capital | 220,000 |
| Furniture | 80,000 | Profit and Loss | 55,000 |
| 15% investment | 120,000 | 12% Debenture | 200,000 |
| Goodwill | 30,000 | Accounts payable | 50,000 |
| Trademark | 20,000 | Interest income | 18,000 |
| Opening stock | 40,000 | Commission income | 22,000 |
Comprehensive Answer / Case / Situation Analysis Questions
[4 × 5 = 20]The following information has been provided to you:
Statement of Profit and Loss of Rara Company for the year ended on 31st December, 2023.
| Particulars | Rs | Rs |
|---|---|---|
| Sales for the year | 1,500,000 | |
| Less: Cost of goods sold | 1,120,000 | |
| Gross profit | 380,000 | |
| Less: Administrative expenses | 160,000 | |
| Depreciation on fixed assets | 40,000 | 200,000 |
| Operating profit | 180,000 | |
| Add: Other income | 50,000 | |
| Income before interest and tax | 230,000 | |
| Less: Interest Expenses | 30,000 | |
| Net profit before tax | 200,000 | |
| Less: Tax (The company is in tax holiday) | Nil | |
| Net profit after tax | 200,000 |
Statement of Financial Position of Rara Company as on 31st December, 2021 and 2023
| Details | 2021 | 2023 |
| Assets | ||
| Non-current assets: | Rs. | Rs. |
| Property, plant and equipment | 400,000 | 500,000 |
| Investment | 250,000 | 250,000 |
| Total non-current assets | 650,000 | 750,000 |
| Current assets: | ||
| Inventories | 120,000 | 160,000 |
| Cash and Cash equivalent | 140,000 | 180,000 |
| Account receivables | 30,000 | 110,000 |
| Total Current Assets | 290,000 | 450,000 |
| Total Assets | 940,000 | 1,200,000 |
| Equity and liabilities | ||
| Equity: | ||
| Share capital at Rs 100 each | 600,000 | 600,000 |
| Reserves | 200,000 | |
| Total equity | 600,000 | 800,000 |
| Liabilities: | ||
| Non-current liabilities: | ||
| 15% Debentures | 120,000 | 120,000 |
| 15% Bank loan | 80,000 | 80,000 |
| Total non-current liabilities | 200,000 | 200,000 |
| Current liabilities: | ||
| Accounts payables | 90,000 | 1,40,000 |
| Other payables | 50,000 | 60,000 |
| Total current liabilities | 140,000 | 200,000 |
| Total of equity and liabilities | 940,000 | 1,200,000 |
a. Current ratio (2:1)
b. Quick ratio (1:1)
c. Debt to total capital ratio (less than 40%)
d. Interest coverage ratio (more than 1)
e. Inventory turnover ratio (at least 8 times)
f. Total assets turnover ratio (more than 1 time)
g. Net profit margin (at least 12%)
h. Return on equity (at least 7%)
i. Return on total assets (at least 5%)
j. Return on capital employed (at least 5%)
k. Comment on the result