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प्रश्न
State any objective of Financial Statement Analysis’.
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उत्तर
An important objective of Financial Statement Analysis is that it helps to conduct meaningful comparisons of financial data. It also provides better and easy understanding of the changes in the financial data over a period of time.
APPEARS IN
संबंधित प्रश्न
Complete the following journal entries left blank in the books of VK Ltd.:
| VK Ltd. Journal |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
| 2018 Feb 1 |
___________________ Dr. ___________________ (Purchased own 500, 9% debentures of Rs 100 each at Rs 97 each for immediate cancellation) |
________
|
________
|
|
| Feb 1 |
___________________ Dr. ___________________ ___________________ (Cancelled own debentures) |
________
|
________ ________ |
|
| ______ |
___________________ Dr. ___________________ (______________________) |
________
|
________ | |
Financial Statements are prepared following the constituent accounting concepts principles procedures and also the legal environment in which the business organisation operate. These statements are the source of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.
From the above statements identify any two values that a company should observe while preparing its financial statements. Also, State under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act 2013
(1) Capital Reserve
(2) Calls-in-Advance
(3) Loose Tools
(4) Bank overdraft
'Panipat Blankets Limited' are the manufacturers and exporters of blankets. The company decided to distribute 1,000 blankets free of cost to five villages of Kashmir which had been damaged by the floods. It also decided to employ 100 young persons from these villages in their newly established factory at Ludhiana in Punjab To meet the requirements of funds for its new factory, the company issued 1,00,000 equity shares of Rs 10 each and 2,000, 9% debentures of Rs 100 each to the vendors of machinery purchased for Rs 12,00,000.
Pass necessary journal entries for the above transactions in the books of the company. Also, identify anyone value which the company wants to communicate to the society.
What is meant by 'Analysis of Financial Statements'? State any two objectives of such an analysis.
Briefly explain the significance of 'Analysis of financial statements' to (a) The Finance Manager, and (b) Trade Payables.
State the interest of tax authorities in the analysis of financial statements.
State the significance of analysis of financial statements to ‘Top Management’.
From the following information, prepare the balance sheet of Jam Ltd.
Inventories Rs. 7,00,000; Equity Share Capital Rs. 16,00,000; Plant and Machinery Rs. 8,00,000; 8% Preference Share Capital Rs. 6,00,000; General Reserves Rs. 6,00,000; Bills payable Rs. 1,50,000; Provision for taxation Rs. 2,50,000; Land and Building Rs. 16,00,000; Noncurrent Investments Rs. 10,00,000; Cash at Bank Rs. 5,00,000;Creditors Rs. 2,00,000; 12% Debentures Rs. 12,00,000.
Brinda Ltd. has furnished the following information:
(a) 25,000, 10% debentures of Rs. 100 each;
(b) Bank Loan of Rs. 10,00,000 repayable after 5 years;
(c) Interest on debentures is yet to be paid.
Show the above items in the balance sheet of the company as at March 31, 2017.
Prepare a balance sheet of Black Swan Ltd., as at March 31, 2017, from the following information:
| Rs. | |
| General Reserve | 3,000 |
| 10% Debentures | 3,000 |
| Balance in Statement of Profit & Loss | 1,200 |
| Depreciation on fixed assets | 700 |
| Gross Block | 9,000 |
| Current Liabilities | 2,500 |
| Preliminary Expenses | 300 |
| 6% Preference Share Capital | 5,000 |
| Cash & Cash Equivalents | 6,100 |
Under which sub-head will the following be classified or shown:
(i) Long-term Borrowings;
(ii) Deferred Tax Liabilities (Net); and
(iii) Long-term Provision?
State any two items that are included in the following major heads under which liabilities of a company are shown:
(i) Reserves and Surplus;
(ii) Long-term Borrowings;
(iii) Short-term Borrowings;
(iv) Other Current Liabilities.
Prepare Balance Sheet of VT Ltd. as at 31st March 2019, from the following information as per Schedule III, Part I of the Companies Act, 2013:
| ₹ | ₹ | |||
| General Reserve | 3,000 | Fixed Assets: Tangible Assets (Cost) | 9,000 | |
| 8% Debentures | 3,000 | Other Current Liabilities | 2,500 | |
| Surplus, i.e., Balance in Statement of Profit and Loss (Credit) | 1,200 | Share Capital | 5,000 | |
| Depreciation of Fixed Assets | 700 | Other Current Assets | 6,400 |
State under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:
(i) Capital Reserve;
(ii) Calls-in-Advance;
(iii) Loose Tools; and
(iv) Bank overdraft.
Which of the following statement is not true?
Which of the following is a fictitious Asset?
Assertion (A): The focus of calculation of working capital revolves around managing the operating cycle of the business.
Reason (R): It is because the concept of operating cycle is required to ascertain the liquidity of assets and urgency of payments to liabilities.
In the context of the above two statements, which of the following is correct?
Which of the following statements are false?
- When all the comparative figures in a balance sheet are stated as percentage of the total, it is termed as horizontal analysis.
- When financial statements of several years are analysed, it is termed as vertical analysis.
- Vertical Analysis is also termed as time series analysis.
A company has an operating cycle of eight months. It has accounts receivables amounting to ₹ 1,00,000 out of which ₹ 60,000 have a maturity period of 11 months. How would this information be presented in the balance sheet?
What are the objectives of financial statements? They provides ______.
For income measurement ______ basis of accounting is followed.
The statement which shows the assets and liabilities of a company is known as ______.
What are the uses and importance of financial statements?
The financial statements of a business enterprise include ______.
As per Schedule III, Part I of the Companies Act, 2013 'calls-in-arrears' will be presented under which of the following head/sub-head, in the Balance Sheet of a company?
Carriage Inwards is shown in the Statement of Profit and Loss under ______.
Securities Premium is shown under which head in the Balance Sheet ?
‘Freedom to Choose of method of depreciation’ refers to which limitation of financial statement analysis.
| Nitya, Shreya and Ishita are partners in a firm. They share profits in the ratio of 5: 3 : 2. Their fixed capitals are ₹ 1,80,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. For the year ending 31st March 2022, Nitya withdrew ₹ 7,500 at the end of every quarter. |
The average number of months for which interest on drawings will be calculated will be:
|
Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. Besides his capital Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:
During the year Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year and Shiv withdrew ₹ 70,000 at the end of each half year. The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹ 7,06,750. |
What will the amount of interest on drawings of the partners?
Richa and Anmol are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 2,50,000 and ₹ 1,50,000 respectively. Interest on capital is agreed @6% p.a. Anmol is to be allowed an annual salary of ₹ 12,500. During the year ended 31st March 2023, the profits of the year prior to calculation of interest on capital but after charging Anmol’s salary amounted to ₹ 62,000. A provision of 5% of this profit is to be made in respect of manager’s commission.
Following is their Profit & Loss Appropriation Account:
| Particulars | (₹) | Particulars | (₹) |
| To Interest on Capital | By Profit & loss account (After manager’s commission) | ___(2)___ | |
| Richa | ______ | ||
| Anmol | ______ | ||
| To Anmol’s Salary A/c | 12,500 | ||
| To Profit transferred to: | |||
| Richa’s Capital A/C (1) | ___(1)___ | ||
| Anmol’s Capital A/c | ______ | ||
| ______ | ______ |
The amount to be reflected in blank (2) will be:
|
Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. Besides his capital Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:
During the year Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year and Shiv withdrew ₹ 70,000 at the end of each half year. The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹ 7,06,750. |
What will the amount of interest on drawings of the partners?
Richa and Anmol are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 2,50,000 and ₹ 1,50,000 respectively. Interest on capital is agreed @6% p.a. Anmol is to be allowed an annual salary of ₹ 12,500. During the year ended 31st March 2023, the profits of the year prior to calculation of interest on capital but after charging Anmol’s salary amounted to ₹ 62,000. A provision of 5% of this profit is to be made in respect of manager’s commission.
Following is their Profit & Loss Appropriation Account:
| Particulars | (₹) | Particulars | (₹) |
| To Interest on Capital | By Profit & loss account (After manager’s commission) | __(2)__ | |
| Richa | ______ | ||
| Anmol | ______ | ||
| To Anmol’s Salary a/c | 12,500 | ||
| To Profit transferred to: Richa’s Capital A/C (1) | __(1)__ | ||
| Anmol’s Capital A/c | ______ | ||
| ______ | ______ |
The amount to be reflected in blank (2) will be:
