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Question
Give one word/term/ phrase for the following statement
Critical evaluation of financial statement to measure profitability.
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Solution
Critical evaluation of financial statement to measure profitability. - Analysis of financial statement
Explanation: It is the process of analysing the business results and the efficiency of the business via various tools. Analysis of financial statement provides an insight into the efficiency with which a business is operating, what is the profitability and what is the present financial position of the business. It facilitates comparison of business results of different firms and over the years.
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Following incomplete information is available from the records maintained by Mr. Premnath.
|
Particulars |
1.4.2009 |
31.3.2010 |
|
Cash Balance Bank Balance Sundry Debtors Stock Furniture Creditors 10% Bank Loan |
12,000 26,000 20,000 24,000 24,000 20,000 20,000 |
13,000 30,000 26,000 26,000 24,000 20,000 20,000 |
(1) Mr. Premnath introduced additional capital in the business amounted to Rs 15,000 on 1st January, 2010.
(2) He has paid life insurance premium Rs 10,000 from the business account and withdrawn goods worth Rs 5,000 for his personal use.
(3) Write off Rs 1,000 as bad debts and maintain reserve for doubtful debts at 5% on remaining debtors.
(4) Provide depreciation at 5% p.a. on furniture.
(5) The closing balance of sundry creditors has been overvalued by Rs 2,000 in the books of account.
(6) Provide Interest on Capital and Bank Loan @ 10% p.a.
(i) Statement of Affairs as on 1.4.2009.
(ii) Statement of Affairs as on 31.3.2010.
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Financial statements include only balance sheet.
Select the appropriate answer from the alternatives given below & rewrite the completed statement:
The methodical classification of financial statement is called _____________.
Select the appropriate answer from the alternatives given below & rewrite the completed statement
Cash proceeds from issue of debentures is _______________.
Select the appropriate answer from the alternatives given below & rewrite the completed statement
Bills payable is _____________.
Answer the following in brief :
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Analysis of financial statement is a tool but not a remedy.
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Explain the limitations of analysis of financial statements.
Bill Payable is ___________
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The statement showing financial position for different periods of previous year and current year.
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| Liabilities | 31-03-2018 (₹) | 31-03-2019 (₹) | Assets | 31-03-2018 (₹) | 31-03-2019 (₹) |
| Equity Share Capital | 1,60,000 | 1,60,000 | Fixed Assets | 2,40,000 | 2,88,000 |
| Pref. Shares Capital | 40,000 | 40,000 | Investment | 40,000 | 40,000 |
| Reserve and Surplus | 40,000 | 48,000 | Current Assets | 1,20,000 | 96,000 |
| Secured Loan | 80,000 | 32,000 | |||
| Unsecured Loan | 40,000 | 72,000 | |||
| Current Liabilities | 40,000 | 72,000 | |||
| 4,00,000 | 4,24,000 | 4,00,000 | 4,24,000 |
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Convert following Trading Account and Profit and Loss Account into Vertical Income Statement:
| Dr. | Trading, Profit and Loss Account for the year ended as on 31st March,2020 |
Cr. | |
| Particulars | Amount ₹ | Particulars | Amount ₹ |
| To Opening stock | 20,000 | By Sales | 1,20,000 |
| To Purchases | 90,000 | By Closing Stock | 30,000 |
| To Carriage inward | 500 | ||
| To Wages | 10,000 | ||
| To Gross Profit c/d | 29,500 | ||
| Total | 1,50,000 | Total | 1,50,000 |
| To Office expenses | 12,500 | By Gross Profit b/d | 29,500 |
| To Selling expenses | 10,000 | ||
| To Finance expenses | 3,000 | ||
| To Net Profit c/d | 4,000 | ||
| 29,500 | 29,500 | ||
Under which major heads and sub-heads will the following items be presented in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013?
- Bills Receivable
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