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MANAGEMENT (FAM)
(101)(120)(125)
INTRODUCTION to PREPARATION
FINANCIAL & ANALYSIS &
ACCOUNTING PRESENTATION INTERPRETATION
(Induction of Financial (Session 20-23)
– Session 1-4) Statements [FS]
Ans.1
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Quiz 9 - (55)(64)(90)
A company has an obligation due in 2017.
On the balance sheet of 2014-15, the
obligation should be classified as:
1. A current asset.
2. A current liability.
3. A long-term debt.
4. None of the above.
Ans.3
Ans.d
Required:
1. Solve for the missing amounts and prepare an Income
Statement for the quarter ended June 30, 2014.
2. What is PVR’s main source of revenue and biggest expense?
Solution: Preparing the Income Statement and
Inferring Missing Values -
PVR ENTERTAINMENT GROUP
Income Statement
For the Quarter Ended June 30, 2014
(in '000)
Revenues
Admissions Revenues Rs.4,55,700
Concessions Revenues 1,88,900
Other Revenues 31,200
Total Revenues Rs.6,75,800
Expenses
Concessions Expenses 25,500
Film Rental Expenses 2,47,000
General and Administrative Expenses 65,700
Rent Expense 90,000
Other Expenses 2,33,800
Total Expenses Rs.6,62,000
?
Earnings.
For the Quarter Ended September 30, 2014
Retained Earnings July 1, 2014 Rs. Nil
Add: Net Income 2,000
Subtract: Dividends (1,000)
Retained Earnings Sept. 30, 2014 Rs.1,000
Relationships Among the Financial Statements -
(55)(56)(64)
PIZZA HUT Pvt. Ltd.
2 Ending Retained Balance Sheet
as at September 30, 2014
Earnings flows from Assets
Cash Rs.14,000
Balance Sheet
Ashok Joy
ASSETS
What is owned
Cash Rs.1,000 Rs.6,000
Play Station -0- 350
Car 800 -0-
TOTAL Rs.1,800 Rs.6,350
What is owed
LIABILITIES
Car loan Rs.250 Rs.-0-
Tuition Payable -0- 800
Student Loan -0- 4,800
TOTAL 250 5,600
“Net worth”
EQUITY 1,550 750
TOTAL Rs.1,800 Rs.6,350
Session 3 & 4:
Shareholders’
Assets = + Liabilities
Equity
Depicts Separate Entity Assumption
Requires that a business’s financial reports include only
the activities of the business and not those of its
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shareholders.
GIM-FAM Prof. Ranjan Dasgupta 43
Expanded Accounting Equation -
Shareholders’
Assets = + Liabilities
Equity
Retained
Equity Stock +
Earnings
Distributions of a
company’s earnings to its
shareholders as a return
on their investment.
Shareholders’
Problem 1 -
Problem 3 -
3 -1,000 +1,000
6 -1,500 -1,500
7 +1,000 -1,000
11 -200 -200
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You are required to:
(a)Explain each transaction.
(b) List the changes in the company’s
BS during the month of June 2018.
(c) Prepare an IS for the month of June
(ignore taxes).
(d) Explain the changes in the Cash
Statement/Account.
(e) Explain why the change in the Cash
Statement/Account and the month’s
income are not the same.
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1) Owners invest
Solution (a):
Rs.20,000 of equity capital in Acme
Consulting.
2) Equipment costing Rs.7,000 is purchased for
Rs.5,000 cash and an account payable of Rs.2,000.
3) Supplies inventory costing Rs.1,000 is bought for
cash.
4) Salaries of Rs.4,500 are paid in cash.
5) Revenues of Rs.10,000 are earned, of which
Rs.5,000 has been recovered in cash. The
remaining Rs.5,000 is owed to the company by its
customers.
6) Accounts payable of Rs.1,500 are paid in cash.
7) Customers pay Rs.1,000 of the Rs.5,000 they owe
the company.
8) Rent Expense of Rs.750 is paid in cash.
9) Utilities of Rs.500 are paid in cash.
10)A Rs.200 travel expense has been incurred but not
yet paid.
11)Supplies
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costing Rs.200 are consumed.54
Prof. Ranjan Dasgupta
Solution (b):
ACME CONSULTING
BALANCE SHEET AS AT JUNE 30 2018
Shareholders’ Equity Rs. Assets Rs.
and Liabilities
Shareholders’ 23,850 Equipment 7,000
Equity
Current assets: 12,750
Current liabilities: 700 Cash
Accounts
payable Accounts 4,000
receivable
Supplies 800
inventory
Total Shareholders’
Equity and Liabilities Rs.24,550
Total Assets Rs.24,550
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Solution (c):
ACME CONSULTING
INCOME STATEMENT JUNE 30 2018
Revenues Rs.10,000
Expenses:
Salaries 4,500
Rent 750
Utilities 500
Travel 200
Supplies 200
6,150
Net Rs. 3,850
Income
Total
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Rs.26,000
Solution (e):
Problem 4 -