Financial Reporting & Financial Statement Analysis

Full Marks – 80

Time – 3 Hours

Group – A
Questions Carries 5 Marks each:

1. Write the advantages of ratio analysis.

Or/
The GP ratio of a company is 25% and operating ratio is 80%. Compute the amount of
gross profit, Cost of Sales and operating expenses if the sales during the year amounted
to `4,00,000.
2. What are the differences between a cash flow statement and a fund flow statement.
Or/
A ltd has earn a Net Profit during the year 2019 amounted to `80,000 and the current
ratio is 2:1 in the year 2018. If the working capital during the year 2018 was `30,000. In
the year 2019, the value of current liabilities were increases by 10% while the value of
current assets decreases by 5%. During the year the company pays the income tax at the
rate of 30% on net profit. Calculate the cash inflows/outflows from operation.
3. What are the advantages of an Accounting Standards? Write any 2 objectives of an
INDAS 1. (3+2)

Group – B
Questions carries 10 marks each:
4. (I) What do you mean by EPS? What are the methods of computing EPS? (2+2)
(II) A LTD purchased a machinery on 1/10/2019 at a cost of `1,68,000 including GST at
the rate of 12%. They also incurred a loading and unloading charges at the rate of 10%
on actual cost excluding GST. At the end of the year they produces some sample goods
costing `10,000. Calculate the cost of the machinery as per the provision of INDAS 16.
(6)
5. Following is the statement of Profit & Loss of ABC LTD for the year ended 31.12.2018 &
31.12.2019, You are required to prepare a comparative statement of Profit & Loss.

P.T.O
 Statement of Profit & Loss
Particulars 31.12.2019 31.12.2018
1 Receipts:
I. Revenue from 8,00,000 6,00,000
operation
II. Other income -- --
Total Receipts(I+II) 8,00,000 6,00,000
2. Payments:
Cost of Raw 50,000 30,000
material
consume
Changes in stock 70,000 1,00,000
Employees Benefit Expenses 1,50,000 1,20,000
Finance Cost 80,000 1,00,000
Tax 15% 15%

Or/

A) What are the various techniques for the analysis of the financial statements of a
company? (4)
B) From the following balance sheet of a Limited company, prepare a common size balance
sheet for the year ended 31.3.2018 and 31.3.2019. (6)

Particulars Note No 31.3.2018 31.3.2019

1 Equity & Liabilities
A. Shareholders’ funds
I. Share capital 4,00,000 5,50,000
II. Reserves & Surplus 3,00,000 2,00,000
B. Non-Current Liabilities
10% Debentures 1,00,000 1,20,000
C. Current Liabilities
I. Trade payables 40,000 60,000
II. Bills payables 70,000 60,500
D. Short-term provision 8,000 6,000
Total 9,18,000 9,96,500
2. Assets
A. Non-Current Assets
I. Fixed Assets 5,00,000 6,00,000
B. Non-Current Investments 2,00,000 1,50,000
C. Current Assets
I. Trade Receivables 50,000 60,000
II. Inventories 1,50,000 1,00,000
 III. Cash & Cash 18,000 86,500
equivalents
Total 9,18,000 9,96,500

Group – C
Questions carries 15 marks each:
6. A Company has a current ratio of 4:1 and Liquid ratio of 2.5:1. Explain with your reason,
how the following transactions will affect the ratios. (5x1=5)
I) Purchase of new raw material in credit.
II) Payment to creditors.
III) Credit sales.
IV) Outstanding salaries paid.
V) 10% Debentures issued.
From the following information of DEE ltd, prepare a Balance Sheet as on
31.3.2020. (10)
Current Ratio – 2:1
Quick Ratio – 1.25:1
Fixed assets to proprietorship ratio – 0.75:1
Surplus - `2,000.
Working Capital - `8,000.
Bank Overdraft - `2,000
Capital Gearing ratio(Equity to Preference share) – 5:1.
7. (A) What do you mean by Minority Interest in a Subsidiary Company? Write any two
reasons for the preparation of CBS? Does a Minority Interested Share holders enjoys the
voting right in the company’s Annual General Meeting? (2+2+1)
(B) From the following information’s of H ltd & S ltd, You are asked to calculate the
Minority Interest & the Cost of Control. (10)
H LTD acquires 7,500 equity shares of S ltd as on 1/1/2019 at a cost of `1,12,500. S LTD
had a total share capital of `1,00,000 which consists of 10,000 shares. On 01/04/2019,
S ltd has `50,000 and `36,000 in their General Reserves and their Profit & Loss a/c
respectively. S ltd declares a dividend at the rate of 10% on 30/9/2018. S ltd has
incurred a preliminary expenses of `5,000 and suffered a revaluation loss of `8,000
during the year.
Or/
H ltd acquires 80% shares of S ltd on 1/7/2018. Following is the balance sheet of H ltd &
S ltd as on 31.3.2019, You are required to prepare a Consolidated Balance Sheet as on
that date.
P.T.O
 Particulars Note No H ltd S ltd
1. Equity & Liability
A. Shareholders’
funds
I. Share capital 5,00,000 1,50,000
of `10 each
II. Reserves & 1 4,50,000 1,60,000
Surplus
B. Non-Current
Liabilities
C. Current
Liabilities
I. Trade 50,000 40,000
Payables
Total 10,00,000 3,50,000
2. Assets
A. Non-Current
Assets
I. Plant
Property &
Equipment
Tangible Assets 6,00,000 2,00,000
B. Non- Current
Investment
Investment in S ltd 1,80,000
C. Current Assets
Inventories 1,20,000 60,000
Trade 70,000 50,000
Receivables
Cash & Cash 30,000 40,000
equivalents
Total 10,00,000 3,50,000

Notes to Accounts

Note No Particulars H LTD S LTD

1 Reserves & Surplus
I. General Reserves 2,00,000 1,30,000
II. Profit & Loss 2,50,000 30,000
III. Total 4,50,000 1,60,000
 P.T.O

Additional Information’s:
I. On 1.4.2018 S ltd has `70,000 and `8,000 in their general reserves & profit & loss
a/c.
II. S ltd issued 1 bonus shares for each 5 shares held in S ltd on 1.8.2018.
III. S ltd declared a dividend at the rate of 10% for the financial year 2017 – 2018 on
1.5.2018.
IV. There was a profit on revaluation of fixed assets amounted to `10,000.
V. H ltd issued 738 10% Debentures of `100 each on 1.2.2019.
VI. At the end of the year the share of goodwill will be part of the balance of

profit & loss a/c.

8. Following is the Balance Sheet of XYZ ltd for the year ended 31.3.2019 & 31.3.2020.

Particulars Note No 31.3.2019 31.3.2020

1 Equity & Liabilities
A. Share Holder’s
Funds
I. Equity Share capital 2,00,000 3,00,000
II. Redeemable 1,50,000 1,00,000
preference
share capital
III. Reserves &
Surplus
I General Reserves 70,000 90,000
ii. Profit & Loss 60,000 75,000
B. Non-Current
Liabilities
10% Debentures 1,00,000 80,000
C. Current Liabilities
I. Trade Payables 50,000 60,000
II. Provision for 30,000 45,000
taxation
Total 6,60,000 7,50,000
3. Assets
A. Non-Current Assets
I. Plant, Property
& Equipments
Land & Building 1,50,000 1,70,000
Plant & Machinery 1,00,000 60,000
 Goodwill 70,000 40,000
B. Non- Current 80,000 60,000
Investment
C. Current Assets
Trade Receavables 1,50,000 3,50,000
Inventories 60,000 40,000
Cash & Cash equivalents 50,000 30,000
Total 6,60,000 7,50,000

Additional information’s:
I. A part of investments worth `25,000 were sold for `30,000.
II. `10,000 were charged for depreciation on plant & machinery.
III. During the year `25,000 were paid for dividend and `10,000 paid for corporate
tax.
IV. A part of land were sold for `50,000 whose original cost was `55,000.
You are required to prepared, Either:
(I). Cash flow Statement or
(II). Fund Flow Statement.