The document provides a statement of profit and loss and balance sheet for Moon and Star Ltd. as of December 31, 2013. It includes notes to accounts that provide additional details. The summary is:
Moon and Star Ltd. reported a net profit of Rs. 100,275 for the year. Its total assets were Rs. 4,35,395, including current assets of Rs. 3,66,080 and non-current assets of Rs. 1,68,815. Total equity and liabilities were also Rs. 4,35,395, consisting of equity of Rs. 2,45,000, non-current liabilities of Rs. 15,700, and current liabilities of Rs. 1,74
This document provides an overview of financial statements that companies are required to prepare under the Companies Act. It discusses the key components of the income statement and balance sheet, including revenues, expenses, assets, liabilities, and equity. Sample income statements and balance sheets are presented with explanatory notes. Key terms related to revenues, expenses, assets, liabilities, equity, and other items are also defined.
This document discusses different types of company shares. It defines a share and notes there are two main classes: preference shares and equity shares. Preference shares offer a fixed dividend rate and right to capital repayment before equity shares. Equity shares have voting rights but no fixed dividend. The document outlines various types of preference shares, including cumulative, participating, redeemable, and convertible varieties. It also describes employee shares and compares key characteristics of preference versus equity shares.
This document discusses the process of vouching in auditing. It defines vouching as verifying the authenticity and authority of transactions recorded in accounting books by comparing them to supporting documentation. The key types of vouchers and objectives of vouching are ensuring transactions are correctly recorded, supported by evidence, and properly authorized. Vouching is an important audit procedure for examining transactions in cash books, subsidiary books, journals, and ledgers.
Here are the journal entries to record the above transactions:
Dr. Capital Reduction Account 2,50,000
To Equity Share Capital Account 2,50,000
(Being reduction in share capital as sanctioned by the court)
Dr. Profit and Loss Account 1,05,000
To Capital Reduction Account 1,05,000
(Being writing off of debit balance of profit and loss account)
Dr. Plant and Machinery Account 45,000
Dr. Goodwill Account 20,000
To Capital Reduction Account 65,000
(Being reduction in value of plant and machinery and goodwill)
Dr. Investment Account 40,000
To
There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares do not have a fixed dividend rate and holders have voting rights. Preference shares have a fixed dividend rate and preferential rights to repayment of capital. There are various kinds of preference shares based on factors like cumulative/non-cumulative dividends and participation in profits. Deferred shares rank below equity and preference shares for dividend payments and repayment of capital.
Meaning of financial statement
Objectives of financial statement
Characteristics of financial statement
Nature of financial statement
Balance sheet
Format of balance sheet
Illustrations
Exercises
Statement of profit & loss
Format of statement of profit & loss
Notes of statement of profit &loss
Illustrations
Exercises
Payment in due course refers to making payment according to the terms of a negotiable instrument, such as a check or promissory note, in good faith and without negligence to the person in possession of the instrument. It is defined in Section 10 of the Negotiable Instruments Act as payment made in accordance with the apparent terms of the instrument and satisfies conditions like being made in good faith, without negligence, and to the person in possession. A bank or other party making payment in due course according to this definition will be protected and obtain a valid discharge against the holder of the instrument.
The document discusses different types of companies based on various classifications:
1. Based on incorporation, companies can be registered, chartered, or statutory. Registered companies are formed under the Company Act, while chartered companies are formed by royal charter and statutory companies are established by a special act of parliament.
2. Based on liability, companies can be limited by shares, limited by guarantee, or unlimited. For limited companies, shareholder liability is limited to share capital, while unlimited companies' liability extends to private properties.
3. Based on number of members, companies are either private (restricted transfer of shares and fewer than 50 members) or public (no restriction on share transfers and minimum 7 members).
This document provides an overview of financial statements that companies are required to prepare under the Companies Act. It discusses the key components of the income statement and balance sheet, including revenues, expenses, assets, liabilities, and equity. Sample income statements and balance sheets are presented with explanatory notes. Key terms related to revenues, expenses, assets, liabilities, equity, and other items are also defined.
This document discusses different types of company shares. It defines a share and notes there are two main classes: preference shares and equity shares. Preference shares offer a fixed dividend rate and right to capital repayment before equity shares. Equity shares have voting rights but no fixed dividend. The document outlines various types of preference shares, including cumulative, participating, redeemable, and convertible varieties. It also describes employee shares and compares key characteristics of preference versus equity shares.
This document discusses the process of vouching in auditing. It defines vouching as verifying the authenticity and authority of transactions recorded in accounting books by comparing them to supporting documentation. The key types of vouchers and objectives of vouching are ensuring transactions are correctly recorded, supported by evidence, and properly authorized. Vouching is an important audit procedure for examining transactions in cash books, subsidiary books, journals, and ledgers.
Here are the journal entries to record the above transactions:
Dr. Capital Reduction Account 2,50,000
To Equity Share Capital Account 2,50,000
(Being reduction in share capital as sanctioned by the court)
Dr. Profit and Loss Account 1,05,000
To Capital Reduction Account 1,05,000
(Being writing off of debit balance of profit and loss account)
Dr. Plant and Machinery Account 45,000
Dr. Goodwill Account 20,000
To Capital Reduction Account 65,000
(Being reduction in value of plant and machinery and goodwill)
Dr. Investment Account 40,000
To
There are three main types of shares that can be issued by companies: equity shares, preference shares, and deferred shares. Equity shares do not have a fixed dividend rate and holders have voting rights. Preference shares have a fixed dividend rate and preferential rights to repayment of capital. There are various kinds of preference shares based on factors like cumulative/non-cumulative dividends and participation in profits. Deferred shares rank below equity and preference shares for dividend payments and repayment of capital.
Meaning of financial statement
Objectives of financial statement
Characteristics of financial statement
Nature of financial statement
Balance sheet
Format of balance sheet
Illustrations
Exercises
Statement of profit & loss
Format of statement of profit & loss
Notes of statement of profit &loss
Illustrations
Exercises
Payment in due course refers to making payment according to the terms of a negotiable instrument, such as a check or promissory note, in good faith and without negligence to the person in possession of the instrument. It is defined in Section 10 of the Negotiable Instruments Act as payment made in accordance with the apparent terms of the instrument and satisfies conditions like being made in good faith, without negligence, and to the person in possession. A bank or other party making payment in due course according to this definition will be protected and obtain a valid discharge against the holder of the instrument.
The document discusses different types of companies based on various classifications:
1. Based on incorporation, companies can be registered, chartered, or statutory. Registered companies are formed under the Company Act, while chartered companies are formed by royal charter and statutory companies are established by a special act of parliament.
2. Based on liability, companies can be limited by shares, limited by guarantee, or unlimited. For limited companies, shareholder liability is limited to share capital, while unlimited companies' liability extends to private properties.
3. Based on number of members, companies are either private (restricted transfer of shares and fewer than 50 members) or public (no restriction on share transfers and minimum 7 members).
The document discusses the key stages and processes involved in forming and operating a company in India according to the Companies Act of 1956. It covers the stages of promotion, incorporation, capital subscription, and commencement of business. It also discusses essential documents like the memorandum of association, articles of association, and prospectus. Other topics covered include types of company meetings, roles and powers of directors, and winding up processes like voluntary and compulsory liquidation.
This document contains the balance sheet of a bank, listing assets and liabilities. It provides details of the bank's capital, reserves, deposits, borrowings, cash balances, investments, advances, fixed assets, other assets, and contingent liabilities. Figures are provided in thousands for various line items such as authorized capital, issued capital, statutory reserves, demand deposits, borrowings, cash balances, investments, advances, fixed assets, other assets, and contingent liabilities.
This accounting standard provides guidelines for classifying and disclosing items in the statement of profit and loss to increase comparability between financial statements of different companies. It requires separate disclosure of ordinary activities, extraordinary items, prior period items, changes in accounting estimates, and changes in accounting policies. The standard defines these terms and specifies disclosure requirements for each category. Companies must disclose the nature and amount of any material items, changes, or policy changes along with their financial impact. The aim is to present financial statements on a uniform basis.
This document discusses lease accounting and the different types of leases. It defines a lease as an agreement where the lessor conveys the right to use an asset to the lessee in exchange for rent payments. The document outlines Accounting Standard 19, which governs lease accounting, and describes the parties involved in a lease contract. It then distinguishes between the two main types of leases: operating leases, which are usually short-term cancellable leases, and finance leases, which transfer substantially all the risks and rewards of asset ownership to the lessee. The document concludes by noting some of the advantages and disadvantages of leasing for both lessees and lessors.
Accounting involves collecting, recording, analyzing, and interpreting financial transactions, and preparing profit and loss statements, balance sheets, and other reports. Auditing examines accounting books and documents to verify the accuracy and fairness of financial reporting and compliance with regulations, and auditors prepare reports for owners and shareholders at the end of their work. While accountants record transactions and report to management as employees, auditors independently verify account books and report to owners.
Accounting involves recording, classifying, and summarizing financial transactions and events in a way that adheres to generally accepted accounting principles (GAAP). It is both an art and a science - it applies scientific principles and methods (the science) but also involves judgment and decision making (the art). Proper accounting provides useful financial information to both internal and external users of the financial statements and allows for informed decision making.
Winding up/liquidation represents the last stage in a company's life where its assets are disposed of and debts are paid off from the proceeds. There are two modes of winding up - by the tribunal which can be compulsory, or voluntary winding up by members or creditors. Voluntary winding up involves passing an ordinary or special resolution to wind up and appointing a liquidator to dispose of assets and pay debts. The liquidator calls meetings, declares solvency, and dissolves the company once winding up is complete.
The document discusses key concepts in financial accounting:
1. Accounting has evolved from a record keeping system to an information system that measures and reports on economic events in financial terms.
2. It involves recording, classifying, and summarizing financial data and communicating results to stakeholders.
3. Financial accounting aims to provide information to assess the financial position and performance of a business entity.
The document discusses company management and the roles and responsibilities of directors. It provides details on:
- Directors are responsible for governing and controlling company policy. They act as agents, managing partners, and trustees of the company.
- Companies must have a minimum of two (private) or three (public) directors. One director may be elected by small shareholders holding a nominal value of Rs. 20,000 or less in qualifying companies.
- Directors are subject to qualification requirements, disqualification criteria, and must obtain a unique Director Identification Number (DIN).
- Appointment, retirement and remuneration of directors is governed by the companies act and articles of association. Maximum managerial remuneration is
The document provides an overview of the accounting process. It defines accounting and discusses its key principles and concepts. It describes the different branches and types of accounting. It then explains the accounting process which involves identifying transactions, preparing documents, recording transactions in a journal, posting to ledgers, preparing trial balances and final accounts such as profit and loss statements and balance sheets. It also discusses the different books of accounts used such as journals, ledgers and trial balances. Finally, it covers accounting systems and basics such as debits and credits, types of accounts and how to prepare and balance accounts.
The document discusses cash flow statements, which show a company's cash inflows and outflows from operating, investing, and financing activities. Cash flow from operating activities includes cash from sales, services, and payments for supplies, employees, taxes. Investing activities involve cash from purchases/sales of property and equipment and other investments. Financing activities include cash from issuing/repaying debt and equity. The cash flow statement is important for understanding a company's liquidity and ability to meet obligations.
It contains meaning with examples, characteristics, methods of recording joint venture transactions, advantage, difference between joint venture and partnership and types of joint venture.
This document discusses key concepts related to capital budgeting and risk analysis. It begins with definitions of capital budgeting as the process of identifying, evaluating, planning, and financing capital investment projects. It describes the main features of capital budgeting projects as having large anticipated benefits, high risk, and a long time period between initial outlay and return.
The document then covers various capital budgeting techniques for evaluating projects, including payback period, net present value (NPV), and internal rate of return (IRR). It provides examples of calculating each measure and the criteria for accepting projects. Finally, it discusses risk in capital budgeting, defining it as uncertainty in cash flow forecasts, and methods for measuring risk, such as
Fund flow statement is a statement that compares the two balance sheets by analyzing the sources of funds (debt and equity capital) and the application of funds (assets) and its reasons for any differences.
A budget is a plan for projected income and expenses over a defined period. Budgeting involves formulating budgets, while budgetary control uses budgets to plan and control all aspects of production. Key elements of budgetary control include preparing budgets for each department, conducting ongoing comparisons of actual vs. budgeted performance, and taking corrective actions on variances. Budgets can be classified by time period (long-term vs. short-term), function (sales, production, etc.), or flexibility (fixed vs. flexible). Zero-based budgeting requires justifying all expenses for each new period without relying on previous budgets.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
1) Capital budgeting is the process of planning for capital expenditures that are expected to generate returns over multiple years. It involves evaluating potential long-term investment projects and determining which ones to undertake.
2) The document discusses various capital budgeting techniques for evaluating projects, including payback period, accounting rate of return, net present value, and internal rate of return. It also outlines the typical capital budgeting process of identifying, screening, evaluating, approving, implementing, and reviewing projects.
3) Key factors in capital budgeting include properly accounting for the time value of money, risk analysis, and ensuring projects will maximize long-term profitability for the company. Both traditional and modern discounted cash flow methods have advantages and
Bonus shares are additional free shares given to existing shareholders based on the number of shares owned, representing a company's accumulated retained earnings. Companies issue bonus shares to increase liquidity and shareholder participation when earnings per share rise substantially. For example, a company with Rs. 10,000 profit and 100 shares has an earnings per share of Rs. 100. To lower the price per share for retail investors and improve liquidity, the company may declare a 1:4 bonus issue, increasing shares to 500. This lowers the price per share to Rs. 20 while maintaining the same total market value. Bonus shares are accounted for by transferring reserves to share capital.
This document discusses the redemption of preference shares and bonus issues. It begins by defining preference shares and outlining their preferential rights over equity shares. It then describes the different types of preference shares, including cumulative, non-cumulative, participative, non-participative, convertible, redeemable, and irredeemable. The document focuses on redeemable preference shares, outlining the key provisions around their redemption according to the Companies Act. It discusses the conditions of redemption, including shares being fully paid, redeemed out of profits or fresh issue, and the creation of a capital redemption reserve. Finally, it provides journal entries for the redemption process.
The document provides an overview of key financial statements including the balance sheet and profit and loss account. The balance sheet shows a company's financial position on a particular date by outlining assets, liabilities, and equity. The profit and loss account shows operating results for a period by outlining revenues, expenses, and net profit. It summarizes the financial performance of a business over a specific period of time.
The document provides information on the key changes introduced in the revised Schedule VI format for balance sheets and statements of profit and loss in India. Some of the major changes include: (1) Replacing 'sources of funds' and 'application of funds' with 'equity and liabilities' and 'assets'; (2) Classifying assets and liabilities as current or non-current based on operating cycle; (3) Prescribing separate line items and additional disclosures for items like cash flow statements, intangible assets, taxes, and related party transactions. The document also explains the revised definitions and disclosure requirements for items like reserves, investments, provisions, and borrowings in the balance sheet.
The document discusses the key stages and processes involved in forming and operating a company in India according to the Companies Act of 1956. It covers the stages of promotion, incorporation, capital subscription, and commencement of business. It also discusses essential documents like the memorandum of association, articles of association, and prospectus. Other topics covered include types of company meetings, roles and powers of directors, and winding up processes like voluntary and compulsory liquidation.
This document contains the balance sheet of a bank, listing assets and liabilities. It provides details of the bank's capital, reserves, deposits, borrowings, cash balances, investments, advances, fixed assets, other assets, and contingent liabilities. Figures are provided in thousands for various line items such as authorized capital, issued capital, statutory reserves, demand deposits, borrowings, cash balances, investments, advances, fixed assets, other assets, and contingent liabilities.
This accounting standard provides guidelines for classifying and disclosing items in the statement of profit and loss to increase comparability between financial statements of different companies. It requires separate disclosure of ordinary activities, extraordinary items, prior period items, changes in accounting estimates, and changes in accounting policies. The standard defines these terms and specifies disclosure requirements for each category. Companies must disclose the nature and amount of any material items, changes, or policy changes along with their financial impact. The aim is to present financial statements on a uniform basis.
This document discusses lease accounting and the different types of leases. It defines a lease as an agreement where the lessor conveys the right to use an asset to the lessee in exchange for rent payments. The document outlines Accounting Standard 19, which governs lease accounting, and describes the parties involved in a lease contract. It then distinguishes between the two main types of leases: operating leases, which are usually short-term cancellable leases, and finance leases, which transfer substantially all the risks and rewards of asset ownership to the lessee. The document concludes by noting some of the advantages and disadvantages of leasing for both lessees and lessors.
Accounting involves collecting, recording, analyzing, and interpreting financial transactions, and preparing profit and loss statements, balance sheets, and other reports. Auditing examines accounting books and documents to verify the accuracy and fairness of financial reporting and compliance with regulations, and auditors prepare reports for owners and shareholders at the end of their work. While accountants record transactions and report to management as employees, auditors independently verify account books and report to owners.
Accounting involves recording, classifying, and summarizing financial transactions and events in a way that adheres to generally accepted accounting principles (GAAP). It is both an art and a science - it applies scientific principles and methods (the science) but also involves judgment and decision making (the art). Proper accounting provides useful financial information to both internal and external users of the financial statements and allows for informed decision making.
Winding up/liquidation represents the last stage in a company's life where its assets are disposed of and debts are paid off from the proceeds. There are two modes of winding up - by the tribunal which can be compulsory, or voluntary winding up by members or creditors. Voluntary winding up involves passing an ordinary or special resolution to wind up and appointing a liquidator to dispose of assets and pay debts. The liquidator calls meetings, declares solvency, and dissolves the company once winding up is complete.
The document discusses key concepts in financial accounting:
1. Accounting has evolved from a record keeping system to an information system that measures and reports on economic events in financial terms.
2. It involves recording, classifying, and summarizing financial data and communicating results to stakeholders.
3. Financial accounting aims to provide information to assess the financial position and performance of a business entity.
The document discusses company management and the roles and responsibilities of directors. It provides details on:
- Directors are responsible for governing and controlling company policy. They act as agents, managing partners, and trustees of the company.
- Companies must have a minimum of two (private) or three (public) directors. One director may be elected by small shareholders holding a nominal value of Rs. 20,000 or less in qualifying companies.
- Directors are subject to qualification requirements, disqualification criteria, and must obtain a unique Director Identification Number (DIN).
- Appointment, retirement and remuneration of directors is governed by the companies act and articles of association. Maximum managerial remuneration is
The document provides an overview of the accounting process. It defines accounting and discusses its key principles and concepts. It describes the different branches and types of accounting. It then explains the accounting process which involves identifying transactions, preparing documents, recording transactions in a journal, posting to ledgers, preparing trial balances and final accounts such as profit and loss statements and balance sheets. It also discusses the different books of accounts used such as journals, ledgers and trial balances. Finally, it covers accounting systems and basics such as debits and credits, types of accounts and how to prepare and balance accounts.
The document discusses cash flow statements, which show a company's cash inflows and outflows from operating, investing, and financing activities. Cash flow from operating activities includes cash from sales, services, and payments for supplies, employees, taxes. Investing activities involve cash from purchases/sales of property and equipment and other investments. Financing activities include cash from issuing/repaying debt and equity. The cash flow statement is important for understanding a company's liquidity and ability to meet obligations.
It contains meaning with examples, characteristics, methods of recording joint venture transactions, advantage, difference between joint venture and partnership and types of joint venture.
This document discusses key concepts related to capital budgeting and risk analysis. It begins with definitions of capital budgeting as the process of identifying, evaluating, planning, and financing capital investment projects. It describes the main features of capital budgeting projects as having large anticipated benefits, high risk, and a long time period between initial outlay and return.
The document then covers various capital budgeting techniques for evaluating projects, including payback period, net present value (NPV), and internal rate of return (IRR). It provides examples of calculating each measure and the criteria for accepting projects. Finally, it discusses risk in capital budgeting, defining it as uncertainty in cash flow forecasts, and methods for measuring risk, such as
Fund flow statement is a statement that compares the two balance sheets by analyzing the sources of funds (debt and equity capital) and the application of funds (assets) and its reasons for any differences.
A budget is a plan for projected income and expenses over a defined period. Budgeting involves formulating budgets, while budgetary control uses budgets to plan and control all aspects of production. Key elements of budgetary control include preparing budgets for each department, conducting ongoing comparisons of actual vs. budgeted performance, and taking corrective actions on variances. Budgets can be classified by time period (long-term vs. short-term), function (sales, production, etc.), or flexibility (fixed vs. flexible). Zero-based budgeting requires justifying all expenses for each new period without relying on previous budgets.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
1) Capital budgeting is the process of planning for capital expenditures that are expected to generate returns over multiple years. It involves evaluating potential long-term investment projects and determining which ones to undertake.
2) The document discusses various capital budgeting techniques for evaluating projects, including payback period, accounting rate of return, net present value, and internal rate of return. It also outlines the typical capital budgeting process of identifying, screening, evaluating, approving, implementing, and reviewing projects.
3) Key factors in capital budgeting include properly accounting for the time value of money, risk analysis, and ensuring projects will maximize long-term profitability for the company. Both traditional and modern discounted cash flow methods have advantages and
Bonus shares are additional free shares given to existing shareholders based on the number of shares owned, representing a company's accumulated retained earnings. Companies issue bonus shares to increase liquidity and shareholder participation when earnings per share rise substantially. For example, a company with Rs. 10,000 profit and 100 shares has an earnings per share of Rs. 100. To lower the price per share for retail investors and improve liquidity, the company may declare a 1:4 bonus issue, increasing shares to 500. This lowers the price per share to Rs. 20 while maintaining the same total market value. Bonus shares are accounted for by transferring reserves to share capital.
This document discusses the redemption of preference shares and bonus issues. It begins by defining preference shares and outlining their preferential rights over equity shares. It then describes the different types of preference shares, including cumulative, non-cumulative, participative, non-participative, convertible, redeemable, and irredeemable. The document focuses on redeemable preference shares, outlining the key provisions around their redemption according to the Companies Act. It discusses the conditions of redemption, including shares being fully paid, redeemed out of profits or fresh issue, and the creation of a capital redemption reserve. Finally, it provides journal entries for the redemption process.
The document provides an overview of key financial statements including the balance sheet and profit and loss account. The balance sheet shows a company's financial position on a particular date by outlining assets, liabilities, and equity. The profit and loss account shows operating results for a period by outlining revenues, expenses, and net profit. It summarizes the financial performance of a business over a specific period of time.
The document provides information on the key changes introduced in the revised Schedule VI format for balance sheets and statements of profit and loss in India. Some of the major changes include: (1) Replacing 'sources of funds' and 'application of funds' with 'equity and liabilities' and 'assets'; (2) Classifying assets and liabilities as current or non-current based on operating cycle; (3) Prescribing separate line items and additional disclosures for items like cash flow statements, intangible assets, taxes, and related party transactions. The document also explains the revised definitions and disclosure requirements for items like reserves, investments, provisions, and borrowings in the balance sheet.
The document discusses corporate financial statements and share capital of companies. It provides definitions of various types of share capital including authorized, issued, subscribed, called up and paid up capital. It also gives an example to illustrate how these various share capital amounts would be presented in the balance sheet of a company. The key types of financial statements for companies are also summarized - balance sheet, statement of profit and loss, statement of changes in equity and statement of cash flows.
The document discusses analyzing cash flows and preparing statement of cash flows. It explains that the statement of cash flows helps address questions about cash generated or used in operations, expenditures from cash from operations, how dividends are paid with operating losses, and sources of cash. It also discusses the four parts of a statement of cash flows: cash, operating activities, investing activities, and financing activities. The document provides examples of cash flows for each category and steps for preparing a statement of cash flows using the direct or indirect method.
Accounting Standard-3 Cash Flow Statement by Nithin RajChinnu Raj
Are you Searching for the Complete Information on AS-3 (Cash Flow Statement)??You have come Correctly..Here is the Brief Description on Cash Flow Statement which enables the Students to gain the complete knowledge on AS-3.
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This document provides an overview of analyzing a company's statement of cash flows. It discusses why the statement of cash flows is needed in addition to the income statement and balance sheet. It also covers the key components of the statement of cash flows, including operating, investing, and financing activities. The document explains how to classify cash flows into these categories and provides examples of cash inflows and outflows for each type of activity. It compares the direct and indirect methods for preparing the statement of cash flows and includes an example of how to prepare one using both methods.
The document discusses preparing final accounts which include a trading and profit and loss account to show the results of buying and selling goods and ascertaining net profit or loss, as well as a balance sheet to set out assets and liabilities to determine the financial position. It provides details on items that appear in trading and profit and loss accounts and balance sheets, as well as adjustments made in final accounts like closing stock, outstanding expenses, prepaid expenses, and accrued incomes.
- Financial statements include the balance sheet, income statement, cash flow statement, and notes. They provide information on a company's financial position and performance.
- The balance sheet presents a snapshot of a company's assets, liabilities, and equity on a given date. It provides information on a company's worth and financial position.
- The income statement is prepared to determine the profit or loss of a company over a period of time. It shows operating performance.
- Managerial remuneration is calculated as a percentage of company profits and has limits set by the Companies Act based on the number of managing directors and effective capital. Certain items are excluded from profits in calculating remuneration.
Meaning
Objective or uses
Limitations of Cash-flow statement
Difference between cash-flow statement & cash budget
Procedures for preparing Cash-Flow Statement
Some terms are used in preparing cash-flow statement
Classification of cash flows
Some special items
Classification of business activities showing cash inflows & cash outflows
Format of cash flow statement
Illustration
Exercise
Managerial remuneration problems and sloution.pptxdefault default
- The document discusses permissible managerial remuneration payable under the Companies Act 2013 for different types of directors and managers.
- Remuneration for non-executive directors is 3% of net profits if no MD/WTD, or 1% if there is an MD/WTD.
- Maximum remuneration is 5% of net profits for one MD/WTD/manager, or 10% for multiple MDs/WTDs/managers. Overall limit is 11% of net profits.
The document provides information about preparing a cash flow statement, including:
1) It defines key terms like cash, cash equivalents, and explains the objectives and uses of a cash flow statement such as for short-term financial planning and dividend decisions.
2) It outlines the three categories of cash flows - operating, investing, and financing activities - and provides examples of cash inflows and outflows for each.
3) It presents the standard format for a cash flow statement with sections for the three categories of cash flows.
The document discusses key financial statements including the balance sheet, income statement, statement of retained earnings, and statement of cash flows. It provides explanations of the purpose and components of each statement. The balance sheet summarizes a company's financial position at a point in time, showing assets, liabilities, and equity. The income statement measures performance over a period by reporting revenues and expenses. The statement of retained earnings tracks changes in retained earnings. The statement of cash flows reports cash inflows and outflows from operating, investing, and financing activities.
The document provides an overview of International Accounting Standard 7 on the statement of cash flows. It discusses the scope, objectives, definitions, presentation requirements, and reporting requirements for the statement of cash flows including the classification of cash flows as operating, investing and financing activities. It also covers topics like foreign currency cash flows, interest and taxes, subsidiaries, non-cash items, and the components of cash and cash equivalents that must be disclosed.
The document provides an overview of International Accounting Standard 7 on the statement of cash flows. It discusses the scope, objectives, definitions, presentation requirements, and reporting requirements for the statement of cash flows including the classification of cash flows as operating, investing and financing activities. It also covers topics like foreign currency cash flows, interest and taxes, subsidiaries, non-cash items, and the components of cash and cash equivalents that must be disclosed.
Presentation by Pooya Hedaytinia, PhD at the University of Rennes 1 (France), at the FogGuru training Business Modeling and Development in November 2019.
The document is a fund flow statement for B Ltd for the year ending 31 December 2019.
1) Sources of funds included fund flow from operations of Rs. 2,26,500, sale of plant and machinery for Rs. 44,000, and a decrease in working capital of Rs. 32,500.
2) Applications of funds included purchase of plant and machinery of Rs. 1,80,000, payment of interim dividend of Rs. 25,000, payment of dividend of Rs. 30,000, payment of tax of Rs. 35,000, and redemption of debentures of Rs. 30,000.
3) Working capital decreased by Rs. 32,000 during the year
The document provides information about cash flow statements, including their purpose, components, and preparation process. A cash flow statement shows the inflows and outflows of cash from operating, investing, and financing activities during a specific period. It reconciles net income to the actual cash changes by adjusting for non-cash items and changes in balance sheet accounts. The statement consists of sections for operating activities, investing activities, and financing activities that report cash flows from changes in working capital accounts, long-term asset balances, and long-term debt or equity positions respectively.
This document summarizes a framework for measuring the performance of microfinance institutions through standardized financial reporting and analysis. It outlines financial statements including an income statement, balance sheet, cash flow statement, portfolio report, and non-financial data report. It provides definitions and examples of line items for each statement to allow for meaningful analysis and monitoring of microfinance institutions according to international financial reporting standards.
Measuring performance of microfinance institutions a framework for reportin...snb9899
This document provides an overview and summary of the "Measuring Performance of Microfinance Institutions: A Framework for Reporting, Analysis, and Monitoring" framework developed by the SEEP Network Financial Services Working Group. The framework aims to standardize financial terms, ratios, and adjustments for microfinance performance monitoring. It includes chapters on financial statements, analytical adjustments, financial ratios and indicators, and promoting adoption of the framework. The summary highlights key aspects of each chapter, including recommended financial reports, adjustments, and standardized ratios for analyzing and benchmarking microfinance institution performance.
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1. UNIT III
COMPANY FINAL ACCOUNTS
Statement of Profit and Loss
Particulars Note no Amount
Revenue from operation
other income
TOTAL REVENUE (A)
EXPENSES:
Costof material consumed
Purchase of stock- in – trade
Changes in inventories of finished
goods/wip/stockin trade
Employee benefits expenses
Finance cost
Depreciation and amortisation expenses
Other expenses
TOTAL EXPENSES (B)
Profit before extraordinary items and tax (A-B)
Less: Extraordinary items
Tax
Profit or loss for the period
1
2
3
4
5
6
7
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXXX
Notes to accounts:
REVENUE FROM OPERATION:
Particulars Amount
Gross profit – manufacturing/trading company XXX
Fees earned – service company XXX
Interest and dividend earned – financial company XXX
OTHER INCOME
2. Particulars Amount
Sale of fixed asset XXX
Interest earned on fixed asset XXX
Interest on investment XXX
Dividend earned XXX
Commission received XXX
Refund of income tax XXX
Excess provision written off XXX
Export subsidy and duty drawback XXX
Miscellaneous income XXX
COST OF MATERIAL CONSUMED
Particulars Amount
Opening stockof raw materials XXX
Add: purchases,carriage inwards,other expenses incurred on
purchase of material
XXX
XXX
Less:purchase return XXX
Less: Closing stockof raw materials XXX
XXX
PURCHASE OF STOCK- IN – TRADE
Particulars Amount
Goods purchased forreselling XXX
CHANGES IN INVENTORIES OF FINISHED
GOODS/WIP/STOCKIN TRADE
Particulars Amount
Opening stock XXX
Less: closing stock XXX
+/-
3. EMPLOYEE BENEFITSEXPENSES
Particulars Amount
Wages XXX
Add: outstanding wages XXX
Less: Prepaid expenses XXX
XXX
Salaries add o/s
Bonus
Leave encashment
gratuity
Medical expenses
FINANCE COST
Particulars Amount
Interest on bank overdraft/ Discount on issue of debentures
w/off
XXX
Interest of debentures/term loans XXX
Interest on bonds/cashcredit XXX
Interest on public deposit XXX
DEPRECIATIONAND AMORTISATION EXPENSES
Particulars Amount
Depreciation on plant and machinery,building,loose tools XXX
Furniture,computer,patent , goodwill,copy
write,preliminary expenses
XXX
OTHER EXPENSES
Particulars Amount
Administrative expenses XXX
Selling expenses XXX
Carriage outwards XXX
Telephone/stationary expenses XXX
Electricity expenses XXX
4. Rent and rates paid XXX
Sundry expenses XXX
Commission paid XXX
EXTRAORDINARYITEMS
Particulars Amount
Loss on account of fire XXX
Loss on clamaties like earthquake,floods XXX
Speculation loss or gain XXX
Salaries or wages paid for previous period due to agreement
with retrospective effect
XXX
FORM OF THE BALANCESHEET
Particulars Note
no
Amount
I.EQUITY AND LIABILITIES
( I ) sharesholders funds:
Share capital
Reserves & surplus
Money received against sharewarrants
(ii) Non Current liabilities:
Long term borrowings
Deferred tax labilities
Other long term liabilities
Long term provisions
(iii) Current liabilities:
Short term borrowings
Trade payables
Other current liabilities
Short term provisions
TOTAL
1
2
3
4
5
6
7
8
9
10
11
II.ASSETS
(i) Non current assets:
(a) Fixed assets:
Tangible assets
Intangible assets
12
13
5. Capital work in progress
Intangible assets under development
(b)Non current investments
(c)Deferred tax assets(net)
(d)Long term loans and advances
(e) Other non current assets
(ii) Current assets
Current investment
Inventories
Trade receivables
Cash and cash euivalents
Short term loans and advances
Othr current assets
TOTAL
14
15
16
17
18
19
20
21
22
23
24
25
Notes to accounts
Share capital
Authorised capital XXX
Issued capital
Subscribed capital and paid up capital
Less: calls in arrear
Add: forfeited shares
Reserves and surplus
PARTICULARS AMT AMT
General reserve (op)
Add: Addition during the year
XXXX
XXXX
XXXXX
6. SECURITIES PREMIUM
LESS: Premium on redemption of pref shares
XXXX
Xxx
xxxx
Capital redemption reserve Xxxx
Capital reserve Xxxxx
Debenture redemption reserve Xxxxx
Surplus i.e balance in statement of profit and loss
Add: Profit for the year
XXX
Xxxx
xxxx
Less: Appropriations:
Transfer to general reserve
Final dividend
Interim dividend
Proposed dividend
Corporate dividend tax@17% on interim dividend and
proposed dividend
Xxxx
Xxx
Xxx
Xxxx
xxxx
(c) Money received against share warrants: Share warrants are the financial
instruments which give the holder right to acquire equity shares. These are
financial instruments which will be converted into equity shares at a later date at
a predetermined price. Since these will be converted into equity shares, these
are classified as shareholders' funds.
II .Non-current liabilities
Long term borrowings: Amount taken as loan by company is termed as
borrowings. The borrowings are considered long term when the loan is repayable
by the company after 12 months from the date of balance sheet or after the
operating cycle period from the date of loan. Debentures, Bonds, Term loans
from banks and other parties, Public deposits and other loans and advances
are categorized as long term borrowings. These items are shown in the Notes to
Accounts on Long term borrowings.
Debentures
bonds
Term loan
Public deposit
Other loans and advances
5. Deferred tax liability
Accounting income
7. Taxable income
Income tax on the difference is termed as deferred tax
6. Other long term liability
Premium payable on redemption on debentures/ pref shares
7. Long term provisions
Provision on retirement benefits payable to
employees who will retire after 12 months of
the date of balance sheet
Provision for warranty claims that relates to the
period after 12 months of the date of the B/s
8. Short term borrowings
Bank overdraft
Cash credit
Deposits
Loan from other parties
9. Trade payables
Sundry creditors
Trade creditors
Bills payable
10. Other current liabilities
Outstanding expense
Unpaid dividend
Income received in advance
Calls in advance
Providend fund payable
ESI payable
VAT payable
Central sales tax payable
11. Short term provision
8. Provision for tax
Proposed dividend
Provision for employee benefit
Provision for expenses
Asstes
12. Tangible asset
Land and building
Plant and machinery
Vehicles
Office euipments
Furniture
13. Intangible asset
Goodwill
Brand/trademarks
Computer software
Mining rights
copyrights
Patents
Formulae
License ,franchise
14. Capital work in progress
It means tangible asstes under construction
15. Intangible assets under development:
It means intangible asstes like patents,intellectual rights
16.Non current investment
Investment in property
Invt in equity instruments
Invt in pref shares
Invt in govt or trust securities
Invt in debentures or bonds
Invt in mutual fund
Invt in partnership firms
9. Managerial remuneration
The companies act lays down a number of restrictions on managerial remuneration
payable by a public company or a private company which is a subsidiary of a public
company. The term managerial remuneration includes remuneration payable to the: a)
managing director b) manager c) part time directors and d) whole time directors
10. The following statement showing the maximum remuneration payable to the different
categories of managerial personnel:
S.NO MANAGERIAL PERSONNEL
MAXIMUM %
ON NET
PROFITS
a Maximum remuneration to all the managerial personnel 11%
b manager 5%
c managing director or whole time director 5%
d managing director or whole time director when there is more than one 10%
e
part time directors when the company is not having managing director,
whole time director or manager 3%
f
part time directors when assisted by a managing director, whole time
director or manager 1%
Calculation of Managerial Remuneration
Format for statement ofprofit for the purpose ofmanagerial remuneration
PARTICULARS AMOUNT AMOUNT
NET PROFITS(GIVEN) xxx
Add: capital expenditure xxxx
special depreciation xxxx
Provision for income tax/taxation xxxx
ex - gratia payment to employee xxxx XXX
XXX
Less: Capital profit on sale of asset xxxx
profit on sale of investment xxxx XXX
Net profit for managerial remuneration XXX
1. From the following particular, determine the maximum remuneration available to a
full time director of a manufacturing company. The profit and loss account of the
company showed a net profit of Rs.40,00,000 after taking into account the following
items:
a) Depreciation (incluing special depn of rs.40,000) rs.1,00,000
11. b) Provision for income tax rs.2,00,000
c) Donation to political parties rs.50,000
d) Ex – gratia payment to a worker Rs.10,000
e) Capital profit on sale of asstes rs.15,000
solution:
Format for statement ofprofit for the purpose ofmanagerial remuneration
PARTICULARS AMOUNT AMOUNT
NET PROFITS(GIVEN) 40,00,000
Add: capital expenditure -
special depreciation 40,000
Provision for income tax/taxation 2,00,000
ex - gratia payment to employee 10,000 2,50,000
42,50,000
Less: Capital profit on sale of asset 15,000
profit on sale of investment - 15,000
Net profit for managerial remuneration 42,35,000
Managing Director Or Whole Time Director 5% is permitted by law
= 42,35,000x 5/100 = Rs.2,11,750
Comprehensive problem
1.Moon and Star Co. Ltd. Is a company with an authorized capital of
5,00,000 divided into 5,000 equity shares of Rs.100 each on 31.12.2013
of which 2,500 shares were fully called up. The following are the
balances extracted from the ledger as on 31.12.2013
Trial balance of Moon & Star Co. Ltd
Debit Rs. Credit Rs.
Opening stock(P&L) 50,000 Sales (P&L) 3,25,000
12. Purchases ( P&L) 2,00,000
Discount
received (P&L)
3150
Wages (P&L) 70,000
Profit & Loss
A/c (B/s)
6220
Discount allowed (P&L) 4,200 Creditors(B/s) 35,200
Insurance(upto Reserves(B/s) 25,000
31.3.14) (P&L) 6,720
Loan from
managing
director (B/s)
15,700
Salaries (P&L) 18,500
Share capital
(B/s)
2,50,000
Rent (P&L) 6,000
General expenses(P&L) 8,950
Printing (P&L) 2,400
Advertisements(P&L) 3,800
Bonus (P&L) 10,500
Debtors (B/s) 38,700
Plant (B/s) 1,80,500
Furniture(B/s) 17,100
Bank (B/s) 34,700
Bad debts (P&L) 3,200
Calls-in-arrears (B/s) 5,000
6,60,270 6,60,270
You are required to prepare Profit & Loss Account for the year ended
31.12.2013 and a balance sheet as on that date. The following further
information is given:
(a) Closing stockwas valued at Rs.1,91,500
(b)Depreciation on plant at 15% and on furniture at 10% should be
provided
(c)A tax provision of Rs. 8,000 is considered necessary
(d)The directors declared an interim dividend on 15.8.13 for 6 months
ending June 30, 2013@ 6%.
13. (e) provide corporatedividend tax @17%.
SOLUTION:
Statement of Profit and Loss ACCOUNT OF MOON AND STAR LTD
Particulars
Note
no
Amount
Revenue from operation 1 3,25,000
other income 2 3,150
TOTAL REVENUE (A) 3,28,150
EXPENSES:
Costof material consumed 3 58,500
Purchase of stock- in – trade NIL
Changes in inventories of finished goods/wip/stockin trade NIL
Employee benefits expenses 99,000
Finance cost 4 NIL
Depreciation and amortisation expenses 5 28,785
Other expenses 6 33,590
TOTAL EXPENSES (B) 7 2,19,875
Profit before extraordinary items and tax (A-B) 1,08,275
Less: Extraordinary items NIL
Tax 8,000
Profit or loss for the period 1,00,275
Balance sheet of moon and star Ltd as on 31.12.2013
Particulars Note no Amount
I.EQUITY AND
14. LIABILITIES
( I ) shareholder’s funds:
Share capital 1 2,45,000
Reserves & surplus 2 1,14,296
Money received against share
warrants
3
(ii) Non-Current liabilities:
Long term borrowings 4 15,700
Deferred tax liabilities 5
Other long term liabilities 6
Long term provisions 7
(iii) Current liabilities:
Short term borrowings 8
Trade payables 9 35,200
Other current liabilities 10 17,199
Short term provisions 11 18,000
TOTAL 4,35,395
II.ASSETS
(i) Non - current assets:
(a) Fixed assets:
Tangible assets 12 1,68,815
Intangible assets 13
Capital work in progress 14
Intangible assets under development 15
(b)Non-current investments 16
(c) Deferred tax assets(net) 17
(d)Long term loans and advances 18
(e) Other non-current assets 19
(ii) Current assets
Current investment 20
Inventories (closing stock) 21 1,91,500
Trade receivables 22 38,700
15. Cash and cash euivalents(bank) 23 34,700
Short term loans and advances 24 1,680
Othr current assets 25
TOTAL 4,35,395
NOTES TO ACCOUNT
REVENUE FROM OPERATION:
Particulars Amount
Gross profit/Sales – manufacturing/trading company 3,25,000
OTHER INCOME
Particulars Amount
Discount received 3,150
COST OF MATERIAL CONSUMED
Particulars Amount
Opening stockof raw materials 50,000
Add: purchase 2,00,000
2,50,000
Less: purchase return -
Less: Closing stockof raw materials 1,91,500
58,500.00
EMPLOYEE BENEFITSEXPENSES
Particulars Amount
Wages 70,000
Salaries 18,500
Bonus 10,500
16. 99,000
DEPRECIATIONAND AMORTISATION
EXPENSES
Particulars Amount
Depreciation on plant 15% on 180500 27,075
Furniture 10% on 17,100 1,710
28,785
OTHER EXPENSES
Particulars Amount
Discount allowed 4,200
Insurance
less: Prepaid(6720x3/12)
6720
1,680
5,040
printing 2400
General expenses 8950
Rent 6,000
Advirtising 3800
bad debts 3200
33,590
Notes to account to balance sheet
Share capital
Authorised capital 5,000 eq shares of Rs.100 each
5,00,000
Issued capital,Subscribed capital up:
2,500 shares of Rs.100 each
Less: calls in arrears
2,50,000
5,000
17. Paid up capital
2,45,000
Reserves and surplus
PARTICULARS AMT AMT
General reserve (op) 25,000
Add: Addition during the year -
25,000
Surplus i.e balance in statement of profit
and loss
6,220
Add: Profit for the year 1,00,275
1,06,495
Less: Appropriations:
Interim dividend (2,45,000x6%) 14,700
Corporate dividend tax@17% (14700x17%) 2,499 89,296
1,14,296
Long term borrowings
Unsecured loan
Loan from managing director
15,700
Trade payables
Sundry creditors 35200
Short term provision
Provision for tax 8,000
Other current liabilities
Interim dividend payable 14,700
Dividend tax payable 2,499
Tangible assets
Plant 1,80,500 1,53,425
18. Less: Depreciation 15% 27,075
Furniture 17,100
Less: Depreciation 10% 1,710
15390
1,68,815
Trade receivables:
Debtors 38,700
Short term loans and advances
Prepaid insurance 1,680
ANSWER:
Rs.
Gross profit c/d
Net profit c/d
Interim dividend
Corporate dividend tax at 10%
Balance carried forward to Balance sheet
Balance sheet total
1,96,500
1,00,275
14,700
1,470
90,325
4,35,395
1.Amount realized from sale of goods is shown in the statement of profit
and loss as
Other income
19. Revenue from operation
Any of the above
None of the above
2. Gain on sale of fixed assets is shown in the statement of profit and loss
as
Other income
Revenue from operation
Any of the above
None of the above
3. Dividend received by a financial company is shown in the statement of
profit and loss as
Other income
Revenue from operation
Any of the above
None of the above
4. Raw materials purchased is shown in the statement of profit and loss
Costof material consumed
Purchase of stockin trade
Changes in inventories
None of these
5. Goodspurchased for reselling is shown in the statement of profit and
loss as
Costof material consumed
Purchase of stock in trade
Changes in inventories
None of these
6. Payment of wages and salaries is shown in the statement of profit and
loss under
20. Employee benefit expenses
Other expenses
Finance cost
None of these
7. Payment of interest on debenture and bank overdraft is shown in
statement of profit and loss under
Employee benefit expenses
Other expenses
Finance cost
None of these
8. Carriage outwards is shown in statement of profit and loss under
Employee benefit expenses
Other expenses
Finance cost
Depreciation and amortization expenses
9. Preliminary expenses written off is shown in statement of profit and
loss under
Employee benefit expenses
Other expenses
Finance cost
Depreciationand amortization expenses
10. Which one of the following assets could be described as a
current asset?
Machinery to manufacture goods forresale
Stock of goods forresale
Buildings to house the machinery
Land on which the buildings stand
21. 11. Retained Earnings is classified as which type of account?
Asset
Liability
Expense
Stockholders'equity
12. Wages is an example of?
Capital expenses
Indirect expenses
Directexpenses
All of before
13. Profit and loss account would not include?
Salaries
Drawings
Rent received
Carriage outwards
14. Current liabilities are those obligations which are to be satisfied
within?
6 months
1 year
2 year
Both A & B
15. All of the following are property, plant, and equipment except?
Machinery
Supplies
Land
Buildings
16. Debentures redeemable after 10 years of issue are shown as
22. Long term borrowings
Short term borrowings
Other current liabilities
None of these
17. Bank overdraft is shown in the balance sheet of a company as
Long term borrowings
Short term borrowings
Other current liabilities
None of these
18. Dividend is paid on
Authorized capital
Issued capital
Called up capital
Paid up capital
19. Securities is shown in the balance sheet of a company as
Share capital
Reserves andsurplus
Long term borrowings
None of these
20. The assets that can be easily converted into cashwithin a short
period, i.e., 1 year or less are known as
Current assets
Fixed assets
Intangible assets
Investments
21. Copyrights, Patents and Trademarks are,
Current assets
23. Fixed assets
Intangible assets
Investments
22. In order to find out the value of the closing stockduring the end of
the financial year we,
do this by stocktaking
deductthe costof goods sold from sales
deductopening stockfrom the costof goods sold
look in the stock account
23. Opening stock+ …………………+ Direct Expenses (Carriage on
Raw material)-Closing Stock = …………………
Sales, Purchases
Sales, Sales return
Purchases, Costof goods produced
Purchases, Costofgoods sold
24. What is deferred tax liability?
Difference betweenaccounting income and taxable income
25. Maximum remuneration to all the managerial personnel
11%
5%
3%
1%
26. Maximum remuneration payable to the manager and managing director or whole
time director
11%
5%
3%
1%
27. Maximum remuneration payable to the managing director or whole time director
when there is more than one
24. 11%
10%
3%
1%
28. Maximum remuneration payable to the part time directors when the company is not
having managing director, whole time director or manager
11%
10%
3%
1%
29. Maximum remuneration payable to the part time directors when assisted by a
managing director, whole time director or manager
11%
10%
3%
1%
25.
26.
27. COMPANYFINAL ACCOUNTS
The following balances have been extracted from the books of Rama
Ltd., on 31st March 2018.
Equity share capital (1,00,000 shares of ` 10 each) ` 10,00,000; Securities
premium ` 2,00,000; Debentures ` 5,00,000; Creditors ` 2,00,000;
Proposed dividend ` 50,000; Land and Building ` 9,00,000;
Government Bonds ` 5,00,000; Capital Work-in-Progress (Buildings) `
3,50,000 and Discount on issue of 12% Debentures ` 1,00,000; Cash at
Bank ` 50,000; Furniture ` 60,000; Debtors ` 20,000.
Debentures were issued on 1st April 2017 redeemable after 5 years, on
31st March 2021.
Surplus, i.e., Balance in statement of profit and loss is before writing off
Discount on issue of Debentures. Prepare the balance sheet of a company
as per revised schedule VI.
Give the format of statement of profit and loss as per Revised schedule VI.
2. A Ltd was registered with an authorized capital of Rs. 6,00,000 in equity shares of
Rs 10 each. The following is its Trail Balance on 31 st March 2018
Trial Balance of ‘A’ Ltd
Debit Balance
Rs.
Credit Balance
Rs.
Goodwill
Cash
Bank
Purchase
Preliminary Expenses
Share capital
25,000
750
39,900
1,85,000
5,000
-
-
-
-
-
-
4,00,000
28. 12 % debentures
P&L A/c(Cr)
Calls-in-arrears
Premises
Plant & Machinery
Interim dividend
Sales
Stocks
Furniture & fixtures
Sundry debtors
Wages
General expenses
Freight and carriage
Salaries
Director’s fees
Bad debts
Debenture interest paid
Bill payable
Sundry creditors
General reserve
Provision for bad debts
-
-
7,500
3,00,000
3,30,000
39,250
-
75,000
7,200
87,000
84,865
6,835
13,115
14,500
5,725
2,110
18,000
-
-
-
-
12,46,750
3,00,000
26,250
-
-
-
-
4,15,000
-
-
-
-
-
-
-
-
-
-
37,000
40,000
25,000
3,500
12,46,750
Prepare Profit & Loss Account, Profit & Loss Appropriation A/c and Balance Sheet
in proper form after making the following adjustments:
(i)Depreciate plant and machinery by 15%
(ii) Write off Rs.500 from preliminary expense
(iii)Provide for 6 months interest on debentures
(iv) Leave bad and doubtful debts provision at 5% on sundry debtors
(v) Provide for income tax at 50%
(iv) Stock on 31.3.2018 was Rs. 95,000.
(vi) Provide for corporate dividend tax @10%
ANSWER:
Gross profit c/d 1,52,000
Provision for income tax 18,000
Net profit c/d 18,000
Interim dividend 39,250
Assume corporate dividend tax 3925
Balance carried forward to
Balance sheet 1,075
Balance sheet total 8,35,500
Moon and Star Co. Ltd. Is a company with an authorized capital of 5,00,000 divided
into 5,000 equity shares of Rs.100 each on 31.12.2003 of which 2,500 shares were
29. fully called up. The following are the balances extracted from the ledger as on
31.12.2003
Trial balance of Moon & Star Co. Ltd
Debit Rs. Credit Rs.
Opening stock
Purchases
Wages
Discount allowed
Insurance(upto
31.3.04)
Salaries
Rent
General expenses
Printing
Advertisements
Bonus
Debtors
Plant
Furniture
Bank
Bad debts
Calls-in-arrears
50,000
2,00,000
70,000
4,200
6,720
18,500
6,000
8,950
2,400
3,800
10,500
38,700
1,80,500
17,100
34,700
3,200
5,000
6,60,270
Sales
Discount received
Profit & Loss A/c
Creditors
Reserves
Loan from managing director
Share capital
3,25,000
3150
6220
35,200
25,000
15,700
2,50,000
6,60,270
You are required to prepare Profit & Loss Account for the year ended 31.12.2003 and
a balance sheet as on that date. The following further information is given:
(f) Closing stock was valued at Rs.1,91,500
(g) Depreciation on plant at 15% and on furniture at 10% should be provided
(h) A tax provision of Rs. 8,000 is considered necessary
(i) The directors declared an interim dividend on 15.8.03 for 6 months ending June
30, 2003@ 6%.Assume corporate dividend tax @10%.
ANSWER:
Rs.
Gross profit c/d
Net profit c/d
Interim dividend
Corporate dividend tax at 10%
Balance carried forward to Balance sheet
Balance sheet total
1,96,500
1,00,275
14,700
1,470
90,325
4,35,395