DISTANCE EDUCATION
M.Com. DEGREE EXAMINATION, DECEMBER 2017.
FINANCIAL ACCOUNTING AND ANALYSIS
(2005 onwards)
Time Three hours Maximum 100 marks
SECTION A — x 8 40 marks)
Answer any FIVE questions.
All questions carry equal marks.
1. Explain briefly about the various users of accounting
information.
2. Describe the advantages of double entry system.
3. Describe the following
Deferred Revenue Expenditure
Unexpired expenses
4. Describe the guidelines for interpretation of income
statements.
5. Distinguish between funds flow statement and cash flow
statement.
6. Describe the objectives of Human Resource accounting.
Sub. Code
12
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7. Automobiles Ltd was incorporated on 1.1.1990 with a
contributed capital of Rs. 2,00,000 and with the object of
buying and selling cars. The dealer price of the car was
Rs. 40,000 on 1.1.1990 and Rs. 50,000 on 31.12.1990. The
general price level increased by 20% during 1990. The
company purchased 5 cars on 1.1.1990 and sold three cars
during the year at an average price of Rs. 70,000 show
how the financial statements will be prepared under
HCA CCA and CPPA.
8. Following is the balance sheet of sunshine Ltd. for the
year ending December 31, 2002.
Balance Sheet
Liabilities Rs. Assets Rs.
Equity share capital 5,00,000 Land Building 3,50,000
Debentures 2,00,000 Plant Machinery 2,50,000
Bank loan 1,50,000 Cash in hand 25,000
Sundry creditors 75,000 Cash at bank 55,000
Bills payable 50,000 Sundry debtors 85,000
Outstanding expenses
5,000
Bills receivable 1,05,000
Stocks 1,00,000
Prepaid expenses 10,000
9,80,000 9,80,000
From the information given above calculate
Current Ratio
Acid test Ratio
Absolute liquid ratio
Common on the short term financial position.
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SECTION B — × 15 60 marks)
Answer any FOUR questions.
All questions carry equal marks.
9. Discuss the following accounting concepts by giving their
significance
Money measurement concept
Cost concept
10. Discuss the various types of ledgers usually kept by a big
business house.
11. The following balances have been extracted from the
books of Wilson limited as on 31st December 2003. You
are required to prepare Trading and Profit and Loss
account for the year and Balance Sheet as on 31st Dec.
2003.
Trial Balance
Rs. Rs.
Opening Stock 4,90,000 Cash in hand 3,250
Fuel and power 10,300 Cash at bank 18,350
Salaries and
wages
2,17,000 Profit Loss a/c 50,900
Purchases 2,32,000 Provision for Bad
debts
6,300
Sales 4,65,000 Bank loan 2,25,000
Share capital 10,00,000 General Reserve 2,00,000
Provision for
taxation
15,000 Unclaimed
dividends
1,600
Rent and taxes 7,500 Sundry creditors 2,01,000
Insurance 10,000 Bills payable 32,000
Sundry debtors 3,17,500 Miscellaneous
Receipts
1,400
Repairs to
building
3,000 Land and Buildings 4,70,000
Sundry expenses 18,000 Machinery Plant 3,50,000
Commission 10,500 Furniture 8,500
Directors fees 5,600 Motor vehicles 26,500
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You are required to consider the following adjustments.
Closing stock was valued at Rs. 7,10,000
Provide Rs. 20,000 for further taxation
Depreciate Land and Building by plant and
machinery by Furniture 10% and motor vehicles
20%
Insurance paid includes Rs. 2,000 annual premium
for the year ending 30th September 2004.
Provide for outstanding commission payable
Rs. 1,500 and salaries RS. 3,500.
Raise provision for bad debts Rs. 15,000 and create
reserve for discount on debtors at 2%.
Transfer Rs. 50,000 for general reserve and the
directors have recommended Rs. 5 per share for the
dividend for 2003.
The authorised share capital is 20,000 shares of
Rs. 100 each but Rs. 50 called and paid up per
share.
12. Explain the different types of financial analysis and
discuss the limitations of such analysis.
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13. The following are the Balance Sheets of DAVNCOM
Enterprises.
Liabilities 2000 2001 Assets 2000 2001
Rs. Rs. Rs. Rs.
Capital 1,50,000 1,60,000 Cash 5,000 8,000
Hire
purchase
vendor
20,000 Debtors 35,000 38,000
Loan from
Bank
30,000 25,000 Stock 25,000 22,000
Current
Liabilities
35,000 40,000 Land 20,000 30,000
Mrs.
Loan
20,000 Buildings 50,000 55,000
Machinery
Depreciation
80,000 87,000
Delivery van 25,000
2,15,000 2,65,000 2,15,000 2,65,000
The delivery van was purchased on hire purchase basis in
December 2001, a payment of Rs. 5,000 was made at the
time of agreement and the balance of amount is to be
paid in 20 monthly installments of Rs. 1,000 each
together with interest 10% p.a. During the year the
proprietor withdraw Rs. 25,000 for household expenses.
The provision for depreciation, for depreciation on
machinery on 1.1.01 was Rs. 27,000 and on 31.12.01 was
Rs. 35,000. You are required to prepare cash flow
statement.
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14. From the following current cost balance sheets calculate
the gearing proportion. Also calculate the gearing
adjustment Given MWCA Rs. 15,000,
COSA Rs.30,000 and depreciation
adjustment Rs. 45,000.
Prema Ltd
Balance Sheets as on
Assets 31.12.89 31.12.90
Fixed asset less Depreciation 3,00,000 3,50,000
Current Assets
Stock
Debtors
Cash balances
1,50,000
2,20,000
80,000
2,00,000
1,50,000
1,20,000
7,50,000 8,20,000
Liabilities
Share capital 1,50,000 1,50,000
Reserves 2,00,000 2,50,000
Current cost reserve 50,000 1,00,000
12% Debentures 2,00,000 2,00,000
H.P. Creditors 20,000 30,000
Provision for taxation 50,000 70,000
Trade creditors 80,000 20,000
7,50,000 8,20,000
15. Examine the relationship between solvency, liquidity and
profitability. Analysis.