DISTANCE EDUCATION
M.Com. DEGREE EXAMINATION, MAY 2016.
FINANCIAL ACCOUNTING AND ANALYSIS
Time Three hours Maximum 100 marks
SECTION A — 8 40 marks)
Answer any FIVE questions.
1. What is Double entry system of book keeping? Explain its
advantages.
2. Explain the various errors not disclosed by trial balance.
3. Briefly explain the purpose of preparation of final
accounts.
4. Mr. Mohan keeps his books of account under Single entry
system. His financial position on 31.12.2000 and
31.12.2001 was as follows
2000 2001
Cash 9,860 800
Stock in trade 38,520 57,020
Plant and machinery 54,420 61,000
Bills receivable 16,480
Sundry debtors 24,840 43,940
Sundry creditors 72,040 80,000
Furniture 4,960 5,220
Drawings 5,000
During the he introduced additional capital of 20,000.
From the above particulars prepare a statement of profit
and loss of Mr. Mohan for the year ended 31.12.2001.
Sub. Code
12
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5. From the following particulars of ABC Ltd., for the year
2003 and 2004, you are required to prepare a comparative
income statement.
Statement of Profit and Loss A/c

Particulars 2003 2004
Net sales 4,000 5,000
Less Cost of goods sold 3,000 3,750
Gross profit 1,000 1,250
Less Operating expenses
Office and administrative expenses 200 250
Selling and distribution expenses 225 300
425 550
Net profit 575 700
6. From the following information calculate
Debtors turnover ratio and
Debt collection period.
Total sales 1,00,000
Cash sales 25,000
Sales return 5,000
Opening accounts receivable 10,000
Closing accounts receivable 15,000.
7. Briefly explain the inflation accounting.
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8. After taking into account the undermentioned items,
Jain Ltd. made a net profit of 1,00,000 for the year
ended 31st Dec. 2009.
Loss on sale of machinery 10,000
Depreciation on building 4,000
Depreciation on machinery 5,000
Preliminary expenses written off 5,000
Provision for taxation 10,000
Goodwill written off 5,000
Gain on sale of buildings 8,000
Find out cash from operations.
SECTION B — 15 60 marks)
Answer any FOUR questions.
9. Briefly explain accounting concepts and conventions.
10. The comparative Balance Sheet of M/s. Anand Brothers
for the two years were as follows
Liabilities 2008 2009 Assets 2008 2009
Capital 1,50,000 1,75,000 Land and
Loan from building 1,10,000 1,50,000
bank 1,60,000 1,00,000 Machinery 2,00,000 1,40,000
Creditors 90,000 1,00,000 Stock 50,000 45,000
Bills payable 50,000 40,000 Debtors 70,000 80,000
Loan from Cash 20,000 25,000
SBI 25,000
4,50,000 4,40,000 4,50,000 4,40,000
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Additional information
Net profit for the year 2009 amounted to 60,000.
During the year a machine costing 25,000
(accumulated depreciation 10,000) was sold for
13,000. The provision for depreciation against
machinery as on 31.12.2008 was 50,000 and on
31.12.2009 85,000.
You are required to prepare a cash flow statement.
11. From the following Trial Balance extracted from the
books of Kamala. Prepare Trading and Profit and Loss a/c
and Balance Sheet for the year ended 31.12.2012.
Debit balances Credit balances
Cash at bank 2,610 Creditors 4,700
Book debts 11,070 Discounts 150
Salaries 4,950 Creditors for expenses 400
Carriage inwards 1,450 Returns outwards 2,520
Carriage outwards 1,590 Sales 80,410
Bad debts 1,310 Capital 40,000
Office expenses 5,100
Purchases 67,350
Returns inwards 1,590
Furniture and
fixtures 1,500
Stock 14,360
Insurance 3,300
Depreciation on
property 1,200
Freehold property 10,800
1,28,180 1,28,180
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Adjustments
Make provision for doubtful debts at 5%.
Calculate discount on creditors at 2%.
Office expenses include stationery purchased 800.
Carriage inwards includes carriage paid on
purchase of furniture 50.
Outstanding salaries 150.
Prepaid insurance 300.
Stock on hand 10,700 (including stationery stock
200).
12. Mr. X keeps his book under single entry system. From the
following, prepare Trading and P and L A/c and Balance
Sheet as on 31.3.2004.
Interest charges 100
Personal withdrawals 2,000
Staff salaries 8,500
Other business expenses 7,500
Payment to creditors 15,000
Balance at bank as on 31.3.2004 425
Cash in hand on 31.3.2004 75
Received from debtors 25,000
Cash sales 15,000
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Furniture details available are
As on
31.3.2003
As on
31.3.2004
Stock on hand 9,000 10,220
Creditors 8,000 5,500
Debtors 22,000 30,000
Furniture 1,000 1,000
Office premises 15,000 15,000
Provide interest on capital balance as on 1.4.2003.
Provide 1,500 for doubtful debts, depreciation on all
fixed assets. group incentive commission to staff has
to be provided for on net profit after meeting all expenses
and the commission.
13. What do you understand by ratio analysis? Examine its
significance and utility.
14. Following ratios are related to trading activities of
National Traders Ltd.
Debtors velocity 3 months
Stock velocity 8 months
Creditors velocity 2 months
Gross profit ratio 25 percent
Gross profit for the year ended 31.12.2009 amounts to
4,00,000. Closing stock of the year is 20,000 above the
opening stock. Bills receivable amount to be 25,000 and
bills payable to 10,000.
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Find out
Sales
Sundry debtors
Closing stock and
Sundry creditors.
15. Explain the meaning of cash flow statement. How does it
differ from fund flow statement?