FORTUNE’S FUN LEARNING ACADEMY

12th CBSE-Accountancy

(Part –B (Financial statements, Analysis of Financial Statements, Accounting Ratios,

Cash Flow Statement)

Time : 3 hours Marks : 80

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Questions:

1. The total debtors of X Ltd. Were ₹ 9,00,000. It had created a provision of 10% for bad and

doubtful debts. What amount of debtors will be used for calculating the ‘Trade Receivables

Turnover Ratio’ ? (1 Mark)

2. Give an example of an activity which is always financing with regards to the Cash Flow

Statement. (1 Mark)

3. On 1.10.2018, Micro Ltd. issued 20,000, 8% debentures of ₹ 100 each and paid interest of

₹ 80,000 on these debentures on 31st March, 2019. Calculate the cash flow from financing

activities for the period ending 31st March, 2019. (1 Mark)

4. An investment normally qualifies as a cash equivalent only when it has a maturity of

months or less from the date of acquisition. (1Mark)

5. X Ltd. purchased furniture for ₹ 20,00,000 paying 60% by issue of equity shares of ₹ 10

each and the balance by a cheque. This transaction will result in : (1Mark)

(A) Cash used in investing activities ₹ 20,00,000.

(B) Cash generated from financing activities ₹ 12,00,000.

(C) Increase in cash and cash equivalents ₹ 8,00,000.

(D) Cash used in investing activities ₹ 8,00,000.

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 6. Which of the following is not a limitation of ‘Financial Statements Analysis’ ? (1Mark)

(A) It is affected by personal bias.

(B) Inter-firm comparative study possible.

(C) Lack of qualitative analysis.

(D) Ignores price level changes.

7. State the objective of preparing ‘Cash Flow Statement’. (1Mark)

8. Under which of the following head/subhead is ‘Forfeited Shares’

presented in the Balance Sheet of a company ? (1Mark)

(A) Reserves and Surplus

(B) Share Capital

(C) Other Long-term Liabilities

(D) Other Current Liabilities

9. Which of the following is not a subhead under the Current Assets ? (1Mark)

(A) Cash and Cash Equivalents

(B) Trademarks

(C) Short-term Loans and Advances

(D) Inventories

10. What will be the effect of purchase of goods for cash ₹ 3,000 on Gross Profit Ratio ?

(1Mark)

11. For a company manufacturing garments, procurement of raw material, incurrence of

manufacturing expenses, sale of garments are classified as activities. (1Mark)

12. Paid ₹ 4,00,000 to acquire shares in R.V. Ltd. and received a dividend of ₹ 40,000 after

acquisition. These transactions will result in (1Mark)

(A) Cash used in investing activities ₹ 4,00,000.

(B) Cash generated from financing activities ₹ 4,40,000.

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 (C) Cash used in investing activities ₹ 3,60,000.

(D) Cash generated from financing activities ₹ 3,60,000.

13. While preparing Cash Flow Statement, if net c ash flow from operating, investing and financing

activities is negative the same is to opening cash balance to obtain

cash balance. (1Mark)

14. ‘Public Deposits’ appear in the company’s Balance Sheet under the head/subhead : (1Mark)

(A) Intangible Assets

(B) Current Liabilities

(C) Shareholders’ Funds

(D) Non-Current Liabilities

15. ‘Income received in advance’ appears in the Balance Sheet of a company under the sub-head

. (1Mark)

16 . ‘Purchase of goods ₹ 35,000 for cash will increase the operating ratio.’

Is the statement correct ? Give reasons. (1Mark)

17. The quick ratio of a company is 0.5 : 0.75. Will cash sales of ₹ 5,000 increase, decrease or

not change the ratio ? Give reason in support of your answer. (1Mark)

18. Employee benefit expenses include (bonus/depreciation/income tax) (1Mark)

19. Which of the following is not a limitation of analysis of financial statements ? (1Mark)

(a) Window Dressing

(b) Price level changes ignored

(c) Subjectivity

(d) Intra firm comparison possible

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20.Under which of the following headings/sub-headings, Calls in advance will be presented in the

Balance Sheet of a Company as per Schedule III Part I of the Companies Act, 2013 ? (1Mark)

(a) Current Liabilities

(b) Share Capital

(c) Share Application Money Pending Allotment

(d) Reserves and Surplus.

21. Interest received in cash from loans and advance is considered as

activity while preparing cash flow statement. (1Mark)

22. List any two items other than cash in hand and cheques in hand that are presented under the

sub-heading ‘Cash and Cash Equivalents’ in the Balance Sheet of a company (1Mark)

23. While preparing cash flow statement, will ‘Cash withdrawn from bank’ result into inflow,

outflow or no flow of cash ? Give reason in support of your answer. (1Mark)

24.From the following information, calculate the amount of cash flow from investing activities.

Acquired machinery for ₹ 10,00,000, paying 10% immediately in cash and accepting a draft for

the balance in favour of the vendor, payable after three months. (1Mark)

25. State giving reason, whether issue of shares for consideration other than cash will

result into inflow, outflow or no flow of cash. (1Mark)

26. Which of the following is a limitation of financial analysis ?

(a) It is just a study of reports of the company.

(b) It judges the ability of the firm to repay its debts.

(c) It identifies the reasons for change in financial position.

(d) It ascertains the relative importance of different components of the financial position

of the firm. (1Mark)

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27. As per Schedule III, Part I of the Companies Act, 2013 ‘calls-in-arrears’ will be

presented under which of the following head/sub-head, in the Balance Sheet of a

company ?

(a) Reserves and Surplus (b) Current Liabilities

(c) Contingent Liabilities (d) Shareholders Funds (1Mark)

28 .‘Interest accrued but not due on loans’ is shown in the companies balance sheet under the

sub head _ . (1Mark)

29. Calculate Liquid Ratio from the following information:

a) Current Liabilities - ₹ 50000, b) Current Assets - ₹ 80000 c) Inventories –₹ 25000

d) Prepaid Expenses- ₹ 5000 e) Trade Receivables –₹ 30000 (1Mark)

30. Prakash Ltd has a term loan of ₹ 10,00,000. Interest on the loan for the year is ₹ 1,25,000

And its Net Profit before Interest and Tax is ₹ 5,00,000. Calculate Interest coverage ratio

(1Mark)

31. Calculate the ‘Total Assets to Debt Ratio’ from the following information : (3Marks)

Current Assets 11,00,000

Working Capital 6,50,000

Shareholder’s Fund 7,50,000

Total Debt 19,50,000

Reserves and Surplus 2,50,000

32. Under which major head/sub-head will the following items be presented in the Balance Sheet of

a company as per Schedule III, Part I of the Companies Act, 2013 ? (3Marks)

(i) Computer software

(ii) Calls-in-advance

(iii) Outstanding salary

(iv) Securities Premium Reserve

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 (v) Patents

(vi) Interest accrued on Investment

33. From the following information of Nova Ltd., calculate the cash flow from investing activities :

(3Marks)

31.3.2019 31.3.2018
Particulars
₹ ₹
Machinery (At cost) 5,00,000 3,00,000
Accumulated Depreciation on machinery 1,00,000 80,000
Goodwill 1,50,000 1,00,000
Land 70,000 1,00,000

Additional Information :

During the year, a machine costing ₹ 50,000 on which the accumulated depreciation was ₹

35,000, was sold for ₹ 12,000.

34. The profit of Jova Ltd. for the year ended 31st March, 2019 after appropriation was

₹ 2,50,000. (3Marks)

Additional Information :

Sl No: Particulars Amount ₹

1 Depreciation of Machinery 20,000

2 Goodwill written off 9,000

3 Loss on Sale of Furniture 2,000

4 Transfer to General Reserve 22,500

The following was the position of its Current Assets and Current Liabilities as at 31st March, 2018 and

2019.

Particulars 31.03.2018 ₹ 31.03.2019 ₹

Income received in Advance 8,000 -

Inventory 12,000 8,000

Calculate the Cash flow from operating activities.

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35. From the following information obtained from the books of P. Ltd., calculate,

(i) Return on Investment, and (ii) Debt-Equity Ratio : Information :

Net Profit after interest and tax ₹ 6,00,000; 6% Debentures ₹ 10,00,000;

Capital employed ₹ 20,00,000, and Tax rate 40%. (3Marks)

36. (i) Current Liabilities ₹ 1,50,000, Current Assets ₹ 2,80,000, Inventories ₹ 40,000,

Advance Tax ₹ 30,000, and Prepaid Rent ₹ 10,000.

Calculate Quick Ratio.

(ii) Average Inventory ₹ 60,000, Revenue from Operations ₹ 6,00,000,

the rate of Gross Loss on Sales is 10%.

Calculate the Inventory Turnover Ratio. (3Marks)

37. Cash flow from the operating activities of Pinnacle Ltd. for the year ended 31st March, 2019

was ₹ 28,000. The Balance Sheet along with notes to accounts of Pinnacle Ltd. as at 31st

March, 2019 is given below :

Pinnacle Ltd.

Balance Sheet as at 31st March, 2019

Note 31.3.2019 31.3.2018

Particulars No. ₹ ₹
I – Equity and Liabilities :

1. Shareholders Funds :

(a) Share Capital 9,00,000 5,00,000

(b) Reserves and Surplus 1 90,000 1,10,000

2. Non-Current Liabilities :

Long-term Borrowings 2 3,00,000 2,00,000

3. Current Liabilities :

60,000 80,000
Trade Payables
Total 13,50,000 8,90,000

II – Assets :

1. Non-Current Assets :

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 Fixed Assets :
3 7,46,000 5,24,000
(i) Tangible Assets
4 36,000 76,000
(ii) Intangible Assets
2.
Current Assets :
1,30,000 20,000
(a) Current Investments
2,00,000 1,30,000
(b) Inventories
2,38,000 1,40,000
(c) Cash and Cash Equivalents
Total 13,50,000 8,90,000

Notes to Accounts

Note 31.3.2019 31.3.2018

Particulars
No. ₹ ₹
1. Reserves and Surplus :

(Balance in Statement of Profit

and Loss) 90,000 1,10,000
2. Long-term Borrowings :

9% Debentures 3,00,000 2,00,000

3. Tangible Assets :
Plant and Machinery Accumulated 8,86,000 6,04,000
Depreciation (1,40,000) (80,000)
7,46,000 5,24,000
4. Intangible Assets :

Goodwill 36,000 76,000

You are given the following additional information :

(i) A machinery of the book value of ₹ 90,000 (depreciation provided thereon was

₹ 23,000), was sold at a profit of ₹ 12,000.

(ii) 9% debentures were issued on 1st April, 2018.

Prepare the Cash Flow Statement. (6Marks)

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38. Calculate the Current Ratio and Debt-Equity Ratio from the following information : (3Marks)

Non-Current Assets 16,00,000

Current Assets 4,00,000

Working Capital 2,00,000

Non-Current Liabilities 12,00,000

39. The Revenue from operations of a firm is ₹ 6,00,000. Its inventory turnover ratio is 3

times. If gross profit ratio is 25%, calculate its opening inventory and closing inventory. The

opening inventory is 25% of closing inventory. (3Marks)

40. From the following information, calculate ‘Interest coverage Ratio’ :

Profit after interest and tax ₹ 6,00,000

10% Debentures ₹ 8,00,000

Rate of Income Tax 40% (3Marks)

41. From the following Balance Sheet of Gopal Ltd. and the additional information as at 31st March,

2019, prepare a Cash Flow statement when cash flows from financing activities is ₹ 2,32,000.

Gopal Ltd.

Balance Sheet as at 31-3-2019

Note 31st March, 31st March,

Particulars
No. 2019 (₹ ) 2018 (₹ )
I. Equity and Liabilities :
1. Shareholder’s Fund
(a) Share Capital 10,00,000 8,00,000
(b) Reserve and Surplus 1 4,00,000 (1,00,000)
2. Non-Current Liabilities
Long term Borrowings 2 9,00,000 9,00,000
3. Current Liabilities
(a) Short term Borrowings 3 2,40,000 1,00,000
(b) Short term Provisions 4 2,00,000 1,75,000
Total : 27,40,000 18,75,000

II. Assets :
1. Non-Current Assets
(a) Fixed Asset
(i) Tangible Assets 5 20,00,000 14,42,000

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 (ii) Intangible Assets 6 46,000 58,000
(b) Non-current Investments 1,00,000 45,000
p2. Current Assets :
(a) Current Investments 2,00,000 1,20,000
(b) Inventories 7 2,14,000 90,000
(c) Cash and Cash
Equivalents 1,80,000 1,20,000
Total : 27,40,000 18,75,000

Notes to Accounts

Note Particulars 31 March, 31 March,

No. 2019 (₹ ) 2018 (₹ )
1. Reserve and Surplus
Surplus (Balance in statement of
Profit and Loss) 4,00,000 (1,00,000)
2. Long term Borrowings 12%
debentures 9,00,000 9,00,000
3. Short term Borrowings
Bank overdraft 2,40,000 1,00,000
4. Short term provisions
Provision for tax 2,00,000 1,75,000
5. Tangible Assets
Machinery 24,00,000 16,42,000
Less : Accumulated Depreciation (4,00,000) (2,00,000)
20,00,000 14,42,000
6. Intangible
Assets 46,000 58,000
Goodwill
7. Inventories
Stock in trade 2,14,000 90,000

Additional Information :

Tax ₹ 1,50,000 was paid during the year. (6Marks)

42. A company had a liquid ratio of 1.5:1 and a current ratio of 2:1. Its inventory turnover ratio was 6

times. It had total current assets of ₹ 2,00,000.

Find out revenue from operations if the goods are sold at 25% profit on cost. (3Marks)

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43. Calculate the amount of opening trade receivables and closing trade receivables from the following

information :

Trade receivables turnover ratio 8 times

Cost of revenue from operations ₹ 4,80,000

The amount of credit revenue from operations is ₹ 2,00,000 more than cash revenue from

operations. Gross profit ratio is 20%. Opening trade receivables are 1/4th of Closing trade

receivables. (3Marks)

44. Segregate the following transactions into (i) Operating Activities , (ii) Investing Activities,

(iii) Financing Activities, and (iv) Cash and Cash Equivalents : (5Marks)

1. Income Tax paid

2. Balance at Bank

3. Cash Paid against Trade Payables

4. Income Tax refund received

5. Sale of Patents

6. Purchase of Goodwill

7. Purchase of Securities (as Investment)

8. Sale of Machines by a dealer of Machines

9. Dividend Paid

10. Purchase of Marketable Securities

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