Common Size Profit and Loss

Q.

Under which heads and sub-heads following items will appear in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013 :

(i) Debentures. (ii) Loose tools.

(iii) Calls-in-Advance. (iv) Stores and spares.

(v) Proposed dividend. (vi) Computer software.

Q.

Under what headings will you show the following items in the Financial Statements of a Company :

(i) Goodwill

(ii) Unclaimed Dividends

(iii) Provision for Tax

(iv) Securities Premium Reserve

(v) Loose Tools

(vi) Sale of Products

(vii) Interest paid on Overdraft

(viii) Business promotion exp.

Q.

Identify the major heads and sub-heads under which the following items will be shown in the Balance Sheet of a company as per Schedule III of Companies Act, 2013:

(i) Provision for Tax.

(ii) Loan payable on demand.

(iii) Computer and related equipment.

(iv) Goods acquired for trading.

Q.

Under what heads the following items on the Assets side of the Balance Sheet of a Company will be presented :

(i) Sundry Debtors

(ii) Patents and Trade Marks

(iii) Shares in D.C.M. Limited

(iv) Bills Receivable

(v) Advances recoverable in cash within the operating cycle

(vi) Prepaid Insurance

(vii) Work-in-Progress

Q.

Leena, Madan and Naresh were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 3. On 31st March, 2015, their Balance Sheet was as follows :

$\begin{array}{cccccc}\text{Capital and Liabilities}& & \text{Rs}& \text{Assets}& & \text{Rs}\\ \text{Trade Creditors}& & 1,60,000& \text{Land and Building}& & 10,00,000\\ \text{Bank Overdraft}& & 44,000& \text{Machinery}& & 5,00,000\\ \text{Long-term Debts}& & 4,00,000& \text{Furniture}& & 7,00,000\\ \text{Employee's Provident Fund}& & 76,000& \text{Investments}& & 2,00,000\\ \text{Capitals:}& \text{Leena 12, 50, 000}& & \text{Closing stock}& & 8,00,000\\ & \text{Madan 8, 00, 000}& & \text{Sundry Debtors}& & 4,00,000\\ & \text{Naresh}\underset{–}{10,50,000}& 31,00,000& \text{Bank}& & 80,000\\ & & & \text{Deferred Advertisement}& & \\ & & & \text{Expenditure}& & 1,00,000\\ & & \overline{\underset{–}{\underset{–}{37,80,000}}}& & & \overline{\underset{–}{\underset{–}{37,80,000}}}\end{array}$

On 31st March, 2015, Madan retired from the firm and the remaining partners decided to carry on the business. It was decided to revalue assets and liabilities as under :

(i) Land and Building be appreciated by Rs 2, 40, 000 and Machinery be depreciated by 10%.

(ii) 50% of Investments were taken over by the retiring partner at book value.

(iii) An old customer Mohit whose account was written off as bad debt has promised to pay Rs 7, 000 in settlement of his full debt of Rs 10, 000.

(iv) Provision for Doubtful Debts was to be made at 5% on debtors.

(v) Closing Stock will be valued at market price which is Rs 1, 00, 000 less than the book value.

(vi) Goodwill of the firm be valued at Rs 5, 60, 000 and Madan's share of goodwill be adjusted in the accounts of Leena and Naresh. Leena and Naresh decided to share future profits and losses in the ratio of 3 : 2.

(vii) The total capital of the new firm will be Rs 32, 00, 000 which will be in the proportion of the profit-sharing ratio of Leena and Naresh.

(viii) Amount due to Madan was settled by accepting a Bill of Exchange in his favour payable after 4 months.

Prepare Revaluation Account, Partner's Capital Accounts and Balance Sheet of the firm after Madan's retirement.

Q. Prepare a format of cash flow from operating activities under direct method.

Q.

Show how will you deal with the following items while preparing the Balance Sheet of a Club as at 31st March, 2018.

$\begin{array}{cc}& \text{Rs}\\ \text{Sports Fund}& 5,00,000\\ 10\%\text{Sports Fund Investments on 1st April, 2017}& 5,00,000\\ \text{Interest Received on Sports Fund Investments}& 37,500\\ \text{Donations for Sports Fund}& 1,20,000\\ \text{Sports prizes awarded}& 1,00,000\\ \text{Expenses on sports events}& 15,000\end{array}$

Q.

Under which major headings and sub-headings will the following items be shown in the Balance Sheet of a company as per Schedule III Part I of the Companies Act, 2013 :

(i) Net loss as shown by Statement of Profit and Loss

(ii) Capital redemption reserve.

(iii) Bonds

(iv) Loans repayable on demand

(v) Unpaid dividend

(vi) Buildings

(vii) Trademarks

(viii) Raw materials

Q.

What is meant by conversion of debentures? Describe the method of such a conversion.

Q.

From the following information for the year ended 31st March, 2018, prepare notes to accounts to determine the amount to be shown in Statement of Profit and Loss against 'Change in Inventory':

$\begin{array}{ccc}& \text{Opening Inventory}& \text{Closing Inventory}\\ & \text{Rs}& \text{Rs}\\ \text{Finished Goods}& 10,00,000& 9,40,000\\ \text{Work-in-Progress (Semi-Finished Goods)}& 5,00,000& 6,00,000\\ \text{Stock-in Trade}& 8,00,000& 7,30,000\\ \text{Materials}& 1,00,000& 1,50,000\end{array}$

Q.

The common size income statement defines all items as a percentage of ___

1. Sales

2. Profit

3. Expenses

4. None of these

Q.

From the following Balance Sheet of JY Ltd. as on 31-3-2017, prepare a Cash Flow Statement.

BALANCE SHEET OF JY LTD.
as on 31-03-2017
$\begin{array}{cccc}\text{Particulars}& \text{Note}& 31-03-2017& 31-03-2016\\ & No.& \left(Rs\right)& \left(Rs\right)\\ I.\text{Equity and Liabilities}& & & \\ \text{(1) Shareholders' Funds}& & & \\ \text{(a) Share Capital}& & 5,00,000& 5,00,000\\ \text{(b) Reerve and Surplus}& 1& 1,00,000& (25,000)\\ \text{(2) Non-current Liabilities}& & & \\ \text{Long-term Borrowings}& 2& 2,50,000& 1,50,000\\ \text{(3) Current Liabilities}& & & \\ \text{(a) Short-term Borrowings}& 3& 1,50,000& 1,00,000\\ \text{(b) Short-term Provisions}& 4& 2,00,000& 1,25,000\\ \text{Total}& & 12,00,000& 8,50,000\\ II.\text{Assets}& & & \\ \text{(1) Non-current Assets}& & & \\ \text{(a) Fixed Assets}& & & \\ \text{(b)Tangible Assets}& 5& 6,00,000& 4,50,000\\ \text{(2) Current Assets}& & & \\ \text{(a) Trade Receivables}& & 2,75,000& 2,25,000\\ \text{(b) Cash amd Cash Equivalents}& & 1,25,000& 75,000\\ \text{(c) Short term Loans and Advances}& & 2,00,000& 1,00,000\\ \text{Total}& & 12,00,000& 8,50,000\end{array}$

Notes to Account:
$\begin{array}{cccc}& \text{Particulars}& \text{31st March, 2017}& \text{31st March, 2016}\\ & & \left(Rs\right)& \left(Rs\right)\\ 1.& \text{Reserve and Surplus (Profit and Loss Balance)}& 1,00,000& (25,000)\\ 2.& 10\%\text{Debentures}& 2,50,000& 1,50,000\\ 3.& \text{Bank Overdraft}& 1,50,000& 1,00,000\\ 4.& \text{Provisions for Tax}& 1,25,000& 75,000\\ & \text{Dividend Declared}& 75,000& 50,000\\ 5.& \text{Machinery}& 7,37,500& 5,25,000\\ & \text{(-) Accumulated Depreciation}& (1,37,500)& (75,000)\end{array}$

Additional Information: Rs 1, 00, 000, 10% debentures were issued on 31-03-2017.

Q.

Raj Ltd. decided to bear the higher education cost of five brilliant students belonging to the weaker section of the society. Following is the Statement of Profit & Loss of Raj Ltd for the year ended 31-03-2018:

$\begin{array}{cc}\text{Particulars}& \text{Amount}\\ & \text{Rs}\\ \text{Income :}& \\ \text{Revenue from Operations}& 2,00,000\\ \text{Other Incomes}& 15,000\\ \text{Total Revenue}& \overline{\underset{–}{2,15,000}}\\ & \\ \text{Expenses:}& \\ \text{Cost of Materials Consumed}& 1,10,000\\ \text{Other Expenses}& 5,000\\ \text{Total Expenses}& \overline{1,15,000}\\ \text{Tax}& 40,000\end{array}$

You are required to :

(a) Prepare a common size Statement of Profit & Loss of Raj Ltd. for the year ended 31.03.2018.

(b) Identify the value involved.

Q.

Following is the Balance Sheet of Oswal Publications as at 31-03-2018.

$\begin{array}{cccc}\text{Particulrs}& \text{Note}& \text{31-03-2017}& \text{31-03-2016}\\ & \text{No.}& \text{Rs}& \text{Rs}\\ \text{I. EQUITY AND LIABILITIES}& & & \\ \text{(1) Shareholders' Funds:}& & & \\ \text{(a) Share Capital}& & 7,00,000& 6,00,000\\ \text{(b) Reserve and Surplus}& & 2,00,000& 1,10,000\\ \text{(2) Non-current Liabilities:}& & & \\ \text{(a) Long-term Borrowings}& & 3,00,000& 2,00,000\\ \text{(3) Current Liabilities:}& & & \\ \text{(a) Trade Payables}& & 30,000& 25,000\\ \text{Total}& & 12,30,000& 9,35,000\\ \text{II. ASSETS}& & & \\ \text{(1) Non-current Assets:}& & & \\ \text{(a) Fixed Assets}& & 11,00,000& 8,00,000\\ \text{(2) Current Assets:}& & & \\ \text{(a) Inventories}& & 70,000& 60,000\\ \text{(b) Trade receivables}& & 32,000& 40,000\\ \text{(c) Cash and Cash Equivalents}& & 28,000& 35,000\\ \text{Total}& & 12,30,000& 9,35,000\end{array}$

Additional Information :

During the year, a piece of machinery of the book value of Rs. 80, 000 was sold for Rs. 65, 000. Depreciation provided on machinery during the year amounted to Rs. 2, 00, 000.

Q. Following are the balance sheet of Reddy Limited as on 31 March, 2011 and 2012.
$\begin{array}{cccccc}\text{Liabilities}& \text{2011 ( Rs)}& \text{2012 ( Rs)}& \text{Assets}& \text{2011 ( Rs)}& \text{2012 ( Rs)}\\ \text{Share Capital}& 2,400& 3,600& \text{Land and}& 1,620& 1,040\\ & & & \text{Buildings}& & \\ \text{Reserves and}& & & \text{Plant and}& 1,860& 4,716\\ \text{Surplus}& 1,872& 2,124& \text{Machinery}& & \\ \text{Debentures}& 300& 600& \text{Furniture and}& & \\ & & & \text{Fixtures}& 54& 108\\ \text{Long Term}& & & \text{Other Fixed}& & \\ \text{Debt}& 900& 1,530& \text{Assets}& 120& 180\\ \text{Bills Payable}& 1,530& 702& \text{Long Term}& & \\ & & & \text{Loans}& 276& 354\\ \text{Other Current}& & & \text{Cash and}& & \\ \text{Liabilities}& 42& 60& \text{Bank}& 708& 60\\ & & & \text{Balances}& & \\ & & & \text{Bill}& 1,254& 1,120\\ & & & \text{Receivable}& & \\ & & & \text{Stock}& 960& 780\\ & & & \text{Prepaid}& & \\ & & & \text{Expenses}& 18& 18\\ & & & \text{Other Current}& & \\ & & & \text{Assets}& 174& 240\\ & \underset{–}{\underset{–}{7,044}}& \underset{–}{\underset{–}{8,616}}& & \underset{–}{\underset{–}{7,044}}& \underset{–}{\underset{–}{8,616}}\end{array}$
Analyse the financial position of the company wih the help of the Common Size Balance Sheet.

Q. When the values are expressed as it is without any comparison, it is called a/an expression.

1. absolute
2. relative
3. financial
4. non-financial

Q.

Describe Gross Profit Percentage

Q. A/an expression is an expression expressed in relationship with another.

1. absolute
2. relative
3. financial
4. non-financial

Q.

The total of column of percentage of all the items in common size income statement comes out to ___

1. 75

2. 50

3. 100

4. None of these

Q.

Common-size income statement will report the revenue and expense amounts as percentages of ___

1. Net Sales

2. Net profit

3. Net profit

4. All of these

Q.

Refer the data in the table below:

$\begin{array}{cc}\text{Particulars}& 2005-06\\ \text{Reveue from Operations}& 4,00,00,000\\ \text{Other Income}& 50,00,000\\ \text{Purchase of stock in trade}& 40,00,000\\ \text{Employee Benefit Expenses}& 10,00,000\\ \text{Depreciation and Amortization}& 65,00,000\\ \text{Profit before tax}& 2,35,00,000\end{array}$

Apply common size analysis to Other Income

1. 12.50%

2. 10%

3. 20%

4. None of these

Q.

Refer the data in the table below:

$\begin{array}{cc}\text{Particulars}& 2005-06\\ \text{Reveue from Operations}& 4,00,00,000\\ \text{Other Income}& 50,00,000\\ \text{Purchase of stock in trade}& 40,00,000\\ \text{Employee Benefit Expenses}& 10,00,000\\ \text{Depreciation and Amortization}& 65,00,000\\ \text{Profit before tax}& 2,35,00,000\end{array}$

Apply common size analysis to Other Income

1. 12.50%

2. 10%

3. 20%

4. None of these