Return on Investment

Q.

From the following calculate

(a) Net Profit Ratio

(b) Operating Profit Ratio

$\begin{array}{ccc}\text{S.No.}& Items& AmountRs.\\ 1.& \text{Revenue from Operations (Sales)}:& 2,00,000\\ 2.& \text{Gross Profit}& 75,000\\ 3.& \text{Office Expenses}& 15,000\\ 4.& \text{Selling Expenses}& 26,000\\ 5.& \text{Interest on Debentures}& 5,000\\ 6.& \text{Accidental losses}& 12,000\\ 7.& \text{Income from Rent}& 2,500\\ 8.& \text{Commission received}& 2,000\end{array}$

Q.

Net Profit before interest and tax Rs. 80, 000; Equity share capital of Rs. 1, 20, 000; 10% Preference Share Capital of Rs. 50, 000; 12% Debentures Rs. 1, 00, 000; Reserves and Surplus Rs. 1, 30, 000; Tax rate 50%; Calculate Return on Investment.

1. 30%

2. 35%

3. 20%

4. 25%

Q.

Calculate Return on Investment from the following information :

Net Profit after Tax : Rs. 6, 50, 000; 12.5% Convertible Debentures : Rs. 8, 00, 000; Income Tax : 50%; Fixed Assets at cost : Rs. 24, 60, 000; Depreciation Reserve : Rs. 4, 60, 000; Current Assets : Rs. 15, 00, 000; Current Liabilities : Rs. 7, 00, 000.

Q.

Distinguish between Firm's Debts and Partner's Private Debts.

Q.

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

(i) Proposed Dividend

(ii) Unpaid/Unclaimed Dividend

(iii) Debentures

(iv) Matured Debentures

(v) Calls in Arrears

(vi) Sinking Fund

(vii) Provision for Provident Fund

(viii) Bills Payable

(ix) Public Deposits

Q.

On what account Realisation Account differs from Revaluation Account?

Q.

Explain the modes of payment to retiring partner.

Q.

A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at 1st April, 2011 was as follows :

$\begin{array}{ccccc}\text{Capital and Liabilities}& & \text{Rs}& \text{Assets}& \text{Rs}\\ \text{Sundry Creditors}& & 10,000& \text{Cash}& 2,000\\ \text{Employee's Provident Fund}& & 5,000& \text{Sundry Debtors}& 8,000\\ \text{Reserve Fund}& & 6,000& \text{Stock}& 40,000\\ \text{Workmen's Compensation}& & & \text{Furniture}& 13,000\\ \text{Reserve}& & 2,000& \text{Patents}& 4,000\\ \text{Capitals :}& & & \text{Building}& 60,000\\ A& 50,000& & \text{Goodwill}& 6,000\\ B& 35,000& & & \\ C& \underset{–}{25,000}& \underset{–}{1,10,000}& & \\ & & \underset{–}{1,33,000}& & \overline{\underset{–}{1,33,000}}\end{array}$

C retires on above date and the partners agreed that :

(1) Goodwill is to be valued at two year's purchase of the average profits of last four years. Profits for the years ending 31st March were : 2008 : Rs 14, 400, 2009 : Rs 20, 000, 2010 : Rs 10, 000 (Loss), 2011 : Rs 15, 600.

(2) 5% provision for doubtful debts to be made on debtors.

(3) Stock be appreciated by 10%.

(4) Patents are valueless.

(5) Buildings be appreciated by 20%.

(6) Sundry Creditors to be paid Rs 2, 000 more than the book value.

Pass Journal entries and prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.

Q.

List the items which may be debited or credited in capital accounts of the partners when

(i) Capitals are fixed

(ii) Capitals are fluctuating

Q.

Return on Proprietors’ funds is also known as ___

1. Return on net worth

2. Return on Shareholders’ fund

3. Return on Shareholders’ Investment

4. All of these

Q.

Is a fixed deposit a current asset?

Q.

The Debt-Equity Ratio of a Company is 1 : 2. Which of the following would increase, decrease or not change it ?

(i) Repayment of Long term Borrowings of Rs. 40, 000.

(ii) Purchased a fixed Asset for Rs. 50, 000 on long-term deferred payment basis.

(iii) Issued new equity shared of Rs. 75, 000.

(iv) Payment of Dividend Payable.

(v) Goods purchased on Credit.

(vi) Payment to Trade Payables.

Q. Capital Employed = - Current Liabilities.

1. Reserves
2. Fixed Assets
3. Current Assets
4. Total Assets

Q.

Return on Investment measures a relationship between which of the following?

1. Net Profit before Interest and Tax and Capital employed

2. Net Profit after Interest and Tax and Capital employed

3. Net Profit before Interest and Tax and Total Assets

4. None of these

Q. Capital Employed = Shareholders' Fund + .

1. Long-term debt
2. Short-term debt
3. Net profit
4. Gross profit

Q.

Under which major head and sub-heads does the following items be placed in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013.

(i) Cash credit.

(ii) 10 years loan obtained from Financial Institutions.

(iii) Debenture Sinking Fund.

(iv) Matured Debentures.

Q.

Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash.

Q.

Anand Ltd. arrived at a net income of Rs 5, 00, 000 for the year ended March 31, 2017. Depreciation for the year was Rs 2, 00, 000. There was a gain of Rs 50, 000 on assets sold which was credited to profit and loss account. Bills Receivables increased during the year Rs 40, 000 and Bills Payables also increased by Rs 60, 000. Compute the cash flow operating activities by the indirect approach.

Q.

How will you compute the amount payable to a deceased partner ?

Q.

Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Details	Amount Rs
Sports Fund as on April 1, 2016	80, 000
Sports Fund Investments	80, 000
Interest on Sports Fund Investments	8, 000
Donations for Sports Fund	30, 000
Sports Prizes awarded	16, 000
Expenses on Sports Events	7, 000
General Fund	2, 00, 000
General Fund Investments	2, 00, 000
Interest on General Fund Investments	20, 000

Q.

How would you deal with ‘Premium on Redemption of Debentures?

Q. Under which head following revenue items of a financial company will be classified or shown:
(i) Gain (Profit) on Sale of Building; (ii) Revenue from Project Consultancy Rendered; (iii) Sale of Scrap; (iv) Interest earned on Loans; and (v) Gain (Profit) on sale of Investments?

Q.

Do you advise that assets and liabilities must be revalued at the time of admission of a partner? If so, why? Also, describe how is this treated in the book of account?

Q. (Profit and Loss Appropriation Account). $X$ and $Y$ started business on 1st April, 2017 with capitals of $Rs.5,00,000$ each As per the Partnership Deed, both $X$ and $Y$ are to get monthly salary of $Rs.10,000$ each and interest on capitals @ $10\%$ p.a. Drawings during the year were $X-Rs.60,000$ and $Y-Rs.1,00,000$; interest being chargeable @ $10\%$ p.a.
During the year, the firm incurred a loss of $Rs.2,00,000$.
Pass Journal entries for the above and prepare Profit and Loss Appropriation Account. The Finn closes its accounts on 31st March, every year.

Q.

Calculate the return on capital employed (ROI) from the following information:

Capital employed is 1, 00, 000

Net profit on sales is 6%

Gross Profit Margin 90, 000 (15%)

1. 13%

2. 28%

3. 36%

4. 20%

Q.

From the following extract of the statement of Profit and Loss for the year ended 31st March, 2012 and 2013 of XYZ Ltd, prepare comparative statement of profit and loss.

$$\begin{array}{ccc}\text{Particulars}& \text{31-03-2013}& \text{31-03-2012}\\ & \text{(Rs)}& \text{(Rs)}\\ \text{Revenue from operations}& 48,00,000& 30,00,000\\ \text{Employees Benefit Exp.}& 22,00,000& 18,00,000\\ \text{Other Exep}& 21,00,000& 4,00,000\\ \text{Tax Rate}& 40\%& 40\%\end{array}$$

Q.

Following is the information in respect of certain items of a Sports Club. You are required to show them in the Income and Expenditure Account and the Balance Sheet.

Details	Amount Rs
Sports Fund as on April 1, 2005	80, 000
Sports Fund Investments	80, 000
Interest on Sports Fund Investments	8, 000
Donations for Sports Fund	30, 000
Sports Prizes awarded	16, 000
Expenses on Sports Events	7, 000
General Fund	2, 00, 000
General Fund Investments	2, 00, 000
Interest on General Fund Investments	20, 000

Q.

Return on Investment =

1. $\left(\frac{\text{Gross Profit before Interest, Tax and Dividend}}{\text{Gross Sales}}\right)\times 100$

2. $\left(\frac{\text{Net Profit before Interest, Tax and Dividend}}{\text{Capital employed}}\right)\times 100$

3. $\left(\frac{\text{Net Profit}}{\text{Capital employed}}\right)\times 100$

4. None of these

Q. Why is Profit and Loss Appropriation Account prepared?

Q. Following is the information given by X ltd. for the year ended 31st March, 2021. Particulars Amount (₹)

Sales Net Profit Cost of Sales Long-term Debts Creditors Average Inventory Current Assets Fixed Assets Current Liabilities Net Profit before Interest and Tax	50, 40, 000 7, 20, 000 38, 40, 000 18, 00, 000 4, 00, 000 16, 00, 000 15, 20, 000 28, 80, 000 12, 00, 000 16, 00, 000

Working capital will be:

[2 marks]

1. ₹16, 80, 000
2. ₹28, 80, 000
3. ₹12, 00, 000
4. ₹16, 00, 000