Accountancy : Company Accounts and Analysis of Financial Statements 2006 CBSE [ Delhi ] Set I
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Q1
What is meant by Guarantee of profit to a partner? Marks:2View AnswerAnswer:
Gurantee of profit to a partner means gurantee of minimum amount of profit to a partner by other partner(s). If the partner's share falls short it will be contributed by other partner(s). -
Q2
What is meant by Authorised Capital of a company? Marks:2View AnswerAnswer:
Authorised Capital of a company refers to the maximum capital which a company is authorised to raise it during its life time. Authorised Capital is stated in the Memorandum of Association. -
Q3
What is Escrow account? Marks:2View AnswerAnswer:
Literally “Escrow” means a contract or bond deposited with a third person as a guarantee to the fulfillment of some condition. Escrow account refers to an account opened by a company with third person to perform its obligations under the scheme of buy-back of shares. An Escrow account may consist of the following:
1.Cash deposited with a commercial bank.
2.Bank guarantee in favour of merchant bank
3.Deposit of acceptable securities with appropriate margin.
4.Combination of all the above. -
Q4
What is meant by a Debenture? Marks:2View AnswerAnswer:
A debenture means a document of company’s indebtedness. A debenture may be defined as an acknowledgement of a debt which contains a contact for the repayment of the principal and for the payment of interest at a fixed percent. -
Q5
What is a Cash Flow Statement? List any two objectives of preparing the statement. Marks:2View AnswerAnswer:
Cash flow statement may be defined as a statement showing inflows and outflows of cash and cash equivalents during the specified period. (1) To depict sources and uses of cash (2) To ascertain liquidity of the enterprise. -
Q6
Classify the following into cash flow from Investing activities/Financing activities while preparing a Cash Flow Statement: a) Redemption of preferences Shares b) Sale of Fixed Assets c) Receipt of Dividend d) Interest Received. Marks:2View AnswerAnswer:
a) Financing Activities b) Investing Activities c) Investing Activities d) Investing Activities. -
Q7
A, B&C entered into a partnership on Oct1,2004 to share profits and loss in the ratio of 3:2:1. A however personally guaranteed that C ‘s share of profit after charging interest on capital at 5% p.a. would not be less than Rs.30,000 in any year. The capital contributions were A: Rs.3 lakhs, B:Rs.2lakhs, C:Rs.1 lakhs. The profit for the period ended March 31,2005 were Rs.1,20,000. Show the distribution of profits. Marks:3View AnswerAnswer:
Net Profit Less interest on capital @5%p.s. for 6 months A(3,00,000 X 5/100 X6/12) 7,500 B(2,00,000 X 5/100 X6/12) 5,000 C(1,00,000 X 5/100 X6/12) 2,500 1,20,000 15,000 Division profit (Net profit after charging interest) A’s Share of profits(1,05,000 X 3/6) B’s Share of profits(1,05,000 X 2/6) Cs Share of profits(1,05,000 X 1/6) C’s minimum profit guaranteed Shortfall to be borne by A(30,000 -17,500) Hence, A’s share of profit (52,500-12,500) Bs share of profit C’s share of profit(17,500 + 12,500) 52,500 32,500 17,500 30,000 12,500 40,000 35,000 30,000 Profit and Loss Account Particulars Amt. Particulars Amt. To interest on capital A 7,500 B 5,000 C 2,500 To profit transferred to Capital: A 40,000 B 35,000 C 30,000 15,000 1,05,000 By profit & loss A/c 1,20,000 1,20,000 1,20,000 -
Q8
Romi Ltd. acquired assets of Rs.20 lakhs and took over creditors of Rs.2 lakhs from kapil enterprises. Romi Ltd. issued 8% debentures of Rs100 each at par as purchase consideration. Record necessary journal entries in the books of Romi ltd. Marks:3View AnswerAnswer:
Value of assets taken over = Rs.20 lakhs Value of creditor = Rs.2 lakhs Net amount payable = Rs.18 lakhs Face value and agreed value of debentures = Rs.100 Number of debentures to be issued = 18,00,000 / 100 = 18,000 JOURNAL ENTRIES Particulars J.F Dr.Amt Cr.Amt Assets A/c Dr. To creditors To Kapil Ent. (purchase of assets and creditors from Kapil Enterprises) 20,00,000 2,00,000 18,00,000 Kapil Ent Dr. To 8% debentures (issue of 18,000 8% debentures at par) 18,00,000 18,00,000 -
Q9
List any three items that can be shown under the heading ‘Reserves & Surplus’ in a Company’s Balance Sheet. Marks:3View AnswerAnswer:
i) Capital Reserve ii) Capital Redemption Reserve iii) Profit & loss Account. -
Q10
From the following data prepare a Statement of Profits in the comparative form: Particulars 31.3.2004 31.3.2004 Sales Gross profit Ratio Administrative Expenses Income Tax 6,00,000 30% 40,000 50% 8,00,000 40% 1,00,000 50% Marks:3View AnswerAnswer:
Comparative Statement of Profit for the years ending 31st March, 2004 and 2005. Particulars 31.3.2004 31.3.2005 Increase or Decrease Increase or Decrease Sales Cost of goods sold 6,00,000 4,20,000 8,00,000 4,80,000 2,00,000 60,000 33.33 14.28 Gross Profit Administration Expenses 1,80,000 40,000 3,20,000 1,00,000 1,40,000 60,000 77.78 150 Profit Before Tax Income Tax 1,40,000 70,000 2,20,000 1,10,000 80,000 40,000 57.14 57.14 Profit after tax 70,000 1,10,000 40,000 57.14
