CBSE Class 12 Accountancy Revision Worksheet

Q. 1. Explain the meaning of the following terms with example:

   a. Goods;

   b. Expenses.

Q. 2. Show the accounting equation on the basis of the following transactions & Prepare Balance Sheet: 

i. Sohan started business with cash Rs.40,000, goods Rs.20,000, furniture  Rs.1,000 & Creditors of Rs. 6,000.

ii. Sold goods to Vikram costing Rs.4,000 @ 10% above cost.

iii. Purchase Building Worth Rs. 1,00,000 by taking Bank Loan.

iv. Bought Good Worth Rs. 5,000 from Ram and Received Cash Discount @ 5%.

v. Purchase Goods from Raju worth Rs. 10,000.

vi. Rent due to landlord for current month.

vii. Advance Salary paid to Mohan an Employee Rs. 2,000.

viii. Returned goods of Rs.2,000 purchased from Raju.

Q. 3. Give Journal entries in the books of Ram Dayal Furniture: 2009

Jan 1. Received Rs. 5,000 from B/R of Mahesh Chand.

Jan 2. Bought machinery Worth Rs. 9,800 & Paid cartage on it Rs. 200 & Paid wages Rs. 2,000 for the Installation of Machinery.

Jan 3. Bought Furniture from Shruti & Co. List Price Rs. 20,000 & Received TradeDiscount @ 10%. Half the Payment made at the time of Purchase & receivedCash Discount for the prompt payment @ 5%.

Jan 5. Furniture worth Rs. 2,000 transfer to Ram Dayal’s House for the Decoration.

Jan 8. Paid Rent Rs. 3,000 to Landlord up March 2009.

Jan 12. Sold to Surender Furniture Costing Rs. 8,000 at profit of 20% on Sale; andalso allowed him trade Discount of 10%.

Jan 23. Paid Outstanding Salaries for the December, 2008; Rs. 12,000.

Jan 29. Received Compensation from Ramu 70 paise in Rupee One from his total Debt of Rs. 2,300, on the Event of his insolvency.

Q. 4. Following are the transaction of Amar Ltd post them into the `T Shape’ ledger of Rakesh. (4)2009

Feb 1 Rakesh purchased goods of Rs.5000

Feb 3 Rakesh sold goods of Rs.30000 to Amar

Feb 8 Rakesh paid cash of Rs.2000

Feb 10 He returned goods of Rs.2000 purchased by him

Q. 5. Ram Started Business with the Capital of Rs. 2,50,000. During he Year 2008- 09 he withdrews for his Capital of Rs. 5,0000. His Assets & Liabilities are Rs. 5,00,000 & Rs. 2,25,000 respectively as 31st March 2009. Find out profit earned or Loss incurred by him during the financial year 2008-09

1. A Ltd. purchased machinery from B Ltd. amounting ₹95,000. Payment was to be made as follow:
20% of the cost of machinery in cash and balance by issue of preference shares of ₹20 each at a discount of 5%.
Pass the requisite Journal entries in the books of A Ltd.
What is the number of preference shares to be issued by A Ltd. A Ltd. purchased machinery from B Ltd. amounting ₹95,000. Payment was to be made as follow: 20% of the cost of machinery in cash and balance by issue of preference shares of ₹20 each at a discount of 5%.Pass the requisite Journal entries in the books of A Ltd.

2. Reliance Ltd. issued ₹1,00,000 shares of ₹10 each at a premium of ₹2 each as follows:
Application    ₹2
Allotment      ₹5 (including premium)
First call        ₹2
Final call       ₹3
All the shares were applied for and allotted. All the moneys were received except one shareholder holding ₹1,000 shares that could not pay allotment and first call money. His shares were forfeited after the first call was made. Final call was made afterwards and the money was duly received. ₹600 of the forfeited shares were reissued at ₹9 per share as fully paid-up.
Pass the requisite Journal entries in the books of Reliance Ltd.

3. Jain Ltd. offered ₹1,00,000 equity shares of ₹10 each at a premium of ₹2 each for Public subscription. The amount was payable, as follows:
Application       ₹2
Allotment         ₹5 (including premium)
First call           ₹2
Final call          ₹3
Applications were received for ₹1,95,000 shares. The allotment was made as follows:
Category-I: Applications for ₹10,000 shares were rejected
Category-II: Full allotment was made to the applicants for ₹15,000 shares
Category-III : Pro-rata allotment was made to the other applicants with the stipulation that the excess money shall be applied for at the time of allotment
All the moneys were received except in the case of :
(a) Ajay holding ₹1000 shares that could not pay allotment and first call money. His shares were forfeited after the first call was made. (Belongs to category-III)
(b) Another shareholder Vijay who has applied for ₹1,000, however, could not pay the two calls. His shares were forfeited after the Final call was made. (Belongs to category-III)
₹700 of the forfeited shares were reissued at ₹8 per share, as fully paid-up (whole of Vijay’s shares being included).
Pass the requisite Journal entries in the books of Jain Ltd.

4. Why Company is called an artificial person? 1

5. What do you mean by issuing shares at premium? State any three purposes for which the balance of share premium account can be utilized.

1. Give two circumstances in which sacrificing ratio may be applied?

2. How the factors of nature affecting the goodwill of the partnership firm?

3. What do you mean by partnership deed?

4. Give one difference between Revaluation Account & Realization Account?

5. What are super profits?

6. Where would you record interest on capital when capitals are fixed?

7. Distinguish between Sacrificing Ratio & Gaining Ratio.

8. The books of the business showed that the capital employed was10 Lakh and the profits for the last five years were ₹80,000, ₹1,00,000, ₹1,10,000,
₹1,40,000 and ₹1,70,000. You are required to find out the value of goodwill based on 3 years purchase of Super Profits of the business given that the normal rate of return is 10%.

9. A, B and C were partners in a firm. On 1st April 209 their fixed capitals stood at ₹50,000, ₹25,000 and ₹25,000 respectively.
As per the provisions of the partnership deed:
a) B was entitled for a salary of ₹5,000 p.a.
b) All the partners were entitled to interest on capital at 5% p.a.
c) Profits were to be shared in the ratio of capitals and C gets a guaranteed amount of profit ₹ 10,000 every year.
d) Any deficiency arises, it will be borne by A.
The net profit for the year ending 31.03.2010 of ₹45,000 was divided equally without providing for the above terms.
Pass an adjustment journal entry to rectify the above error.

10. A and B were partners sharing profits and losses in the ratio of 3:2. They admitted C into partnership for 1/5th share in profits. C brought ₹50,000 as capital and ₹10,000 as his share of goodwill. At the time of admission goodwill was appearing in the books at ₹3,000. A and B withdrew half of their share of goodwill from the firm. Partners decided to share future profits in the ratio of 5:3:2. Pass necessary journal entries.

11. Neena and Meena were partners. The partnership deed provided for:
a) Profits to be divided as Neena 2/5 and Meena 3/5
b) The accounts are closed on March 31st each year
c) In the event of death of a partner the executors will be entitled to:
I. Capital to credit on the date of death
II. Interest on capital at 12% p.a.
III. Interest on drawing 6% p.a.
IV. Proportion of profit to the date of death based on the average profits for the last three years.
V. Share of goodwill based on 3 years purchase of average profits of preceding 3 years.
The following information is provided to you:
Neena’s Capital ₹1,20,000, Meena’s Capital ₹80,000, Reserves ₹30,000, Cash ₹1,10,000 and Goodwill ₹70,000.
Prepare Neena’s Capital Account to be presented to her executors who died on 31-May-07. The profits for the three preceding years were ₹84,000, ₹90,000 and ₹99,000.

12. Following was the balance sheet of D, T and G as at 28-Feb-02.

The firm was dissolved on the above date on the following terms.
I. Debtors realized ₹28,000, Creditors and bills payable were paid at a discount of 10%.
II. Stock was taken by T for ₹15,000 and furniture was sold to N for ₹12,000.
III. Land and building were sold for ₹2,80,000.
IV. R’s loan was paid by cheque for the same amount
V. Firm had a joint life policy of ₹5,00,000 with a surrender value of ₹1,00,000. The policy was surrendered at its surrender value.
Prepare the Realization Account, Bank Account and Partners Capital Account.

13. Ramesh, Suresh and Dinesh were partners in a firm sharing profit in the ratio of 3:3:4. Their capitals were ₹5,00,000, ₹4,00,000 and ₹5,00,000 respectively. The firm closes its books on 31st March every year. On 30-Sept-06 Ramesh died. The executor of a deceased partner, according to the agreement, was entitled for the following.
I. Interest on capital from the first day of the accounting year till the date of his death @9% p.a.
II. His share of goodwill – The goodwill of the firm was valued at ₹1,80,000.
III. His share of profits – The profit of the firm till his date of death was ₹1,20,000.
IV. His drawing was ₹60,000 and interest on drawing charged at 6%. Ramesh Executor was paid the sum due in two equal annual installments with interest @10% p.a. Pass necessary journal entries and prepare Ramesh’s capital account.

14. Pass the necessary journal entries for the following transactions of the dissolution of the firm of Geethu and Meethu after the various assets (other than cash) and outside liability have been transferred to realization account.
I. Creditors paid ₹18,500 in full settlement of their claims of ₹21,000
II. Geethu agreed to pay her hunband’s loan ₹17,000
III. Other assets realized ₹80,000
IV. Expenses of realization ₹25,000 were paid by Meethu
V. Stock ₹40,000 was taken over by Meethu for ₹40,000
VI. Profit on dissolution ₹9,000 was divided between Geethu & Meethu in the ratio of 2:1.

15. A, B and C are partners sharing profits and losses in the ratio of 2:3:5. On 31-Mar-10 their balance sheet was

They admit D into partnership on the following terms:
I. Furniture, investments & machinery to be depreciated by 15%
II. Stock is revalued at ₹48,000
III. Outstanding rent amounted to ₹1,800,
IV. Prepaid salaries 800
V. D brings in ₹32,000 as his capital and ₹6,000 for goodwill in cash for 1/6th share of future profits of the firm.
VI. Adjustment of capitals to be made in cash
VII. Capital of the partner shall be proportionate to their profit sharing ratio taking D’s capital as basePrepare Revaluation Account, Partner’s Capital Account and the Balance Sheet of the new firm.

1. A, B and C are partners. Their capital accounts stood at Rs 30000, Rs 15000 and Rs 15000 respectively on 1st Jan 1996.As per the provisions of the deed.
i) C was to be allowed a remuneration of Rs 3000 per annum.
ii) Interest @ 5% p.a was to be provided on capital.
iii) Profits were to be divided in the ratio of 2:2:1.
Ignoring the above terms net profit of Rs 18000 for the year ended 1996 was divided among the three partners equally. Pass and adjustment entry to rectify the error.

2. X, Y and Z are partners sharing profits in the ratio of 3:2:1.Now the partners decide to share profits in the ratio of 2:2:1.They have also decided that the change shall be carried out with retrospective effect from1995.The profits and losses during the last few years have been 1994 – Rs 16000,1995- Rs 12000,1996 – Rs 14000 ,1997-Rs 19000,1998-Rs 15000 (Loss)
Pass and adjustment entry.

3. A and B are partners sharing profits in the ratio of 2:1.They admit ‘C’ for ¼ share in profits. ‘C’ brings Rs 30000 for his capital and Rs 8000 for his share of G/w .Before admission g/w appeared in the books at Rs 18000.Give journal entries.

4. A and C are partners sharing profits and losses in the ratio of 7:3. ‘A’ surrenders ¼ th of his share and ‘C’ surrenders 1/3rd of his share in favour of ‘Z’ ,a new partner.Calculate the new profit sharing ratio.

5. Asha,Deepa and lata are the partners in a firm sharing profits in the ratio of 3:2:1.Deepa retires after making all adjustments relating revaluation/w and accumulated profit etc.,the capital accounts of Asha and Lata showed a credit balance of Rs 1,60,000 and Rs 80,000 respectively. It was decided to adjust the capitals of Asha and Lata in their new profit sharing ratio .You are required to calculate the new capitals of the partners and record necessary new journal entries for bringing in or withdrawal of the necessary amounts involved.

6. A,B,C are partners in a firm sharing profits in the ratio of 4:3:1.A retires and his share is taken by B and C equally.Find the new profit sharing ratio and gain ratio. The g/w of the firm is valued at Rs 16000.Pass necessary journal entries for recording G/W.

7. Ali and Arib are partners in a firm sharing profits in the ratio of 4:1.They had insured their lives jointly for Rs 5,00,000.Ali dies 3 months after date of the last Balance Sheet. According to the partnership deed, legal representatives of the deceased partner were entitled for the following payments. (i)His capital Rs 1, 50,000 as per the last balance sheet.
(ii)Interest on capital @ 12% p.a. (iii)His share of profit to the date of death calculated on the basis of the average profits of last three years were Rs 1,00,000,Rs 1,50,000 and Rs 2,00,000. Prepare Ali’s capital account to by rendered to his representatives and the Executors account.

8. How will you deal with following items while preparing the final accounts of the club?
                                       1-4-2007 (in Rs)       31-3-2008 (in Rs)
Stock of stationary               40000                         30000
Creditors fro stationary        72000                         54000
Amount paid for stationary during the year 2007 -2008- Rs 2,50,000.

9. From the following information calculate the amount of subscription to be credited to the income and Expenditure Account for the year 2007-08.
Subscription received during the year                                  Rs 40000
Subscription outstanding on 31st March 2007                     Rs 11000
Subscription outstanding on 31st March 2008                     Rs 5000
Subscription received in advance on 31st March 2007       Rs 10000

10. The directors of a company forfeited 300 shares of Rs 10 each issued at a premium of Rs 3 per share,for the non-payment of the first call money of Rs 2 per share. The final call for Rs 2 per share has not been made.Half the forfeited share were reissued at Rs 1500 fully paid. Record journal entrie for the forfeiture and reissue of shares.

11. Vt Ltd.Forfieted 20 shares of Rs 10each (7 called up) issued at a discount of 10% to Meena on which she had paid Rs 2 per share .Out of these 18 shares were reissued to Neeta as Rs 8 called up for Rs 6 per share.Give journal entries to record forfeiture and reissue of shares./

12. JCM Ltd invited applications for issuing 20000 equity shares of Rs 20 each at a discount of 10 %.The whole amount was payable on application.The issue was fully subscribed .Pass necessary journal entries.

13. Write two items on credit side of partners current accounts.

14. A,B and C are partners sharing profits and losses in the ratio of 3:2:1. ‘B’ retires.What will be the new profit sharing ratio.

15. Why profit and loss appropriation is prepared?

Question. A, B are partners sharing profits in the ratio of \( 5:3 \). Their balance sheet as on \( 31^{\text{st}} \) December 2013 was as follows:

Balance Sheet of A and B

On the January, 2014, they decided to admit C giving \( 1/5^{\text{th}} \) share. He brings Rs. 50,000 in cash. The partners decide to revalue the assets as follows:
Goodwill: Rs. 50,000       Debtors: Rs. 31,000
Building: Rs. 40,000       Bills Receivable: Rs. 12,500
Furniture: Rs. 2,000       Stock: Rs. 32,500
Plant: Rs. 25,000

The partners decide not to show goodwill account in the new firm. A and B also decided to adjust their capital accounts on the basis of C’s Capital by opening current accounts. You are required to show journal entries regarding Goodwill, Revaluation account, Capital account and Balance Sheet of the new firm.
Answer:
1. Journal Entries in the Books of the Firm

2. Revaluation Account

3. Partners' Capital Accounts

4. Balance Sheet of the New Firm as on 1st January 2014

Question. P, Q, R were partners sharing profits in the ratio of 3:2:1. Their Balance sheet on 31st December 2011 was as follows;

Balance Sheet 31st December 2011

The firm had joint life policy for Rs.60,000 on which premium were paid in all amounting to Rs.25,000. The surrender value of the policy was Rs.90,000 on 31st December 2011. Q retired on the above date upon the following terms:
a) Goodwill of the firm be valued at Rs.25,000.
b) Machinery be written down by 10%, Patent written up by 25%, a provision of 5% be created on debtors and a provision of 3% on creditors be made.
c) Unclaimed liability of Rs.600 is to be written off
d) Sale of scraps realized Rs. 300.
e) Provision of Rs.982 be made for settling dispute with the former manager.
f) Q be paid Rs.7000 by accepting a draft drawn by him payable after 3 months and Rs. 15,000 immediately, which is to be contributed by the other partners in the ratio of their capital.

P and R agreed to share profits in future in the ratio of 3:2 and decided not to keep any account in books in respect of joint policy. Prepare revaluation account, partners capital account and the Balance sheet of the firm after Q’s retirement.
Answer:
1. Revaluation Account

Notes on Adjustments:

• Gaining Ratio of P & R: \( \text{P's Gain} = \frac{3}{5} - \frac{3}{6} = \frac{3}{30} \), \( \text{R's Gain} = \frac{2}{5} - \frac{1}{6} = \frac{7}{30} \). Therefore, Gaining Ratio = \( 3:7 \).
• Share of retiring partner Q in Goodwill = \( \text{Rs. } 25,000 \times \frac{2}{6} = \text{Rs. } 8,333 \) (contributed by P and R in \( 3:7 \), i.e., P: Rs. 2,500; R: Rs. 5,833).
• Share of Q in JLP Surrender value = \( \text{Rs. } 90,000 \times \frac{2}{6} = \text{Rs. } 30,000 \) (adjusted through capitals of P & R in gaining ratio \( 3:7 \), i.e., P: Rs. 9,000; R: Rs. 21,000).
• Existing Goodwill of Rs. 10,000 is written off among old partners in their old ratio (P: Rs. 5,000; Q: Rs. 3,333; R: Rs. 1,667).
• Retained Earnings of Rs. 9,000 is distributed (P: Rs. 4,500; Q: Rs. 3,000; R: Rs. 1,500).
• P and R bring in cash of Rs. 10,000 and Rs. 5,000 respectively (ratio of old capitals \( 2:1 \)) to pay Q Rs. 15,000 immediately.

2. Partners' Capital Accounts

3. Balance Sheet of the New Firm as on 1st January 2012

Question. A, B and C were partners in sharing profit and loss in the ratio of 3:1:1. Their balance sheet as on 31st March 2009 the date on which they dissolve their firm was as follows:

Balance Sheet 31st March 2009

It was agreed that:
a) A to takeover Bills receivable t Rs. 800, debtors amounting to Rs.20,000 at Rs. 17200 and the creditors of Rs. 6000 were to be paid by him at this figure.
b) B is to takeover all stock for Rs.7,000 and some sundry assets at Rs.7,200 (being 10% less than the book value).
c) C to takeover remaining sundry assets at 90% of the book value and assume the responsibility of discharge of loan together with accrued interest of Rs.300.
d) The expenses of the realization were Rs.270/-
Answer:
1. Realisation Account

2. Partners' Capital Accounts

3. Cash Account

Question. Show necessary accounting solutions for the following:
i) X limited forfeited 200 shares of Rs.10 each, Rs. 6 called up, issued at a discount of 10% to Mahesh on which he paid Rs.4 per share out of these 120 shares were reissued at Rs.6 per share to Suresh, Rs. 8 paid up.
ii) DC Limited purchased assets of Rs.38,0000 from Ram Traders. It issued shares of Rs.100 each fully paid at a discount of 5% in satisfaction of purchase consideration.
iii) ABC Company Limited issued 5000 shares at Rs.10 each at a premium of Rs. 2 per share for public subscription, payable at Rs.5 on application and Rs.7 on allotment (including premium). Rajesh who was allotted 200 shares by the company failed to pay the allotment and his shares were forfeited by the company. 100 out of these forfeited shares were reissued to Brijesh as fully paid up for Rs.8 per share.
Answer:
i) Journal Entries for X Limited (Forfeiture and Reissue):

ii) Journal Entries for DC Limited (Issue of Shares to Vendor):

iii) Journal Entries for ABC Company Limited (Forfeiture and Reissue):

Question. A company invited application for issuing 2,50,000 equity shares of Rs.10 each. The amount was payable as follows:
On Application: Rs.2
On Allotment: Rs.5
On first and final call: Rs.3

Applications for 4,00,000 shares were received and the allotment was made as follows:

All the shares were allotted on pro rata basis and excess application money was adjusted towards some due on allotment. Shakun who belonged to category I and to whom 1000 shares were allotted failed to pay the allotment money. Her shares were forfeited immediately after allotment. Sneha who belonged to Category II and who had applied for 400 shares failed to pay the final call. Her shares were forfeited after the final call. Out of the forfeited shares all the shares were reissued as fully paid up at the rate of Rs.8 per share. Pass the necessary journal entries in the books of the company.
Answer:
Journal Entries in the Books of the Company:

Question. Pass journal entries for the following:
A Shasco Ltd. Issued 5000, 9% debentures of Rs.500 each. Pass journal entries when;
i) Debentures are issued at 10% Premium and redeemable at par.
ii) When debentures are issued at a premium of 25% to the vendors at for machinery purchased for Rs.25,00,000
B i) Redeemed 1200, 10% debentures of Rs.75 each by converting in equity shares of 100 each. The equity shares were issued at a discount of 10%.
ii) Converted 550, 12% debentures at Rs.1000 each in to new 13% debentures of Rs.100 each. The new debentures were issued at a premium of 10%.
Answer:
Journal Entries:

Question. List the items which are shown under the heading current liabilities as per schedule VI part I of the companies act 1956.
Answer:
As per Schedule VI Part I of the Companies Act, 1956, the following items are shown under the heading "Current Liabilities and Provisions":

A. Current Liabilities:

1. Acceptances (Bills Payable)
2. Sundry Creditors
3. Subsidiary Companies' Balances
4. Advance Payments and Unexpired Discounts (Deferred Revenue/Income received in advance)
5. Unclaimed Dividends
6. Other Liabilities (such as Outstanding Expenses, Salaries/Wages outstanding, etc.)
7. Interest Accrued but not due on Loans

Question. Give the major heading under which the following items will be put as per schedule VI part I of the companies act 1956.
a) Long term investment
b) Provision of tax
c) Preliminary expenses
d) Loose tools
e) Bill receivable
f) Patents
g) Discount issue of shares
h) Sundry creditors
i) Unclaimed dividend
j) Motor car
Answer:
Under Schedule VI Part I of the Companies Act, 1956, the items are classified under the following major headings:

Question. From the following information provided prepare comparative income statement for the period 2011 and 2012.

Answer:
Comparative Income Statement for the Years Ended 2011 and 2012:

Question. Debtors turn over ration - 4 Times
Average debtors - Rs.1,80,000
Cash Sales - 25% of total sales
Gross profit ratio - \( 33\frac{1}{3}\% \)
Calculate a) sales b) cost of goods sold
Answer:
a) Calculation of Sales:
Debtors Turnover Ratio is given by:
\[ \text{Debtors Turnover Ratio} = \frac{\text{Net Credit Sales}}{\text{Average Debtors}} \]
Given, Debtors Turnover Ratio = 4 times, and Average Debtors = Rs. 1,80,000.
\[ 4 = \frac{\text{Net Credit Sales}}{\text{Rs. } 1,80,000} \]
\[ \text{Net Credit Sales} = 4 \times \text{Rs. } 1,80,000 = \text{Rs. } 7,20,000 \]

Since Cash Sales = \( 25\% \) of Total Sales, Credit Sales will be:
\[ \text{Credit Sales} = 100\% - 25\% = 75\% \text{ of Total Sales} \]
Therefore,
\[ \text{Total Sales} = \frac{\text{Net Credit Sales}}{0.75} = \frac{\text{Rs. } 7,20,000}{0.75} = \text{Rs. } 9,60,000 \]

b) Calculation of Cost of Goods Sold (COGS):
Gross Profit Ratio = \( 33\frac{1}{3}\% = \frac{1}{3} \text{ of Sales} \)
\[ \text{Gross Profit} = \frac{1}{3} \times \text{Rs. } 9,60,000 = \text{Rs. } 3,20,000 \]
\[ \text{Cost of Goods Sold (COGS)} = \text{Total Sales} - \text{Gross Profit} \]
\[ \text{COGS} = \text{Rs. } 9,60,000 - \text{Rs. } 3,20,000 = \text{Rs. } 6,40,000 \]

Question. Calculate the current ratio from the following information:
Total assets - Rs.4,50,000
Fixed assets - Rs.2,40,000
Non current investment - Rs.1,50,000
Long term liabilities - Rs.1,20,000
Share holders fund - Rs. 3,00,000
Answer:
1. Calculation of Current Assets:
\[ \text{Total Assets} = \text{Fixed Assets} + \text{Non-Current Investments} + \text{Current Assets} \]
\[ \text{Rs. } 4,50,000 = \text{Rs. } 2,40,000 + \text{Rs. } 1,50,000 + \text{Current Assets} \]
\[ \text{Current Assets} = \text{Rs. } 4,50,000 - \text{Rs. } 3,90,000 = \text{Rs. } 60,000 \]

2. Calculation of Current Liabilities:
\[ \text{Total Equity & Liabilities} = \text{Total Assets} = \text{Rs. } 4,50,000 \]
\[ \text{Total Equity & Liabilities} = \text{Shareholders' Fund} + \text{Long-Term Liabilities} + \text{Current Liabilities} \]
\[ \text{Rs. } 4,50,000 = \text{Rs. } 3,00,000 + \text{Rs. } 1,20,000 + \text{Current Liabilities} \]
\[ \text{Current Liabilities} = \text{Rs. } 4,50,000 - \text{Rs. } 4,20,000 = \text{Rs. } 30,000 \]

3. Current Ratio:
\[ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{\text{Rs. } 60,000}{\text{Rs. } 30,000} = 2:1 \]

Question. From the following information calculate (i) Opening Stock (ii) Liquid Ratio (iii) Operating profit ratio.
Current assets - Rs.1,00,000
Current Liabilities - Rs.70,000
Total sales - Rs.2,00,000
Cost of Goods sold - Rs.1,50,000
Operating Expenses - Rs. 20,000
Stock Turnover Ratio - 5 times
Closing stock is more by Rs.4,000 than opening stock.
Answer:
(i) Calculation of Opening Stock:
\[ \text{Stock Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Stock}} \]
\[ 5 = \frac{\text{Rs. } 1,50,000}{\text{Average Stock}} \]
\[ \text{Average Stock} = \frac{\text{Rs. } 1,50,000}{5} = \text{Rs. } 30,000 \]
Let Opening Stock = \( x \). Then Closing Stock = \( x + 4,000 \).
\[ \text{Average Stock} = \frac{\text{Opening Stock} + \text{Closing Stock}}{2} \]
\[ \text{Rs. } 30,000 = \frac{x + (x + 4,000)}{2} \]
\[ \text{Rs. } 60,000 = 2x + 4,000 \implies 2x = 56,000 \implies x = \text{Rs. } 28,000 \]
Therefore,

• Opening Stock = Rs. 28,000
• Closing Stock = Rs. 32,000

(ii) Calculation of Liquid Ratio:
\[ \text{Liquid Assets} = \text{Current Assets} - \text{Closing Stock} = \text{Rs. } 1,00,000 - \text{Rs. } 32,000 = \text{Rs. } 68,000 \]
\[ \text{Liquid Ratio} = \frac{\text{Liquid Assets}}{\text{Current Liabilities}} = \frac{\text{Rs. } 68,000}{\text{Rs. } 70,000} \approx 0.97:1 \]

(iii) Calculation of Operating Profit Ratio:
\[ \text{Operating Profit} = \text{Total Sales} - \text{Cost of Goods Sold} - \text{Operating Expenses} \]
\[ \text{Operating Profit} = \text{Rs. } 2,00,000 - \text{Rs. } 1,50,000 - \text{Rs. } 20,000 = \text{Rs. } 30,000 \]
\[ \text{Operating Profit Ratio} = \left(\frac{\text{Operating Profit}}{\text{Total Sales}}\right) \times 100 = \left(\frac{\text{Rs. } 30,000}{\text{Rs. } 2,00,000}\right) \times 100 = 15\% \]

Question. Closing Stock Rs.30,000 Opening stock Rs. 20,000 Sales Rs.1,00,000 Administrative and selling expenses Rs.20,000 Purchases Rs. 70,000
Calculate (i) Gross profit Ratio (ii) Net Profit Ratio (iii) Stock turnover Ratio
Answer:
(i) Calculation of Gross Profit Ratio:
\[ \text{Cost of Goods Sold (COGS)} = \text{Opening Stock} + \text{Purchases} - \text{Closing Stock} \]
\[ \text{COGS} = \text{Rs. } 20,000 + \text{Rs. } 70,000 - \text{Rs. } 30,000 = \text{Rs. } 60,000 \]
\[ \text{Gross Profit} = \text{Sales} - \text{COGS} = \text{Rs. } 1,00,000 - \text{Rs. } 60,000 = \text{Rs. } 40,000 \]
\[ \text{Gross Profit Ratio} = \left(\frac{\text{Gross Profit}}{\text{Sales}}\right) \times 100 = \left(\frac{\text{Rs. } 40,000}{\text{Rs. } 1,00,000}\right) \times 100 = 40\% \]

(ii) Calculation of Net Profit Ratio:
\[ \text{Net Profit} = \text{Gross Profit} - \text{Administrative and Selling Expenses} \]
\[ \text{Net Profit} = \text{Rs. } 40,000 - \text{Rs. } 20,000 = \text{Rs. } 20,000 \]
\[ \text{Net Profit Ratio} = \left(\frac{\text{Net Profit}}{\text{Sales}}\right) \times 100 = \left(\frac{\text{Rs. } 20,000}{\text{Rs. } 1,00,000}\right) \times 100 = 20\% \]

(iii) Calculation of Stock Turnover Ratio:
\[ \text{Average Stock} = \frac{\text{Opening Stock} + \text{Closing Stock}}{2} = \frac{\text{Rs. } 20,000 + \text{Rs. } 30,000}{2} = \text{Rs. } 25,000 \]
\[ \text{Stock Turnover Ratio} = \frac{\text{COGS}}{\text{Average Stock}} = \frac{\text{Rs. } 60,000}{\text{Rs. } 25,000} = 2.4 \text{ times} \]

Question. From the following Balance sheet of XYZ Ltd.as on 31st March 2010 and 31st March 2011 prepare a cash flow statement

During the year equipment costing Rs. 50,000 was purchased. Loss on sale of equipment amounted to Rs. 6,000. Rs. 9,000 was charged on equipment.
Answer:
XYZ Ltd. — Cash Flow Statement for the Year Ended 31st March 2011

Working Note on Equipment Account:
\[ \text{Opening Balance} = \text{Rs. } 2,50,000 \]
\[ \text{Add: Purchases during the year} = \text{Rs. } 50,000 \]
\[ \text{Less: Depreciation charged} = \text{Rs. } 9,000 \]
\[ \text{Less: WDV of Sold Equipment (Balancing Fig.)} = \text{Rs. } 41,000 \]
\[ \text{Closing Balance} = \text{Rs. } 2,50,000 \]
Since loss on sale is Rs. 6,000, Sale Value = \( 41,000 - 6,000 = \text{Rs. } 35,000 \).

Question. X Ltd. Made a profit of Rs. 1,00,000. Calculate cash flow from operating activities.
Depreciation of fixed assets: Rs. 20,000
Writing off of preliminary expenses: Rs. 10,000
Loss on sale of furniture: Rs. 1,000
Provision of taxation: Rs. 1,60,000
Transfer to general reserve: Rs. 14,000
Profit on sale of machinery: Rs. 6,000

Answer:
Calculation of Cash Flow from Operating Activities: