CBSE Set Qa7a Accounts Sample Test Papers For Class 12th for students online

Accounts Class - XII  (CBSE)
You are on Set no 2 Answer 6 to 14

Q6) A, B and C were partners in a firm. On 1.1.98 their capitals stood at Rs. 50,000/-, Rs. 25,000/- and Rs. 25,000/- respectively. As per the provisions of the partnership deed:
(a) C was entitled for a salary of Rs. 1,000/- pm.
(b) Partners were entitled to interest on capital at 5% pa..
(c) Profits were to be shared in the ratio of capitals.
The net profit for the year 1998 of Rs. 33,000/- was divided equally without providing for the above terms.
Pass an adjustment entry to rectify the above errors.    (Marks 4)
Ans6) Working Notes :

Thus, the adjustment entry is,

Journal

Q13) The following information is provided to you:

From the above information, calculate any three of the following ratios :
(a) Debt Equity Ratio
(b) Capital Turnover Ratio
(c) Interest coverage ratio
(d) Return on Investment
(e) Debt to total funds ratio  (Marks 6)
Ans13) (a) Debt Equity Ratio = Long term debts/Shareholders' funds
Shareholders funds = Share capital + General Reserve + Profit
= 160000 + 80000 + 80000
= 320000
Thus, the ratio = 100000/320000
= 5 : 16

(b) Capital Turnover Ratio = Sales/Capital Employed
Capital Employed = Share capital + General Reserve + 15% loan + Profit
= 160000 + 80000 + 100000 + 80000
= 420000
Thus, the ratio = 200000/420000
= .47 times

(c) Interest coverage ratio = (Net profit before interest, tax and dividend) / Interest charges
Net profit before interest, tax = Net profit after interest, tax + tax + interest
= 80000 + 15000 + 40000
= 135000
Interest charges = 15/100 x 100000
= 15000
Ratio = 135000/15000
= 9 times

(d) Return on Investment = (Net profit before interest, tax, dividend/capital Employed) x 100
= (135000/420000) x 100
= 32.14%

(e) Debt to total funds ratio = Long term debts/capital employed
= 100000/420000
=1 : 4.2

Q14) What is analysis of financial statements? Briefly explain the techniques of analysing these statements.  (Marks 6)
Ans14) Meaning of analysis of financial statements :
Analysis of financial statements is a study of relationships among the various financial factors in a business. It is an attempt to determine the meaning and significance of financial statement data so that the forecast may be made regarding future earnings, profitability and the likes. Thus it is such treatment to information disclosed in financial statement to afford a full diagnosis of profitability and financial position of the firm.

Techniques of Financial Statement Analysis :
They are broadly classified into three categories:
a) Cross Sectional Analysis or Inter firm comparison.
b) Time series Analysis or Intra comparison.
c) Cross Sectional-cum-time series analysis.

Cross Sectional Analysis : Under this, financial statements of one firm are compared with financial statements of one or more other similar firms for profitability, solvency, liquidity, credit worthiness and the likes. It prepares the comparative financial characteristics of an enterprise with other comparable enterprises.

Time Series Analysis : This reflects the movement of various financial characteristics. Under this the financial characteristics of a firm are compared over a number of years.

Cross Sectional-cum-Time Series Analysis: This is the most effective approach of financial statement analysis and compares the financial characteristics of two or more enterprises for a defined accounting period.

Q17) State the reasons whether the following would result in an inflow, outflow or no flow of funds. Attempt any four:
(a) Redemption of debentures;
(b) Debentures converted as redeemable preference shares;
(c) Amount transferred to provision for taxation;
(d) Tax refund;
(e) Obtained loan for mortgage.  (Marks 4)
Ans17) (a) Redemption of debentures :
Outflow of funds for cash will be paid to redeem the debentures. As cash is current and the debentures non-current, so there is outflow of funds.

(b) Debentures converted as preference shares :
No flow of funds because both the items of the transaction, i.e. debentures and preference shares are non-current.

(c) Amount transferred to prov. for taxation :
No flow of funds because the terms involved are non-current.

(d) Tax refund : Tax refund will have inflow of funds as the refund of tax will increase the cash balance.

(e) Repaid loan on mortgage :
Outflow of funds as cash is decreasing for repayment of loans.

Q18)  From the following Balance Sheet prepare Schedule showing  changes in Working Capital and  Funds Flow Statement:

Balance Sheet

Additional information :
(a) Depreciation charged on Fixed Assets was Rs. 60,000/-.
(b) A machine of book value of Rs. 40,000/- was sold for Rs. 25,000/-.  (Marks 12)
Ans18) 

Schedule of changes in Working Capital

Funds flow Statement for the year ended

Working Notes:

Fixed Assets A/C

Adjusted P/L A/C