CBSE Set Qa5 Accounts Sample Test Papers For Class 12th for students online
Accounts Class - XII 2000
(CBSE)
You are on Set no 1 Answer 10 to 15
Part B
(ANALYSIS OF FINANCIAL STATEMENTS)
Q10) When does flow of funds
take place? Explain briefly? (Marks 3)
Ans10) Flow of funds takes place when there is a change in the
working capital. The journal entry is passed for the transaction. The accounts
of the entry are classified as current assets or current liabilities or
non-current assets and non-current liabilities. If all the account of the
transaction are of current category, there will be no flow of funds. Similarly
no flow of funds will take place if all the accounts are of non-current
category. If one account of transaction belongs to current category of the other
to non-current category. There will be flow of fund.
Q11) A company earns a
gross profit of 20% on cost. Its credit sales are twice its cash sales. If the
credit sales are Rs. 4,00,000, calculate the gross profit ratio of the company.
(Marks 4)
Ans11) Credit sales = 400000
Gross profit = 20% on Cost
Credit sales = 2 (cash sales)
...Cash sales = 200000
Total sales = Cash sale + Credit sale
= 200000 + 400000
= 600000
Let cost = 100, Profit = 20
...Sale = 120
Hence, when sale = 120, cost = 100
Sales = 600000, Cost = 100/120 x 600000 = 500000
Gross profit ratio = (Gross profit/Net sales) x 100 = 100000/600000 x 100
= 16.6%
Gross profit = Sales - Cost
= 600000 - 500000
= 100000
Q12) Find out the sources and application of funds from the details given below extracted from the Balance Sheet of Arun Ltd :
| Machinery at cost Provision for Depreciation on Machinery |
31/12/1997 Rs. 8,00,000 1,00,000 |
31/12/1998 Rs. 14,00,000 1,50,000 |
Additional Information :
During the year a piece of machinery costing Rs. 30,000 on which accumulated
depreciation was Rs.10,000 was sold for Rs. 25,000 (Marks 5)
Ans. 12)
Machinery A/C
|
Particulars
|
Amount
|
Particulars
|
Amount
|
|
|
To balance b/d
To P/L (gain on sale) To Cash A/C (Purchases) |
800000 |
By Cash (Sales)
By Prov. for Depreciation By balance c/d |
25000 |
Thus, the sources of fund = Rs. 25000
Application of funds = Rs. 630000
Q13) Briefly explain the
meaning and significance of any two of the following ratios :
(i) Return on Investment,
(ii) Debt - Equity Ratio and
(iii) Stock Turnover Ratio. (Marks 5)
Ans13) (i) Return on Investment :
The overall performance of a business is judged by this ratio which is a measure
of relationship between profit earned and capital employed. It ascertains how
much income the use of Rs. 100 of capital generates. The ratio is expressed as
%.
It is calculated as:
Profit before interest and tax x 100
Capital employed
Where capital employed = Share capital + Reserve + Long term loan - Fictitious
assets and non-operating assets.
ROI is a fair measure of the profitability of any concern which also helps in
comparing performance efficiency of different industries.
(ii) Debt Equity Ratio :
This ratio indicates the relationship between shareholders funds and long term
liabilities. Shareholders funds include equity and preference share capital,
reserves less fictitious assets. It is computed as :
Long term debts
Shareholders funds
The ratio is calculated to ascertain the long term financial soundness of
business. It indicates the extent to which business depends upon outsiders. It
discloses the firms ability to meet its long term obligations. The lower the
ratio, the better for the firm.
(iii) Stock Turnover Ratio :
This ratio gives the relationship between cost of goods sold during a given
period and the average amount of inventory during that period :
Cost of Goods Sold
Average stock
where, cost of goods sold = Opg stock + Purchase + Direct Exp. - Cl. stock
The ratio indicates whether stock has been efficiently used or not. The purpose
is to keep only the required minimum invested in stock. Higher the ratio the
better as it indicates that more sales are produced by a rupee of Invest in
stock. In directs the management attention to control excess investment in stock
and helps reduce storage cost.
Q14) Prepare a comparative income statement of X Ltd., with the help of the following information:
Sales Cost of goods sold |
1997 |
1998 |
| Indirect
expenses Rate of Income Tax |
10% of Gross
Profit |
|
(Marks 5)
Ans14).
X LTD.
Comparative Income Statement for the year eneded 1997 and 1998
|
Particulars |
1997 |
1998 |
Absolute |
% Change |
|
Sales |
100000 60000 40000 4000 36000 18000 18000 |
200000 140000 60000 6000 54000 27000 27000 |
100000 80000 20000 2000 18000 9000 9000 |
100 133.33 50 50 50 50 50 |
Q15) What is meant by
analysis of financial statements? Briefly explain horizontal analysis.? (Marks
6)
Ans15) Analysis of financial statement is a systematic process of
evaluating and establishing relationships between different components of
financial statements to better understand the performance of the firm. It
determines the meaning of the information disclosed in the financial statement
of have complete results regarding profitability and financial position of the
firm.
Horizontal analysis is a technique of financial analyses to depict the trends of
financial characteristics of an enterprise over the years. It involves :
(i) Analysis of financial statement of a firm for a number of years.
(ii) Analysis of financial statement of different enterprises for the same year.
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