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2151.

Fine Garments Ltd. Is engaged in the export of readymade garments. The company purchased a machinery of Rs 10,00,000 for the use in packaging of such garments. Cash flow due to the purchase of machinery will be cash flow from:

Answer»

CASH Flow FRO Operating ACTIVITIES
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Cash Flow from Financing Activities

ANSWER :B
Discussion
2152.

Finserve Ltd., is carrying on a Mutual Fund business. In invested Rs. 30,00,000 in shares and Rs. 15,00,000 in debentures of various companies during the year. It received Rs. 3,00,000 as dividend and interest. Find out Cash Flow from Investing Activities.

Answer»

Solution :Cash FLOW from INVESTING Activities-Nil, Finserve Ltd. Is a FINANCING CO.
Discussion
2153.

Financial Statements reflect a combination of recorded facts, accounting conventions and personal judgments.' Discuss.

Answer»


SOLUTION :N/a
Discussion
2154.

Financial Analysis is significant for

Answer»

Investors
Bankers and Lenders
Employees and Management
all of these

Solution :all of these
Discussion
2155.

Financial analysis helps an analyst to arrive at a decision.

Answer»


ANSWER :1
Discussion
2156.

Financial Analysis can be used for

Answer»

SECURITIES Analysis.
Credit Analysis.
Dividend Decisions.
All of these.

Solution :All of these.
Discussion
2157.

Financial analysis becomes significant because it :

Answer»

Ignores price level changes
Measures the EFFICIENCY of business
Lacks qualitative analysis
Is EFFECTED by PERSONAL bias

Answer :B
Discussion
2158.

Financial analysis become useless because it :

Answer»

Measuresthe profitability
Measures theSolvency
LACKS QUALITATIVE Analysis
Makes a COMPARATIVE study

Answer :C
Discussion
2159.

Fill in the blanks with appropriate words: (i) When the firm is dissolved, Reserve is transferred to __________ in the profit -sharing ratio. (ii) Urecorded liability paid at the time of dissolution of the firm to be debited to ________ Account. (iii) When an unrecorded asset is realised at the time of dissolution of the firm________. Account is debited and _______ Account is credited. (iv) Goodwill Account appearing in the books on the dissolution date is closed by transferring it to _________ side of the ________ Account. (v) Entry for the asset taken over by a creditor is ______ but entry for the net payment to the creditor is made. (vi) Debit balance of Profit and Loss Account is transferred to _______ Accounts at the time of dissolution of the firm. (vii) Expenses of realisation are ______ to Realisation Account. (viii) Unrecorded asset takem by a partner is ________ to Partner's Capital Account. (ix) Balance of Realisation Account is transferred to ___________

Answer»


Solution :(i) Partner's CAPITAL ACCOUNTS (ii) Realisation (III) Cash, Realisation (IV) debit, Realisation (v) not passed (vi) Partner's Capital (vii) debited (viii) debited (ix) Capital Accounts of the PARTNERS in their profit-sharing ratio
Discussion
2160.

Fill the missing value in the following:

Answer»

SOLUTION :
Discussion
2161.

Fill in the blanks with appropriate words: (i) The objective of financial statement analysis is _________ comparison. (ii) _________ financial statement analysis is based on one year's data. (iii) Financial Statement analysis is not free from _________ bias. (iv) Financial Statement analysis ignores price level changes. it is its ________ (v) __________ financial statement analysis of dynamic

Answer»


Solution :(i) intra-firm (ii) vertical (III) PERSONAL (iv) limitation (V) Horizontal
Discussion
2162.

Fill in the blanks with appropriate words: (i) The basis of Cash Flow Statements is ________ (ii) Debentures issued for consideration other than cash are not shown in the Cash Flow Statement because _______ is not received against the issue. (iii) Marketable Securities are included in ________ (iv) Current investment are shown as ________ (v) Buy back of own shares is shown as outflow in Financing Activity as ________ (vi) Share issue expenses paid are shown as outflow under ________ (vii) Discount/Loss on Issue of Debentures written off is shown by way of deduction from ________ of the debentures. (viii) Patents purchased and completely amortised in the year of purchase is added under ________ and shown as Outflow under ______ (ix) Purchase and sale of securities by a financing company is ___________ (x) Purchase of securities by a non-finance company is _________

Answer»


Solution :(i) cash basis (ii) cash (III) cash and cash equivalents (iv) cash and cash equivalents (v) extraordinary activity (vi) FINANCING activity (vii) nominal value (face value) (viii) operating activity, INVESTING activities (ix) operating ACITIVITY (x) investing activity
Discussion
2163.

Fill in the blanks with appropriate words: (i) Shares on which the company has called total nominal value and has also received it is shown in the Note to Accounts on Share Capital under Subscribed Capital as _______ (ii) Minimum subscription prescribed is _______ (iii) Shares on which the company has called the total nominal value but has not fully received final call of Rs 2 on 500 shares, the shares on which the final call of Rs 2 on 500 shares, the shares on which the final call is not received are shown in the Note to Accounts on share Capital under Subscribed Capital as _______ (iv) A company has resolved to call Rs 2 per share at the time of winding up the company. Rs 2 per share is ________ Capital. (v) Securities Premium Reserve is the liabilities side in the Balance Sheet under ________ (vi) Trade Payables, unless agreed otherwise, are shown as __________ (vii) Prepaid Insurance is shown as _____ in the Balance Sheet

Answer»


Solution :(i) Subscribed and Fully paid up (II) 90% (iii) Subscribed but not fully paid up (IV) Reserve (v) Reserves and SURPLUS (VI) Current Liabilities (vii) Other Current Assets
Discussion
2164.

Fill in the blanks with appropriate words: (i) If the partners of a firm decided to change their profit -sharing ratio, the gaining partner compensates the sacrificing partner by paying the proportionate amount of _________ (ii) Change in relationship among the partners is ________ of the partnership firm. (iii) Revalution of assets on the reconstitution of partnership is necessary because their present value may be different from their_________ (iv) A change in profit -sharing ratio among the existing partners results in _________ of the partnership firm. (v) Revalution Account is a _________ Account. (vi) Workmen Compensation Reserve is a reserve created out of profit to meet the _________. (vii) The ratio in which all the partners share future profits and losses is known as_________

Answer»


Solution :(i) goodwill (II) reconstitution (iii) book value (iv) reconstitution (V) Nominal (vi) Workmen COMPENSATION Liability (vii) new profit -SHARING ratio
Discussion
2165.

Fill in the blanks with appropriate words: (i) Goodwillis an ______ asset, but not a ________ asset (ii) Goodwill is a capitalised value of _______ (iii) Under Average Profit Method, goodwill is calculated by multiplying the _______ by a certain number of year's purchase as agreed by the partners. (iv) ________ is the excess of actual profit over the normal profit (v) When the business is taken over by another business, the excess of purchase consideration over its net asset value is referredto as ______ (vi) The value of goodwill is based on______ judgment of the value. (vii) Under_____ method goodwill is the excess of Capitalised Value of business over Net Assets. (viii) Average Profit = __________ (ix) Anyfirm that earns only normal profits or is incurring loss, normally does not have____________

Answer»


SOLUTION :(i) intangible, FICTITIOUS ; (ii) Super Profit; (iii) Average Profit; (iv) Super Profit; (v) Purchased GOODWILL; (vi) subjective; (vii) Capitalisation of Average Profit; (VIII) Total Profits/No. of RELEVANT year; (ix) goodwill
Discussion
2166.

Fill in the blanks with appropriate words: (i) Receipts and Payments Account is___________ of the year's_____. (ii) In the Receipts and Payments Account receipts are shown on the _______ side. (iii) Credit balance in the Income and Expenditure Account means excess of _____ over _____ (iv) Income and Expenditure Account shows all_________ receipts and ____ Payments for an accounting year (v) Subscriptions received in advance by a club are shown on the_________ side of the Balance Sheet. (vi) Life Membership Fees received by a club are shown on the _____. (vii) Excess of expenditure over income is_________ Capital Fund in the Balance Sheet. (viii) Income and Expenditure Account is prepared by_______ concerns. (ix) Match fund of Rs 1,000 appears in the books. Match expenses for a year amount to Rs 1,200. _______ will be debited to the Income and Expenditure Account (x) If expenditure is Rs 16,000 and surplus credited to Capital Fund Rs 4,500, income is_________

Answer»


Solution :(i) a summary, cash and BANK transactions; (ii) debit; (iii) Income, EXPENDITURE; (IV) Revenue, Revenue; (v) liabilities; (vi) Balance Sheet; (vii) deducted from ; (viii) not-for-profit,; (ix) RS 200; (x) Rs 20,500
Discussion
2167.

Fill in the blanks with appropriate words: (i) Liquidity Ratios measure _______ solvency of the enterprise. (ii) _________ and stores and spares are not considered in computing Current Ratio. (iii) Debit balance is Surplus, i.e., Balance in Statement of Profit and Loss is deducted to calculate ________ to calculate Debt-Equity ratio. (iv) It is an objective of __________ ratio is to measure proportion of fixed assets financed by the Shareholder's Funds. (v) ________ estabilishes the number of times amount invested in trade receivables is turned over in a year in relation to Revenue from Operations. (vi) The formula for Working Capital Turnover ratio is __________ (vii) Complete the formula for Inventory Turnover Ratio: cost of Revenue from Operations/________. (viii) Gross Profit + Other Income - ________ = Net Profit. (ix) __________ and Operating Profit Ratio are complimentary to each other. (x) Trade Payable is the sum total of Creditors and _______

Answer»


SOLUTION :(i) Short-term (ii) Loose tools (iii) Shareholders' Funds (iv) Proprietary (V) Trade Receivables Turnover Ratio (vi) Revenue from Operation/Working Capital (vii) Average Inventory (VIII) Indirect Expenses (ix) Operating Ratio (X) BILLS Payable
Discussion
2168.

Fill in the blanks with appropriate words: (i) Debentures are redeemed without setting aside amount to Debenture Redemption Reserve (DRR). It is redemption out of _______ (ii) Debentures are redeemed setting aside full nominal (face) value of debentures of Debenture Redemption Reserve (DRR). It is redemption out of ________ (iii) Debentures are redeemed setting aside 25% of nominal (face) value of debentures to Debenture Redemption Reserve (DRR). It is redemption out of ________ (iv) Amount should be set aside to _______ before the redemption of debentures. (v) Debentures Redemption Investment (DRI) should be made of an amount at least equal to ______ of the nominal (face) value of the debentures to be redeemed during the year ending March 31 of the next year. (vi) Debenture Redemption Investment (DRI) should be made _________ 30th April of the year in which debentures are redeemed. (vii) Discount or Loss on Issue of Debentures is a _______ (viii) It is not necessary for _______ to set aside amount to Debenture Redemption Reserve (DRR). (ix) It is not necessary for All India Financial Institutions regulated by RBI and Banking Companies to Invest amount in ________ (x) Once the debentures are redeemed, amount of DRR is transferred to ________

Answer»


SOLUTION :(i) CAPITAL (II) profit (iii) profit and capital (iv) Debenture Redemption Reserve (DRR); (v) 15% (vi) on or before (vii) capital loss (VIII) All India Financial INSTITUTIONS regulated by RBI and Banking Companies (ix) Debenture Redemption Investment (DRI) (x) General Reserve
Discussion
2169.

Fill in the blanks with appropriate words: (i) Debentures are ________ of the company. (ii) Debenture -holders are _______ of the company. (iii) Debenture Accounts is always credited with the __________ value of the debentures. (iv) Interest on debentures is paid whether the company ________ or ________ (v) An entry may or may not be passed in the Books of Accounts for Debentures issued as ________ (vi) _______ is not paid on Debentures issued as collateral security. (vii) ______ is written off in the year when debentures are issued. (viii) Discount or Loss on Issues of Debentures is written off in the year when debentures are issued first from _______ (ix) A company has Loss on Issue of Debentures of Rs 50,000. It has a balance in Securities Premium Reserve of Rs 25,000. It will debit _______ by Rs 25,000 and ______ by Rs 25,000 in the year of issue. (x) A company has issued 5,000 7% Debentures of Rs 100 each at a price at Rs 94. It will credit 7% Debentures Account by ________ (ix) A company has issued 5,000, 7% Debentures of Rs 100 each at a price of Rs 94. It will pay interset on debentures @ ________ on _______ (xii) Discount or Loss on Issues of Debentures Account will not have _______ at the year end.

Answer»


Solution :(i) borrowings, (ii) lenders (III) nominal (face); (iv) earns profit, incurs loss. (v) collateral security (vi) Interest (VII) Discount or Loss on ISSUE of Debentures (viii) Securities Premium Reserve (IX) Securities Premium Reserve, Statement of Profit and Loss (Finance Cost) (X) Rs 5,00,000 (xi) 7%, Rs 5,00,000 (xii) balance.
Discussion
2170.

Fill in the blanks with appropriate words: (i) Current Accounts of the Partners should be opened when the capitals are_____ (ii) In the absence of an agreement, interest on partner's loan shall be paid @______ (iii) In the absence of an agreement, partners shall _____ salaries. (iv) When there is no agreement among the partners, the profit or loss of the firm will be shared _____ by the partners. (v) ______ is an extension of Profit and Loss Account. (vi) Minimum number of persons required to start partnership business is _______ (vii) Number of partners which should not exceed for partnership business is____ (viii) Salary of Commission to a partner is an ______ out of profit.

Answer»


Solution :(i) fixed (ii) `6% p.a.` (iii) not be paid; (iv) equally; (v) Profit and LOSS Appropriation ACCOUNT; (vi) two; (VII) fifty (viii) appropriation
Discussion
2171.

Fill in the blanks with appropriate words: (i) A, B and C share profits and losses in the ratio of 1/2, 1/3 and 1/6 respectively. D, a new partner, is given 1/8th share. Then new profit-sharing ratio will be ________. (ii) The rati in which the old partners are surrendering their share of profit in favour of the new partner is called _________. (iii) Calculation of sacrificing ratio is necessary when the new partner will bring _______ in cash. (iv) The capital balance of A and B are Rs 25,000 and Rs 20,000 respectively after making all the adjustments. If C, the incoming partner, is to bring 1/3rd of the total capital of the firm, then his share of capital will be _______ (v) For any decrease in the value of liability, the Revaluation Account is ________. (vi) C, the incoming partner is to bring Rs 6,000 as goodwill for 1.5th share in the firm's profit. Total goodwill of the firm will be _________. (vii) Investment Fluctuation Reserve is a reserve set aside out of profit to adjust the difference between _________ and _______ of investments. (viii) In case of admission of a new partner, the Accumulated Profit, Reserves, Losses and Fictitious Assets should be transferred to _________ Partner's Capital/Current Accounts in their _______ profit-sharing ratio. (ix) If goodwill is appearing in the Balance Sheet at the time of admission of a new partner, the existing goodwill is written -off among _________ partners in ________ ratio.

Answer»


Solution :(i) `21 : 14 : 7 : 6`, (ii) SACRIFICING ratio, (iii) PREMIUM for goodwill, (iv) Rs 22,500, (V) credited ; (vi) Rs 30,000; (vii) book value, MARKET value, (viii) OLD, old; (ix) old, old
Discussion
2172.

Fill in the blanks with appropriate words: (i) A company issued 50,000 shares of Rs 10 each for subscription . It receives applications for 60,000 shares. It is a case of ________ (ii) A company issued 50,000 shares of Rs 10 each for subscription. it receives applications for 45,000 shares. it is a case of ________. (iii) A company issued 50,000 shares of Rs 10 each for subscription. It receives applications for 40,000 shares. It is a case of where _________ is not received. (iv) A company issued 50,000 shares of Rs 10 each for subscription. It receives applications for 40,000 shares. It cannot issue shares as it has not received ________. (v) Shares of Rs 10 each on which Rs 8 have been called and received will be shown as ______ (vi) Shares of Rs 10 each on which the company decides to call Rs 2 at the time of its winding up will be shown as ______ (vii) Shares are allotted on pro rata basis in the case of ________ (viii) Shares are allotted to all applicants in the case of _______ (ix) A company may receive calls in advance if its _______ (x) Shares are _______ by a company, if it does not receive the called amount. (xi) Gain (profit) on reissue of forfeited shares is transferred to ________ (xii) ________ on reissue of forfeited shares cannot be more than the amount forfeited. (xiii) Shares cannot be issued at a discount except to employees as _________ (xiv) A company may issue shares for ______ for purchase of assets. (xv) Shares issued to promoterns in lieu of their services are categorised as shares issued for ______ (xvi) Preference Shares can be issued for _____ to promoters or for purchases of business or assets. (xvii) Preference Shareholders have the preferential right to receive ________ before it is paid on Equilty Shares. (xviii) Secured Preference Shares means that Preference shares ar ______ by a charge on the _________ of the company. (xix) Unlike ________ Preference Shares, ______ Preference Shares are those shares on which dividend, if not paid in one year, will not be paid in later years. (xx) In a Balance Sheet, ________ for ________ Share Capital and ______ Share Capital is shown separately

Answer»


Solution :(i) oversubscription (II) undersubscription (iii) Minium subscription (iv) minimum subscription (v) Subscribed but not fully paid (vi) Subscribed but not fully paid Capital (vii) oversubscription (viii) undersubscription (IX) Articles of Association (x) forfeited (xi) Capital RESERVE (xii) Discount (xiii) ESOPs (xiv) consideration other than cash (xv) consideration other than cash (xvi) consideration other cash (xvii) dividend (xviii) secured, assets (XIX) Cumulative, Non-cumulative (xx) Authorised Capital, EQUITY, Preference
Discussion
2173.

Fill in the blanks with appropriate words: (i) Comparative Statement is a tool of _________ analysis. (ii) Comparative Statement is a technique of _________ of two or more years. (iii) In Common-size Balance Sheet, each item of Balance Sheet is expressed as a precentage of ________ (iv) Comparison of values of two year of the firm is known as __________ comparison. (v) Comparison of values of two firms is called _________ comparison.

Answer»


Solution :(i) FINANCIAL (ii) financial analysis (III) TOTAL assets (IV) intra-firm (v) inter-firm
Discussion
2174.

Fill in the blanks in the following entries:

Answer»

Solution :
NOTE: Number of DEBENTURES to be issued =`=("PURCHASE PRICE")/("Issue Price")=("Rs.15,00,000")/("Rs. 100")=15,000" Debentures".`
Discussion
2175.

Fill in the blank with akppropriate words: ltBrgt (i) The profit or loss shown by the Revalution Account at the time of retirement of a partner is transferred to the Capital Accounts of the Partners in the _________ ratio. (ii) At the time of retirement/death, the undistributed profits/losses and reserves are distributed among all the partners in their _________ profit-sharing ratio (iii) Unless agreed otherwise, it is presumed that the continuing partners gain in their _______ and hence their __________ is same as their old profit-sharing ratio. (iv) __________ is the ratio in which the remaining partners acquire the share of retiring or decreased partner. (v) At the time of retirement or death of a partner, goodwill appearing in the books of the firm is written-off among ___________ the partners in their _________ ratio. (vi) When firm pays an amount in excess of total amount due to the retiring partner, then excess amount is treated as ________

Answer»


Solution :(i) OLD profit-sharing (II) old (iii) old profit-sharing ratio, gaining ratio (iv) Gaining Ratio (v) all, old (VI) hidden GOODWILL
Discussion
2176.

Fill in the blanks in the following entries:

Answer»

SOLUTION :
Discussion
2177.

Fill in the blanks (i) Current Ratio =("Current Assets ")/(?) (ii) Return on Total Assets =("Profit after Tax")/(?)xx100

Answer»

SOLUTION :i) CURRENT Liabilities ,(II) TOTAL Assets
Discussion
2178.

Fena Ltd. issued Rs. 7,00,000, 12% Debentures of Rs. 100 each at a premium of 5% redeemable at a premium of 20%. Pass necessary Journal entries at the time of issue of debentures.

Answer»

Solution :(i) Dr. Bank A/c and Cr. DEBENTURES Application and Allotment A/c by Rs. 7,35,000.
(II) Dr. Debentures Application and Allotment A/c by Rs. 7,35,000 and
Loss on Issue of Debentures A/c by Rs. 1,40,000,
Cr. 12% Debentures A/c - Rs. 7,00,000, SECURITIES Premium Reserve A/c - Rs. 35,000 and
Premium on REDEMPTION of Debentures A/c - Rs. 1,40,000.
Discussion
2179.

Fill in the blank spaces in the Journal entries given below:

Answer»

SOLUTION :
Discussion
2180.

Fill in the blank spaces in the Journal entries given below:

Answer»

SOLUTION :
Discussion
2181.

Feature of financial analysis is to present the data contained in financial statements in

Answer»

EASY form
Convenient and RATIONAL groups
Comparable form
All of the Above

Answer :D
Discussion
2182.

Fast Internet Ltd. Issued 10,000 , 7% Debentures of Rs.100 each at a discount of Rs.6 on 1st Ocyober, 2018. These debentures are redeemable at a premium of Rs.4 .Interest for the year ended 31st March , 2019 will be

Answer»

Rs.65,800.
Rs.32,900.
Rs.70,000.
Rs.35,000.

Answer :d
Discussion
2183.

Farhan, Hina and Dolly are parters in a firm sharing profits in the ratio of 5:3:3. On 1st April, 2016, th cpitals of the partners were: Rs 5,00,000, Rs 3,00,000 and Rs 2,00,000 respectively. The firm closes its books on 31st March every year. Dolly died on 5th April, 2016. On that date : (a) Goodwill of the firm was valued at Rs 30,000, and (b) Dolly's share of profit till the date of her death was calculated as Rs 200. Prepare Dolly's Capital A/c to be rendered to her executors.

Answer»

Solution :
WORKING Note: Dolly's Share of Goodwill `=Rs 30,000xx2/10=6,000.` which is to be contributed by Fathan and HINA in their Gaining RATIO of `5:3` as under:
FARHAN's CONTRIBUTION `=Rs 6,000xx5/8=Rs3,750,`
Hina's Contribution `=Rs6,000xx3/8=Rs2,250.`
Discussion
2184.

Fast Internet Ltd. Issued 10,000, 7% Debentures of Rs 100 each at a discounted of Rs 6 on 1st October, 2018. These debentures are redeemable at a premium of Rs 4. Interest for the year ended 31st March, 2019 will be

Answer»

RS 65,800
Rs 32,900
Rs 70,000
Rs 35,000

Answer :D
Discussion
2185.

F Ltd. issued Rs. 1,00,000, 15% Debentures of Rs. 100 each at a premium of 5%, redeemable at a premium of 10% at the end of 4 years. The Board of Directors decided to transfer the minimum required amount to Debenture Redemption Reserve Account at the time of redemption. Pass Journal entries at the time of Redemption of Debentures.

Answer»

Solution :(i) Dr. Surplus, i.e., BALANCE in Statement of Profit and Loss A/c and Cr. DRR A/c by Rs. 25,000.
(ii) Dr. Debenture REDEMPTION Investment A/c and Cr. Bank A/c byRs. 15,000.
(iii) Dr. Bank A/c and Cr. Debenture Redemption Investment A/c by Rs. 15,000.
(iv) Dr. 15% Debentures A/c - Rs. 1,00,000 and Premium on Redemption of Debentures A/c - Rs. 10,000, Cr. Debentureholders' A/c - Rs. 1,10,000.
(V) Dr. Debentureholders' A/c and Cr. Bank A/c by Rs. 1,10,000.
(VI) Dr. DRR A/c and Cr. GENERAL Reserve A/c by Rs. 25,000.
Discussion
2186.

Extracts of Receipt and Payment Account for the year ended March 31, 2017 are given below: Additional Information: Total number of members: 230. Annual membership fee: Rs. 125. Subscriptions outstandings on April 1, 2016: Rs. 2,750. Prepare a statement showing all relevant items of subscriptions viz., income, advance, outstandings, etc.

Answer»

SOLUTION :Amount of subscription DUE for the YEAR 2016-17 irrespective of cash Rs. 28,750 (i.e. Rs. 125 × Rs. 230).

NOTE: The amount of subscriptions outstanding as on 01-04-2014 has been ascertained as follows:
Discussion
2187.

Extract of a Receipt and Payment Account for the year ended on March 31, 2015: Payments: Stationery Rs. 23,000 Additional Information:

Answer»

Solution :
Stationery: Normally expenses incurred on stationary, a consumable items are charged to Income and Expenditure Account. But in case stock of stationery (OPENING and/or closing) is given, the approach would be make necessary adjustments in purchases of stationery and work out cost of stationery consumed and show that AMOUNT in Income and Expenditure Account and its stock in the balance sheet. For EXAMPLE, the Receipt and Payment Account shows a payment for stationery AMOUNTING to Rs. 40,000 and there is an opening and closing stationery amounting to Rs. 12,000 and Rs. 15,000. The amount of expense on stationery will be worked out as follows:

In case stationery is also purchased on credit, the amount of its CONSUMPTION will be worked out as given in Illustration 12.
Discussion
2188.

Explain with an imaginary example how issue of debentures as collateral security is shown in the Balance Sheet of a company when it is recorded in the Books of Account.

Answer»

Solution :Example: X Ltd. secured a loan of Rs. 8,00,000 from the Bank of Baroda by issuing 10,000, 9% Debentures of Rs. 100 each as COLLATERAL SECURITY.
For Presentation in BALANCE Sheet: Refer to Answer of Previous QUESTION - Second Method (When Journal Entry is passed).
Discussion
2189.

Explanin the accounting reatment of specific donation in case of Not-for-Profit Organisation.

Answer»

Solution :Specific DONATIONS are shown on the liabilities SIDE of the BALANCE Sheet.
Discussion
2190.

Explain the term 'Subscribedbut not fully paid-up Share Capital'.

Answer»

Solution :It is the amount of share CAPITAL issued by a COMPANY that is SUBSCRIBED but the company has not received entire nominal (FACE) value of the share.
Discussion
2191.

Explain With illustration the concept of Fund Based Accounting.

Answer»


SOLUTION :N/a
Discussion
2192.

Explain ‘Transparency control’ and ‘Scalability’ as features of Computerized Accounting System

Answer»

Solution :Transparency and control CAS provides sufficient time to PLAN, increases DATA accessibility and enhances user satisfaction. With computerised accounting, the organisation will have GREATER transparency for day to day business OPERATIONS and access to the vital information.
ScalabilityCAS enables in changing the volume of data processing in tune with the change in the SIZE of the business. The software can be used for any size the business and type of the organisation.
Discussion
2193.

Explain the term operating Cycle?

Answer»

Solution :The term 'Operating Cycle' MEANS the TIME TAKEN for acquisition of ACTS CURRENT Liabilites on the basis of Operating cycle .
Discussion
2194.

Explain the provisions of Section 48 of Partnership Act , 1932 dealingwith the settlement of accounts at the time of dissolution of firm .

Answer»
Discussion
2195.

Explain the term 'Subscribed and Fully Paid-up Share Capital'.

Answer»

Solution :It is the AMOUNT of share capital issued by a company that is SUBSCRIBED on which the company has called and also received ENTIRE nominal (FACE) VALUE of the share.
Discussion
2196.

Explain the following terms.

Answer»

SOLUTION :
ASSETS: Assets are those resource that the business owns. These refer to some property or LEGAL RIGHT owned by a business unit ,which can be measured in terms of money .
Liabilities: Liabilities refer to the financial obigations of an enterprise other than owner's FUNDS.
Capital: Capital is the excess of assets over liabilities.
Discussion
2197.

Explain Retuirn on Total Assets Ratio

Answer»

Solution : Frofitability can be measured by ESTABLISHING RELATIONSHIP between net profit and total assets. This RATIO is computed by dividing the net profit after tax by total assets.
RETURN on Tatal Assets `=("Net Profit after Tax ")/("Total Assets ")xx100=.....%`
Discussion
2198.

Explain Short-term investments and why they are shown as current asset.

Answer»


SOLUTION :N/a
Discussion
2199.

Explain Matching Principle of accounting

Answer»

Solution :According to MATCHING Principle, the INCOME of a GIVEN period should be matched with the EXPENSES of the same period
Discussion
2200.

Explain how Financial Statement Analysis ignores qualitative elements.

Answer»

SOLUTION :Since the financial statements are confined to the MONETARY matters only, the qualitative elements LIKE quality of product, of management, public relations are ignored while carrying out the Analysis of Financial Statements.
Discussion