Gauhati University Question Papers
Regulatory Framework of Business - I' 2017
Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Answer the following questions as directed: 1x5=5
a) A cash flow arises when the net result of a transaction results in either increase or decrease in cash or cash equivalents. (State whether the statement is ‘true’ or ‘false’)
b) Mention one element of Financial Statement.
c) Liquid ratio is also knows as _______. (Fill in the blank with appropriate word/words).
d) Which of the following transactions affects the flow of fund?
1) Conversion of debentures into shares.
2) Final dividend proposed.
3) Raising of long-term loan.
e) Financial Statements are:
1) Interim reports.
2) Final reports.
3) Both of them. (Select the correct answer)
2. Write the meaning of the following: 2x5=10
a) Quick ratio.
b) Cash equivalent.
c) Equity.
d) Trend analysis.
e) Liquidity position.
3. Answer the following questions: 5x5=25
(a) Mention the characteristics of ideal financial statements.
(b) Prepare a Statement of changes in working capital from the Balance Sheet of a company given below:
| Equity and Liabilities | 31.3.2016 Rs. | 31.3.2017 Rs. |
| Shareholder’s fund: Share Capital Reserves and Surplus: Statement of Profit and Loss Non-Current Liabilities: Bank loan Current Liabilities and Provisions: Sundry Creditors Provision for taxation Proposed dividend Interest payable | 5,00,000 1,70,000 1,00,000 1,20,000 40,000 40,000 20,000 | 5,00,000 1,80,000 50,000 1,35,000 55,000 30,000 30,000 |
| Total | 9,90,000 | 9,80,000 |
| Assets | 31.3.2016 Rs. | 31.3.2017 Rs. |
| Non –current Assets: Land and Building (at cost) Current Assets: Debtors Stock in trade Cash | 7,40,000 1,00,000 1,00,000 50,000 | 7,36,000 1,04,000 1,00,000 40,000 |
| Total | 9,90,000 | 9,80,000 |
(c) Mention in brief the contents of Board of Director’s Report.
(d) Write a critical note on common-size statement stating its merits and demerits.
Or
From the following, calculate (a) Gross Profit ratio, (b) Operating ratio and (c) Operating profit ratio: 1+2+2=5
| | Rs. |
| Sales Cost of goods sold Selling expenses Administration expenses Loss on sale of machinery Interest received on investment | 10,00,000 8,00,000 60,000 40,000 2,000 5,000 |
(e) Explain in brief the distinctions between Fund Flow Statement and Cash Flow Statement.
4. Discuss the objectives and limitations of financial statements. 5+5=10
Or
What are the constituents of financial statements? Briefly explain each of them. 3+7=10
5. Explain the relevant provisions of Companies Act as regards preparation of financial statements. 10
Or
What is Corporate Annual Report? Mention the mandatory disclosures to be made in Corporate Annual Report.
6. Following are the ratios relating to the activities of XYZ Ltd.: 2x5=10
| Stock velocity Debtors velocity Creditors velocity Gross profit ratio | 6 months 3 months 73 days 25% |
Gross profit for the year ended 31st March, 2017 amounts to Rs. 4,00,000. Closing inventory of the year is Rs. 10,000 above the opening inventory. Bills Receivable amounts to Rs. 20,000 and Bills Payable amounts to Rs. 10,000. Find out:
1) Sales.
2) Purchases.
3) Sundry debtors.
4) Sundry creditors.
5) Closing stock.
Or
Write a note on the importance of ratio analysis to different categories of users of financial statements. 10
7. What is Fund Flow Statement? Describe the procedure that you would adopt in preparing a Fund Flow Statement of a company. 2+8=10
Or
Techno Ltd. provides you the following information for the year ending 31st March, 2017:
1) Sales for the year: Cash sales Rs. 1,20,000, Credit sales Rs. 80,000.
2) Collection from debtors amounted to Rs. 60,000.
3) Payments to creditors of inventory amounted to Rs. 45,000.
4) Total salary for the period amounted to Rs. 6,000, out of which Rs. 1,000 was outstanding.
5) Office expenses paid in cash Rs. 8,000.
Outstanding office expenses Rs. 2,000.
6) Fully paid equity shares of the face value of Rs. 2,00,000 were issued at a premium of 10%.
7) A machine was sold for Rs. 15,000. The book value of the machine was Rs. 12,000.
8) A vehicle was purchased for cash at a cost Rs. 1,50,000.
9) Dividends paid during the year amounts to Rs. 40,000.
10) Income tax paid Rs. 10,000.
11) Cash in hand at bank as at 31st March, 2016 Rs. 23,000 and as at 31st March, 2017 Rs. 1,80,000.
Prepare a Cash Flow Statement using direct method. 10
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