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corporate accounting

Questions and Answers of Corporate Accounting

Write short notes on:(a) Current Ratio;(b) Debt-Equity Ratio;(c) Total Assets to Debt Ratio;(d) Operating Ratio.
Quick Liabilities = ?A. Current liabilities - Outstanding expensesB. Current liabilities - Bank overdraftC. Current liabilities + Bank overdraftD. Current liabilities + Surplus
Proprietary Ratio = ? A B C Equity Share Capital Total Assets Equity Share Capital + Preference Share Capital Fixed Assets Shareholders' Funds Total Assets
State the meaning and significance of:(a) Quick Ratio;(b) Debtors Turnover Ratio;(c) Working Capital Turnover Ratio;(d) Gross Profit Ratio.
Explain briefly the meaning and significance of(i) Operating ratio;(ii) Working capital turnover ratio.
The debt-equity ratio of X Ltd is 1:2. Which of the following would increase, decrease or not change the debt-equity ratio:(a) Issue of equity shares;(b) Cash received from debtors;(c) Sale of goods
"Accounting ratios may be misleading in the absence of absolute data" ---- Comment.
Who are the uses of accounting ratios?
Readers of financial statements use EPS data in evaluatingA. The financial health of the enterpriseB. Efficiency of inventory managementC. Operating performance of the enterprise
An enterprise should present basic and diluted earnings per shareA. On the face of the balance sheetB. On the face of the profit and loss accountC. In directors’ report
While preparing its final accounts for the year ended 31st March, 2015 a company made a provision for bad debts @ 4% of its total debtors (as per trend follows from the previous years). In the first
Dilution isA. The reduction in the earnings per shareB. The increase in the earnings per shareC. The reduction in net loss per share
A company created a provision of ₹75,000 for staff welfare while preparing the financial statements for the year 2011-12. On 31st March, in a meeting with staff welfare association, it was decided
Diluted earnings per share is required whenA. There is long-time loan in the balance sheet of the companyB. An acquisition has been madeC. There are potential shares outstanding
A company signed an agreement with the employees’ union on 01.09.2010 for revision of wages with retrospective effect from 01.04.2009. This would cost the company an additional liability of ₹10
Sunshine Company Limited imported raw materials worth US Dollars 9,000 on 25th February 2012, when the exchange rate was ₹44 per US Dollar. the transaction was recorded in the books at the above
Equity Shares issued as part of the consideration in an amalgamation in the nature of purchase are included in the weighted average number of sharesA. As of the date of acquisitionB. From the
Santosh Ltd has received a grant of ₹8 crores from the Government for setting up a factory in a backward area. Out of this grant, the company distributed ₹2 crores as dividend. Also, Santosh Ltd
Basic earnings per share amounts uses the net profit attributable toA. Both equity and preference shareholdersB. Equity shareholders onlyC. Preference shareholders only
X Ltd received a revenue grant of ₹10 crores during 2011-12 from Government for welfare activities to be carried on by the company for its employees. The grant prescribed the conditions for
Equity Shares issued during the reporting period as part of the consideration in an amalgamation in the nature of merger are included in the calculation of the weighted average number of sharesA.
On 25th April, 2014, Neel Limited obtained a loan from the bank for ₹70 lakhs to be utilised as under: Construction of factory shed ---- ₹28 lakhs; Purchase of machinery ------------
Equity Shares issued in exchange for the settlement of a liability of the enterprise are included in the EPS calculation fromA. The date of contract for serviceB. The date of settlement become
X Limited began construction of a new plant on 1st April, 2011 and obtained a special loan of ₹8 lakhs to finance the construction of the plant. The rate of interest on loan was 10 per cent per
Contingently - issuable shares are treated as outstanding and are included in the calculation of basicearnings per shareA. From the date of contractB. From the date when new shares are registeredC.
B&P Ltd availed a lease from N&L Ltd. The conditions of the lease terms are as under:(i) Lease period is 3 years in the beginning of the year 2011 for equipment costing ₹10,00,000 and has
X Ltd. has issued some high interest debentures, which will be anti-dilutive if converted. These will beincluded in the calculation ofA. Basic earnings per shareB. Dilutive earnings per shareC.
An equipment having expected useful life of 5 years, is leased for 3 years. Both the cost and the fair value of the equipment are ₹6,00,000. The amount will be paid in 3 equal instalments and at
The cost of an intangible asset comprises :(i) Purchase price(ii) Import duties(iii) General office overheadsWhich of the following alternative is correct ?A. (i) and (iii) aboveB. (i) and (ii)
(i) Explain the concept of weighted average number of equity shares outstanding during the period. State how would you compute based on AS-20 the weighted average number of equity shares in the
If an intangible asset is acquired in exchange for share of the reporting enterprise, the asset is recorded :A. At the fair value of the intangible assetB. At the fair value of the shares issuedC. At
Start-up cost, training costs and costs of relocating should be accounted for as :A. Deferred revenue expendituresB. ExpensesC. Intangible assets
Internally generated goodwill :A. Should be recognised as a fixed assetB. Should be recognised as an intangible assetC. Should not be recognised as an asset
An intangible asset acquired in exchange of another asset, should be recordedA. At nil valueB. At the net book value of the asset given upC. At the original cost of the asset given up
Expenditure on research should be recognised asA. A deferred revenue expenditureB. A capital expenditureC. A revenue expenditure
At present, carrying amount of a patent is ₹ 4,00,000. The fair value is ₹ 6,00,000. The patent willA. Not be amortised any moreB. Continue to be amortisedC. Be revalued at ₹ 6,00,000
The amortisation period and amortisation method should be reviewedA. At least twice in a financial yearB. At least at each quarter endC. At least at each financial year end
Amortisation changes for a period are recorded :A. As an exceptional itemB. Only in the profit and loss accountC. In the profit and loss account, or as part of the cost of another asset (such as
Which of the following is not a component of the cost of an internally generated intangible asset:A. The salaries and wages of the security staffB. Any expenditure that is directly attributable to
Profit manipulation often involves :A. Contingent liabilityB. Contingent assetsC. Provision
AS----29 is applicable only to:A. Provision for valuation adjustment for fixed assetB. Provision for liabilities and chargesC. Provision for valuation adjustment for current assets
A provision should be recognisedA. For a future obligationB. For a present obligationC. For a future event
An obligating event isA. A past event that leads to a present obligationB. An event that creates a legal obligationC. A liability of uncertain timing, or amount
Gains from the expected disposal of assets shouldA. Be taken into consideration in measuring a provisionB. Not be taken into account in measuring a provisionC. Be taken into account in measuring a
Provisions are reportedA. As a part of accrualsB. As a part of trade payableC. Separately
A restructuring provision should includeA. Refraining costB. Marking costC. None of the above
The amount recognised for the reimbursementA. May be more than the amount of the provisionB. Should not exceed the amount of the provisionC. None of the above
Warranty claims normally generate aA. Contingent liabilityB. ProvisionC. None of the above
Contingent assets areA. Shown in the balance sheetB. Shown below the balance sheet just like contingent liabilitiesC. Disclosed in the directors’ report of the company
What do you mean by Ratio Analysis? What are the advantages and limitations of ratio analysis?
Quick Assets = ?A. Current assets - Prepaid expensesB. Current assets - Inventories - Prepaid expensesC. Current assets + Inventories - Prepaid expensesD. Current assets - Inventories + Prepaid
Limited has an authorised capital of ₹40,00,000 divided into equity shares of ₹100 each. The Balance Sheet of the Company as on 31.12.2016 was as follows :(i) Issue 6,000 equity shares of 100
Alfa Ltd commenced its manufacturing business on 1st April 2016. You have been asked to advise the Managing Director on the valuation of closing inventory on 31st March, 2017. You have the following
PQR Co. Ltd. intends to purchase the business of ABC Co. Ltd. Goodwill for their purpose is agreed to be valued at 3 years’ purchase of the weighted average profits of the past four years. The
The profit of ABC Ltd. for the last 6 years were as follows
The authorised capital of Moon Ltd. is ₹5,00,000 consisting of 2,000, 6% Preference Shares of ₹100 each and 30,000 Equity Shares of ₹10 each. The following was the Trial Balance of Moon Ltd. as
Following is the Trial Balance of X Ltd as on 31st March, 2017:Additional information:(1) Net Realisable Value of closing stock is ₹ 55,00,000. However, it is estimated that the cost of closing
The following is the Balance Sheet of ABC Ltd. as on 31st March, 2016:The value of assets is assessed as follows:(1) Furniture is to be depreciated at 10%.(2) Value of stock-in-trade, land and
The following is the Balance Sheet of D Company Ltd. as on 31st March, 2016:The assets are valued as follows: Current assets at .................. 2,35,000; Fixed assets at
Following are the Balance Sheets of A Ltd. and B Ltd. as on 1.4.2016:Two companies decided to amalgamate in the nature of merger. A new company, AB Ltd. is formed to take over all the assets and
The following is the Balance Sheet of F Company Ltd. as on December 31, 2015:You are required to ascertain the fair value of the equity shares of the company from the following particulars :(1) The
On December 31, 2015, the Balance Sheet of P Ltd.reveals the following position:On December 31, 2015, the fixed assets were independently valued at ₹ 3,50,000 and the goodwill at ₹ 50,000. Thenet
Following is the Balance Sheet of Bharat Lamp Ltd. as at 31st December, 2015:(a) The Land and Building is valued at ₹ 14,40,000 and the Plant and Machinery at ₹ 7,20,000.(b) Out of the Trade
The following is the Balance Sheet of XYZ Ltd. as on 31st December, 2015:Net profits (before taxation) for the past three years: Year ended 31st December:2013 ---- ₹ 69,000;2014 ---- ₹
Exe Limited was wound up on 31.3.2016 and its Balance Sheet as on that date is given below:Wye Limited took over the following assets at values shown as under :Plant ₹ 12,80,000; Inventories ₹
From the following Balance Sheet of XYZ Ltd. as on 31st December, 2015, you are required to ascertain the fair value of the company’s shares showing in detail your calculation:The following
The following figures relate to a company which has ₹ 10,00,000 in Equity Shares and ₹3,00,000 in 9%, Preference shares, all of ₹100 each:The company has investments worth ₹ 2,80,000 (at
On 1.4.2016, A Ltd. had the following capital structure :On the above date, B Ltd. absorbed A Ltd. under the following terms and conditions:(1) B Ltd. will take over all the assets and liabilities of
The following are the Balance Sheets of A Ltd. and B Ltd. as on 31.3.2016:A new company C Ltd. was formed to take over the business of A Ltd. and B Ltd. ---- the purchase consideration being ₹
The Balance Sheets of Hot Ltd. and Cold Ltd. as on 31st March, 2016 were as follows:Profits earned for the half-year ended on 30th September, 2015 were :Hot Ltd. ---- ₹ 2,05,000; Cold Ltd. ---- ₹
The following abridged Balance Sheet of S Co Ltd. as on 31.3.2016 is given below:The following scheme of reconstruction has been sanctioned by the court:(1) A new company S S Co Ltd. is formed with
B Ltd. is absorbed by A Ltd. on 31st March, 2016 on the basis of the following Balance Sheets:The following is the scheme of absorption:(i) Prior to absorption A Ltd. was to declare a dividend of
The Balance Sheet of Swan Ltd. as on 31.3.2016 was as follows:The following scheme of reconstruction was adopted:(a) The preference shares be reduced to an equal number of fully paid shares of ₹ 50
Following are the Balance Sheets of A Ltd. and B Ltd. as on 31.3.2016:B Ltd. is to be absorbed by A Ltd. on the following terms :(1) B Ltd. declares a dividend of 10% before absorption for the
Below is given the Balance Sheet of D. Ltd. as at 31.3.2016.Due to heavy losses the company decided upon the following scheme of reconstruction:(i) The preference shares were to be reduced to a value
The following was the Balance Sheet of Tin Toys Ltd. as on 31st March, 2016:The directors find that the machinery is overvalued by ₹ 10,000. It is now proposed to write-down this asset to its true
Following was the Balance Sheet of B Ltd. as on 31.3.2016:The company undertook following scheme of reconstruction:(a) Equity shares were to be reduced to shares of ₹ 50 each fully paid.(b)
Following is the Balance Sheet of Eknath & Co. Ltd. as on 31.3.2016:It is believed that the worst is over and that the time has arrived to effect reconstruction. A revaluation of assets reveals
The Balance Sheet of X Ltd. before reconstruction is as follows:Preference dividend is in arrear for five years. The company is now earning profits but is short of working capital. A reconstruction
The Balance Sheet of P Ltd., as on 31st March, 2016 is as stated below:Dividends on preference shares are in arrear for three years. The company passes a Special Resolution to reduce its capital in
The following is the Balance Sheet of Sick Ltd. as on 31.3.2016:The following scheme of reorganisation is sanctioned :(1) Tangible fixed assets are to be written-down by 331/3%.(2) Current assets are
Given below is the Balance Sheet of Be-Kismat Ltd. as at 31st March, 2016:The company having turned to the corner, a scheme of reconstruction was prepared and approved as under :(1) To bring in the
The Balance Sheet of Tripathi Ltd. dated 31.3.2016 is as follows:The fixed Assets are much over-valued. The Debentureholders are prepared to accept modification of their claims in consideration of a
The following is the summarised Balance Sheet of AB Ltd. as on 31st March, 2016:(a) There is a contingent liability of ₹ 30,000.(b) Preference shares are cumulative and dividends are in arrear for
Abridged Balance Sheet of Z Ltd as on 31.3.2016 is as under:Following scheme of reconstruction has been passed and approved by the Tribunal:(i) The equity shares are to be subdivided into shares of
The Directors of Hardluck Ltd. decided to recommend to the shareholders certain steps to put the affairs of the company back on the rails. On 31st March, 2016 the Balance Sheet of the company was as
The following was the Balance Sheet of R Ltd. as on March 31, 2016:No preference dividend has been paid for eight years and the company is handicapped by the antiquated nature of its plant. In the
Depression Ltd. decided to reorganise its structure following a period of adverse trading conditions. The Balance Sheet of the company as on 31st March, 2016 showed the following:Preference dividends
The Balance Sheet of A Co. Ltd. as on 31.3.2016 is as follows:The Tribunal approved a Scheme of re-organisation to take effect on 1.4.2016 whereby:(i) Preference Shares to be written-down to ₹ 75
The Balance Sheet of Alpha Ltd. as on 31.3.2016 is as follows:The Preference Shares carry the right to a prior return of capital, together with all arrears of dividends. Debentures carry a floating
The Balance Sheet of the Premier Co. Ltd. is as follows:As the company has been making losses for some time and the financial prospects seem to be unfavourable under its present financial setup, you
The Balance Sheet of Moon Ltd. as on 31.3.2016 was as follows:Sun Ltd. was formed to take over the business of Moon Ltd. on the following terms :(i) Preferential creditors to be paid ₹ 10,000 in
Prosperous Ltd. has incurred exceptional losses and a scheme of reconstruction was approved by all the concerned parties. The Balance Sheet as at 31st March, 2016 showed:The scheme of reconstruction
From the following information, find out the amount of discount credited to Profit and Loss Account: Rebate on bills discounted (1.4.2015) ₹ 32,480; Discount received ₹ 1,08,000. An analysis of
Following are the statements of interest on advances in respect of performing and non-performing assets of H K Bank Ltd Find out the income to be recognised for the year ended 31st March, 2016.
Bidisha Bank Ltd had extended the following credit lines to a small-scale industry which had not paid any interest since March, 1995: Balance outstanding on 31.3.2001 DICGC/ECGC
From the following information find out the amount of provisions to be shown in the Profit and Loss Account of a Commercial Bank. Assets Standard Sub-standard Doubtful one year Doubtful three
Prepare a Profit and Loss Account for the year ended 31.3.2016 and a Balance Sheet of Mini Bank Ltd as on that date from following Trial Balance on 31st March, 2016 (all figures in ₹): Dr. Unissued
Progressive Bank Ltd has authorised capital of ₹ 50 lakhs comprising of 50,000 shares of ₹ 100 each, all of which are subscribed. But 70% of the face value of the shares is called up. Bills
Distinguish between fixed income bearing securities and variable income bearing securities.

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