NMIMS Internal Assignment - Financial Accounting and Analysis - Jun 2017

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NMIMS Internal Assignment - Financial Accounting and Analysis - Jun 2017

Question 1 Income statement for the year ended 31st March 17, is as under (10 Marks)

 

 

 Previous year

2016

Current Year

2017

Gross Sales

Less: Returns

1200

225

1500

300

Net sales

Less: Cost of goods sold

975

438.75

1200

600

Gross profit

Less: Selling and distribution Exp.

536.25

140

600

180

Operating Profit

Less: Interest expenses

396

101

420

126

Earnings before taxes

Less: Taxes

295

118

294

117.6

Earnings after taxes

177

176.4

Required:

Convert it into common size income statement

Question 2 The matching concept of accounting suggests that in order to calculate accurate amount of profit or loss for the period the expenses or revenues should be recognized correctly. Thus, it is important to differentiate between the capital and revenue items. Mr. Ramchandani purchased Shaper Jet 3D printer at Rs90000, extra printer cartridges and ink for Rs10000 for his business. Discuss how the expenditure will be treated while preparing the financial statements. Provided the rate of depreciation on printer and related assets is 10 % p.a. (10 Marks)

Question 3 a) TCD Ltd provided Rs50 lacs for inventory obsolescence in 2013-14. In the subsequent year, it was determined that 25 % of such stocks are usable. The accounts manager of the company wants to adjust the same through prior period adjustment account, as the provision was made in the earlier years. Give your opinion whether the contention of the accounts manager is correct or not. (5 Marks)

b) Rectify the following errors by passing Journal entry (5 Marks)

  1. Paid Rs 15000 for advertisement debited to electricity expenses
  2. Received Rs 250000 on account of cash sales to Jannaak omitted to recorded in the books

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