Fundamentals Of Accounting And Financial Analysis 1st Edition Anil Chowdhury - Solutions

What are the different types of accounts? Explain each type of account with suitable examples.
What do you understand by the classification of accounts?
‘Every debit must have a corresponding credit’. Please discuss.
State the various types of personal accounts.
Give reasons for the universal acceptance of the double-entry system of accounting.
Give the applicable rule for the debit and credit of the three types of accounts.
Give three examples of the representative personal accounts.
Classify the following accounts into personal, real and nominal accounts:i. Machinery purchased ii. Capital brought to start the business iii. Goodwill purchased iv. Insurance premium paid v. Electricity bill paid vi. Outstanding salary
State to which class of accounts does each of the following transactions belong:i. Cash ii. Bank iii. Creditors iv. Debtors v. Commission received vi. Amount paid to proprietor
Classify the following accounts into three types of accounts:i. Capital account ii. Steel authority account iii. Debtors account iv. Outstanding expenses account v. G.I.M.T. account vi. I.C.C.M.R.T account vii. Sri Ram college account Hint [i, iii, (Natural person account); iv, (Artificial person
What are the books of original entries?
What are the source documents of accountancy?
What are the rules of journalizing the different types of accounts?
What is a voucher? Prepare a sample voucher with the use of imaginary figures.
Distinguish between trade discount and cash discount.
Write short notes on the following:i. Narration ii. Opening entries iii. Compound entries iv. Trade discount
Determine the amount of capital if, cash Rs 5,000; furniture Rs 15,000; stock Rs 27,000 and creditors Rs 6,000.Options are: (a) Rs 53,000; (b) Rs 47,000; (c) Rs 41,000.
Received Rs 15,000 from Mr Arman Suri, whose account was written off as bad-debt last year; to which account it shall be credited and why?Options are:i. Mr Arman Suri’s account ii. Bad-debts account iii. Bad-debts recovered account iv. None of these accounts
Fill in the blanks:i. Rule of …………. account is ‘Debit what comes in and credit what goes out’.ii. Rule of …………. account is ‘Debit all expenses and losses, and credit all incomes and gains.’iii. Rule of …………… account is ‘Debit the receiver and credit the giver.’
Explain the meaning and significance of business-entity concept.
Explain the meaning and significance of money-measurement concept.
Explain the difference between important Indian Accounting Standards and International Accounting Standards.
What basic concepts of accounting are not considered in the following instances:i. Accounts manager instructs his accountant to record in the accounts books the non-cooperation between production and marketing department.ii. Air-conditioner purchased for the residence of the proprietor is treated
How will you justify the recording of all possible expenses/losses in the books of accounts, but not the possible gains/incomes?
Malavika Drugs Ltd, was constituted by Ms. Malavika Tandon in 2000. Its financial position as on 1 January 2004 is given as:01 January 2004 Assets: leasehold office Rs 60,000; machinery Rs 80,000; cash-at-bank Rs 80,000;cash-in-hand Rs 4,000; due from Rahul Organics Rs 25,000; due from Decan
State whether each of the following statements is ‘True’ or ‘False’.i. Accounting is the language of business.ii. Accounting can be useful only for recording business transactions.iii. Book-keeping and accounting are synonymous terms.iv. Accounting records only those transactions which do
Indicate the best answer for each of the following.i. The prime function of accounting is to:a. Record economic and financial data.b. Provide basic information to the management.c. Attain non-economic goals.d. Provide desired information to the internal departments of the company.ii. The basic
Define accounting. State its functions. How does it differ from book-keeping?
Who are the persons interested in the accounting information?
Explain the role of an accountant.
Why is accounting regarded as an important aid to the management?
What do you mean by accounting concepts? Explain any four accounting concepts.
What are the basic concepts of accounting? Explain in detail.
Explain the meaning and significance of the business-entity concept.
Explain the money-measurement concept.
Explain the dual-aspect concept.
What do you understand by the accounting equation? Explain in 50 words.
Explain the principle of consistency.
Explain the principle of materiality in a business undertaking.
Explain the concept of going concern.
What is the difference between manufacturing account and trading account?
Write short notes on: i. Intangible assets, ii. Fixed assets, iii. Current assets.
What is the difference between trading and profit loss account and the balance sheet of an organization.
What is the difference between trial balance and balance sheet?
What is the object of the trial balance? Why it is prepared? Is it essential to prepare a trial balance under double entry accounting system?
Explain the limitations of the trial balance.
What is the difference between journal and general ledger?
What is the difference between single entry and double entry book-keeping systems of accounting?
What are the golden rules of debit and credit in respect of various types of accounts?
Distinguish between capital expenditure and revenue expenditure. Explain with suitable examples in respect of both.
The profit and loss of a company is normally divided into three sections. Explain the objective behind it.
‘The Companies Act, 1956, under Schedule VI, lays down that the profit and loss account shall be so made out as to clearly disclose the result of the working of the company during the period covered by the accounts and shall disclose every material feature, including credits or receipts and
Give four examples of extraneous sources of income, which are shown in the profit and loss account.
What does a balance sheet communicate? Explain the limitations of the balance sheet, if any.
What are the components of the final accounts of an organization? Explain the significance of each component. What is meant by reserve and provision? Explain with suitable illustrations.
What do you understand by inflation accounting?
Explain the limitations of the historical cost accounting method vís-a-vís inflation accounting.
How can changes in the price level be reflected in the financial statements through the current purchasing power method?
Explain the concept of current cost accounting method.
State with reason whether the following statements are true or false.i. Goods amounting to Rs 6,000 taken by the proprietor for personal use should be credited to purchase account.ii. Rent paid account is a nominal account whereas rent received account is a real account.iii. Amount paid to the
Explain the statement ‘accounting ratios are like statistics that have a set of principles and finality about them which at times may be misleading’.
Define accounting ratios and explain their importance as well as their limitations.
What are the ways in which debt–equity ratio can be computed? What does this ratio signify and in your opinion what should be the ideal debt–equity ratio?
Distinguish between current ratio, quick asset ratio and cash position ratio?
How is the debtors turnover ratio helpful in controlling credit facility?
What do you understand by:i. Profitability ratios ii. Turnover ratios iii. Debt–equity ratios iv. Liquidity ratios v. Return on investment ratio
Write notes on:i. Stock turnover ratio ii. Working capital ratios iii. Net profit ratios iv. Payout ratios v. Operating ratios
What is the need of financial analysis? How does the ratio analysis technique help in the financial analysis?
‘Accounting ratios are a mere guide and complete reliance on them in decision-making may be suicidal’. If agreed, give reasons.
What are the ratios required to be computed in order to study the long-term financial strategies?
‘The figure of net profit is a measure of ability, skill, aggressiveness and ingenuity of the management to operate a business successfully for its main purpose. Into this one final mathematical figure are translated the operating policies of the executive in connection with the primary purpose
‘The figure of net profit is a measure of ability, skill, aggressiveness and ingenuity of the management to operate a business successfully for its main purpose. Into this one final mathematical figure are translated the operating policies of the executive in connection with the primary purpose
‘The Company’s Act 1956, under Schedule VI, lays down that the profit and loss account shall be made out so clearly as to disclose the result of the working of the company during the period covered by the accounts and shall disclose every material feature including credits or receipts and
What do you understand with the term Gross Profit and Net profit? How are these different from each other?
Ratio analysis is the measure of strengths and weaknesses of an organization. Do you agree? Discuss your point of view by giving suitable examples.
What do you understand by Financial Analysis? Discuss its objectives.
Discuss various Accounting Ratios which an organization uses to ascertain the Solvency Position.
What do you understand by the funds flow statement?
Differentiate between the funds flow statement and the balance sheet.
What do you understand with the term 'gross working capital'?
What is net working capital? How is it computed?
What are the steps required to construct a funds flow statement?
While constructing funds flow statement, what are the two basic statements?
Is increase in working capital a source of funds or an application of funds?
‘A funds flow statement is a better substitute for an income statement.’ Examine the statement by giving suitable examples.
What are the effects of the following transactions on the flow of funds?i. Purchases of plant and machinery costing Rs 1,50,000.ii. Purchase of raw materials for an amount Rs 2,00,000.iii. Receivables Rs 50,000.iv. Received Rs 75,000 as an advance from a customer against the future supply of goods.
The owner of a small manufacturing company is confused after going through the account statements.The accountant of the company has informed the owner that the company’s net increase is negligible this year. Cash has increased steadily since the inception of the company, about 6 years ago, so the
The managing director of Sky Lark Products Limited, believes that something is wrong with the financial statement for the year 2004. The company’s income statement shows a net loss of Rs 37,400, yet a comparison of the previous year’s balance sheet with the current year’s balance sheet shows
What do you understand with the cash flow statement?
Discuss various items which are included as sources of cash and applications of cash while prepararing the cash flow statement.
Differentiate between funds flow statement and cash flow statement.
What is a cash flow statement? What is meant by the terms ‘cash’, ‘cash equivalents’ and ‘cash flows’ in the context of the cash flow statements?
What do you understand by i. Operating activities?ii. Investment activities?iii. Financing activities?
What are the recommendations of accounting standards-3 (revised) regarding classification of cash flows arising from interest and dividends received and paid?
How does the direct method of calculating cash provided or used by operating activities differ from the indirect method of making this calculation?
Explain the points of distinction between cash flow statement and income statement.
How does funds flow statement differ from cash flow statement?
Distinguish between i. Income statement and funds flow statement.ii. Statement showing changes in working capital and funds flow statement.
Explain the term ‘working capital’.
Prepare a statement of sources and application of funds for the Star Semiconductor Corporation Limited(SSCL).Star Semiconductor Corporation Limited (SSCL) is a reputed manufacturer of semiconductors and related products. The balance sheet and income statement for the year ended 31 March 2004 and

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Fundamentals Of Accounting And Financial Analysis 1st Edition Anil Chowdhury - Solutions

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