Financial Accounting & Analysis

14 Jun

Question 1

Calculate Net cash flow from operating activities and discuss how here the non-cash item and the non-operating items are to be treated

  • Net profit for the year 155000
  • One of the machinery whose opening written down value is 120000/- depreciation charged on the same Rs 15000 is sold at the year-end for Rs 95000.Loss on sale of machinery included in above.
  • Interest received included in above Rs2000
  • The opening balances of stock is Rs 50000/- and the closing is Rs 55000/-
  • The opening balances of creditors is Rs 75000/- and the closing is Rs 90000/-

Question 2

You being the account’s manager of JVP Ltd in the online grocery business. The account executive recognizes the income arising from lease rentals on the basis of accounting standard -9 which talks about revenue recognition.

You have a difference of opinion with him as this Accounting standard is not applicable to income arising from lease agreement and other income mentioned there. How will you make him understand what exactly AS-9 talks about?

Question 3

From the following information

Liabilities Amount Assets Amount
Equity share Capital 225000 Fixed assets

(net depreciation)


Reserves & Surplus 105000 Stock 48000
Bank Over draft 115000 Debtors 72000
Creditors 55000 Bank 154000
Total 500000 Total 500000


Calculate –

  1. Cash ratio and interpret the results.
  2. Interpret how quick ratio is different from current ratio if computed in the above scenario.

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