Preparing the profit and loss account is a lengthy but at the same time interesting task. You need a lot of information to prepare the profit and loss statement

20 Sep

Financial Accounting & Analysis

 

1. Prepare the journal by recording the following transactions:

3-Dec Mrs. Veena started business by introducing cash Rs5000 and Rs 500000 as transfer from her saving bank account in the business
5-Dec She Purchased furniture worth Rs 60000, 50% payment made through the bank account of the business and the rest amount is payable
7-Dec She purchased goods for sale, costing her Rs 315000 and made the payment through the business bank account
8-Dec She sold off the entire goods at Rs 500000
10-Dec She paid rent, electricity, salary to employees Rs10000 of each type of expense through the bank account

 

2. Preparing the profit and loss account is a lengthy but at the same time interesting task. You need a lot of information to prepare the profit and loss statement. Discuss any five essential components out of the total eight components which contributes in preparing the profit and loss statement.

3. Following are the particulars available for Z and X, LLP

Particulars (Rs in ‘000)
Retained earnings 860
Accounts receivable 250
Supplies 150
Salaries payable 150
Equipment 1500
Unearned revenue 200
Accounts payable 540
Cash 550
Prepaid insurance 300
Common stock 1000

 

a. Prepare T Form Balance Sheet out of the details as shared in the table.

b. Define and calculate the current ratio, Discuss the significance of this ratio.

 

NMIMS Solutions December 2022

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