Financial Accounting & Analysis
1. Prepare the journal by recording the following transactions (10 Marks)
3-Dec Mrs. Veena started business by introducing cash Rs 5000 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
SOLUTION:
Introduction:
The accounting transactions in a company are taped using the double-entry accounting system. A Journal is a book of original access where the accounting transactions are taped chronologically. A journal additionally complies with a double-entry accounting system; for each debit, there is a credit. It forms the basis of the various accounting ledgers prepared as accounting entrances are published in the ledgers from the
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. (10 Marks)
SOLUTION:
Introduction:
Bookkeeping is the process of summarizing, evaluating, and reporting monetary transactions. Correct bookkeeping plays a crucial duty in taping business efficiency and tracking the development and survival of the business organization. Better, keeping proper accounts of the organization’s different divisions assists in evaluating the efficiency of the various departments in the organization. It assists in determining the actual profit from its functional tasks. It is generally viewed as a key to the success of
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 (5 Marks)
SOLUTION:
Introduction:
A balance sheet is a financial statement that an organization prepares. It reveals the setting of assets and liabilities on a given day. This date typically notes the end of the fiscal year of the business. A balance sheet shows assets owned or rented by the company and the sources from which they are funded. These funding resources may be borrowed capital, the equity added by the organization participants, or a combination
b. Define and calculate the current ratio, discuss the significance of this ratio. (5 Marks)
SOLUTION:
Introduction:
The ratio between the existing properties of the business and its present responsibilities is known as the current ratio. Existing properties can be realized within the operating cycle of business, usually one year. Present obligations are the service’s responsibilities that must be paid or satisfied within one year.
