Model Question of Principles of Accounting-II | Grade 12-XII | SET-I | NEB | With Solution
Candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.
Also Check:
Accounting SET-A | NEB Class XII 12 Model Question 2079-2080.
Accounting SET-B | NEB Class XII 12 Model Question 2079-2080.
Also Check:
Principles of Accounting-II | Class 12 | Question Paper 2076 [2019] | Sub Code: 224B | NEB
Also Check:
Principles Of Accounting - II | Class 12 | Exam Paper 2075 [2018] | National Examinations Board.
Question No. 1: Write any two characteristics of a company. (2)
Answer: The two characteristics of a company are as follows:
a) Legal artificial person: A joint stock company is an artificial person created by law. It makes the company as human being. The company can purchase and sell the properties in it's own name. It can sue and be sued by others in matter of dispute and conflict. As a real person, it can carry out lawful business activities and make other business contract.
b) Transferability of shares: The capital of the company is divided into small part i.e. share. A company can raise large amount of capital by selling such shares to the public. The shares issued by company are transferable except in case of private companies.
Question No. 2: Point out any three differences between equity shares and preferences shares. (3)
Answer: The three differences between equity shares and preferences shares are as follows:
| Basis of difference | Equity shares | Preference shares |
|---|---|---|
| 1. Payment of dividend | Dividend payment is made after the payment on preference shares. |
Dividend is paid before the equity dividend. |
| 2. Rate of dividend | Rate of dividend may vary according to the profit earned by the company. |
Rate of dividend is pre-fixed at the time of issue. |
| 3. Voting right | Equity share holders enjoy the voting right. | Preference shareholders do not have voting right. |
Question No. 3: What do you understand by financial statement analysis? (3)
Answer: Financial statement analysis is the systematic process of analyzing the financial statements under various bases. It is the act of regrouping and rearranging the figures of financial statements to measure the financial strengths and weakness. The main purpose of financial statement analysis is to supply the various financial information to different parties, such as shareholders, management, creditors, bankers and lenders, employees and trade unions, etc.
Question No. 4: Mentions any two objectives of funds flow analysis. (2)
Answer: The two objectives of fund flow analysis are as follows:
a) To explain the changes in financial position of the firm.
b) To evaluate the operational efficiency of the firm during a period.
Question No. 5: Name and define any two types of costing. (3)
Answer: There are different types of costing. Two types of costing are defined below:
a) Contract costing: When the job is big and spread over long period of time, the method of contract costing is used. A separate account is kept for each individual contractor, builders, civil engineers, contractors, constructional and mechanical engineering firms, etc.
b) Unit or output costing: This is suitable for those industries where manufacturers are continuous and units are identical. It is also called single output costing. This method is applied in industries like mines, cement works, oil drilling, etc.
Question No. 6: Differentiate between direct and indirect cost. (2)
Answer: The differences between direct cost and indirect cost are as follow:
| Basis of difference |
Direct cost |
Indirect cost |
|---|---|---|
| 1.Meaning | The cost which are directly chargable or identifiable with the cost center or unit are called direct cost. |
The cost which are not directly involved identifiable to the cost center or unit are called indirect cost. |
| 2.Component | It includes direct material, direct labour and direct expenses and total of these comprises prime cost. |
It includes indirect materials, indirect labour and indirect expenses and total of these comprises overhead or total indirect cost. |
Question No. 7: Give the specimen of purchase requisition form. (2)
Answer: The specimen of purchase requisition form is as follows:
Question No. 8: What do you understand by allocation, apportionment and absorption of overhead? Write in brief. (3)
Answer: The definitions of allocation, apportionment and absorption of overhead are as follows:
a) Allocation of overhead: Allocation of overhead is the process of identifying whole items of overhead to specific department. It is the allotment of whole items of cost-to-cost centers to the charging of expenses, which can be identified fullt with the particulars department.
b) Apportionment of overhead: The items of overheads which cannot be identified with specific department or cost center and disturbed among the related departments and this way of distribution is known as apportionment. In other words, apportionment refers to the distribution of overheads cost among various departments or cost center.
c) Absorption of overhead: The term absorption refers to the process of charging of overhead to cost center or department to different cost units in a way that each cost unit bears an appropriate portion of total overhead. In other words, the way of charging the overhead to individual unit of specific product is known as absorption of overhead.
Question No. 9: A company forfeited 200 shares of Rs. 100 each of a shareholder for non-payment of final call money of Rs. 30 per share. These shares were reissued at Rs.60 per share as fully paid.
Required: Journal entries for (a) Forfeiture (b) Reissue (c) Transfer. (3)
Answer:
Solution
Journal Entries
| Date | Particulars | LF | Debit Rs. | Credit Rs. |
|---|---|---|---|---|
| a. | Forfeiture of Shares | |||
| Share capital a/c (200 x 100) ..... Dr. | 20,000 | |||
| To Share forfeiture a/c (200 x 70) | 14,000 | |||
| To Calls-in-arrear a/c (200 x 30) | 6,000 | |||
| (Being forfeiture of 200 shares for non-payment of final call money) | ||||
| b. | Re-issue of Shares | |||
| Bank a/c (200 x 60) ..... Dr. | 12,000 | |||
| Share forfeiture a/c (200 x 40) ..... Dr. | 8,000 | |||
| To Share capital a/c (200 x 100) | 20,000 | |||
| (Being re-issue of 200 shares @Rs. 60 each) | ||||
| c. | Transfer Entry | |||
| Share forfeiture a/c (200 x 30) ..... Dr. | 6,000 | |||
| To Capital reserve | 6,000 | |||
| (Being gain on forfeiture amount transferred to capital reserve account) |
Question No. 10: A company limited invited applications for 1,000 shares of Rs. 100 each at a premium of Rs. 20 per share payable as under:
On application - Rs. 30
On allotment (including premium) - Rs. 50
On first and final call - Rs. 40
The public applied for 1,500 shares. Applications for 300 shares were rejected and allotment of shares were made among the remaining applicants on pro-rata basis. It was decided to utilize excess application money in part payment of allotment. One shareholder, holding 20 shares, failed to pay the money due on allotment and the call. His shares were forfeited.
Required: Journal entries for: (a) Share allotment (b) Share first and final call and (c) Share forfeiture. (6)
Answer:
Solution
Journal Entries
| Date | Particulars | LF | Debit Rs. | Credit Rs. |
|---|---|---|---|---|
| (a) | Share allotment | |||
| Share allotment a/c (1,000 x 50) ..... Dr. | 50,000 | |||
| To share capital a/c (1,000 x 30) | 30,000 | |||
| To Share premium a/c (1,000 x 20) | 20,000 | |||
| (Being share allotment money made due at premium) | ||||
| Bank a/c [50,000 - 6,000 - (20 x 44)] ..... Dr. | 43,120 | |||
| Calls-inarrear a/c (20 x 44) ..... Dr. | 880 | |||
| To Share allotment a/c | 44,000 | |||
| (Being share allotment money received except on 20 shares) | ||||
| (b) | Share first and final call | |||
| Share first and final call a/c (1,000 x 40) ..... Dr. | 40,000 | |||
| To Share capital a/c | 40,000 | |||
| (Being share first and final call money made due) | ||||
| Bank a/c [40,000 - (20 x 40)] ..... Dr. | 39,200 | |||
| Calls-in-arrear a/c (20 x 40) ..... Dr. | 800 | |||
| To Share first and final call a/c | 40,000 | |||
| (Being share first and final call money received) | ||||
| (c) | Forfeiture of shares | |||
| Share capital a/c (20 x 100) ..... Dr. | 2,000 | |||
| Share premium a/c (20 x 20) ..... Dr. | 400 | |||
| To Share forfeiture a/c (20 x 36) | 720 | |||
| To Calls in arrear a/c (20 x 84) | 1,680 | |||
| (Being forfeiture of 20 share for non-payment of allotment and call money) |
Working notes:
Calculation of call-in-arrear on share allotment
Shares allotted ratio = 1200:1000 or 6:5
No. of shares applied by defaulter (20 ÷ 5 x 6) = 24
Application money received from defaulter (24 x 30) = Rs. 720
Excess application money transferred to shares allotment [720 - (20 x 30)] = Rs. 120
Total allotment money due from defaulter = 20 x 50 = Rs. 1,000
Less: Excess application money transferred to allotment = Rs. 120
So, Calls-in-arrear = Rs. 880
Therefore, Calls-in-arrear per share = 880 ÷ 20 = Rs. 44
Alternatively,
Calls-in-arrear per share or share allotment = (1,000 x 50) - (200 x 30) ÷ 1,000 = Rs. 44
Question No. 11: R. Co. Ltd. took over the following assets and liabilities of S. Co. Ltd. at on agreed purchase price of Rs. 69,000:
Sundry debtors - 60,000
Machinery - 1,00,000
Sundry creditors - 40,000
Stock in trade - 76,000
Cash and bank - 5,000
Outstanding expenses - 15,000
The company issued fully paid equity shares of Rs. 100 each at Rs. 115 per share for the payment of purchase consideration amount.
Required: Journal entries. (3)
Answer:
Solution
In the book of R. Co. Ltd.
Journal Entries
| Date | Particulars | LF | Debit Rs. | Credit Rs. |
|---|---|---|---|---|
| Sundry debtors a/c ..... Dr. | 60,000 | |||
| Machinery a/c ..... Dr. | 1,00,000 | |||
| Stock in trade a/c ..... Dr. | 76,000 | |||
| Cash and bank a/c ..... Dr. | 5,000 | |||
| To Sundry creditors a/c | 40,000 | |||
| To Outstanding expenses a/c | 15,000 | |||
| To S. Co. Ltd a/c | 69,000 | |||
| To Capital reserve (Balancing figure) | 1,17,000 | |||
| (Being assets and liabilities taken over) | ||||
| S. Co. Ltd a/c ..... Dr. | 69,000 | |||
| To Equity share capital a/c (600 x 100) | 60,000 | |||
| To Share premium a/c (600 x 15) | 9,000 | |||
| (Being issue of 600 shares @ Rs. 115 to S. Co. Ltd for purchase consideration) |
Working notes:
No. of shares issued = Amount payable∕F.V. of Share + Premium per share = 69,000∕100 + 15 =600 shares.
Question No. 12: X. Co. Ltd issued 200, 10% debentures of Rs. 100 each at a discount of 10% and redeemable at the end of years at a premium of 5%. The debentures were redeemed after 5 years.
Required: Journal entries for issue and redemption of debentures. (4)
Answer:
Solution
In the book of X. Co. Ltd.
Journal Entries
| Date | Particulars | LF | Debit Rs. | Credit Rs. |
|---|---|---|---|---|
| Entry for issue | ||||
| Bank a/c (200 x 90) ..... Dr. | 18,000 | |||
| Discount on issue of debenture a/c (200 x 10) ..... Dr. | 2,000 | |||
| Loss on issue of debenture a/c (200 x 5) ..... Dr. | 1,000 | |||
| To 10% Debenture a/c (200 x 100) | 20,000 | |||
| To Premium on redemption of debenture a/c (200 x 5) | 1,000 | |||
| (Being issue of 200, 10% debentures at discount 10% redeemable at premium 5%) | ||||
| Entry for redemption | ||||
| 10% Debenture a/c (200 x 100) ..... Dr. | 20,000 | |||
| Premium on redemption debenture a/c (200 x 5) ..... Dr. | 1,000 | |||
| To Bank a/c | 21,000 | |||
| (Being redemption of debenture at premium 5%) |
Question No. 13: The Trial Balance of a company as on 31st Chaitra, last year is given below:
| Particulars | Debit Rs. | Credit Rs. |
|---|---|---|
| Building | 90,000 | |
| Machinery | 66,000 | |
| Land | 1,07,000 | |
| Creditors | 68,000 | |
| Advanced rent | 12,000 | |
| Share capital | 80,000 | |
| Cash at bank | 40,000 | |
| Debtors | 14,000 | |
| Prepaid insurance | 6,000 | |
| General reserve | 44,000 | |
| Revenue | 3,22,000 | |
| Wages | 1,10,000 | |
| Salaries | 20,000 | |
| Sundry expenses | 40,000 | |
| Interest | 9,000 | |
| Insurance | 24,000 | |
| Total | 5,26,000 | 5,26,000 |
Additional Information: (i) Outstanding wages Rs.10,000 (ii) Outstanding Interest Rs.1,000 (iii) Depreciation on Building and Machinery 10% (iv) Insurance premium Rs.4,000 advance paid.
Required: Ten-column worksheet. (15)
Answer:
Solution
Worksheet
|
S.N. |
Particulars |
Part I |
Part II |
Part III |
Part IV |
Part V |
|||||
|
Unadjustable
Trial Balance |
Adjustments |
Adjusted Trial
Balance |
Income
Statement |
Balance Sheet |
|||||||
|
|
|
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
|
1. |
Building |
90,000 |
|
|
iii.9,000 |
81,000 |
|
|
|
81,000 |
|
|
2. |
Machinery |
66,000 |
|
|
iii.6,600 |
59,400 |
|
|
|
59,400 |
|
|
3. |
Land |
1,07,000 |
|
|
|
1,07,000 |
|
|
|
1,07,000 |
|
|
4. |
Creditors |
|
68,000 |
|
|
|
68,000 |
|
|
|
68,000 |
|
5. |
Advance rent |
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
6. |
Share capital |
|
80,000 |
|
|
|
80,000 |
|
|
|
80,000 |
|
7. |
Cash at bank |
40,000 |
|
|
|
40,000 |
|
|
|
40,000 |
|
|
8. |
Debtors |
14,000 |
|
|
|
14,000 |
|
|
|
14,000 |
|
|
9. |
Insurance prepaid |
6,000 |
|
|
|
6,000 |
|
|
|
6,000 |
|
|
10. |
General reserve |
|
44,000 |
|
|
|
44,000 |
|
|
|
44,000 |
|
11. |
Revenue |
|
3,22,000 |
|
|
|
3,22,000 |
|
3,22,000 |
|
|
|
12. |
Wages |
1,10,000 |
|
i. 10,000 |
|
1,20,000 |
|
1,20,000 |
|
|
|
|
13. |
Salaries |
20,000 |
|
|
|
20,000 |
|
20,000 |
|
|
|
|
14. |
Sundry expenses |
40,000 |
|
|
|
40,000 |
|
40,000 |
|
|
|
|
15. |
Interest |
9,000 |
|
Ii.1,000 |
|
10,000 |
|
10,000 |
|
|
|
|
16. |
Insurance |
24,000 |
|
|
iv.4,000 |
20,000 |
|
20,000 |
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
17. |
O/S wages |
|
|
|
10,000 |
|
10,000 |
|
|
|
10,000 |
|
18. |
O/S Interest |
|
|
|
1,000 |
|
1,000 |
|
|
|
1,000 |
|
19. |
Depreciation on building |
|
|
iii.9,000 |
|
9,000 |
|
9,000 |
|
|
|
|
20. |
Depreciation on machinery |
|
|
iii.6,600 |
|
6,600 |
|
6,600 |
|
|
|
|
21. |
Prepaid insurance |
|
|
4,000 |
|
4,000 |
|
|
|
4,000 |
|
|
22. |
Net profit |
|
|
|
|
|
|
96,400 |
|
|
96,400 |
|
23. |
Total |
5,26,000 |
5,26,000 |
30,600 |
30,600 |
5,37,000 |
5,37,000 |
3,22,000 |
3,22,000 |
3,11,400 |
3,11,400 |
14. Prepare Income statement and balance Sheet as on 31st Chaitra, last year from the Ten-column work sheet of questions No. 13. [5]
Answer:
Solution
Income Statement
For the year ended Chaitra 31 ...
| Particulars | Rs. | Rs. |
|---|---|---|
| Less: Operating Expenses | 3,22,000 | |
| Wages ………………………………………………………………..... 1,10,000 | ||
| Add: Outstanding …………………………………………………. 10,000 | 1,20,000 | |
| Salaries ……………………………………………………………………………... | 20,000 | |
| Sundry expenses ……………………………………………………………… | 40,000 | |
| Insurance ……………………………………………………………… 24,000 | ||
| Less: Prepaid ………………………………………………………….. 4,000 | 20,000 | |
| Depreciation on building …………………………………………………. | 9,000 | |
| Depreciation on machinery ……………………………………………… | 6,600 | |
| Interest ………………………………………………………………….. 9,000 | ||
| Add: Outstanding …………………………………………………… 1,000 | 10,000 | 2,25,600 |
| Income before tax ……………………………………………………………. | 96,400 |
Balance Sheet
As on Chaitra 31 ...
| S.N. | Particulars | Rs. | Rs. |
|---|---|---|---|
| A. | Shareholder's fund | ||
| Share capital | 80,000 | ||
| General reserve | 44,000 | ||
| Profit and loss a/c | 96,400 | 2,20,400 | |
| B | Loan funds | Nil | |
| Total | 2,20,400 | ||
| 1. | Fixed assets | ||
| Building .............................................. 90,000 | |||
| Less: Depreciation .............................. 9,000 | 81,000 | ||
| Machinery .......................................... 66,000 | |||
| Less: Depreciation .............................. 6,600 | 59,400 | ||
| Land ................................................. | 1,07,000 | 2,47,000 | |
| 2. | Investment ........................................... | Nil | |
| 3. | Current assets and loan and advance .............. | ||
| Cash at bank ......................................... | 40,000 | ||
| Debtors .............................................. | 14,000 | ||
| Prepaid insurance (6,000 + 4,000) .................... | 10,000 | ||
| Total ................................................ | 64,000 | ||
| Less: Current liabilities ............................ | |||
| Creditors ............................................ | 68,000 | ||
| Advanced rent ........................................ | 12,000 | ||
| O/s wages ............................................ | 10,000 | ||
| O/s interest ......................................... | 1,000 | ||
| Net current assets ................................... | 27,000 | ||
| Total ................................................ | 2,20,400 |
15. The Balance Sheet of A.K. Co. Ltd. as on 31st Chaitra, 2062 is as under:
| Libilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Share capital | 2,00,000 | Fixed assets | 2,00,000 |
| Retained earning | 1,50,000 | Investment | 1,23,000 |
| 10% Debentures | 70,000 | Sundry debtors | 1,00,000 |
| Sundry creditors | 30,000 | Inventory | 50,000 |
| Overdraft | 20,000 | Preliminary expenses | 7,000 |
| Outstanding expenses | 10,000 | ||
| Total | 4,80,000 | Total | 4,80,000 |
Additional Information:
(i) Fixed assets turnover ratio 3.
(ii) Gross profit Rs. 60,000.
Required:
(a) Sales amount
(b) Current ratio
(c) Quick ratio
(d) Debt-equity ratio
(e) Gross profit ratio [5]
Answer:
Solution
a) We have,
Fixed assets turnover ratio = Net Sales ÷ Fixed assets
Or, 3 = Net sales ÷ 2,00,000
Or, Net sales = 3 × 2,00,000
∴ Net sales = 6,00,000
b) We have,
Current ratio = Current assets ÷ Current liabilities = 1,50,000 ÷ 60,000 = 2.5:1
Current assets = Sundry debtors + Inventory = 1,00,000 + 50,000 = Rs. 1,50,000
Current liabilities = Sundry creditors + Bank Overdraft + Outstanding expenses = 30,000 + 20,000 + 10,000 = Rs. 60,000
c) We have,
Quick ratio = Quick assets ÷ Current liabilities = 1,00,000 ÷ 60,000 = 1.667:1
Quick assets = Current assets ₋ Inventory = 1,50,000 ₋ 50,000 = Rs. 1,00,000
d) We have,
Debt equity ratio = Long term debt ÷ Shareholder's = 70,000 ÷ 3,43,000 = 0.2041:1 or 20.41%
Long-term debt = 10% Debentures = Rs. 70,000
Shareholder's fund = Share capital + Retained earning ₋ Preliminary expenses = 2,00,000 + 1,50,000 ₋ 7,000 = Rs. 3,43,000
e) We have,
Gross profit ratio = (Gross profit ÷ Sales) × 100 = (60,000 ÷ 6,00,000) × 100 = 10%
16. The opening and closing balance of different accounts are as under:
| Particulars | Opening Balance (Rs.) | Closing Balance (Rs.) |
|---|---|---|
| Sundry debtors | 30,000 | 50,000 |
| Inventories | 1,00,000 | 1,10,000 |
| Cash at bank | 11,000 | 18,500 |
| Sundry creditors | 71,000 | 94,000 |
| Outstanding expenses | 7,500 | 5,500 |
| Fixed assets | 1,40,000 | 1,88,000 |
| 10% Debentures | 75,000 | 50,000 |
| Share capital | 1,53,000 | 2,04,000 |
Additional information:
Funds from operation was Rs. 38,500
Required:
(a) Schedule of changes in working capital
(b) Funds flow statement [5]
Answer:
Solution
a)
Schedule of Changes in Working Capital
| Particulars | Last year | Current year | Working capital | |
|---|---|---|---|---|
| Increase | Decrease | |||
| Current assets: | ||||
| Sundry debtors | 30,000 | 50,000 | 20,000 | |
| Inventories | 1,00,000 | 1,10,000 | 10,000 | |
| Cash at Bank | 11,000 | 18,500 | 7,500 | |
| Total current assets (A) | 1,41,000 | 1,78,500 | ||
| Current liabilities: | ||||
| Sundry creditors | 71,000 | 94,000 | - | 23,000 |
| Outstanding expenses | 7,500 | 5,500 | 2,000 | - |
| Total current liabilities (B) | 78,500 | 99,500 | ||
| Net working capital (A-B) | 62,500 | 79,000 | ||
| Increase in working capital | 16,500 | - | 16,500 | |
| 79,000 | 79,000 | 39,500 | 39,500 | |
b)
Funds Flow Statement
| Sources | Amount | Uses | Amount |
|---|---|---|---|
| Funds from operation (B/F) | 38,500 | Increased in working capital | 16,500 |
| Issue of Shares | 51,000 | Purchased of fixed assets | 48,000 |
| Redemption of debenture | 25,000 | ||
| 89,500 | 89,500 |
17. Following are the Balance Sheets of a company as on 31st Chaitra:
| Liabilities | 1st Year | 2nd Year | Assets | 1st Year | 2nd Year |
|---|---|---|---|---|---|
| Share capital | 2,40,000 | 3,30,000 | Plant and machinery | 2,10,000 | 3,00,000 |
| Share premium | 33,000 | Land and building | 1,41,000 | 3,81,000 | |
| Reserve and surplus | 1,95,000 | 2,01,600 | Long term investment | 66,000 | 42,000 |
| Long term liabilities | 1,50,000 | 3,00,000 | Inventories | 42,000 | 57,000 |
| Accumulated Dep. | 90,000 | 1,65,000 | Sundry debtors | 75,000 | 87,000 |
| Sundry creditors | 45,000 | 60,000 | Cash and bank | 2,01,000 | 2,52,600 |
| Bills payable | 15,000 | 30,000 | |||
| 7,35,000 | 11,19,600 | 7,35,000 | 11,19,600 |
Income for the second year is as follows:
| Particulars | Rs. | Rs. |
|---|---|---|
| Sales | 3,60,000 | |
| Cost of goods sold | 2,02,200 | |
| Gross profit | 1,57,800 | |
| Less: Depreciation on plant | 30,000 | |
| Depreciation on building | 48,000 | |
| Operating expenses | 60,000 | |
| Net income from operation | 19,800 | |
| Gain on sales of investment | 7,200 | |
| 27,000 | ||
| Less: Loss on sale of machinery (Proceeds were Rs. 9,000) | 3,000 | |
| Net income | 24,000 | |
| Less: Divident paid | 17,400 | |
| Retained earning | 6,600 |
Additional Information:
i) Investment costing Rs. 24,000 was sold for Rs. 31,200
ii) The plant purchase for Rs. 1,05,000
Required:
Cash flow statement using direct method. [10]
Answer:
Solution
Cash Flow Statement under Direct Method
| Particulars | Rs. | Rs. |
|---|---|---|
| Cash flow from operating activities | ||
| a. Cash collection from debtors | ||
| Sales revenue | 3,60,000 | |
| Increase in sundry debtors | (12,000) | 3,48,000 |
| b. Cash paid to suppliers | ||
| Cost of goods sold | (2,02,200) | |
| Increase in sundry creditors | 15,000 | |
| Increase in bills payable | 15,000 | |
| Increase in inventories | (15,000) | (1,87,200) |
| c. Cash paid to employee and others | ||
| Operating expenses | 60,000 | 60,000 |
| Net cash flow from operating activities (A=a+b+c) | 1,00,800 | |
| Cash flow from investing activities | ||
| Purchase of plant and machinery | (1,05,000) | |
| Purchase of land | (2,40,000) | |
| Sale of investment | 31,200 | |
| Sale of machinery | 9,000 | |
| Net cash flow from investing activities (B) | (3,04,800) | |
| Cash flow from financing activities | ||
| Issue of shares | 90,000 | |
| Cash from shares premium | 33,000 | |
| Cash from long-term liabilities | 1,50,000 | |
| Dividend paid | (17,400) | |
| Net cash flow from financing activities (C) | 2,55,600 | |
| Increase in cash (A+B+C) | 51,600 | |
| Add: Opening cash and bank | 2,01,000 | |
| Closing cash and bank | 2,52,600 |
18. The details from materials purchase of a firm are:
Annual requirement 4,000 units, cost per order Rs. 400, Cost per unit Rs. 200, Inventory carrying cost 100% of inventory value.
Required:
(a) Economic order quantity
(b) No. of orders per year. [2]
Answer:
Solution
Given,
Annual requirement (A) = 4,000 units
Cost per order (O) =Rs. 400
Cost per unit = Rs. 200
Carrying cost (C) = 10% of inventory value = 200 × 10 ÷ 100 = Rs. 20.
a) We have,
Economics order quantity (EOQ) = √(2AO/C) = √(2 × 4,000 × 400 /20) = 400 units.
b) We have,
No. of orders per year = A ÷ EOQ = 4,000 ÷ 400 = 10 orders.
19.
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