Accountancy important questions

Return from work place (Falgun 12) is valued at the last issue rate Rs.7 and placed at the head of the FIFO queue.

Store Ledger (FIFO Method) (amounts in Rs.)

Closing balance = 1,230 units valued at Rs.9,510.

Opening 400 units for Rs.2,000 = Rs.5 per unit. Return from department (Poush 15) is valued at the last issue rate Rs.6. Verification surplus (Poush 28) is added at the current rate Rs.7. Store Ledger (FIFO Method) (amounts in Rs.) Date ...

Store Ledger (FIFO Method) (amounts in Rs.) Date Receipt (Qty/Rate/Amt) Issue (Qty/Rate/Amt) Balance ------------ Magh 1 Opening 500 @ 10 = 5,000 Magh 4 600 @ 11 = 6,600 500 @ 10; 600 @ 11 = 11,600 Magh 7 500 @ 10 = 5,000 600 @ 11 = 6,60...

Return to store on Chaitra 12 (20 units) relates to material issued on Chaitra 6, valued at the last issue rate Rs.22, and is placed at the head of the queue under FIFO. Store Ledger (FIFO Method) (amounts in Rs.) Date Receipt (Qty/Rate/...

Store Ledger (LIFO Method) (amounts in Rs.) Date Receipt (Qty/Rate/Amt) Issue (Qty/Rate/Amt) Balance ------------ Jes 1 Opening 1,000 @ 10 = 10,000 Jes 5 300 @ 10 = 3,000 700 @ 10 = 7,000 Jes 8 400 @ 12 = 4,800 700 @ 10; 400 @ 12 = 11,80...

Duties of a storekeeper (any three):

1. To receive and inspect materials and to arrange their proper storage.
2. To issue materials only against duly authorised material requisitions.
3. To maintain proper records (Bin Cards) and keep the stock within the maximum and minimum levels.
4. To prevent loss, damage and pilferage and to inform the purchase department when stock reaches the reorder level.

Essentials of material control (any three): 1. Proper coordination among the departments dealing with purchase, receipt, storage and use of materials. 2. Proper purchasing of the right quantity of the right quality at the right time and ...

$$ \begin{aligned} \text{Carrying cost per unit} &= 10% \text{ of } \text{Rs.}4 \ &= \text{Rs.}0.40 \ EOQ &= \sqrt{\frac{2 \times A \times O}{C}} \ &= \sqrt{\frac{2 \times 10{,}000 \times 80}{0.40}} \ &= \sqrt{40{,}00{,}000} \ &= 2{,}000 \text{ units} \end{aligned} $$

Economic Order Quantity = 2,000 units.

$$ \begin{aligned} \text{Carrying cost per unit} &= 10% \text{ of } \text{Rs.}100 \ &= \text{Rs.}10 \ EOQ &= \sqrt{\frac{2 \times A \times O}{C}} \ &= \sqrt{\frac{2 \times 36{,}000 \times 60}{10}} \ &= \sqrt{4{,}32{,}000} \ &\approx 657 \text{ units} \end{aligned} $$

Economic Order Quantity ≈ 657 units.

$$ \begin{aligned} \text{Carrying cost per unit} &= 20% \text{ of } \text{Rs.}20 \ &= \text{Rs.}4 \ EOQ &= \sqrt{\frac{2 \times A \times O}{C}} \ &= \sqrt{\frac{2 \times 60{,}000 \times 300}{4}} \ &= \sqrt{90{,}00{,}000} \ &= 3{,}0...

$$ \begin{aligned} \text{Carrying cost per unit} &= 10% \text{ of } \text{Rs.}20 \ &= \text{Rs.}2 \ EOQ &= \sqrt{\frac{2 \times A \times O}{C}} \ &= \sqrt{\frac{2 \times 50{,}000 \times 500}{2}} \ &= \sqrt{2{,}50{,}00{,}000} \ &= 5...

A purchase order is a written document prepared by the purchasing department and sent to a supplier requesting the supply of the materials described in it. It states the quantity, quality, rate, terms of delivery and payment for the good...

A perpetual inventory system is a method of recording stores by which a continuous, up-to-date record of receipts, issues and balance of each item of material is maintained (through the Bin Card and Stores Ledger) so that the balance in ...

Reorder Level = Maximum consumption $\times$ Maximum reorder period $$ \begin{aligned} &= 200 \times 15 \ &= 3{,}000 \text{ units} \end{aligned} $$ Maximum Stock Level = Reorder Level + Reorder Quantity - (Minimum consumption $\times$ M...

$$ \begin{aligned} \text{Current Assets} &= \text{Inventory }10{,}000 + \text{Debtors }15{,}000 + \text{Cash }5{,}000 \ &= \text{Rs.}30{,}000 \end{aligned} $$

Current Liabilities = Creditors Rs.15,000.

(i) Current Ratio = CA / CL $$ \begin{aligned} &= \frac{30{,}000}{15{,}000} \ &= 2 : 1 \end{aligned} $$

(ii) Quick Ratio = (CA - Inventory) / CL $$ \begin{aligned} &= \frac{20{,}000}{15{,}000} \ &= 1.33 : 1 \end{aligned} $$

(iii) Sales Amount:

$$ \begin{aligned} \text{Debtors turnover} &= \text{Sales} / \text{Debtors} \ &= 4 \ \text{Sales} &= 4 \times 15{,}000 \ &= \text{Rs.}60{,}000 \end{aligned} $$

(iv) Gross Profit Ratio = Gross Profit / Sales $\times$ 100 $$ \begin{aligned} &= \frac{15{,}000}{60{,}000} \times 100 \ &= 25% \end{aligned} $$

$$ \begin{aligned} \text{Current Assets} &= \text{Stock }2{,}00{,}000 + \text{Cash }50{,}000 + \text{Debtors }1{,}50{,}000 \ &= \text{Rs.}4{,}00{,}000 \end{aligned} $$ Current Liabilities = Creditors Rs.1,25,000. (i) Current Ratio = CA ...

$$ \begin{aligned} \text{Current Assets} &= \text{Debtors }2{,}50{,}000 + \text{Cash }1{,}50{,}000 + \text{Inventory }2{,}00{,}000 \ &= \text{Rs.}6{,}00{,}000 \ \text{Current Liabilities} &= \text{Creditors }1{,}00{,}000 + \text{Outsta...

(i) Current Liabilities: $$ \begin{aligned} \text{Current ratio} &= CA / CL \ &= 2 \ CL &= \frac{2{,}00{,}000}{2} \ &= \text{Rs.}1{,}00{,}000 \end{aligned} $$ (ii) Sales amount: $$ \begin{aligned} \text{Inventory turnover} &= \text{Sa...

$$ \begin{aligned} \text{Current Assets} &= 4{,}50{,}000 + 1{,}60{,}000 + 1{,}00{,}000 \ &= \text{Rs.}7{,}10{,}000 \ \text{Quick Assets} &= 7{,}10{,}000 - 4{,}50{,}000 \ &= \text{Rs.}2{,}60{,}000 \ \text{Total Sales} &= 2{,}00{,}000 ...

Reasons a shareholder analyses financial statements:

1. To know the profitability and earning capacity of the company and the safety of the dividend.
2. To assess the financial position and solvency, that is the safety of their invested capital.
3. To judge the growth and future prospects before deciding whether to hold, buy more or sell their shares.

Parties interested in financial statements:

1. Owners/Shareholders - to know profitability and safety of their investment.
2. Management - for decision making and control.
3. Creditors and lenders - to judge the solvency and repaying capacity.
4. Government and tax authorities - for taxation and regulation.
5. Employees and investors - for job security and investment decisions.

Objectives of financial statement analysis (any three): 1. To assess the earning capacity and profitability of the firm. 2. To measure the short-term and long-term solvency position. 3. To evaluate the operating efficiency of management....

Objectives of financial statement analysis (any three): 1. To assess the profitability and earning capacity of the business. 2. To judge the liquidity (short-term solvency) and long-term solvency of the firm. 3. To measure the operationa...

Fixed assets are assets held on a long-term basis to be used in the operation of the business rather than for resale, for example land, building, machinery and furniture. They provide benefit over several years and are not meant to be co...

Ratio analysis is a technique of financial statement analysis in which meaningful relationships between two related figures of the financial statements are established and expressed as a ratio, percentage or proportion. It is used to jud...