ASSIGNMENT DEC 2022

FINANCIAL ACCOUNTING AND ANALYSIS

ANS 1.

INTRODUCTION

A journal entry is the act of keeping or making records of any

transactions economic or non-economic .

Depriciation or bond amortisation are examples of recurring

items that can be recorded in journal entries . accounts payable
normally has its own subledger that indirectly impacts the
general ledger, and journal entries are frequently filed using a
different module In accounting software.As a result, general
ledger account balances are changed directly by journal entries
.The correct date,the amounts that will be debited ,the amount
that will be credited, a description of the transaction ,and a
special reference number are all parts of correctly documented
journal entry.

Examples help us comprehend journal entries more clearly . we

use accounting examples to assist us record transactions
,events ,and recurring items in real world company .for
instances , the ABC company sold a $ 300 laptop in a single day
for cash.simple journal entries show that cash account was
debited by $300 and the sales of the laptop were credited by
$100.
 Journal entries in the books of M/s veena

Date Particulars L.F No Debit Credit

amount amount
3-Dec Cash A/c Dr. 5,000
Bank A/c Dr. 5,00,000
To Capital A/c
(Being Mrs.veena Started Business 5,05,000
started Business With Cash )

5-Dec Furniture A/c Dr. 60,000

To Bank A/c 30,000
To Cash A/ c 30,000
(Being furniture purchase and half
amount paid )

7-Dec Purchase A/c Dr. 3,15,000

To Bank A/c 3,15,000
(Being purchased goods for sale
Payment made through by bank )

Party A/c Dr. 5,00,000

8-Dec To Sales A/c
(Being sold entire goods At 5 lakh ) 5,00,000
10-Dec Rent A/c Dr. 10,000
Electricity A/c Dr. 10,000
Salary A/c 10,000
Dr. 30,000
To Bank A/c
(Being the amount paid for
salaries rent, electricity to
employees)

TOTAL 1,410,000 1,410,000

ANS 2.

Introduction

An organization profit and loss account statement is critical for

representating the state of business activities in an organization .
A financial statement that lists the revenues,expenditures,and
expenses incurred over a given time period is called a profit and loss
statement .Along with the balance sheet and the cash flow statement
,every publicly traded firm also releases a P&L statement quarterly and
annually.

The following are the key components needed to prepare a profit and
loss statement .

Components :-

1.Revenue :- Revenue is the total of all of a company operating

income and additional non –operating income. As an illustration ,the
sale of finished goods can serve as the operating income for a
manufacturing facility. Non operating revenue might include interest on
financial investments.

2. Cost of good sold:-The overall cost of producing products

and services is shown as the cost of goods sold . It covers expense for
direct labour and production as well as those related to the cost of
purchasing raw materials.Gross profit is calculated by substracting the
cost of goods sold from the total income.

3.Operating expense:-All cost associated in the routine

operation of a business such as rent, payroll, insurance , maintenance
etc. are categorised as operating expense .

4.Depriciation and financial charges :-Depriciation is

deducted from the value of fixed assets on the basis of deterioration
or obsolescence. Financial expenses like interest on loans are similarly
charged against the company profit and given to its borrowers.

5.Tax rate:- To determine the net profit , operating profit is

reduced to account for non –operating revenue , non –operating
expenses ,gains, and losses. Non-operating items include things like
interest income,dividend income , interest expense,profit and loss on
selling fixed assets ,etc. that are unrelated to the company core
business operations .

Conclusion
Hence , The P&L statement is a critical document that can help you
understand your business profitability &operational efficiency.
 ANS 3 (a) .

Introduction

An organization assets ,liabilities , and shareholder equity are

listed on a balance sheet ,which is a financial statement . one of
the three primary financial statements used to assess a
company is the balance sheet .It offers a snapshot of the assets
and liabilities of a cooporation as of the publication date.

BALANCE SHEET FOR Z AND X , LLP

LIABILITY AMOUNT ASSETS AMOUNT
Retained earning 8,60,000 Account receivable 2,50,000

Salary payable 1,50,000 Supplies 1,50,000

Unearned revenue 2,00,000 Equipment 15,00,000

Account payable 5,40,000 Cash 5,50,000

Common stock 10,00,000 Prepiad insurance 3,00,000

27,50,000 27,50,000
ANS 3(b) .
Introduction
The current ratio is a liquidity ratio used to determine a
company capacity to satisfy its short term debt and obligations ,
or those due in a single year , using assests availabe on its
balance sheet . It is often reffered to as working capital ratio .
investors want a current of one or higher . A company may not
be able to pay its short term debt if its current ratio is less than
one . on the other hand , a current ratio above one may
indicate that the company has too much cash or unsold
inventory.

 FORMULA OF CURRENT RATIO:-

= CURRENT ASSESTS /CURRENT LIABILITIES
ASSETS- PARTICULARS AMOUNT
TOTAL CURRENT ASSEST 16,61,70,100
TOTAL NON-CURRENT ASSET 45,87,33,100

TOTAL ASSETS 624,903,200

LIABILITIES-TOTAL CURRENT LIABILITY 9,07603,100

TOTAL NON-CURRENT LIABILITY 1,29,72,800

TOTAL LIABILITY 920,575,900

 AS PER CURRENT RATIO FORMULA
TOTAL CURRENT ASSETS /TOTAL CURRENT LIABILITY
=624,903,200/920,575,900= 0.678

 SIGNIFICANCE OF CURRENT RATIO-

By calculating the current ratio , one can determine a company
capacity to use its current assets to cover its short term –
liabilities .The firm short term liability are persumed to be
satisfied by the expected cash conversion of all of the current
assets . In other words ,the calculation of this ratio identifies a
firm ability to sustain itself in the short term .Ideal current ratio
is thought to be 2:1 . it follows that the company current
liability should be equal to twice its current assets. The firm is
thought to have poor inventory control or a slow turnover of
debtors if the ratio is extremely high and funds are thought to
be sitting idle.