Question Paper

Financial Accounting –I (MB132) : October 2007

I
Answer all questions.
Marks are indicated against each question.
1. The dividend declared by the Board of Directors between two annual general meetings
is called as
(a) Proposed dividend
(b) Final dividend
(c) Interim dividend
(d) Declared dividend
(e) Unpaid dividend.
(1 mark)
2. In which of the following situations, price earnings ratio is applied?
(a) To determine the financial risk of a business entity
(b) To determine the expected market price of the shares of a company
(c) To assess the earning potential of a company in the near future
(d) To examine the operational efficiency of a company
(e) To check how efficiently the assets are utilized by a firm.
(1 mark)
3. If the holding company receives dividend out of pre-acquisition profits of the
subsidiary company, it
will be
(a) Credited to the capital reserve account
(b) Debited to the capital reserve account
(c) Credited to the consolidated profit and loss account
(d) Debited to the consolidated profit and loss account
(e) Ignored completely.
(1 mark)
4. Which of the following items could appear in a company’s cash flow statement?
(a) Proposed dividends
(b) Forfeiture of shares
(c) Bonus issue of shares
(d) Repayment of loan
(e) Conversion of debentures into equity shares.
(1 mark)
5. Gross Value Added is equal to
(a) Net Value Added + Depreciation
(b) Net Value Added + Interest
(c) Net Value Added – Depreciation
(d) Net Value Added – Inventory
(e) Net Value Added + Inventory.
(1 mark)
6. An amalgamating company transfers its assets to the Realization Account at
(a) Agreed values
(b) Fair market values
(c) Original costs
(d) Book values
(e) Agreed value or book value, whichever is less.
(1 mark)
7. The issued and paid-up share capital of Alpha Limited is as follows:
1,00,000 equity shares of Rs.10 each, fully paid Rs.10,00,000
8% Preference shares of Rs.50 each, fully paid Rs. 5,00,000
For the year ended March 31, 2007, the company has paid the preference dividend for the
year and an
interim dividend of Rs.2 per share on the equity shares during the year. A final equity
dividend of Rs.3

per share is proposed (excluding interim dividend).

What is the total amount of dividends for the year ended March 31, 2007?
(a) Rs.5,80,000
(b) Rs.2,40,000
(c) Rs.3,40,000
(d) Rs.5,40,000
(e) Rs.5,00,000.
(2 marks)
8. Which of the following items represent use of funds?
(a) Sale of land and building at loss
(b) Dividend proposed and not yet declared
(c) Sale of trade marks and patent rights
(d) Net loss from operations
(e) Amortization of goodwill.
(1 mark)
The profits earned by a subsidiary company before holding company acquires control
over it are known
9.
as
(a) Revenue profits
(b) Capital profits
(c) Super profits
(d) Normal profits
(e) Minority interest.
Which of the following is not an item to be recorded under Current Assets, Loans and
Advances under <
10.
Part 1 of Schedule VI of the Companies Act, 1956?
(a) Interest accrued on investment
(b) Bills of exchange
(c) Balances with customs, port trust, etc
(d) Development expenditure not adjusted
(e) Loose tools.
(1 mark)
<
11. Earnings per share can be classified as a
(a) Liquidity ratio
(b) Ownership ratio
(c) Leverage ratio
(d) Activity ratio
(e) Capital gearing ratio.
(1 mark)
<
12. An interest coverage ratio of 2.25 indicates that
(a) Earnings before interest and taxes is 2.25 times the interest payable
(b) Earnings before taxes is 2.25 times the interest payable
(c) Earnings after taxes is 2.25 times the interest payable
(d) Retained earnings are 2.25 times the interest payable
(e) Earnings before depreciation and taxes is 2.25 times the interest payable.
(1 mark)

13. Consider the following data of a company:

Particulars Rs.
Credit sales 3,00,000
Cost of sales 2,00,000
Debtors 1,20,000
Creditors 2,50,000
The average collection period for the company is
(a) 60 days
(b) 73 days
(c) 146 days
(d) 219 days
(e) 240 days.
(2 marks)
<
On March 31, 2007, A Ltd. acquired B Ltd. As on that date B Ltd.’s balance sheet was as
follows:
14.
Liabilities Rs. Assets Rs.
Equity share capital 3,00,000 Net fixed assets 13,00,000
Reserves and Surplus 9,50,000 Current assets 5,70,000
Current liabilities 7,20,000 Preliminary Expenses 1,00,000
Total 19,70,000 Total 19,70,000
If all the assets and liabilities of B Ltd. are taken over at their book values, the purchase
consideration
payable by A Ltd. is
(a) Rs.12,24,000
(b) Rs.11,50,000
(c) Rs.15,22,000
(d) Rs.14,30,000
(e) Rs.10,28,000.
(2 marks)

The profit and loss account of Urmila Ltd. for the year ending March 31, 2007 showed a
debit balance < A
15.
of Rs.75,000. Subsequently, the following omissions were noticed:
Goods worth Rs.3,000 returned to the supplier were not recorded in the books.
The rent of the godown is Rs.24,000 per annum, out of which only Rs.20,000 was paid.
The rent
accrued but not paid was not recorded in the books of account.
The profit/loss made by the company after considering the above transactions is
(a) Rs.76,000 (Profit)
(b) Rs.74,000 (Profit)
(c) Rs.83,000 (Loss)
(d) Rs.69,000 (Profit)
(e) Rs.76,000 (Loss).
(2 marks)
<A
16. Consider the following data regarding Gangadhar Publications Ltd. for the year 2006-
07:
Particulars Rs. in lakh
Profit as per profit and loss appropriation account 38
Depreciation 8
Dividends paid 20
Preliminary expenses written off 10
Funds from operations of Gangadhar Publications Ltd. during the year 2006-07 amounted
to
(a) Rs.100 lakh
(b) Rs. 82 lakh
(c) Rs. 76 lakh
(d) Rs. 42 lakh
(e) Rs. 40 lakh.
(2 marks)

The following are the balance sheets of A Ltd. and B Ltd. as on March 31, 2007:
17.
A Ltd. B Ltd. A Ltd. B Ltd.
Liabilities Assets Rs.
Rs. Rs. Rs.
Share Capital:
Equity shares of 4,00,000 2,40,000 Fixed Assets 2,80,000 2,00,000
Rs.10 each Investments:
Profit and Loss a/c 1,00,000 70,000 4,000 shares in B Ltd. 48,000 –
Current Liabilities 20,000 30,000 Current Assets 1,92,000 1,40,000
Total 3,40,000 Total
5,20,000 5,20,000 3,40,000
B Ltd. was absorbed by A Ltd. and the purchase consideration was fixed at Rs.1,92,000.
The proportinate share of A Ltd., in the purchase consideration payable to B Ltd., was
(a) Rs.48,000
(b) Rs.40,000
(c) Rs.32,000
(d) Rs.50,000
(e) Rs. 8,000.
(2 marks)
18. Which of the following is a use of funds that decreases cash in cash flow statements?
<
(a) A gross increase in fixed assets
(b) A net decrease in any asset other than cash or fixed assets
(c) Proceeds from sale of equity shares
(d) Funds from operations
(e) A net increase in any liability.
(1 mark)
19. Which of the following statements is false? <
(a) A bill drawn by the holding company and accepted by its subsidiary company is an
outside
obligation
(b) A consolidated balance sheet shows the assets and liabilities of the holding company
and its
subsidiaries
(c) A holding company can acquire control over its subsidiary company by controlling the
composition of board of directors of the subsidiary company
(d) The time interval between the dates of balance sheet of holding company and
subsidiary
company cannot be more than 6 months
(e) Preparation of consolidated balance sheet is not compulsory in India.
(1 mark)
20. Every figure in the financial statements for the first year is considered as 100 percent
while the <
corresponding figures for the subsequent years are expressed as a percentage of the first
year figure.
Which type of analysis is being carried out?
(a) Cross-sectional analysis
(b) Year-to-year change analysis
(c) Index number trend analysis
(d) Common size analysis
(e) Funds flow analysis.
(1 mark)
21. The opening balance of Profit and Loss Appropriation account of Word World Ltd. for
the year 2006-07 <
was Rs.7,500. The dividends paid to shareholders were Rs.1,500. The ending balance of
Profit and Loss
Appropriation account was Rs.5,000. The net income or net loss for the accounting
period was
(a) Net loss of Rs.1,000
(b) Net income of Rs.1,000
(c) Net loss of Rs.2,000
(d) Net income of Rs.2,000
(e) Net income of Rs.6,500.
(2 marks)
<
22. Issue of bonus shares by a subsidiary company out of its pre-acquisition profits will
(a) Decrease cost of control
(b) Increase cost of control
(c) Have no effect on cost of control
(d) Increase revenue profit
(e) Decrease revenue profit.
(1 mark)

(1 mark)
23. Tax deducted at source on the payments made by a company appears in the Balance
Sheet of the
company on the
(a) Liabilities side under current liabilities
(b) Liabilities side under provisions
(c) Assets side under current assets
(d) Assets side under loans and advances
(e) Assets side under miscellaneous expenditure.
(1 mark)
24. Which of the following is a source of funds while carrying out funds flow analysis on
total resources
basis?

(a) Redemption of preference share capital

(b) Installation of a capital asset
(c) Conversion of debentures into equity shares
(d) Selling an old car today in order to buy a new one after one year
(e) Buy back of equity shares.
(1 mark)
While preparing a funds flow statement on working capital basis, a short term loan repaid
in cash by the
25.
organization
(a) Is shown as a source of funds
(b) Is shown as an increase in cash
(c) Is shown as a decrease in cash
(d) Is shown as increase in working capital
(e) Is shown as decrease in working capital.
(1 mark)
26. The following data are available from the books of Judo Company:
Cash inflow from operating activities is Rs.1,29,000.
Cash used for investing activities is Rs.1,00,000.
Cash used for financing activities is Rs.35,000.
Cash at the beginning of the period is Rs.95,000.
Cash at the end of the period amounts to
(a) Rs. 89,000
(b) Rs.1,01,000
(c) Rs. 31,000
(d) Rs. 98,000
(e) Rs.1,59,000.
(2 marks)

27. Dividends are usually paid as a percentage of

(a) Authorized share capital
(b) Net profit
(c) Paid-up capital
(d) Called-up capital
(e) Subscribed capital.
(1 mark)
As per Schedule VI, of the Companies Act, 1956, which of the following is true regarding
the treatment
28.
of calls in arrears in the final accounts of a company?
(a) The amount will be shown under the head ‘current assets’ on the assets side of the
balance sheet
(b) The amount will be deducted from the called-up capital in the balance sheet
(c) The amount will be shown under the head ‘current liabilities’
(d) The amount will be shown in the profit and loss account as a loss without showing it
in the
balance sheet
(e) The amount will be added to the share capital in the balance sheet.
(1 mark)
In terms of Part I Schedule VI of the Companies Act, 1956, which of the following assets
is categorized
29.
under the head “Fixed Assets”?
(a) Vehicles
(b) Loose tools
(c) Debts outstanding for a period exceeding six months
(d) Debts due by directors
(e) Investments in Government or Trust securities.
(1 mark)
Which of the following ratios is not an ownership ratio?
30.
(a) Leverage ratio
(b) Capital structure ratio
(c) Coverage ratio
(d) Dividend ratio
(e) Inventory turnover ratio.
(1 mark)
31. A company’s system of maintaining books of accounts
(a) Must be the same as all the other companies which are operating in the similar line of
business
(b) Can be different from the other companies which are operating in the similar line of
business
(c) Must be disclosed, if it is different from the recognised system of accounting
(d) Must be on accrual basis and according to the double entry system of accounting
(e) Can be on cash basis of accounting with the approval of the Registrar of Companies.
(1 mark)
32. Which of the following statements is true with regard to the consolidated financial
statements?
(a) The total equity represents the parent company’s equity plus subsidiary company’s
equity
(b) No investment in subsidiary company appears as an asset in the balance sheet
(c) Minority interest is not shown in the consolidated balance sheet
(d) Goodwill could never be reported as an intangible asset in the consolidated balance
sheet
(e) Inter-company transactions need not be eliminated.
(1 mark)
33. The current ratio of a company is 2:1. Which of the following transactions would
improve the ratio?
(a) Purchase of a fixed asset on credit
(b) Cash received from debtors
(c) Sale of office furniture for cash
(d) Purchase of stock-in-trade for cash
(e) Acceptance of bills of exchange drawn by creditors.
(1 mark)
34. Which of the following disclosures is/are considered appropriate in the first financial
statements
prepared after the amalgamation?
I. Names and general nature of business of the amalgamating companies.
II. Effective date of amalgamation for accounting purposes.
III. The method of accounting used to reflect the amalgamation.
IV. Particulars of the scheme sanctioned under a statute.
(a) Only (I) above
(b) Both (I) and (II) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III), and (IV) above.
(1 mark)
35. As per Schedule VI of the Companies Act, 1956, under which of the following heads
is ‘Premium on
issue of debentures’ shown in the balance sheet of a company?
(a) Miscellaneous expenditure
(b) Debentures
(c) Reserves and surplus
(d) Current liabilities and provisions
(e) Current Assets.
(1 mark)
(1 mark)
37. Which of the following statements is false in relation to the consolidated financial
statements?
(a) As far as minority shareholders are concerned, there is no difference between pre-
acquisition and
post-acquisition profits
(b) The internal contingent liabilities should be shown by way of a note in the
Consolidated Balance
Sheet
(c) Any fall in the value of assets of the subsidiary after the date of acquisition should be
treated as
an ordinary revenue loss
(d) When bonus shares are issued out of pre-acquisition profits, there is no change in the
cost of
control
(e) Consolidated financial statements provide financial information about economic
activities of a
group of enterprises under the control of a parent company.
(1 mark)
<
38. Which of the following is a leverage ratio?
(a) Debt-Equity ratio
(b) Current ratio
(c) Quick ratio
(d) Accounts receivable turnover ratio
(e) Gross profit margin ratio.
(1 mark)
<
39. Which of the following statements is false?
(a) An increase in share premium account is a source of funds
(b) Funds flow refers to changes in short-term funds as well as long-term funds
(c) Net profit earned less non-fund and non-operating expenses is equal to funds from
operations
(d) Cash or credit sales at a loss decreases the working capital
(e) Goods purchased on credit do not result in flow of funds.
(1 mark)
<
40. The starting point in the preparation of proforma income statement is the projection of
(a) The amount of sales for the next year
(b) The amount of raw material to be purchased in the next year
(c) The quantum of product to be manufactured in the next year
(d) Anticipated earning per share for the next year
(e) Anticipated dividend per share for the next year.
(1 mark)

41. Following data is extracted from the books of Shripada Ltd. for the year 2006-07:
Current Ratio 1.75
Acid test Ratio 1.25
Stock Rs.1,00,000
The current assets of Shripada Ltd. amount to
(a) Rs.1,75,000
(b) Rs.1,25,000
(c) Rs.1,50,000
(d) Rs.3,50,000
(e) Rs.2,25,000.
(2 marks)
42. Excl Ltd. acquired Building worth Rs.6,30,000 from Light-blue Ltd. by issue of
shares of Rs.100 at a
discount of 10%. The number of shares to be issued by Excl Ltd. to settle the purchase
consideration is
(a) 6,300 shares
(b) 7,500 shares
(c) 7,000 shares
(d) 5,727 shares
(e) 5,670 shares.
(2 marks)
43. Given below is the extract of income statement of JD Ltd. for the years 2005-06 and
2006-07:
(Rs.’000)
Particulars 2005-06 2006-07
Total sales 600 900
Cost of goods sold 350 550
Gross profit 250 350

If the sales for the year 2007-08 are estimated at Rs.11,00,000, the estimated gross profit
for the year
2007-08 will be
(a) Rs.5,50,000
(b) Rs.6,60,000
(c) Rs.4,20,000
(d) Rs.4,40,000
(e) Rs.5,30,000.
(2 marks)
The original cost of machinery is Rs.50,000 and accumulated depreciation is Rs.25,000.
This machinery <
44.
is sold at a gain of Rs.6,000. The working capital provided by the sale of the machinery is
(a) Rs.32,500
(b) Rs.31,000
(c) Rs.30,000
(d) Rs.29,500
(e) Rs.27,500.
(2 marks)
<
45. On October 01, 2006, Sun Ltd. acquired 60% shares in Moon Ltd. at a cost of
Rs.18,75,000.
Balance Sheet of Moon Ltd. as on March 31, 2007
Liabilities Rs. Assets Rs.
Share capital 20,00,000 Fixed assets 28,50,000
(2,00,000 shares Rs.10 each) Current assets 3,80,000
Capital reserve 6,00,000
Profit and loss account 4,00,000
Current liabilities 2,30,000
Total 32,30,000 Total 32,30,000
Sun Ltd’s share in capital profits of Moon Ltd. was Rs.4,20,000. The amount of goodwill
that is to be
shown in the Consolidated Balance Sheet as on March 31, 2007 was
(a) Rs.2,55,000
(b) Rs.2,85,000
(c) Rs.6,75,000
(d) Rs.3,75,000
(e) Rs.1,35,000.
(2 marks)
<
46. The following information relates to Western Ltd.:
Net worth to long-term debt ratio 3.975
Interest on long-term debt 15%
Interest paid Rs. 3 lakh
The Net worth is
(a) Rs.75.2 lakh
(b) Rs.79.5 lakh
(c) Rs.81.4 lakh
(d) Rs.82.3 lakh
(e) Rs.82.8 lakh.
(2 marks)
<
47. The following information is extracted from the books of ABC Company Ltd.:
Total assets Rs.1,80,000
Debt to total assets ratio 4:9
The total debt of the company is
(a) Rs.95,000
(b) Rs.85,000
(c) Rs.80,000
(d) Rs.70,000
(e) Rs.90,000.
(2 marks)
The net profit of ABC Ltd. is Rs.43,000, which is arrived after considering the following:
48.
Particulars Rs.
Extension cost of building 2,00,000
Income tax 1,00,000
Profit on sale of the undertaking 1,00,000
The Managing Director is entitled to a commission of 3% of the net profit after charging
such
commission. The commission payable to the Managing Director is
(a) Nil
(b) Rs.6,558
(c) Rs.9,988
(d) Rs.4,748
(e) Rs.7,078.
(2 marks)
H Ltd. acquired 75% shares of S Ltd. on August 1, 2006. The equity share capital of S
Ltd. is <
49.
Rs.1,00,000. The Land and buildings of S Ltd. are appreciated by Rs.2,00,000. The
minority interest
shown in the consolidated balance sheet as on March 31, 2007 was
(a) Rs.2,00,000
(b) Rs.1,50,000
(c) Rs.1,00,000
(d) Rs. 75,000
(e) Rs. 50,000.
(2 marks)
<
50. The following data pertains to Amrit Ltd. for the year ended March 31, 2007:
Particulars Rs.
Sales 10,00,000
Gross profit 20% on sales
Opening stock 1,40,000
Closing stock 1,80,000
The stock turnover ratio of Amrit Ltd. as on March 31, 2007 was
(a) 7.14 times
(b) 5.17 times
(c) 6.25 times
(d) 5.00 times
(e) 5.55 times.
(2 marks)
51. Dividend yield is equal to
(a) Dividend Rate
(b) Dividend per share/Face value of the share
(c) Dividend per share/Earnings per share
(d) Dividend per share/Retained earnings per share
(e) Dividend per share/Market price per share.
(1 mark)
The purpose of internal reconstruction is
52.
(a) To bring about a merger
(b) To bring about combination
(c) To acquire another company
(d) To float a new company to take over the business of an old company
(e) To bring about a reduction in capital.
(1 mark)
Which of the following can be considered as a source of funds?
53.
I. Increase in current liabilities.
II. Decrease in current assets.
III. Decrease in capital.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
(1 mark)
54. Which of the following is/are generally used for ratio analysis?
I. Profit and loss account.
II. Balance sheet.
III. Trial Balance.
IV. Cash Budget.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (II) and (III) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
55. Which of the following is true with respect to sources and uses of funds?
(a) Depreciation and decrease in net working capital are sources of funds
(b) Depreciation and decrease in net working capital are uses of funds
(c) Depreciation is a source of fund but decrease in net working capital is a use of fund
(d) Depreciation is a use of fund but decrease in net working capital is a source of fund
(e) Depreciation and increase in net working capital are uses of funds.
(1 mark)
56. The details of the current assets and current liabilities of Episolon Ltd. for the
financial year 2006-07 are
given below: (Rs. in lakh)
Particulars Debtors Cash balance Inventory Current liabilities
Beginning 100 70 30 60
Ending 120 60 45 55
The change in net working capital of the company was
(a) Rs.15 lakh
(b) Rs.20 lakh
(c) Rs.25 lakh
(d) Rs.30 lakh
(e) Rs.50 lakh.
(2 marks)
57. Inability to pay dues by a firm to the financial institutions is indicated by
(a) Inventory turnover ratio
(b) Debtors turnover ratio
(c) Current ratio
(d) Debt service coverage ratio
(e) Debtors’ collection period.
(1 mark)
(e) Debtors’ collection period.
(1 mark)
58. Following data is extracted from the books of Venus Ltd. as on March 31, 2007:
Particulars Rs.
Earnings per share 300
Dividend per share 40
The dividend pay-out ratio for the year 2006-07 was
(a) 13.33%
(b) 16.67%
(c) 26.67%
(d) 23.33%
(e) 15.00%.
(2 marks)
59. The following information is given about PS Ltd.:
Inventories Rs.4.0 lakh
Sundry debtors Rs.3.0 lakh
Cash and Bank balances Rs.5.0 lakh
Current liabilities Rs.3.2 lakh
The quick ratio of the firm is
(a) 5.45
(b) 3.75
(c) 3.64
(d) 2.50
(e) 1.56.
(2 marks)
Harris Ltd. acquired 21,000 equity shares of Sati Ltd. on December 31, 2006. The equity
share capital <
60.
of Sati Ltd. as on March 31, 2007 was Rs.3,00,000 (share of Rs.10 each fully paid-up).
The net profit of Sati Ltd. for the year ended March 31, 2007 was Rs.1,00,000.
The share of Harris Ltd. in the capital profits is
(a) Rs.1,00,000
(b) Rs. 52,500
(c) Rs. 70,000
(d) Rs. 75,000
(e) Rs. 22,500.
(2 marks)
Wealth Ltd. acquired 55% shares of Gold Ltd. on February 01, 2006. Wealth Ltd. sells
goods at cost <
61.
plus 20%. During the year 2006-07, it supplied goods worth Rs.90,000 to Gold Ltd., out
of which, 60%
are unsold and still in stock of Gold Ltd. as on March 31, 2007. The unrealized profit on
stock to be
adjusted while preparing Consolidated Balance Sheet as on March 31, 2007 was
(a) Rs. 5,000
(b) Rs. 5,940
(c) Rs. 9,000
(d) Rs.10,800
(e) Rs. 6,000.
(2 marks)
<
62. The following information is related to Arnika Industries Ltd.:
Current liabilities Rs.150 lakh
Closing inventory Rs.100 lakh
Current ratio 1.50
Account receivables Rs.100 lakh
What is the amount of cash and bank balance?
(a) Rs.18 lakh
(b) Rs.10 lakh
(c) Rs.12 lakh
(d) Rs.15 lakh
(e) Rs.25 lakh.
(2 marks)
<
63. Jupon Ltd. has furnished the following data for the year ended March 31, 2007:
Particulars Rs.
Sales 30,00,000
Average inventory 5,00,000
Inventory turnover ratio 3.6 times
Gross profit of Jupon Ltd. for the year ended March 31, 2007 was
(a) Rs.42,00,000
(b) Rs. 6,00,000
(c) Rs.18,00,000
(d) Rs.12,00,000
(e) Rs. 8,75,000.
(2 marks)
(2 marks)
Anil Ltd. reports net profit of Rs.2,50,000 and has an Equity Share Capital of
Rs.10,00,000. Vimal Ltd.
64.
reports post-acquisition profit of Rs.50,000 and has an Equity Share Capital of
Rs.2,50,000. Anil Ltd.
owns 80% of the Vimal Ltd.’s equity. The consolidated financial statements will report
(a) Net profit of Rs.3,00,000
(b) Net profit of Rs.2,90,000
(c) Share Capital of Rs.12,50,000
(d) Share Capital of Rs.12,00,000
(e) Investments of Rs.2,50,000.
(2 marks)
65. Consider the following Balance Sheet of Ravera Ltd. as on March 31, 2007:
Liabilities Rs. Assets Rs.
Equity capital (50,000 shares of 5,00,000 Fixed assets 5,50,000
Rs.10 each)
Reserves and surplus 2,00,000 Current assets 2,25,000
Current liabilities 75,000
Total 7,75,000 Total 7,75,000
The profit after tax for the year 2006-07 was Rs.1,00,000.
The earning per share for the year 2006-07 was
(a) Rs.5
(b) Rs.6
(c) Rs.2
(d) Rs.4
(e) Rs.3.
(2 marks)
(2 marks)
Current liabilities are Rs.10,000 and current assets are Rs.15,000. If debtors realized
Rs.2,000 and
66.
Rs.6,000 worth preference shares got converted into equity, the impact on Working
Capital (WC) would
be
(a) Decrease of Rs.3,000
(b) Increase of Rs.3,000
(c) No change
(d) Increase of Rs.9,000
(e) Decrease of Rs.9,000.
(2 marks)
The share capital of Sunny Ltd. comprises of Equity Share Capital (Rs.10 each) of
Rs.3,00,000. Harry
67.
Ltd. acquired 24,000 shares in Sunny Ltd. on July 1, 2007 at the rate of Rs.12.50 per
share. The cost of
the investment and the holding percentage of Harry Ltd. in Sunny Ltd. are
(a) Rs.2,40,000 and 85%
(b) Rs.3,00,000 and 70%
(c) Rs.2,40,000 and 80%
(d) Rs.1,25,000 and 80%
(e) Rs.3,00,000 and 80%.
(2 marks)
Raju Ltd. acquired 60% shares of Rani Ltd. on November 01, 2006. The profit and loss
account showed
68.
a debit balance of Rs.90,000 on April 01, 2006 and a credit balance of Rs.1,50,000 on
March 31, 2007.
The share of minority in the capital profit/loss of to be shown in the Consolidated
Balance Sheet as on
March 31, 2007 was
(a) (Rs.50,000)
(b) (Rs.42,000)
(c) Rs.84,000
(d) (Rs.75,000)
(e) Rs.20,000.
(2 marks)
(2 marks)
<
The increase in equity from major operating activities of a business entity is known as
69.
(a) Capital
(b) Gross profit
(c) Net worth
(d) Net profit
(e) Cash in hand.
(1 mark)
<

70. Which of the following would directly affect the dividend yield?
(a) Retention ratio
(b) Book value per share
(c) Nominal value of a share
(d) The cost of equity capital
(e) Debt-equity ratio.
(1 mark)