Cash Flow Statement

CENTRE FOR CONTINUING EDUCATION
EXECUTIVE MBA
(POWER MANAGEMENT)
BATCH: _______________________
SEMESTER: _______________________
NAME: _______________________
SAP NO/REGN NO: _______________________

ASSIGNMENT 1

FOR

Power Industry Accounting

MBPF-911

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Note: All sections are compulsory. Last Date to submit: - 15
th
Oct 2011

Section-A (10 Questions) (10x2 = 20 marks)
1 The going concern concept assumes that:
A the business is continuing to be profitable.
B the business is causing concern to investor
C the business continues in operational existence for the definite profitable future.
D the business continues in operational existence for the foreseeable future.

2 Which of the following characteristics of financial information can be described as a threshold quality?
A Understandability
B Relevance
C Materiality
D Reliability

3 Now in order to save printing and distribution costs, companies are allowed to send financial information to
shareholder:
A Only if they ask for
B only if the company is profitable
C only once every two years
D in an electronic version.

4 The main reason that led to the development of independent professional accountancy association within specific
countries is
A Banks owning majority of shares of large companies
B Wide share ownership
C Communist Government
D Small, family run business.

5 The status of International Accounting Standard (IASs) was given a significant boost in 2001, when which one of the
following events occurred?
A IASs were made compulsory throughout Asia & Africa
B IASs received World heritage status from United States
C European commission proposed that from 2005 listed companies throughout the EU should be obliged to
follow IASs rather than national standards.
D President of USA endorsed IASs for all American companies.

6 Which one of the following can not be classified as Revenue Income?
A Income from sales of services
B Income from sale of fixed assets.
C Goods sold on credit
D Goods sold for cash

7 A good reason for a business to keep detailed financial records?
A It must have detailed records available for inspection by competitors
B It will pay lower tax if its records are well kept.
C It needs to know who it owes money to and who owes it money.
D It must employ a qualified accountant to keep good records.

8 A trial balance which shows equal totals for the debit and credit column:
A shows that there is only one error within the bookkeeping.
B shows that the arithmetic is correct, but error may still be present in the bookkeeping system
C Shows that the bookkeeping system is free of errors.
D shows that there must be more than one error within the book keeping system.

9 A profit is earned
A Income exceeds liabilities
B Assets exceed expenditure
C cash inflow exceeds cash outflow
D Income exceeds expenditure

10 Which one of the following assts could be described as a current assets?
A Land on which Building stands
B Building to house machinery
C Machinery to manufacture goods for resale
D stock of goods for resale.

Section-B (5 Questions)
(5x6 = 30 marks)
11. What are the methods of inventory valuation? Briefly describe them.
12. Distinguish between obsolescence and scrap value.
13. Briefly discuss the main factors of providing depreciation.
14. What is the relationship between the three financial statements?
15. Financial information can be described as a materiality quality. Elucidate.

Section-C (3 Questions)
(10x3 = 30 marks )
16. Prepare cash flow statement from the following information of M/s Sujuna Bearing Limited for the year ended
March2010.
Balance sheet of M/s Sujuna Bearing Limited as on 31
st
March2010.
All in Rupees
Liabilities 2009 2010 Assets 2009 2010
Share capital 3,00,000 4,00,000 Goodwill 70,000 30,000
Profit & Loss A/c 1,20,000 2,60,000 Machinery 3,00,000 3,20,000
General Reserve 60,000 95,000 12% investment 1,50,000 3,00,000
Tax provision 70,000 80,000 Stock 35,000 1,85,000
Creditors 50,000 90,000 Debtors 50,000 70,000
Bills payable 30,000 10,000 Cash at bank 30,000 40,000
Depreciation provision 25,000 40,000 Short term investment 20,000 30,000
6,55,000 9,75,000 6,55,000 9,75,000
Additional information:
a) Investment costing Rs.50,000 were sold for Rs.48,000 during the year.
b) Tax paid during the year Rs.70,000
c) Interest received on Investment Rs.12,000/-

17. M/s Indigo Electrical Appliance furnishes the following information:
Calculate net cash flow from financing activities:-
Particular 31.12.2009 31.12.201
Equity share capital 2,00,000 4,50,000
10% debentures 1,00,000 -
8% Preference shares - 3,00,000

Additional information:-
a) Interest paid on debentures Rs.5000/-
b) Dividend paid on equity shares Rs.50,000/-
c) Bonus shares were issued to existing shareholders in the ration of 4:1 during the year.

18. M/s Liquid Vessels Private Limited had the following balance :-
Particular
Investment at the beginning of the period Rs. 3,40,000/-
Investment at the end of the period Rs. 2,80,000/-
During the year the company sold 40% of investments at the beginning at a profit of Rs.84,000. Calculate cash from
investing activities.
Section-D
(20x1 = 20 marks)
19. Balance sheet of M/s Andhra Reactors Limited as on 31st march2009
All in Rs.
Liabilities Rs. Assets Rs.
Equity Shares of Rs. 10/- each 10,000 Fixed assets 1,10,000
Additional money received on shares 30,000 Accumulated depreciation 30,000 80,000
Retained earnings 13,250 Accounts receivable 3,000
Bonds 30,000 Inventories 11,000
Accounts payable 11,580 Prepaid expenses 230
Cash 600
94,830 94,830

The company neither sold any fixed assets nor issued any shares during 2010. On 31.03.2010, the companys
Accountant obtained the following ratios and other details based on 2010 operations.
a) Current ratio-2.0 times
b) Acid test ratio-0.8
c) Turnover of average inventory-25 times
d) Equity ratio-58.8%
e) Debt ratio-41.2%
f) Times interest earned-6.0 times
g) Percentage of profit after tax on sales-7.0%
h) Gross margin percentage-52.0%
i) Book value per share-Rs.58.80.
j) Market value per share-Rs.8.75
k) Dividend yield-5.0%
l) Corporate income tax rate-30%
m) Depreciation rate-4% on original cost
Use the above data to prepare M/s Andhra Reactors Balance sheet on 31.03.2010 and income statements for the year
ending on 31
st
March2010.

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CENTRE FOR CONTINUING EDUCATION

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