COST CONTROL AND MANAGEMENT ACCOUNTING

Problems on Techniques of Financial Statement Analysis

Short Problems

1. From the following Statement of Profit and Loss for the years ending 30 th June 2016
and 2017 prepare a Comparative Income Statement.
(Rs. 000)
Particulars 31-3-2017 31-3-2016
I. Income
Net Revenue from Operations (Sales) 2,000 1,600
II. Expenses
Purchase of Stock in Trade 1,500 1,200
Change in Inventories 80 60
Employees Benefit Expenses (wages) 40 40
Total Expenses 1,620 1,300
III. Net Profit (I - II) 380 300

2. Profit and Loss Accounts of Union Carbide are given below for the years 2016 and 2017
ending 31st December. Prepare Comparative Income Statement from them.
(Rs. 000)
Particulars 31-3-2016 31-3-2017
Sales 935 1,269
Cost of Goods Sold 582 711
Sales Expenses 204 360
Administrative Expenses 75 92
Other Income 12 13
Other Expenses 11 20
Income Tax 27 64
Net Profit 48 65

3. You are required to calculate Trend Percentages to the following data taking 2015 as
the base year.
Current Assets As on 31st December
2015 2016 2017
Cash 100 120 80
Debtors 200 250 325
Stock in Trade 300 400 350
Other Current Assets 50 75 125

4. From the following data, calculate trend percentages (taking 2015 as base).
2015 2016 2017
Sales 50,000 75,000 1,00,000
Purchases 40,000 60,000 72,000
Expenses 5,000 8,000 15,000
Profit 5,000 7,000 13,000
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5. From the following Profit and Loss Account and the Balance Sheet of Swadeshi Plytex
Ltd., for the year ended 31st December 2016 and 2017 you are required to prepare a
Common Size Income Statement. (Rs. 000)
Particulars 31-12-2016 31-12-2017
Net Revenue from Operations 800 1000
Cost of Revenue 600 750
Sales Expenses 30 40
Administrative Expenses 20 30
Net Profit 150 190

6. Following is an extract from the Balance Sheet of Nagendra Ltd., as on 31 March 2017.
Particulars Amount
Equity and Liabilities
Shareholders Funds
Share Capital 2,50,000
Reserves and Surplus 56,650
Current Liabilities
Trade Payables 1,10,000
Other Current Liabilities 58,350
Total 4,75,000
Assets
Non-Current Assets
Fixed Assets
Tangible Assets 2,10,000
Intangible Assets 25,000
Current Assets
Inventories 1,50,000
Trade Receivables 90,000
Total 4,75,000
Analyze the financial position of the company.

Main Problems

1. Prepare Comparative Income Statement of Mehak Ltd., from the following details.
Particulars 31-12-2017 31-12-2016
Revenue from Operations 160 % of Cost 140 % of Cost of
Of Revenue from Revenue from
Operations Operations
Purchases 4,50,000 2,50,000
Cost of Revenue from Operations 5,00,000 3,00,000
Operating Expenses 10 % of Cost 12 % of Cost of
Of Revenue from Revenue from
Operations Operations
Income Tax 50 % 40 %
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2. The Income Statements of Goutham Ltd., are given for the years 2016 and 2017.
Prepare Comparative Statement, analyze and interpret the significance of changes in
these statements.
31-12-2017 31-12-2016
Sales 10,00,000 7,25,000
Less : Discounts, Sales Returns etc., 15,000 10,000
Net Sales 9,85,000 7,15,000
Less : Cost of Goods Sold 6,15,000 4,35,000
Gross Profit 3,70,000 2,80,000
Less : Administrative & General Expenses 70,000 50,000
Selling Expenses 1,80,000 1,60,000
Net Operating Profit 1,20,000 70,000
Less : Interest on Loans 15,000 20,000
Net Profit before Tax 1,05,000 50,000
Less : Corporate Tax 30,000 15,000
Net Profit for the year 75,000 35,000

3. The Income Statement of Priyanka Ltd., is given for the years ending on 31st December
2016 and 2017, rearrange the figures in a comparative form and study the profitability
position of the concern.
(Rs. 000)
2016 2017
Net Sales 785 900
Cost of Goods Sold 450 500
Operating Expenses
General and Administrative Expenses 70 72
Selling Expenses 80 90
Non-Operating Expenses
Interest Paid 25 30
Income Tax 70 80

4. The following is the Profit and Loss Account of Muskaan and Mahek Ltd., for the years
2010 and 2011. Prepare a Comparative Income Statement and comment on the
profitability of the company.
Income Statement
2010 2011 2010 2011
To Opening By Sales
Stock 1,53,000 3,60,000 less returns 18,00,000 21,60,000
To Purchases By Closing
Less Returns 9,00,000 9,90,000 Stock 3,60,000 4,05,000
To Wages 1,08,000 1,44,000 By Income
To Salaries 75,600 1,15,200 from

To Rent, Rates Investments 21,600 27,000

& Taxes 63,000 72,000 By Dividend
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To Depreciation 72,000 1.08,000 Received 9,000 13,500

To Selling Exp 21,600 21,600
To Commission 9,000 12,600
To Loss on Sale
Of Plant ----- 14,400
To Interest Paid 21,600 25,200
To Net Profit 7,66,800 7,42,500
21,90,600 26,05,500 21,90,600 26,05,500

5. The following is the Statement of Profit and Loss of Tanushree Ltd., for the year 2015
and its previous year.

Particulars 2014 2015

Revenue from Operations 7,21,456 8,34,250
Returns of Revenue from Operations 11,588 13,903
Cost of Revenue from Operations 4,63,250 4,83,899
Administration Expenses 91,823 1,15,632
Selling Expenses 46,531 54,137
Interest Paid 4,275 3,500
Interest and Dividends 3,795 2,620
Loss on sale of plant 1,254 350
Profit on sale of land 3,000 -----
Purchase Discount 4,250 3,792
Income Tax 43,038 80,390
Net Profit 70,742 88,851
Present the above data in suitable comparative form.

6. From the following data pertaining to Mamta Ltd., prepare Comparative Statement of
Profit and Loss :
Particulars 2016 (Rs.) 2017 (Rs.)
Sales 6,00,000 8,00,000
Gross Profit Ratio (%) 30 % 40 %
Administrative Expenses 40,000 1,00,000
Income Tax (%) 50 % 50 %

7. From the following Balance Sheets of Jishnudeep Ltd., as at 31 st March 2017 and
2016, prepare Comparative Balance Sheet.

Particulars 31-3-2017 31-3-2016

Equity and Liabilities
Shareholders Funds
Share Capital
Equity Share Capital 4,50,000 3,00,000
Preference Share Capital 3,00,000 1,50,000
Reserves and Surplus 1,50,000 1,50,000
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Non-Current Liabilities
9 % Debentures 2,00,000 1,00,000
Loan from Bank 1,00,000 2,00,000
Current Liabilities
Trade Payables 2,00,000 1,00,000
Short Term Provisions 1,50,000 1,50,000
Total 15,50,000 11,50,000
Assets
Non-Current Assets
Fixed Assets 7,50,000 6,00,000
Non-Current Investments 1,50,000 1,50,000
Current Assets
Trade Receivables 4,50,000 3,00,000
Cash and Cash Equivalents 2,00,000 1,00,000
Total 15,50,000 11,50,000

8. From the following information, prepare comparative balance sheet and comment.
(Rs) (Rs) (Rs) (Rs)
Equity 1,50,000 1,50,000 Bills
Reserves 4,050 5,050 Receivable 1,555 2,111
Bills Payable 6,000 6,667 Cash 30,000 20,000
Creditors 7,422 6,322 Debtors 14,000 14,000
Debentures 4,000 ----- Stock 6,627 2,650
Outstanding Prepaid
Expenses ----- 6,000 Expenses 199 -----
Long Term Land &
Loans 42,000 31,000 Building 1,00,000 1,10,000
Short Term Furniture 30,000 20,000
Loans 11,000 15,000 Machinery &
Plant 30,000 31,200
Bank ----- 20,000
Goodwill 12,091 78
2,24,472 2,20,039 2,24,472 2,20,039

9. From the information given below, prepare a comparative balance sheet and study the
financial position of Preksha Ltd.
Balance Sheet as on 31st December
2016 2017
Equity Share Capital 6,00,000 8,00,000
Reserves and Surplus 3,30,000 2,20,000
Debentures 2,00,000 3,00,000
Long Term Loans on Mortgage 1,50,000 2,00,000
Bills Payable 50,000 45,000
Sundry Creditors 1,00,000 1,20,000
Other Current Liabilities 5,000 10,000
 -6-

Land and Buildings 3,70,000 2,70,000

Plant and Machinery 4,00,000 6,00,000
Furniture and Fixtures 20,000 25,000
Other Fixed Assets 25,000 30,000
Cash and Bank 20,000 80,000
Bills Receivables 1,50,000 90,000
Sundry Debtors 2,00,000 2,50,000
Stock 2,50,000 3,50,000

10. The following are the extracts from Balance Sheets for the years 2016 and 2017 and
their supporting notes to the accounts. Prepare the comparative balance sheet and
comment on the financial position.
Particulars 2016 (Rs) 2017 (Rs)
6 % Preference Shares 30,000 30,000
Equity Share Capital 40,000 40,000
Reserves 20,000 24,500
Outstanding Tax 10,000 15,000
Creditors 15,000 20,000
Bills Payable 5,000 7,500
Debentures 10,000 15,000
Land 10,000 10,000
Buildings 30,000 27,000
Plant 30,000 27,000
Furniture 10,000 14,000
Stock 20,000 30,000
Debtors 20,000 30,000
Cash 10,000 14,000

11. Following information is extracted from the Financial statements of Ravi Ltd., for the
years ended 31-12-2016 and 2017.

Particulars 2016 (Rs) 2017 (Rs)

Provision for bad debts 1,000 1,500
Machinery 1,500 3,750
Buildings 6,000 9,000
Bills Payable 16,500 20,000
Outstanding Expenses 1,750 2,250
Debentures 20,000 17,500
Share Capital 1,00,000 1,00,000
P & L A/c 11,750 26,000
Cash in hand 21,500 29,000
Prepaid Expenses 1,000 1,000
Bills Receivable 40,000 45,000
Inventories 16,000 20,000
Investments 25,000 15,000
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Machinery at cost 12,500 20,000

Building at cost 37,500 45,000
Land 5,000 5,000
Prepare Comparative Balance Sheet.

12. The comparative balance sheets of ABC Ltd., are given below :
Balance Sheets as at 31st December 1991 and 1992
(Rs. Lakhs)
1991 1992 1991 1992
Equity Share Capital 800 1,200
Current Assets
Capital Reserve 120 220Debtors 418 380
General Reserve 444 418Stock 320 260
Sinking Fund 80 100Cash 236 20
Long Term Liabilities Others 64 26
Debentures 400 650 Investments 540 340
Current Liabilities Fixed Assets
Sundry Creditors 510 234 Furniture less
Others 14 20 depreciation 18 36
Building less
Depreciation 620 1,572
Land 40 60
Other Assets 112 148
2,368 2,842 2,368 2,842
Prepare a Comparative Statement and comment on the significant changes that have
taken place during the year 1992.

13. Prepare Comparative Balance Sheet of Pravek Ltd., from the following information.
Particulars 2016 2017
I. Equity and Liabilities
Shareholders Funds
Equity Share Capital 5,00,000 5,00,000
Reserves and Surplus 10,00,000 15,40,000
Non-Current Liabilities
Secured Loans 1,50,000 1,00,000
Unsecured Loans 1,50,000 1,50,000
Current Liabilities
Sundry Creditors 1,80,000 1,75,000
Bills Payable 20,000 35,000
Total 20,00,000 25,00,000
II. Assets
Non-Current Assets
Land and Building 5,00,000 5,00,000
Plant and Machinery 12,00,000 16,54,000
Furniture 50,000 75,000
Investments 50,000 50,000
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Current Assets
Cash and Cash Equivalent 54,000 57,000
Trade Receivables 1,00,000 1,20,000
Inventories 44,000 40,000
Prepaid Expenses 2,000 4,000
Total 20,00,000 25,00,000

14. Calculate the trend percentages from the following figures of X Ltd., taking 1979 as the
base and interpret them.
(Rs. Lakhs)
Year Sales Stock Profit before tax
1979 1,881 709 321
1980 2,340 781 435
1981 2,655 816 458
1982 3,021 944 527
1983 3,768 1,154 672

15. From the following data relating to the assets side of the Balance Sheet of Polymers Ltd.,
for the period 31 December 1985 to 31 December 1988, calculate the trend
percentage taking 1985 as the base year.
(Rs in thousands)
Assets 1985 1986 1987 1988
Cash 100 120 80 140
Debtors 200 250 325 400
Stock in Trade 300 400 350 500
Other Current Assets 50 75 125 150
Land 400 500 500 500
Building 800 1,000 1,200 1,500
Plant 1,000 1,000 1,200 1,500
2,850 3,345 3,780 4,690

16. From the following data relating to the liabilities side of the Balance Sheet of Tektronics
Limited for the period of 31st March 1988, you are required to calculate the trend
percentages taking 1988 as the base year and comment.
(Rs in lakhs)
1988 1989 1990 1991
Share Capital 100 125 130 150
Reserves and Surplus 50 60 65 75
12 % Debentures 200 250 300 400
Bank Overdraft 10 20 25 25
Profit and Loss Account 20 22 28 26
Sundry Creditors 40 70 60 70
Outside Creditors 2 3 5 4
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17. From the following data relating to the liabilities side of the Balance Sheet of Maruthi Ltd.,
for the period 31st December 1986 to 31st December 1989, you are required to
calculate the trend percentage taking 1986 as the base year and comment.
(Rs in lakhs)
1986 1987 1988 1989
Equity Share Capital 1,000 1,000 1,200 1,500
General Reserve 800 1,000 1,200 1,500
12 % Debentures 400 500 500 500
Bank Overdraft 300 400 550 500
Bills Payable 100 120 80 140
Sundry Creditors 300 400 500 600
Outstanding Liabilities 50 75 125 150

18. The following data is available from the P & L A/c of Deepak Ltd.
(in Rs)
1986 1987 1988 1989
Sales 3,10,000 3,27,500 3,20,000 3,32,500
Wages 1,07,500 1,07,500 1,15,000 1,20,000
Selling Expenses 25,750 29,000 29,750 27,750
Gross Profit 90,000 95,000 77,500 80,000

You are required to show (a) Trend Ratios of different items (b) Trend percentage of
relationship of wages , selling expenses and gross profit to sales.

19. From the following Statement of Profit & Loss, prepare Common Size Income
Statement.
Yash Ltd
Statement of Profit and Loss for the year ended 31st March 2017
Particulars Amount (Rs)
Revenue from Operations 4,00,000
Other Income 1,00,000
Total Revenue 5,00,000
Expenses
Cost of Material Consumed 2,40,000
Employee Benefit Expenses 72,000
Other Expenses 24,000
Total Expenses 3,36,000
Net Profit 1,64,000

20. The following figures are extracted from the books of Ravindra Ltd., for the year ending
31st March 2017.
Amount (Rs)
Sales 3,15,000
Purchases 1,57,500
Opening Stock 29,400
 Closing Stock 33,600
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Salaries 15,540
Rent 5,040
Postage and Stationary 2,100
Advertising 2,520
Commission on Sales 3,150
Discount allowed 840
Interest Paid 2,100
Loss on sale of asset 4,830
Profit on sale of investment 3,999
Provision for taxation 21,000

You are required to prepare a Common Size Income Statement.

21. Convert the following statement prepared by an analyst into common size statement and
interpret the changes in 2017 in the light of the conditions in 2016.

2016 (Rs) 2017 (Rs)

Gross Sales 30,600 36,720
Less : Sales Return 600 700
Net Sales 30,000 36,020
Less : Cost of Goods Sold 18,200 20,250
Gross Profit 11,800 15,770
Less : Operating Expenses
Administrative Expenses 3,000 3,400
Sales Expenses 6,000 6,600
Total Expenses 9,000 10,000
Income from Operations 2,800 5,770
Add : Non-Operating Income 300 400
Total Income 3,100 6,170
Less : Non-Operating Expenses 400 600
Net Profit 2,700 5,570

22. Prepare a common size Income Statement from the following information pertaining to
Aparna Ltd., for the year ended 31st March 2015.

Particulars 31-3-2014 31-3-2015

Revenue from Operations 25,000 40,000
Cost of Material Consumed 10,000 15,000
Employee Benefit Expenses 6,000 10,000
Finance Cost 2,000 2,000
Depreciation 3,000 5,000
Tax 50 %
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23. From the following Balance Sheets of Vijay Ltd., as at 31 st March 2017 and 2016
prepare Common Size Balance Sheet.

Particulars 31-3-2017 31-3-2016

Equity and Liabilities

Shareholders Funds
Share Capital 5,00,000 2,50,000
Reserves and Surplus 2,00,000 1,50,000
Non-Current Liabilities
12 % Debentures 4,00,000 5,00,000
Current Liabilities
Trade Payable 4,00,000 2,00,000
Total 15,00,000 11,00,000
Assets
Non-Current Assets
Fixed Assets 12,00,000 9,00,000
Current Assets
Cash and Cash Equivalent 3,00,000 2,00,000
Total 15,00,000 11,00,000

24. Prepare a Common Size Statement and interpret the result.

Balance Sheet as on 31st March

Particulars 2017 2016

Equity and Liabilities

Shareholders Funds
Share Capital 1,00,000 1,00,000
Reserves and Surplus 84,500 67,250
Non-Current Liabilities
12 % Debentures 1,00,000 1,00,000
Current Liabilities
Trade Payables 22,500 32,750
Total 3,07,000 3,00,000
Assets
Non-Current Assets
Fixed Assets 2,19,810 2,17,200
Current Assets
Cash and Cash Equivalent 87,190 82,800
Total 3,07,000 3,00,000
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25. The following balance sheets pertain to accounting records of Pankaj Ltd., as on 31 st
March 2014 and 2015.

Balance Sheet as on 31st March (Rs. In lakhs)

2014 2015 2014 2015

Eq. Share Cap 1,000 1,200 Debtors 450 390
Cap. Reserve 90 185 Cash 200 15
Gen. Reserve 500 450 Stock 320 250
Sinking Fund 90 100 Investments 300 250
Debentures 450 650 Building 800 1,400
Creditors 200 150 Land 198 345
Other Liabilities 15 20 Furniture 77 105
2,345 2,755 2,345 2,755

You are required to arrange the above Balance Sheet in a form suitable for analysis and
interpret the same.