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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Financial Accounting & Analysis
Internal Assignment Applicable for April 2020 Examination
Assignment Marks: 30
Instructions:
- All Questions carry equal marks.
- All Questions are compulsory
- All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far aspossible.
- All answers to be written individually. Discussion and group work is not advisable.
- Students are free to refer to any books/reference material/website/internet for attempting theirassignments, but are not allowed to copy the matter as it is from the source of reference.
- Students should write the assignment in their own words. Copying of assignments from otherstudents is not allowed.
- Students should follow the following parameter for answering the assignment questions.
| For Theoretical Answer | For Numerical Answer | |||
| Assessment Parameter | Weightage | Assessment Parameter | Weightage | |
| Introduction | 20% | Understanding and usage of the formula | 20% | |
| Concepts and Application related to the question | 60% | Procedure / Steps | 50% | |
| Conclusion | 20% | Correct Answer & Interpretation | 30% |
Question. 1. With the given information prepare the statement of Profit and Loss of the company in vertical format.
TABLE BELOW
| Depreciation and amortisation expenses | 295600 |
| Purchase of stock in trade | 10450 |
| Employees benefit costs | 959139 |
| Other expenses | 565000 |
| Revenue from sale of product | 5000000 |
| Other operating revenues | 2500000 |
| Cost of material consumed | 1050000 |
| Finance cost | 525000 |
Also share your opinion on the statement – “Revenue from operations and earnings before interest, taxes, depreciation and amortization differs from each other”. How? (10 Marks)
Answer: 1. Statement of profit and loss :
Preparation of P&L account
(Source: Case study)
STATEMENT OF PROFIT AND LOSS for the Year ended…
Ques.2. Cash flow statement is different as it classifies financial information into three major heads which allow the stakeholders in effective decision making. Discuss the broad heads as defined under AS 3 cash flow statement. What can be the potential benefits of preparing a cash flow statement? Elaborate (10 Marks)
Answer: Discussion of AS 3 cash flow statement
The statement of cash flow can be regarded as a financial metric and a part of the financial statements that are released by an organization that primarily summarizes the number of cash equivalents and cash coming inwards and going outwards of an entity (Nga et al. 2020). The statement of cash flow primarily complements the other two financial metrics of financial statements namely the income statement and balance sheet (Knežević et al. 2018). Cash flow or CF provides the investors and the
Question.3. These selected condensed data are taken from a recent balance sheet of Sambhav Realities (Rs in crores)
| PARTICULARS | AMOUNT |
| Cash | 29.3 |
| Debtors | 20.5 |
| Inventory | 28.7 |
| Prepaid expenses | 24 |
| Outstanding payments | 15.5 |
| Trade payables | 30.7 |
| Unpaid taxes | 25 |
| Loan taken for construction of building for 11 months | 50 |
- Discuss about current assets and current liabilities, classify the above into current assets and current liabilities (5 Marks)
Answer: STATEMENT OF PROFIT AND LOSS
Statement of P&L
(Source: case study)
a. Classification of current liabilities and current assets along with Working capital
| PARTICULARS | AMOUNT |
| Current Assets |
Question: b. Calculate the working capital and current ratio (5 Marks
Answer: Working Capital and Current Ratio
Working capital in the context of financial accounting that primarily represents the liquidity related to operations that is available to an organization or an entity that also includes the government organizations (Pakdel and Ashrafi, 2019). If an organization possesses a positive working capital then it is usually assumed that it must be having the potential to invest and achieve growth. On the other hand, if an organization’s working capital does not surpass the current liabilities then it usually
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