Question 1

Solution
What is cash flow statement?
The cash flow statement is a type of financial statement that shows the total amount of money
coming in and going out. It includes all the cash inflows and cash outflows that is used and paid
for trading operations and finances over a certain time period, as well as all the cash inflow and
outflow that has been paid for continuous progress and for external financing purposes

The cash flow statement is divided into three sections, cash flow from operating activities, cash
flow from investing activities, cash flow from financing activities

Loss on sale of asset 97,780

Dividend income 26,000

Interest income 35,000

Finance cost paid on debentures 12,000

Gain on sale on investment 45,000

Depreciation on fixed assets 85,000

Amortisation expenses 110,000

The operating activities includes the revenue which is earned from day to day activities of the
business whether from selling goods or providing services
 Cash flow statement from operating activities are as follows
Indirect method

Particulars Amount

Net profit before tax 2,69,244

(+) Non-Operating expenses
Depreciation on fixed asset 85,000
Amortisation expenses 1,10,000
Loss on sale of assets 95,780
Finance cost paid on debentures 12,000
(-) Non-Operating income

Dividend income (26,000)

Interest income (35,000)
Gain on sale of investment (45,000)

Net cash flow from operating activities 4,66,024

Question No 2 Solution
What is trend analysis

Trend analysis is defined as “an analysis of trend of the company by comparing its financial
statement to analyse the trend of market or analysis of future on the basis of results of past
performance and it’s an attempt to make the best decision on the basis of results of the
analysis done. Trend analysis is also known as horizontal analysis as well

Steps for calculating trend analysis are as follows.

The very first step is to select the base year. Generally first year is taken as base year. The base
year figure will be 100
Second step is to divide the each non base year amount by the base year amount and multiply
it by 100
Let’s take an example for proper understanding of trend analysis
Let’s take example of profit and loss statement of Infosys company

In above example the base year is 2019 the trend percentage of base year is always hundred.
To calculate the trend percentage of sales the amount of sales of 2021 is divided by the amount
of 2019 which is base year and divided by 100
Let’s discuss with above example the trend analysis of Infosys
 Profit and loss of Infosys
Amount in crores Trend percentage

Mar 21 Mar 20 Mar 19 Mar 21 Mar 20 Mar 19

Income

Revenue 85,912.00 79,047.00 73,107.00 108.6847 108.1250 100

from
operations
Total 85,912.00 79,047.00 73,107.00 108.6847 108.1250 100
operating
revenue
Other 2,467.00 2,700.00 2,852.00 86.500 9.4670 100
income
Total 88,379.00 81,747.00 75,959.00 116.350 107.6199 100
revenue
Expenses

Operating 13,533.00 13,791.00 12,633.00 107.124 109.1664 100

and direct
expenses
Employee 45,179.00 42,434.00 38,296.00 117.973 110.8053 100
benefit
expenses
Finance cost 126.00 114.00 0.00 0 0 100

Depreciation 2,321.00 2,144.00 1,599.00 14.515 134.0838 100

Other 2,743.00 2,787.00 3,504.00 78.2819 79.5376 100

expenses
Total 63,902.00 61,270.00 56,032.00 35,805,568 109.34822 100
expenses

In above profit and loss statement I have calculated trend analysis using base year 2019
For example trend analysis for march 2021 would be 85,912/73,107×100= 108.6847.
In same way I have calculated trend percentage for others

Interpretation
In year 2021 March sale of Infosys has increased by 8.68% and expenses of year 2021 have
decreased by 68.6%. This is best sign for Infosys has their expenses have decreased
 Question no 3 (A)
Solution

Particulars Assets Equity Liability Accounts Type of

involved account

Started Cash will Equity will be Cash capital Real personal

business with increase by increased by
cash 15,000 15,000 15,000

Purchased Inventory will Purchase cash Nominal real

goods worth increase 25,000
25,000 and cash will
decrease
Sold goods to C Inventory will C's A/C sales Personal
on credit reduce 20,000 nominal
20,000 and debtors
will increase by
20,000
Paid salary for Cash will Equity would Salary cash Nominal real
cash 15,000 reduce by reduce by
15,000 15,000

Deposited cash Cash will Bank cash Real

into bank reduce by
worth 1,00,000 1,00,000 and
amount in bank
would increase
Question No 3 (B)
Solution

What are golden rules of passing the journal entry.

Type of account Golden rules

Real account Debit what comes in

Credit what goes out

Personal account Debit the receiver

Credit the giver

Nominal account Debit all expenses and losses

Credit all incomes and gains
Journal of Mr.Akbar is as follows

Date Particulars L.F Debit amount Credit amount

1 Cash A/C---- Dr 1,50,000 1,50,000

To capital A/C
(Being started
business with
cash)
2 Purchase A/C---- 25,000 25,000
Dr. To cash A/C
(Being goods
purchased using
cash)
3 C's A/C----- Dr. 20,000 20,000
To sales A/C
(Being goods
sold to C on
credit)
4 Salary A/C---- Dr. 15,000 15,000
To cash A/C
(Being salary
paid in cash)
5 Bank A/C--- Dr. 1,00,000 1,00,00
To cash A/C
Being cash
deposited in
bank

Total 3,10,000 3,10,000