Financial accounting and analysis

Assignment -3
1. The following trial balance was extracted from the books XYZ on 31st mar 2018.

particulars Dr. Cr.

Capital 15’000
Opening stock 3,400
Drawings 2,500
Debtors and creditors 10,000 5,000
Loan from bank 4,750
Interest on loan 150
Cash in hand 1,000
Cash at bank 1,750
Provision for bad debts 350
Motor vehicle 5,000
Land and building 6,000
Purchase and sales 33,000 55,000
Returns 4,000 750
Carriage outward 1,250
Carriage inward 1,500
Salaries 4,500
Rent and insurance 1,500
General expenses 3,450
Bad debts 250
Discount received 250
B/R and B/P 3,000 1,000
Rent received 150
total 82,250 82,250

Adjustments:

I. Closing stock was Rs 3,500

II. Provision for bad debt is to be maintained at 5% on debtor
III. Depreciation on land and building @2.5% and on motor vehicle @20% p.a
IV. Outstanding salaries of Rs.100
V. Prepaid insurance of Rs. 100
2. On 1ST JAN 2014 machinery was purchased by X for rs. 50,000. On 1 st July 2015,addition
were made to the extent of rs. 10,000. On 1st April 2016 further addition were made of
rs.6 400 .on 30th June 2017 machinery the original value of which was 8,000 on 1 st Jan
2014 was sold for 6,000 .depreciation is charged at 10% p.a on original cost. Show the
machinery a/c for the year from 2014-2017 in the books of X .X closes the books on 31st
dec.
3. Elaborate the cash flow statement as per AS-3 by mentioning the operating,
Investing and financing activities?
4. Illustrate the format of cash flow statement in case of indirect method and also
mention the adjustments of typical items?
5. What is ratio analysis? Discuss its benefits and limitations in detail?