INTRODUCTION TO MNAGEMENT ACCOUNTING

(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

A. When Balance sheet is to be prepared

1. Following is the Balance Sheet of X Ltd., as on 31st March, 2018 :
Liabilities Rs.Assets Rs.

Share Capital 3,00,000Goodwill 40,000

Securities Premium 10,000Land 1,60,000
General Reserve 1,20,000Plant 88,000
Profit & Loss A/c 34,000Furniture 6,000
11% Debentures 1,00,000Trade Investments 1,60,000
Bank Loan 70,000Amounts Receivable 1,40,000
Bank Overdraft 40,000Inventories 1,20,000
Sundry Creditors 1,20,000Prepaid Expenses 10,000
Provision for Taxation 20,000Cash at Bank 80,000
-Preliminary Expenses 10,000
8,14,000 8,14,000

Present the above Balance Sheet in vertical form and show the following :
a) Fixed Assets. d) Quick Assets. g) Long-term Liabilities.
b) Intangible Assets. e) Current Assets. h) Quick Liabilities.
c) Fictitious Assets. f) Net Worth. i) Working Capital.

2. Following is the Balance Sheet of XYZ Ltd.

Balance Sheet as on 31st March, 2018
Liabilities Rs.Assets Rs.
Share Capital 6,50,000Goodwill 25,000
Capital Reserve 2,500 Land 1,29,000
General Reserve 1,20,410Leasehold Premises 1,50,000
Leasehold Redemption Fund 42,500Plant 2,34,395
Profit & Loss A/c 18,777Furniture 8,575
5% Debentures 1,57,5003% G.P. Notes 71,400
Sundry Creditors 73,900Stock 1,96,770
Proposed Dividend 75,000Debtors 2,03,942
Provision for Taxation 25,000Cash and Bank 1,21,280
Advance Tax 23,675
 -Preliminary Expenses 1,550
11,65,587 11,65,587
Rearrange the above Balance Sheet in a form suitable for analysis and give the following :
a) Current Assets. e) Fixed Assets. i) Total Funds Employed.
b) Quick Assets. f) Fixed Liabilities. j) Secured Loan.
c) Intangible Assets. g) ProprietorsRs. Funds. k) Owed Funds.
d) Fictitious Assets. h) Working Capital.

3. The following balances appear in the books of ABC. Ltd. at 31st March, 2018.
You are required to prepare Balance Sheet, in a form suitable for Financial Analysis. Rs.
Cash and Bank 6,000
Land and Building at Cost Less Depreciation 40,000
Prepaid Expenses 10,000
Stock 30,000
Trade Creditors 8,000
General Reserve 14,000
Debtors 18,000
Preliminary Expenditure 3,000
Plant and Machinery at cost less depreciation 52,000
10% Debentures 35,000
Bank Overdraft 18,000
Equity Shares of ` 10 each 80,000
Profit and Loss A/c - Cr. Balance 16,000
Marketable Investments 10,000
Advance Payment of Tax 18,000
Provision for Tax 16,000

B. When Income Statement is to be prepared

4. M/s. Moon Light Ltd. Profit & Loss A/c for the year ended 31st March, 2018
Rs. Rs.

To Establishment Expenses 32,500By Gross Profit b/d 1,53,350

To Rent and Taxes 3,000By Dividend (Gross) 5,000
To Interest on Debentures 5,250
Add : Outstanding 5,250 10,500
To Audit Fees 1,250
To Directors Fees 7,000
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

To Sundry Expenses 350

To Depreciation on :
Land & Building 8,750
Furniture 35,000 43,750
To Remuneration to
Managing Director 3,000
To Provision for Taxes 28,500
To Net Profit c/d 28,500 -
1,58,350 1,58,350
To General Reserve 7,500By Net Profit b/d (Previous year) 28,500
To Proposed Equity Dividend 30,000By Balance b/d (Previous year) 12,500
To Balance carried forward 3,500 -
41,000 41,000

You are required to convert the above Profit & Loss A/c in vertical form and determine the
following:
a) Administrative Expenses. c) Operating Expenses. e) Net Profit before tax.
b) Finance Expenses. d) Non-operating Income. f) Net Profit after tax.

5. The following balances appear in the books of M/s. Bhushan Ltd. for the year ended 31 st March,
2018. you are required to prepare a Revenue statement in vertical form.
Particulars Rs.Particulars Rs.
Opening Stock 50,000Sales Return 20,000
Net Profit b/f from P.Y. 60,000Profit on Sale of Investment 5,000
Office Rent 5,000Loss by Fire 5,000
Carriage Inward 20,000Closing Stock 40,000
General Reserve 40,000Purchases 2,00,000
Wages 72,000Postage and Telegram 5,000
Octroi 5,000Provision for Tax 30,000
Office Staff Salaries 40,000Sales6,20,000
Audit Fees 20,000Dividend on Shares Held 25,000
Advertisement 25,000Carriage Outward 5,000
Finance Expenses 25,000Warehouse Expenses 5,000
Loss on Sale of Asset 30,000Import Duty 3,000
Depreciation : Proposed Dividend 35,000
 Plant and Machinery 15,000
Furniture 16,000
Delivery Van 14,000
C. When Income Statement and Balance sheet is to be prepared
6. Following are the balances in the books of Aarav Ltd for the year ended 31st March 2018:
Particulars Amount
10% Preference Share Capital 10,00,000
Administrative Expense 6,00,000
Cash and Bank 50,000
Marketable Investments 4,00,000
Depreciation 3,50,000
Direct Labour 3,75,000
Equity Share Capital 15,00,000
Fixed Assets 70,00,000
Income tax 8,85,000
Interest Paid 7,20,000
Inventories 30,00,000
Long Term Investments 2,00,000
Other Current Liabilities 1,00,000
Other Direct Expenses 2,40,000
Provision for Expenses 3,25,000
Raw Materials Consumed 39,00,000
Reserves and Surplus 3,50,000
Sales 80,00,000
Secured Term Loans 60,00,000
Selling Expenses 1,30,000
Trade Payables 16,75,000
Trade Receivables 18,50,000
Unsecured Term Loan 7,50,000
You are required to prepare Vertical Income Statement for the year ended 31 st March 2018 and
Vertical Balance Sheet as on the date for analysis.

7. From the following balances from the books of Chetna Ltd for the year ended on 31-03-2018 you
are required to prepare vertical Income statement and Vertical Balance Sheet.
Particulars Rs.Particulars Rs.
Advertising 25,000Sales Return 10,000
Interest Received 6,000Bills Payable 43,000
Sales 12,00,00010% Pref. Share Capital 1,50,000
Equity Share Capital 9,00,000Debenture Interest 24,000
Salaries 1,80,000Wages 1,85,000
Furniture and Fixture 2,00,000Cash and Bank Balances 80,000
Outstanding Expenses 25,000Debtors 2,00,000
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

P / L A/c (Cr Balance) 1,30,000Opening Stock 50,000

Bad Debts 5,000General Reserve 75,000
Purchases 6,00,000Creditors 1,00,000
Machinery 7,50,0008% Debentures 4,00,000
Preliminary Expenses 10,000Income Tax 10,000
Land And Building 7,00,000
Closing Stock on 31-03-2018 is Rs. 1,50,000.

ANALYSIS & INTERPRETATION OF FINANCIAL STATEMENTS & TOOLS OF

ANALYSIS

(Comparative Statements)
8. From the following particulars relating to N.R. Pura Ltd., prepare a Comparative Income
Statement.
2017 (\s\do1(Rs.)2018 (\s\
do1(Rs.)
Sales 58,000 65,200
Cost of Goods Sold 47,600 49,200
Administration Expenses 1,016 1,000
Selling Expenses 1,840 1,920
Non-operating Expenses 140 155
Non-operating Income 96 644
Sales Returns 2,000 1,200
Tax Rate 43.75%43.75%

9. Prepare Comparative Balance Sheet.

Comparative Balance Sheet as on 31st December, 2018 and 2017
2018 2017
Rs. Rs.
Assets :
Current Assets :
Cash 29,000 32,000
Accounts Receivable, Net 1,14,00085,000
Inventories 1,13,0001,11,000
Prepaid Expenses 6,000 8,000
Total Current Assets 2,62,0002,36,000
Long-term Investments 18,000 9,000
Property, Plant & Equipment, Net 5,07,0003,99,000
Total Assets 7,87,0006,44,000
Liabilities :
Current Liabilities :
Notes Payable 42,000 27,000
Accounts Payable 73,000 68,000
Accrued Liabilities 27,000 31,000
 Total Current Liabilities 1,42,0001,26,000
Long-term Notes Payable 2,89,0001,98,000
Total Liabilities 4,31,0003,24,000
Stockholder’s Equity
Common Stock, 1,86,0001,86,000
Retained Earnings 1,70,0001,34,000
Total Stockholders’ Equity 3,56,0003,20,000
Total Liabilities and Equity 7,87,0006,44,000

10. From the following data prepare a Comparative Income statement showing increases, decreases and
percentages taking 2016 as a base :
2016 2017 2018
Rs. Rs. Rs.
Sales 10,00,00012,00,000 14,00,000
Less : Cost of Goods Sold :
Opening Stock 41,2001,01,000 81,000
Add : Purchases 6,42,8008,00,000 9,20,000
Wages 36,000 58,000 56,000
Carriage 6,400 8,000 9,000
Custom 8,000 7,000 8,000
7,34,4009,74,000 10,74,000
Less : Closing Stock 1,01,000 81,000 1,20,000
6,33,4008,93,000 9,54,000
Gross Profit 3,66,6003,07,000 4,46,000
Comment on the profitability of the concern and also how each item has contributed to the
increase or decrease in the gross profit.

11. Balance Sheet as on 31st March 2017 and 2018

31.12.2017 31.12.2018
Rs. Rs.
Current Assets :
Cash at Bank 1,23,3001,53,000
Debtors 2,11,2001,97,700
Bills Receivable 1,20,00091,500
Prepaid Expenses 9,000 12,000
Fixed Assets :
Building 4,80,0004,65,000
Plant 4,05,0003,75,000
Furniture 1,51,500 55,800
15,00,00013,50,000
Current Liabilities :
Creditor 2,70,00015,000
Bills Payable 1,20,0002,41,500
Outstanding Expenses 45,000 49,500
Reserves & Surplus 1,65,0001,44,000
Share Capital 9,00,000 9,00,000
15,00,00013,50,000
Prepare Comparative Balance Sheet from the above & comment on financial position of the
company.

Common Size Statements:

12. Compare Star and Moon by converting their Income Statements to common size.
Star Moon
Rs. Rs.
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

Net Sales 9,48919,536

Cost of Goods Sold 5,78514,101
Other Expenses 3,114 4,497
Net Income 590 938
Which company earns more net income? Which company’s net income is a higher percentage
of its net sales?
13. Income Statement for the year ended 31st December
2018 2017
Rs. Rs.
Sales Less Returns 10,00,0009,00,000
Less : Cost of Goods Sold 8,00,0008,00,000
Gross Profit 2,00,0001,00,000
Less : Administrative Expenses 70,000 75,000
Selling Expenses 7,000 7,000
Depreciation 10,00010,500
Net Profit 1,13,000 7,500
Convert the above income statement into common size-statement and offer your comments on
the profitability of the company.

14. Following is the Balance Sheet of Kedar Ltd. as on 31st March, 2018.
Balance Sheet as on 31st March, 2018
Equity & Liabilities Rs.Assets Rs.
Equity Share Capital 2,00,000Fixed Assets 4,50,000
10% Preference Share Capital 2,50,000Investments 2,00,000
General Reserve 1,50,000Stock 75,000
Profit and Loss Account 30,000Debtors 2,50,000
12% Debentures 1,20,000Bills Receivable 1,25,000
Creditors 3,00,000Cash 40,000
Bills Payable 80,000Preliminary Expenses 10,000
Outstanding Expenses 20,000 -
Total 11,50,000 Total 11,50,000
Prepare a Common Size Balance Sheet from the above in vertical form.

15. Prepare a Common size Income Statement from the following Profit & Loss Account of Devta
Limited for the three consecutive years ended on 31st March and offer your comments.
Devta Ltd. : Profit & Loss A/c (\s\do0(` in thousands)
2016 2017 2018
Rs. Rs. Rs.
Opening Stock 130 150 180
Purchases 1,370 1,702 2,032
Administrative Expenses 180 231 286
Selling Expenses 90 121 156
Debenture Interest 18 18 18
Depreciation at 10% 15 20 25
Provision for Taxation 73.5 69 56.5
Net Profit c/d 73.5 69 56.5
1,950 2,380 2,810
Sales : Cash 450 448 520
 Credit 1,350 1,752 2,080
1,800 2,200 2,080
Closing Stock 150 180 210
1,950 2,380 2,810

(Trend %)
16. From the following data, calculate the trend percentages :
20162017 2018
Particulars Rs. Rs. Rs.
Sales 6,00,0008,00,00010,00,000
Cost of Goods sold 3,00,0005,00,0006,00,000
Selling Expenses 1,00,0001,50,0002,00,000
Administrative Expenses 50,00060,000 80,000
Non-Operating Expenses 30,00040,000 20,000

17. Analyse and comment on the trend.

Balance Sheet of Efficient Ltd. as on 31st March (\s\do0(\s\do0(`Rs.in thousands)
2016 2017 2018
Particulars Rs. Rs. Rs.
Assets :
Fixed Assets (at Cost less Depreciation) 15.00 12.50 12.00
Investments 1.00 0.50 1.00
Stock in Trade 6.00 5.00 4.00
Accounts Receivable 9.00 7.50 6.00
Loans and Advances 4.00 4.00 3.00
Cash and Bank Balances 0.50 0.50 0.50
35.50 30.00 26.50
Liabilities :
Share Capital 20.50 17.00 14.50
Bank Loans 4.00 3.00 3.00
Sundry Creditors 11.00 10.00 9.00
35.50 30.00 26.50

18. From the following prepare trend revenue statement of Moon Limited after arranging in
Vertical form (Ignore decimals) :
Particulars 31-03-2016 31-03-2017 31-02018
Sales 2,00,0002,50,0002,60,000
Materials Consumed 30,00050,000 50,000
Direct Wages 15,00015,000 18,000
Gross Profit ? ??
Office Salaries 12,00014,000 15,000
Office Rent 3,0004,000 5,000
Other Admin. Expenses 4,0005,000 5,000
Selling & Distribution Expenses 10,00015,000 18,000
Bad Debts 1,0001,500 500
Debentures Interest 3,0003,000 3,000
Dividend Received 4,0004,000 4,000
Provision for Tax 40% 40% 40%

19. Hidden Statement – Comparative:

 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

Complete the following Comparative Statement of DT Ltd. by ascerting the missing

balances:
Particulars 2017 (Rs.) 2018 (Rs.) Absolute % Increase
Increase or or Decrease
Decrease
A. Sales ? ? (+) 4,00,000 + 25%
Cost of Goods Sold
Opening Stock 80,000 1,20,000 ? ?
Purchases ? ? (+) 2,00,000 + 20%
Wages 2,40,000 4,40,000 ? ?
Less: Closing Stock ? 1,60,000 ? ?
B. Cost of Goods Sold ? ? ? ?
C. Gross Profit(A-B) ? ? ? ?
Less: Operating Exp
a) Administrative ? ? (+) 20,000 +20%
b) Selling 50,000 60,000 ? ?
c) Finance ? ? (+) 4,500 +22.50%
D. Total Operating Exp ? ? ? ?
Net Operating Profit (C-D) ? ? ? ?
Add: Non Operating Income 20,000 1,00,000 ? ?
Net Profit Before Tax ? ? ? ?
Less: Provision for Tax ? ? ? ?
Net Profit After Tax 2,10,000 2,35,500 ? ?

20. The following is financial information of ZN Ltd. for 3 years ended on 31st December every
year.
Particulars 2016 (Rs.) 2017 (Rs.) 2018 (Rs.)
Share Capital 1,50,000 1,80,000 1,90,000
Gross Profit 3,50,000 3,50,000 4,00,000
Current Liabilities 40,000 ? ?
Fixed Assets 2,40,000 2,50,000 2,35,000
Long Term Loan 1,00,000 ? 1,20,000
Cost of Goods Sold ? 4,00,000 3,00,000
Working capital 60,000 45,000 1,40,000
Net Worth 2,00,000 2,20,000 2,55,000
Current Assets ? 1,20,000 2,00,000
Sales 5,50,000 7,50,000 ?
Capital Employed 3,00,000 ? ?
Reserves and Surplus ? 40,000 65,000
You are required to prepare vertical Trend Financial Statement taking 2016 as the base.
Practice Questions:
1. Balance Sheet as on 31st March, 2018
Liabilities Rs.Assets Rs.

Paid-up Share Capital 4,75,000Factory Premises 2,25,000

Capital Redemption Reserve 32,500 Plant & Machinery 1,74,586
Profit & Loss A/c 12,929Motor Car 35,520
Sundry Creditors 25,515Stock 52,320
Outstanding Wages 6,415Debtors 45,790
Provision for Taxation 8,950 Cash 16,595
Taxes paid in Advance 3,998
-Preliminary Expenses 7,500
5,61,309 5,61,309

Re-arrange the above Balance Sheet in the form suitable for analysis and calculate the following:
a) Total Funds employed. b) Proprietors Funds c)Non–current Liabilities
d) Current Liabilities. e) Fixed Assets / Non–current Assets f)Current Assets
g) Quick Assets. h)Working Capital. i)Fictitious Assets

2. The following balances appear in the books of M/s. Laxman Ltd. as on 31 st March, 2018.
You are required to prepare a Balance Sheet in the vertical form.
Particulars \s\do0(Rs. Particulars \s\do0(Rs.
Sundry Debtors 2,00,000Creditors 1,50,000
Trade Investments 2,50,000Capital Reserve 1,50,000
Bank Overdraft 1,00,000Short term Investment 50,000
Public Deposits 3,00,000Plant and Machinery 12,00,000
Bills payable 7,90,000Outstanding Expenses 1,20,000
General Reserve 1,00,000Cash and Bank 7,00,000
Bills Receivable 2,00,000Profit & Loss A/c (Credit) 4,00,000
Vehicles 9,00,000Stock 5,00,000
10% Preference Share Capital 8,00,000Land and Building 12,00,000
Commission on Issue of 40,000Equity Share Capital 16,00,000
Shares (not yet w/off) Preliminary Expenses (not yet w/off) 10,000
Provision for Tax 1,00,000Debentures 5,00,000
Bank Loan 3,00,000Proposed Dividend 3,00,000
Advance Tax 3,00,000Advance to Suppliers 60,000
Prepaid Expenses 1,00,000
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

3. Balance Sheet as on 31st March, 2018

Liabilities Rs.Assets Rs.
Share Capital 7,50,000Goodwill 1,25,000
Capital Reserve 1,500 Land 1,29,000
General Reserve 1,20,410Premises 1,50,000
Leasehold Redemption Fund 42,500Plant 2,34,395
Profit & Loss A/c 18,777Furniture 8,575
5% Debentures 1,57,5003% G.P. Notes 71,400
Sundry Creditors 73,900Stock 196,770
Bills Payable 75,000Debtors 2,03,942
Provision for Taxation 25,000Cash & Bank 1,20,280
Advance Tax 23,675
-Preliminary Expenses 1,550
12,64,587 12,64,587

Rearrange the above Balance Sheet in a form suitable for analysis and calculate the following :
a) Current Assets. e) Fixed Assets / Non–current assets. i)Total Funds Employed.
b) Quick Assets. f) Long Term Borrowings / Equity. j) Secured Loan.
c) Intangible Assets. g) ProprietorsRs. Funds. k) Owed Funds.
d) Fictitious Assets. h) Working Capital.

4. Present the following Profit & Loss Account in a form suitable for analysis & show
following items :
a) Cost of Sales. b) Net Sales. c) Gross Profit.
d) Operating Expenses. e) Administrative Expenses. f) Operating Net Profit.
g) Net Profit before Tax h) Net Profit after Tax.
Profit & Loss A/c for the year ended 31st March, 2018
Rs. Rs.

To Opening Stock 45,000By Sales 20,00,00

To Purchases (Net) 15,00,000 Less : Returns 5,000 19,95,000
To Carriage 5,000By Closing Stock 70,000
To Wages 30,000
To Gross Profit c/d 4,85,000 -
20,65,000 20,65,000
To Salaries 40,000By Gross Profit b/d 4,85,000
To Office Rent 15,000By Interest on Investments 5,000
To Rates and Taxes 12,000
To Travelling Expenses 2,000
To Insurance 2,000
To Advertising 10,000
To Bad Debts 15,000
To Discount 5,000
To General Expenses 20,000
To Postage 14,000
To Depreciation :
Plant & Machinery 3,000
Furniture 1,000
To Audit Fees 11,000
To Loss on Sale of Furniture 3,000
To Taxes 55,000
To Net Profit c/d 2,82,000 -
4,90,000 4,90,000

5. Rearrange the following Manufacturing and Trading A/c of M/s. Dada and Co. in a form
suitable for financial analysis.
Manufacturing and Trading A/c for the year ended 31st March 2018
Particulars Rs.Particulars Rs.

To Opening Stock : By Sales 9,00,000

Raw materials 72,000By Sale of Factory Scrap 6,000
Work in Progress 12,000By Closing Stock :
Finished Gods 48,000 Raw materials 60,000
To Purchase of Raw material 4,80,000 Work in Progress 18,000
To Freight 12,000 Finished Goods 72,000
To Octroi 48,000
To Import Duty 6,000
To Direct Wages 1,20,000

To Direct Expensed 36,000

To Factory Power 24,000
To Factory Salaries 12,000
To Factory Repairs 36,000
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

To Factory Rent 60,000

To Depreciation on Machinery 24,000
To Gross Profit 66,000 -
Total 10,56,000 Total 10,56,000

6. From the following Trial Balance of M/s. Kedar Corporation, prepare Trading and Profit &
Loss Account for the year ended 31 st March, 2018 and the Balance Sheet as on that date in
vertical format.
Debit Balances Rs.Credit Balances Rs.

Opening Stock 16,000Sales1,32,000

Purchases 1,12,000Creditors 24,200
Trade Charges 4,320Discount 2,400
Salaries 6,200Sundry Receipts 4,840
Rent 3,600Kedars Capital 1,00,000
Stationery 1,250
Carriage Outward 450
Discount Allowed 2,400
Debtors 84,000
Furniture 8,000
Cash at Bank 24,200
Cash in Hand 1,020 -
2,63,440 2,63,440

Adjustments :
1. Closing Stock on 31st March, 2018 was Rs. 20,000.
2. Provide for Trade Charges due Rs. 1,200.
3. Write off Bad Debtors Rs. 1,000.
4. Depreciate Furniture by 10% p.a.

7. Following is the Trial balance of M/s. Anupama Ltd. as on 31st March, 2018.
Particulars Rs. Rs.
Sales 20,00,000
Fixed Assets 10,00,000
Bills Receivable & Bills Payable 2,00,0001,50,000
 Cash and Bank Balance 50,000
Opening Stock 1,00,000
Bank overdraft 1,00,000
Purchases 12,50,000
Administrative Expenses 30,000
Legal Expenses 20,000
Salaries 50,000
Advertisement 40,000
Warehouse Rent 20,000
Depreciation on Machinery 50,000
Interest on Bank Overdraft 10,000
Equity Share Capital 6,00,000
General Reserve 1,00,000
Lap Top Repairs 20,000
Direct Expenses 20,000
Investment 40,000
Debtors and Creditors 1,00,000 50,000
Total 30,00,00030,00,000
Additional Information :
1. Closing stock on 31st March 2018 was valued at Rs. 50,000.
2. Cash sales were 1/3 of credit sales.
You are required to prepare vertical income statement for the year ended 31 st March 2018
and Vertical balance sheet as on that date for financial analysis.

8. The following balances appear in the books of M/s. Suman Ltd. for the year ended 31 st
March, 2018. You are required to prepare Revenue Statement and Balance Sheet in Vertical
Form.
Particulars \s\do0(Rs. Particulars \s\do0(Rs.
Equity Shares Capital 2,25,000Sales 8,55,000
Plant & Machinery 45,000Debentures 50,000
Purchases 6,55,000Interim Dividend Paid 15,000
Wages 85,000Depreciation 15,000
Bank Overdraft 20,000Office Salaries 15,000
Office Rent 5,000Dividend Received 5,000
Advertisement 20,000Goodwill 25,000
Finance Expenses 8,000Land & Building 48,000
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

Income Tax 15,000Creditors 25,000

Preliminary Expenses (Not yet w/off) 5,000 Trade Investment 75,000
Bills Payable 15,000Return to Suppliers 5,000
Net Profit b/f from P.Y. 13,000Debtors 65,000
Opening Stock 75,000Cash 42,000
Closing Stock on 31st March, 2018 is \s\do0(Rs. 80,000.

9. Prepare a Comparative Statement from the following :

31.3.2017 31.3.2018
Rs. Rs.
Sales 48,00,00048,00,000
Gross Profit Ratio 30% 40%
Office Expenses 3,00,0006,00,000
Tax Rate 50% 50%

10. Prepare a horizontal analysis of the following Comparative Income Statement of Fashion
Ltd. Round percentage changes to the nearest one-tenth percent (three decimal places).
Fashion Ltd.
Comparative Income StatementYears ended 31st December, 2018 and 2017
2018 (Rs.) 2017 (Rs.)
Net Sales Revenue 4,30,0003,73,000
Expenses :
Cost of Goods Sold 2,02,0001,88,000
Selling & General Expenses 98,000 93,000 Other Expenses
7,000 4,000
Total Expenses 3,07,0002,85,000
Net Income 1,23,000 88,000
Why did Net Income increase by higher percentage than Net Sales Revenue during 2018?

11. Prepare Comparative Balance Sheet of DGK Ltd.

Liabilities 20172018 Assets 2017 2018
Rs. Rs. Rs. Rs.
Share Capital 3,00,0003,60,000Fixed Assets 6,00,0007,50,000
Reserves & Surplus 1,20,0001,50,000Current Assets 1,40,0001,35,000
Debentures 1,70,0002,55,000
Creditors 1,50,0001,20,000 - -
7,40,0008,85,000 7,40,000 8,85,000

12. Prepare Comparative Income Statement.

31.3.2017 31.3.2018
Rs. Rs.
Sales 3,50,0005,00,000
Cost of Goods sold 2,50,0004,00,000
Direct Expenses 25,000 37,500
 Other Expenses 5,000 10,000
Tax Rate 40% 50%

13. The financial statements of Healthy Ltd. include the following items :
Current Year Preceding Year
Rs. Rs.
Balance Sheet :
Cash 17,00022,000
Short-term Investments 11,00026,000
Net Receivables 54,00073,000
Inventory 77,00071,000
Prepaid Expenses 16,000 8,000
Total Current Assets 1,75,0002,00,000
Total Current Liabilities 1,31,000 91,000
Prepare Common Size Statement.

14. Following is the Balance Sheet of S.P. Ltd., as on 31st December, 2017 :
Liabilities Rs.Assets Rs.
Share Capital 40,000Fixed Assets 80,000
Capital Reserve 8,000Stock 12,000
General Reserve 4,000Debtors 12,000
Profit & Loss A/c 12,000Cash 16,000
10% Loan 32,000
Creditors 16,000
Bank Overdraft 4,000
Provision for Taxation 4,000 -
1,20,000 1,20,000
Prepare Common-size Balance Sheet from the above data.

15. Prepare common size statement from the following for the year ended 31st March, 2018.
(\s\do0(Rs. in ‘000)
Liabilities Rs.
Creditors 33
Other Current Liabilities 307
Total Current Liabilities 340
Long-term Loans 44
Total Liabilities 384
Share Capital 1
Reserves 2,928
Total 2,929
Total Liabilities 3,313
Also pass comments.

16. From the following information, interpret the results of operations of a manufacturing concern
using Trend Ratios. Use 2015 as base. Amount in lakhs of Rupees for the year ended. (\s\do0(\
s\do0(` in lakhs)
20152016 20172018 Rs. Rs. Rs.
Net Sales 100.00 95.00120.00 130.00
Cost of Goods Sold 60.0058.90 69.6072.80
Gross Profit 40.0036.10 50.4057.20
 INTRODUCTION TO MNAGEMENT ACCOUNTING
(Study of Balance Sheet and Income Statement in Vertical Form, Trend Analysis,
Comparative and Common Size Statement)

Operating Expenses 10.009.70 11.0012.00

Net Operating Profit 30.0026.40 39.4045.20

17. From the following data, calculate the trend percentages :

20162017 2018
Rs. Rs. Rs.
Sales 6,00,0008,00,00010,00,000
Cost of Goods sold 3,00,0005,00,0006,00,000
Selling Expenses 1,00,0001,50,0002,00,000
Administrative Expenses 50,00060,000 80,000
Non-Operating Expenses 30,00040,000 20,000

18. The following data are available from the Profit & Loss Account of Synthetic Ltd.
Year Sales Wages Selling Expenses Gross Profit
Rs. Rs. Rs. Rs.
2014 1,24,00043,000 10,30036,000
2015 1,31,00043,000 11,60038,000
2016 1,28,00046,000 11,90031,000
2017 1,33,00048,000 11,10032,000
2018 1,30,00050,000 12,00033,000
You are required to show : (a) Trend Ratios of different items. (b) Trend Percentage of
relationship of Wages, Selling Expenses, Gross Profit to Sales.

19. Complete the following Common Size Income Statement of Alpana Ltd by ascertaining the
missing figures / percentages:
Particulars Rs Rs. % %
Net Sales 20,00,000 ?
Less: Cost of Goods Sold:
Opening Stock ? 20%
Purchases ? 60%
Wages 2,50,000 ?
Factory Overheads ? 12.50%
? 105.%
Less: Closing Stock 6,00,000 ? 30% 75%
Gross Profit 5,00,000 25%
Less: Operating Expenses
a) Administrative ? 7%
b) Selling 50,000 2.5%
c) Finance ? 2,10,000 ? 10.50%
Operating Profit ? ?
Add: Non-Operating Income 50,000 2.50
Less: Non-Operating Expense ? 1.00
Net Profit Before Tax 3,20,000 ?