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Kerala Plus Two Accountancy AFS Board Model Paper 2021 with Answers
Time: 2 Hours
Maximum Score: 60
Part – B
Analysis of Financial Statements
VII. Questions from 23 to 26 carry 1 score each. (4 × 1 = 4)
Question 23.
Debentures, those which are redeemable on the expiry of the specific period,d are called ______________ debentures.
(a) Secured
(b) Convertible
(c) Redeemable
(d) Bearer
Answer:
(c) Redeemable
Question 24.
Capital Reserve shown under which head of the financial statement of a company?
(a) Shareholder’s funds
(b) Non-current liabilities
(c) Non-current assets
(d) None of these
Answer:
(a) Shareholder’s funds
Question 25.
Financial statement analysis helps to know which of the following?
(a) Profitability
(b) Operational efficiency
(c) Long-term liquidity
(d) All of these
Answer:
(d) All of these
Question 26.
Identify the liquidity ratio from the following:
(a) Debt-Equity Ratio
(b) Gross-Profit Ratio
(c) Net-Profit Ratio
(d) Current Ratio
Answer:
(d) Current Ratio
VIII. Questions from 27 to 29 carry 2 scores each. (3 × 2 = 6)
Question 27.
What is a preference share?
Answer:
Preference shares are the shares which enjoy preference as to the payment of a fixed dividend and the return of capital on winding up of the company.
Question 28.
List out any two financial statements of a company.
Answer:
Income statement and position statement.
Question 29.
List out any two tools used for analysis of financial statements.
Answer:
- Comparative statement
- Common size statement
- Ratio analysis
IX. Questions from 30 to 32 carry 3 scores each. (3 × 3 = 9)
Question 30.
List out any three features of a limited company.
Answer:
Features of a limited company:
- Limited liability
- Separate legal entity
- Common seal
- Perpetual succession
Question 31.
List out any three methods of redemption of Debentures.
Answer:
- Lumpsum payment method.
- Purchasing own debentures from the open market.
- Conversion of debentures into shares or new debentures.
- Draw of lots.
Question 32.
State the three objectives of financial statements of a company.
Answer:
- To provide information about the assets and liabilities of a business concern.
- To give information about changes in assets and liabilities.
- To provide information about changes in net assets.
- To disclose information about the earnings capacity of the business.
X. Questions from 33 to 37 carry 4 scores each. (5 × 4 = 20)
Question 33.
Explain the terms “Calls-in-arrear” and “Calls-in-advance” with suitable examples.
Answer:
Calls-in-arrear:
When a shareholder fails to pay the amount due on allotment or on any calls, such unpaid amount is called calls in arrear.
For example: Chetna a shareholder who hold 200 shares failed to pay call money of Rs. 2 per share.
Call-in-arrear is 200 × 2 = 400/-
Calls-in-advance:
Some shareholders pays a part or whole of the amount of the calls not yet made. The amount so received from the shareholders is known as calls in advance.
For example Anal, a shareholder holding 200 shares paid the entire call money along with allotment.
Question 34.
List out four rules of the Companies Act, to form a one-person company.
Answer:
- A one-person company cannot carry on non-banking financial activities.
- A minor cannot become a member of a one-person company.
- Only a natural person being an Indian citizen and resident in India can form a one person company.
- The share capital of a one person company is not more than Rs. 50 lakhs or
- Its annual turnover during the last three consecutive financial years exceeds two crores.
Question 35.
List out any four limitations of financial statement analysis.
Answer:
- Financial analysis is just a study of the reports of the company.
- It does not consider price level changes.
- Financial statement analysis is based on the money measurement concept.
- Financial analysis is only a means, not the results.
Question 36.
From the following information, calculate inventory turnover ratio:
Revenue from Operations: Rs.5,00,000
Gross Profit: Rs. 1,00,000
Average Inventory: Rs. 40,000
Answer:
Inventory turn over ratio = \(\frac{Cost of goods sold}{Average Inventory}\)
= \(\frac{4,00,000}{4,000}\)
= 10 times
(Cost of goods sold = 5,00,000 – 1,00,000 = 4,00,000)
Question 37.
State any four benefits of cash flow statement.
Answer:
- It provides information about the financial aspects of a business.
- It helps to know the firm’s ability to pay dividend, or interest to investors, and meet its obligation to creditors.
- It projects future inflows and outflows of cash.
- It also facilitates interfirm comparison.
XI. Questions from 38 to 42 carry 5 scores each. (5 × 5 = 25)
Question 38.
Krishna Ltd. issued 2,00,000 shares of Rs.10 each. Company received applications on 3,00,000 shares. Identify this situation. State three options before the company to overcome this situation.
Answer:
Oversubscription: there are 3 alternatives available to deal with oversubscription.
- Accept some applications in full and reject the others.
- Make pro-rata allotment.
- A combination of the above two alternatives.
Question 39.
What is the share capital of a company? Explain briefly the categories of share capital with a suitable example.
Answer:
Share Capital: The share capital is the amount of capital raised by a company by the issue of shares.
Different kinds of Share Capital
- Authorised, Registered or Nominal Capital
- Issued Capital
- Subscribed Capital
- Called up Capital
- Paid-up Capital
Question 40.
Laxmi, a shareholder of 1000 shares of Rs.10 each, did not pay the allotment money Rs. 3 per share and first and final call of Rs. 4 per share. Her shares were forfeited after the first and final call. These shares were re-issued to Shamla for Rs.8 per share as fully paid. Pass Journal entries for these transactions in the books of the company.
Answer:
Journal
Question 41.
From the following statement of profit and loss of Neetha Nutry Ltd. prepare Comparative Statement of Profit & Loss for the year ended 31 March, 2019 and 2020.
Answer:
Comparative Statement of Profit/Loss
Question 42.
The following information are given by a company from its books of accounts as on March 31, 2020:
Total current assets – Rs. 3,00,000
Total current liabilities – Rs. 1,50,000
Inventory – Rs. 75,000
Calculate:
(i) Current Ratio
(ii) Liquid Ratio
Answer:
(i) Current Ratio = \(\frac{Current Assets}{Current Liabilities}\)
= \(\frac{3,00,000}{1,50,000}\)
= 2 : 1
(ii) Liquid Ratio = \(\frac{Liquid Assets}{Current Liabilities}\)
Liquid Assets = Current Assets – Inventory
= 3,00,000 – 75,000
= 2,25,000
Liquid Ratio = \(\frac{2,25,000}{1,50,000}\) = 1.5 : 1
XII. Questions from 43 to 44 carry 8 scores each. (2 × 8 = 16)
Question 43.
Chandra Paints Ltd. issued to the public for subscription 1,00,000 shares of Rs. 10 each at par, payable at Rs. 3 on application, Rs. 4 on allotment and Rs. 3 on 1st and final call. The issue was fully subscribed and all the money were duly received. Record journal entries for the above in the books of the company.
Answer:
Journal
Question 44.
What is debenture? Briefly explain different types of debentures.
Answer:
Debenture is a written acknowledgement of debt taken by a company.
Types of Debentures
- Secured or Mortgage Debentures and Unsecured debentures.
- Redeemable Debentures and Irredeemable Debentures.
- Convertible and Non-convertible Debentures.
- Bearer Debentures and Registered Debentures.
- Zero coupon bond and Specific Rate Debentures.