International Accounting Practices — Winter 2021

What is International Accounting? Discuss scope of International Accounting.

Discuss the objectives of financial statement analysis.

Write a note on the role of Financial Accounting Standard Board (FASB).

What are the objectives of International Taxation?

Prepare flexible budget for overhead expenses on the basis of the following data and determine the overhead rates at 70%, 80% and 90% plant capacity. At 80% Capacity (₹) Variable Overheads: Indirect Labour 12,000 Stores including spares 4,000 Semi-Variable Overheads: Power (30% Fixed, 70% Variable) 20,000 Repairs & Maintenance (60% Fixed, 40% Variable) 2,000 Fixed Overheads: Depreciation 11,000 Insurance 3,000 Salaries 10,000 Total Overheads 60,000 Estimated Direct Labour Hours 1,24,000 hrs

Briefly discuss functions of International Finance Manager.

From the following information, interpret the results of operations of a manufacturing concern using Trend Ratios. Use 2007 as the base. Page 1 of (Amount in ₹ Lakh for the year ended) Year 2007 2008 2009 2010 Net Sales 100.00 95.00 120.00 130.00 Cost of Goods Sold 60.00 58.00 69.60 72.80 Gross Profit 40.00 36.10 50.40 57.20 Operating Expenses 10.00 9.70 11.00 12.00 Net Operating Profit 30.00 26.40 39.40 45.20

XYZ Ltd manufactures and sells three chemicals by consecutive processes known as X,Yand Z. In each process 2% of total weight put in is lost and 10% is scrap, which from processes X & Yrealized ₹100 a tonne and from Z ₹200 a tonne. The products of the three processes are dealt with as follows: X Y Z Sent to warehouse for sale 25% 50% 100% Passed on the next process 75% 50% – The following particulars relate to the month of May: Materials used (tonnes) 1,000 140 1,348 Cost per tonne of materials (₹) 120 200 80 Manufacturing Expenses (₹) 30,800 25,760 18,100 Prepare an account for each process, showing the cost per tonne of each product.

From the following information prepare a Comparative Balance Sheet. 31st March 31st March (₹) (₹) Equity Share Capital 4,00,000 6,00,000 Debentures 2,00,000 3,25,000 Sundry Creditors 2,55,000 1,17,000 Bank Overdraft 7,000 10,000 Total Liabilities and Capital 8,62,000 10,52,000 Plant & Machinery 1,00,000 2,00,000 Land & Building 3,60,000 5,40,000 Investments 2,70,000 1,70,000 Sundry Debtors 1,00,000 88,000 Cash in hand 32,000 54,000 Total Assets 8,62,000 10,52,000

The following is data is given: ₹ Selling Price 20 per unit Variable Manufacturing Costs 11 per unit Variable Selling Costs 3 per unit Fixed Factory Overheads 5,40,000 per year Fixed Selling Costs 2,52,000 per year You are required to compute:

Break even point expressed in amount of sales in rupees;

Number of units that must be sold to earn profit of ₹60,000 per year; Page 2 of

How many units must be sold to earn a net income of 10% of sales?

Journalize the following transactions: 2015 January 1st Rajini started business with a capital of ₹ 50,000. 2nd She purchased furniture for ₹ 5,000 3rd She bought goods on credit from Vinod for ₹ 8,000 14th She sold goods to Suresh for ₹ 5,000. 15th She received cash from Suresh ₹ 3,000 18th She purchased goods for cash ₹ 12,000 25th She sold goods for cash ₹ 8,000 28th She paid rent ₹1,200. 31st She paid Vinod ₹3,000 on account. Page 3 of

You have the following information on the performance of B C Co. as also the industry averages. Balance Sheet as on 31 December 2010 Liabilities ₹ Assets ₹ Equity Share 24,00,000 Net Fixed Assets 12,10,000 Capital 10% Debentures 4,60,000 Cash 4,40,000 Sundry Creditors 3,30,000 Sundry Debtors 5,50,000 Bills Payable 4,40,000 Stock 16,50,000 Other Current 2,20,000 Liabilities 38,50,000 38,50,000 Statement of Profit for the year ending 31 December 2010 ₹ ₹ Sales 55,00,000 Less: Cost of Goods Sold Materials 20,90,000 Wages 13,20,000 Factory Overheads 6,49,000 40,59,000 Gross Profit 14,41,000 Less: Selling and Distribution Cost 5,50,000 Administration & General Expenses 6,14,000 11,64,000 Earnings Before Interest & Taxes 2,77,000 Less: Interest Charges 46,000 Earning Before Taxes 2,31,000 Less: Taxes (50%) 1,15,500 Net Profit 1,15,500 Ratios Considered Industry Current Assets/Current Liabilities 2.4 Sales/Debtors 8.0 Sales/Stocks 9.8 Sales/Total Assets 2.0 Net Profit/Sales 3.3% Net Profit/Total Assets 6.6% Net Profit/Net worth 10.7% Total Debts/Total Assets 60%

Determine the indicated ratios for B C Co. and

Comment on the company’s strength and weaknesses based on your answer and industry averages.

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The controller of Hindustan Housewares Co. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: March (₹) April (₹) May (₹) Sales 6,50,000 6,50,000 6,50,000 Manufacturing Costs 3,50,000 3,70,000 4,30,000 Selling & Administration 1,75,000 2,25,000 2,45,000 expenses Capital Expenditures –_ –_ 1,60,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in full in the month following the sale and the remainder the following month. Depreciation, insurance and property tax expense represent ₹ 25,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in July, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of March 1 include cash of ₹30,000, marketable securities of ₹1,05,000, and accounts receivable of ₹7,50,000 (₹6,00,000 from February sales and ₹1,50,000 from January sales). Sales on account for January and February were ₹5,00,000 and ₹6,00,000 respectively. Current liabilities as of March 1 include ₹1,20,000, 15% 90 day note payable due May 20 and ₹60,000 of accounts payable incurred in February for manufacturing costs. All selling and administration expenses are paid in cash in the period they are incurred. It is expected that ₹1,800 in dividend will be received in March. An estimated income tax payment of ₹46,000 will be made in April. The regular quarterly dividend of ₹12,000 is expected to be declared in April and paid in May. Management desires to maintain cash balance of ₹40,000. Page 5 of