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Practice Test Papers PTP.11

Answers to Practice Test Paper 3

1. It will be shown under the head ‘Financing Activity’ as Extraordinary Item.
2. It will be shown under ‘Financing Activity’, because, dividend paid is associated with the
share capital of the company.
3.
Item Main Head Sub-head
(i) Share Application Money As a line item between ...
Pending Allotment Shareholders’ Funds
and Non-current
Liabilities.

(ii) Workmen Compensation Shareholders’ Funds Reserves and Surplus
Reserve
(iii) Patents Non-current Assets Property, Plant and Equipment and Intangible Assets
—Intangible Assets
(iv) Debentures Non-current Liabilities Long-term Borrowings

4. (i) Gross Profit Ratio = 20%.
(ii) Issue of Shares for cash, Long-term loan borrowed from Bank.
5. Debt to Equity Ratio: 2024 – 1 : 1; and 2023 – 1.42 : 1.
6. Cash Flow from Operating Activities = ` 3,08,000;
Cash Used in Investing Activities = ` 5,15,000;
Cash Flow from Financing Activities = ` 2,00,000;
Net Decrease in Cash and Cash Equivalents = ` 7,000.