CommonSize Statements

Meaning
Common size statements are those in
which individual figures are
into percentages
to some common base.
convertedrelation to its respective total. This Percentage of each individual iterr
shows its type of analysis is called Vertical
Analysis since
each
accounting variable
for balance
is
sheet
analysed
as well as
vertically. Common size
be prepared statement of profit and loss.
statements may
Common Size Statements Comprise of the Following items
& Loss and Balance
more successive periods, and
Sheet
to some common base. Normally, the figure of revenue from
(ii) Percentage
operations is taken as a base for the Statement of Profit & Loss items and the total of
assets or equity
& liabilities is taken as a base for the Balance Sheet items.

Purpose or Utility of Common Size Statements

(i) To Present the Change in Various Items in Relation to Revenue from
Operations, Total Assets or Total Liabilities : One of the major drawbacks of
comparative financial statements is that they do not present the change in various items
in relation to revenue from operations, total assets or total equity & liabilities. This
drawback is removed through the preparation of common size statements.
is established
(ii) To Establish a Relationship : Over a period, a relationship
between various items of the statement of profit & loss to revenue from operations and
various items of balance sheet to total assets or total equity & liabilities. Significant
example,
conclusions can be drawn by studying the change in such a relationship. For
consumed constitute 40% of
established that cost of materials
if over the years it is
will need immediate attention.
revenue from operations, an increase in this percentage
(iii) To Provide for a Common Base for Comparison : Common size statements
firms can
provide for a common base for comparison. Financial statements of different
be converted into uniform common-size format irrespective of the size of individual
position of
items.
Hence, they facilitate the comparison of profitability and financial
Two or more businesses over a period of time.

Balance Sheet
Preparation of Common Size
Meaning of Common Size Balance Sheet : &
of assets or equity
A common size balance sheet is a statement which total
in
as percentage
liabilitiesis assumed to be equal to 100 and all the figures are expressedtotal assets and
to
of the total.
In other is expressed as percentage & liabilities.
words, each asset
each item of equity & to total equity
liability is expressed as percentage
 COMMON SIZE
9.2
STATEMEN

Purpose or
Utility of Common Size Balance Sheet :
(i) To analyse
changes in individual items of balance sheet.
items of assets and liabilities.
establish the trend in various

(iii) To judge the relative financial soundness for different enterprisesbelongingto

the same industry by preparing their common size
balance sheets for
different
periods.
adopted by different enterprises
(iv) To assess the financial strategy belonging to
the same industry.
Form of Common Size Balance Sheet :
The form of Common Size Balance Sheet consists of five columns.
of Balance Sheet.
(i) First column for items
Second column for amounts of different items of assests and equity &
previous year's balance sheet.
liabilities of

(it) Third column for amounts of different items of assets and equity & liabilities
year's balance sheet.
of current

(iv) Fourth column for percentage

of different items of previous year's assets and
equity & liabilities to total assets/liabilities of previous year which are taken
as 100.

(v) Fifth column for percentage of different items of current year's assets and
liabilities to total assets/liabilities of current year, which are taken as 100.

Format of a Common Size Balance Sheet

(as per CBSE Circular No. 43 dated 2nd July, 2013)
COMMON SIZE BALANCE SHEET
as at 31st March, 2022 and 2023

Absolute Amounts Percentage of

Particulars Note Balance Sheet Total
No. 31.3.2023
31.3.2022 31.3.2023 31.3.2022
% %

I. EQUITY AND LIABILITIES:

1. Shareholder's Funds
(a) Share Capital
(b) Reserve & Surplus
2. Non-Current Liabilities
(a) Long term Borrowings
(b) Long term Provisions
3. Current Liabilities
(a) Short-term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short-term Provisions
100
TOTAL
100
 SIZE STATEMENTS
COMMON 9.3

I. ASSETS: Assets
1. Non-Current Plant and
Equip-
(a) Property,
and Intangible Assets:
ment
(i) Property,
Plant and
Equipment
(in) Intangible Assets
(b) Non-current Investments
() Long-term Loans and
Advances
2. Current Assets
Investments
(a) Current
(b) Inventories
(c) Trade Receivables
(d) Cash and Cash Equivalents
(e) Short-term Loans and
Advances
Assets
(f) Other Current
TOTAL
100 100

ILLUSTRATION 1.
Following information is related to Oxford Ltd. R in Lakhs)
Particulars 31.3.2022 31.3.2021

Equity Share Capital 16.00 16.00

Preference Share Capital 2.00 2.00

Reserves and Surplus 5.40 4.00

Non-Current Liabilities 14.40 14.00
Current Liabilities 7.20 4.00

Non-Current Assets
Property, Plant and Equipment and Intangible Assets 30.60 28.00

Current Assets 14.40 12.00

You are required to prepare a Common Size Balance Sheet.

SOLUTION: OXFORD LTD.

COMMON SIZE BALANCE SHEET

as at 31.3.2021 and 31.3.2022
Absolute Amounts Percentage of
Balance Sheet Total
Particulars Note
No. 2022 2021 2022
2021

I. % %
EQUITY AND LIABILITIES
(I) Shareholder's Funds
18.00
(a) Share Capital 18.00
5.40
(b) Reserves & Surplus 4.00
14.40
(4.) Non-Current Liabilities 14.00
 COMMON
SIZE STATEN
9.4
4.00 7.20 10
(3) Current Liabilities 40.00 45.00 100
16

100

I1. ASSETS:
(1) Non-Current Assets
Property, Plant and Equipment 28.00 30.60 70
and Intangible Assets 68
12.00 14.40 30
(2) Current Assets 32
40.00 45.00 100
100

Working Notes : 2021 2022

(1) Share Capital :
16.00 16.00
Equity Share Capital
2.00 2.00
Preference Share Capital
18.00 18.00

will be calculated on the basis of total of Balance Sheet.

(2) All percentages
on 740 Lakhs.
Hence, in 2021 percentages will be based
in 2022 percentages will be based on 745 Lakhs.
18
18
100 = 45% (iv) X 100 = 40%
Thus, (i) X 45
40
5.40
(v) x 100 = 12%
X 100 = 10% 45
40
14.40
14 (vi) x 100 32%
X 100 = 35% 45
40
and so on.

ILLUSTRATION 2.

Following data is derived from the books of X Ltd.:

Particulars 31.3.2021 31.3.2020

3,00,000 2,40,000
Share Capital
80,000 70,000
Reserve and Surplus
1,00,000 1,10,000
Trade Payables
1,90,000 1,80,000
Trade Receivables
40,000 15,000
Short Term Provisions
2,90,000 2.30,000
Property, Plant and Equipment and Intangible Assets
80,000 65,000
Long Term Provisions
8,000
Current Investments
10,000
72,000
1,01,000
Inventory 10,000
9,000
Cash and Cash Equivalents

You are required to prepare a Common Size Balance Sheet.

 STATEMENTS
SIZE
AMMON
9.5
X Ltd.
COMMON SIZE
BALANCE SHEET
as at
31st March, 2020 and 2021

Particulars Absolute
Amounts
Note Percentage of
No. Balance Sheet Total
2020
2021
2020 2021
AND LIABILITIES
% %
Funds
Shareholder S
1.

(a) Share Capital 2,40,000 3,00,000 48.00 50.00

b Reserve and Surplus 70,000 80,000 14.00 13.33
Liabilities
2. Non Current
Provisions 65,000
Long term 80,000 13.00 13.33
3.
Current Liabilities
(a) Trade Payables 1,10,000 1,00,000 22.00 16.67
(b) Short term Provisions 15,000 40,000 3.00 6.67
TOTAL 5,00,000 6,00,000 100.00 100.00

ASSETS :
1. Non Current Assets :
(a) Property, Plant and Equip-
ment and Intangible Assets 2,30,000 2,90,000 46.00 48.33
2. Current Assets

(a) Current Investments 8,000 10,000 1.60 1.67

(b) Inventory 72,000 1,01,000 14.40 16.83

(c) Trade Receivables 1,80,000 1,90,000 36.00 31.67

(d) Cash & Cash Equivalents 10,000 9,000 2.00 1.50

TOTAL 5,00,000 6,00,000 100.00 100.00

ILLUSTRATION 3.

Prepare a common size Balance Sheet and comment on the financial position of
G Ltd. and L Ltd. The Balance Sheet of G Ltd. and L Ltd. as at 31.3.2022 are given
below:

Note G. Ltd. L. Ltd.

Particulars
No.

EQUITY AND LIABILITIES

3,00,000 4,00,000
(1) Shareholder's Funds
2,00,000 3,00,000
(2) Non-Current Liabilities
1,00,000 50,000
(3) Current Liabilities
6,00,000 7,50,000
TOTAL

ASSETS .
(I) Non-Current Assets
Property, Plant and Equipment and Intangible Assets
2,50,000 3,00,000
() Property, Plant and Equipment 1,50,000 1,00,000
Intangible Assets
 COMMON SIZE
9.6
STATEMEN

2,00,000
(2) Current Assets 5,50,000
TOTAL 6,00,000
1,50,000

SOLUTION: COMMON SIZE BALANCE SHEET OF G LTD. AND L LTD

as at 31.3.2022

Note } Ltd.
Particulars Ltd.
No.
Amount % of Total Amount
% of Total

I. EQUITY AND LIABILITIES

(1) Shareholder's Funds 3,00,000 50.00 4,00,000 53.33
2,00,000 33.33 3,00,000
(2) Non-Current Liabilities 40.00

(3) Current Liabilities 1,00,000 16.67 50,000 6.67

TOTAL 6,00,000 100.00 7,50,000 100.00

II. ASSETS :

(1) Non-Current Assets

Property, Plant and Equipment
and Intangible Assets
(i) Property, Plant and Equip-
ment 2,50,000 41.67 3,00,000 40.00

(ii) Intangible Assets 1,50,000 25.00 1,00,000 13.33

(2) Current Assets 2,00,000 33.33 3,50,000 46.67

TOTAL 6,00,000 100.00 7,50,000 100.00

Comments : The following differences may be observed in the financial position

of both the companies on the basis of above common size balance sheets of G Ltd. and
L Ltd.:

(i) The short-term financial position of L Ltd. is definitely better as comparedto

G Ltd. The current liabilities of L Ltd. are 6.67% of total funds invested

whereas a proportion of current assets in these funds is 46.67%. On the other

hand, the current liabilities of G Ltd. are 16.67% of total funds and current
assets are 33.33% of these funds. Thus, trade payables are more secured 1
L Ltd.

(ii) The long-term financial position also of L Ltd. is better than G Ltd. because
Shareholder's Funds are 53.33% of total funds in case of L Ltd. while it is
50% in G Ltd.

(ii) G Ltd. has invested more (66.67%) in non-current assets as compared to

53.33% by L Ltd.
Comments given above are not in the syllabus. They are meant only for enriched learning.

Preparation of Common Size Statement of Profit & Loss

Meaning of Common Size Statement of Profit & Loss
of
A common size Statement of Profit & Loss is a statement in which the figure'
 SIZESTATEMENTS
COMMON
from operations
is assumed to be 9.7
to 100
and all other
revenue figures are

Utility ofa Common

Purpose orestablish
Size Statement of Profit & Loss
:
relationship between individual
To

oSs
(i)
and revenue
from operations: items of statement of profit &

item in common size statement

Since each
a
of profit
fromoperations,a relationshipcanbe established between each
& loss
percentage of revenue
1s shown as

profit
im ofstatement
of
from operations volume of revenue from operations eiecn each
flosswillandcertainly
in revenue increase selling expenses and not
expenses
the

increase a considerable
may go up only if the revenue from
extent. In
case the revenue from operations
selling expenses should be reduced at once.
decline, the
calltedbetvcen rovemne from
Hence, a relationship is
operations and other items of
such a relationship is helpful in the statement of profit
& loss analysing the increase or decrease in the
reycentage of each item.
To analyse changes in individual items of statement of profit & loss in
relationship to revenue from operations.
To judge the relative efficiency of cost items of the two or more firms
the same industry.
belonging to
Form of Common Size Statement of Profit & Loss
The form of Common Size Statement of Profit & Loss consists of five columns

(i) First Column for items of Statement of Profit and Loss.

(ii) Second Column for amounts of different items (i.e., Income/Expenses) of
Statement of Profit & Loss for the previous year.

(iii) Third Column for amounts of different items (i.e., Income/Expenses) of

Statement of Profit & Loss for the current year.
(iv) Fourth Column for percentage of different items of statement of profit & loss
for the previous year to revenue from operations of the previous year, which
are taken at 100.

(v) Fifth Column for percentage of different items of statement of profit & loss for
which are
the current year to revenue from operations of the current year,
taken at 100.

Format of Common Size Statement of Profit & Loss

as per CBSE Circular No. 43 dated 2nd July 2013
& LOSS
COMMON SIZE STATEMENT OF PROFIT
for the year ended 31st March, 2022 and 2023
Percentage of
Absolute Amounts
Revenue from
Particulars Note
Operations
No.
2021-22 2022-23
2021-22 2022-23
% %

100 100
1.
Revenue fromOperations
 COMMON SIZE
9.8 STATEMENTO

II. Add : Other Incomes

III. Total Income (I+ IN)

IV. Less : Expenses

Cost of Materials Consumed
Purchase of Stock in Trade
of
Changes in Inventories
Finished Goods, Work in
Progress and Stock in
Trade

Employee Benefit Exp.

Finance Costs

Depreciation and Amor-

tization Exp.
Other Expenses

Total Expenses

V. Profit before Tax (III - IV)

VI. Less : Tax

VII. Profit after Tax (V - VI)

ILLUSTRATION 4.
Following information is derived from the books of Vasundhra Ltd. :
Particulars 31.3.2022 31.3.2021

12,00,000 10,00,000
Revenue from Operations
6,60,000 6,00,000
Cost of Materials Consumed
1,20,000 1,20,000
Employee Benefit Expenses
96,000 50,000
Other Expenses

You are required to prepare a Common Size Statement of Profit & Loss.

SOLUTION: Vasundhra Ltd.

COMMON SIZE STATEMENT OF PROFIT & LOSS

for the years ended 31st March 2021 and 2022

Absolute Amounts Percentageof Revenue

Particulars Note from Operations
No. 2021-22
2020-21 2021-22 2020-21
%
%
100
10,00,000 12,00,000 100
I. Revenue from Operations

II. Less : Expenses : 55(4)

60(1)
Cost of Materials Consumed 6,00,000 6,60,000
12(2)
Employee Benefit Exp. 1,20,000 1,20,000
 STATEMENTS
SIZE
9.9
Expenses 50,000
Other 96,000 5(3) 8(6)
Expenses 7,70,000
Total 8,76,000 77
73
hefore Tax (I- 11) 2,30,000 3,24,000
Profit 23
27

caloulated on the basis of Revenue homt Operations.

will be
All
Of percentages is as follows
calculation
Year 2020-21
Year 2021-22
6,00,000 X 100 = 60%
Notes
(1) 10,00,000 (4) 6,60,000
12,00,000
X 100 = 55%
1,20,000
X 100 = 12%
(2) 1,20,000
10,00,000 (5) X 100 = 10%
12,00,000
50,000
X 100 = 5% 96,000
(3)
10,00,000 (6) x 100 = 8%
12,00,000
and so on.

Following is the Statement of Profit & Loss

of Raj Ltd. for the year ended
31.3-2021:

Particulars Amount

Income :

Revenue from Operations 2,00,000

Other Incomes 15,000

Total Income 2,15,000

Expenses
Cost of Materials Consumed 1,10,000
Other Expenses 5,000

Total Expenses 1,15,000

Tax 40,000

You are required to prepare a common size Statement of Profit & Loss of Raj Ltd.
for the year ended 31.3.2021.
SOLUTION: Raj Ltd.
LOSS
COMMON SIZE STATEMENT OF PROFIT &
31.3.2021
for the year ended
Absolute % of
Note
Particulars Amounts Revenue
No.
from
Operations

2,00,000 100
Revenue from Operations
 COMMON SIZE
STATEMEN
9.10

15,000
II. Other Incomes 7.5
2,15,000
III. Total Income (I 107.5

IV. Expenses
Cost of Materials Consumed 1,10,000
55

Other Expenses 5,000 2.5

Total Expenses 1,15,000

57.5

V. Profit before Tax (III - IV) 1,00,000 50

VI. Less : Tax 40,000 20

VII. Profit after Tax (V - VI) 60,000 30

ILLUSTRATION 6.
Prepare a Common Size Statement of Profit & Loss from the following
and
interpret the same
STATEMENT OF PROFIT & LOSS

Note
No. March March
2022 2021

Revenue from Operations 25,00,000 20,00,000

Other Income 1,00,000 1,00,000
Cost of Materials Consumed 17,00,000 14,00,000
Finance Costs 2,00,000 1,60,000

Other Expenses 1,00,000 1,40,000

SOLUTION : COMMON SIZE STATEMENT OF PROFIT & LOSS

for the years ended 31st March 2021 and 2022

Absolute Amounts Percentage of Revenue

Particulars Note from Operations
No. 2021-22
2020-21 2021-22 2020-21

% %

100 100
I. Revenue from Operations 20,00,000 25,00,000
II. Other Incomes 1,00,000 1,00,000
104
III. Total Income (I+ II) 21,00,000 26,00,000 105

IV. Less : Expenses

Cost of Materials
Consumed 14,00,000 17,00,000 70 68
Finance Costs 1,60,000 2,00,000
Other Expenses 1,40,000 1,00,000
80
Total Expenses 17,00,000 20,00,000 85
24
V. Profit before Tax (III - IV) 4,00,000 6,00,000 20
 STATEMENTS
COMMONSIZE will be calculated on the basis of 9.11
percentages
All
percentages
is as follows

calculationof 1,00,000X 100

Revenue from
Operations.
(4) 1,00,000 X
= 5%
(1) 20,00,000
Note: 25,00,000 100 = 4%
14,00,000X 100 = 70%
(2) 20,00,000 (5) 17,00,000
25,00,000 X 100 = 68%

1,60,000 100 = 8% 2,00,000

(3)
20,00,000 * (6)
25,00,000 X 100 = 8%
and so on.

The above statement

Interpretation: reveals the following:
of materialsconsumed has reduced by 2% in the year 2021-22. This is
(i) Cost
due to reduction the cost raw materials.
in of

(ii) Total expenses have decreased from 85%to 80%. As a result,profit before tax
has increased from 20% to 24%. It may be concluded that the company has
worked more efficiently in the year 2021-22 as compared to 2020-21.

ILLUSTRATION 7.
Following particulars are obtained from the books of Tanushree Ltd.:
Note 31.3.2021 31.3.2020
No.

Revenue from Operations 40,00,000 25,00,000

Purchase of Stock in Trade 33,60,000 18,50,000

Changes in Inventories (2,00,000) 1,50,000

1,20,000 1,00,000
Other Expenses
1,60,000 50,000
Other Income

of Profit & Loss.

You are required to prepare a Common Size Statement

SOLUTION: Tanushree Ltd.

PROFIT & LOSS
COMMON SIZE STATEMENT OF
for the years ended 31st March 2020 and 2021
Absolute Amounts Percentage of
Revenue from
Particulars Note
Operations
No.
2019-20 2020-21
2019-20 2020-21

% %

100 100
Revenue from Operations
I. 25,00,000 40,00,000
50,000 1,60,000
I. Add : Other Income 104
102
11. TotalIncome (I+ II) 25,50,000 41,60,000

IV. Less Expenses 84

74
Purchase of Stock in Trade 18,50,000 33,60,000 (5)
Changes in Inventories 1,50,000 (2,00,000)
 COMMON SIZE
STATEMENTS
9.12 1.00,000 1,20,000

Other Expenses 21,00,000 32,80,000

84
82

Total Expenses 4.50,000 8,80,000 18

22

v. Profit before Tax

ILLUSTRATION° Sun Ltd., for the years

of Profit and Loss of ended
From the following Statement a Common Size Statement :
2022 and 2023, prepare
31st March, Note 2022-23 2021-22
Particulars No.

30,00,000 20,00,000
Revenue from Operations 22,80,000 15,60,000
Expenses 3,60,000 4,00,000
Other Incomes

Additional Information :
of 75,60,000 for the year ending 31st March
Expenses include Provision for Tax
2022 and 310,80,000 for the year ending 31st March, 2023.
Size Statement of Profit and Loss
Common
SOLUTION: 2022 and 2023
For the years ended 31st March

Note Absolute Amounts Percentage of Revenue

No.
from operations
Particulars

2022-23 2021-22 2022-23

2021-22
% %

100 100
20,00,000 30,00,000
I. Revenue from Operations
20 12
4,00,000 3,60,000
Il. Add : Other Incomes
120 112
III. Total Income (I 24,00,000 33,60,000

10,00,000 12,00,000 50 40
IV. Less Expenses (Note 1)
70 72
V. Profit before Tax (III - IV) 14,00,000 21,60,000

28 36
VI. Less : Income Tax 5,60,000 10,80,000
36
8,40,000 10,80,000 42
VII. Profit after Tax (V - VI)

Note (1) : Expenses for 2021-22 = 315,60,000 - 3 5,60,000 = 710,00,000

Expenses for 2022-23 = 722,80,000 - 10,80,000 = 7 12,00,000

Trend Percentage Analysis financial

Trend percentages are very useful in making comparative study of the
statements for a number of years. These indicate the direction of movement overwhether
& lone
as to
time and help an analyst of financial statements to form an opinion forecasl
future
favourable or unfavourable tendencies have developed. This helps in
of various items.
 SIZE
STATEMENTS

trend percentages 9.13

calculating
for into year mnay be taken as the thare year'. Each
year is assumed to be equal
n of base calculated. to 100 and on that basis the
For example: percentage of each
2018
2019
from Operations (F) 2,00,000 2020 2021
Revenue 2,50,000
percentage assu- 2,80,000 3,00,000
Trend
2018 as base year 100
125
ming
140 150
Trend Percentages
have been calculated as follows .
2,50,000
2019 : 125
2,00,000

2,80,000
2020 X 100 = 140
2,00,000
3,00,000
2021: X 100 = 150
2,00,000

#LUSTRATION 9.
Calculate the trend percentages from the following information taking year ending
2018 as the base year :
Current Assets As at 31st March

2018 2019 2020 2021

Inventory 1,00,000 1,25,000 1,40,000 1,50,000

Trade Receivables 50,000 60,000 75,000 1,00,000
Cash and Cash Equivalents 10,000 15,000 25,000 20,000

Other Current Assets 40,000 30,000 60,000 50,000

2,00,000 2,30,000 3,00,000 3,20,000

SOLUTION: COMPARATIVE BALANCE SHEETS

as at 31st March, 2021

Absolute Amounts Trend Percentages

Current Assets 2019 2020 2021 2018 2019 2020 2021

2018
% % % %

100 125 140 150

Inventory 1,00,000 1,25,000 1,40,000 1,50,000 200
100 120 150
Trade Receivables 60,000 75,000 ,00,000
50,000
Cash and Cash 150 250 200
20,000 100
Equivalents 10,000 15,000 25,000
75 150 125
100
Other Current Assets 40,000 30,000 60,000 50,000
160
115 150
3.20,000
2.00,000 2,30,000 3,00,000
 COMMON SIZE
9.14 STATEMEN

VERY SHORT ANSWER QUESTIONS

(Questions Carrying 1 Mark)
Remembering:
Common Size Statements?
Q. 1. What are
items of a financial
Ans. Common size statements express all Statemen+
as revenue from operations
as
percentage of some common base such for profit and
statement and total assets for balance sheet.

0. 2. What is the meaning of Common Size Balance Sheet?

Ans. A common size balance sheet is a statement in which total of
assets or equity
& liabilities is assumed to be equal to 100 and all the figures are
expressed as
percentage of the total.

Q.3. What is the meaning of Common Size Statement of Profit & Loss?

Ans. A common size statement of Profit & Loss is a statement in which

the figure
of revenue from operations is assumed to be equal to 100 and all other figures
are
expressed as percentage of revenue from operations.

SHORT ANSWER QUESTIONS

(Questions Carrying 2 Marks)
Q.1. What is meant by Common Size Statements? Give any two uses of Common
Size Statements.

Q.2. What is Common Size Balance Sheet? What are its objectives?

Q. 3. What is Common Size Statement of Profit & Loss? What are its objectives?
Q. 4. Give a format of Common Size Balance Sheet of a company for two years.

Q.5. Give a format of Common Size Statement of Profit & Loss for two years.

Q. 6. Take a few imaginary figures and prepare a Common Size Statement of Profit
& Loss for two years.

Q. 7. What is meant by Trend Percentage Analysis?

PRACTICAL QUESTIONS
(Q. Nos. to 9 are strictly in the serial order of Illustrations)
Q. 1. Prepare Common Size Balance Sheet the
of Vishal Paper Ltd. from
following information :
Particulars 31.3.2022 31.3.2021

Share Capital 21,00,000

21,00,000
Reserves and Surplus 9,10,000
6.00,000
Non-Current Liabilities 20.40,000
24,45,000
Current Liabilities 12.60,000
15,45,000
 SIZESTATEMENTS
COMINON 9.15

CurrentAssetsand Equipment and Intangible Assets

:

Non Plant
Property, 43,40,000 36,00,000
Assets 26,60,000 24,00,000
Current
31.3.2021 31.3.2022
(%) (%)

Share CapitalSurplus 35 30

Reservesand 10
CurrentLiabilities
13

Non 34 34.93

CurrentLiabilities •
Assets
21 22.07

Non Current Equipment and Intangible Assets

Property, Plant and 60 62

Current Assets 40 38

following balance sheets relate to Modern

Q.2. The Computers Ltd. convert these
size balance sheet and interpret the same
into common
BALANCE SHEETS as at 31st March
Particulars Note 2022 2021
No.

I. EQUITY
AND LIABILITIES :
Funds :
(1) Shareholder's
(a) Share Capital 3,00,000 3,00,000
and Surplus
(b) Reserves 6,50,000 4,36,000

(d) Non-Currrent Liabilities :

Long-term Borrowings 2,50,000 2,00,000

(3) Current Liabilities :

2,85,000 2,40,000
(a) Trade Payables
Provisions 15,000 24,000
(b) Short term
15,00,000 12,00,000

(1) Non-Current Assets :

(a) Property, Plant and Equipment and Intangible
5,00,000 5,00,000
Assets
3,10,000 1,96,000
(b) Non-Current Investments
(2) Current Assets :
3,69,000 2,58,000
(a) Inventory 1,98,000
2,25,000
(b) Trade Receivables 48,000
96,000
(c) Cash & Cash Equivalents
15,00,000 12,00,000

2021 2022
lAne. (%)
(%)
25 20
Share Capital 36.33 43.33

Keserve & Surplus

 COMMONSIZE
9.16
STATEMENTS
Current Liabilities
16.67
Non 16.67
20
Trade Payables 19
Short term Provisions
Property, Plant and Equipment and Intangible Assets 41.67
33.33
Non Current Investments 16.33
20.67
21.5
Inventory 24.6
Trade Receivables 16.5
15
Cash & Cash Equivalents
6.4

common size Balance Sheet andcomment on thefinancialposition

. 3. Prepare a
of A Ltd. and B Ltd. The BalanceSheets of A Ltd. and B Ltd. as at 31.3.2022
aregiven
below :

Particulars Note A. Ltd.

B. Ltd.
No.

I. EQUITY AND LIABILITIES : Met pada

(1) Shareholder's Funds
(a) Share Capital 4,00,000
5,40,000
(b) Reserve & Surplus 2,00,000 2,60,000
(2) Non-Current Liabilities 3,00,000 2,50,000
(3) Current Liabilities 1,00,000 1,50,000
TOTAL 10,00,000 12,00,000
II. ASSETS:
(1) Non-Current Assets
Property, Plant and Equipment and Intangible Assets 4,00,000 7,00,000
(2) Current Assets
6,00,000 5,00,000
TOTAL 10,00,000 12,00,000

Ans.
A Ltd. B Ltd.
Share Capital
40% 45%
Reserve & Surplus
20% 21.67%
Non-Current Liabilities
30% 20.83%
Current Liabilities
10% 12.50%
Non-Current Assets
Property, Plant and Equipment and Intangible Assets 40% 58.33%
Current Assets
60% 41.67%

4. Prepare a Common Size Statement of

Q.
Profit & Loss from the following
Statements of Profit & Loss :

Note 2021-22 2020-21

No.
Revenue from
Operations 10,00,000
Cost of Materials Consumed 14,00,000
8,40,000 6,50,000
Finance Costs
80,000
Other Expenses 1,40,000
60.000
70,000
 STATEMENTS
SIZE 9.17

•Revenue
from Operations
2020-21 2021-22
% of
of Materials Consumed
Cost 65% 60%
Costs
Finance 8% 10%
Other Expenses 6% 5%
Profit
before Tax 21% 25%

5.
From the following Statement of Profit & Loss, prepare a Common Size
of Profit & Loss of Jayant Ltd. for the year ended 31.3.2022 :
of Profit & Loss of Jayant Ltd. for the year
Statement ended 31.3.2022
Particulars Amount

Income•

Revenue from Operations 25,38,000

Other Incomes 38,000

Total Income 25,76,000

Expenses •
Cost of Materials Consumed 14,00,000

Other Expenses 5,00,000

19,00,000
Total Expenses
3,38,000
Tax

% of Revenue from Operations

[Ans.
1.5
Other Incomes
101.5
Total Revenue
55.16
Cost of Materials Consumed
19.70
Other Expenses
74.86
Total Expenses
26.64
Profit before Tax
13.32
Profit after Tax

Convert the following particulars into Common Size Statement of Profit

&
0. 6.
Loss and interpret the changes in 2023 :
Note 31.3.2023 31.3.2022
Particulars
No.

18,00,000 15,00,000
Revenue from Operations 72,000 45,000
Other Income 8,64,000 6,60,000
Cost of Materials Consumed 1,80,000 1,80,000
Employee Benefit Expenses 54,000 1,05,000
Other Expenses
% of Revenue from
[Ans, Operations
2021-22 2022-23

Other Income 44 48
Cost
of Materials Consumed
9.18
COMMON SIZE STATE
12
Employee Benefit Expenses 10
Other Expenses 3
40
Profit before Tax 43

0. 7. Following particulars are obtained from the books of XLtd.:

Note 31st March
3 Ist
No. 2023
2022

Revenue from Operations 60,00,000

40,00,000
Purchase of Stock in Trade 43,20,000
30,40,000
Changes in Inventories 1,20,000
(80,000)
Other Incomes 1,50,000
60,000
Other Expenses 3,60,000
2,00,000

You are required to prepare a Common Size Statement of Profit & Loss.

Ans. % of Revenue from

Operations
2022 2023

Other Income 1.5 2.5

Purchase of Stock in Trade 76 72

Changes in Inventories (2)

6
Other Expenses
22.5 22.5
Profit before Tax

Q.8. From the following information, prepare a Common Size Statement of Profit
and Loss of Ashoka Ltd. :

Particulars 2016-17 2017-18

Amount Amount

20,00,000 10,00,000
Revenue from operations
2,00,000 50,000
Other income
Cost of materials consumed 60% of revenue 50% of revenue

from operations from operations

1,40,000 80,000
Employee benefit expenses
30%
Tax rate 30%

(C.B.S.E. 2019, Delhi)

[Ans. % of Revenue from

Operations
2016-17
2017-18
5.00
Other Income 10.00
50.00
Cost of Materials Consumed 60.00
8.00
7.00
Employee Benefit Expenses
47.00
Profit Before Tax 43.00
32.90
Profit After Tax 30.10
 SIZE
COMMONCalculate
STATEMENTS 9.19
the trend percentages from the
Q.9. thebase year :
following information taking year
ending 2019 as
As at 31st
Current Liabilities 2019
March
2020 2021 2022

Short-term Borrowings
2,00,000 3,00,000 4,00,000 5,00,000

TradePayables
50,000 40,000 80,000
Current Liabilities
1,00,000
1,50,000 3,00,000
Other 2,40,000 6,00,000
4,00,000 6,40,000 7,20,000 12,00,000

2019 2020 2021 2022

%
% % %

Borrowings
DY
100 150 200
Short-term 100
250

Trade Payables
80 160 200
Liabilities 100
Other Current
200 160 400
100 160 180
Total 300]

ADDITIONAL QUESTIONS
Q. 10. From the following Balance Sheets of Sun Ltd., as at 31st March, 2022
size Balance Sheet.
prepare a common
Sun Ltd.

BALANCE SHEET as at 31st March, 2022

Particulars Note 31.3.2022

No.

LIABILITIES :
I. EQUITY AND
(1) Shareholder's
Funds
40,00,000
(a) ShareCapital
6,00,000
(b) Reserves & Surplus
(2) Non-Current Liabilities
12,00,000
Long-term Borrowings
(3) Current Liabilities 2,00,000
Trade Payables
60,00,000
TOTAL

I. ASSETS:

(1) Non-Current Assets

(a) Property, Plant and Equipment and

Intangible Assets
40,00,000
(i) Property, Plant and Equipment 2,00,000
(ii) Intangible Assets
(2) Current Assets 12,00,000
(a) Inventories
 COMMON SIZE
STATEMEN
9.20

(b) Cash and Cash Equivalents 0,00,000

TOTAL
00,00,000 .
(From [Link]
Notes
[Ans. Share Capital 66.67%; Reserve & Surplus 10%; Non-Current
Liabilities
20%; Current Liabilities 3.33%; Property,
Plant and Equipment 66.67%; Intangible
Assets 3.33%; Inventories 20%; Cash & Cash Equivalents 10%.]
Q. 11. Prepare a Common Size Balance Sheet of X Ltd. from the

information K in Lakhs
31.3.2022 31.3.2021
Current Assets 28.80
22.80
Non-Current Investments 1.80
1.20
Property, Plant and Equipment and Intangible Assets 41.40
36.00
Share Capital 30.00
30.00
Reserves & Surplus 12.00
7.20
Non-Current Liabilities 12.60 12.00
Current Liabilities 17.40 10.80

[Ans. Year 2021 Share Capital 50%; Reserve & Surplus 12%; Non-Current
Liabilities 20%; Current Liabilities 18%; Property, Plant and Equipment and
Intangible Assets 60%; Non-Current Investments 2%; Current Assets 38%.
Year 2022 Share Capital 41.67%; Reserve & Surplus 16.66%; Non-Current
Liabilities17.5%; Current Liabilities 24.17%; Property, Plant and Equipment and
Intangible Assets 57.5%; Investments 2.5%; Current Assets 40%.]
Q. 12. From the following information, prepare a Common Size Balance Sheet
and comment upon
the changes :
Particulars 31.3.2022 31.3.2023

Share Capital
6,60,000 7,20,000
Reserves and Surplus 7,92,000 17,28,000
Non-Current Liabilities
6,65,000 4.00,000
Trade Payables
9,90,000 16,52,000
Short term Provision
1,93,000 3,00,000
Property, Plant and Equipment and Intangible Assets 10,00,000 20,00,000
Inventories
8,20,000 12,60,000
Trade Receivables
14,15,000 14,00,000
Cash and Cash Equivalents 1,40,000
65,000

[Ans.
2022 2023
Share Capital
20.00 15.00
Reserve & Surplus
24.00 36.00
Non Current Liabilities
20.15 8.33
Trade Payables 34.42
Short term Provisions 30.00
6.25
5.85
COMMON
SIZE STATEMENTS 9.21
andEquipment and Intangible Assets
Property, Plant 30.30
Inventories
41.67

Trade Receivables
24.85 26.25

Cash &Cash Equivalents 42.88

1.97
29.17
2.91

Hint: Figures of 2022 will be presented first.

Prepare a Common Size Statement
Q. 13. of Profit &
Loss of X Ltd. from the
following information
Note 31.3.2023
31.3.2022
No.

Revenue from Operations

Consumed 18,00,000 15,00,000
Cost of Materials 10,86,300 9,24,000
Employee Benefit Expenses 2,75,760 2,50,650
Other Expenses 45,000 30,000

[Ans. % of Revenue from

Operations
2021-22 2022-23

Cost of Materials Consumed 61.6 60.35

Employee Benefit Expenses 16.71 15.32

Other Expenses 2.00 2.5

Total Expenses 80.31 78.17

Profit before Tax 19.69 21.83

Q.14. You are given the following information :

Note 31.3.2022 31.3.2023
No.

60,00,000 65,00,000
Revenue from Operations
36,000 91,000
Other Income
43,39,200 44,49,250
Cost of Materials Consumed
9,15,600 9,64,600
Finance Costs
1,50,000 2,08,000
Other Expenses

from the above.

Prepare a Common Size Statement of Profit & Loss
% of Revenue from
Ans,
Operations
2021-22 2022-23

0.6 1.40
Other Income 68.45
72.32
Materials Consumed 15.26 14.84
Finance Costs 3.20
2.50
Other
Expenses 10.52 14.91
Profit before Tax

Hint: Figures of the year 2021-22 will be presented first.

 COMMON SIZE
STATEMEN
9.22

Q. 15. Prepare a Common Size Statement of Profit & Loss from the following
Vote 31.3.2023
No. 31.3.2022

48,00,000
Revenue from Operations 50,00,000
32,64,000
Purchase of Stock in Trade 21,00,000
Inventories
(1,92,000)
Changes in (90,000)
3,36,000
Other Expenses 1,50,000
72,000
Other Income 60,000

Income Tax (40%)

[Ans.
% of Revenue from
Operations
2021-22 2022-23

Other Income 15
68
Purchase of Stock in Trade

Changes in Inventories (4)

Other Expenses
30 30.50
Profit before Tax
18 18.30
Profit after Tax

Q. 16. Prepare a Common Size Statement of Profit & Loss of Vinod Paper Mills
Rin Lakhs)
Ltd. from the following information :
Note 31.3.2022 31.3.2021
No.

30.00 25.00
Revenue from Operations
11.25 8.95
Finance Costs
3.30 3.00
Employee Benefit Expenses
0.96 0.96
Other Expenses
0.35
Gain on Sale of Land

% of Revenue from
[Ans.
Operations
2021 2022

1.40
Other Income
35.80 37.50
Finance Costs
12.00 11.00
Employee Benefit Expenses 3.20
3.84
Other Expenses 48.30
49.76
Profit before Tax
the following:
Q. 17. Prepare a Common Size Statement of Profit & Loss from
31.3.2022
31.3.2021
Note
No.
45.00,000
54,00,000
Revenue from Operations 28,80,000
35,10,000
Purchase of Stock in Trade (2.25,000)
1,08,000
Changes in Inventories
 SIZE STATEMENTS
COMMON
9.23
Expenses
other
Tax 3,24,000 4,95,000
40%
35%

% of Revenue from
Operations
2021
of Stock in Trade 2022
Purchase 64
in Inventories 65
Changes (5)
Expenses
Other 11
Profit
before Tax
30 27
Profit
after Tax
19.5 16.2

18. From following Statement of Profit

the
& Loss of Star
March 2022, prepare a Common Ltd. for the year
ended 31st Size Statement of Profit & Loss:
Note 31.3.2022
No. (3)
from Operations
Revenue 20,00,000
Employee Benefit Expenses 10,00,000
other Expenses 1,00,000

(From C.B.S.E. Guidance Notes)

[Ans. % of Revenue
from
Operations
Employee Benefit Exp. 50

Other Expenses
Total Expenses 55

Profit before Tax 45

Common Size Statement of

0.19. From the information given below, prepare a

Profit & Loss of Relay Ltd.

Particulars
March, March,
2023 2022

51,73,000 49,70,000
Revenue from Operations
35,000 40,000
Other Income
40,50,000 33,20,000
Purchase of Stock-in Trade
(90,000) 1,00,000
Change in Inventories 1,50,000
1,70,000
Other Expenses

[Ans.
% of Revenue from
Particulars Operations

2021-22 2022-23

0.80 0.68
Other Income
 COMMON SIZE
STATEMENT
9.24
66.80
Purchase of Stock in Trade 2.01
78.29

Changes in Inventories (1.74)

3.02
Other Expenses 3.29
28.97
20.84
Profit before Tax

KJ Ltd.
Q. 20. Prepare a common size Balance Sheet of from the following
information :
Note 31.3.2017
Particulars 31.3.2016
No.

I. EQUITY AND LIABILITIES :

8,00,000 4,00,000
(1) Shareholder's Funds
5,00,000 2,00,000
(2) Non-Current Liabilities
3,00,000 2,00,000
(3) Current Liabilities
16,00,000 8,00,000
TOTAL

II. ASSETS

(1) Non-Current Assets

Assets 10,00,000 5,00,000
Property, Plant and Equipment and Intangible
6,00,000 3,00,000
(2) Current Assets
16,00,000 8,00,000
TOTAL

(C.B.S.E. 2018)

[Ans.
31.3.2016 31.3.2017
Particulars
50.00 50.00
Shareholder's Funds
25.00 31.25
Non-Current Liabilities
25.00 18.75
Current Liabilities
Non-Current Assets :

Property, Plant and Equipment and

62.50 62.50
Intangible Assets
37.50 37.50
Current Assets

Ltd., Prepare a Common Size

Q. 21. From the following Balance Sheet of R
Statement :
BALANCE SHEET
as at 31st March, 2018
31.3.201/
Particulars Note 31.3.2018
No.

I. EQUITY AND LIABILITIES :

(1) Shareholder's Funds 2.00,000
2,50,000
(a) Share Capital 60,000
80,000
(b) Reserve and Surplus
(2) Current Liabilities :
 SIZE STATEMENTS
COMMON
(a)
Trade Payables 9.25

70,000 40,000
TOTAL
4,00,000 3,00,000
Assets :
Non-Current
(1)
(a)Property,
Assets :
Plant and Equipmentand Intangible
(i) Property, Plant and Equipment
(ii) Intangible Assets 1,60,000 1,20,000
Current Assets
20,000 30,000
(2)
(a) Inventories
(b) Trade Receivables
80,000 30,000
1,20,000
(c) Cash and Cash Equivalents 1,00,000
20,000 20,000
TOTAL
4,00,000 3,00,000

(C.B.S.E. Sample Paper, 2019)

[Ans.
Particulars
Note 2017 2018
No.

EQUITY AND LIABILITIES :

Share Capital 66.67 62.50
Reserve & Surplus 20 20
Trade Payables 13.33 17.50

TOTAL 100 100

II. ASSETS

Property, Plant and Equipment 40 40

Intangible Assets 10
Inventories 10 20
Trade Receivables 33.33 30

Cash & Cash Equivalents 6.67

TOTAL 100 100

MISSING FIGURES QUESTIONS

Problem 1.

Fill in the missing figures in the following Common Size Statement of Profit &
Loss :

& LOSS
COMMON SIZE STATEMENT OF PROFIT
for the years ended 31st March, 2021 and 2022
Absolute Amounts Percentage of Revenue
Particulars Note
from Operations
No.
2020-21 2021-22
2020-21 2021-22
%
 COMMON SIZE
9.26 STATEMENT

I. Revenue from Operations

II. Less : Expenses :
Cost of Materials Consumed 7,20,000 9,60,000 45 48
10
Employee Benefit Expenses
7.5
Depreciation
Other Expenses 80,000 1,00,000

Total Expenses
III. Profit before Tax (I - II)
Less : Tax 2,08,000 2,97,000

Profit after Tax

Problem 2.
Fill in the missing figures in the following Common Size Statement of Profit &
Loss :

COMMON SIZE STATEMENT OF PROFIT & LOSS

for the year ended 31st March, 2022

Particulars Note Absolute Percentage

No. Amounts of Revenue
from
Operations
%

I. Revenue from Operations

II. Other Income 60,000

III. Total Income (I+ IN)

IV. Less Expenses

Cost of Materials Consumed 50

2,10,000 14
Other Expenses
Total Expenses
Profit before Tax (III - IV)
Less : Tax

Profit after Tax

Problem 3.
Fill in the amounts left blank in Size Statement of Profit
the following Common
and Loss for the year ended 31st March, 2019 :

COMMON SIZE STATEMENT OF PROFIT & LOSS

for the year ended 31st March, 2019

of Revenue
Particulars Note Absolute Amounts Percentage
No. from
2018-19
2017-18 2018-19 2017-18
%
%
100
I. Revenue from Operations 20,00,000 25,00,000
COMMON
SIZE STATEMENTS 9.27

1.
OtherIncome 1,00,000
2,50,000 •...... .. 10
Total Income 21,00,000 27,50,000
105
Expenses
110
Less :
IV. Material
(a) Cost of
Consumed 8,00,000
in Inventory
30
(b) Change
1,00,000
Benefit
(c) Employee
Expenses 3,00,000 4,50,000 15
(d) Other Expenses 2,00,000
10

Total Expenses 12,00,000 16,75,000 60 67

V. Profit
before Tax(I1I-IV) 9,00,000 10,75,000 45 43
2,00,000
Less : Tax 2,50,000 10 10
VI. Profitafter Tax 7,00,000 8,25,000 35

(C.B.S.E. 2020; Punjab Modified)

Solutions and Answers to Missing Figures Questions

Solution to Problem 1:
COMMON SIZE STATEMENT OF PROFIT & LOSS

for the years ended 31st March, 2021 and 2022

Particulars Note Absolute Amounts Percentage of

No. Revenue from
Operations

2020-21 2021-22 2020-21 2021-22

% %

16,00,000 20,00,000 100 100

I. Revenue from Operations"

II. Less : Expenses

45 48
Cost of Materials Consumed 7,20,000 9,60,000
1,60,000 1,60,000 10
Employee Benefit Expenses ~
1,20,000 7.5
1,20,000
Depreciation® (4)
80,000 1,00,000
Other Expenses
67.5 67
Total Expenses® 10,80,000 13,40,000
32.5 33
5,20,000 6,60,000
II. Profit before Tax (I - II)(©)
2,97,000 (7) 13 14.85
Less : Tax 2,08,000
19.5 18.15
3,12,000 3,63,000
Profit after Tax ®)

Working Note : It will be calculated

will be found out.
(1) First of all, figure of Revenue from Operations
on the basis of 'Cost of Materials Consumed®:

100
2020-21 7,20,000 X 45 = 16,00,000

100
2021-22 9,60,000 X
= 720,00,000
48
 COMMON SIZE
STATEMENTO
9.28

Answer to Problem 2:
%

from
Operations
Other Income
of Materials Consumed 50
Cost
14
Other Expenses
40
Profit before Tax
24
Profit after Tax

Hint. First of all, figure of Revenue from Operations will be calculated on the basis of
'Other Expenses'

Solution to Problem 3 :
COMMON SIZE STATEMENT OF PROFIT & LOSS
for the year ended 31st March, 2019

Particulars Note Absolute Amounts Percentage of Revenue

No. from Operations
2017-18 2018-19 2017-18 2018-19
% %

I. Revenue from Operations 20,00,000 25,00,000 100 100

II. Other Income 1,00,000 2,50,000 10

III. Total Income 21,00,000 27,50,000 105 110

IV. Less : Expenses

(a) Cost of Material
consumed 6,00,000 8,00,000 30 32

(b) Change in Inventory 1,00,000 2,00,000

(c) Employee Benefit
4,50,000 15 18
Expenses 3,00,000
(d) Other expenses 2,00,000 2,25,000 10

Total Expenses 12,00,000 16,75,000 60 67

V. Profit before Tax (III-IV) 45 43

9,00,000 10,75,000
Less : Tax 10 10
2,00,000 2,50,000
33
VI. Profit after Tax 7,00,000 8,25,000 35

OBJECTIVE TYPE QUESTIONS

(A) State Whether the following statements are True or False :
of
1. In a common size statement, each item is expressed as a percentage
common base.

2.
One of the objectives of common size statement is to present the changes in
various items.

3. Common size statements are prepared in the form of percentages.

 STATEMENTS
COMION SIZEobjective of 9.29
common size
statement of
4. Main profit & loss is to
relationship between sales and other items of income statement. establish

5. Main
objective of common size balance sheet Is to
present changes in various
items of income
and expenses.

D.
Common size statementsare prepared both in the form of
percentages and
ratios.
common size statement of profit
7. In a
100.
& loss figure of net salesis assumed to
be equal to
8. In a
balance sheetshare capital is assumed to be 100.
common size

9. In a
commonsizebalancesheetfigureofrevenuefrom
operations is assumed
to be 100.
size statements enable
10. Common horizontal analysis.
11. In a common size statement, figures of previous year are taken as base for
comparison.
(See Answers at the end of the book.)

(B) Fill in
the Blanks :
1. In
statements individual items of financial statement are
converted into percentages to some common base.

2. In a ...... . . . . . . . . . . . . . . total of assets or equity & liabilities is assumed to be equal

to 100.

3. In a common size statement of Profit & Loss figure of

assumed to be equal to 100.
4. Common size statements are prepared in the form of......................

(See Answers at the end of the book.)

(C) Matching Questions

1. If Revenue from operations are #40,00,000, then match the following :

(i) Purchase of stock in trade (a) 15%
732,00,000
(ii) Change in Inventory (-) (b) 80%
72,00,000
(iii) Other Expenses <4,00,000 (c) (-) 5%
(d) 10%
Profit before tax < 6,00,000
the following :
2. If Revenue from operations are 725,00,000, then match
(1) Purchase of stock in trade 70% (a) 33,00,000

Other Expenses 12%

(b) () 1,50,000
Change in Inventory (-) 6%
(c) 76,00,000
(in) (d) 717,50,000
Profit before tax

(See
Answers at the end of the book.)
9.30 COMMONSIZE STATEMENTS
(D) Multiple Choice Questions :
statement is
Q. 1. Main objective of Common Size
present the changes in various items
To provide for a common base for comparison
To establish relationship between various items
All of the Above

Q.2. Main objective of Common Size Balance Sheet is :

(A) To establish relationship between revenue from operations and other
items of statement of profit & loss

(B) To present changes in assets and liabilities

To present changes in various items of income and expenses

(D) All of the Above

Q.3. Common Size Statements are prepared

(A) In the form of Ratios (B) In the form of Percentages
(C) In both of the Above (D) None of the Above

Q. 4. Which of the following is untrue :

(A) Common size Balance Sheet

(B) Common size Statement of Profit & Loss
(C) Common size Cash Flow Statement
(D) None of the Above

Q.5. Main objective of Common Size Statement of Profit & Loss is :

(A) To present changes in assets and liabilities

(B) To judge the financial soundness

(C) To establish relationship between revenue from operations and other
items of statement of Profit & Loss
(D) All of the Above
Q. 6. In the Statement of Profit & Loss of a Common Size Statement :

(A) Figure of net revenue from operations is assumed to be equal to 100

(B) Figure of gross profit is assumed to be equal to 100
(C) Figure of net profit is assumed to be equal to 100
(D) Figure of assets iS assumed to be equal to 100
Q.7. In the Balance Sheet of a Common Size Statement:
(A) Figure of share capital is assumed to be 100
(B) Figure of current liabilities is assumed to be 100
(C) Figure of non-current assets is assumed to be 100
(D) Figure of total assets is assumed to be 100
Q.8. Total assets of a firm are $20,00,000 and its non-current assets are 78,00,000.
What will be the percentage
of non-current assets on total assets?
(A) 60% (B) 40%
(C) 29% (D) 71%
Q.9. If total assets of a firm are 78,20,000 and its non-current assets are 75,90,400,
what will be the percentage of current assets on total assets?
 STATEMENTS
COMMONSIZE
42%
9.31
(A) (B) 58%
(C)28% (D) 72%
netrevenue
fromoperations of a firm are
10. If <66,000 and operating $1,20,000; cost of revenue from
operations is
expenses are 21,600, what will be the
operations?
(B) 45%
(C) 73% (D) 27%
from operations of a
netrevenue firm
(.11. If are
R15,00,000; Gross Profit is
$9,00,000 and operating expenses are 375,000, what will be
percentage of
operating income on net revenue from operations?
(A) 45% (B) 55%
(C) 35% (D) 65%

0.12.
Main objective of Trend Analysis is
(A) To make comparative study of the financial statements for a number of
years
indicate direction of movement
the
(B) To forecasts of various items
(©) To help in

(D) All of the Above

0.13. What will

be the trend percentage, if the Inventory of a firm is 72,00,000;
72.40,000; 73,00,000 and #4,00,000 respectively?
(A) 1, 1.2, 1.5, 2 (B) 10, 12, 15, 20
(C) 100, 120, 150, 200 (D) None of the Above

0.14. In a common size Balance Sheet, total liabilities are assumed to be equal
to:

(A) (B) 10

(C) 100 (D) 1,000

0.15. In a common size Statement of Profit & Loss, the amount of net revenue from
operations is assumed to be equal to

(A) 1 (B) 10

(C) 100
(D) 1,000

& to Loss is not

0.16. The objective of common size Statement of Profit
(A) Present Changes in Various items of incomes and expenses
(B) Judge the cost items from operations and other items
(C) Establish relationship between revenue
of statement of profit & loss
(D) Judge the To ative financial soundness for different enterprises
(E) Assertion-Reason Questions :
1.
Assertion (A) : of items of
Loss is the vertical analysis
Common-size Statement of Profit and
Revenue and Expenses.
 COMMON SIZE
9.32
STATEMENTS
Reason (R):
of Profit and Loss, Revenue from operations
In Common Size Statement Is
100 and all other items of Revenue and Expenses are expressed
taken as as

percentage of Revenue from Operations.

In the context of the above
two statements, which of the following is correct)
Codes :

(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
not the correct
(B) Both (A) and (R) are correct but (R) is reason of (A).
(© Only (R) is correct.

(D) Both (A) and (R) are wrong.

2. Assertion (A):
Common-size Balance Sheet is the Horizontal analysis of Balance Sheet.
Reason (R) :

In Common-size Balance Sheet total of assets is taken as 100 and all other
items of assets, liabilities and shareholder's funds are expressed as percentage
of Total Assets.

In the context of the above two statements, which of the following is correct?
Codes :
Both (A) and (R) are true, but (R) is not the correct explanation of (A).
Both (A) and (R) are true and (R) is the correct explanation of (A).
Both (A) and (R) are false.
(D) (A) is false, but (R) is true.
3. Assertion (A) :

Comparative Balance Sheet is the Horizontal analysis of Balance Sheet.

Reason (R) :

Common-size Balance Sheet is the Vertical analysis of Balance Sheet.

In the context of the above two statements, which of the following is correct.

Codes :

(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
© Only (R) is correct.
(D) Both (A) and (R) are wrong.

4. Assertion (A) :
of
In a common-size statement, each item is expressed as a percentage
common base.

Reason (R) :
and
Common size statements are prepared both in the form of percentages
ratios.
correct.
In the context of the above two statements, which of the following is
COMMON SIZE:
STATEMENTS 9.33
Codes
Both (A) and (R) are correct and
(A) Both (A) and (R) are correct but (R) is thecorrect reason of (A).
(B) (R) is not the
Only (A) is correct. correct reason of (A).
(©) and (R) are wrong.
(D) Both (A)
5. Assertion
(A) :
Common-size Statement of Profit & Loss
In a
figure of revenue from
Operations is assumed to be equal to 100.
Reason (R) :
In a Common-size Balance Sheet Share Capital is assumed to be equal to 100.
In the context of the above two statements, which of the
following is correct?
Codes :
(R) are true, but (R) is not the
(A) Both (A) and correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
(C) Both (A) and (R) are false.
but (R) is false.
(D) (A) is true,

6. Assertion (A) :
In a Common-size Statement, figures of previous year are taken as base for

comparison.
Reason (R) :

Common-size Statements enable horizontal analysis.

correct?
In the context of the above two statements, which of the following is
Codes :

(A) (A) and (R) both are correct and (R) correctly explains (A).
(B) Both (A) and (R) are correct but (R) does not explain (A).
(C) Both (A) and (R) are incorrect.
D) (A) is correct but (R) is incorrect.
(See Answers at the end of the book.)

LATEST C.B.S.E. EXAMINATION QUESTIONS

profit and loss from the following
Q. 1. Prepare common size statement of
information :
2016-17
Note 2017-18
Particulars
No.
8,00,000
16,00,000 /
Revenue from Operations
Cost of Materials Consumed 60% 50%

(% of revenue from operations) 80,000 40,000

30%
Operating Expenses 40%
Income Tax Rate
(C.B.S.E. 2020; Delhi)
 COMMON SIZE
9.34 STATEMENT
[Ans.
Particulars % of Revenue
from
Operations
2016-17
2017-18
50
of Materials Consumed 60
Cost

Operating Expenses 45
35
Profit before Tax
31.5 21
Profit after Tax

.2. From the following Balance Sheet of R Ltd., Prepare a Common Size

Statement :
Balance Sheet of R Ltd. (as at 31st March, 2020)

Particulars Note 31.3.2020 31.3.2079

No.

I. EQUITY AND LIABILITIES:

1. Shareholder's Funds :
(a) Share Capital 2,50,000 2,00,000
(b) Reserve and Surplus 80,000 60,000
2. Current Liabilities :

(a) Trade Payables 70,000 40,000

Total 4,00,000 3,00,000

II. ASSETS :
1. Non-Current Assets
(a) Property, Plant and Equipment and Intangible
Assets

(i) Property, Plant and Equipment 1,60,000 1,20,000

(ii) Intangible Assets 20,000 30,000
2. Current Assets

(a) Inventories 80,000 30,000

(b) Trade Receivables 1,20,000 1,00,000

(c) Cash and Cash Equivalents 20,000 20,000

Total 4,00,000 3,00,000

(C.B.S.E. Sample Paper 2019; 2020)

[Ans.
Particulars 31.3.2019 31.3.2020
(%) (%)
Share Capital 66.67 62.50
Reserves and Surplus 20.00 20.00

Trade Payables 13.33 17.50

Property, Plant and Equipment 40 40
Intangible Assets 10
Inventories 10
Trade Receivables 33.33
Cash and Cash Equivalents 6.67
ANSWERS A-1
ANSWERS
ANSWER OF OBJECTIVETYPE QUESTIONS
Chapter 6
Company Accounts Issue of Shares

() Answers of Case Based MCQs:

1. (a) Ans. (ii) 230,00,000
(b) Ans. (iv) 327,30,000
(c) Ans. (iii) 327,00,000
(d) Ans. (ii) ? 30,000

Hint :

Issued Capital:
30,000 Equity Shares of = 100 each 30,00,000

Subscribed Capital:
Subscribed and Fully Paid Capital :
27,000 Equity Shares of 3100 each fully called up 27,00,000
Subscribed but not Fully Paid Capital :
1,000 Equity Shares of <100 each fully Called up 1,00,000

Less Calls in Arrears (1,000 Shares X 770*) 70,000 30,000 27,30,000

*
Calls in Arrears
On Allotment 1,000 shares @ 730 (excluding premium) 30,000
On First & Final Call 1,000 shares (@ 740 40,000
70,000

(e) Ans. (ii) 3 10,80,000

Securities Premium 28,000 shares @ 740 11,20,000

40,000
Less : Calls in Arrears 1,000 shares @ 340
10,80,000

2. (a) Ans. (ii) < 10,000

Hint :
Dr. Cr.
Date Particulars
Amount Amount

Dr. 20,000
Share Capital A/c
Dr. 36,000
Securities Premium A/c
46,000
To Calls in Arrears A/c
10,000
To Share Forfeiture A/c

(b) Ans. (i) 336,000

(c) Ans. (iv) #46,000
(d) Ans. (i) Face Value
A-2 ANSWERS

3. (a) Ans. (iii) <4,800

Called up
Account is debited by
amount on shares
Hint : Share Capital

(excluding premium) :

On Application
On Allotment

800 X 36 = 24,800
Called up amount on 800 shares
=

Entry on Forfeiture :

Date Particulars Dr. Cr.

Amount Amount

Share Capital A/c (800 x 76) Dr. 4,800

Securities Premium A/c (800 x 24) Dr. 3,200

To Calls in Arrears A/c (800 X 77) 5,600

To Share Forfeiture A/c 2,400

(b) Ans. (iii) 33,200

(c) Ans. (iv) 72,400

(d) Ans. (ii) Profit earned by a company after its incorporation.

4. (a) Ans. (iv) 38,000

Hint :

Date Particulars Dr. Cr.

Amount Amount

(i) Share Capital A/c (3,000 X 716) 48,000

Dr.
Securities Premium A/c Dr. 30,000
To Calls in Arrears A/c 60,000
To Share Forfeiture A/c 18,000

Bank A/c Dr. 28,000

Share Forfeiture A/c Dr. 4,000
To Share Capital A/c 32,000
Share Forfeiture A/c
Dr. 8,000
To Capital Reserve A/c 8,000

(b) Ans. (iii) <6,000

(c) Ans. (ii) NIL
(d) Ans. (i) 3 5,76,000
Hint : Subscribed but not Fully Paid Capital
36,000 Shares of 720 each, ~ 16 called 75.76,000
Note : Share Forfeiture A/c will not be added to
Subscribed but not Fully paid Capital
(e) Ans. (ii) Issuing partly paid bonus shares to shareholders.
ANSWERS
(a) Ans. (iii) $13,000 A-3
5.
Hint :
Amount
not paid on
allotment (including
Amount not paid on first call premium) 13
(including premium) 13

Calls in Arrears = 500 26

Shares X 326 =
13,000
Entry on Forfeiture •
Share Capital Alc
Dr. 7,500
Securities Premium A/c
Dr. 7,500
To Calls in Arrears A/c
13,000
To
Share Forfeiture A/c
2,000
(b) Ans. (ii) *7,500
(c) Ans. (iv) 32,000
(d) Ans. (iii) 37,500

6. (a) Ans. (ii) 39,00,000

(b) Ans. (iv) 84,800

(c) Ans. (ii) 8,48,000

Hint : Subscribed and Fully Paid Capital:

84,800 Shares of 310 each fully paid 8,48,000

(d) Ans. (ii) Capital Reserve Account

7. (a) Ans. (ii) 321,000
(b) Ans. (iv) Nil

(c) Ans. (iii) 29,23,000

Hint : Subscribed but not Fully Paid Capital

29,44,000
3,68,000 Shares of 710 each, 38 called up
21,000 29,23,000
Less Calls in Arrears (7,000 x 23)
Note : Share Forfeiture A/c will not be added to
Subscribed but not Fully Paid Capital.

(d) Ans. (it) Subscribed Capital

(e) Ans. (iii) Distribution of Dividend

8. (a) Ans. (iv) <2,53,500

Hints :
Excess amount received from
Anil on application:
(A) more shares.
He must have applied for
Anil has been allotted 1,500 shares. = 80,000
for were
If shares allotted were 60,000, shares applied 80,000

shares allotted were 1,500, shares applied

were
60,000
If
= 2,000 shares
A-4
ANSWER.
received from Anil
Excess application money
shares x 73.50 = 31,750
= 2,000 shares 1,500 shares = 500

(B)
allotment : 1,500 shares x 35.50
Amount due from Anil on 8,250
Less : Excess received from Anil on Application 1,750
on allotment, which has not been received
Net amount due from Anil 6,500
allotment 60,000 shares x 35.50
(C) Total amount due
on
- 3,30,000
Less Excess amount received on application
(20,000 shares x 73.50)
- 70,000
Balance Due
- 2,60,000
on allotment
Less : Amount not received from Anil 6,500
Net amount received on allotment 2,53,500

(b) Ans. (ii) 37,000

Hint : Entry on forfeiture of Anil's shares :

Date Particulars Dr. Cr.

Amount Amount

Share Capital A/c (1,500 x 78) Dr. 12,000

Securities Premium A/c Dr. 4,500
To Calls in Arrears A/c
9,500
To Share Forfeiture Alc
7,000
(Forfeiture of 1,500 shares of Anil)

(c) Ans. (iv) 714,400

Hint : Entry on forfeiture of Sunil's shares

Date
Particulars Dr. Cr.
Amount Amount

Share Capital A/c (2,400 x710)

Dr. 24,000
To Calls in Arrears A/c
9,600
To Share Forfeiture A/c 14.400
(Forfeiture of 2,400 shares of Sunil)

(d) Ans. (i) < 12,700

Calculation of Amount transferred to Capital Reserve :

3,000
Re-issued shares include whole of the
shares of Sunil and the balance of Anil.
Hence, 3,000 shares include 2,400 shares of Sunil and 600
of Anil :

Amount forfeited on 600 shares of 600

2,800
Anil = 77,000 X
1,500
ANSWERS
Amount forfeited on 2,400 shares
of Sunil
A-5

14,400

re-issue of 3,000 shares @ 17,200

Less Loss
on
31.50 each
4,500
Amount transferred to Capital Reserve
12,700
(e) Ans. (iii) 74,200

Forfeited amount on Anil's 900 shares = 7,000 900

x 74,200
1,500

9. (a) Ans. (ii)

314,76,300
Hint :

(a) Shares applied by Divya = 800 x 3,60,000 = 900 Shares

3,20,000

(b) Excess application money received 900 Shares - 800 Shares

=
100 Shares x 73 = 7300

Allotment money due from Divya = 800 X 35 4,000

Less : Excess received on application stage 300

Allotment money not received 3,700

(c)
Total amount due on allotment : 3,20,000 shares x 75 16,00,000
Less : Excess received on application 1,20,000
14,80,000

Less : Amount not received on allotment from Divya 3,700

Net amount received on allotment 14,76,300

(b) Ans. (iii) 31,900

Hint :

Entry on forfeiture of Divya's shares

Dr. Cr.
Date Particulars
Amount Amount

Dr.
4,000
Equity Share Capital A/c (800 x 75) 1,600
Dr.
Securities Premium A/c (800 X 72) 3,700
To Calls in Arrears A/c 1,900
To Forfeited Shares A/c
(800 Shares of Divya forfeited after allotment)
(c) Ans. (ii) <12,000
Hint :
of Prisha's shares
Entry on forfeiture Dr. Cr.

Date Amount
Particulars Amount

24,000
Dr.
Equity Share Capital A/c (2,400* x 710) Dr.
4,800

Securities Premium A/c (2,400 X 72)

A-6 ANSWER!

To Calls in Arrears A/c (2,400 x 77) 16,800

To Forfeited Shares A/c 12,000
(2,400 Shares of Prisha forfeited)

3,20,000
*
Prisha was allotted 2,700 X = 2,400 shares
3,60,000

(d) Ans. (iv) 33,900

Calculation of gain on Re-issue to be transferred to Capital Reserve :
Amount forfeited on Re-issued Shares

Divya (800 Shares) 1,900

700
Prisha (700 Shares) (=12,000 x 2,400'
3,500
Total Forfeited amount on 1,500 Shares
5,400
Less : Discount on Re-issue (1,500 x 31)
1,500
Gain on Re-issue to be transferred to Capital Reserve 3,900
(e) Ans. (i) 331,83,000
Subscribed and Fully Paid Capital :
3,18,300 shares of #10 each
31,83,000
10. (a) Ans. (iii) <42,900
Hint :

(A) X must have applied for 24,000 X 500 = 600 Shares

20,000
Excess Application money received from X:
600 shares - 500 shares = 100 shares X 34

(B) Amount due from X on allotment : 500 shares x 33 1,500

Less Excess received from X on
application
Amount not received from X on allotment 1,100

(C) Total amount due on allotment = 20,000 shares X 73 - 60,000

Less Excess received on applications 16,000
Balance due 44,000
Less : Amount not received from X on allotment 1,100
Net amount received on allotment in Cash 42,900
(b) Ans. (i) 71,900

Hint : Entry on forfeiture of X's shares :

Date
Particulars
Dr. Cr.
Amount Amount

Share Capital A/c (500 x 37 Called up) Dr. 3,500

Securities Premium A/c (500 x 72) Dr. 1,000
 A-7
To Calls
in Arrears A/c
Forfeiture A/c
To Share 2,600*
(500 shares of X forfeited for non Payment of 1,900

Allotment and First Call)

Allotment 71,100 + First Call

$1,500 = 72,600
*

(c) Ans. (ii) 37,500

Hint : Entry on forfeiture of r's shares.

Particulars
Date Dr. Cr.
Amount Amount

Share Capital A/c (1,500* X710) Dr. 15,000

Securities Premium A/c (1,500 x 72) Dr. 3,000
To Calls in Arrears A/c
10,500
To Share Forfeiture A/c
7,500
(1,500 shares of Y forfeited for Ton-payment of First
and Second Call)

Shares allotted to Y = 1,800 x 20.000

24,000
= 1,500

(d) Ans. (iii) #4,860

to Capital Reserve •
Calculation of Amount transferred
include
1,700 Re-issued shares 1,500 shares of Y and the balance
200 shares of X

1,900
Forfeited amount on 200 shares of X=
500
200 760

Forfeited amount on 1,500 shares of Y 7,500

8,260

1,700 shares @ 72 3,400

Less : Loss on Re-issue of 4,860
Amount transferred to Capital Reserve

(e) Ans. (iv) <75,500

(B) Answers of True or False :

28, 29, 30, 31, 32, 38, 43, 46, 48
True : 1, 2, 4, 6, 7, 10, 12, 15, 16, 17, 22, 26, 37, 39,
False : 3,5, 8, 9, 11, 13, 14, 18, 19, 20, 21, 23,24, 25,27,33, 34, 35, 36,
40, 41, 42, 44, 45, 47

(C) Answers of Fill in the Blanks :

2. One Person Company (OPC)
1.
Registered Capital
or Nominal Capital
3. Preference
4. Non-participating preference share
Equity Shares
5. Sweat Equity Shares
6.

7. Cumulative
8. Employees Stock Option Plan (ESOP)
9. Share
10. Issued Capital
A-8
ANSWERS
12. Redeemable
11. Subscribed Capital
14. 15 days
13. Called up
16. Calls-in-arrears
15. Dividend
18. 76
17. Share Capital
20. 780
19. 12%
22. Public
21. Separate
24. 71,300
23. 31,30,000
26. Common
25. Reserve Capital
28. 37 per share
27. Three
30. 790,000
29. 3400
31. Private
32. Uncalled Capital
33. Private Placement 34. Capital

D) Answers of Matching Questions :

(i) b; (ii) d; (iii) a; (iv) c
(i) c (i) b; (ii) c; (iii) d; (iv) a
(i) c; (ii) d; (iii) a; (iv) b (i) d; (ii) a
(i) a; (ii) b (i) c; (ii) a; (iii) d
(i) b; (ii) a (i) b; (ii) c
(i) b; (ii) a; (iii) c (12) (if c. (in) a; (titi) b
(i) c; (ii) a (14) (i) b; (ii) a; (iii) c
(15) (1) a; (i) b (16) (1i) b; (ii) b
(17) (i) b; (ii) d (18) (i) a; (ii) a
(19) (i) c; (ii) a; (iiil) d; (iv) b

(E) Answer of Multiple Choice Questions :

D B 3. C 4. B 5. C
A C 8. B 9. B 10. D
D C 13. A 14. B 15. D
A 18. B 19. C 20. A
C 23. D 24. B 25.

28. D
D
B
C
B

B
B
D
A A
B A 85.
87. B 88. B B 90. A
 A-9
92. C 93.
B 94. C
B 95. C
97. 98. c 99. C 100. B
102. B 103.
104. C 105. B
107. C 108.
109. D 110. C
112. 113.
114. B 115. A
117. 118.
119. D 120. A
122. 123.
124. B 125.
127. 128. c 129. A 130.
B
D
132. 133. B 134. D 135.
137. 138. C 139. C 140. C
142. 143. C 144. C 145. B
147. 148. B 149. A 150. A
152. C 153. 154. C 155. B

Answers to Multiple
Choice Questions II:
1. Ans. (C) 4,00,000
Hint :
Building 25,00,000
Plant & Machinery 3,55,000
Stock 2,70,000

Sundry Debtors 4,75,000

36,00,000
4,00,000
Less : Sundry Creditors
32,00,000
Purchase Consideration

32,00,000
Number of Shares issued = = 4,00,000

2. Ans. (C) <30,000 shares.

Hint : Applicants for 50,000 shares have been allotted 20,000
33 90,000
Hence, Excess Application Money = 30,000 X 40,000
Less : Amount adjusted on allotment : 20,000 x 32 50,000
Balance to be adjusted against first call 80,000
Amount due on first call : 20,000 X 74 30,000
on First Call
Net amount to be received

3. Ans. (B) <4,800.

Hint : 4,200
600 X 7
Forfeited amount on 600 shares =
= 3,000
Reserve
Less Amount transferred
to Capital 1,200

Loss Reissue of 600 shares 4,800

6,000 - 1,200 =
on

shares were
reissued for
As such, 600

4.
Ans. (B) 33,600.
2,40,000 1,200
800 x
Hint : Shares applied by Aditya = 1,60,000
A-10
(@ 73 per share. Hence, amount Crediteda
Aditya has paid only application money to
be 1,200 x 33 = 73,600.
Share Forfeiture Account will

5. Ans. (B) -10,400

1,00,000 4,000
Shares applied by Vidya = 3,200 80,000

Excess Application money received = 4,000 - 3,200 - 800 Shares x #5 = 74,000

Allotment money due from Vidya = 3,200 x 37 22,400

Less : Excess received on application 4,000
Allotment money not received 18,400
Entry for Forfeiture :
Date Particulars Dr. Cr.
Amount Amount

Share Capital A/c (3,200 X 710) Dr. 32,000

Securities Premium Reserve A/c (3,200 x 32) Dr. 6,400
To Share Allotment A/c
18,400
To Share First and Final Call A/c
9,600
To Share Forfeiture A/c
10.400

6. Ans. (B) Credited with 76,500

Hint :

Amount not paid on allotment : 500 x 6 =

3,000
Amount not paid on first call : 500 x 7 -
3,500
6,500

7. Ans. (D) R7 per share.

Hint :

Amount forfeited on 2,000 reissued shares = 2,000 x 77 14,000

Less : Transferred to Capital Reserve 8,000
Loss on Reissue
6,000
6,000
Since, loss on Reissue is
2,000 73 per share, shares were re-issued for 77 per share.

8. Ans. (B) Writing off Capital losses.

9. Ans. (C) 32,100.
Hint : Forfeited amount is 72 on application and 73 on allotment.

Thus, forfeited amount on 700 shares = 3,500

Loss on Reissue 700 x 2 1,400
Amount transferred to Capital Reserve 2,100
10.
Ans. (D) 730,000
ANSW A-11
Hint :
Amount forfeited in respect of 500
reissuedShares .
Amount receivedon application 500 x 750 25,000
Amount of Capitalportion received on allotment 500 x 720 10,000
35,000
Less : Loss on Reissue : 500 x 710
5,000
30,000
11. Ans. (B) 7 8,000
Hint :

Shares allotted to Rashm? = 600 x 2,00,000 = 400

3,00,000
Excess application money received
600
400 - 200 Shares x 320 = 4,000
Allotmentmoney due from Rashmi -
400 x 330 12,000
Less
Excess received on application 4,000
Allotment money not received 8,000
Entry on Forfeiture :

Date
Particulars Dr. Cr.
Amount Amount

Share Capital A/c (400 x 750) Dr. 20,000

2,000
Securities Premium Reserve A/c (400 x 35) Dr.

8,000
To Share Allotment A/c
6,000
To Share First and Final Call A/c
8,000
To Share Forfeiture A/c

12. Ans. (B) 750,000

Hint :

Share Capital Account will be debited by Called-up amount (excluding premium).

Capital Account will be debited by 1,000
Since all Calls have been made Share
Shares x 750 = 350,000

13. Ans. (C) Forfeited Shares

14. Ans. (A) 2,080
Hint: = 2,880
480 x 6
Amount received on application 800
Securities Premium Reserve : 400 x 32
Less Credited to 2,080
Credited to Forfeited Shares Account®

15. Ans. (D) 1,60,000

Hint • 8,00,000
& Machinery
Agreed Value of Plant
160 4,00,000
2,50,000 X
Agreed Value of Stock: 100
12,00,000
A-12
20% by Cheque 4,40.00
Payment made 2370,000

200.000
79,60,000 = 1,60,000
Number of shares issued :

16. Ans. (B) 36 per share

Hint :
Forfeited amount on 3,000 reissued shares = 3,000 x 37 21,000

Less : Transferred to Capital Reserve 9,000

Loss on Reissue 12,000

12,000 = 34
Reissue per share
Per Share Loss on
3,000

Hence, shares were reissued at

710-34= 76

17. Ans. (D) 73,000

Hint:
Amount Called up (710 less Final Call of 73) 7

Less : Amount not paid on First Call

Amount paid (or forfeited) per share

Forfeited amount on 1,000 shares is 35 per share

As such forfeited amount on 600 reissued shares @ 75 =

3,000
Less : Loss on Reissue Nil
Transferred to Capital Reserve A/c 3,000
18. Ans. (C) 340,000
Hint :

2,00,000
Shares Allotted to Tina = 2,400 x 1,600
3,00,000
Excess Application money received from Tina :
2,400 Shares 1,600 Shares = 800 Shares x 730 = <24,000

Allotment money due from Tina = 1,600 x 350 80,000

Less : Excess received on application 24,000
Allotment money not received 56,000
Entry for Forfeiture:
Date Particulars Cr.
Dr.
Amount Amount

Share Capital A/c (1,600 x 7100) Dr. 1,60,000

To Share Allotment A/c 56,000
To Share First and Final Call A/c 64,000
To Share Forfeiture A/c 40,000

19. Ans. (C) 315,000

Hint :

Amount not paid on First Call : 200 Shares X 340 8,000

ANSWERS Amount not paid on Second &
Final Call : 200 Shares x
A-13

735 7,000

15,000
(A)
20. Ans.
Subscribed Capital
Subscribed andFully Paid Capital
39,000 Equity Shares of #100 each 39,00,000
Forfeited Shares Account is not added
Note to Subscribed and Fully Paid Capital.
(C) 79,000
21. Ans.
Hint :
Out of F7 Called up, First Call of 72 has not been paid. Hence
amount paid (forfeited)
is 35 per share.
Forfeited amount on 4,000 shares is 75 per share

As such, Forfeited amount on 3,000 reissued shares @ 35

15,000

6,000
Transferred to Capital Reserve 9,000

22. Ans. (B) 73,000

Hint :

Amount Called up per share

Less Not paid on Allotment <2 (Excluding Premium)

Not paid on First Call 72 per share

Amount paid on 2,000 shares per share

4,500
Hence, amount paid (forfeited) on 1,500 reissued shares @ 33
1,500
Less : Loss on Reissue 15,000 shares @ 71
3,000
Transferred to Capital Reserve

23. Ans. (B) 31,200

Hint :
1,40,000 = 420
Shares applied by Vishesh 300
= X
1,00,000
420 Shares - 300 Shares
Excess application money received
=

= 120 Shares XR5 = 7600

1,200
Allotment money
due from Vishesh = 300 x 24 600
Excess received on application
Less 600
Allotment money not received
Forfeiture
Entry on
Dr. Cr.
Date Particulars Amount Amount

3,000
Dr.
Share Capital A/c (300 X 710)
 ANSWEr
A-14

600
To Share Allotment A/c
74)
To Share First and Final Call A/c (300 X 1,200

1,200
To Share Forfeiture A/c

24. Ans. (A) 79,000

Hint:

Amount Called up
2
Less Not paid on allotment (Excluding Premium)
Not paid on first call
Amount paid on 5,000 shares per share

As such, amount paid (forfeited) on 3,000 reissued shares @ 75 15,000

Less : Loss on Reissue 3,000 @ 72 6,000
Transferred to Capital Reserve 9,000
25. Ans. (D) 76,000
Hint :

Face Value of the share (fully Called-up) 10

Less Not paid on allotment (excluding premium)

Not paid on first and final call (excluding premium) 3
Hence, amount paid (forfeited) on 5,000 shares per share

Amount paid (forfeited) on 2,000 reissued shares @ 33 each 6,000

Less : Loss on Reissue Nil
Transferred to Capital Reserve 6,000
26. Ans. (B) 335,000
Hint :

Amount Called up (3100 less 720 for Second Call) 80

Less : Not paid on First Call 20

Amount paid on 1,000 shares 60 per share

As such, amount paid (forfeited) on 700 reissued shares @ 760 = 42,000

Less : Loss on Reissue : 700 x 310 7,000
Transferred to Capital Reserve 35,000

27. Ans. (B) 7760

Hint :

Scheme of Allotment :

Shares Applied Allotted

Full Allotment 50,000 50,000
Rejected 10,000 Nil
Pro-rata Allotment
(2,50,000 - 50,000 - 10,000) 1,90,000 1,50,000
2,50,000 2,00,000

Shares 1,90,000
applied by Jiya = 300 x = 380
1,50,000
ANSWERS A-15

Jiya has application money @ 72 per share. Hence, amount Credited to

paid only
Share Forfeiture Account will
be 380 x 32 = 7760

28. Ans.
(D) 24,400
Hint :
Share Forfeiture Account will be Credited by Capital portion of 711 per share
received on application.

29. Ans. (B)

Subscribed but not fully paid Capital:

99,500 equity shares of <10 each, 78 called up 7,96,000

Note : Share Forfeiture Account will not be added to Subscribed but not fully paid capital.

30. Ans. (D) =4,000

Hint :

Amount Called-up (310 less 32 for Second Call)

Less Not paid on allotment (Excluding Premium)
Not paid on First Call
Amount paid on 3,000 shares per share

As such, amount paid (forfeited) on 1,000 reissued shares @ 74 4,000

Less Loss on Reissue Nil

Transferred to Capital Reserve 4,000

31. Ans. (A) 315,000

Balance in Forfeited Shares Account will be the amount forfeited on unissued

shares = 200 Shares x 375 = 15,000

32. Ans. (C) Credited with 322,000

Hint :
100 x 3 100 10,000
Amount not paid on allotment
Final Call 100 x 3 120 12,000
Amount not paid on First &
22,000

33. Ans. (D) 352,000

Hint:

Scheme of Allotment :
Shares Applied Allotted

5,000 Nil
Rejected 80,000
80,000
Full Allotment
3,00,000 2,40,000
Pro-rata Allotment (3,85,000 - 5,000 - 80,000) 3,85,000 3,20,000

2,40,000 4,000
Shares Allotted to Sandhya = 5,000 3,00,000
A-16 ANSWERS

Entry on Forfeiture of Shares

Particulars Dr. Cr
Date
Amount
Amount

80,000
Share Capital A/c (4,000 x 720)
To Share First Call (4,000 X #4) 16,000

To Share Final Call (4,000 x 73) 12,000

To Share Forfeiture A/c $2,000

34. Ans. (B) 335,000

Hint :

Share Forfeiture Account will be Credited from Capital portion received •

On application 315 per share
On allotment 722 per share
On first call 733 per share

500 Shares x 770 = 335,000

35. Ans. (B) <42,000

Hint :

2,00,000
Shares Allotted to the defaulting shareholder : 6,900 x 6,000
2,30,000
Entry on Forfeiture :
Date Particulars Dr. Cr.
Amount Amount

Share Capital A/c (6,000 X 310) Dr. 60,000

To First and Final Call A/c (6,000 x 73) 18,000
To Share Forfeiture A/c 42,000

36. Ans. (A)

Hint :

Subscribed and Fully Paid Capital:

3,97,000 equity shares of 3 10 each 39,70,000

Hint: Share Forfeited Account will be ignored.

37. Ans. (D) Profit earned by a Company after its incorporation.

38. Ans. (C) Issuing partly paid bonus shares to shareholders.

39. Ans. (C) 37,500

Hint :

Amount Called-up per share 20

ANSWERS Less Capital portion not paid on
allotment (=10 - 35)
A-17

Not paid on first call

Capital portion paid on forfeited shares 11

per share

Hence, forfeited amount on 1,500

reissued shares =
1,500 x 79 13,500
Less : Loss on Reissue 1,500 x 34
Transferred to Capital Reserve 6,000

(D)72,80,000
7,500
40. Ans.
Hint :
Scheme of Allotment :

Shares Applied Allotted

Rejected 20,000
Full Allotment
80,000 80,000
Pro-rata Allotment (5,00,000 - 20,000 - 80,000 4,00,000 3,20,000
5,00,000 4,00,000
Shares Allotted to Somesh = 3,20,000
5,000 ) 4,000
4,00,000
Entry for Forfeiture of Shares :

Particulars Dr.
Date Cr.
Amount Amount

Share Capital A/c (4,000 X 2100) Dr. 4,00,000

To Share First and Final Call A/c (4,000 x 730) 1,20,000

To Share Forfeiture A/c 2,80,000

41. Ans. (C) 39,72,000

Hint :

Subscribed but not fully Paid Capital :

1,40,000 shares of 710 each, 77 Called up 9,80,000
8,000
Less Calls in Arrears (4,000 x 22)
9,72,000

42. Ans. (C) Nil

43. Ans. (C) 31,000
Hint:
75
Amount Called up
Premium) 20
Less : Not paid on allotment (Excluding
20 40
Not paid on first call
35 per share
Amount paid on 500 shares

@ 735 each 7,000

200 reissued shares
Hence, amount paid (forfeited) on 6,000
Less Loss on Reissue 200 shares @
730 each
1,000
Reserve
Transferred to Capital
 ANSWERS
A-18

44. Ans. (D) 10,000

Hint:
Excess received from Monika on Application
72 = 2,000
5,000 Shares 4,000 Shares = 1,000 Shares @

Amount Due on allotment : 4,000 x 74 16,000

Less Excess received on application 2,000

Calls in Arrears 14,000

Entry on Forfeiture :

Date Particulars Dr. Cr.

Amount Amount

Dr. 16,000
Share Capital A/c (4,000 x 74)
Security Premium Reserve A/c Dr. 8,000
To Calls in Arrears A/c 14,000
To Shares Forfeited A/c 10,000
(4,000 shares forfeited)

45. Ans. (A) 721,000

Hint :

Amount Called up (3100 less final call of 730) 70

Less Amount not paid on allotment (excluding premium) 10

Amount not paid on first call (excluding premium) 20 30

Amount paid (or forfeited) on 800 shares 40 per share

Hence, forfeited amount on 75% or 600 shares @ 740 each =

24,000
Less Loss on Reissue : 600 shares @ 35 each 3,000

Transferred to Capital Reserve 21,000

46. Ans. (C)

Hint :

Subscribed Capital :
Subscribed and Fully Paid Capital:
20,000 Equity Shares of 720 each fully Paid up 4,00,000

Subscribed but not Fully Paid Capital:

1,00,000 Equity Shares of 720 each issued to public, <12 called up 12,00,000

TOTAL 16.00.000

0. 47. Ans. (B)

Q 48. Ans. (C)

O. 49. Ans. (C)

Excess Application money paid by Santosh 3,000 x 34 = < 12,000
ANSWERS
Amount Due on Allotment = 3,000 x 75 = 7
A-19

15,000
Out of which,
3,000 x 2 =
3 6,000
is for Capital Portion
3,000 x 3 =
$9,000 is
for Premium Portion
Hence, out of excess application of $ 12,000, amount adjusted for Capital portion
6.000 and for premium is remaining 76,000. is

Entry on Forfeiture :
Particulars
Date Dr. Cr.
Amount Amount

Share Capital A/c Dr.

30,000
Securities Premium A/c Dr.
3,000
To Calls in Arrears
(Allotment 33,000; First Call 76,000;
Second Call 36,000)
15,000
To Share Forfeiture A/c
18,000

Bank A/c (1,500 x 35) Dr. 7,500

Share Forfeiture A/c Dr. 7,500
To Share Capital A/c 15,000

Forfeited Amount on 1,500 shares is 18,000 x 1,500 =

79,000
3,000
Out of this, 31,500 is to be transferred to Capital Reserve; Hence, shares may be
reissued at a discount of 37,500 i.e., 35 per share.

0.50. Ans. (D)

0.51. Ans. (C)

0.52. Ans. (B)

(F) Answers of Assertion-Reason MCQs:

B 2. B 3. C 4. B 5. A
1.
B 8. D 9. A 10. B
6. B 7.
14. A 15. D
A 12. C 13. C
19. B 20. B
A 17. D 18. D

Chapter 7
Issue of Debentures

(A) Answers of True or False

True 1, 6, 8, 9, 13, 14, 15, 17, 18, 19, 20, 22, 23, 24, 25
False 2, 3, 4, 5, 7, 10, 11, 12, 16, 21, 26,27
(B) Answers of Fill in the Blanks

2. Interest
1. Creditors
3. Fixed (Specified) 4. Capital
A-20
ANSWERS
6. Revenue
5. Capital
8. Charge
7. Face
10. Secured
9. Non Current Liabilities
12. Other
11. Irredeemable
14. 780,000
13. Personal
16. Prefixed (Specified)
15. 38,00,000
18. 761,000
17. Collateral
19. Debenture Suspense A/c 20. Capital
21. Zero Coupon Bond
JOURNAL
22.

Particulars Dr. (?) Cr. (3)

Date
Dr. 30,00,000
Debenture Suspense A/c
To 10% Debentures A/c 30,00,000
collateral
(30,00,000; 10% debentures issued as
security for a loan of 325,00,000).

23. Loss on Issue of Debentures

(C) Answers of Matching Questions :

(1) (i) b; (ii) c; (iii) a

(i) b; (ii) a; (iii) d; (iv) c
(i) b; (ii) a
(i) d; (ii) b; (iii) a; (iv) c
(i) c; (ii) a; (iii) b; (iv) d (10) (i) c; (ii) d
(11) (i) b; (ii) d (12) (i) d; (ii) a
(13) (i) b; (ii) c

(D) Answer of Multiple Choice Questions:

1. C 2. A 3. C 4. B 5. D

D 8. B B 10. B
13. B B 15. D
20.

b0 0
18. B A
23. B 25. A
28. D 30. c
B 33. D 35.
36. A 38. B 39. D 40.
41. B

(E) Answers of Assertion-Reason Questions

1. A 2. C 3. A 4. D 5. B
6. A 7. A 8. D 9. A 10. D
11. 12. A
ANSWERS
ANSW
A-21
Chapter 8
Tools of Financial Analysis
Comparative Statements
Answers
of True or
False Questions .
True
False
[Link]. 6.7,8.9, 11, 12,15.17
5, 10, 13, 14, 16

a Answers of Fill in the Blanks :

1. Capital
2. Percentage
3. Intra-firm
4. Comparative Financial
5. Inter-firm

b. Dynamic
7. Static
8. (100%)
9. Infinite or immeasurable or endless
10. 2017-18 $15,00,000; 2018-19 318,00,000
11. 2017-18 $3,00,000; 2018-19 32,40,000
12. 2017-18 $2,00,000; Absolute Change (71,00,000)
13. 2017-18 5,00,000; Absolute Change (74,00,000)
14. 2017-18 <40,000; 2018-19 -20,000

(C) Answers of Matching Questions :

(1) (i) b; (ii) a; (iii) b (2) (i) d; (ii) a
(3) (i) b; (ii) b (4) (i) a; (ii) d
(5) (i) a; (ii) d; (iii) c

(D) Answer of Multiple Choice Questions :

D 2. D 3. D 4. B 5. C
D
8. D 9. C 10.

A c 13. B 14. A 15. C

D B 18. A 19. C 20. B

B c 23. C 24. C 25. D

C 29. A 30. B
D 28.
A

(E) Answers of Assertion-Reason Questions :

4. C 5. D
1. A 3. B
2. C
6. A 7. B
 ANSWERS
A-22

Chapter 9
Common-Size Statements
(A) Answers of True or False Questions :
True 1, 2, 3, 4, 7
False 5, 6, 8,9, 10, 11

(B) Answers of Fill in the Blanks

Common Size Balance Sheet

1. Common Size 2.

3. Revenue from Operations 4. Percentages

(C) Answers of Matching Questions

(1) (i) b; (ii) c; (iii) d; (iv) a (2) (i) d; (ii) a; (iii) b; (iv) c

(D) Answer of Multiple Choice Questions :

B 3. B 4. C 5. C
1. D 2.
7. B 9. 10. D
6. A D 8.
D 13. C 14. C 15.
11. B 12.
16. D

(E) Answers of Assertion-Reason Questions

2. 3. B 4.
1. A

6. C