Page 101 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes The next step is to prepare the Adjusted Profit & Loss account.

Adjusted Profit & Loss Account

Particulars ` Particulars `
To Fixed Assets Depreciation 1,40,000 By Balance B/d 1,12,000

To Transfer of profit to general reserve 20,000 By Profit on sale of fi xed assets 4,000

To Provision for taxation made during 20,000 By Profit on sale of Investments 1,000

the current year
To Dividend paid 80,000
To Balance c/d 1,36,000 By Fund from operations 2,79,000

3,96,000 3,96,000
The next step is to prepare the fund fl ow statement.

Fund Flow Statement

Sources ` Applications `
Sale of fixed assets 24,000 Purchase of Investments 36,000

Sale of investments 17,000 Payment of previous year taxation 1,50,000
Mortgage loan raised 5,40,000 Payment of dividend 80,000
Fund from operations 2,79,000 Increase in working capital 5,94,000
8,60,000 8,60,000

Self Assessment

Choose the appropriate answer
10. The meaning of the “To cash ( Tax paid)” entry posted in the Provision for taxation account
is
(a) Last year taxation is paid through the current year provision
(b) Current year taxation is paid through the current year provision

(c) Last year tax is paid through the last year taxation
(d) Current year taxation is paid through the last year provision

11. Profit on sale of the fixed assets are considered to be
(a) Resource to the enterprise
(b) Non-operating income

(c) Application of the enterprise
(d) None of the above
12. The treatment of current year depreciation with the closing balance of profit in determining

the fund from operations
(a) To be added
(b) To be multiplied
(c) To be deducted
(d) To be divided

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