Current ratio = \(\frac { Current\ assets }{ Current\ liabilities } \)
Current assets Current investments + Inventories + Trade receivables + Cash and cash equivalents + Prepaid expenses
= 15,000 + 29,000 + 5,000 + 5,000 + 0
= Rs.54,000
Current liabilities = Trade creditors + Bills payable + Expenses payable
= 36,000 + 10,000 + 8,000 = Rs.54,000
∴ Current assets = \(\frac { 54,000 }{ 54,000 } \) = 1 : 1

Journal entries

Date	Particulars		L.F	Depit Rs	Credit Rs
	Machinery A/c	Dr		25,000
	Investments A/c	Dr		2,000
	Provision for outstanding bill A/c	Dr		1,000
	To Revaluation A/c				28,000
	(Increase in value of Assets i.e., Machinery and investment and reduction in provision)
	Revaluation A/c	Dr		12,000
	To Land and Building A/c				12,000
	(Decrease in value of assets)
	Revaluation A/c	Dr		16,000
	To Mukil's capital A/c				8,000
	To Mohit's capital A/c				5,333
	To Sonus capital A/c				2,667
	(Profit on revaluation credited to all partners capital Ale in old profit sharing ratio)

Dr Revaluation Account Cr

Particulars	Rs	Particulars	Rs
Land and Building	12,000	Machinery	25,000
Profit transferred to		Investments	2,000
Mukil's capital                   8,000
Mohit's capital                   5,333
Sonu's capital                   2,667	16,000
	28,000		28,000

(i) New partner sharing ratio:
Let the total profit be 1
New partner Kamala's share \(=\frac{1}{5}\)
Remaining share of Sheela and Neela \(=1-\frac{1}{5}=\frac{5-1}{5}=\frac{4}{5}\)
New share of Sheela = Remaining share x Sheela's old share
Sheela \(=\frac{4}{5}\times\frac{4}{7}=\frac{16}{35}\)
Neela \(=\frac{4}{5}\times\frac{3}{7}=\frac{12}{35}\)
Share of new partner:
Kamala \(=\frac{1}{5}\)
In order to equalize the denominator, multiply and divide Kamala's share by 7.
Kamala's share \(=\frac{1}{5}\times\frac{1}{7}=\frac{7}{35}\)
New profit sharing ratio of Sheela, Neela and Kamala \(=\frac{16}{35}:\frac{12}{32}=\frac{7}{35}\) that 16:12:7
ii. Sacrificing ratio:
Sacrifice = Old share - New share
Sheela's sacrifice \(=\frac { 4 }{ 7 } -\frac { 16 }{ 35 } =\frac { 15-12 }{ 35 } =\frac { 4 }{ 35 } \)
Neela's sacrifice \(=\frac { 3 }{ 7 } -\frac { 12 }{ 35 } =\frac { 15-12 }{ 35 } =\frac { 3 }{ 35 } \)
Sacrificing ratio \(=\frac { 4 }{ 35 } :\frac { 3 }{ 35 } =4:3\)

Statement of profit or loss

Particulars	Rs.
Closing capital	32,000
Add: Drawings	4,800
	36,800
Less: Additional capital	8,000
Adjusted closing capital	28,800
Less: Opening capital [B/F]	19,200
Profit made during the year	9,600

Balance Sheet as on 31^st March, 2016

Liabilities	Rs.	Rs	Assets	Rs.
subscription in advance		24,000	Cash in hand	12,000
Out standing expenses		40,000	Cash at bank	8,000
Capital fund	1,76,000		Books	16,000
(balanceing figure)			Billiard Table	24,000
Add:Surplus	20,000	1,96,000	Furniture	30,000
			Investment	30,000
			Prepaid expenses	20,000
			Building	1,00,000
			Subscription accrued	20,000
	2,60,000			2,60,000

In the books of clean Delhi club Income and Expenditure Dr     Account for the year ending March 31^st, 2017 Cr

Expenditure	Rs.	Income	Rs.
To Salary	1,500	By Subscriptions	22,500
To Rent	800	By Entrance fees	1,250
To Electricity	3,500	By Donation	2,500
To Printing & Stationery	380
To Surplus
(Excess of income over
expenditure)
	27,000		27,000

(i) Inventory turnover ratio = \(\frac{Cost\ of\ revenue\ from\ operations}{Average\ inventory}\) = \(\frac{6,00,000}{1,20,000}\) = 5 times
Average inventory = \(\frac{Opening\ inventory + Closing\ inventory}{2}\)
= \(\frac{1,40,000 + 1,00,000}{2}\)= \(\frac{2,40,000}{2}\)= Rs. 1,20,000
(ii) Trade receivables turnover ratio = \(\frac{Credit\ revenue\ from\ operations}{Average\ trade\ receivables}\)
= \(\frac{10,50,000}{70,000}\) = 15 times
Average trade receivables = \(\frac{Opening\ trade\ receivables + Closing\ trade\ receivables}{2}\)
= \(\frac{80,000 + 60,000}{2}\) =\(\frac{1,40,000}{2}\)= Rs.70,000
(iii) Creditors payables turnover ratio = \(\frac{Net\ credit purchases}{Average\ trade\ payables}\) = \(\frac{4,50,000}{45,000}\)= 10 times
Average trade payables = \(\frac{Opening\ trade\ payables + Closing\ trade\ payables}{2}\)
= \(\frac{40,000 + 50,000}{2}\) = \(\frac{90,000}{2}\) = Rs. 45,000
(iv) Fixed assets turnover ratio = \(\frac{Revenue\ from\ operations}{Average\ xed\ assets}\)= \(\frac{10,50,000}{5,25,000}\) = 2 times
Average fixed assets = \(\frac{Opening\ fixed\ assets + Closing\ fixed\ assets}{2}\)
= \(\frac{5,50,000 + 5,00,000}{2}\) = \(\frac{10,50,000}{2}\)= Rs. 5,25,000

Basic Sacrificing ratio Gaining ratio 1. Meaning It is the proportion of the profit which is sacrificed by the old partners in favour of a new partner It is the proportion of the profit which is gained by the continuing partners from the retiring partner 2. Purpose It is calculated to determine the amount to be adjusted towards goodwill for the sacrificing partners It is calculated to determine the amount to be adjusted towards goodwill for the gaining partners 3. Method of Calculation It is the difference between the old ratio and the new ratio Sacrificing ratio = Old profit sharing ratio - New profit sharing ratio It is the difference between the new ratio and the old ratio Gaining ratio = New profit sharing ratio - Old profit sharing ratio 4. Time of calculation It is calculated at the time of admission of a new partner It is calculated at the time of retirement of a partner

In the books of Viswanath Furniture Ltd Journal Entries

Date	Particulars		L.F	Debit Rs.	Credit Rs.
(i)	Share capital A/c	Dr		2,500
	To Share forfeited A/c				2,500
	To share final call				500
	(250 shares forfeited failed to pay final call)
(ii)	Share capital A/c	Dr		2,500
	Share premium A/c	Dr		250
	To share allotment				1,000
	To share 1st call A/c				500
	To share final call A/c				500
	To share forfeiture A/c				750
	(250 Shares were forfeited failed to pay allotment, 1st calls final call)
	Share capital	Dr		2,000
(iii)	Securities premium A/c	Dr		250
	To Share allotment A/c				1,000
	To share 1st call A/c				500
	To share forfeiture A/c	Dr			750
	(250 Shares were forfeited failed to pay allotment, 1st calls)

Forfeited share account : (i) Rs. 2000; (ii) 750; (iii) 750 

Dr. Revaluation Account Cr.

Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		5,000	By Buildings A/c	16,000
To Provision for doubtful debts A/c		1,000
To Profit on revaluation transferred to
Mani’s capital A/c (4/10)	4,000
Rama’s capital A/c (3/10)	3,000
Devan’s capital A/c (3/10)	3,000	10,000
		16,000		16,000

Dr. Capital Account Cr.

Particulars	Mani Rs.	Rama Rs.	Devan Rs.	Particulars	Mani Rs.	Rama Rs.	Devan Rs.
To Mani’s loan A/c	66,000			By Balance b/d	50,000	50,000	50,000
To Balance c/d		62,000	62,000	By Revaluation A/c	4,000	3,000	3,000
				By Profit and loss A/c	12,000	9,000	9,000
	66,000	62,000	62,000		66,000	62,000	62,000
				By Balance b/d		62,000	62,000

In the books of Khan Ltd. Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c (65,000 × 4)	Dr.		2,60,000
	To Equity share application A/c				2,60,000
	(Application money received)
	Equity share application A/c (50,000 × 4)	Dr.		2,00,000
	To Equity share capital A/c				2,00,000
	(Transfer of share application money to share capital)
	Equity share application A/c (15,000 × 4)	Dr.		60,000
	To Equity share allotment A/c				60,000
	(Excess share application money utilised for allotment)
	Equity share allotment A/c	Dr.		2,00,000
	To Equity share capital A/c				2,00,000
	(Share allotment money due)
	Bank A/c (2,00,000 – 60,000)	Dr.		1,40,000
	To Equity share allotment A/c				1,40,000
	(Allotment money received)
	Equity share first and final call A/c (50,000 × 2)	Dr.		1,00,000
	To Equity share capital A/c				1,00,000
	(Share first and final call money due)
	Bank A/c	Dr.		1,00,000
	To Equity share first and final call A/c				1,00,000
	(Share first and final call money received)

Analysis of transactions, passing journal entries, identification of voucher type and group:

S.NO.	Particulars		Debit Rs.	Credit Rs.	Voucher type	Group
(1)	Cash A/c	Dr.	1,00,000		Receipt	Cash -in -Hand
	To Robert’s Capital A/c			1,00,000	Voucher	Capital Account
(2)	State Bank of India A/c	Dr.	30,000		Contra	Bank Accounts
	To Cash A/c			30,000	Voucher	Cash-in-Hand
(3)	Furniture A/c	Dr.	10,000		Payment	Fixed Assets
	To Cash A/c			10,000	Voucher	Cash-in-Hand
(4)	Purchases A/c	Dr.	20,000		Purchase	Purchase Accounts
	To Mohaideen A/c			20,000	Voucher	Sundry Creditors
(5)	Cash A/c	Dr.	8,000		Sales	Cash-in-Hand
	To Sales A/c			8,000	Voucher	Sales Accounts
(6)	Purchases A/c	Dr.	5,000		Purchase	Purchase Accounts
	To Cash A/c			5,000	Voucher	Cash-in-Hand
(7)	Rony A/c	Dr.	60,000		Sales	Sundry Debtors
	To Sales A/c			60,000	Voucher	Sales Accounts
(8)	Cash A/c	Dr.	9,000		Contra	Cash-in-Hand
	To Bank A/c			9,000	Voucher	Bank Accounts
(9)	Mohaideen A/c	Dr.	10,000		Payment	Sundry Creditors
	To Bank A/c			10,000	Voucher	Bank Accounts
(10)	Cash A/c	Dr.	5,000		Receipt	Cash -in -Hand
	To Arun A/c			5,000	Voucher	Sundry Debtors
(11)	Salaries A/c	Dr.	6,000		Payment	Indirect Expenses
	To Bank A/c			6,000	Voucher	Bank Accounts
(12)	Wages A/c	Dr.	3,000		Payment	Direct Expenses
	To Cash A/c			3,000	Voucher	Cash-in-Hand
(13)	Stationery A/c	Dr.	4,000		Journal	Indirect Expenses
	To Pandian Ltd. A/c			4,000	Voucher	Sundry Creditors

Following steps are to be followed to enter the transaction in Tally ERP 9
1. To create company
Company Info > Create Company
Type the Name as Robert and keep all other fields as they are and choose ‘Yes’ to accept.

2. To maintain accounts only
Gateway of Tally > F11 Accounting Features > General > Maintain accounts only: Yes > Accept> Yes

3. To Create ledger accounts
Gateway of Tally > Masters > Accounts Info > Ledgers > Single Ledger > Create

(i) To Create Devi's Capital A/c
Name: Devi's Capital A/c
Under Capital Account
Accept: Yes

(ii) To Create Indian Bank A/c
Name: Indian Bank A/c
Under: Bank Accounts
Accept: Yes

(iii) To Create Furniture A/c
Name: Furniture A/c
Under: Fixed Assets
Accept: Yes

(iv) To Create Purchases A/c
Name: Purchases A/c
Under: Purchase
Accept: Yes

(v) To Create Mohaideen A/c
Name: Mohaideen A/c
Under: Sundry Creditors
Accept: Yes

(vi) To Create Sales A/c
Name: Sales A/c
Under: Sales Account
Accept: Yes

(vii) To create Rony A/c
Name: Rony A/c
Under: Sundry Debtors
Accept: Yes

(viii) To create Salaries A/c
Name: Salaries A/c
Under: Indirect Expenses
Accept: Yes

(ix) To create Wages A/c
Name: Wages A/c
Under: Direct Expenses
Accept: Yes

(x) To create Stationery A/c
Name: Stationery A/c
Under: Indirect Expenses
Accept: Yes

(xi) To create Pandian Ltd. A/c
Name: Pandian Ltd. A/c
Under:Sundry Creditors
Accept: Yes

4. To enter transactions through vouchers
Gateway of Tally > Transactions > Accounting Vouchers
(i) Robert commenced a transport business with a capital of Rs. 1,00,000
F6: Receipt Voucher: Accounts: Cash
Particulars: Robert Capital A/c (Choose from List of Ledgers Accounts)
Enter the amount of Capital Rs. 1,00,000
Narration: Capital Introduced
Accept: Yes

(ii) An account was opened with State Bank of India and deposited Rs. 30,000
F4: Contra Voucher
Accounts: State Bank of India
Particulars: Cash
Amount: Rs. 30,000
Narration: Opened bank account in SBI
Accept: Yes

(iii) Purchased Furniture by paying cash Rs. 10,000
F5: Payment Vouchers
Account: Cash
Particulars: Furniture A/c
Amount: Rs. 15,000
Narration: Furniture bought by Cash
Accept: Yes

4 Goods purchased on credit from Mohaideen for Rs. 20,000
F9: Purchase voucher
Party A/c name: Mohaideen A/c
Particulars: Purchases A/c
Amount: Rs. 20,000
Narration: Goods purchased on
credit from Mohaideen
Accept Yes

(5) Cash sales made for Rs. 8,000
F8: Sales Voucher,
Account: Cash
Particulars: Sales A/c
Amount: Rs. 8,000
Narration: Cash Sales Mode
Accept: Yes

(6) Goods purchased from Rathinam for Rs. 5,000 and money deposited in CDM
F9: Purchase Voucher
Account: Bank
Particulars: Purchase A/c
Amount: Rs. 5,000
Narration: Goods Purchased

(vii) Goods sold to Rony on credit for Rs. 60,000
F8: Sales Voucher
Party: A/c Name: Rony A/c
Particulars: Sales A/c
Amount: Rs. 70,000
Narration: Goods sold on credit to Rony
Accept: Yes

(viii) Money withdrawn from bank for office use Rs. 9,000
F4: Contra Voucher
Account: Cash
Particulars: State Bank of India A/c
Amount: Rs. 9,000
Narration: Cash withdrawn from bank
Accept: Yes

(ix) Part payment of Rs 10,000 to Mohaideen by cheque
F5: Payment Vouchers
Account: State Bank of India
Particulars: Mohaideen A/c
Amount: Rs.10,000
Narration: Payment made to
Mohaideen by cheque
Accept Yes

(x) Rony made part payment of Rs. 5,000 by cash
F6: Receipt voucher
Account: Cash
Particulars: Rony A/c
Amount: Rs. 5,000
Narration: Cash received from Rony
Accept Yes.

(xi) Salaries Paid to Staff through ECS Rs. 6,000
F5: Payment Vouchers
Account: Indian Bank
Particulars: Salaries A/c
Amount: Rs 6,000
Narration: Salaries paid through ECS,
Accept: Yes

(xii) Wages of Rs. 3,000 paid by cash
F5: Payment voucher
Account: Cash
Particulars: Wages A/c
Amount: Rs. 3,000
Narration: Wages paid by cash
Accept Yes

(xiii) Purchased stationery from Pandian Ltd. on credit Rs.4,000
F7: Journal Voucher
Particulars: Computer A/c
Account: Muthu Ltd.
Amount: Rs. 4,000
Narration: Stationery bought on credit from Pandian Ltd.
Accept: Yes

To view reports
(i) To view Trial Balance
Gateway of Tally > Reports > Display > Trial Balance > Alt + F1 (detailed)

(ii) To view profit and loss Account
F10: A/c Reports > Profit & Loss A/c > Alt + F1 (detailed) or
Gateway of Tally > Reports > Profit & Loss A/c Alt + F1 (detailed)

(iii) To view Balance sheet
F10: A/c Reports > Balance sheet > Alt + F1 (detailed)
Gate of Tally > Reports > Balance Sheet > Alt + F1 (detailed)

(iv) To view Ratio Analysis
F10: A/c Reports > Ratio Analysis (or)
Gateway of Tally > Reports > Ratio Analysis

(v) To view Day book
F10: A/c Reports > Day Book > Alt + F1 (detailed (or)
Gateway of Tally > Reports > Display > Day Books > Alt + F1 (detailed)

Goodwill   = Super profit \(\times\) Number of years of purchase
Super profit = Average profit - Normal profit
Normal profit = Capital employed \(\times\) Normal rate of return
Capital employed = Fixed asset + Current assets - Current liabilities
 5,00,000 - 2,00,000 = Rs. 3,00,000
Normal profit = 3,00,000 x 12.5%
= Rs. 37,500
Super profit  = 60,000 - 37,500 = Rs. 22,500
Goodwill  = 22,500 \(\times\) 2
= Rs. 45,000

Dr Profit and loss appropriation accounts for the year ended
31st December 2018 Cr

Particulars	Rs.	Rs.	Particulars	Rs.
To Interest on capital A/c			By Profit and loss A/c	3,65,000
Antony (4,00,000 \(\times\) 5%)	20,000
Ranjith (3,00,000 \(\times\) 5%)	15,000	35,000
To Salary to Antony		90,000
To Commission to Ranjith		48,000
To Partner's capital A/c (profit)
Antony \(\left( 1,92,000\times \frac { 1 }{ 2 } \right) \)	96,000
Ranjith \(\left( 1,92,000\times \frac { 1 }{ 2 } \right) \)	96,000	1,92,000
		3,65,000		3,65,000

Profit before commission = 3,65,000 - (35,000 + 90,000) = Rs. 2,40,000
Commission = Net profit before commission \(\times\) \(\frac{Rate \ of \ commission}{(100+Rate \ of \ commission)}\)
Commission = 2,40,000 \(\times\) \(\frac{25}{125}\) = Rs. 48,000

Dr.                                      Partners’ Capital A/c                                        Cr.

Particulars	Mannan Rs.	Sevagan Rs.	Particulars	Mannan Rs.	Sevagan Rs.
To Drawings A/c	40,000	35,000	By Balance b/d	2,00,000	1,75,000
To Interest on			By Profit and loss
drawings A/c	1,000	500	appropriation A/c	21,000	16,500
To Balance c/d	2,10,00	1,69,000	By Interest on capital A/c	12,000	10,500
			By Salary A/c	18,000	-
			By Commission A/c	-	2,500
	2,51,000	2,04,500		2,51,000	2,04,500
				2,10,000	1,69,000

 kumbakonam basketball association 
Dr    Income Expenditure A/c for the year ended 31^st March, 2018                  Cr

Expenditure	Rs	Income	Rs
To Rent of ground	12,000	By Rent of hall received	6,000
To Printing Charges	5,000	By Subscription received	9,000
To Bank charges	1,000	By Locker rent received	2,000
To Tournament expenses	16,000	By Deficit	26,000
To Audit fees	3,000	(Excess of expenditure over income)
To Sports materials  purchased	4,000
To Insurance for building	2,000
	43,000		43,000

Balance sheet as on 31^st March, 2018

Liabilities	Rs.	Assets	Rs.
Capital fund	1,15,000	Buildings	40,000
(Balancing figure)		Furniture	50,000
Loan borrowed	10,000	Investments	20,000
Subscription received in advance	5,000	Subscription outstanding	10,000
		Cash at bank	6,000
		Cash in hand	4,000
	1,30,000		1,30,000

Yes, common size statement is also known as 100 % statement. Since in this statement, all items are expressed as percentage of the base item i.e. revenue from operations in case of common size statement of profit and loss or total assets in case of common size balance sheet.

According to Indian partnership Act, 1932, no salary is allowed to partners in the absence of partnership deed so the claim of A for salary of Rs.18,000 per month is not valid.

Revaluation account will be credited

No, due to legal restrictions, a company cannot maintain its accounts under single entry system.

Share gained by Arya = \(\frac{2}{8}\)
Gaining ratio = \(\frac{2}{8}\): 0 that is, \(\frac{1}{4}:\)0 or 1 : 0
New share of continuing partner = Old share + Share gained
Arya  \(=\frac{3}{8}+\frac{2}{8}=\frac{5}{8}\)
Benin \(=\frac{3}{8}+0=\frac{3}{8}\)
Therefore, new profit sharing ratio of Arya and Benin is \(\frac{5}{8}:\frac{3}{8}\) that is 5:3

Accounting report is a compilation of accounting information that are derived from the accounting records of a business concern. Accounting reports may be classified as routine reports and special purpose reports.

Average profit = \(\frac{Total \ profit}{Number\ of\ years}\)
Average profit = \(\frac{8,000+10,000+9,000}{3}\)
Average profit: Rs. 9,000

Total capitalised value of the average profit = \(\frac { Average\ profit }{ Normal\ rate\ of\ return } \)\(\times\) 100
=\(\frac { 60,000 }{ 10 } \) \(\times\) 100
= Rs. 6,00,000
Goodwill = Total capitalised value of the average profit – Capital employed
= 6,00,000 – 4,50,000
= Rs. 1,50,000

Dr Income and Expenditure Account for the year ended 31 December, 2018 Cr

Expenditure	Rs	Income	Rs	Rs
		By Subscription received
		during the year	50,000
		Less: Subscription received for
		2017	5000
			45,000
		Less: Subscription received for 2019	7,000
			38,000
		Add: Subscription due for 2018	6,000
			44,000
		Add: Received in advance in
		2017 for 2018	4,000	48,000

(i) Long-term solvency means the firm's ability to meet its liabilities in the long run.
(ii) Long term solvency ratios help to determine the ability of the business to repay its debts in the long run.
(iii) The following ratios are normally computed for evaluating long term solvency of the business:
(i) Debt equity ratio
(ii) Proprietary ratio
(iii) Capital gearing ratio

The share capital of a company is divided into the following categories:
(i) Authorised capital
It means such capital as is authorised by the memorandum of association. It is the maximum amount which can be raised as capital. It is also known as registered capital or nominal capital.
(ii) Issued capital
This represents that part of authorised capital which is offered for subscription.
(iii) Subscribed capital It refers to that part of issued capital which has been applied for and also allotted by the company.
(iv) Called up capital It refers to that part of subscribed capital which has been called up by the company for payment.
(v) Paid up capital
It is that part of called up capital which has been actually paid by the shareholders.
(vi) Reserve capital
The company can reserve a part of its subscribed capital to be called up only at the time of winding up. It is called reserve capital.

(i) In sole proprietorship, the profit or loss in the profit and loss account is transferred directly to the sole proprietor's capital account. In partnership, profit and loss appropriation account is prepared to which net profit or loss from profit and to which net profit or loss from profit and loss account is transferred.
(ii) In the profit and loss appropriation account, adjustments for interest on capital, interest on drawings, salary and other remuneration due to the partners are shown. Finally, the balance in the appropriation account is transferred to the partner's capital account in the profit sharing ratio.
(iii) Capital account balance of the sole proprietor alone is shown in the balance sheet of sole proprietorship. The balance sheet of a partnership concern shows the balances in the individual capital accounts (an current accounts) of the partners.

Calculation of sacrificing ratio
Sacrificing ratio = Old share - New share
Varun \(=\frac { 5 }{ 9 } =\frac { 1 }{ 3 } =\frac { 5-3 }{ 9 } =\frac { 2 }{ 9 } \)
Bharath \(=\frac { 4 }{ 9 } =\frac { 1 }{ 3 } =\frac { 4-3 }{ 9 } =\frac { 1 }{ 9 } \)
Therefore, sacrificing ratio is 2 : 1

Journal Entry

Date	Particulars	L.F	Debit Rs.	Credit Rs.
	Cash   A/c                    Dr		10,000
	Damn's capital A/c        Dr		5,000
	To Varun's capital A/c (2/3)			10,000
	To Bharath's Capital A/c (1/3)			5,000
	(Share of goodwill of Damu credited to old partner's capital account)

Proprietary ratio = \(\frac{Shareholders ' funds}{Total assets}\) = \(\frac{2,00,000}{4,00,000}\) = 0.5:1
Shareholders’ funds = Equity share capital + Preference share capital + Reserves and surplus
= 1,00,000 + 75,000 + 25,000
= Rs. 2,00,000
(iii) Capital gearing ratio
Proprietary ratio gives the proportion of shareholders’ funds to total assets. Proprietary ratio shows the extent to which the total assets have been financed by the shareholders’ funds. It is calculated as follows:
Capital gearing ratio = \(\frac{Funds\ bearing\ fixed\ interest\ or\ fixed\ dividend}{Equity\ shareholders'\ funds}\)

Funds bearing fixed interest or fixed dividend	Equity shareholders’ funds
Preference share capital	Equity shareholders’ funds
Debentures	= Equity share capital + Reserves and surplus
Bonds
Long term borrowings carrying fixed interest

Capital gearing ratio is a measure of long term solvency as well as capital structure. When thecapital gearing ratio is greater than one, the firm is said to be high geared.

(i) Give only interim reports:
Financial statements are prepared at the end of every accounting period. But the actual position of the business can be known only when the business is closed.
(ii) LImited access to external users:
The external users do not have detailed and frequent information of financial results as they have limited access
(iii) Influenced by personal judgement:
Preparation of financial statements may be influenced by personal judgements and therefore these are not free from bias.

Trend analysis for Kurinji Ltd

Particulars	Rs.in thousands			Trend percentages
	2015-16	2016-17	2017-18	2015-16	2016-17	2017-18
Revenue from operations	120	132	156	100	110	130
Add: Other income	50	38	65	100	76	130
Total revenue	170	170	221	100	100	130
Less: Expenses	100	135	123	100	135	123
Profit	70	35	98	100	50	140

Computation of trend percentage for revenue from operations:
For 2016-17: \(\cfrac { 132 }{ 120 } \times 100=110\)%
For 2017-18: \(\cfrac { 156 }{ 120 } \times 100=130\)%

Following are some of the major accounting vouchers used in an organisation:
(i) Receipt Voucher
(ii) Payment Voucher
(iii) Contra Voucher
(iv) Purchase Voucher
(v) Sales Voucher
(vi) Journal Voucher