In the books of Shanthi Statement of affairs as on
31^st December, 2018

Liabilities	Rs	Assets	Rs
Sundry creditors	25,000	Cash	4,000
Bills payable	4,000	Stock	45,000
Capital (balancing figure)	1,66,000	Debtors	70,000
		Bills receivable	6,000
		Machinery	60,000
		Furniture	10,000
	1,95,000		1,95,000

Computation of sacrificing ratio and new profit sharing ratio
Old share = 3:2 that is, Suresh \(\frac { 3 }{ 5 } \) and Dinesh \(\frac{2}{5}\) \(Suresh\)
Share sacrificed = Old share x Proportion of share sacrificed
Suresh = \(\frac { 3 }{ 5 } \times \frac { 1 }{ 5 } =\frac { 3 }{ 25 } \)
Dinesh = \(\frac { 2 }{ 5 } \times \frac { 2 }{ 5 } =\frac { 4 }{ 25 } \)
Sacrificing ratio of Suresh and Dinesh is \(\frac { 3 }{ 25 } \) and \(\frac { 4 }{ 25 } \) that is, 3:4
New share = Old share - Share sacrificed
Suresh = \(\frac { 3 }{ 5 } -\frac { 3 }{ 25 } =\frac { 15-3 }{ 25 } =\frac { 12 }{ 25 } \)
Dinesh = \(\frac { 2 }{ 5 } -\frac { 4 }{ 25 } =\frac { 10-4 }{ 25 } =\frac { 6 }{ 25 } \)
Share of new partner = Sum of shares sacrificed by Suresh and Dinesh
Ramesh = \(\frac { 3 }{ 25 } +\frac { 4 }{ 25 } =\frac { 3+4 }{ 25 } =\frac { 7 }{ 25 } \)
New profit sharing ratio of Suresh, Dinesh and Ramesh = \(\frac { 12 }{ 25 } :\frac { 6 }{ 25 } :\frac { 7 }{ 25 } \)that is, 12:6:7.

Quick ratio = \(\frac{Quick\ assets}{Current\ liabilities}\) = \(\frac{1,85,000}{1,00,000}\) = 1.85:1
Quick assets = Current assets – Inventories – Prepaid expenses
= 2,50,000 – 50,000 – 15,000
= Rs.1,85,000

Following are the commonly used tools of financial statement analysis
(i) Comparative statement
(ii) Common-size statement
(iii) Trend analysis
(iv) Funds flow analysis
(v) Cash flow analysis

When a shareholder defaults in making payment of allotment andlor call money, the shares may be forfeited. On forfeiture, the share allotment is cancelled and to that extent paid up share capital a reduced. The person ceases to be a shareholder of the company after the shares are forfeited.

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 Information System (AIS) collects financial data, processes them and provides information to the various users. To provide information AIS requires data from other information system that is manufacturing, marketing and human resources.

Normal rate of return refers to the rate at which profit is earned by similar business entities in the industry under normal circumstances.

Calculation of interest on capital:
Arivazhagan:

On opening capital for 1 year	15,000 \(\times\) \(\frac{6}{100}\)	Rs. 900
On additional capital for 6 months	5,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{6}{12}\)	Rs. 150
Interest on capital		Rs. 4,050

 Interest on Akbar’s capital:

On opening capital for 1 year	10,000 \(\times\) \(\frac{6}{100}\)	Rs. 600
On additional capital for 4 months	10,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{4}{12}\)	Rs. 200
Total interest on capital		Rs. 800

 Note: Since the date of additional capital introduced by Akbar is not given, interest on additional capital is calculated for an average period of 6 months.

Dr. Income and Expenditure Account for the year ended 31^st March, 2017 Cr Expenditure Rs. Income Rs. Rs.     By Subscription 60,000       Add: Outstanding subscription for 2016-17 2,400       Subscription received in advance in         in advance in 1,000 63,400           Tutorial note
(i) Subscription for the year 2015-16 Rs. 7,500 and for the year 2017-18 Rs. 1,500 do not relate to the current year. So they should not be recorded in Income and Expenditure Account.
(ii) Subscription outstanding for the current year 2016-17 is Rs. 2,400. It should be added with the amount of subscription received during 2016-17.