DCM2203 CORPORATE ACCOUNTING

Description

SESSION	JAN 2026
PROGRAM	BACHELOR OF COMMERCE
SEMESTER	IV
COURSE CODE & NAME	DCM2203 CORPORATE ACCOUNTING

 

Assignment Set – 1

 

Q.1. (a) Explain the objectives of corporate accounting and discuss the importance of Schedule III of the Companies Act, 2013 in preparation of financial statements. (b) From the following particulars, prepare a Statement of Profit & Loss (extract): Revenue from operations ₹5,00,000; Cost of goods sold ₹3,00,000; Administrative expenses ₹50,000; Finance cost ₹20,000; Tax rate 30%. (5+5 = 10 Marks)

Ans 1.

1. a) Objectives of Corporate Accounting and Schedule III

Corporate accounting refers to the systematic recording, report, and study of financial transactions in firms that have been incorporated under Companies Act. The primary objectives of corporate accounting comprise providing accurate financial information to shareholders and other stakeholders as well as ensuring compliance with relevant laws and accounting guidelines, facilitating comparison of performance in different periods as well as with peers in the industry, as well as assisting the management with the planning and budgeting process, as well as taking strategic decision

 

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Q.2. (a) Explain the significance of a cash flow statement and distinguish between operating, investing, and financing activities. (b) From the following, calculate Cash from Operating Activities (Indirect Method): Net Profit before tax ₹1,00,000; Depreciation ₹20,000; Increase in Debtors ₹10,000; Decrease in Creditors ₹5,000. (5+5 = 10 Marks)

Ans 2.

1. a) Significance of Cash Flow Statement

A Cash Flow Statement, prepared as per AS-3 (Revised) in addition to AS 7, shows the inflows and outflows of cash and cash equivalents over an accounting period. Its significance lies in revealing the actual liquidity situation of a company that may be different from the profits reported within the Profit and LOSS Account. Profitable companies may have to face liquidity issues if they do not effectively manage its working capital. A cash flow report can assist creditors, investors, and

 

Q.3. (a) Explain the concept of forfeiture and reissue of shares and its accounting treatment. (b) A company forfeits 100 shares of ₹10 each (₹8 called, ₹6 paid). These shares are reissued at ₹7 per share. Pass journal entries. (5+5 = 10 Marks)

Ans 3.

1. a) Forfeiture and Reissue of Shares

Shares are forfeited when the shareholder is not able to pay the amount called for shares on the due date, and the firm, following the deadline gives notice to cancel the allotment. It considers the money already paid as forfeited. According to the Articles of Association must authorise forfeiture. In the event of forfeiture, the company alters the capital of its shares by debiting the Share Capital account with the called-up amount, credits the accounts for calls-in-arrears with the

Assignment Set – 2

 

 

Q.4. (a) Explain the sinking fund method for redemption of debentures and its advantages. (b) A company has ₹1,00,000 debentures to be redeemed after 2 years. It creates a sinking fund with annual contribution ₹40,000. Investment earns ₹5,000 interest. Calculate total fund available at redemption. (5+5 = 10 Marks)

Ans 4.

1. a) Sinking Fund Method

The sinking fund method is a systematic approach to accumulating funds for the redemption of debentures upon the completion the term. With this approach, the business reserves a specific annual cash sum from its profits (charged to the Profit and Loss Account) which is transferred into an Sinking Fund or Debenture Redemption Fund. It is then invested in safe, liquid security (external investment). Over the course of the debt, the debentures grow thanks to annual contributions and the

 

 

Q.5. (a) Explain the net asset method and yield method of valuation of shares. (b) A company has net assets worth ₹5,00,000 and 10,000 equity shares. Calculate value per share. (5+5 = 10 Marks)

Ans 5.

1. a) Methods of Valuation of Shares

Valuation of shares is required in a number of situations, such as amalgamation, absorption, change of shares from debentures buybacks, sales of an enterprise, gift or estate valuations for tax reasons.

Net Asset Method (Intrinsic Value Method) Methodology: In this case, the value per share is determined by dividing the net assets of the company attributable for equity investors by the amount of shares in equity. Net assets are computed as the total assets minus all external liabilities (including

 

Q.6. (a) Explain internal reconstruction and reduction of share capital with its objectives. (b) A company reduces share capital from ₹10 to ₹8 per share on 1,000 shares. Pass journal entry. (5+5 = 10 Marks)

Ans 6.

1. a) Internal Reconstruction and Reduction of Share Capital

Internal reconstruction is an approach to reorganizing the financial structure of a company with no winding up the company or creating a brand new business and is different from external reconstruction that is the process of creating new entities. The procedure is used after a company has built up losses, overvalued assets, fake assets, or an unsound capital structure, which has to be rectified to ensure its financial viability. Current shareholders carry the costs of rebuilding by giving up their