Financial Reports: Lengths and Concerns
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Questions and Answers

What was the total cash balance at the end of the month before any transactions occurred?

  • 4,100 (correct)
  • 3,400
  • 10,000
  • 16,700
  • Which transaction involved an increase in liabilities?

  • Paid staff salaries for November, `1,600.
  • Paid interest on a bank loan, `100.
  • Provided services for cash, `2,800.
  • Took a bank loan, `6,000. (correct)
  • How much did the company earn from cash services in February?

  • 14,000
  • 9,000 (correct)
  • 2,100
  • 6,800
  • What was the total for trade receivables at the end of December after all transactions?

    <p>7,900</p> Signup and view all the answers

    What is the effect on equity from providing services on credit in December?

    <p>Increases equity</p> Signup and view all the answers

    What was the impact of issuing shares for cash in March?

    <p>Increase in cash and increase in equity</p> Signup and view all the answers

    Which transaction in February resulted in a decrease in assets?

    <p>Paid Naik's salary, `6,000.</p> Signup and view all the answers

    What was the effect of cancelling a billed service in December due to a customer complaint?

    <p>Decreases equity</p> Signup and view all the answers

    What was the effect on the balance sheet when Softomation paid `58,000 for equipment on March 3?

    <p>Cash decreased by <code>58,000 and equipment increased by </code>58,000.</p> Signup and view all the answers

    How did Softomation's sale on March 9 affect its equity?

    <p>Equity increased because revenue increases owner's claim.</p> Signup and view all the answers

    What was the net effect on assets after Softomation took supplies costing `1,000 for personal use?

    <p>Assets decreased by `1,000.</p> Signup and view all the answers

    Which statement is true regarding the transaction on March 6 for buying supplies on credit?

    <p>Both assets and liabilities increased by `6,000.</p> Signup and view all the answers

    After the payment to the supplier on March 12, what was the new balance of trade payables?

    <p>`4,000.</p> Signup and view all the answers

    What is the total cash balance as of March 12 after all transactions?

    <p>`22,000.</p> Signup and view all the answers

    How did Softomation's loan payable change by March 12?

    <p>It remained unchanged.</p> Signup and view all the answers

    What is the total amount of liabilities on March 9 after the sale?

    <p>`76,000.</p> Signup and view all the answers

    What effect does Suresh's withdrawal of `3,500 have on the business's balance sheet?

    <p>It decreases both assets and equity.</p> Signup and view all the answers

    What is the primary accounting principle applied when treating Suresh's cash withdrawal?

    <p>Reporting entity assumption.</p> Signup and view all the answers

    How does using supplies costing `1,400 impact the business's financial statements?

    <p>Decreases both assets and equity.</p> Signup and view all the answers

    What was the total cash Suresh had after the withdrawal on March 30?

    <p>`15,200</p> Signup and view all the answers

    Which transaction affects trade receivables by increasing their total?

    <p>Selling software on credit.</p> Signup and view all the answers

    What accounting effect is observed when Suresh uses supplies on March 31?

    <p>Equity decreases due to the expense recognized.</p> Signup and view all the answers

    Which of the following is true about the transaction of buying supplies on credit?

    <p>It increases both assets and liabilities.</p> Signup and view all the answers

    Which company published the largest annual report based on the number of pages listed?

    <p>Larsen &amp; Toubro Limited</p> Signup and view all the answers

    What was the total equity after the withdrawal on March 30?

    <p>`60,300</p> Signup and view all the answers

    What is a common issue with annual reports according to the information provided?

    <p>They focus heavily on jargon and visual distractions instead of performance analysis.</p> Signup and view all the answers

    What is suggested about the purpose of annual reports in recent years?

    <p>They are often crafted to impress rather than inform.</p> Signup and view all the answers

    Which number of pages does the HDFC Bank Limited annual report contain?

    <p>220</p> Signup and view all the answers

    In the discussion of financial statements, what advice is highlighted?

    <p>Trust but verify the presented information.</p> Signup and view all the answers

    Which foreign company's annual report is mentioned as being over 600 pages long?

    <p>Deutsche Bank</p> Signup and view all the answers

    What is a common characteristic of financial statements mentioned?

    <p>They often lack transparent analysis and may include misleading information.</p> Signup and view all the answers

    Which of these companies has the smallest reported number of pages in their annual report based on the data provided?

    <p>Hindustan Unilever Limited</p> Signup and view all the answers

    What was the total gross carrying value of property, plant, and equipment on January 31, 20XX?

    <p>12,000</p> Signup and view all the answers

    How much was the total accumulated depreciation as of January 31, 20XX?

    <p>0</p> Signup and view all the answers

    Which activity would increase assets while having no effect on liabilities or equity?

    <p>Providing services for cash</p> Signup and view all the answers

    What is the total amount of revenue from operations reported?

    <p>34,000</p> Signup and view all the answers

    What was the net effect on equity when Pai invested cash in the business?

    <p>Increase</p> Signup and view all the answers

    Which of the following results in an increase in both assets and liabilities?

    <p>Receiving a bank loan</p> Signup and view all the answers

    What is the value of the inventories reported in supplies?

    <p>9,000</p> Signup and view all the answers

    How much did the rent expense amount to during the month?

    <p>2,500</p> Signup and view all the answers

    Study Notes

    Company Financial Report Lengths

    • Larsen & Toubro Limited has the longest report with 412 pages.
    • Reliance Industries Limited follows closely with 404 pages.
    • Oil and Natural Gas Corporation Limited and Bharti Airtel Limited have reports of 396 and 360 pages, respectively.
    • Tata Steel Limited (300 pages), State Bank of India (290 pages), and Tata Motors Limited (288 pages) also feature extensive reports.
    • Smaller reports from Bharat Heavy Electricals Limited (276 pages), ICICI Bank Limited (252 pages), HDFC Bank Limited (220 pages), and Hindustan Unilever Limited (208 pages).

    Concerns Over Annual Reports

    • Foreign companies like Deutsche Bank produce much longer reports (over 600 pages).
    • Many reports are filled with jargon, photographs, and charts, often lacking meaningful analysis of performance.
    • Annual reports increasingly serve as public relations documents, leading to concerns over transparency and understanding for shareholders.
    • The phrase "Trust, but verify" is recommended when interpreting financial statements.

    Financial Balances and Transactions

    • Initial monthly balances include: Cash: ₹4,100, Trade Receivables: ₹3,400, Office Supplies: ₹1,100, Office Equipment: ₹10,000, Bank Loan Payable: ₹1,900, and Capital: ₹16,700.
    • Various transactions for December include providing services on credit, obtaining a bank loan, paying office rent, and utilizing office supplies.
    • Required tasks involve entering beginning balances, analyzing transaction effects, and calculating profits.

    Fête Company Activity Analysis

    • Naik invested ₹14,000 upon starting the company and conducted various transactions including purchases and service provision.
    • Transactions include buying equipment, billing for services, paying salaries, and managing supplies.
    • Analysis and preparation of balance sheets, profit and loss statements, and cash flow statements are needed for each month.

    Softomation's March Transactions

    • Detailed examination of transactions over the month reveals asset increases from cash sales and loan acceptances, contrasted with cash outflows for expenses and equipment purchases.
    • Transactions include computer purchases, service sales, and payments to suppliers.
    • Essential to analyze effects on assets, liabilities, and equity based on each transaction.

    Impact of Transactions on Financial Statements

    • Assessing effects: Cash withdrawn for personal use impacts equity; utilizing supplies is treated as an expense that reduces equity.
    • The 'reporting entity assumption' differentiates personal and business finances.
    • Each transaction's financial impact must be well-documented and reflected in the balance sheets.

    Example of Balance Sheet Preparation

    • Balance sheet example includes assets (like cash and receivables), liabilities (like trade payables), and equity components (like capital and retained earnings).
    • Balwant Travels' balance sheet indicates total assets, liabilities, and equity components as follows:
      • Total Assets: ₹75,200
      • Total Liabilities: ₹9,900
      • Total Equity: ₹65,300

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    Description

    Explore the lengths of financial reports from various companies, highlighting the longest reports and the concerns regarding transparency and meaningful analysis. This quiz addresses the trend of using annual reports as public relations tools and the potential implications for shareholders.

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