Financial Accounting June 2026 Solved Assignments

Description

NMIMS

Financial Accounting

APPLICABLE FOR SEM 2 (JUNE 2026 EXAMINATION)

Q1. A regional retail chain is planning to expand operations and is seeking a substantial loan from a leading bank. The bank’s credit analysis team has requested a detailed set of financial statements, including the balance sheet, income statement, and cash flow statement, to assess the company’s financial stability and liquidity. The retail chain’s finance manager is aware that several stakeholders including internal management, creditors, and investors will rely on these statements for their decisions. With the expansion hinging upon approval, the finance manager must ensure the statements present a transparent and accurate financial picture in line with generally accepted accounting principles (GAAP). How should the finance manager apply appropriate financial accounting principles and frameworks to prepare the required financial statements for the bank and other stakeholders? Describe which key principles and accounting conventions must be emphasized to ensure the statements are reliable for credit evaluation and decision-making. (10 Marks)

Ans 1.

Introduction

Preparing accurate and transparent financial accounts is essential as the regional retail chain looks for a large loan for development. These reports are used by stakeholders, including banks, investors, and internal management, to evaluate liquidity, profitability, and financial health. The balance sheet, income statement, and cash flow statement must be prepared by the finance manager in compliance with generally accepted accounting principles (GAAP) in order to guarantee credibility. The financial statements’ dependability, comparability, and decision-making utility will all be improved by using the proper accounting principles and conventions.

Utilizing Financial Accounting Frameworks and Principles

Q2 (A). TechGen Inc., a rapidly expanding technology firm, recently completed its first fiscal year using a traditional accounting cycle with a combination of manual and automated processes. The finance team encountered challenges in maintaining consistency as the company scaled, particularly with subsidiary books and ledger postings. Some entries were made only in electronic systems, while others used paper ledgers, leading to confusion during trial balance preparation and internal audits. Senior management is now considering consolidating all accounting records onto a single digital platform but fears issues with accuracy, compliance, and transition. Evaluate the pros and cons of consolidating TechGen Inc.’s manual and automated accounting systems into a centralized digital platform. Critically assess which approach would best maintain accuracy, compliance, and audit readiness, considering the potential risks of transition and the need for consistency in record-keeping. (5 Marks)

Ans 2(A).

Introduction

The quick growth of TechGen Inc. has revealed inefficiencies in its hybrid accounting system, which combines computerized and human procedures. Inconsistencies in trial balance preparation, ledger posts, and subsidiary books have resulted from this disjointed approach, which has eventually impacted audit preparedness. To guarantee accuracy, compliance, and consistency in financial reporting, management must weigh the benefits, drawbacks, and dangers of moving to a consolidated digital platform.

Concept and Application

Benefits of Creating a Centralized Digital Platform

Accuracy and efficiency are two major advantages of a unified digital accounting system. Automated posts lower the possibility of human mistakes like duplication, omission, or wrong categorization that are often connected with manual inputs. By ensuring that all financial records are updated concurrently, real-time data synchronization eliminates disparities between the main ledger and subsidiary books.

Q2 (B). The following partial balance sheet (presented in order of liquidity) relates to Adroit Engineers Ltd. as at 31st March 2024. Analyse and compute the company’s closing Owner’s Equity, given that a revaluation surplus must be created if the land’s market value exceeds the net book value, and all investments must be valued at cost or market value, whichever is lower. Assume inventory is correctly stated, no additional outside information is available, and all adjustments must strictly conform to the cost, realization, and conservatism concepts. (5 Marks)

Ans 2(B).

Introduction

Strict attention to accounting concepts like prudence and historical cost is necessary while preparing a balance sheet. Before calculating the closing Owner’s Equity in this instance of AdroitEngineers Ltd., adjustments must be made for inventory, investments, and land value. In order to ensure an accurate and fair picture of the financial situation, the valuation rules cost or market value, whichever is lower for investments and inventories, and acknowledgment of revaluation surplus for land are essential.

Step 1: Adjustment of Inventory
Inventory is valued at cost or market value, whichever is lower.

• Cost = ₹18 lakh
• Market Value = ₹16 lakh