Answer key — Mock 1 (Accounting & statements)¶
Part A (1 mark each)¶
| Q | Answer | Why |
|---|---|---|
| A1 | c | Ind AS 115: revenue on transfer of control (02.2) |
| A2 | a | Contract → obligations → price → allocate → recognise |
| A3 | c | Cash received before performance is a contract liability |
| A4 | b | Dividends are distributions of profit, shown in equity and financing cash flow |
| A5 | b | Assets under construction; depreciation starts when ready for use |
| A6 | b | 100 − 4 × 10 |
| A7 | b | Closing inventory reduces COGS; overstating it understates COGS and overstates profit |
| A8 | a | Faster tax depreciation defers tax: a temporary difference that reverses later |
| A9 | b | Right-of-use depreciation plus interest (02.7) |
| A10 | b | Rent leaves EBITDA; depreciation and interest sit below it |
| A11 | b | Ind AS 36/103: annual impairment test, no amortisation |
| A12 | b | Probable + reliably estimable → provision (Ind AS 37) |
| A13 | b | Profit, adjusted for non-cash items and working capital |
| A14 | b | Sales not yet collected are deducted |
| A15 | c | Ind AS 7 allows either for non-financial entities, applied consistently |
| A16 | b | Purchase of PP&E |
| A17 | b | Profit tied up in receivables and inventory |
| A18 | c | Significant influence (20–50%) → equity method |
| A19 | b | The outside shareholders' share of subsidiaries |
| A20 | b | Anti-dilutive instruments (which would raise EPS) are excluded |
| A21 | b | 45 days (LODR Reg 33) |
| A22 | b | 60 days for Q4/annual audited results |
| A23 | b | EoM draws attention; opinion not modified (03.2) |
| A24 | b | KAMs describe the most significant matters and the audit response |
| A25 | b | AOC-2: particulars of related-party contracts |
| A26 | b | CARO clause (ii)(b) on quarterly returns to banks |
| A27 | b | OCI: actuarial remeasurements, some fair-value and translation changes |
| A28 | b | Capitalising moves the cost to the balance sheet (and the cash outflow to investing) |
| A29 | c | Long-term borrowings are financing, not working capital |
| A30 | b | MD&A |
Part B (6 marks each)¶
B1. Accrual revenue = 520 + 30 (uncollected credit sales) − 15 (advance, unearned) = ₹535 Cr (2 marks). Accrual expenses = 410 − 12 (prepaid rent) + 8 (unpaid salaries) + 25 (depreciation) = ₹431 Cr (2). PBT = ₹104 Cr vs a cash surplus of ₹110 Cr (1). The difference: revenue earned but not collected, cash received but not earned, expenses paid in advance or not yet paid, and depreciation (non-cash) (1).
B2. (a) Straight-line: (200 − 20) ÷ 5 = ₹36 Cr a year; book value after three years = 200 − 108 = ₹92 Cr (2). (b) Tax WDV at 40%: year 1 ₹80 Cr, year 2 ₹48 Cr, year 3 ₹28.8 Cr (2). (c) End of year 1: tax base 120 vs book 164 → temporary difference 44 × 25% = ₹11 Cr DTL. End of year 2: tax base 72 vs book 128 → 56 × 25% = ₹14 Cr DTL (2).
B3. (a) PV of ₹100 Cr for five years at 10% = ₹379.08 Cr; ROU asset the same (1.5). (b) Depreciation 379.08 ÷ 5 = ₹75.82 Cr; interest 10% × 379.08 = ₹37.91 Cr; total ₹113.72 Cr (1.5). (c) EBITDA +₹100 Cr (rent removed); EBIT +₹24.18 Cr (100 − 75.82); PBT −₹13.72 Cr (113.72 vs 100) — front-loaded cost in early years (2). (d) Closing liability = 379.08 + 37.91 − 100 = ₹316.99 Cr (1).
B4. (a) Receivable days 346.7 ÷ 1,318 × 365 = 96; inventory days 188.1 ÷ 858 × 365 = 80; payable days 143.4 ÷ 858 × 365 = 61; cash conversion cycle 96 + 80 − 61 = 115 days (4). (b) Receivables at 70 days = 1,318 × 70 ÷ 365 = ₹252.8 Cr → ₹93.9 Cr released, more than Kaveri's entire FY26 CFO of ₹65.1 Cr (2). See Kaveri running example.
B5. Basic EPS = 120 ÷ 10 = ₹12.00 (1). Options (treasury-stock method): 1 − 1 × 150 ÷ 300 = 0.5 Cr incremental shares, no earnings adjustment → EPS 120 ÷ 10.5 = ₹11.43 (dilutive) (2). Convertible: interest saved after tax = 200 × 8% × 0.75 = ₹12 Cr for 0.8 Cr shares → incremental EPS ₹15.00, above ₹11.43 → anti-dilutive; exclude (2). Diluted EPS = ₹11.43 (1). (Including the bond would give ₹11.68 — the classic error.)
Part C (20 marks)¶
(a) Statement of profit and loss, FY26 (₹ Cr) — 6 marks
| Item | ₹ Cr |
|---|---|
| Revenue | 600.0 |
| Cost of materials (50 + 380 − 60) | (370.0) |
| Employee costs | (70.0) |
| Other expenses | (50.0) |
| EBITDA | 110.0 |
| Depreciation | (25.0) |
| EBIT | 85.0 |
| Finance costs (8% × 80 + 10% × 30) | (9.4) |
| Profit before tax | 75.6 |
| Tax at 25% | (18.9) |
| Profit after tax | 56.7 |
(b) Balance sheet at 31 March 2026 (₹ Cr) — 7 marks
| Assets | ₹ Cr | Equity and liabilities | ₹ Cr |
|---|---|---|---|
| PP&E (200 + 45 − 25) | 220.0 | Share capital | 50.0 |
| Inventory | 60.0 | Reserves (130 + 56.7 − 15) | 171.7 |
| Trade receivables (60 + 600 − 580) | 80.0 | Long-term debt (80 − 20) | 60.0 |
| Cash | 9.7 | Short-term borrowings | 30.0 |
| Trade payables (40 + 380 − 370) | 50.0 | ||
| Other current liabilities (accrued expenses) | 5.0 | ||
| Tax payable | 3.0 | ||
| Total | 369.7 | Total | 369.7 |
(c) Cash-flow statement, FY26 (indirect method, ₹ Cr) — 7 marks
| Item | ₹ Cr |
|---|---|
| Profit before tax | 75.6 |
| Add: depreciation | 25.0 |
| Add: finance costs (shown in financing) | 9.4 |
| Operating profit before working-capital changes | 110.0 |
| Increase in trade receivables | (20.0) |
| Increase in inventory | (10.0) |
| Increase in trade payables | 10.0 |
| Increase in accrued expenses | 5.0 |
| Tax paid (18.9 − 3.0) | (15.9) |
| Cash from operations | 79.1 |
| Capital expenditure | (45.0) |
| Cash from investing | (45.0) |
| Interest paid | (9.4) |
| Repayment of long-term debt | (20.0) |
| Dividends paid | (15.0) |
| Cash from financing | (44.4) |
| Net change in cash | (10.3) |
| Opening cash → closing cash | 20.0 → 9.7 |
Marking notes: award method marks for correct treatment even if an earlier arithmetic error carries through; the balance sheet must balance and the cash-flow statement must reconcile to the change in cash for full marks.
Scoring: 70%+ (56/80): move on. 55–69%: redo the Module 02 lessons behind your misses. Below 55%: work through Module 02 again before continuing (02.6 Linking the three statements).