DISTANCE EDUCATION
M.B.A. DEGREE EXAMINATION, DECEMBER 2017.
Second Semester
FINANCIAL AND MANAGEMENT ACCOUNTING
(Upto 2012-13 Academic year and 2013 calendar year)
Time Three hours Maximum 100 marks
SECTION A — × 8 40 marks)
Answer any FIVE questions.
All questions carry equal marks.
1. Explain the characteristics of management accounting.
2. Write short notes on: Subsidiary books, and Trend
Analysis.
3. Distinguish between 'income statement' and 'cash flow
statement'.
4. What do you mean by 'Financial Statements'? What are
its objectives? State the limitations of financial
statements.
5. Following are the ratios relating to the trading activities
of Neela Traders Ltd.
Receivables turnover 90 days (360 days a year)
Inventory turnover 3 times
Payables turnover 3 months
Gross profit ratio 25%
Sub. Code
21
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Gross profit for the year amounted to Rs. 18,000. Closing
inventory of the year is Rs. 2,000 above the opening
inventory. Bills receivable amount to Rs. 2,500 and Bills
payable Rs. 1,000. Ascertain the following Sales,
Debtors, Closing inventory, Sundry Creditors.
6. The following are the balance sheets of X Ltd. as on 31st
March 2000. Prepare a common size balance sheet.
Balance sheets on 31st March 2000.
Liabilities X Ltd.
Rs.
Assets X Ltd.
Rs.
Share capital 30,00,000 Fixed assets 60,00,000
Reserves 10,00,000 Stock 20,00,000
10% Debentures 40,00,000 Debtors 50,00,000
Term loan 60,00,000 Bills
Creditors 20,00,000 Receivable 10,00,000
Cash at bank 20,00,000
1,60,00,000 1,60,00,000
7. Sel Tex Ltd. earned a profit of Rs. 2,10,000 after charging
or crediting the following items to its P LA/c during
31-3-2000. Calculate fund from operating activity.
Rs.
Profit on sale of investments 4,000
Loss on sale of buildings 9,000
Depreciation on fixed assets 7,000
Goodwill written off 2,000
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The following additional details are available
1-4-99 31-3-2000
Bills payable 5,000 8,000
Creditors 12,000 16,000
Outstanding expenses 2,000 1,000
Bills Receivable 20,000 18,000
Debtor 40,000 60,000
Prepaid expenses 2,000 3,000
8. Determine which of the following two projects should be
selected
A B
Investment Rs. 40,000 Rs. 60,000
Life 4 yrs 7 yrs
Annual net cash inflows Rs. 15,000 Rs. 16,000
Scrap value Rs. 5,000 Rs. 3,000
Cost of capital is 15%. Ignore taxation.
The present value of annuity for 4 years and 7 years at
15% are 2.8550 and 4.1604 and the discounting factors at
4 years and 7 years are 0.5718 and 0.3759.
SECTION B — × 15 60 marks)
Answer any FOUR questions.
All questions carry equal marks.
9. Briefly describe the different types of financial statement
analysis.
10. Explain the various methods used for evaluating
investment proposals.
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11. What do you understand by 'budget' and 'budgetary'
control? How is budgetary control a tool in the hands of
management?
12. From the following balance sheet, calculate
Liquid Ratio,
Proprietary Ratio,
Debt-Equity Ratio,
Current ratio.
Balance Sheet
Liabilities Rs. Assets Rs.
5000 Equity shares of Rs. 50 each 2,50,000 Buildings 3,00,000
1000 Preference shares of Rs. 100 each 1,00,000 Machinery 2,50,000
2000 Debentures of Rs. 100 each 2,00,000 Stock 1,20,000
Reserve 1,50,000 Debtors 1,00,000
Creditors 75,000 Cash 27,500
Bank of overdraft 25,000 Prepaid expenses 2,500
8,00,000 8,00,000
13. The following balances are drawn from the books of
M/s. Arvind Mills as on 31.12.2008.
Rs. Rs.
Land 1,00,000 Sales 3,00,000
Buildings 2,00,000 Purchases returns 5,000
Sales returns 10,000 Bank overdraft 15,000
Creditors 20,000 Debtors 50,000
Wages 12,000 Purchases 1,75,000
General expenses 5,000 Opening Stock 25,000
Bad debts 1,000 Cash 5,000
Capital 2,81,000 Salaries 10,000
Goodwill 15,000 Selling expenses 12,000
Insurance 1,000
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Closing stock is Rs. 30,000,
Provide for depreciation at 10% on Buildings,
Salaries outstanding Rs. 3,000. Prepare final
accounts of Ms. Arvind Mills.
14. The following are the Balance sheets of a company as on
31.12.2003 2004.
Balance Sheet
Liabilities 2003
Rs.
2004
Rs.
Assets 2003
Rs.
2004
Rs.
Equity share Fixed assets 1,80,000 1,50,000
capital 2,40,000 3,00,000 Sundry debtors 1,20,000 1,44,000
Profit and loss Stock 60,000 70,000
account 18,000 19,200 Investments 1,20,000 1,40,000
15% debentures 75,000 66,000 Preliminary
Current liability expenses 3,800 3,000
Provision for Good will 40,000 30,000
taxation 68,000 65,200 Bank 47,200 52,000
Proposed
dividend 36,000 34,800
Bills payable 52,000 41,000
Creditors 82,000 62,800
5,71,000 5,89,000 5,71,000 5,89,000
Additional information
Interim dividend of Rs. 20,000 was paid during the
year.
A part of the fixed asset was sold for Rs,8,000
during the year 2004. It had cost Rs. 21,000 and
depreciation of Rs. 16,000 was provided.
Prepare Fund Flow Statement.
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15. X Ltd. is contemplating adding a new product line. The
new product line would be marketable for only five years,
after that time it would have to be discontinued. The
costs and revenues that would be associated with the line
are
Rs.
Cost of equipment required 80,000
Working Capital needed 70,000
Salvage value of equipment in 5 years 10,000
Annual sales revenues 75,000
Annual out of pocket costs for salaries,
advertising 45,000
Overhaul cost for the equipment
required in the 4th year 5,000
The company's cost of capital is 12%. Would you
recommend that the new line be introduced? Ignore
income tax. The present value of Re. 1 for 5 years at 12%
discount factor is 0.893,0.797,0.712,0.636 and 0.567.
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