DISTANCE EDUCATION
M.C.A./M.C.A. (Lateral) DEGREE EXAMINATION,
DECEMBER 2017.
Fourth Semester
ACCOUNTING AND FINANCIAL MANAGEMENT
(2010 Academic Year Onwards)
Time Three hours Maximum 100 marks
PART A — X 8 40 marks)
Answer any FIVE questions.
1. Prepare journal from the following transactions in the
books of Sankar Co. for the month of May 2013.
May 2013 Rs.
May 1 Started business with a capital of 2,00,000
May 2 Paid into bank 60,000
May 4 Goods purchased 3,00,000
May 6 Purchased goods from Anand on credit 20,000
May 7 Paid to Anand 19,600
May 7 Discount allowed by him 400
May 10 Goods sold 4,00,000
May 13 Cash sales 50,000
May 20 Sold to Naveen 25,000
May 22 Purchased goods from Raju on credit 75,000
May 23 Received from Naveen 24,500
May 23 Allowed him discount 500
Sub. Code
401
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May 2013 Rs.
May 24 Withdrew from bank for office use 10,000
May 25 Withdraw from bank for personal use 5,000
May 26 Paid to Raju by cheque 30,000
May 28 Rent paid 10,000
May 29 Interest received from bank 8,000
May 31 Paid salaries 50,000
2. Explain the principles of accounting.
3. The total sales (all credit) of a firm are Rs. 6,40,000. It
has a gross profit margin of 15 per cent and a current
ratio of 2.5. The firm's current liabilities are Rs. 96,000;
inventories Rs. 48,000 and cash Rs. 16,000. Determine
the average inventory to be carried by the firm, if an
inventory turnover of 5 times is expected; Determine
the average collection period if the opening balance of
debtors is intended to be of Rs. 80,000. Assume a 360-day
year.
4. From the following details prepare a statement showing
changes in working capital during year 2011 and 2012.
Liabilities 2011 2012 Assets 2011 2012
Rs. Rs. Rs. Rs.
Share capital 5,00,000 6,00,000 Fixed
Reserves 1,50,000 1,80,000 assets 10,00,000 11,20,000
Profit and Less
Loss A/c 40,000 65,000 Depreciation 3,70,000 4,60,000
Debentures 3,00,000 2,50,000 6,30,000 6,60,000
Creditors for Stock 2,40,000 3,70,000
goods 1,70,000 1,60,000 Book debts 2,50,000 2,30,000
Provision Cash in hand 80,000 60,000
for tax 60,000 80,000 Preliminary
expenses 20,000 15,000
Total 12,20,000 13,35,000 Total 12,20,000 13,35,000
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5. What do you mean by costing? What are its elements?
6. The following information is available from the annual
budget of a company manufacturing only one item.
Budgeted output and sales 5000 units
Budgeted selling price per unit Rs. 40
Budgeted cost per unit
Material Rs. 15
Direct labour Rs. 5
Variable overhead Rs. 10
Fixed cost per unit Rs. 5 Rs. 35
Budgeted profit per unit Rs. 5
Calculate the break-even point both in terms of the
number of units and sales value.
7. Draw up a material purchase budget from the following
information:
Estimated sales of a product are 30,000 units. Two kinds
of raw materials A and B are required for manufacturing
the product. Each unit of the product requires 3 units of
A and 4 units of B. The estimated opening balance in the
beginning of the next year finished goods 5,000 units;
6,000 units: 10,000 units. The desirable closing
balance at the end of the next year finished product,
8,000 units; 10,000 units, 12,000 units.
8. Define working capital. Explain its various types.
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PART B — 15 60 marks)
Answer any FOUR questions.
9. The following trial balance is extracted from the books of
a merchant on 31st March 2013.
Particulars Debit

Credit

Furniture and fittings 640
Motor vehicles 6,250
Buildings 7,500
Capital 12,500
Bad debts 125
Provision for bad debts 200
Sundry debtors and creditors 3,800 2,500
Stock on April 2012 3,460
Purchases and sales 5,475 15,450
Bank overdraft 2,850
Sales and purchase returns 200 125
Advertising 450
Interest 118
Commission 375
Cash 650
Taxes and insurance 1,250
General expenses 782
Salaries 3,300
Total 34,000 34,000
The following adjustments are to be made: Stock in hand
on 31st March 2013 was Rs. 3,250; depreciate buildings
furniture and fittings 10% and motor vehicles
Rs. 85 is due for interest on bank overdraft;
salaries Rs. 300 and taxes Rs. 120 are outstanding;
insurance amounting to Rs. 100 is prepaid; one-third of
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the commission received is in respect of work to be done
next year; write off a further Rs. 100 as bad debts and
provision for bad debts is to be made at on sundry
debtors; and purchases included purchase of furniture
Rs. 200, on January 1989. Prepare a trading and profit
and loss account for the year ending 31st March 2013 and
a balance sheet as on that date.
10. Given below is the summarized balance sheet and profit
and loss account of Bell Limited as on 31.12.2009. You
are required to calculate: current ratio, quick ratio, fixed
assets ratio, debt equity ratio, proprietary ratio, stock
turnover ratio, fixed assets turnover ratio, return on
capital employed, debtors turnover ratio, debt collection
period, creditors turnover ratio, debt payment period, net
profit ratio, and operating ratio.
Profit and Loss Account
Particulars Rs. Particulars Rs.
To Opening stock 9,95,000 By Sales 85,00,000
To Purchase 54,52,500 By Closing stock 14,90,000
To Direct
expenses 1,42,500
To Gross profit 34,00,000
Total 99,90,000 Total 99,90,000
To Administration By Gross profit 34,00,000
expenses 15,00,000 By Non operating
To Selling and income 90,000
distribution
expenses 3,00,000
To Financial
expenses 1,50,000
To Other
non-operating
expenses 40,000
To Net profit 15,00,000
Total 34,90,000 Total 34,90,000
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Balance Sheet as on 31.12.2009
Liabilities Rs. Assets Rs.
Issued capital Land and
20,000 shares of Building 15,00,000
Rs. 100 each 20,00,000 Plant and
Reserves 9,00,000 Machinery 8,00,000
Creditors 13,00,000 Stock 14,80,000
Profit and Loss Debtors 7,10,000
account 3,00,000 Cash at bank 3,10,000
debentures 3,00,000
Total 48,00,000 Total 48,00,000
11. What do you mean by budgetary control? Explain the
steps involved in budgetary control in detail.
12. From the following data given below, calculate the
material price variance, the material usage variance and
material mix variance. Consumption per 100 units of
product.
Material Standard Actual
A 40 units Rs. 50 each 50 units Rs. 50 each
B 60 units Rs. 40 each 60 units Rs. 45 each
13. The fixed cost per month in a factory is Rs. 50,000. The
contribution per unit is Rs. 50 for product A and Rs. 25
for B. Which of the following product mixes is most
yielding?
800 A and 100 B
1500 A only;
3000 B only;
1200 A and 400 B.
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14. Prepare a flexible budget for overheads on the basis of
the following data. Ascertain the overhead rates at
60% and 70% capacity.
At 50% capacity
Variable overheads
Indirect material 3,000
Indirect labour 9,000
Semi-variable overheads
Electricity fixed 60% variable) 15,000
Repairs fixed 20% variable) 1,500
Fixed overheads
Depreciation 8,250
Insurance 2,250
Salaries 7,500
Total overheads 46,500
Estimated direct labour hours 93,000
15. Give a detailed note on the various methods of appraising
capital expenditure.
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