DISTANCE EDUCATION
M.B.A. DEGREE EXAMINATION, MAY 2017.
Second Semester
FINANCIAL AND MANAGEMENT ACCOUNTING
(Upto 2012-2013 Academic Year and 2013 Calendar year)
Time Three hours Maximum 100 marks
SECTION A — 8 40 marks)
Answer any FIVE of the following.
1. Explain the need of accounting and its functions in
modern business.
2. Explain various accounting conventions.
3. Journalise the following transactions in the books of
Ramesh
Sold goods for cash 15,000
Purchased goods for cash 10,000
Sold goods to Mr. A 25,000
Purchased goods from Mr. B 30,000
Paid Salary 5,000
Paid Rent to Kumar the land lord 4,000
Sub. Code
21
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4. From the following, calculate the amount of sales during
the year by preparing Memorandum Trading A/c.
Stock on 1.1.2010 21,000 Wages 3,500
Stock on 31.12.2010 14,000 Rate of Gross Profit
Purchases during 2010 1,40,000 on sales 20%
5. Explain the limitations of financial statements.
6. Explain the special features of common-size statements.
7. Raj Ltd. gives the following Balance sheet. You are
required to compute the following ratios.
Liquid ratio
Debt-Equity ratio
Solvency ratio
Stock-working capital ratio
Balance sheet as on 31st December.
Liabilities Assets
Equity share capital 15,00,000 Fixed assets 14,00,000
Reserves and surplus 1,00,000 Stock 5,00,000
Debentures 3,00,000 Debtors 2,00,000
Overdraft 1,00,000 Cash 1,00,000
Creditors 2,00,000
22,00,000 22,00,000
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8. The following are the particulars relating to a project.
Cost of cthe project 50,000
Operating savings
1st year 5,000
2nd year 20,000
3rd year 30,000
4th year 30,000
5th year 10,000
Calculate pay-back period ignoring interest factor
and
discount pay-back period taking into account
interest factor at 10%
SECTION B — × 15 60 marks)
Answer any FOUR of the following.
9. From the following balances, prepare Trading and Profit
and loss account for the year ended 31st December 2001,
and a balance sheet as on that date.
Particulars Amount
Capital 30,000
Cash at bank 3,418
Purchases 35,640
Creditors 3,920
Rent, rates, taxes 700
Bills payable 2,690
Furniture 500
(including purchases of 200 on 30th june)
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Particulars Amount
Bills Receivable 3,560
Trade charges 460
Debtors 17,078
Sales 29,360
Returns outwards 1,756
Drawings 2,600
Rent owing 160
Interest and discount 270
Salaries 1,200
Return Inwards 2,460
Adjustments
Stock at the end was valued at 12,800 (market
value 13,100)
300 paid by Madhan against our acceptances were
debited by mistake to Balu's account and from there
its was included in the list of sundry debtors.
Travelling expenses paid to our sales representative
250 for the month of December were debited to his
personal account.
Depreciate furniture at 10% p.a.
Provide for doubtful debts to the extend of on
debtors.
Goods costing 500 were used by the proprietor.
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10. The following information is given about M/s. S.P. Ltd.
for the year ending Dec. 31. 2009.
Stock turnover ratio 6 times
Gross profit ratio 20% on sales
Sales for 2009 3,00,000
Closing stock is 10,000 more than the
opening stock
Opening creditors 20,000
Closing creditors 30,000
Trade debtors at the end 60,000
Net working capital 50,000
Find out
Average stock
Purchases
Creditors turnover ratio
Average Payment Period
Average collection period
Working capital turnover ratio.
11. State the different types of financial analysis and discuss
the limitations of analysis and interpretation of financial
statements.
12. The following are the summaries of the Balance Sheets of
Parveen Ltd. as at 31st December 2005 and 2006.
Liabilities 2005 2006 Assets 2005 2006
Share capital 2,00,000 2,50,000 Land and building 2,00,000 1,90,000
General reserve 50,000 60,000 Plant 1,50,000 1,74,000
Profit and loss a/c 30,500 30,600 Stock 1,00,000 74,000
Bank Loan (short term) 70,000 Debtors 80,000 64,200
Creditors 1,50,000 1,35,200 Cash 500 600
Provision for Taxation 30,000 35,000 Bank 8,000
5,30,500 5,10,800 5,30,500 5,10,800
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Additional Information
Depreciation was written off on plant 14,000 in
2006.
Dividend of 20,000 was paid during 2006.
Income Tax provision made during the year was
25,000
A piece of land has been sold during the year at
cost.
You are required to prepare a statement showing
sources and application of funds for the year 2006
and a schedule of changes in working capital.
13. What do you mean by cash flow statement? Explain the
procedure of preparing a cash flow statement.
14. With the following data for a 60% activity, prepare a
budget for production at 80% and 100% capacity.
Production at 60% activity 600 units
Materials 100 per unit
Labour 40 per unit
Direct Expenses 10 per unit
Factory overheads= 40,000 fixed)
Administration Expense 30,000 fixed)
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15. From the following information calculate the net present
value of the two projects and suggest which of the two
projects should be accepted assuming a discount rate of
10%
Particulars Project X Project Y
Initial Investment 20,000 30,000
Estimated Life 5 years 5 years
Scrap value 1,000 2,000
The profits before depreciation and after taxes (cash
flows) are as follows.
Year 1 Year 2 Year 3 Year 4 Year 5
Project X 5,000 10,000 10,000 3,000 2,000
Project Y 20,000 10,000 5,000 3,000 2,000