CENTRE FOR CONTINUING EDUCATION E MBA (AVIATION MANAGEMENT) BATCH: SEMESTER: NAME: SAP NO/REGN NO: _______________________ _______________________

_______________________ _______________________ ASSIGNMENT 1 FOR AVIATION INDUSTRY ACCOUNTING MBAF 911 UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Section A Short Answer Questions (4*5)

Q 1: Mohan purchased a plant on 1.1 1995 for a sum of Rs. 2,00,000 having a useful life of 5 years. It is estimated that the plant will have a scrap value of Rs. 32,000 at the end of useful life. Mohan decides to charge depreciation according to the depreciation fund method. The Deprecation fund investments are expected to earn Interest @ 5% p.a. It is give that Rs. 0.170965 if invested yearly would yield Rs. 1. The investments are sold as the end of 5th Year for a sum of Rs. 1,30,000. The scrap of the old plant realizes Rs. 34,000. You are required to prepare the necessary accounts in the books of Mohan. Q 2: Purchase of a certain product during May 2013 are set out below: May 1 May 15 May 18 May 22 May 30 250 Units @ Rs. 25 400 Units @ Rs. 32 500 Units @ Rs. 50 1000 Units @ Rs. 40 60 Units @ Rs. 41

Units sold during the month were as follows: May 8 May 16 May 26 72 Units 64 Units 160 Units

No opening inventories You are required to determine the cost of goods sold for May under different valuation methods i.e FIFO, LIFO Q3: Briefly Outline the AS 3 (Cash Flow Statement) Q4: Briefly discuss Accrual Concept and Convention of Materiality with suitable examples in maintaining Books of Accounts.

Section B Descriptive Type Questions

(3*10)

Q1: Describe various methods of preparing cash flow statement? Which method would you adopt and why?

Q2: From the following information as contained in the Income Statement and the balance sheet of Ashok Ltd.,
Prepare a Cash Flow Statement.

Income Statement for the year ended 31/03/2003 Rs. Net Sales Less : Cost of Sales Depreciation Salaries & Wages Operating Expenses Provision for Taxation Net Operating Profit Non Recurring Income Profit on sale of Equipment Profit for the Year Retained Earnings(balance of P& L brought forward) 12,000 84,000 1,51,800 2,35,800 Dividend declared and paid during the year Profit and Loss Account Balance as on 31/03/2003 72,000 1,63,800 19,80,000 60,000 2,40,000 80,000 88,000 24,48,000 72,000 25,20,000 Rs.

Comparative Balance Sheets Rs. As on 31-03-2002 Fixed Assets: Land Building and Equipment Current Assets: Cash Debtors Stock Advances Total Capital Surplus in P & L a/c Sundry creditors Outstanding Expenses Income Tax Payable Accumulated Dep. on Building and equipment Total Cost of Equipment sold was Rs. 72,000 48,000 3,60,000 60000 1,68,000 2,64,000 7,800 9,07,800 3,60,000 1,51,800 2,40,000 24,000 12,000 1,20,000 9,07,800 Rs. As on 31-03-2003 96,000 5,76,000 72,000 1,86,000 96,000 9000 10,35,000 4,44,000 1,63,800 2,34,000 48,000 13,200 1,32,000 10,35,000

Q 3: Activity Ratios are most important of all the ratios, more important than profitability ratios. Do you agree with this statement? If yes, why and of not, why not?

Section C Analytical/Case Study

(2*25)

Q 1: With the help of the following ratios regarding , Anand Packers Limited, prepare the Trading account, Profit and loss account and a balance sheet for 2010 Gross Profit Ratio Net Profit/Sales Stock Turnover Ratio Net Profit/Capital Capital to Total Liabilities Fixed Assets/Capital Fixed Assets/Total Current Assets Fixed Assets Closing Stock 25% 20% 10 times 1/5 1/2 5/4 5/7 Rs. 10,00,000 Rs. 1,00,000

Q 2: Spice Jet Ltd. was registered with a nominal capital of Rs. 10,00,000 divided in to shares of Rs. 10 each, of which 40,000 shares had been issued and fully called. Dr. Stock (1st April, 1988) Manufacturing Wages Manufacturing Expenses Purchase Machinery Repairs Carriage Inwards Carriage outwards Advance Payment of Income tax Interest on Loan Debtors Bank current account Cash in hand Leasehold Factory Plant and machinery Loose Tools Calls in arrear Rates and Electricity (factory 14,210 Office 3400) Directors Fees and Remuneration Office salaries and expenses Auditor Fees Office Furniture Rs. In Crore 1,86,420 1,09,740 19,240 7,18,210 8,610 4,910 9,260 14,290 4,500 1,64,400 1,06,860 1,920 1,64,210 1,28,400 12,500 1,000 17,610 12,000 13,000 1,250 5,000 Sales Bank Loan @18% Creditors Profit and Loss Account 1st April 1988 Share capital Purchase Return Transfer Fees Rs .in Crore 11,69,900 50,000 92,220 8,640 4,00,000 9,810 90

Commission Sales Return Preliminary expenses

8,640 12,640 6,000

In addition the following information is also given (i) Write off Preliminary expenses (ii) Depreciation is to provided on Plant and machinery @15%, Furniture @10% (iii) Manufacturing wages Rs. 1890 and office salaries 1200 had accrued due (iv) Provide for Interest on loan for 6 months (v) The stock was valued at Rs. 1,24,840 and Loose Tools at Rs. 10,000 (vi) Provide Rs. 8,500 on Debtors for Provision for Doubtful Debts (vii) Provide further Rs. 3120 for discount on debtors (viii) Tax Provision @ 50% (ix) The Director recommended dividend at 15% for the year ending 31st mach 1989 after transferring 5 % of the net profits to Reserve You are required to prepare Trading and Profit and Loss Account and Profit and Loss Appropriation for the year ending March 31, 1989 and Balance Sheet as on that date.