FIRST SEMESTER- ASSIGNMENT

SUBJECT CODE: MB 0025

(3 CREDITS)
SET-I
MARKS: 60

FINANCIAL AND MANAGEMENT ACCOUNTING

Answer all questions and each question carries TEN marks.

1. Explain the following accounting terms:

a) Going Concern concept
b) Periodicity Concept
c) Principle of income recognition
d) Money measurement concept
e) Principle of full disclosure

2. State the differences between Financial Accounting and Management Accounting

3. What do you mean by financial statement analysis? What are its purposes?

4. Show the accounting equation on the basis of the following transactions:

a) Business was started with capital of Rs.2,50,000 and goods in stock
Rs.35,000 on 1-1-2003
b) Equipment was taken on hire and rent was paid Rs.15,000 on 5-1-2003
c) Agreed to render consultancy services for a monthly fee of Rs.10,000 on
10- 01-2003
d) Land was purchased by borrowing from bank Rs.50,000 on 20-01-2003
e) Stationery and other miscellaneous expenses paid during the month Rs. 3,000
on 25-01-2003
f) Credit sales made during the month Rs.30,000 and cash sales Rs.25,000 (cost of
goods sold Rs. 25,000) on 26-01-2003
g) Purchases made on credit from Madhusudan Rs.70,000 on 28-01-2003
h) Paid to Madhusudan Rs.50,000 on 31-01-2003

5. Pass Journal entries for the following transactions:

i) Provide depreciation on Furniture Rs.5000 and on Machinery Rs.4,000
ii) Received cash Rs.1,200 for bad debts written off last year
iii) Ajit was declared insolvent . He owed to us Rs. 2,000 and this amount was
written off as bad debt.
iv) Rs. 20,000 for wages and Rs. 4,000 for salaries were outstanding.
v) Purchased furniture for Rs.16,000 for the proprietor and paid the amount.
6. The working capital of Goodluck Company has deteriorated in recent years and now
stands as under
Current Assets Rs Current liabilities Rs
Inventory 5,60,000 Creditors 4,90,000
Debtors 3,50,000 Bank Loan 2,10,000
Cash 70,000
Total 9,80,000 Total 7,00,000

a) Compute the current and quick ratios

b) A further loan from the bank Rs.50,000 was raised. c) An obsolete stock worth
Rs.1,25,000 are sold for Rs.80,000.
d) Of the cash collected, the Company paid Rs.1,25,000 towards bank loan.
Compute current and quick ratios after incorporating the above transactions.
 FIRST SEMESTER- ASSIGNMENT
SUBJECT CODE: MB 0025
(3 CREDITS)
SET-II
MARKS: 60
FINANCIAL AND MANAGEMENT ACCOUNTING
Answer all questions and each question carries TEN marks
1
a) ‘A cash flow statement can be more useful than a funds flow statement’- Discuss (5 Marks)
b) Indicate which of the following transactions would result in a i) Source ii) Use
iii) Neither Source nor Use: (5 Marks)
A) Amount transferred to Provision for Taxation
B) Collection form Debtors
C) Conversion of debentures into preference Shares
D) Goods sold on credit
E) Income tax refund
F) Issue of Debentures
G) Issue of shares in exchange of fixed assets
H) Long Term Loan from Bank
I) Provision created for depreciation
J) Redemption of Debentures

2. State the nature and importance of final accounts and balance sheet.

3. What is the purpose of Cost Accounting? Classify each of the following costs using
the following classes: a) Direct Material b) Direct labor c) Manufacturing
Overheads d) Non-manufacturing expenses

i) Salary payable to the President of the Company

ii) Oil for the milling machine
iii) Salary of the milling machine operator
iv) Salary of the supervisor of assembly department for product A,B and C
v) Depreciation on factory building
vi) Income tax expenses
vii) Depreciation on warehouse of direct materials
viii) Depreciation on the truck used for delivery of finished goods sold
ix) Rent on the finished goods warehouse
x) Insurance on the office and administrative building
xi) Cost of batteries installed in Product C
xii) Contribution to Relief Fund

4. From the following information relating to M/S Good Faith Co., prepare a fund flow
statement for year ending 31-3-2005.

M/S GOOD FAITH COMPANY

BALANCE SHEET AS AT 31-03-2005 (in Rs)
Asset 2004 2005 Liabilities 2004 2005
Fixed Assets 4,50,000 6,00,000 Equity Share Cap 2,00,000 3,00,000
Investments in
Govt. securities 1,00,000 1,50,000 Pref. Sh. Capital 2,00,000 1,00,000
Debtors 1,10,000 1,15,000 Debentures 1,00,000 1,50,000
Bank balance 50,000 1,35,000 Reserves 1,50,000 4,05,000
Closing Stock 3,30,000 3,80,000 RBD 10,000 15,000
Cash in hand 10,000 20,000 Sundry Creditors 2,00,000 2,15,000
Preliminary Bills Payable 1,50,000 1,50,000
expenses 10,000 5,000 Short term loans 50,000 70,000

Total 10,60,000 14,05,000 Total 10,60,000 14,05,000

Additional information.
a) Preference shares were redeemed at 10% premium in the beginning of 2004.
b) Dividend paid during the year on equity shares and preference shares was Rs.10,000
and Rs.12,000 respectively.

5. What is marginal costing? Describe its application in decision making activities

6. The following is the summary of ledger balances of Anand Associates for the year
ending 31st December, 2006. Prepare Trading and Profit and Loss Account. Also prepare
Balance Sheet on that date after considering the following adjustments
a. Closing stock was valued at Rs. 15,700
b. Write off Rs.500 as bad and create RBD on debtors at 5%
c. Depreciate agent’s sample by 33 1/3% and advertising fund by 25%
d. Charge Manager’s commission at 5% on net profits, after charging his commission.
LEDGER BALANCES OF ANAND
Rs Rs
Capital 20,500 Purchase Returns 2,000
Creditors 15,000 Sales 1,44,800
Outstanding expenses 3,400 Provision for bad debts 300
Rent received 300 Advertisement Fund 4,000
Plant and Machinery 10,000 Power 4,000
Goodwill 2,500 Depreciation of machinery 500
Agents Sample 1,350 Salary 17,200
Opening Stock 16,000 Discount received 900
Debtors 7,300 General Expenses 4,100
Cash at bank 1,000 Prepaid expenses 200
Cash in hand 55 Salary to agent 4,550
Drawings 2,500 Rent and insurance 9,950
Purchases 85,500 Discount allowed 2,500
Carriage inwards 750 Sales return 300
Wages 11,500 Commission to agents 1,445