Name : Benoy

Johnson Kurien.

Subject : Financial
Management and
Accounting

Date of Submission : 14th August

2007.

Assignment no. : MB0025.

 Financial and Management Accounting-
MB0025

Q1. Explain the differences between Financial

Accounting and
Management Accounting.

Financial accounting is the preparation and

communication of financial
information to outsiders such as creditors, bankers,
government, customers and so on. Another objective of
financial accounting is to give complete picture of the
enterprise to shareholders. Management accounting on
the other hand aims at preparing and reporting the
financial data to the management on regular basis.
Management is entrusted with the responsibility of taking
appropriate decisions, planning, performance evaluation,
control, management of costs, cost determination etc.,
For both financial accounting and management
accounting the financial data is the same and the reports
prepared in financial accounting are also used in
management accounting But the following are major
differences between Financial accounting and
Management accounting.
Q2. Hiran, a retailer, has prepared the following balance
sheets for the years ending 31st March 2004 and 2005:
Other data: The net profit for the year 2004 was
Rs.40000. Hiran is paid a salary of Rs.16,000. His
drawings amounted to Rs.45,200. You are required to
prepare a statement of changes in financial position, on
working capital basis.

The layout for schedule of changes in Working Capital is

as follows

Balances as on Effect on
Schedule of changes in Working Capital is as follows:
Year Year Increase Decrease
2004 2005
A. CURRENT
ASSETS
4000 2000 2000
Cash in hand &
bank 50000 34000 16000

Sundry Debtors 36000 34000 2000

Stock & _ _
inventory

B.CURRENT 24000 2000 4000

LIABILITIES

Trade and 16000

accrued
Expenses

Net Working
Capital
Decrease in
Working(A-B)
Statement of Profit and loss adjustment a/c:

Particulars Amount Particulars Amount

Salaries 16000 Net profit 40000

for the
year 2004
Funds from
operations 24000
transferred
to
applications
Total: 40000 40000

Funds Flow Statement:

Particulars Amount Particulars Amount
Increase in 5200
capital

Decrease in 16000 Funds from 24000

Working operations
capital
Total:

Q3. Enter the following transactions in proper

subsidiary book. Find
out the total of:
 a) Purchase book b) sales book c) purchase return
book d) sales
return book.

Purchase book
Date Name of Ledger Inward Amount
Supplier Folio Invoice no. Rs
Dr
Jan 1 Purchase 34000
d from
Karthik
Jan 10 Purchase 40000
d from
Vikas
Jan 12 Purchase 102000
d from
Naveen
Jan 15 Purchase 100000
d from
Brinda
Jan 25 Purchase 45000
d from
Anand
TOTAL: 321000

Sales book
Date Name of Ledger Outward Amount
Customer Folio Invoice no. Rs
Dr
Jan 5 Sold to 12000
Vinay
Jan 7 Sold to 10000
Nagraj
Jan 12 Sold to 16000
 Gururaj
TOTAL: 38000
Sales returns Book:
Date Name of Ledger Outward Amount
Customer Folio Invoice Rs
no. Dr
Jan 14 Returned 3000
goods to
Vinay
Jan 22 Nagraj 2000
Returned
goods
TOTAL 5000
Purchase return book:
Date Name of Ledger Inward Amount
Supplier Folio Invoice Rs
no.
Jan 14 Returned 4000
to Karthink
Jan 22 Returned 2000
to Naveen
TOTAL: 6000

4a. On 01-04-2007 Mr. Gundu Rao stated business with

Rs. 3, 00,000 cash and opened a bank account with Rs.
1,50,000. He purchased furniture for his business for Rs.
25000. Goods were bought from selvaraj for Rs. 50000 on
credit. He sold goods for Rs. 27000 in cash and Rs. 30000
on credit. He paid Rs. 2500 for business expenses during
April month. Rs. 10000 was withdrawn for office purpose
form the back. Find out the closing balance of cash and
bank.

Date Particul Cash Bank Date Particular Cash Bank

 ars A/c Dr a/c s a/c a/c
1-4- To 30000 1-4-
2007 capital 2007
a/c of
gundu
rao 1500 By cash 1500
0 a/c 0
To Bank
a/c By 5000
Furniture
27000 a/c
By 2500
Business
To sales Exp
a/c 10000
10000
By Cash -
Office
To bank 31-4- Expenses 14000
31-4- Office 2007 1605
2007 Expense By 00
s balance
c/d
33700 1500 3370 15000
0 00 00 0
01/05/20 To Bal 16050 1400
07 B/d 0 0

4b. Following are the extracts from the Trial Balance of a

firm as on 31st December 1998:
TRIAL BALANCE
As on 31st December 1998
Particulars Dr. Cr.
Salaries A/c 10,000
Rent a/c 5,000
Additional Information:
I. Salary for the month of December Rs.2000 has not yet
been paid.
II. Rent amounting to Rs.1000 is still outstanding
You are required to pass the necessary adjusting entries
and show how the above items will appear in the Firm’s
Account
Entry:
Salary a/c Dr 2000
To Salary outstanding A/c 2000
Rent a/c Dr. 1000
To rent outstanding 1000

Trial balance
Particulars Dr. Cr.
Salaries A/c 12000
Rent a/c 6000
Q5. From the following figures extracted from the
book if Shri
Govind, you are required to prepare a Trading and
Profit & Loss
Account for the year ended 31st March, 1999 and a
Balance Sheet as
on that date after making the necessary
adjustment.
Adjustments
1. Stock on 31st March, 1999 was valued at Rs. 72,600
2. A new machine was installed during the year costing
Rs. 15,400, but it was not recorded in the books as no
payment was made for it. Wages Rs. 1,100 paid for its
erection has been debited to wages account.
3. Depreciate: Plant and Machinery by 33 1/3 % Furniture
by 10% Freehold property by 5%
4. Loose tools were valued at Rs. 1,760 on 31.3.1999.
5. Of the Sundry Debtors Rs. 600 are bad and should be
written off.
 6. Maintain a provision of 5% on Sundry Debtors for
doubtful debts.
7. The manager is entitled to a commission of 10% of the
net profits after charging such commission.
Ans:
Trading A/c for the year ended 31st March, 1999:

Particulars Amou Total Particul Amount Total

nt Amount ars amount
Dr Cr
To opening 38500 Sales 231440
stock Less - 1100 230340
110000 returns
Purchases
Closing 72600
35200 Stock
Wages 1100 34100
Less inst

Erection 1100
Factory
Lighting 2970

Gas & Fuel 9900

Freight 106370

To gross
profit
transferred
to P/L a/c
Total 302940 302940
 Profit & Loss A/c for the year ended 31st March,
1999

Particulars Amoun Total Particul Amount Total

t Amount ars Amount
Dr Cr
To Salaries 13200 By 106370
Balance
To Office 2750 b/d from
exp Trading
1320 A/c 1100
To Discount
1540 Interest
To Postage Receive
& d
telegram 1760

To 2860
Insurance
660
To Office 600
rent
1433
To Bad
debts 880 1813
(+) FBD

(+) NRDD 550

(+)ORDD
38830

To
Depreciatio
n 3300
on Furniture

To
Depreciatio 4381
n
on Plant &
machinery 440

To
Depreciatio
n 35056
on Free hold
property

To
Manager’s
Commission

To loose
tools

To Net
profit
transferred
to B/S
Total: 107760 107760

Balance Sheet for the year ended 31st March, 1999

Liabilities Amount Assets Amount

Capital Plant and Mach
228800 99000
(-)Drawings 250656 (+) add on mach
13200 15400 77000
(+) Net profit (+) installation
35056 8800 1100
(-) Dep 33.33% 62700
44000 38800
Bills payable
66281 Free hold prop. 4950
Creditors 66000
(-) Dep 5% 44000
Suspense 3300
account 3300
Furniture
5500 29260
(-) Dep 10%
550 72600

Loan Given 2640

Interest 2200
Receivable
440
Cash

Closing stock

Cash in Hand

Loose tools

Revolution
Debtors
29260
(-) NBD
600
(-) RDD 5%