B.

Com (Part-I) Examination, 2011

(10+2+3 Patterns) (Faculty of Commerce) Accountancy and Business Statistics Second Paper : Management Accounting Objective Part-I 2011
Time: One Hour Attempt all questions. 1. Answer the following in not more than 20 words each : (i) (ii) (iii) (iv) (v) (vi) (vii) Define Management Accounting. Write the names of any four theories of capital structure? Give any two characteristics of Financial Leverage. What is qualitative concept of working capital? Give any four names of fictitious assets. Give the name of five activity ratios. Define the Fund Flow Statement. 10 x 2 =20 Max. Marks. : 40

(viii) Give the formula for calculating cost of redeemable preference shares. (ix) (x) 2. What is meant by responsibility accounting? Define activity based costing. 5 x 4 = 20

Answer following in not more than 50 words each : (i) (ii) (iii) (iv) (v) Give five advantage of management accounting.

What is difference between capital structure and financial structure? When does flow of funds take place? Explain two differences between control reports and information reports.. Find out the weighted average cost of capital from the following information: Amount After Tax Cost of Capital Equity share capital 4,00,000 .15 .10 .10 .08

Preference share capital 1,50,000 Debentures Retained Earnings 2,50,000 2.00,000

Descriptive Part-II
Time : Two Hour Max. Marks: 60 Attempt three questions in all, selecting at least one question from each section. Each question carries 20 marks. Section A (a) The following data relate to the companies A and B which are of homogeneous groups. Net Operating leverage income Overall cost of capital 5% debentures A Rs 50,000 12.5% Rs 2,00,000 B Rs 50,000 12.5%

3.

Calculate value of companies under Net Operating Income Theory and also compute cost of equity capital.

(b) Shivam Enterprises has a turnover of Rs 15,00,000. Variable cost is Rs 8,00,000 while fixed cost is Rs 3,00,000. Debenture worth Rs 3.00.000 at 12% per annum. Calculate operating, financial and combined leverage. Rate of tax is 50%.

4.

The Board of Directors of Jai Engineering Ltd. request you to prepare a statement showing the working capital requirements. Forecast for an expected level of production is 26,000 tonnes. The following information is available for your computation. Raw material to remain in stock on an average Process period Permanent material in process Finished goods in stock Credit allowed to customers Expected ratio of material to sales price Wages and overheads Selling price per ton Section B 4 weeks 2 weeks 200 tonnes 6 weeks 8 weeks 70% 20% Rs 300

5.

(a) From the following income statement of X Ltd. prepare a common size income statement . 2009 Amount Gross sales Less: Sales return Net Sales Cost of Good sold Gross Profit Sales Expenses Administration Expenses Total Expenses Income from operation Other Incomes Total Income Less: Other Expenses Net Income 1,38,000 -3,000 1,35,000 -82,000 53,000 27,000 +13,500 40,500 12,500 +1,500 14,000 -2,000 12,000 2010 Amount 1,65,000 -3,5000 1,61,500 -90,000 71,500 30,000 +15,000 16,500 16,500 +2,000 18,500 -3,000 15,500

(b) From the following items of the assets side of the balance sheet of ABC Ltd for the period from 31-3-2007 to 31-3-2010. Calculate trend percentages taking 2007 as the base year: As on 31st March Assets Cash Debtors Stock Other Current Assets Land and Building Furniture 80 100 60 100 400 500 600 600 2007 40 20 50 20 2008 60 40 75 10 2009 80 30 60 25 2010 70 15 70 30

Plant & Machinery Total Assets

100

125

130

150

710

910

985

1035

6.

(a) A firm had current aeests of Rs 1,50,000. It then paid a current liability of Rs 30,000. After the payment, the ratio was 2:1. What were the current liabilities before the payment was made? (b) Current liabilities = Rs 40,000 Capital employed= Rs 4,00,000 Fixed Assets = Rs 2,80,000 Calculate current ratio, assuming that there were no long-term investments. ( c) From the following informations calculate cash from operating activities: 2009 31st March 20,000 30,000 14,000 30,000 1,600 1,400 20,000 14,000 3,000 1,250 2010 31st March 30,000 35,000 18,000 34,000 4,000 1,200 16,000 18,000 3,750 600

Profit & Loss Appropriation General Reserve Bills receivables Provision for depreciation Outstanding Rent Payable Prepaid Insurance Goodwill Stock Accrued Income Income received in Advance

An old machine costing Rs 20,000 having book value of Rs 14,000 was for Rs 18,000 during the year 2010. Section C

7.

Laxmi Plastic Ltd. desires to purchase a new machine in order to increase its present level of production. The cost of machine will be Rs50,000 and net income after tax but before depreciation during its life will be as follows: Year 1 2 3 Net Income after tax before depreciation 15,000 20,000 25,000

4 5

15,000 10,000

Evaluate the project according to: (i) Net present value method(assuming discount rate 16%) (ii) Internal rate of return of the project with the help of 20% and 25% discount factor. Year Discount Factor at 16% Discount Factor at 20% Discount Factor at 25% 1 0.862 0.833 0.800 2 0.743 0.694 0.640 3 0.641 0.579 0.512 4 0.552 0.482 0.410 5 0.476 0.402 0.328 investment

Minimum rate of return laid down by the management is 16% p.a. Is the desirable? Give your suggestion. 8. Write short note on the following: (i) Responsibility Reporting (ii) Investment centre (iii) Management Information System (iv) Cost Driver

Accountancy and Business Statistics Second Paper : Management Accounting Objective Part-I 2010
Time: One Hour Attempt all questions. 1. Answer the following in not more than 20 words each : (i) (ii) (iii) (iv) Give any four techniques of management accounting. What is point of indifference? What is the difference between favorable and unfavorable financial leverage? If the current assets and current liabilities lf a firm are Rs.10 lakhs and 6 lakhs respectively. What would be the amount of maximum bank credit according to second method of Tandon Committee? (v) (vi) What is owner's equity? Current liabilities of a company are Rs.3,00,000 its current ratio is 3 :1 and quick ratio 1 : 1 calculate the value of stock in trade. (vii) Give the meaning of cash flow. 10 x 2 =20 Max. Marks. : 40

(viii) Differentiate between book value weight and market value weight. (ix) (x) State any two advantages of responsibility accounting Define activity based costing. 5 x 4 = 20

2. Answer following in not more than 50 words each : (i) (ii) Explain the policy of trading on equity.

Ankit limited does not use any debt in its financing. The firm has earnings before interest and tax of Rs.3,20,000 and the after tax capitalization rate is 16% assuming the corporate tax of 50%, calculate the value of the firm according to M.M. hypothesis.

(iii) (iv)

Write a brief note on trend analysis. A project costs Rs.25,000 scrap value Rs.5,000 life 5 years and annual average income before depreciation and tax Rs.7,000 assuming tax rate at 50% and depreciation on straight line basis, find out average rate of return.

(v)

Give four advantages of ABC system.

Descriptive Part II
Time : Two Hour Max. Marks: 60 Attempt three questions in all, selecting at least one question from each section. Each question carries 20 marks. Section A The following details of Sanchit limited for the year ended 31st March 2009 are furnished below: Operating leverage Financial leverage Interest charges per annum Corporate tax rate Prepare the income statement of the company 3:1 2:1 Rs. 20 lakhs 50% 60%

3.

4.

What is the concept of "Working Capital"? What factors determine the needs of working capital and how is it measured?

5.

Section B Balance sheet of Jaipur Limited is given below: (Rs.) (Rs.) Equity Capital 50,000 Fixed Assets 1,40,000 12% Pref. Capital 30,000 Stock 20,000 15% Debentures 70,000 Debtors 16,000 Capital Reserve 5,000 Bank 14,000 Profit & Loss A/C 10,000 Creditors 12,000 Bank Overdraft 8,000 Proposed Dividend 5,000 Find out Current Ratio, Liquid Ratio, Capital Gearing Ratio and fixed assets ratio

6.

The following are the summarized balances sheets and income statement of Tata motors. Liabilities 31.12.08 Rs. Share Capital 7,20,000 P & L A/c 3,03,600 Accumulated Depreciation on plant & Equipment 2,40,000 Sundry Creditors 4,80,000 31012.09 Rs. 8,88,888 3,27,000 2,64,000 4,68,000

Outstanding Exp. Prov. For Taxation

48,000 24,000 18,15,600 Rs. 96,000 7,00,000 1,20,000 3,36,000 5,28,000 15,600 18,15,6,00

96,000 24,400 20,70,000 Rs. 1,92,000 11,52,000 1,44,000 3,72,000 1,92,000 18,000 20,70,000

Land and Building Plant and Equipment Cash Debtors Stock Advances

Note : Cost of equipment sold was Rs. 1,44,000 Income Statement for 2009 Rs. 39,60,000 1,20,000 4,80,000 1,60,000 1,76,000

Net sales Less : Cost of sales Depreciation Salaries and wages Operating Expenses Provision for taxation

Rs. 50,40,000

48,96,000 1,44,000

Add: Non-Recurring income : Profit on sales of an item of Equipment Retained Earnings Balance in P & L A/c brought forward Less : Dividend declared and paid during the Year

24,000 1,68,000 3,03,600 4,71,000 1,44,000 3,27,600

You are required to prepare a statement of changes in working capital and statement of changes in working capital and statement of sources and application of funds assuming provision for taxation as current liability. Section C The capital structure of Kavita Limited is as under : 2,000 6% debentures of Rs.100 each (First issue) 1,000 7% debentures of Rs.100 each (Second issue) 1,00,000 Rs. 2,000,000

7.

2,000 8% cumulative preferebee shares of Rs.100 each 4,000 equity shares of Rs.100 each Retained Earnings

2,00,000 4,00,000 1,00,000

The earnings per share of the company in the past many years have been Rs. 15. The shares of the company are sold in the market at book value. The company's tax rate is 50% and shareholders personal tax liability is 10% find out the weighted average cost of capital.

8.

Discuss various kinds of reports prepared by the management accountant for different levels of management.