BALAJI INSTITUTE OF ENGINEERING & MANAGEMENT STUDIES

DEPARTMENT OF MBA
(14E00208) MANAGEMENT INFORMATION SYSTEM LAB

1.ACCOUNTING
2.FINANCE
3.MARKETING
4.HUMAN RESOURCE MANAGEMENT
5. SYSTEMS

PROBLEM 1

S.No

DATE

1.

1-4-2005

TRANSACTIONS
Nandhini Kapur started Universal Business Solutions by
bringing in cash of Rs.3,00,000.

2.

2-4-2005

Ms.Kapur paid Rs.22500 in cash to purchase a computer

with preloaded.
Tally. The computer does not have any disposal value at
useful life of four years. All assets are to be depreciated
using the Straight Line Method.

3.

3-4-2005

Ms.Kapur opened a bank account with HDFC Bank,

Bangalore for the Firm by depositing cash of Rs.1,00,000.

4.

4-4-2005

Ms.Kapur rented an office space for Rs.2,500 per month on

April 01,2005. She paid the security deposit of Rs.25,000
by cheque.

5.

5-4-2005

Ms.Kapur hired Maya Nair as Manager (operations) on a

monthly salary of Rs.7,500. She also hired Vijay Narayan
as Assistant Manager (Marketing) on a monthly salary of
Rs.4,500.

6.

10-4-2005

Ms.Kapur made an arrangement with Raj Travels to receive

bills, for Travel expenses, at regular intervals.

7.

15-4-2005

Ms.Kapur issued cheques and purchases the following

fixed assets.
1.A cell phone for office use for Rs.6,000 (useful life yrs
ii. Furniture for Rs.20,000 (useful life 8 years)
iii. An air conditioner for Rs.20,000 (useful life:10 years)
iv. Electrical fittings for Rs.15,000 (useful life 10 years)
The above assets do not have any disposal value at the end
of their useful life.

8.

16-4-2005

Ms.Kapur obtained a mobile phone subscription form

Planet Telecommunications Ltd., by paying a deposit of
Rs.3,000 in cash.

9.

20-4-2005

Ms.Kapur purchased stationery consumables worth

Rs.12,500 from Global House, on credit.

10.

21-4-2005

Ms.Kapur signed a contract with Silver Services to provide

consultancy Services at an agreed price of Rs. 75,000. She
received an advance of Rs.25,000 by cheque.

11.

23-4-2005

Ms.Kapur deposited Rs.50,000 cash in HDFC Bank.

12.

25-4-2005

Ms.Kapur received an invoice for Rs.6,000 from Ink and

Paper Publishers for printing office stationery.

13.

27-4-2005

Ms.Kapur withdrew Rs.7,500 cash for personal use.

14.

30-4-2005

Ms.Kapur paid Rs.750 in cash towards office maintenance

chaged for April 2005.

STEPS TO SOLVE THE PROBLEM

TRANCTION 1:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Nandhini Kapur Capital A/c
Under Group : Capital Account
ii. Entry of the transaction in a Receipt Voucher
Gateway of Tally ---- Accounting Vouchers ----F6:Receipt
Press F2 to change Voucher Date.
Credit Particulars: Nandhini Kapur Capital A/c -- 3,00,000
Debit Particulars: Cash (pre-defined ledger) ----- 3,00,000
TRANCTION 2:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Computer
Under Group : Fixed Assets
ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: Computer -- 22,500
Credit Particulars: Cash (pre-defined ledger) ----- 22,500
TRANCTION 3:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : HDFC Bank
Under Group : Bank Account
ii. Entry of the transaction in a Contra Voucher
Gateway of Tally ---- Accounting Vouchers ----F4:Contra
Press F2 to change Voucher Date.

Credit Particulars: Cash -- 1,00,000

Debit Particulars: HDFC Bank ----- 1,00,000
TRANCTION 4:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Security Deposit-Office
Under Group : Deposits (Assets)
ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: Security Deposit-Office -- 25,000
Credit Particulars: HDFC Bank ----- 25,000
TRANCTION 5 & 6: No entry is required for these transactions as they are not accounting
transactions.
TRANCTION 7:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Multi Ledger -- Create
Name : Cell Phone, Furniture, Air Conditioner, Electrical Fittings
Under Group : Fixed Assets
ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: -- Cell Phone, Furniture, Air Conditioner, Electrical Fittings
Credit Particulars: HDFC Bank
TRANCTION 8:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Security Deposit-Phone
Under Group : Deposits (assets)
Note: Ledgers can be created from the Accounting Voucher screen also. If the ledger which you
are looking for is not listed in the list of ledgers, press Alt + C at the Particulars column to
bring up the Ledger Creation (secondary) screen.
ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: Security Deposit Phone -- 3,000
Credit Particulars: Cash ----- 3,000
TRANCTION 9:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Stationery Expenses
Under Group : Indirect Expenses
Name : Global House
Under Group : Sundry Creditors
ii. Entry of the transaction in a Journal Voucher
Gateway of Tally ---- Accounting Vouchers ----F7:Journal Voucher
Press F2 to change Voucher Date.
Debit Particulars: Stationery Expenses -- 12,500

Credit Particulars: Global House ----- 12,500

TRANCTION 10:
Note: Ms.Kapur wants all advances from customers to be grouped separately. Hence, create a
sub-group, Advance From Customers, under the predefined primary group,
Current Liabilities.
Gateway of Tally ---- Accounts Info----- Group----- Single Group -- Create
Name : Advance from Customers
Under Group : Current Liabilities
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Advance Consulting Revenue
Under Group : Advance from Customers
ii. Entry of the transaction in a Receipt Voucher
Gateway of Tally ---- Accounting Vouchers ----F6:Receipt
Press F2 to change Voucher Date.
Credit Particulars: -- Advance Consulting Revenue -- 25,000
Debit Particulars: HDFC Bank
TRANCTION 11:
Entry of the transaction in a Contra Voucher
Gateway of Tally ---- Accounting Vouchers ----F4:Contra
Press F2 to change Voucher Date.
Credit Particulars: Cash -- 50,000
Debit Particulars: HDFC Bank ----- 50,000
TRANCTION 12:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Ink and Paper Publishers
Under Group : Sundry Creditors
ii. Entry of the transaction in a Journal Voucher
Gateway of Tally ---- Accounting Vouchers ----Journal
Press F2 to change Voucher Date.
Debit Particulars: Stationery Expenses -- 6,000
Debit Particulars: Ink and Paper Publishers ----- 6,000
TRANCTION 13:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Withdrawals
Under Group : Capital Account
ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: Withdrawals -- 7,500
Credit Particulars: Cash ----- 7,500
TRANCTION 14:
Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- Create
Name : Office Maintance Expenses

Under Group : Indirect Expenses

ii. Entry of the transaction in a Payment Voucher
Gateway of Tally ---- Accounting Vouchers ----F5:Payment
Press F2 to change Voucher Date.
Debit Particulars: Office Maintance Expenses -- 750
Credit Particulars: Cash ----- 750

UNIT 2. FINANCE
Capital budgeting decisions, calculation of NPV, IRR, Profitable Index, preparation of budget,
calculation of cost of capital.
Meaning of Capital budgeting: Capital expenditure budget or capital budgeting is a process of
making decision regarding investment in fixed assets, which are not meant for sale. Such as land
building, machinery or furniture etc. Management is to desire to acquire of not to replace fixed
assets in the life of overall objectives of the firm.
Definitions:
Capital budgeting is long term planning for making and financing proposed capital
outplace.
Charles T.Horngrem
Capital budgeting involves the planning of expenditure for assets, the returns from which
will be realize the future time period.
Milton H.Spencer
Features:

Need:

Future benefits are expected over a time period.

The funds are invested for long-term activities.
This involves huge investments.
They are strategic investment decisions.
Long-term effect on profitability.
Irreversible decisions.

Maintaining firms in competitive position

Planning for future needs
Co-ordinating the funds
Cost control
Organization effectivensss
Importance:
Long term effect
Risk & uncertainty
Large funds
Corporate image
Types of Capital Budgeting Decisions:

Expansion & Diversification

Replacement & Modernization
Mutually exclusive investments
Independent investment
Contingent investment

 Research & Development

Miscellaneous investment
Components:

Cash outlay
Cash flow
Cut-off rate
Ranking proposals

Process:

Project generation
Project evaluation
Project selection
Project implementation
Project control

Techniques:
There are two types of techniques are there.
Traditional Techniques
1. Pay-back period
2. Average Rate of Return

Modern Techniques
1. Net present value method
2. Internal Rate of return
3.Profitability Index

1. Net present value method:

NPV method considered the time value of money.

Under this method all cash inflows and outflows are discounted at a given rate.
If NPV is positive the proposal is accepted. Or negative proposal is rejected.
The minimum cut off rate or rate of return is determined by company or investor.
If there are two project proposals, the project with the higher NPV is selected.

NPV= present value of cash inflows-original investment.

Advantages:

NPV is superior to other methods of evaluating the economic worth of investments.

NPV recognizes all cash flows throughout the life of the project
NPV helps to satisfy the objectives for maximizing firms values.

NPV recognized the time value of money.

NPV generally accepted by economists.

Disadvantages:

NPV fails to give satisfactory answer when projects under consideration involve different
amounts of investments and with different economic life periods.
NPV gives the same decision for mutually exclusive projects as in the case of discounted
benefit-cost ratio.
NPV fails to indicate the rate of return which is expected to be earned.

2. Average Rate of Return (or) Accounting rate of return:

ARR is used to measure the rate of return on an investment in a project under this method
average annual profits are considered as profit after tax and depreciation. It is expressed as
percentage of investment. Thus ARR is find out by dividing the average annual profit by the
average investment. If there is additional working capital required by the project it should be
added to original investment.
Average annual profits after tax& depreciation
ARR ----------------------------------------------------------- *100
Average investment
Annual profits
Average annual profits = -------------------Number.of years
Investment
Average investment = ---------------2
3. Profitability index:
In case of profitability index the present value of cash inflows are divided by the present
value of cash outflows. If the profitability index is more than one. The proposal is
accepted, otherwise rejected. If there are more than one proposal the highest profitability
index is selected. This method is more useful in case of projects with different cash
outflow hence it is superior technique to the net present value method.

Present value of cash inflows

Profitability Index = -------------------------------------Present value of cash outflows

Problem1
1. Calculate the Net Present Value & profitability Index for the following data @ 10% using MSExcel.
Original investment = 200000
Years:

Cash inflows: 90000 90000 80000 80000 60000

Steps for the Solution:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Click on Start button

Go to MS-Office
Click on MS-excel
Open new work sheet
Enter the values
Go to Formulas menu bar
Click Auto sum button
Select NPV function
Enter the values in that window with 10%
You will get the answer 308130

NPV= present value of cash inflows-original investment.

308130 200000
= 108130
Profitability index calculation:

Present value of cash inflows

Profitability Index = -------------------------------------Present value of cash outflows
308130
PI = ----------200000
= 1.54

Problem 2:
Calculate the Average Rate of Return for project A & B.
Particulars

Project A

Project B

Investment

20,000

30,000

Expected Life

4 years

5 years

Projected net cash inflows after depreciation & Taxes

Years

Project A

Project B

2,000

3,000

1,500

3,000

1,500

2,000

1,000

1,000

--------

1,000

Solution:
1. Enter the values in new work sheet
2. According to the formula do calculations by using auto sum function

Average annual profits after tax & depreciation

ARR ----------------------------------------------------------- *100
Average investment
Annual profits
Average annual profits = -------------------Number of years

Project A = 6,000/4 = 1,500

Project B = 10,000/5 = 2,000
Investment
Average investment = ---------------2

Project A = 20,000/2 = 10,000

Project B = 30,000/2 = 15,000
Average annual profits after tax & depreciation
ARR ----------------------------------------------------------- *100
Average investment
Project A = 1,500/10,000 *100
= 15%
Project B = 2,000/15,000*100
= 13.33%
Comment: Project A average return is higher than Project B average returns. So project A is
preferable or acceptable.
Cost of Capital:
Introduction: The term Cost of Capital refers to the minimum rate of return, a firm must earn on
its investment.
Definition:
Cost of capital is the minimum required rate of earning or the cut-off rate of capital
expenditure.
- Solman Ezra
Basic aspects:

Cost of capital is not a cost

Cost of capital is the minimum rate of return
Cost of capital comprises of 3 components
1. Return at 0 risk level
2. Premium for business risk
3. Financial risk EPS effect on capital structure.

Cost of capital (k) = r0 +b+f

Where k = Cost of capital
r0 = return at 0 risk level
b = premium for business risk
f = Financial risk
Importance of Cost of Capital:

 As a tool for evaluation of financial performance

As an aspten criterian in capital budgeting
As a determinant of capital mix in capital structure decision
As basis for taking other financial decisions.
Components of Cost of Capital:

Cost of Debt
Cost of preference share capital
Cost of equity
Cost of retained earnings (reserves & surplus)

A. Cost of Debt: It is the rate of return which is expected by lenders. This is actually the
interest rate specified at the time of issue. Debt may be issued at per (face value) at
premium or at discount. It may be perpectual or irredeemable. The following of the
technique is used for computing the cost of debt.
Kd= R(1-t)
R = Interest rate
t= Tax rate
1.A company issues 9% debentures and its marginal tax rate is 50%. You are required to
calculate cost of debt.
R = 9%
0.09%
t=50%
0.50%
kd= R(1-t)
= 0.09 (1-0.50)
= 0.09(0.50)
= 0.045 *100 = 4.5%
A.1 Readeemable debt or perpectual debt: If debentures are issued at discount on premium

1
( 1t ) R+ ( f p )
n
f +p
2

Where t = tax rate

R = interest rate on debenture
n= number of years
f= debenture face value
p= issue price of debenture
2.A company issues 10 years 8% debentures @ 90% & its face value is 100/-. The marginal rate
of cost to the company is 50%. You are required to calculate the cost of debt.

t=50% or 0.5

n=10 years

f=100

p=90 R = 8%

(1-0.5) [8+1/10(100-90)]
------------------------------- = 4.7%
100-90/2
A.2 Irredeemable debentures:
Cost of debt =

R
p

(1-t)

Where R = interest rate

P = issue price
t= tax rate
3.A limited issues 9.5% irredeemable debentures @ 95. The tax rate is 50%.
R = 95*9.5/100 = 9.025 p=95

t=50 or 0.5

9.025
= --------------- (1-0.5)
95
= 0.095(0.5) = 0.0475 = 4.75%

B. Cost of preference share capital:

B.1 Irredemable preference share capital: The shares that can not be paid till the
liquidation of the company are called irredeemable preference share.
D
Cost of preference shares (kp) = ------------------------------------------------(without tax)
Current market price / net proceeds
Where kp = cost of preference shares
D = dividend per share
Net proceeds = face value of preference share floating charges
1. HFC limited issues 12% preference shares face value of 200 each. Compute cost of preference
shares without tax.
D=12% 200*12/100 =24
CMP = 200
= 24/200*100 = 12%

2. A limited company is planning to issue 14% irredeemable preference share at face value of 250
per share with estimated flotation cost 5%. What is cost of preference share with 10% dividend
tax.
D(1+dt)
Cost of preference shares with tax (kp) = ----------- *100
Np
dt= tax on preference dividend
np=face value floating charges
D = 250 * 14/100 = 35

dt = 10% or 0.10

np = face value floating charges

= 250 12.5 = 237.5

35(1+0.10)
= ---------------- * 100 = 16.21%
237.5
B.2.Cost of redeemable or perpectual preference shares:
Dp + (F-NP/n)
Kp = ---------------------- * 100
F+NP
--------2
Where Dp= preference share dividend
N= number of years

F = face value of preference shares

NP = net proceeds of preference share

3. A company has 10% 1,00,000 redeemable preference shares for 10 years. The underwriting or
floting 5%. Calculate cost of perpectual capital.
Dp = 1,00,000 * 10/100 = 10,000
NP = 1,00,000 5000 = 95,000

f= 1,00,000

Dp + (F-NP/n)
Kp = ---------------------- * 100
F+NP
--------2
10,000+ 100000 -95000/10
= ------------------------------------------ * 100
1,00,000 + 95,000/2
10,000 + 500
= ----------------------- * 100
97500

C. Cost of retained earnings:

= 10.76

Kre = ke [(1- Ti) / (1-Tb)]

Where ke = cost of equity
D = dividend

Ti = market tax rate

Np = net proceeds

Tb = cost of purchase of new securities

4. A company paid a dividend @ 2 per share. Market price is 20 per share. Income tax rate is 60% &
brokerage expected to be 2%. Compute cost of retained earnings.

Kre = ke [(1- Ti) / (1-Tb)]

Ke = D/np= 2/20 = 0.1
Tax rate = 60% = 0.60
= 0.10 [1-0.60/1-0.20] * 100
= 0.10 [ 0.40/0.98] * 100
0.10 (0.4082) *100 = 4.0820

UNIT3: MARKETING
Meaning: Marketing means selling and advertising. Marketing is a comprehensive term and it
includes all resources and a set of different activities necessary to direct and facilitate the flow of
goods and services from producer to consumer in the process of distribution system.
Definitions:
marketing is a social and managerial process by which individuals and groups obtain what they
need and by creating and exchanging products and value with others.
- Philip Kotler
marketing is a system of integrated business activities designed to develop strategies and plans
to satisfy customer wants of selected markets segments or targets.
Scope:

Goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas

Advantages / Importance:
1. Importance of the Marketing to the society
i.
ii.
iii.
iv.
v.

Delivery of standard of living to the society

Decreases in distribution cost
Increase in employment opportunities
Protection against business slump
Increase in national income

2. Importance of marketing to the firm

i.
Helpful in business planning and decision making

ii.
iii.

Helpful in increasing profits

Helpful in communication between firm and society.

3. Importance of marketing in developed economy

4. Importance of marketing in underdeveloped or developing economy
5. Importance of marketing in a sellers or buyers market

Customer
xxxxx
Yyyyy
Zzzzz
aaaaa

Sales
70,000
85,000
50,000
1,20,250

Dealers
Ppppp
Qqqqq
Rrrrr
sssss

Products
FMCGS
Electronics
Stationery
Food items

Areas
Anantapur
Chittoor
Nellore
vijayawada

Sales

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

Unit 4: Human resource Management

Human resource management reflects a new philosophy, outlook, approach and strategy which views
organisations manpower as its resources and assets. The values, ethics, attitudes, approaches and beliefs
of the individuals operating in an organization also form a part of human resource. It is the sum total or
aggregate of inherent abilities, acquired knowledge and skills represented by th talents and aptitudes of
the persons working in an organization.
Definitions:
the human resource management refers to the philosophy, policies, procedures, and practice related to
the management of people within the organization.
- Wendell L.French
personnel management is the planning, organizing, directing and controlling of th procurement,
development, compensation, integration, maintenance and separation of human resources to the end that
individual, organizational and societal objectives are accomplished.
-

Edwin Flippo

Scope:

Recruitment
Training and development
Formulation of promotion policy
Job analysis
Performance appraisal
Job evaluation
Compensation management
Employee welfare

Importance:

Employee enjoy their work

Employees have a sense of accomplishment in their work
Employees have a high sense of belongingness to their organization and work place
Employees feel that they are respected as individuals and their contributions are valued

Employees have a feeling to enhance their competence and perform more challenging and
satisfying tasks.
Instead of spending time in satisfying their needs, employees contribute to the organizational
tasks and goals.

Characterstics:

HRM is an art and a science

HRM is pervasive
HRM is a continuous process
HRM is a service function
HRM must be regulation-friendly
Interdisciplinary and fast changing
Focus on results
People-centric
Human relations philosophy
An integrated concept

Employee
Salary
Department
Designation

Ravindra
60,000
R&D
Team leader

Chaitanya
75,000
Finance
Manager

Vikram
70,000
Administation
PRO

jayanth
55,000
HR
Manager

Unit 5: Systems
Information systems play a crucial role in todays society. For many businesses and
organizations, innovations in information processes and systems are critical for competitiveness
and survival. For individuals, our personal and social lives are now mediated by an ever growing
array of information systems.

Meanings of Design
The key to successful information systems is good design. But what makes a good design? A
number of disciplines weigh in on this topic. We will look at design from a number of different
perspectives. Whenever possible we will contrast good and bad designs.
Different people use the word design in different contexts. When IS professionals speak of
design, they are referring to business processes. Problems must be analyzed and requirements
documented before solutions are designed, developed, and implemented. After all if the design
does not satisfy the business need, then whats the point? However, satisfying the business need
is really a baseline standard. The vilified hospital system described earlier meets the business
need of registering patients. And yet its design is in other ways lacking. Similarly, fast food
meets the need for feeding ones hunger. However, we want to be metaphorically better than fast
food in our designs.
Usability describes how easy the system is to navigate. The easier the system is to navigate, the
less time a user will need to spend learning to use the system. A more usable system also leaves
less room for error. Usability theory provides rules of thumb (heuristics) that document best
practice conventions for designing a user interface.
Graphic design refers to the visual appeal and organization of the user interface. There is
obviously some overlap here with usability. Usable systems typically adhere to at least some
graphic design rules. However, a usable system could be bland and uninteresting. Employing
graphic design principles helps ensure that the system will have visual appeal. Designs also need

to fit with the overall brand of the client. Existing colors, fonts, and logos are all a part of the
brand for which the system is being created.
Analytical Design describes how to best represent informationespecially quantitative
informationto communicate clearly and truthfully. Every information systems project has
quantitative dimensions associated with project management. These include estimating costs,
time schedules, and so forth.

Systems Development Life Cycle (SDLC)

Information systems are designed using the systems development life cycle (SDLC). The SDLC
is to a large extent common sense spelled out in stages. First, analyze the current situation. Then
specify the requirements that a solution should embody. The next stage is to design a solution (no
programming yet). Then the system is developed (programmed) and tested. Finally, the system
goes live for the end users as it is implemented in the business setting. To review, the five phases
are:
1. Analysis
2. Requirements (vision of future state)
3. Design
4. Development
5. Implementation
In this course we will cover all five stages. However we will focus most heavily on the first three
stages for two reasons. First, because that is where IS professionals tend to spend most of their
time and second because it is much easier to make changes to a system when in the planning
stages, than after code has already been generated.