ASSIGNMENT

MBA
Subject code: MB0025
(3 Credits)
SET 1
MARKS 60
Financial and Management Accounting
 

Answer the following question:

1. Explain the differences between Financial Accounting and Management Accounting.

10 Marks

2. Hiran, a retailer, has prepared the following balance sheets for the years ending 31st March
2004 and 2005:

Balance Sheets as on 31st March, 2004 and 2005

Particulars 2004 2005
Freehold property at cost 200000 200000
Furniture 32000 30000
Less depreciation 23200 8000 20000 10000
Current Assets:
Stock 36000 34000
Debtors and prepayments 50000 34000
Cash in hand and at bank 4000 2000
Liabilities:
Capital 254800 260000
Trade and accrued expenses 24000 20000
Loan account 20000 -------
Total 298800 280000
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. 10 Marks

3. 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.
Jan 1 Purchase goods from Karthik 34000

5 Sold goods to Vinay 12000

7 Sold goods to Nagaraj 10000

10 Bought goods from Vikas 40000

12 Bought goods from Naveen 102000

14 Vinay returned goods 3000

15 Bought goods from Brinda 100000

18 Returned goods to Karthik 4000

19 Returned goods to Naveen 8000

20 Sold goods to Gururaj worth Rs. 20000 subject to a trade discount of 25%

22 Nagaraj returned goods 2000

25 Bought goods from Anand 45000 10 Marks

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was withdrawn for office purpose form the back.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. 5 Marks

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 5 Marks
5. 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.

Particulars Amount Rs Particulars Amount Rs.

Shri Govind’s Capital 228800 Stock 1.4.1999 38500
Shri Govind’s Drawings 13200 wages 35200
Plant and Machinery 99000 Sundry Creditors 44000
Freehold Property 66000 Postage and Telegrams 1540
Purchases 110000 Insurance 1760
Returns Outwards 1100 Gas and Fuel 2970
Salaries 13200 Bad Debt 660
Office Expenses 2750 Office Rent 2860
Office Furniture 5500 Freight 9900
Discounts A/c (Dr.) 1320 Loose Tools 2200
Sundry Debtors 29260 Factory Lighting 1100
Loan to Shri Krishna @ 44000 Provision for D/D 880
10% p.a. –balance on
1.4.1999
Interest on loan to Shri 1100
Krishna
Cash at Bank 29260 Cash in Hand 2640

Biils Payable 5500 Sales 231440

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. 10 Marks

6. Differentiate between Standard Costing & Budgetary Control 10 Marks

 ASSIGNMENT

MBA
Subject code: MB0025
(3 Credits)
SET2
MARKS 60
Financial and Management Accounting
1. From the following details, prepare the balance sheet of the firm concerned.

Stock velocity 6
Capital turnover ratio 2
Fixed asset turnover ratio 4
Gross profit 20%
Debt collection period 2 months
Creditors payment period 73 days
The gross profit was Rs.60000. Closing stock was Rs.5000 in excess of the opening
stock. 10 Marks

2. Write short notes with suitable examples on:

A. Principles of Income Recognition

B. Principles of Full Disclosure 10 Marks

3 The following data have been extracted from the books of M/s Moonshine Industries for
the calendar year 2006.
Rs Rs.
Opening stock of raw materials 25,000 Purchase of raw materials 85,000
Closing stock of raw materials 40,000 Carriage inwards 5,000
Wages-Direct 75000
Indirect 10000 85,000 Other direct charges 15,000
Rent and rates (Factory) 5,000 Rent and rates (office) 500
Indirect consumption materials 500 Depreciation- Plant 1,500
Depreciation-office furniture 100 Salary-office 2,500
Salary- salesman 2,000 Other factory expenses 5,700
Other office expenses 900 MD’s remuneration 12,000
Travelling expenses of salesmen 1,100 Other selling expenses 1,000
 Sales 250000 Advance Income tax paid 15,000
Advertisement 2,000
MD’s remuneration is to be allocated as Rs.4000 to the factory, Rs.2,000to the office
and Rs.6,000 to the selling departments. From the above information, prepare a) Prime
cost b) Works cost c) cost of production d) cost of sales and e) Net profit. 10 Marks

4. Describe the advantages and limitations of budgetary control. 10 Marks

5. A) A factory is manufacturing sewing machines. The variable cost of each machine is

Rs.200 and each machine is sold for Rs.250. Fixed costs are Rs.12000. Calculate the
BEP for output.
B) Calculate breakeven point and margin of safety. Fixed cost Rs.1,60,000. Variable
cost per unit Rs.2 and Selling price per unit Rs.18. Also compute the margin of safety if
the company is earning a profit of Rs.36,000.
C) Calculate the break-even point and turnover required to earn a profit of Rs.3,600.
Fixed overheads Rs.1,80,000. Variable cost per unit Rs. Selling price Rs.20. If the
company is earning a profit of Rs.36,000, express the margin of safety available to it.
(3+4+3) = 10 Marks

6. From the following particulars compute: (a) materials cost variance (b) materials price
variance, and (c) materials usage variance.

Quantity of materials purchased 3000 units

Value of material purchased Rs. 9,000

Standard quantity of materials required

Per tonne of output 30 units

Standard rate of materials Rs. 2.50 per unit

Opening stock of materials Nil

Closing stock of materials 500 unit

Output during the period 80 tonnes 10 Marks