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Accounting for Managers Assignment

Assignments
Program: MBA (2 Years) Sem-1
Subject Name
Permanent Enrollment Number (PEN)
Roll Number (SEN)
Student Name

Accounting for Managers

INSTRUCTIONS
a) Students are required to submit all three assignment sets
ASSIGNMENT

DETAILS

MARKS

Assignment A

Five Subjective Questions

10

Assignment B

Three Subjective Questions + Case Study

10

Assignment C

40 Objective Questions

10

b) Total weightage given to these assignments is 30%. OR 30 Marks c) All assignments are to be completed
as typed in word/pdf.
c) All questions are required to be attempted.
d) All the three assignments are to be completed by due dates (specified from time to time) and need to be
submitted for evaluation by Amity University.

( ) Tick mark in front of the assignments submitted


Assignment A

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Assignment B

Assignment C

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Accounting for Managers Assignment

Assignment: A
Problem 1:
Journalize the following transactions in the books of Mr. Walter:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Paid rent of building $ 12,000 half of the building is used by the proprietor for residential use.
Paid fire insurance of the above building in advance $ 1,000.
Paid life insurance premium $ 2,000. d) Paid income-tax $ 3,000.
Salary due to clerk $ 500.
Charge depreciation on furniture @ 10% p.a. for 1 month (furniture $ 12,000).
Provide interest on capital ($ 60,000) at 15% p.a. for 6 months.
Charge interest on drawing (10,000) at 18% p.a. for 6 months.
Provide interest on loan to Ram ($ 100,000) at 18% p.a. for 2 months.
Charge interest on loan to Shyam ($ 200,000) at 18% p.a. for 2 months.
Received commission $ 1,000 half of which is in advance.
Brokerage due to us $ 500.

Problem 2:
From following figures extracted from the books of Mr. XYZ, you are required to prepare a Trading & Profit & Loss
Account for the year ended 31st March, 2008 and a Balance Sheet as on that date after making the necessary
adjustments.
$

Mr. XYZs Capital


Mr. XYZ Drawings
Plant & Machinery
Freehold property
Purchases
Rtuens outwards
Salaries
Office Expenses
Discount A/c (Dr.)
Sundry Debtors
Loan to Mr. Krish @10% p.a.
Balance on 1.4.2007
Cash at bank
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228,800
Stock 1.4.2007
13,200
Wages
99,000
Sundry creditors
66,000
Postage & Telegrams
110,000
Insurance
1,100
Gas & fuel
13,200
Bad debts
2,750
Office rent
5,500
Loose tools
29,260
Factory lighting
44,000 Provision for doubtful debts
Interest on loan to Mr. Krish
29,260
Cash in hand

38,500
35,200
44,000
1,540
1,760
2,970
660
2,860
2,900
1,100
880
1,100
2,640
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Accounting for Managers Assignment


Bills payable

5,500

sales

231,440

Adjustments:
a. Stock on 31st March, 2008 was valued at $ 72,600
b. A new machine was installed during the year costing $15,400 but it is not recorded in the books as on
payment was made for it. Wages $ 1,100 paid for its erection has been debited to the wages account.
c. Depreciate :
1) Plant & machine by 33.33%
2) Furniture by 10%
3) Freehold property by 6%
d. Loose tools were valued at $ 1.760 as on 31.3.2008
e. Of the sundry debtors Rs.660 are bad and should be written off.
f. Maintain a provision of 5% on sundry debtors for doubtful debts.
g. The manager is entitled to a commission of 10% of the net profits after charging such commission.

Problem 3:
Following is the Trial Balance of M/s. Trinity Foods as on 30th June 2007 (after closing Nominal Accounts). Prepare a
Balance Sheet on the basis of this trial balance.
Particulars

Cash
Capital
Bank
Furniture
Ram
Rahim
Trading & Profit & Loss

Debit (Rs.)

Credit (in Rs.)

10,000
100,000
77,000
25,000
15,000
50,000
47,000
162,000

162,000

Problem 4:
Given below are the financial statements of Safal Enterprises, using the tool of ratio analysis comment on the
profitability and liquidity position of the firm for the year 2006-07. Total no. of shares outstanding for the firm is
2.69crores. In the view of growth opportunities in the near future the firm has been maintaining a policy of 45%
payout.

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Accounting for Managers Assignment

Summarized P & L of Safal Enterprises


For the year ended 31 March
Particulars

2006

2007
( Rs. In crores)
132.00
12.00
102.96
29.04

Sales
Other income
Cost of sales
Gross margin
Operating expenses
Administration
Selling & distribution
Profit before interest & tax (PBIT)
Interest
Profit before tax (PBT)
Provision for taxes
Profit after tax (PAT)

12.44
4.42
24.18
3.00
21.18
7.94
13.24

144.00
15.00
110.02
33.98
14.36
5.36
29.26
4.01
25.26
9.47
15.79

Balance Sheet of Safal Enterprises


Particulars
Assets
Fixed assets
Current assets
Inventory
Accounts receivable
Cash
Less: Current liabilities
Net current assets
Total Assets
Liabilities &owners equity
Share capital
Reserves & Surplus
Debt(long term)
Total

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31/03/06

31/03/07
(Rs in crores)
31.25

37.50

14.56
13.20
1.50
8.55
20.71
51.96

16.64
15.43
1.75
11.25
22.57
60.07

27.00
4.96
20.00
51.96

27.00
6.36
26.71
60.07

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Accounting for Managers Assignment

Problem 5:
Given below are the balance sheets of the two firms- Gloria Ltd and Victoria Ltd as on 31st March 2007.

Gloria Ltd.
Assets
Cash and Bank balance
Marketable securities
Sundry debtors
Prepaid expenses
Stock
Current Assets
Fixed Assets (Net)

12.70
10.00
22.00
93.50
1.12
139.32
589.00

Total Assets
728.32
Liabilities and Owners Equit
Sundry creditors
Notes payable
Long term debt
Equity
Total

6.75
6.56
130.01
585.00
728.32

Victoria Ltd.

38.60
21.00
23.70
162.45
2.14
247.89
642.00

889.89
26.45
6.44
345.00
512.00
889.89

Can the financial positions of the two firms be compared assuming that the two firms fall in the same industry?

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Accounting for Managers Assignment

Assignment: B
Problem 1:
Find out the cost of raw material purchased from the data given below:
Particulars

Rs.

Prime cost

200,000

Closing stock of raw material

20,000

Direct labour cost

100,000

Expenses on purchases

10,000

Problem 2:
The product of a manufacturing concern passes through two processes A and B and then to finished stock. It is
ascertained that in process A normally 5% of the total input is scrap which realizes Rs. 80 per tone.
From the following information relating to process A for the month of August 2007, prepare process A account
Materials
Cost of materials
Wages
Manufacturing overheads
Output

500 tonnes
Rs. 125 per tonne
Rs. 14,000
Rs. 4,000
415 tonnes

Problem 3:
Ahmedabad Company Ltd. manufactures and sells four types of products under the brand name Ambience, Luxury,
Comfort and Lavish. The sales mix in value comprises the following:
Brand name

Percentage

Ambience

33 1/3

Luxury

41 2/3

Comfort

16 2/3

Lavish

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8 1/3

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Accounting for Managers Assignment


-----100

The total budgeted sales (100%) are $ 600,000 per month. The operating costs are:
Ambience

60% of selling price Luxury

Luxury

68% of selling price Comfort

Comfort

80% of selling price Lavish

Lavish

40% of selling price

The fixed costs are $. 159,000 per month.

A) Calculate the breakeven point for the products on an overall basis.


b) It has been proposed to change the sales mix as follows, with the sales per month remaining at $. 6,00,000:
Brand Name

Percentage

Ambience

25

Luxury

40

Comfort

30

Lavish

05
--100

Assuming that this proposal is implemented, calculate the new breakeven point.

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Accounting for Managers Assignment

Case study:
Bajaj Auto Limited: The Unprecedented Growth Story
Bajaj Auto Limited is the flagship company of the Bajaj Group. The company manufactures two & three wheelers.
Mr. Rahul Bajaj is the present Chairman of the company. The company was incorporated in the year 1945 as M/s
Bachraj Trading Corporation Private Ltd. The promoters hold about 30% equity, whereas Indian public holds about
26% and institutional investors have more than 27% stake in the company.
The products manufactured by Bajaj Auto are scooters, motor cycles, auto spares parts, machine tools, steel and
engineering products. The company also produces three- wheelers as goods carriers such as pick-up or delivery vans
and passenger carriers such as auto-rickshaws. Bajaj Auto has a network of 498 dealers, 1,500 authorized service
centres and 162 exclusive three-wheeler dealers spread across the country.
Bajaj Auto has also diversified into the general as well as life insurance business through its subsidiaries Bajaj Allianz
General Insurance Company Ltd, respectively. The Bajaj brand has presence in many countries such as Sri Lanka,
Mexico, Bangladesh, Columbia, Peru, Egypt, etc. The main competitors of the company in the two-wheelers and
three- wheelers segment are- Hero Honda Motors Ltd, Kinetic Motor Co Ltd, LML ltd, Maharashtra Scooters Ltd, and
TVS Motor Co. Ltd.
The company sold close to 23 lakh vehicles in 2005-06, which is a record performance in its history. The sales of
motorcycles manufactured grew by 32% in 2005-06 compared to a market growth of below 19%. For the fifth
successive year, the company raised its market share in the motorcycle segment. Today it stands at almost 31%.
Sales increased by almost 31% to an all-time high of Rs 9,285 crore in 2005-06. the export of the company in all its
product categories has also been unprecedented during the FY 2005-06 as is reflected in the figures given below:
Table A Product-wise exports of Bajaj Auto Ltd
Product

2005-06

Motorcycles
Total two-wheelers
Three-wheelers
Total vehicles

165,288
174,907
75,297
250,204

2004-05
( in numbers )
123,946
130,945
65,765
196,710

Growth
(in percentage)
33
34
14
27

Even more impressive has been the growth in companys operating EBITDA, which increased by 47% to touch Rs
1805 crore during 2005-06. Consequently the operating EBITDA margin grew by 220 basis points to 17.9% of the
sales and operating income. Earnings per share have been risen from Rs 75.60 to Rs 111.00 in the current year.
Dividend too has grown to Rs 40 per share (400%) for the year ended 31st March 2006 as against Rs 25 per share in
2005.
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Accounting for Managers Assignment


Over the past few years, Bajaj Auto has focused on his technology development, and product development in
anticipation of market needs, scaling up its manufacturing facilities, implementing best-in-class production systems,
rationalizing vendors, slashing costs while upgrading quality, restructuring dealerships, and distribution
channels. These capabilities enabled the company to create exciting new products, which have set benchmarks in
styling, design, and technology. The companys products are creating a customer pull at all price points and the
company has now transformed from being a price warrior to a price leader. The results of these strategies are
reflected in its financial statements as follows (refer Table B and C):

Table B Profit and Loss Account for Bajaj Auto Ltd for the year ended
March 2003

Sales
Other income
Change in stocks
Expenditure
Profit & Loss

PBDIT
Interest
Depreciation
PBT
Tax provision
PAT
Dividends

March 2004

March 2005

March
2006

4987.05
297.10
32.92
5317.07
4335.16

(Rs in crore)
5721.44
7078.06
507.04
516.41
10.87
-11.57
6239.35
7582.90
5017.92
6286.91

9284.84
602.52
50.10
9937.46
8131.87

981.91
1.12
171.42
809.37
274.44
534.93
159.81

1221.43
0.94
184.32
1036.17
285.41
750.76
285.37

1805.59
0.34
191.28
1613.97
509.37
1104.60
461.50

1295.99
0.67
185.66
1109.66
349.32
760.34
288.64

Table C Assets and Liabilities of Bajaj Auto Ltd as on 31 March 2006


Liabilities
Net Worth
Paid up Equity

Mar 05
Mar 06
Rs in crore
4447.16
5349.79
101.18
101.18

Assets

capital
Bonus
Equity

114.17

114.17

Less: cumulative

1660.32

1834.19

capital
Minority
interest
Reserves &

89.46
4256.52

148.79
5099.82

depreciation
Net
fixed Assets
Investments

1205.64
5273.83

1230.77
6865.43

Gross fixed assets


Capital WIP

Mar 05
Mar 06
Rs in crore
2870.02
3092.28
9.14
25.26

Surplus
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Accounting for Managers Assignment


Free reserves

4233.28

5076.58

Deferred tax

9.20

6.43

Share premium

87.07

285.78

assets
Inventories

224.70

274.47

Otherreserves
free reserves
Specific reserves
Borrowings

4146.21
23.24
1229.17

4790.80
23.24
1469.44

Receivables
Sundry debtors
Debtors exceeding

3116.05
176.97
0.20

5799.11
302.54
1.13

Deferred tax

139.90

87.58

6 months to
Advances/loans

62.29

33.66

liabilities
Current
liabilities

4284.64

7773.20

corporate
bodies
Group/associate

34.44

19.41

& provisions
Sundry
Creditors
Other current

833.86
1169.04

1404.40
3674.37

companies
Other
companies
Advance payment

27.85
1823.60

14.25
1869.40

liabilities
Provisions

2281.74

2694.43

tax
Other of
receivables
Cash & Bank

1053.19
266.88

3593.51
476.48

balance
Intangible/DRE

4.57

27.32

10100.87

14680.01

not written off


Total Liabilities

10100.87

14680.01

Total Assets

Notwithstanding its excellent financial performance in the years following its major strategic shift, the management
of the firm believes in the philosophy that the quest for perfection is eternal.

To preclude the complacency from setting in, the management not only sets higher standards it also continuously
monitors its performance and benchmarks with the industry performance in general and their closest competitors
results in particular.

Discuss
1. Is the profitability performance of the firm satisfactory? If not, how can it be improved?
2. How attractive is the firm from the short-term and long-term lenders, perspective? Does the firm
appear to be the favorite destination in the automobile sector (two-wheelers and three-wheelers segment)
for the lenders?
3. How efficient is the firm been in utilizing the resources at its disposal? How do you think the company can
improve upon its efficiency?

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Accounting for Managers Assignment


Assignment: C
State whether the following are true or false:
1. Accounting is a language of business.
2. Accounting is a service function.
3. Accounting records only those transactions and events which are financial character.
4. Drawings reduce capital.
5. Capital is increased by profit and decreased by losses.
6. The system of recording transaction on the basis of their two old aspects is called double entry system.
7. Purchases made from B for cash should be debited to B.
8. Earnings of revenue means increase in Cash/Bank balance
9. The balance of an account is always known by the side which is shorter.
10. The return of goods by a customer should be debited to Returns Inwards Account.
11. Goods bought for resale are referred to as Stocks
12. If the business has any liability, the proprietors capital must be more than the total assets.
13. Withdrawal of money by the owner is an expense for the business.
14. Ledger is called the book of final entry.
15. Cash book is used to record all receipts and payments of cash.
16. Sales book is used to record all credit sales.
17. The journal is not a book of original entry.
18. Goodwill is an intangible asset.
19. Salaries & Wages appearing in the trial balance are shown on the liabilities side of the balance sheet.
20. The profit & loss account is one of the financial statements.
21. Share having preferential right as to dividend and repayment of capital are termed as equity share capital.
22. Shares which are not preference shares are called equity shares.
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23. The amount of share premium received by the company is shown under the heading reserves & surplus in
the companys balance sheet.
24. Debenture holders are not the member of the company.
25. There are no legal restrictions, similar to shares, for issue of debentures at discount.
26. Fixed cost per unit remains constant.
27. Direct cost is that cost which can not be easily allocated to cost units.
28. Selling overheads form a part of cost of production.
29. Manufacturing and administrative overheads are different.
30. Total fixed cost remains unaffected by the change in volume of output.
31. Variable cost per unit remains fixed.
32. In chemical industries unit costing is used.
33. The output of a process is transferred to next process.
34. Good units bear the abnormal loss arising in the process costing.
35. Excess of pre-estimated loss over actual loss is known as abnormal loss.
36. Marginal costing is a method of ascertaining cost.
37. A firm earns no profit or incurs no loss at BEP.
38. Margin of Safety implies Break Even Point.
39. In marginal costing, stock is valued at fixed costs.
40. Sales below BEP mean profit.

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