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Management Programme ASSIGNMENT SECOND SEMESTER 2010 MS-04: Accounting and Finance for Managers Best Solution by: <awww.distpub.com Mail For Best Solution: distpub@gmail.com School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI – 110 0 68 " id="pdf-obj-0-3" src="pdf-obj-0-3.jpg">

Management Programme

ASSIGNMENT SECOND SEMESTER

2010

MS-04: Accounting and Finance for Managers

Best Solution by:

Mail For Best Solution:

Management Programme ASSIGNMENT SECOND SEMESTER 2010 MS-04: Accounting and Finance for Managers Best Solution by: <awww.distpub.com Mail For Best Solution: distpub@gmail.com School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI – 110 0 68 " id="pdf-obj-0-22" src="pdf-obj-0-22.jpg">

School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI – 110 068

MS- 04: Accounting and Finance for Managers

ASSIGNMENT

Course Code

:

MS-04

Course Title

:

Accounting and Finance for

Managers Assignment Code

:

01/TMA/SEM-II/2010

Coverage

:

All Blocks

Attempt All the Questions.

Ques.1 Explain the following accounting concept

  • 1. Concept of conservatism

  • 2. Cost Concept

  • 3. Periodicity Concept

  • 4. Money Measurement Concept

Ques.2: The following is the Trial Balance of a trader as at 31 st December, 2001:

Debit Balances

Rs.

Credit Balances

Rs.

Stock (1-1-2001)

46,800

Neeru’s capital account

1,08,090

Sales returns

8,600

Sales

2,89,600

Purchases

2,43,100

Purchases returns

5,800

Freight and carriage

18,600

Sundry creditors

14,800

Rate, Rent etc.

5,700

Bank loan at 6%

20,000

Salaries and wages

9,300

Income from investments

250

Sundry debtors

24,000

Discounts

4,190

Bank Interest

900

Printing and

14,600

advertisement

8,000

Cash at Bank

5,000

Investments

1,800

Furniture and fittings

7,540

Discounts

3,910

General expense

700

Audit Fees

600

Insurance

2,330

Travelling expenses

870

Postage and telegrams

380

Cash in hand

30,000

Deposit with Pran

10,000

Drawing Account

4,42,730

4,42,730

Adjustments:

(i)

Stock at the end was Rs. 78,600

A depreciation of 10% p.a. is to be written off Furniture and fittings.

(ii)

Included amongst the debtors is Rs. 3,000 due from Zeenat and included

(iii)

amongst the creditors is Rs. 1,000 due to her. The effect of advertising not yet expired, a quarter of the amount ‘Printing and

(iv)

Advertising’ is to be carried forward to the next year. Reserve 2 per cent for discount on Debtors and create a bad debts reserve at 5

(v)

percent.

(vi)

Wages owing on 31 st December, 2001 is Rs. 300, salaries owing Rs. 500 and

(vii)

carriage owing Rs. 100. Prepaid insurance is Rs. 80.

(viii)

Furniture which stood at Rs. 600 in books Ist January, 2001 was disposed of at

(ix)

Rs. 290 on June, in part exchange for new furniture costing Rs. 520. A net invoice at Rs. 230 was passed through the purchase-day book. Purchase Invoice amounting to Rs. 400 had been omitted from the books.

(x)

A Neon-sign costing Rs. 100 is included in Advertising.

(xi)

Two dishonored cheques for Rs. 200 and Rs. 300 respectively has not been

(xii)

entered in the cast book. The first for Rs. 200 is known to be bad. In the case of a second cheque for Rs. 300, it is expected that 75% of it would be realized. Private purchase amounting to Rs. 600 had been included in the Purchase Day

(xiii)

Book. Charge full year’s interest on Deposit with Pran at 7% p.a.

(xiv)

Provide for interest on Bank loan for the amount due. Prepare Final Accounts.

Q.3 : From the following Balance Sheets of Sriramco, prepare (a) Statement of Changes in Working Capital, and (b) Funds Flow Statement: Balance Sheet of Sriramco as on 31 st December…

 

2000.

2001

Assets

Rs.

Rs.

Goodwill

90,000

80,000

Land and Buildings

2,80,000

2,00,000

Plant

1,00,000

2,00,000

Investments

30,000

40,000

Book Debts

1,80,000

2,10,000

Stock

80,000

1,20,000

Cash in hand and at Bank

40,000

45,000

Preliminary Expenses

20,000

10,000

8,20,000

9,05,000

Liabilities

   

Share Capital Equity Share Capital

4,00,000

5,00,000

10% Red. Pref. Share Capital

2,00,000

1,00,000

Capital Reserve

-

30,000

General Reserve

60,000

80,000

P. and L. Account

30,000

45,000

Proposed Dividend

60,000

60,000

Sundry Creditors

30,000

45,000

Provision for Taxation

40,000

45,000

8,20,000

9,05,000

The following additional information is also available

  • (a) A machine has been sold for Rs. 40,000 whose written down value was Rs. 36,000. Depreciation of Rs. 15,000 has been charged on plant in 2001;

  • (b) A piece of land had been sold out in 2001 and the profit on the sale has been credited to capital reserve;

  • (c) An interim dividend of Rs. 30,000 has been paid in 2001;

  • (d) Income tax paid during 2001 amounts to Rs. 45,000;

  • (e) Preference Shares were redeemed at 5% premium.

Ques. 4 : The capital structure of Bombay Refrigeration Company Ltd. Consists of an equity share capital of Rs. 3, 00,000 (share of Rs. 10 par value) and Rs. 3,00,000 10% debentures. Sales increased by 20% from 30,000 to 36,000 units, the selling price is Rs. 10 per unit. Variable cost Rs.6 Per unit and fixed costs amount to Rs. 50,000 The company’s tax rate is 50%.

You are required to compute the degree of operating leverage, degree of financial leverage and degree of combined leverage.

Ques. 5: The following details relates to the two machines X and Y:

 

Machine X

Machine Y

Cost

Rs. 56,125

Rs.56,125

Estimated Life

5 years

5 years

Estimated salvage value

Rs. 3,000

Rs. 3,000

Working Capital required in the beginning

Rs.10,000

Rs. 20,000

     

Annual income after tax and depreciation:

 
 

Year

 

Rs.

 

Rs.

I

 

3,275

 

11,375

II

 

5,375

 

9,375

III

 

7,375

 

7,375

IV

 

9,375

 

5,375

V

 

11,375

 

3,375

Overhauling charges at the end of third year Rs. 25,000 on machine X. Depreciation has been charged at straight line method. Discount rate is 10%? P.V.F. at 10% for five years are 0.909, 0.826, 0.751, 0.683 and 0.621. Suggest which project should be accepted.

Ques. 6: Discuss the concept of working capital what shall be the repercussions if the firm has

  • a) Shortage of working capital

  • b) Excess of working capital

Ques 7: What is dividend and why is dividend decision important?