Birla Institute of Technology & Science, Pilani

Distance Learning Programmes Division

First Semester 2008-2009

Mid-Semester Test
(EC-1 Regular)

Course No. : CM ZG513

Course Title : FINANCIAL MANAGEMENT
Nature of Exam : Closed Book
Weightage : 30% No. of Pages =2
Duration : 2 Hours No. of Questions = 5
Date of Exam : 03/08/2008 (FN)
Note:
1. This test is only for students of MS Consultancy Management.
2. Please follow all the Instructions to Candidates given on the cover page of the answer book.
3. All parts of a question should be answered consecutively. Each answer should start from a fresh page.
4. Mobile phones and computers of any kind should not be brought inside the examination hall.
5. Use of any unfair means will result in severe disciplinary action.

Q.1 (a). Distinguish between the following:

i) Capital and Revenue Expenditures

ii) Dual and Accrual Principles of Accountancy
iii) Tangible and Intangible Assets
iv) Depreciation and Amortization [4]

Q.1 (b). Comment on the following:

(i). A Company wants to charge heavy Advertisement Expenses over a
period of 5 years instead in the year in which these are incurred.
(ii). An Accountant refuses to provide for contingent liability in the Books
of Accounts.
(iii). ABC Company wants to charge the cost of renovation of picture hall to
Capital instead to Revenue expenditures.
(iv). A Company has purchased shares of Reliance at Rs.1500 per share. The
price of the share is Rs 2000 on the date of closing the accounts. The
company wants to value these shares at the Market price. [4]

Q.2 Write Short Notes on the following:

(i) Money Measurement Concept

(ii) Working Capital
(iii) Provisions
(iv) Absorption Costing
(v) Cost –Volume- Profit Analysis [5]

Q.3 “A successful Consultant must possess the knowledge of Finance & Accounts”.
Discuss. [5]

CM ZG513 (EC-1 Regular) Page 1 of 2 (PTO)

CM ZG513 (EC-1 REGULAR) FIRST SEMESTER 2008-2009 PAGE 2

Q.4 Prepare a Cash flow statement from the following information and the Balance
Sheet relating to M/S ABC (Pvt.) Limited
ABC (Pvt.) Limited
Balance Sheet as on 31st March
Description 2007 (Rs.) 2008 (Rs.)
Assets
Cash 10,000 15,000
Receivables 20,000 25,000
Inventory 20,000 35,000
Plant and Machinery at cost 85,000 85,000
Less Accumulated Depreciation 15000 10,000
Total Assets 1,20,000 1,50,000
Liabilities
Sundry Creditors 8,000 10,000
Outstanding Expenses 7,000 10,000
Secured Loans 10,000 5,000
Unsecured Loans 5,000 25,000
Capital 50,000 50,000
Reserves and Surplus 40,000 50,000
Total Liabilities 1,20,000 1,50,000

The net profit for the period after charging depreciation was Rs.20,000. A piece of
equipment costing RS.25, 000 on which accumulated. Depreciation amounted to
Rs.10, 000 was sold for Rs.10, 000.Dividend Paid during the year amounted to
Rs.10, 000. [6]

Q.5 (a). A multi product Company has the following cost and out put data for the Last
year
Products Total
X Y Z
Sales Mix 40% 35% 25%
Selling Price Per unit (Rs.) 20 25 30
Variable cost per unit (Rs.) 10 15 18
Total Fixed Cost (Rs.) 1,50,000
Total Sales (Rs.) 5,00,000
The Company proposes to replace Product Z by Product S.Estimated Cost and out
put data are:
Products Total
X Y Z
Sales Mix 50% 30% 20%
Selling Price Per unit (Rs.) 20 25 28
Variable cost per unit (Rs.) 10 15 14
Total Fixed Cost (Rs.) 1,50,000
Total Sales 5,00,000

As a Consultant advise the Management as to whether they should replace

product Z by S or not. [4]

Q.5 (b). Will the breakeven point in both the cases remain the same or change? [2]