Management Accounting and

Analysis
ASSIGNMENT Term - 1

Subramanyam Gayathri Saran

PR No: 180101616161
EPGDM Term - 1, 34th Batch
Alliance University

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1. Given here are a few situations:

REQUIRED
State the accounting assumption or principle that describes each of the given situations.

Personal and business transactions are separately maintained. Business Entry Concepts
Inventory is recorded at its purchase price. Cost concept
The death of the chief executive officer of the company is not
recorded in accounts. Money Measurement concept
In case of doubt, it is considered better to understate rather than
overstate income. Conservatism or Prudence concept
Assets are not stated at their liquidation value. Cost concept
Financial Statements are prepared on an annual basis. Accounting period concept

Expenses are recognized in the same period as the related revenues. Matching concept
Revenue is recognized when it is earned and expense is recognized
when it is incurred. Accrual Concept

The accounting records only events that affect the financial position
of the entity and at the same time can be reasonably determined in
monetary terms. Money Measurement concept
Same treatment is given to comparable transactions from period to
period. Consistency Principle

2. The manager of a company who did not have proper accounting knowledge prepared the following balance
sheet. He has wrongly classified the items under assets, liabilities and owners’ equity.

Owner’s Equity and Liabilities Rs Assets Rs

Share Capital 10,00,000 Retained Earnings 5,00,000

Equipment 9,00,000 Land and Buildings 7,00,000

Cash 2,00,000 Long – term loan 4,00,000
Accounts Payable 2,00,000

Accounts Receivables 3,00,000

21,00,000 21,00,000

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REQUIRED: Prepare the correct Balance sheet

Answer: Correct Balance sheet

Owner’s Equity and Liabilities Rs Assets Rs
Share Capital 10,00,000 Equipment 9,00,000

Retained Earnings 5,00,000 Land and Buildings 7,00,000

Accounts Payable 2,00,000 Cash 2,00,000
Long – term loan 4,00,000 Accounts Receivables 3,00,000

21,00,000 21,00,000

3. Using Accounting Equation, Answer the following independent Questions.

1) New Company’s assets are Rs 250 lakh and its external liabilities are of Rs 100 lakh, determine the amount
of owner’s Equity.
Owner’s Equity = Total Assets – External liabilities

Owner’s Equity = 250, 00,000 – 100, 00,000

= 150, 00,000

2) Royal Industries has total assets of Rs 100 lakh and owners’ Equity of Rs 70 lakh, Compute the amount of
external liabilities.
External Liabilities = Total Assets - Owner’s Equity
= 100, 00,000 - 70, 00,000
= 30, 00,000

3) Small Enterprise has following amounts appearing in Balance Sheet as at 31 st December, 2015: Capital Rs 50
lakh, Reserve and undistributed profits Rs 15 lakh, and total external liabilities Rs 35 lakh, determine the
amount of total assets.
BALANCE SHEET:
Assets = Liabilities + Equity
= 35, 00,000 +15, 00,000 + 50, 00,000
= 100, 00,000

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Capital 50,00,000 Total Assets 100,00,000
Reserves 15,00,000
Ext. Liabilities 35,00,000
100,00,000 100,00,000

4. Journalize the following transactions, Post them into ledger account and prepare a Trial Balance
2017

March – 1 Commenced business with cash Rs.1, 00,000

March – 2 Purchased goods for cash Rs. 25,000

March – 3 Purchased furniture for cash Rs. 6,000

March – 5 Purchased goods from Suresh on credit Rs. 5,000

March – 7 Sold goods for cash Rs. 30,000

March – 10 Sold goods to Mahesh on credit Rs. 25,000

March – 12 Returned goods to Suresh Rs. 500

March – 13 Mahesh returned us goods worth Rs. 500

March -15 Paid Rs. 4,450 to Suresh by cheque in full settlement of his account

March – 20 received a cheque of Rs. 24,450 from Mahesh and gave a discount of Rs. 50

March – 25 Withdrew cash for personal use Rs. 2,500

March – 28 Paid rent of Rs. 5,000 and Salary Rs. 6,000 by cheque

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 Date Name, A/c debited and credited Dr Amount Cr Amount

March 1st Cash A/c Dr 1,00,000

To capital A/c 1,00,000

March 2nd Purchases A/c Dr 25,000

To cash A/c 25,000

March 3rd Furniture A/c Dr 6,000

To Cash A/c 6,000

March 5th Purchases A/c Dr 5,000

To Suresh A/c 5,000

March 7th Cash A/c Dr 30,000

To sales A/c 30,000

March 10th Mahesh A/c Dr 25,000

To sales A/c 25,000

March 12th Suresh A/c Dr 500

To purchases A/c 500

March 13th Sales return A/c Dr 500

To Mahesh A/c 500

March 15th Suresh A/c Dr 4,500

To Bank A/c 4,450
To Discount received 50

March 20th Bank a/c Dr 24,450

Discount allowed A/c Dr 50
To Mahesh A/c 24,500

March 25th Drawings A/c Dr 2,500

To Cash A/c 2,500

March 28th Rent A/c Dr 5,000

Salary A/c Dr 6,000
To Bank A/c 11,000

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Ledger
Cash Ledger
Debit Rs Credit Rs
To capital 1,00,00 By 25,000
0 purchases
To sales 30,000 By furniture 6,000
By capital 2,500

By bal.fig 96,500

1,30,00 1,30,000
0

Purchases Ledger
Debit Rs Credit Rs
To Cash 25,000

To Suresh 5,000

By balance 30,000
c/d
30,000 30,000

Furniture Ledger
Debit Rs Credit Rs
To cash 6,000

By bal c/d 6,000

6,000 6,000

Suresh Ledger
Debit Rs Credit Rs
To purchase returns 500 By 5,00
purchase 0
To Bank 4,45
0
To Discount 50

5,00 5,00
0 0

Sales Ledger
Debit Rs Credit Rs
By cash 30,00
0

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 By 25,00
Mahesh 0
To bal c/d 55,00
0
55,00 55,00
0 0

Sales return
Debit Rs Credit Rs

To Mahesh 500

By bal c/d 500

500 500

Purchase returns
Debit Rs Credit Rs
By 50
Suresh 0
To bal c/d 50
0
50 50
0 0

Bank Ledger
Debit Rs Credit Rs
To Mahesh 24,45 By 4,450
0 Suresh
By rent 5,000

By salary 6,000

By bal c/d 9000

24,45 24,45
0 0

Mahesh Ledger
Debit Rs Credit Rs
To sales 25,00 By sales 500
0 return
By Bank 24,45
0
By Discount 50

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 25,00 25,00
0 0

Discounts allowed
Debit Rs Credit Rs
To Mahesh 50

By bal c/d 50

50 50

Discounts received
Debit Rs Credit Rs
By Suresh 50

To bal c/d 50

50 50

Drawing
Debit Rs Credit Rs
To cash 2,500

By bal c/d 2,500

2,500 2,500

Salary
Debit Rs Credit Rs
To Bank 6,00
0
By bal 6,00
c/d 0
6,00 6,00
0 0

Rent
Debit Rs Credit Rs
To Bank 5,00
0
By bal 5,00
c/d 0
5,00 5,00
0 0

Capital A/c
Debit Rs Credit Rs
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To Drawing 25,00 By 1,00,00
0 cash 0
To bal c/d 97,50
0

Trial Balance

Particulars Dr. Amount Cr. Amount

Cash in hand 96,500
Capital 100,000
purchase 30,000
Furniture 6,000
Sales 55,000
Purchase return 500
500
Sales return
Cash at bank 9,000
Discount received 50
Discount allowed 50
Drawing 2500
Rent 5000
Salary 6000

1,55,550 1,55,550