Dear Students,

The University has decided to have only one assignment per course w.e.f. January 2007
session onwards for students of MBA and MBA (Banking and Finance). Please attempt
the assignment questions given in this leaflet/booklet and submit it to the coordinator of the
study center, you are attached with, on or before 31st October, 2008.

MS-04: ACCOUNTING AND FINANCE FOR MANAGERS

ASSIGNMENT

Course Code : MS-04

Course Title : Accounting and Finance for Managers
Assignment Code : MS-04/SEM-II/2008
Coverage : All Blocks

Note: Please attempt all the questions and send them to the Coordinator of the Study Centre you are
attached with.

1. Meet the Accounts/Finance personnel of any organization and find out about the activities
carried out by them? Discuss about the accounting conventions & standards that are being
followed by them & the reasons thereof? Also try to find out as to how the accounting
information collected by them, helps in making different financial decisions.

2. You are required to prepare a Profit & Loss Account for the year ending 31st December, 2007
and the Balance Sheet on that date. The Trial Balance of XYZ Ltd. for the year ended 31 st
December 2007 is as follows:-

Trial Balance of XYZ Ltd. as on 31st Dec. 2007

Debit Balances Rs. Credit Balances Rs.

Materials used 3,50,00 Sales(including 2% Sales tax) 9,18,000
0
Cost of Labour 1,50,00 Sale of Scrap 100
0
Stock, finished and work in 50,00 Rent received 2,000
st
process on 31 December, 2006 0
Wages : Factory Staff 15,00 Discounts 2,750
0
Directors Remuneration 50,00 Recovered against fire claim 5,000
0 re : Stock
Salaries : Clerical Staff 75,00 Capital : Equity 25,000
0
Insurances : Workmen’s 1,50 Preference- 9% 8,000
Compensation 0
General, fire etc. 2,00 Creditors 1,56,000
0
Directors’ Life Insurance 1,50 Provision for Taxation 1,05,000
0
Maintenance : Buildings 1,00 Profit & Loss Account 13,750
0
Plant and Machinery 12,50

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 0
Rent and Rates of premises and 20,00
hire of plant 0
Heat, Light and Power 15,00
0
Experimental and Laboratory 10,00
Expenses 0
Canteen Expenses 5,00
0
Staff Welfare expenses 2,50
0
Motor Expenses 12,50
0
Professional Charges 2,80
0
Postage and Telephone 3,50
0
Books, Printing and Stationery 11,000
Sundry expenses 10,00
0
Carriage and Packing on Sales 3,30
0
Discounts 5,00
0
Debtors 1,78,00
0
Freehold Property 50,00
0
Plant and Machinery 12,50
0
Fixtures and Fittings – Offices 3,50
0
Office machinery and Equipment 3,00
0
Motor Car and Van 6,50
0
Stock of materials on 31st Dec. 1,20,00
2007 0
Bank 38,00
0
Sales Tax Paid 15,00
0
12,35,60 12,35,600
0

Depreciation is to be provided at the following rates:

Plant and Machinery 10%
Fixture and Fittings 05%
Office Machinery, etc. 10%
Motor Vans and Cars 25%

The stock of finished goods and work in progress as on 31 st December, 2007 was Rs. 35,000.
Provide for preference dividend and ordinary dividend at 10%. The total taxation liability is
estimated at Rs.1,50,000 of which Rs. 75,000 relates to the current year.

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 Debtors include Rs. 10,000 deposited as security against government contracts.

The Works Manager is paid partly by salary and partly by a commission; he is entitled to a
commission of 5% on the amount by which the surplus in the factory cost exceeds 20% of the
sales for the period. Charge the commission if any in the Profit and Loss Account.

3. You are required to show the effect of each of the following changes on profit and Break-
Even-Volume from the information given below:

Sales 50,000 units Rs. 5.00 per unit

Variable cost Rs. 3.00 per unit
Fixed cost Rs. 70,000

Changes:
(i) Price changes by 20%.
(ii) Volume decreases to 40,000 units.
(iii) Variable cost increases to Rs 3.50 per unit.
(iv) Fixed cost decreases by 10%.

4. From the following information you are to prepare a Cash Budget for the period from July to
December 2008.
(i) The estimated sales and expenses are as follows:

June July Aug. Sep. Oct. Nov. Dec.

Sales 35,000 40,000 40,000 50,000 50,000 60,000 65,000
Purchases 14,000 16,000 17,000 20,000 20,000 25,000 28,000
Wages & Salaries 12,000 14,000 14,000 18,000 18,000 20,000 22,000
Expenses 5,000 6,000 6,000 6,000 7,000 7,000 7,000
Interest Received 2,000 - - 2,000 - - 2,000
Sale of Fixed Assets - - 20,000 - - - -

(ii) Sales are 20% in cash and balance on credit. 50% of the debtors are collected in the
month of sales and the remaining in the next month.
(iii) The time lag in payment of purchases and expenses is 1 month. However, wages and
salaries are paid fortnightly with a time lag of 15 days.
(iv) The company maintains a minimum cash balance of Rs. 5,000. The cash balance in
excess of Rs. 7,000 is invested in government securities in multiples of Rs. 1,000. Short
falls in cash balance are made good by borrowing from banks. The interest received as
well as paid is to be ignored.

5. As a Finance Manager what is your role in matters of dividend policy. What will be the
alternatives and factors that you may consider before finalizing your dividend policy?