MB0041–Financial and Management Accounting

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Summer-2013

Master of Business Administration- MBA Semester 1

MB0041–Financial and Management Accounting-4 Credits

(Book ID: B1624)

Assignment (60 Marks)

Note: Answer all questions (with 300 to 400 words each) must be written within 6-8 pages. Each Question carries 10 marks 6 X 10=60

Q1. Accounting is one of the oldest, structured management information system. Give the meaning of accounting and book keeping? Explain the objectives of accounting?

Answer. Accounting:-The system recording, reporting and analyzing of financial transactions of a business. The person in charge of accounting is known as an accountant & this individual is typically required to follow a set of rules & regulations such as the Generally Accepted Accounting Principle (GAAP). Accounting allows a company to analyze the financial performance of the business, look at statistics such as net profit.

Book keeping: - It is the task of recording, classifying and summarizing (up to trial balance) of

Q2. Explain GAAP and write down the relationship between accounting principles, accounting concepts, and accounting conventions. Explain all the five accounting concepts with an example.

Answer. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) :- The common set of accounting principles, standards and procedures that company uses to compile their financial statements. GAAP are a combination of authorities’ standards and simply the commonly accepted ways of recording and reporting accounting information.

ACCOUNTING PRINCIPLES:-  

Q3. List down the classification of accounts according to accounting equation approach. Give the meaning and examples for all the types of accounts.

Answer. ACCOUNTING EQUATION:-

ASSETS = LIABILITIES + OWNERS EQUITY

Basic accounting group covers all finance related things into 5 fundamental types of accounts. That is, everything that accounting deals with can be placed into one of these 5 accounts:-

Q4. What is cash book? Differentiate between other subsidiary books and cash book.

Answer. CASH BOOK: -   Journal in which all cash receipts and payments (including bank deposits and with drawls) are recorded first, in chronological order, for posting to journal ledger, termed as cash book. Cash book is regularly reconciled with the bank statements as an internal auditing measure. In large firms cash book is of two types:-

1. Cash disbursement: Journal in which all cash payments are recorded.

Q5. The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000.

Sundry Debtors Rs.160000

Bad Debts written off Rs 9000

Discount allowed to Debtors Rs. 1800

Reserve for Bad and doubtful Debts 31-12-1999 Rs. 16500

Reserve for discount on Debtors 31-12-1999 Rs. 3200

You are required to provide the bad and doubtful debts at 5% and for discount on debtors at 2%. Show the adjustments for bad debts, bad debts reserve, discount account, and provision for discount on debtors.

Hint: RBD to be provided = 500

Reserve for discount to be provided now =1640

Answer. The amount debited to P&L account towards RBD is computed as follows:

Old RBD                                                                                                     = Rs.16500

(-) Bad debts                                                                                             = Rs. 9000

Balance                                                                                                      = Rs. 7500

New RBD @5%on 160000                                                                      = Rs. 8000

RBD to be provided                                                                                 = Rs. 500(8000-7500)

Q6. What is management accounting? Explain the roles of management accounting and write down about any 2 functions of management accounting.

Answer. MANAGEMENT ACCOUNTING:-It combines accounting, finance and management with the leading edge techniques needed to drive successful business. it is concerned with the provisions and use of accounting information to managers with in organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.

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