MB0041–Financial and Management Accounting

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Winter-2014

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. Analyze the following transaction under traditional approach.

18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000

19.1.2011 Paid Ramu by cheque Rs.1,50,000

20.1.2011 Paid salary Rs. 30,000

20.1.2011 Paid rent by chequeRs. 8,000

21.1.2011 Goods withdrawn for personal use Rs. 5,000

25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000

26.1.2011 Received an advance from customers Rs. 3,00,000

31.1.2011 Paid interest on loan Rs. 5,000

31.1.2011 Paid instalment of loan Rs. 25,000

31.1.2011 Interest allowed by bank Rs. 8,000

Analysis of transaction –with accounts involved-nature of account-affects and debit/credit

Answer: Analysis of Transaction under Traditional Approach

Date	Accounts Involved	Nature of Account	Affects	Debit/ Credit
18.1.2011	Shyam a/c	Personal	Shyam is the receiver	Debit
	Bank a/c	Personal	Bank is the giver	Credit
19.1.2011	Ram’s a/c	Personal	Ram is the receiver	Debit
	Bank a/c	Personal	Bank is the giver	Credit

Q2. The trial balance of Nilgiris Co Ltd., as taken on 31st December, 2002 did not tally and the  difference was carried to suspense account. The following errors were detected  subsequently.

a) Sales book total for November was under cast by Rs. 1200.

b) Purchase of new equipment costing Rs. 9475 has been posted to Purchases a/c.

c) Discount received Rs.1250 and discount allowed Rs. 850 in September 2002 have been  posted to wrong sides of discount account.

d) A cheque received from Mr. Longford for Rs. 1500 for goods sold to him on credit earlier,  though entered correctly in the cash book has been posted in his account as Rs. 1050.

e) Stocks worth Rs. 255 taken for use by MrDayananda, the Managing Director, have been  entered in sales day book.

f) While carrying forward, the total in Returns Inwards Book has been taken as Rs. 674  instead of Rs. 647.

g) An amount paid to cashier, Mr. Ramachandra, Rs. 775 as salary for the month of November  has been debited to his personal account as Rs. 757.

Answer:  Journal Proper of Evergreen Co Ltd.

Date	Particulars	LF	Debit	Credit
			Rs.	Rs.
31-12-2002	Suspense account Dr		1,200
	To Sales account			1,200
	(Being under casting of sales book rectified)

Q3. From the given trial balance draft an Adjusted Trial Balance.

Trial Balance as on 31.03.2011

Debit balances	Rs.	Credit balances	Rs.
Furniture and Fittings	10000	Bank Over Draft	16000
Buildings	500000	Capital Account	400000
Sales Returns	1000	Purchase Returns	4000
Bad Debts	2000	Sundry Creditors	30000
Sundry Debtors	25000	Commission	5000
Purchases	90000	Sales	235000
Advertising	20000
Cash	10000
Taxes and Insurance	5000
General Expenses	7000
Salaries	20000
TOTAL	690000	TOTAL	690000

Adjustments:

1. Charge depreciation at 10% on Buildings and Furniture and fittings.

2. Write off further bad debts 1000

3. Taxes and Insurance prepaid 2000

4. Outstanding salaries 5000

5. Commission received in advance1000

Answer.  Ledger accounts

Furniture and fittings A/C

Particulars	Rs.	Particulars	Rs.
To bal b/d	10000	By Depreciation By bal c/d	10009000
Total	10000	Total	10000
To bal b/d	9000

Q4. Compute trend ratios and comment on the financial performance of Infosys Technologies Ltd. from the following extract of its income statements of five years. (in Crore)

Answer. Infosys Technologies Ltd.

Q5. Give the meaning of cash flow analysis and put down the objectives of cash flow analysis. Explain the preparation of cash flow statement.

Answer: DEFINITION OF 'CASH FLOW'

1. An accounting statement called the "statement of cash flows", which shows the amount of cash generated and used by a company in a given period. It is calculated by adding noncash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific

Q6. Write the assumptions of marginal costing. Differentiate between absorption costing and marginal costing.

Answer: Marginal Costing is ascertainment of the marginal cost which varies directly with the volume of production by differentiating between fixed costs and variable costs and finally ascertaining its effect on profit.

The basic assumptions made by marginal costing are following:

- Total variable

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