[4] d) Interest debited by the bank on Jun 06 but no advice received 4000 e) Amount wrongly debited by the bank 400 f) Dividend collected by the bank not recorded in cash book 6000 g) Directly deposited by customer 000 Q.5 i. Write a note on Cost Concept. ii. What is Cost Accounting? Briefly explain different methods of Costing. OR ii. Following details are available for two successive years for a product. Particulars Year Year Sales 00000 80000 Profit 000 6000 Calculate P/V ratio, Fixed Cost, BEP, Amount of Profit if Sales are Rs. 00000, Sales in Rs. when desired Profit is Rs. 5000 and margin of safety for both the years. Q.6 i. What are the different objectives of Management Accounting? Explain any three. ii. From the following balance sheet of X Ltd., prepare Cash flow statement. Liabilities 009 00 Assets 009 00 Capital 800000 800000 Building 00000 680000 Profit & loss 6500 000 Plant 80000 5000 Sundry 8500 4000 Stock 5000 000 creditors Bills payable 000 000 Debtors 5000 0000 Cash at Bank 000 4000 84000 8000 84000 8000 Dividend paid during the year 00 is Rs. 0000. The changes in building and plant value are due to depreciation. OR ii. From the given information of a company prepare the balance sheet. Receivable turnover ratio 4, payable turnover ratio 5, inventory turnover ratio 8, capital turnover ratio, fixed assets turnover ratio 8, gross profit ratio 5%, gross profit for the year Rs. 40000. Reserve & surplus Rs. 8000, Closing stock was Rs. 000 more than opening stock. There is no long term loan or OD. ****** Total No. of Questions: 6 Total No. of Printed Pages:4 Enrollment No... Faculty of Management End Sem (Odd) Examination Dec-06 MS5CO0 Accounting for Managers Programme: MBA Branch/Specialisation: Management Duration: Hrs. Maximum Marks: 60 Note: All questions are compulsory. Internal choices, if any, are indicated. Q. i. Which of the following concept assume that business will last indefinitely? a) Business entity b) Going concern c) Periodicity d) Conservatism ii. The process of preparing the ledger is called a) Journalising b) Posting c) Balancing d) Totalling iii Management accounting involves a) Preparation of final statement b) Analysis and interpretation of data c) Recording of transaction d) Assisting the management in performing its function effectively iv Management accounting is highly sensitive to a) Management needs b) Investors needs c) Government needs d) Consumer needs v Bank reconciliation statement is a) A part of cash book b) A part of pass book c) A statement prepared by bank d) A statement prepared by customer vi In which of the following methods, the amount of depreciation remains the same throughout: a) Fixed Installment Method b) Diminishing Balance Method c) Fixed and Diminishing Balance Methods d) Neither Fixed nor Diminishing Balance Method vii Patent is a/an a) Current asset b) Intangible fixed asset c) Tangible fixed asset d) Investment viii Major objective of cost accounting is to ascertain a) Cost b) Profit c) Loss d) Planning ix cost consists of costs of direct material, direct labour and direct expenses. a) Fixed b) Variable c) Direct d) Prime PTO
x [] A business has assets of Rs. 45600 and liability of Rs. 0000. Capital is a) 65600 b) 5600 c) 5600 d) None of these Q. i. Define Accounting. Explain rules of debit and credit. ii. Pass the Journal entries for the following transactions: Jan 0, 05 Raj, the proprietor of the business brought in cash of Rs. 00000 and furniture of Rs. 60000 to start the business. Jan 0, 05 Purchased goods for Rs. 0000 in cash. Jan, 05 Cheque received from Shyam of Rs. 9800 and allowed him a discount of Rs. 00. Jan, 05 Purchased a Building of Rs. 00000 in cash. Jan, 05 Sold goods to Ramesh for Rs. 0000 at a trade discount of 0% and availed a cash discount of 5% on half of the bill amount by making the payment immediately. Jan 4, 05 Salary paid Rs. 5000. Jan 8, 05 Goods given as free sample of Rs. 5000. OR ii. Prepare a three column cash book from the following. Jan 0, 04 Cash in hand Rs. 5000 and Bank O.D. Rs. 4000. Jan 05, 04 Salary paid by cash Rs. 0000. Jan 09, 04 Cash sales of goods worth Rs. 0000 on 0% Trade discount and 5% Cash discount. Jan, 04 Deposited the amount of above sale in Bank a/c. Jan, 04 Purchased goods worth Rs. 000 and paid by Cheque. Jan 4, 04 Received a Cheque of Rs. 4000 from Mr. X in full settlement of Rs. 450 and deposited in the bank on the same day. Jan 5, 04 Bank charged Rs. 80 as bank charges and interest credited Rs. 0. Q. i. What is trial balance? Write down different methods of preparation of trial balance. ii. What do you mean by final account? Explain the adjustments related to depreciation, bad debt, pre-paid expenses, outstanding expenses and accrued income in detail. OR ii. The following is the Trial Balance of Mr. Shyam as on Mar 05: Particulars Dr. (Rs.) Cr. (Rs.) Machinery 50000 Cash in hand 000 Cash at bank 680 Return Outwards 000 Return Inwards 60 Carriage on Purchases 4080 [] Sales 400 Purchase 80 Opening Stock 500 Building 80000 Carriage on sales 6400 Furniture 5000 General Expenses 6000 Insurance 00 Capital 000 Drawing 0490 Sundry Debtors 000 Sundry Creditors 600 Wages 040 Salary 40000 Total 6000 6000 Taking into account the following adjustments, prepare Trading and Profit and Loss Accounts and also Balance Sheet on Mar 05.. Stock as on Mar 05 is Rs. 400.. Machinery is to be depreciated @0% and Furniture @ 0%.. Salaries for the month Mar 05 amounting to Rs. 4500 were unpaid. 4. Insurance included a premium of Rs. 00 for the next year. 5. A provision for doubtful debts is to be created to the extent of 0% on sundry debtors. Q.4 i. What are the reasons for difference in cash book and pass book balances? ii. A company purchased a Machine on Jan, 0 for Rs. 4000 and spend Rs. 000 on its installation. On Jul 04 company purchased another Machine for Rs. 0000 and in Jul 05 it sold off st Machine for Rs. 8000 and bought another for Rs. 5000. On Jul 06 second Machine was sold for Rs. 000. Depreciation provided on machine at the rate of 0% P.A. on the original cost on Dec annually. In 04, the company changed method of depreciation and adopted the WDV method at the rate of 5% P.A. with retrospective effect. Prepare the Machinery account for 4 years commencing from the date of acquisition of machine. OR ii. Prepare a Bank reconciliation statement as on 0 Jun 06 from the information given below: a) Bank Balance as per cash book as on 0 Jun 06 0000 b) Cheques issued on 0 Jun 06 but not yet presented 4000 c) Cheque deposited but not yet credited by the bank 050 PTO
Model Solution / Scheme of Marking Q. i. Which of the following concept assume that business will last indefinitely? a) Business entity b) Going concern c) Periodicity d) Conservatism B ii. The process of preparing the ledger is called a) Journalising b) Posting c) Balancing d) Totalling B iii Management accounting involves a) Preparation of final statement b) Analysis and interpretation of data c) Recording of transaction d) Assisting the management in performing its function effectively B or D iv Management accounting is highly sensitive to a) Management needs b) Investors needs c) Government needs d) Consumer needs A v Bank reconciliation statement is a) A part of cash book b) A part of pass book c) A statement prepared by bank d) A statement prepared by customer D vi In which of the following methods, the amount of depreciation remains the same throughout: a) Fixed Installment Method b) Diminishing Balance Method c) Fixed and Diminishing Balance Methods d) Neither Fixed nor Diminishing Balance Method A vii Patent is a/an a) Current asset b) Intangible fixed asset c) Tangible fixed asset d) Investment B viii Major objective of cost accounting is to ascertain a) Cost b) Profit c) Loss d) Planning A ix cost consists of costs of direct material, direct labour and direct expenses. a) Fixed b) Variable c) Direct d) Prime D x. A business has assets of Rs. 45600 and liability of Rs. 0000. Capital is a) 65600 b) 5600 c) 5600 d) None of these B Q. i. Define Accounting. Explain rules of debit and credit. Definition Enumeration of three rules Explanation of each. Pass the Journal entries for the following transactions: Jan 0, 05 Raj, the proprietor of the business brought in cash of Rs. 00000 and furniture of Rs. 60000 to start the business. Jan 0, 05 Purchased goods for Rs. 0000 in cash. Jan, 05 Cheque received from Shyam of Rs. 9800 and allowed him a discount of Rs. 00. Jan, 05 Purchased a Building of Rs. 00000 in cash. Jan, 05 Sold goods to Ramesh for Rs. 0000 at a trade discount of 0% and allowed a cash discount of 5% on half of the bill amount by making the payment immediately. 0.5.5
Jan 4, 05 Salary paid Rs. 5000. Jan 8, 05 Goods given as free sample of Rs. 5000. Every entry with narration marks and without narration 0.5 marks Date Particulars Debit Amt Credit Amt --5 Cash A/c Dr. 00000 Furniture A/c Dr. 60000 To Raj s Capital A/c or Capital A/c 60000 (Being the investment of cash and furniture by Raj to start the business) --5 Purchase A/c Dr. 0000 To Cash 0000 (Being the purchase of goods on cash) --5 Bank A/c Dr. 9800 Discount A/c Dr. 00 To Shyam 0000 (Being cheque received from Shyam Rs. 9800 and allowed him discount of Rs. 00) --5 Building A/c Dr. 00000 To Cash 00000 (Being building purchased in cash) --5 Ramesh A/c Dr. 8000 To Sales 8000 (Being goods sold to Ramesh Rs. 0000 at a trade discount of 0%) --5 Cash A/c Dr. 8550 Discount A/c Dr. 450 To Ramesh 9000 (Being cash received for half of the bill amount and allowed 5% CD on thereof and balance amount is unpaid) OR --5 Cash A/c Dr. 8550 Discount A/c Dr. 450 Ramesh A/c Dr. 9000 To Sales 8000 (Being goods sold to Ramesh Rs. 0000 at a trade discount of 0% and cash received for half of the bill amount and allowed 5% CD, balance amount is unpaid) 4--5 Salary A/c Dr. 5000 To Cash/Bank 5000 (Being Salary paid by Cash/Cheque) 8--5 Free sample / Advertisement A/c Dr. 5000 To Purchase A/c 5000 (being goods given as free sample) OR ii. Prepare a three column cash book from the following. Jan 0, 04 Cash in hand Rs. 5000 and Bank O.D. Rs. 4000. Jan 05, 04 Salary paid by cash Rs. 0000. Jan 09, 04 Cash sales of goods worth Rs. 0000 on 0% Trade discount and 5% Cash discount. Jan, 04 Deposited the amount of above sale in Bank a/c. Jan, 04 Purchased goods worth Rs. 000 and paid by Cheque. Jan 4, 04 Received a Cheque of Rs. 4000 from Mr. X in full settlement of Rs. 450 and deposited in the bank on the same day. Jan 5, 04 Bank charged Rs. 80 as bank charges and interest credited Rs. 0.
Every correct transaction marks Date Particular L/F Dis Cash Bank Date Particular L/F Dis Cash Bank --4 To balance b/d 5000 --4 By balance b/d 4000 9--4 To Sales A/c 450 8550 5--4 By Salary A/c 0000 --4 To Cash A/c C 8550 --4 By Bank A/c C 8550 --4 By Purchase A/c 000 4--4 To Mr. X 50 4000 5--4 To interest A/c 0 5--4 By Bank Charges 80 --4 By balance c/d 5000 580 00 550 660 550 660 --4 To balance b/d 5000 580 Q. i. What is trial balance? Write down different methods of preparation of trial balance. Meaning of trial balance Method Enumeration any two ii. What do you mean by final account? Explain the adjustments related to depreciation, bad debt, pre-paid expenses, outstanding expenses and accrued income in detail. Meaning of final account Explanation of each adjustment with example mark/ without example 0.5 each 5 OR iii. The following is the Trial Balance of Mr. Shyam as on Mar 05: Particulars Dr. (Rs.) Cr. (Rs.) Machinery 50000 Cash in hand 000 Cash at bank 680 Return Outwards 000 Return Inwards 60 Carriage on Purchases 4080 Sales 400 Purchase 80 Opening Stock 500 Building 80000 Carriage on sales 6400 Furniture 5000 General Expenses 6000 Insurance 00 Capital 000 Drawing 0490 Sundry Debtors 000 Sundry Creditors 600 Wages 040 Salary 40000 Total 6000 6000 Taking into account the following adjustments, prepare Trading and Profit and Loss Accounts and also Balance Sheet on Mar 05.. Stock as on Mar 05 is Rs. 400.. Machinery is to be depreciated @0% and Furniture @ 0%.. Salaries for the month Mar 05 amounting to Rs. 4500 were unpaid. 4. Insurance included a premium of Rs. 00 for the next year. 5. A provision for doubtful debts is to be created to the extent of 0% on sundry debtors. Each adjustment mark(total 5); Trading and Profit and Loss account preparation mark; Balance sheet marks
Trading and Profit and Loss Account of Mr. Shyam for the year ended --5 Rs. Rs. Rs. Rs. To Opening Stock 500 By Sales 400 To Purchases 80 Less: Return 60 6040 Less: Return 000 800 By closing stock 400 To Carriage on Purchase 4080 To Wages 040 To Gross Profit tfd. 00.. 88440 88440 To Carriage on sale 6400 By Gross Profit b/d 00 To General Expenses 6000 To Insurance (00-00) 000 To Salary (40000+4500) 44500 To Depreciation Machinery 5000 To Depreciation Furniture 000 To Provision for Debts 00 To Net Profit 40 Balance Sheet of Mr. Shyamas on --5 Liabilities Rs. Assets Rs. Capital 000 Building 80000 Add: Net Profit 40 Machinery 50000 Less: Drawing 0490 64980 Less: Depreciation 5000 45000 Furniture 5000 Less: Depreciation 000 000 Sundry Creditors 600 Sundry Debtors 000 Less: 00 400 Outstanding Salary 4500 Closing Stock 400 Cash in Hand 000 Cash in Bank 680 Prepaid Insurance 00.... 8080 8080 Q.4 i. What are the reasons for difference in cash book and pass book balances? Minimum three reason each mark ii. A company purchased a Machine on Jan, 0 for Rs. 4000 and spend Rs. 000 on its installation. On Jul 04 company purchased another Machine for Rs. 0000 and in Jul 05 it sold off st Machine for Rs. 8000 and bought another for Rs. 5000. On Jul 06 second Machine was sold for Rs. 000. Depreciation provided on machine at the rate of 0% P.A. on the original cost on Dec annually. In 04, the company changed method of depreciation and adopted the WDV method at the rate of 5% P.A. with retrospective effect. Prepare the Machinery account for 4 years commencing from the date of acquisition of machine.
Machinery Account Date Particular Amt Date Particular Amt -- To Bank/Cash (a) 50000 -- By Depreciation 5000 (4000+000) By Balance c/d 45000 50000 50000 --4 To Balance b/d (a) 45000 --4 By Depreciation (a) 65 --4 To Bank (b) 0000 By P & L (Change in method) 500 By Depreciation (b) 500 By Balance (a) 65 By Balance (b) 8500 65000 65000 --5 To Balance b/d (a) 65 --5 By Depreciation (a) 09 To Balance b/d (b) 8500 By Bank 8000 --5 To Bank/Cash (c) 5000 By P & L (a) 546 --5 By Depreciation (b) 5 By Depreciation (c) 85 By Balance (b) 55 By Balance (c) 5 965 965 --6 To Balance (b) 55 --6 By Depreciation (b) 9 To Balance (c) 5 By Bank 000 By P & L (b) 546 --6 By Depreciation (c) 469 By Balance (c) 9656 8850 8850 OR ii. Prepare a Bank reconciliation statement as on 0 Jun 06 from the information given below: a) Bank Balance as per cash book as on 0 Jun 06 0000 b) Cheques issued on 0 Jun 06 but not yet presented 4000 c) Cheque deposited but not yet credited by the bank 050 d) Interest debited by the bank on Jun 06 but no advice received 4000 e) Amount wrongly debited by the bank 400 f) Dividend collected by the bank not recorded in cash book 6000 g) Directly deposited by customer 000 One mark each for correct transaction Bank Reconciliation Statement as on 0-6-6 Balance as per cash book (Dr.) 0000 + Cheques issued on 0 Jun 06 but not yet presented 4000 - Cheque deposited but not yet credited by the bank 050 - Interest debited by the bank on Jun 06 but no advice received 4000 - Amount wrongly debited by the bank 400 + Dividend collected by the bank not recorded in cash book 6000 + Directly deposited by customer 000 Balance as per passbook (Cr.) 850 Q.5 i. Write a note on Cost Concept. Meaning of Cost concept Explanation ii. What is Cost Accounting? Briefly explain different methods of Costing. Meaning and explanation of Cost Accounting Any five methods (one mark each) 5
OR ii. Following details are available for two successive years for a product. Particulars Year Year Sales 00000 80000 Profit 000 6000 Calculate P/V ratio, Fixed Cost, BEP, Amount of Profit if Sales are Rs. 00000, Sales in Rs. when desired Profit is Rs. 5000 and margin of safety for both the years. One mark each for both correct (formula and answer) and 0.5 each if only formula is correct P/V ratio = (Change in Profit / Change in Sales)*00 = (6000/0000)*00 =0% Fixed Cost = Sales x PV ratio Profit = 0000*0% - 000 = 8000 BEP = Fixed cost / PV ratio = 8000 / 0% = 60000 Amount of Profit if Sales are Rs. 00000 Profit = Sales * PV ratio * Fixed cost = 00000*0%*8000 = 4000 Sales in Rs. when desired Profit is Rs. 5000 Sales = (Fixed cost + Desired Profit) / PV ratio = (8000+5000) / 0% = 0000 Margin of safety MOS I year = Actual Sales BE Sales = 00000 60000 = 40000 MOS II year = 80000 60000 = 0000 Q.6 i. What are the different objectives of Management Accounting? Explain any three. One mark for each objective ii. From the following balance sheet of X Ltd., prepare Cash flow statement. Liabilities 009 00 Assets 009 00 Capital 800000 800000 Building 00000 680000 Profit & loss 6500 000 Plant 80000 5000 Sundry creditors 8500 4000 Stock 5000 000 Bills payable 000 000 Debtors 5000 0000 Cash at Bank 000 4000 84000 8000 84000 8000 Dividend paid during the year 00 is Rs. 0000. The changes in building and plant value are due to depreciation. Format of Cash flow statement Operating Activity Investing Activity Finance Activity Cash flow statement of X Ltd. Particular Amount. Cash flow from operating activity Difference between opening and closing balance of P & L (4500) (000-6500) Add: Depreciation on building 0000 Depreciation on Plant 5000 Dividend Paid 0000 Decrease in Debtors 5000 Decrease in Stock 4000 Less: Decrease in creditors (4500) Decrease in Bills Payable (000) Cash flow from operating activity 4000
. Cash flow from investing activity NIL. Cash flow from finance activity (0000) 4. Net Increase / Decrease in Cash and Cash Equivalent 4000 Add: Cash and Cash equivalent at the beginning 000 5. Cash and Cash equivalent at the end of period 4000 OR ii. From the given information of a company prepare the balance sheet. Receivable turnover ratio 4, payable turnover ratio 5, inventory turnover ratio 8, capital turnover ratio, fixed assets turnover ratio 8, gross profit ratio 5%, gross profit for the year Rs. 40000. Reserve & surplus Rs. 8000, Closing stock was Rs. 000 more than opening stock. There is no long term loan or OD. One mark for each item of balance sheet GP Ratio = (GP / Sales) * 00 ; 5 = (40000 / Sales) * 00; Sales = 60000 COGS = Sales GP = 60000 40000 = 0000 Receivable turnover Ratio = Total Sales / Receivables; 4 = 60000 / Receivables; Receivables = 40000 Inventory Turnover Ratio = COGS / Average Stock; 8 = 0000 / Average Stock; Average Stock = 5000 Average Stock = (Opening Stock + Closing Stock) / ; 5000 = (X + (000+X)) / ; X = 4500 i.e. Opening Stock and Closing Stock = 5500 COGS = Opening stock + Purchase Closing Stock; 0000 = 4500+Purchase- 5500; Purchase = 000 Creditor Turnover Ratio = Purchase / Creditors; 5 = 000/Creditors; Creditors = 400 Fixed Asset Turnover Ratio = Sales / Fixed Assets; Fixed Assets = 0000 Capital Turnover Ratio = Sales / Capital; Capital = 80000 Balance Sheet Liabilities Rs. Assets Rs. Capital 80000 Fixed Assets 0000 Reserve and Surplus 8000 Debtors 40000 Creditors 400 Closing Stock 5500 Cash(Balancing Figure)4600 00 00