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Management Accounting
Time: 3 hours	March 2002	Marks: 100

Q.1.

The following is the Trading & Profit & loss A/c and Balance Sheet of Sunder Mumbai Ltd.

Trading and Profit and Loss Account as on 31^st March, 2002

Particulars	Amount	Particulars	Amount
To opening Stock	10000	By sales	150000
TO Purchases	55000	By Closing Stock	15000
To Wages	20000
To Power & Fuel	10000
To Gross Profit c/d	70000
	165000		165000
To Administration Expenses	15000	By Gross Profit b/d	70000
To Interest	3000	BY Rent Received	1500
To Depreciation on Machinery	5000
To Selling Expenses	12000
To Loss by Fire	2000
TO Provision for Tax	14500
To Net Profit	20000
	71500		71500
To Interim Dividend	10000	By Opening Balance	15000
To Closing Balance	25000	By Net Profit	20000
	35000		35000

Balance Sheet as on 31^st March, 2002

Liabilities	Rs.	Assets	Rs.
Equity Share Capital	100000	Land & Buildings	50000
Profit & Loss A/c.	25000	Plant & Machinery	30000
Creditors	15000	Furniture	20000
Secured Loans	10000	Stock	15000
Bank Overdraft	25000	Debtors	15000
Provision for tax	5000	Investments	12500
Outstanding Expenses	5000	Cash	17500
Provision for Tax	45,000	Goodwill	20000
Proposed Dividend	40,000	Miscellaneous Expenses	5000
Total	185000	Total	185000

Calculate the following ratios after converting above financial statements in Vertical Form:

(i) Inventory Turnover Ratio

(ii) Gross Profit Ratio

(iii) Operating Ratio

(iv) Current Ratio

(v) Proprietary Ratio

(vi) Liquid Ratio

Q.2.

From the following particulars of Super Market Limited, estimate their working capital Requirement for the year ended 31^st March, 2001.

Balance Sheet as on 1^st April, 2000	Rs.
Debtor	70000
Bills Receivable	5000
Creditors	55000
Bills Payable	4000
Stock	25000
Bank Balance (Credit)	1000
Transaction during the year ended 31st March, 2001	Rs.
Sales for the year (with uniform profit of 25% on sales)	300000
Purchases for the year	210000
Payment to creditors during the year	170000
Receipt from debtors during the year	250000
Bills Receivable received during the year	3000
Bills payable accepted during the year	2000
Amount received against Bills Receivable	2000
Amount paid against Bills Payable	1000
Overheads on annual basis (one sixth to remain outstanding)	24000
Purchased fixed assets by cheque payment	50000
Contingencies to be kept at 10%

Q.3.

Prepare comparative Income statement & comparative balance sheet in vertical form and offer your brief comments:

Profit & Loss A/cs. For the years ended.

Particulars	31-3-2000 Amount	31-3-2001Amount	Particulars	31-3-2000 Amount	31-3-2001 Amount
To Opening Stock	44000	40000	By Sales	190000	200000
To Purchases	84000	72000	By Closing Stock	46000	44000
To Wages	40000	36000	By Interest Received	20000	--
To Factory Expenses	32000	28000
TO Establishment Expenses.	8000	6000
To Management Expenses	2000	2000
To Selling Expenses	6000	10000
To Interest	6000	8000
To Loss on sale of Assets	2000	2000
To Provision for Taxation	22000	24000
To Net profit trf to Reserve	10000	16000
Total	256000	244000	Total	256000	244000

Balance Sheet as at

Liabilities	31-3-2000	31-3-2001	Assets	31-3-2000	31-3-2001
Equity Capital	50000	70000	Fixed Assets	70000	82000
Preference Capital	20000	--	Investments	20000	10000
Reserves	50000	68000	Current Assets Excluding Bank Balance	100000	92000
Secured Loans	22000	24000	Bank Balance	10000	20000
Unsecured Loans	30000	--	Loans & Advance	40000	30000
Creditors	20000	25000	Preliminary Expenses	12000	10000
Outstanding Expenses	6000	5000
Provisions	54000	50000
Unclaimed Dividend	--	2000
Total	252000	244000	Total	252000	244000

Q.4.

The following balance sheet of Chandan Product Ltd. For the year 2000 & 2001 are available:

Liabilities	2000 Rs.	2001 Rs.	Assets	2000 Rs.	2001 Rs.
Share Capital	600000	700000	Fixed Assets	1000000	1200000
General Reserve	2,00,000	250,000	Less: Dep. Provision	200000	250000
Capital Reserve	--	10000	Net Block	800000	950000
Profit & Loss Alc.	10000	--	Investments (at Cost)	180000	156000
7% Debentures	300000	200000	Stock	200000	270000
Unsecured Loans	100000	2,00,000	Sundry Debtors	245000	258000
Creditors	160000	250000	Bills Receivable	40000	65000
Proposed Dividend	30000	35000	Prepaid Expenses	10000	20000
Provision for Bad Debts	20000	30000	Misc. Expenses	15000	19000
Provision for taxation	70000	75000	Profit & Loss A/c	--	-12000
Total	1490,000	1750,000	Total	1490,000	1750,000

Other Information :

(i) In the year fixed assets (W.D.V. Rs. 10000, depreciation written off Rs. 30000) was sold for Rs. 8000.

(ii) Company spent Rs. 7500 for issue of shares which were debited to Misc. Expenses.

(iii) The proposed Dividend for last year was paid.

(iv) During the year investment costing Rs. 50000 were sold and profit on sale was credited to capital reserve.

(v) Debentures were redeemed at a premium of 10%.

(vi) Liability for taxation for the year 2000 amounted to Rs. 55000.

(vii) During the year bad debts written off were Rs. 15000 against the provision account.

Prepare a Fund Flow Statement.

Q.5.

Calculate Trend Percentage from the following information extracted from Financial Statements of Excellent Fashions Ltd. After arranging in vertical form. Give your comments.

Round off percentage :- (Rs. In ‘000)

Particulars	1998Rs.	1999Rs.	2000Rs.	2001Rs.
Profit & Loss Accounts
Sales	10000	11000	12000	13000
Cost of Sales	7500	8175	8850	9525
Expenses	800	935	1140	1287
Interest	225	300	375	450
Profit before Tax	?	?	?	1738
Tax	590	636	654	695
Profit after Tax	885	?	?	?
Balance Sheet
Fixed Assets	?	?	?	?
Current Assets	15000	?	17800	?
Current Liabilities	?	10900	?	12800
Net Working Capital	5000	5500	5950	6450
Net Worth	10000	10700	11100	11600
Loans (Liabilities)	5000	6000	7000	8000

Q.6.

The following are balance sheet as on 31st March, 2001 of two different companies.

Balance Sheet (Rs. In lacs)

Liabilities	TinyLtd.	GiantLtd.	Assets	TinyLtd.	GiantLtd.
Equity Share Capital	1000	2000	Trade Marks & Copy Right	200	500
General Reserve	200	500	Building	500	1000
Profit & Loss A/c	300	600	Machinery	400	900
Preference Share Capital	400	800	Furniture	10	50
Secured Loan	250	600	Stock	700	1500
Provision for Income Tax	100	200	Trade Investments	100	150
Bank Overdraft	50	100	Debtors	600	1400
Creditors	400	1000	Bills Receivable	100	200
Provision for Doubtful Debts	10	20	Goods with consignee	10	20
			Share Issue Expenses	90	100
Total	2710	5820	Total	2710	5820

Investment depreciated by 10% which effect is required to be given.

Prepare Commonsize Balance Sheet in vertical form. Also compute following ratios & give your comments :-

(i) Debt Equity Ratio

(ii) Stock Working Capital Ratio

Q.7.

(a) Calculate return on total resources from the following information :

Particular	X. Ltd	Y. Ltd
Net sales	1268750	?
Total assets	?	42500
Net Profit ratio	4%	20%
Gross Profit	?	4680
Gross Profit Ratio	10%	25%
Turnover of Total assets (Sales/Total assets)	5 times	?

(b) A trader carries average stock of Rs. 50000 & turns this over 5 times a year at a gross profit ratio of 20%. His administrative & selling overheads are Rs. 20000 per year. Find out the net profit.

(c) The current ratio of a company is 2:1 & current assets were Rs. 300000 which of the following transactions would :

(a) improve the ratio

(b) reduce the ratio &

(i) Pay a current liability of Rs. 40000

(ii) Sell a machinery of Rs. 50000 on cash payment of Rs. 30000 & balance credit.

(iii) Endorse a bill of exchange of Rs. 30000 to supplier.

(iv) Purchase material of Rs. 25000 for cash.

Q.8.

Y2k Industries Ltd. had the following summarized financial statements for the year ended 31-12-2001.

Balance Sheet

Liabilities	2002 Rs.	Assets	2002 Rs.
Equity Share Capital of Rs. 10 each	200000	Fixed Assets at Cost 500000
General Reserve	75000	Less: Provision for Dep. 175000	325000
8% Debentures	125000	Stock in trade	95000
Profit & Loss A/c	17500	Debtors	80000
Creditors	100000	Bank Balance	20000
Outstanding Liabilities	17500	Preliminary Expenses	15000

Total Rs.	535000	Total Rs.	535000

Profit & Loss A/c

Particulars	Rs.	Particulars	Rs.
To material consumed	400000	By Sales	1000000
To labour Charges	160000	By profit on Sale of Investments	7500
To manufacturing cost	220000
To other overheads	115000
To depreciation	45000
To interest	10000
To preliminary Exps. w/off	2500
To net profit	55000
Total	1007500	Total	1007500

Profit & Loss Appropriation A/c

Particulars	Rs.	Particulars	Rs.
To Transfer to General Reserve	15000	By Balance b/d	10000
To Dividend	32500	BY Net Profit	55000
To Balance	17500
Total Rs.	65000	Total Rs.	65000

The position on 1-1-2001 in respect of certain items is as under:

8% Debentures	Nil
Creditors	100000
Outstanding liabilities	7500
Stock in trade	75000
Debtors	100000
Fixed assets at cost	400000
Investments	30000

From the information given above you are required to prepare-

(i) Cash Flow Statement.

(ii) Statement of Cash from operations.

(iii) Statement of Fund from operations.

(iv) Determine Opening Cash/Bank Balance.

Q.9.

Write note on any four:

a) Limitations of Ratio Analysis

b) Contingent Liability

c) Fictitious Assets

d) Debtor Turnover Ratio & Creditor Turnover Ratio.

e) Points to be considered for Developing a soft-ware for Cash flow & Fund flow analysis

f) Trading on Equity.

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