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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 31st 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
20 
  Balance Sheet as on 31st 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 31st March, 2001.

16
 

Balance Sheet as on 1st 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.
16
 
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:

16
 
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.

16
 

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)
16
 
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 :

16
 
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 &

(c) Not alter 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.

16
  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:

16
 

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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