| Management Accounting |
| Time: 3 hours |
March -2003 |
Marks: 100 |
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| Q.1. |
Following are the Balance Sheets of RD Ltd. as at 31st December, 2001 and 31st December, 2002:- |
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| Liabilities |
2001
Rs. |
2002
Rs. |
Assets |
2001
Rs. |
2002
Rs. |
| Equity Share Capital |
2,00,000 |
4,00,000 |
Fixed Assets (at Cost) |
4,60,000 |
7,00,000 |
| Preference Capital |
1,00,000 |
50,000 |
Less: Provision for Dep. |
1,25,000 |
1,35,000 |
| Share Premium |
20,000 |
35, 000 |
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| Capital Reserve |
-- |
10,000 |
|
3,35,000 |
5,65,000 |
| Profit & Loss Alc. |
65,000 |
1,15,000 |
Investments |
75,000 |
1,50,000 |
| 10% Debentures |
-- |
2,00,000 |
Stock |
80,000 |
1,20,000 |
| Loan from JD Ltd. |
1,50,000 |
50,000 |
Debtors |
1,20,000 |
1,50,000 |
| Bills Payable |
40,000 |
45,000 |
Bills Receivable |
50,000 |
35,000 |
| Creditors |
60,000 |
50,000 |
Cash & Bank |
65,000 |
'85,000 |
| Unpaid Exps. |
10,000 |
20,000 |
Prepaid Exps. |
20,000 |
14,000 |
| Bank Overdraft |
40,000 |
75,000 |
Discount on Debentures |
- |
16,000 |
| Provision for Tax |
35,000 |
45,000 |
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| Proposed Dividend |
25,000 |
40,000 |
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| Total |
7,45,000 |
11,35,000 |
Total |
7,45,000 |
11,35,000 |
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Additional Information: |
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i) During the year preference shares are redeemed at 10% premium.
For the purpose of redemption, Equity shares are issued at 10% premium. |
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ii) 10% Debentures are issued at 10% discount. |
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iii) Last year dividend was paid in May, 2002 and Interim Dividend of Rs. 20,000 was paid in November, 2002. |
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iv) Income tax paid during the year Rs. 28,000. |
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v) Fixed Assets of Rs.4,00,000 were purchased during the year and Depreciation for the current year is Rs. 70,000/-. |
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vi ) Old Fixed Assets were sold and the profit on sale was transferred to capital reserve A/c. |
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Prepare statement of changes in working capital and funds flow statement for the year 2002. |
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| Q.2. |
The Balance Sheets of Sagar Ltd. are as follows :--- |
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Balance Sheet as on 31st December |
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| Liabilities |
2001
Rs. |
2002
Rs. |
Assets |
2001
Rs. |
2002
Rs. |
| Equity Share Capital |
150,000 |
250,000 |
Goodwill |
55,000 |
45,000 |
| General Reserve |
-- |
30,000 |
Land & Building |
80,000 |
90,000 |
| Profit and Loss A/c. |
-- |
29,000 |
Plant & Machinery |
40,000 |
100,000 |
| Debentures |
100,000 |
-- |
Stock |
42,000 |
53,000 |
| Sundry Creditors |
57,000 |
46,000 |
Debtors |
90,000 |
98,000 |
| Bills Payable |
30,000 |
6,000 |
Bill Receivable |
8,000 |
12,000 |
| Provision for Tax |
-- |
25,000 |
Prepaid Expenses |
6,000 |
4,000 |
| Proposed Dividend |
-- |
20,000 |
Cash in Hand |
10,000 |
4,000 |
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Profit and Loss A/c |
6,000 |
-- |
| Total |
337,000 |
406,000 |
Total |
337,000 |
406,000 |
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Additional Information: |
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(1) During the year 2002 Depreciation of Rs. 8,000/- and Rs. 10,000/- have been charged on Land & Building and Plant & Machinery respectively. |
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(2) An Interim Dividend of Rs. 7,500 was paid during the year 2002. |
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(3) During the year 2002 Machinery having a Book value of Rs. 8,000 was sold for Rs. 7,000. |
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Prepare a Cash Flow statement (by Indirect Method) for the year ended 31st December 2002 as per A.S.-3. |
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| Q.3. |
A proforma cost sheet of a Shrinath & Co. provides the following particulars : |
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| Element of Cost |
Amount per unit (Rs.) |
| Raw Material |
80 |
| Direct Labour |
30 |
| Overheads |
60 |
| Total Cost |
170 |
| Profit |
30 |
| Selling Price |
200 |
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The following further particulars are available: |
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Raw materials are in stock on average one month. Production period is two week. For estimating work-in-progress consider 100% Material cost and 50% of labour and overheads. |
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Finished goods are in stock on an average for one month. |
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Credit allowed by suppliers is one month. Credit allowed to debtors is two months. |
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Lag in payment of wages, is 1.5 weeks. Lag in payment of overhead expenses is one month. |
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One-fourth of the output is sold against cash. Cash on hand at bank is expected to be Rs. 10,000/-. |
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You are required to prepare a statement showing the Working Capital needed to finance a level of activity of 2,000 units of production per week. Debtors to be considered at selling price. |
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You may assume that production is carried on evenly throughout the year. Wages and Overheads accrue similarly and a time period of 4 weeks is equivalent to a month.
(Month to be converted in weeks). All purchases are on credit basis. |
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| Q.4. |
X Ltd. and Y Ltd. are in the same line of business. Followings are their Balance Sheets as on 31st December, 2002 : |
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Balance Sheet as on 31st December 2002 |
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| Liabilities |
X Ltd.
Rs. |
Y Ltd.
Rs. |
Assets |
X Ltd.
Rs. |
Y Ltd.
Rs. |
| Equity Share Capital |
700,000 |
200,000 |
Land |
100,000 |
80,000 |
| Reserve & Surplus |
100,000 |
100,000 |
Building |
250,000 |
200,000 |
| 12% Debentures |
200,000 |
500,000 |
Plant & Machinery |
500,000 |
300,000 |
| Creditors |
120,000 |
70,000 |
Debtors |
210,000 |
110,000 |
| Bills Payable |
40,000 |
20,000 |
Stock |
100,000 |
200,000 |
| Proposed Dividend |
20,000 |
20,000 |
Cash & Bank |
55,000 |
40,000 |
| Provision for Tax |
35,000 |
20,000 |
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| Total |
1,215,000 |
930,000 |
Total |
1,215,000 |
930,000 |
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You are required to rearrange the Balance Sheets (in Vertical form) and calculate the following ratios for both the companies and comment thereon (any three): |
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(a) Proprietary ratio, (c) Current ratio, |
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(b) Capital-Gearing ratio, (d) Stock Working capital ratio. |
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| Q.5. |
From the following figures of AX Ltd; prepare Vertical Revenue Statement and Vertical Balance Sheet and calculate following ratios :- |
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(a) Operating Ratio (c) Stock Turnover Ratio. |
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(b) Debtors Turnover Ratio (in No. of times based on closing debtors) |
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Balances as on 31st December, 2002 |
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Rs. |
|
Rs. |
| Sales ( Credit ) |
7,50,000 |
Fixed Assets (at W.D.V. ) |
4,00,000 |
| Debtors |
1,47,000 |
Creditors |
1,00,000 |
| Bank Balance |
10,500 |
Closing Stock |
2,00,000 |
| Purchases |
6,00,000 |
Bank Overdraft |
1,25,000 |
| Expenses |
75,000 |
Depreciation |
60,000 |
| Interest on Overdraft |
20,000 |
Interest on Loan |
21,500 |
| Loan |
1,00,000 |
Equity Share capital |
1,50,000 |
| 8% Preference Capital |
50,000 |
Reserves & Surplus (including current year surplus) |
1,04,000 |
| Provision for Income Tax |
99,000 |
Proposed Dividend for 2002 |
30,000 |
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Further information: |
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(i) Stock on 1st January, 2002 Rs. 1,00,000. |
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(ii) Income Tax Provision on 1st January, 2002 was Rs. 62,250. |
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(iii) Tax Provision for the current year was made at 50% of profits. |
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Note: Interest on Overdraft and Loan is to be treated as Operating Expense. |
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| Q.6. |
You are furnished with the following revenue statements for the four years ended 31st December: -- |
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1999
Rs. |
2000
Rs. |
2001
Rs. |
2002
Rs. |
| Sales |
50,000 |
60,000 |
72,000 |
86,400 |
| Cost of Sales |
32,000 |
38,000 |
46,000 |
56,000 |
| Margin |
18,000 |
22,000 |
26,000 |
30,400 |
| Management Exps. |
3,000 |
3,500 |
4,000 |
4,500 |
| Sales Exps. |
5,000 |
6,000 |
7,200 |
8,640 |
| Interest on Loans |
3,000 |
4,000 |
5,000 |
6,000 |
| Total Exps. |
11,000 |
13,500 |
16,200 |
19,140 |
| Profit before Dep. |
7,000 |
8,500 |
9,800 |
11,260 |
| Depreciation |
5,000 |
4,500 |
6,000 |
6,500 |
| Profit before tax |
2,000 |
4,000 |
3,800 |
4,760 |
| Income Tax |
800 |
2,000 |
1,850 |
2,400 |
| Profit after Tax |
1,200 |
2,000 |
1,950 |
2,360 |
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You are required to make trend analysis (absolute figures need not be shown) and comment in brief on change in Gross Profit, Net Profit before Tax. |
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| Q.7. |
From the following Financial Statements of Nikhil Ltd. prepare a common size financial statements in Vertical form and give comments in brief : |
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Profit and Loss Account for the year ended 31st December |
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2001
Rs. |
2002
Rs. |
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2001
Rs. |
2002
Rs. |
| To Opening Stock |
40,000 |
60,000 |
By Sales |
8,00,000 |
1,000,000 |
| Purchases |
495,000 |
620,000 |
Closing Stock |
60,000 |
80,000 |
| Wages |
125,000 |
200,000 |
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| Gross Profit |
200,000 |
200,000 |
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860,000 |
1,080,000 |
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860,000 |
1,080,000 |
| To Administrative Exp. |
50,000 |
60,000 |
By Gross Profit |
200,000 |
200,000 |
| Selling Expenses |
25,000 |
30,000 |
Non-Operating Income |
10,000 |
50,000 |
| Finance Expenses |
-- |
10,000 |
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| Provision for Tax |
54,000 |
60,000 |
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| Proposed Dividend |
20,000 |
25,000 |
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| Retained Earnings |
61,000 |
65,000 |
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| Total |
210,000 |
2,50,000 |
Total |
210,000 |
2,50,000 |
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Balance Sheet as on 31st December |
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| Liabilities |
2001
Rs. |
2002
Rs. |
Assets |
2001
Rs. |
2002
Rs. |
| Share Capital |
200,000 |
200,000 |
Land & Building |
50,000 |
40,000 |
| Reserves |
86,000 |
151,000 |
Machinery |
175,000 |
212,000 |
| Debentures |
-- |
100,000 |
Office Equipments |
20,000 |
50,000 |
| Current Liabilities |
116,000 |
137,000 |
Stock |
60,000 |
80,000 |
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Debtors |
66,000 |
167,000 |
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Cash |
31,000 |
39,000 |
| Total |
402,000 |
5,88,000 |
Total |
402,000 |
588,000 |
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Note : Total of Vertical Balance Sheet is to be taken 100 as base. |
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| Q.8. |
From the data presented by M/s. Jyoti Petro Limited, prepare comparative Statement in vertical form and offer your comments. |
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| Liabilities |
2001
Rs. |
2002
Rs. |
Assets |
2001
Rs. |
2002
Rs. |
| Creditors |
163 |
146 |
Cash & Bank |
50 |
40 |
| Outstanding Exps. |
13 |
22 |
Debtors |
77 |
73 |
| 15% Debentures |
90 |
70 |
Stock |
202 |
190 |
| Depreciation Provision |
40 |
44 |
Prepaid Expenses |
1 |
2 |
| Capital Reserve |
6 |
7.8 |
Land & Building |
100 |
100 |
| P & L A/c. |
10 |
15.2 |
Machinery |
72 |
80 |
| Equity Capital |
180 |
180 |
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| Total Rs. |
502 |
485 |
Total Rs. |
502 |
485 |
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Debentures were issued during the year 2000 redeemable upto Rs. 20 lakhs each year from the year 2002 for the first 4 years and balance in the 5th year. The comparative statement should show absolute and percentage changes. |
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| Q.9. |
Write note on any four: |
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a) Liquid Assets |
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b) Benefits of using computers for MIS |
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c) Non-Operating Income and Expenses with Example |
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d) MIS Report |
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e) Funds from Operation |
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f ) Practical Importance of Management Accounting. |
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