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Management Accounting

Time: 3 hours

March -2003

Marks: 100

 

Q.1.

Following are the Balance Sheets of RD Ltd. as at 31st December, 2001 and 31st December, 2002:-

 
 

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

     

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

     

Proposed Dividend

25,000

40,000

     

 Total

7,45,000

11,35,000

 Total

7,45,000

11,35,000

 
 

Additional Information:

 
 

i) During the year preference shares are redeemed at 10% premium.

    For the purpose of redemption, Equity shares are issued at 10% premium.

 
 

ii) 10% Debentures are issued at 10% discount.

 
 

iii) Last year dividend was paid in May, 2002 and Interim Dividend of Rs. 20,000 was paid in November, 2002.

 
 

iv) Income tax paid during the year Rs. 28,000.

 
 

v) Fixed Assets of Rs.4,00,000 were purchased during the year and Depreciation for the current year is Rs. 70,000/-.

 
 

vi ) Old Fixed Assets were sold and the profit on sale was transferred to capital reserve A/c.

 
 

Prepare statement of changes in working capital and funds flow statement for the year 2002.

 
     

Q.2.

The Balance Sheets of Sagar Ltd. are as follows :---

16

 

Balance Sheet as on 31st December

 
 

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

     

Profit and Loss A/c

6,000

--

 Total

337,000

406,000

 Total 

337,000

406,000

 
 

Additional Information:

 
 

(1) During the year 2002 Depreciation of Rs. 8,000/- and Rs. 10,000/- have been charged on Land & Building and Plant & Machinery respectively.

 
 

(2) An Interim Dividend of Rs. 7,500 was paid during the year 2002.

 
 

(3) During the year 2002 Machinery having a Book value of Rs. 8,000 was sold for Rs. 7,000.

 
 

Prepare a Cash Flow statement (by Indirect Method) for the year ended 31st December 2002 as per A.S.-3.

 
     

Q.3.

A proforma cost sheet of a Shrinath & Co. provides the following particulars :­

16

 

 Element of Cost

Amount per unit (Rs.)

Raw Material

80

Direct Labour

30

Overheads

60

Total Cost

170

Profit

30

Selling Price

200

 
 

The following further particulars are available:­

 
 

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.

 
 

Finished goods are in stock on an average for one month.

 
 

Credit allowed by suppliers is one month. Credit allowed to debtors is two months.

 
 

Lag in payment of wages, is 1.5 weeks. Lag in payment of overhead expenses is one month.

 
 

One-fourth of the output is sold against cash. Cash on hand at bank is expected to be Rs. 10,000/-.

 
 

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.

 
 

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.

 
     

Q.4.

X Ltd. and Y Ltd. are in the same line of business. Followings are their Balance Sheets as on 31st December, 2002 :

16

 

Balance Sheet as on 31st December 2002

 
 

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

     

 Total

1,215,000

930,000

 Total 

1,215,000

930,000

 
 

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):­

 
 

(a) Proprietary ratio, (c) Current ratio,

 
 

(b) Capital-Gearing ratio, (d) Stock Working capital ratio.

 
     

Q.5.

From the following figures of AX Ltd; prepare Vertical Revenue Statement and Vertical Balance Sheet and calculate following ratios :-

16

 

(a) Operating Ratio                                                  (c) Stock Turnover Ratio.

 
 

(b) Debtors Turnover Ratio (in No. of times based on closing debtors)

 
 

Balances as on 31st December, 2002

 
 
 

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

 
 

Further information:­

 
 

(i) Stock on 1st January, 2002 Rs. 1,00,000.

 
 

(ii) Income Tax Provision on 1st January, 2002 was Rs. 62,250.

 
 

(iii) Tax Provision for the current year was made at 50% of profits.

 
 

Note: Interest on Overdraft and Loan is to be treated as Operating Expense.

 
     

Q.6.

You are furnished with the following revenue statements for the four years ended 31st December: ­--

16

 
 

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

 
 

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.

 
     

Q.7.

From the following Financial Statements of Nikhil Ltd. prepare a common size financial statements in Vertical form and give comments in brief :­

16

 

Profit and Loss Account for the year ended 31st December

 
 
 

2001

Rs.

2002

Rs.

 

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

     

 ”  Gross Profit

200,000

200,000

     
 

860,000

1,080,000

 

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

     

 ”  Provision for Tax

54,000

60,000

     

 ”  Proposed Dividend

20,000

25,000

     

 ”  Retained Earnings

61,000

65,000

     
           
           

 Total

210,000

2,50,000

Total 

210,000

2,50,000

 
 

Balance Sheet as on 31st December

 
 

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

     

Debtors

66,000

167,000

     

Cash

31,000

39,000

 Total

402,000

5,88,000

Total 

402,000

588,000

 
 

Note : Total of Vertical Balance Sheet is to be taken 100 as base.

 
     

Q.8.

From the data presented by M/s. Jyoti Petro Limited, prepare comparative Statement in vertical form and offer your comments.

16

 

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

     

Total Rs.

502

485

Total Rs.

502

485

 
 

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.

 
     

Q.9.

Write note on any four:

16

 

a) Liquid Assets

 
 

b) Benefits of using computers for MIS

 
 

c) Non-Operating Income and Expenses with Example

 
 

d) MIS Report

 
 

e) Funds from Operation

 
 

f ) Practical Importance of Management Accounting.

 
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