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Management Accounting

Time: 3 Hours

October – 2003 Marks: 100
 

N.B.:

(1)

Question NO.1 is compulsory and carries 20 marks.

 
 

(2)

Attempt any five questions from the remaining questions.

 
 

(3)

Working notes should form part of your answer.

 
 

(4)

Proper presentation and neatness is essential.

 
       

Q.1.

  The Balance Sheets of Anil Ltd. as at 31st March, 2001 and 2002 are given below :
Particulars 31/03/2001Rs. In Lakhs 31/03/2002Rs. In Lakhs

Sources of Funds :

   

Share Capital

400 500

Capital Reserve

20

General Reserve

180 210

Profit & Loss A/c.

70 90

Debentures

300 200

Current Liabilities

130 120

Provision for Income Tax

80 60

Proposed Dividend

40 50
Total Rs. 1200 1250

Application of funds :

   

Fixed Assets : at cost

1000 1000

Less : Depreciation

260 310
  740 690

Investments

110 90

Current Assets

320 450

Preliminary Expenses

30 20
Total Rs. 1200 1250
During the year ended 31st March 2002, the company:
(a) Sold one machine for Rs. 40 lacs the cost of which was Rs. 80 lacs and the depreciation
provided on it was Rs. 30 lacs.
(b) Provided Rs. 100 lacs as depreciation.
(c) Redeemed the debentures at Rs. 105.
(d) Sold dome trade investments at a profit which was credited to capital reserve.
(e) Written off fixed assets (fully depreciation) costing Rs. 20 lacs.
Prepare the Statement of Sources and Application of funds (Fund flow statement) for the year ended 31st March, 2002, showing the change in the working Capital.
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Q.2.

 
Liabilities 2002 Rs. 2001 Rs. Assets 2002 Rs. 2001 Rs.

Akhil's Capital

1,75,000 1,00,000

Fixed Assets

79,000 50,000

General Reserve

37,500 25,000

Stock

1,12,500 75,000

Loan From 'X'

1,00,000 75,000

Debtors

1,25,000 1,00,000

Bank Loan

12,500 25,000

Cash & Bank

11 ,000 21,000

Creditors

40,000 30,000

Deferred Advertising

12,500 14,000

Outstanding Expenses

12,500 20,000

Loan to 'K'

37,500 15,000

Rs.                               

3,77,500

2,75,000

Rs.

3,77,500

2,75,000

Following further information is available :

(a)

During the year ended 30th June, 2002, Mr. Akhil earned Net Profit of Rs. 85,000 after writing off Depreciation Rs. 9,000 but before transfer to General Reserve.

(b)

Akhil was drawing Rs. 4,000 per month from his business for personal use.

(c)

Fixed Assets of book value of Rs. 8,000 were sold at a profit of Rs. 2,000.

(d)

Interest on loans paid to 'X' Rs. 15,000 and Interest on Loan received from 'K' Rs. 4,500/-
You are required to prepare cash flow statement by Indirect method as per AS-3, for the year ended 30th June, 2002.
16
       

Q.3.

  D.K. Ltd. provides the following information :

(a)

Projected Annual Material & Labour cost of the Co. is Rs. 7,20,000/- & Rs. 5,40,000/-respectively.

(b)

Cost of Sales consists of Material, Labour and Overhead Cost only.

(c)

Production and Sales take place evenly throughout the year.

(d)

As per the credit policy of the Co. Debtors (at selling price) at three months credit will be Rs. 4,50,000/- However for working capital statement Investment in Debtors is to considered at cost.

(e)

Raw Materials are in stock on an average for one month.

(f)

Finished goods are in stock on an average for half a month.

(g)

Credit allowed by suppliers is two months.

(h)

Materials remain in process (valued at cost of Raw Material plus 50% of Labour and Overheads) on an average for one month.

(i)

Company sales goods at 25% profit on cost.

(j)

Time lag in payment of wages and overheads is one month.

(k)

Cash balance to be maintained at Rs. 1,10,000.
You are required to prepare a statement showing the Working Capital Requirement.
16
       

Q.4.

 

You are required to complete the following Balance-Sheet as at 31st October, 2002 of Net Set

Ltd.

Liabilities

Rs. (in Lakhs)

Assets

Rs. (in Lakhs)

Share Capital

10

Fixed Assets

15

Reserves & Surplus

?

Current Assets :

 

Loans

1

Stock                              ?

 

Current Liabilities

?

Debtors                           ?

 
   

Cash                               ?

?
Rs. ? Rs. ?

Ratios of the company are :-

(i)

Reserve & Surplus to share Capital Ratio 1:1

(ii)

Sales to Net worth Ratio 1.5:1

(iii)

Sales to Debtors Ratio 6:1

(iv)

Gross Profit Ratio 20% on sales

(v)

Net working Capital Rs. 6 lakhs

(vi)

Stock Turnover Ratio 6 times

(vii)

Current Ratio 2.5:1

(viii)

Acid Test Ratio 1.5:1

Net worth means total of share capital and Reserves and surplus.

16
       

Q.5.

a)

Following is the Profit and Loss Account of Saurav-balanced Limited for the year ended 31st March, 2002. You are required to prepare Vertical Income statement for the purpose of analysis.
Particulars Rs. In Lacs Particulars Rs. In Lacs

To Opening Stock

700 By Sales  

To Purchase

900     Cash                                     520  

To wages

150    Credit                                   1500  

To Factory Exps.

350 2020  

To Office Salaries

25    Less: Returns and Allowances    20 2000

To Office Rent

39 By Closing Stock 600

To Postage & Telegram

5 By Dividend on Investment 10

To Directors Fee

6 By Profit on Sale of Furniture 20

To Salesman Salaries

12    

To Advertising

18    

To Delivery Exps.

20    

To Debenture Interest

20    

To Depreciation

     

     On Office Furniture

10    

     On Plant

30    

     On Delivery Van

20    

To Loss on Sale of Van

5    

To Income Tax

175    

To Net Profit

145    
Total 2,630 Total 2,630
16
 

b)

From the Vertical Income Statement Calculate:

(i)

Gross Profit Ratio

(ii)

Operating Costs Ratio including Finance Expenses

(iii)

Stock Turnover Ratio

 
       

Q.6.

  Trial Balance as on 31st March, 2002 is furnished to you of M/s. Pady Ltd.
Particulars Debit Rs. Credit Rs.

Debtors accounts

5,00,000 20,000

Creditors accounts

12,000 4,80,000

Cash & Bank Balance

38,000 --

Building & Provision for Dep.

1,20,000 40,000

Machinery & Provision for Dep.

6,00,000 2,80,000

Vehicles & Provision for Dep.

50,000 30,000

Stock of Finished Goods (on 1-4-2001)

30,000 --

Cost of Production

20,92,500 --

Sales

-- 25,00,000

Office Expenses

20,000 --

Selling & Distribution Expenses

3,10,000 --

Prepaid and Outstanding Exps.

8,000 15,000

Advance Tax Paid

1,50,000 --

Provision for Income Tax (on 1-4-2001)

-- 1,40,000

Investments (at cost)

8,40,000 --

Profit on Sale of Investments

-- 15,000

Dividend Received

-- 30,000

Interim Dividend

50,000 --

Equity Share Capital (Rs. 10 each)

-- 8,00,000

Reserve on 1-4-2001

-- 5,00,000

Profit & Loss A/c on 1-4-2001

-- 63,000

Closing Stock of Materials & Work-in-process

92,500 --
  49,13,000 49,13,000
On 31st March, 2002 stock of Fini shed Goods was Rs. 50,000. Provide for Income Tax at 30% of profits and Proposed Dividend at Rs. one per share.Prepare final accounts in suitable form for analysis.
16
       

Q.7.

  Complete the following Trend Statement of Yuvraj by filling the blanks and comment in very brief.
Particulars Rs. In Lakhs Trend in %
1999 2000 2001 2002 1999 2000 2001 2002

Sales

10,000   12,000 13,000 100 110   130

Less cost of Sales

    8,850     109    

Gross Profit

2,500     3,475     126  

Administrative Expenses

    1,140     117    

Sales Expenses

225     450   133    

Total Operating Expenses

1025   1,515 1,737        

Net Profit before Tax

      1,738   108    

Income Tax

  636       108   118

Net Profit after Tax

885   981   100      
16
       

Q.8.

 

From the data presented by Messrs. Jyoti Petro Limited, prepare Comparative Statement in Vertical Form and offer your comments.

Balance Sheet as on 31st December

Liabilities

2001 Rs.

(in Lacs)

2002 Rs.

(in Lacs)

Assets

2001 Rs.

(in Lacs)

2002 Rs.

(in Lacs)

Creditors

163 146

Cash & bank

50 40

Outstanding Exps.

13 22

Debtors

77 73

15% Debentures

90 70

Stock

202 190

Depreciation Fund

40 44

Prepaid Expenses

1 2

Capital Reserve

6 7.8

Land & Building

100 100

P&LA/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 on a short to medium term basis redeemable upto Rs. 20 lakhs each year from the year 2002 for the first 4 years and balanced in the 5th year.The comparative statement must show absolute and percentage changes.
16
       

Q.9. 

  Answer in brief:
(a) Explain the drawbacks of using computer for MIS Reports.
(b) Distinguish between Gross Working Capital and Net Working Capital.
(c) Distinguish between Fund Flow Statement and Cash Flow Statement.
(d) Distinguish between Own Funds and Owed Funds.
(e) Distinguish between Over Trading & Under Trading.
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