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Management Accounting

October 2008

Time: 3 Hours
Marks: 100
NB:
  1. Questions No. 1 is compulsory and carries 20 marks.
  2. Attempt any five from the rest questions, each carrying 16 marks from remaining questions.
  3. Working notes should form part of your answer.
  4. Proper presentation and neatness is essential.
  5. Use of simple calculator is allowed
  • Q.1 ABC Ltd. provides you following Balance - sheets as on 31 st March: 20
  • Trading and Profit and Loss Account for the year ending on 31st March, 2007
  • Liabilities 2006
    Rs.
    2007
    Rs.
    Assets 2006
    Rs.
    2007
    Rs.
    Equity Share Capital 15,00,000 24,00,000 Fixed Assets 30,00,000 31,00,000
    10% Preference Share Capital 20,00,000 15,00,000 Investments 22,60,000 28,00,000
    Profit & Loss A/c 20,08,000 20,58,000 Inventory 9,20,000 8,00,000
    15% Debentures 3,00,000 10,00,000 Debtors 12,00,000 11,00,000
    Bank Loan (Long Term) 4,40,000 - Bills Receivable 5,75,000 6,00,000
    Creditors 12,48,000 8,60,000 Cash 2,21,000 5,48,000
    Provision for Tax 4,80,000 7,30,000
    Proposed Dividend 2,00,000 4,00,000
    Total 81,76,000 89,48,000 Total 81,76,000 89,48,000
  • The following information is given for the year ended on 31st March, 2007.
    1. 10% Preference shares were redeemed out of fresh issue of Equity shares on 1st April, 2006.
    2. Partly paid Equity shares were converted into a fully paid shares by utilizing Rs. 4,00,000 from Profit and Loss A/c during the year.
    3. Interim dividend of Rs. 1,00,000 was paid.
    4. Depreciation was charged during the year Rs. 2,00,000.
    5. Fixed Assets were revalued in excess of book value and amount was credited to Profit and Loss A/c.
    6. Dividend on Equity shares paid for the year 2005-08 Rs. 2,00,000.
    7. Tax paid Rs. 5,50,000.

    Prepare fund flow statement and statement showing changes in working capital in detail for the year ended on 31st March, 2007.

  • Q 2. You are required to prepare a statement showing the working capital required to finance the level of activity of 12,000 Units per year from the following information: 16
    1. Raw materials are in stock on an average for 2 months
    2. Materials are in process on an average for half a month.
    3. Finished goods are in stock on an average for one month.
    4. Credit allowed by the suppliers is 1½ months of purchase of raw materials and credit allowed to the customers is 2 ½ months.
    5. Lag in payment of wages and overheads is one month.
    6. Cash and Bank balance is expected to be 10% of Net working Capital before considering the Cash and Bank balance.
    7. Activities are spread evenly through out the year:
  • Cost Per Unit:
  • Raw Material Rs. 10
    Wages Rs. 5
    Total Cost Rs. 30
  • Profit is 20% on selling price.
  • Q 3. The following is financial information of ZN Ltd. for 3 years ended on 31st December every year. 16
  • Particulars 2005
    Rs.
    2006
    Rs.
    2007
    Rs.
    Share Capital 1,50,000 1,80,000 1,90,000
    Gross profit 3,50,000 3,50,000 4,00,000
    Current liabilities 40,000 ? ?
    Fixed Assets 2,40,000 2,50,000 2,35,000
    Long Term Loan 1,00,000 ? 1,20,000
    Cost of Goods Sold ? 4,00,000 3,00,000
    Working Capital 60,000 4,50,000 1,40,000
    Net Worth 2,00,000 2,20,000 2,55,000
    Current Assets ? 1,20,000 2,00,000
    Sales 5,50,000 7,50,000 ?
    Capital Employed 3,00,000 ? ?
    Reserve and Surplus ? 40,000 65,000
  • You are required to prepare vertical Trend Financial Statement taking 2005 as the Base.
  • Q 4. Complete the following Balance-sheet from the information given below: 16
  • Liabilities Rs. Assets Rs.
    Equity Share Capital (Rs.100 each) ? Fixed Assets ?
    Reserve and Surplus ? Current Assets
    20% Debentures 5,00,000 Stock ?
    Current Liabilities Debtors ?
    Sundry Creditors ? Bank / Cash Balance ?
    Provision for Tax,(Current Year) ?
    ? ?
  • Following information is available:
    1. Gross profit ratio is 25% and which is Rs. 12,00,000.
    2. Operating expenses (including Debenture interest) Rs. 8,00,000.
    3. Rate of Income Tax is 50%.
    4. Purchases and Sales are on credit basis.
    5. Debtors Turnover Ratio (Sales / Debtors) = 12 times.
    6. Creditors Turnover Ratio (Cost of sales / creditors) = 12 times
    7. Earning per share Rs. 20
    8. Stock Turnover Ratio = 10 times
    9. Debt Equity Ratio 0.25 : 1
    10. Current Ratio 2 : 1.
  • Q.5 Prepare a Comparative Revenue Statement in Vertical Form from the following details: 16
  • Nilkamal Ltd.
    Trading, Profit and Loss Account for the year ended 31st March
    Particulars 2006
    Rs.
    2007
    Rs.
    Particulars 2006
    Rs.
    2007
    Rs.
    To Opening Stock 2,25,000 3,00,000 By Sales 45,00,000 60,00,000
    To Purchases 22,50,000 32,10,000 By Closing Stock 3,00,000 3,60,000
    To interest on Debenture 1,50,000 1,50,000 By Dividend 12,000 39,000
    To Depreciation: By Profit on Sale of Machinery 24,000
    -
    Furniture
    15,000 15,000
    Machinery
    36,000 30,000
    To Administrative Expenses 2,94,000 4,41,000
    To Selling Expenses 4,56,000 7,53,000
    To Carriage Outward 75,000 3,15,000
    To Loss by Fire
    -
    15,000
    To Wages 1,95,000 3,00,000
    To Provision for Tax 5,70,000 4,35,000
    To Net Profit 5,70,000 4,35,000
    48,36,000 63,99,000 48,36,000 63,99,000
  • Q.6 Telestar Ltd. gives you the following Balance - Sheets for the year ended 31 st March, 2006 and 2007. Prepare a Cash Flow Statement for the year ended 31st March, 2007 as per As - 3 by indirect method. 16
  • Liabilities 31-3-06
    Rs.
    31-3-07
    Rs.
    Assets 31-3-06
    Rs.
    31-3-07
    Rs.
    Equity Share Capital 1,20,000 1,20,000 Land 2,10,000 2,70,000
    5% Preference Share Capital 90,000 60,000 Building 2,85,000 2,70,000
    General Reserve 30,000 42,330 Stock 27,000 36,300
    Profit and Loss Account 15,240 28,080 Debtors 40,440 38,460
    Provision for Tax 17,000 8,000 Prepaid Expenses 25,880 17,000
    Creditors 3,37,920 3,81,990 Bank Balance 15,840 3,240
    Misc Expenditure 6,000 5,400
    Total
    6,10,160 6,40,400
    Total
    6,10,160 6,40,400
  • Other information for the year ended 31st March,2007
  • (1) The company has paid Interim dividend of 5 %on Equity shares.
  • (2) Preference shares were redeemed during the year at 10% premium.
  • (3) Income Tax paid during the year Rs. 15,000.
  • Q.7 From the following information calculate: 16
  • (a) Return on Capital Employed.
  • (b) Debtors turn over ratio (in Times)
  • (c) Stock - working capital ratio
  • (d) Current ratio
  • (e) Proprietory ratio (on the basis.of Total Fund)
  • Some of relevant balances as on 31st March, 2007 are given below:
  • Particulars Amount
    (Rs.)
    Equity share capital (of Rs. 10 each) 2,00,000
    6% Preference share capital 1,00,000
    8% Debentures 1,50,000
    Debtors 18,000
    Creditors 15,000
    Cash in hand 20,000
    Bills receivable 12,000
    Bank Overdraft 8,000
    Reserves and Surplus 43,000
    Closing Stock 32,500
    Provision for taxation 35,000
    Proposed dividends 10,000
  • Other information for the year 2006-07
  • Particulars Amount
    (Rs.)
    Sales 10,00,000
    Cost of Sales 7,50,000
    Net profit before Tax 1,00,000
  • Q.8 The following information regarding Maruti car Ltd. for the year ended 31st March.2007 is given to you. 16  
  • Rs.
    Sales 75,00,000
    Purchases 50,00,000
    Opening Stock (01/04/2006) 5,00,000
    Closing Stock (31/03/2007) 7,50,000
    Return Inward 75,000
    Carriage Outward 57,000
    Carriage Inward 50,000
    Return Outward 50,000
    Salesmen Salary 75,000
    Advertising and Publicity 2,52,000
    Salesmen Travelling Allowance 7,500
    Office Salary 4,00,000
    Computer Repairs and Maintenance 84,000
    Rent, Rates, Taxes 4000
    Printing and Stationery 400
    Bad Debts 75,750
    Purchase of Computer 40,000
    Dividend on Shares (Cr) 10,000
    Staff Welfare Expenses 44,000
    Interest (Dr.) 50,000
    Loss on Sales of Shares 1,25,000
  • Rearrange above information in Vertical Form suitable for analysis.
  • Q.9 (a) From the following information calculate the amount of Creditors 0pening Stock and Closing Stock: 5
  • Cost of Sales Rs.3,25,000
    Gross Profit Ratio 35%
    Stock Turn Over ratio 2.5
    Creditors Turnover Ratio (On Purchaes) 8
  • Opening Stock is more by Rs. 6,000 than Closing Stock.
  • (b) Working Capital is Rs. 3,00,000.Quick Ratio is 1.25 : 1.and Current Ratio is 2:1.The Bank Overdraft is Rs.20,000.Non quick assets includes closing stock only.Calculate Closing Stock. 4
  • (c) Write short notes on : (any two) 6
  • i Fund Flow Statement and Cash Flow Statement.
  • ii Limitations of Ratio Analysis.
  • iii Trend Analysis.
  • iv MIS Reporting.
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