Hall Ticket No Question Paper Code: CMB002
INSTITUTE OF AERONAUTICAL ENGINEERING
(Autonomous)
MBA I Semester End Examinations (Supplementary) May/June, 2018
Regulation: IARE-R16
Financial Accounting and Analysis
Time: 3 Hours Max Marks: 70
Answer ONE Question from each Unit
All Questions Carry Equal Marks
All parts of the question must be answered in one place only
UNIT I
1. Define Accounting. Explain importance and limitations of financial accounting.
Explain accounting concepts and conventions. Name them and explain any five accounting concepts
in detail.
2. Define double entry system. Explain its advantage and disadvantages.
Explain the classification of accounts.
UNIT II
3. Record the following transactions in the journal and post them into ledger and prepare a trail
balance
Table 1
2010, Oct 1st, Neel started business with a capital of 80,000
3rd Bought goods from Karl on credit 20,000
4th Sold goods to Tarl 25,000
5th Cash purchases 25,000
7th Cash sales 15,000
9th Goods retuned to Karl 2,000
10th Bought furniture for 15,000
11th Cash paid to Karl 12,000
12th Goods returned by Tarl 3,000
14th Goods taken by Neel for personal use 3,000
15th Cash received from Tarl 12,000
16th Took loan from Parl 30,000
17th Salary paid 5,000
18th Bought stationery for 1,000
19th Amount paid to Parl on loan account 18,000
20th Interest received 4,000
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From the following trial balance prepare trading and profit and loss account for the year ended
31st December, 2009 and balance sheet as on that date.
Table 2
Particulars Dr. Cr.
Drawings 10,000
Opening Stock 46,000
Purchase and Purchase returns 1,50,000 600
Cash in hand 34,000
Bank Balance 22,660
Freehold Premises 38,600
Trade expenses 840
Printing, Stationary and advertising 1640
Professional charges 280
Commission received 3300
Investment as on 1st Jan. 4000
Interest on Deposits 200
Sundry debtors and creditors 36000 29000
Wages 25000
Salaries 14000
Rent Rates and insurance 4000
Capital 114,700
Income Tax 1600
Discount allowed and received 6300 4600
Sales returns and Sales 500 2,08,000
Bills Receivables and Bills Payables 3200 10000
Office Furniture 3050
Bad Debts Provision 670
3,71,070 3,71,070
Adjustments:
i. Provide outstanding for wages Rs.5000.
ii. Write off depreciation on freehold premises and 10% on office furniture.
iii. Insurance to the extent of Rs.200 belongs to 2010.
iv. Closing stock as on 31.3.2010 is Rs.52000.
v. Charge interest on capital
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4. On September 2011, company M purchased a building at Rs.1,200,000. Buildings are depreciated
using the straight-line depreciation method. Useful life of the building is 40 years. Salvage
value of the building at the end of useful life is estimated as Rs. 120,000. What is the amount of
depreciation expense for 2011? What is the book value of the building at December 31, 2011?

Prepare a purchases return (journal) book from the following transactions for January 2014:[7M]
Table 3
Date Details Amount (Rs.
5th January, 2014 Returned goods to M/s Karthik Traders 1,200
10th Goods returned to Sahil Pvt. Ltd. 2,500
17th Goods returned to M/s Kohinoor Traders. for list price 2,000
less 10% trade discount.
28th Return outwards to M/s Handa Traders 550
UNIT III
5. Bike Ltd purchased 10 bikes during January and sold 6 bikes, details of which are as follows:
January 1 purchased 5 bikes $50 each
January 5 sold 2 bikes
January 10 sold 1 bike
January 15 purchased 5 bikes 70 each
January 25 sold 3 bikes
The value of 4 bikes found as shortage at the end of January use FIFO Method.
Define inventory. Explain various techniques for valuation of inventory.
6. A limited company issued 25,000 ordinary shares of Rs. 25 each payable Rs. 5 on application,
Rs. 10 on allotment and Rs. 5 each on first call and Rs. 5 on final call, 20,000 shares were fullysubscribed
and moneys duly received. You are required to give journal entries, cash book and
balance sheet of the company.
Distinguish between shares and debentures.
UNIT IV
7. The balance sheets of National Co. as on 31st December, 2003 and 31st December 2004 are as
follows:
Additional information:
Rs. 50,000 depreciation has been charged on plant and machinery during 2004.
A piece of machinery was sold for Rs. 8,000 during the year 2004. It had cost Rs. 12,000;
depreciation of Rs. 7,000 had been provided on it.
prepare a schedule of changes in working capital and a statement showing the sources and application
of funds for 2004.
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Table 4
Liabilities 2003 2004(Rs.) Assets 2003(Rs.) 2004(Rs.)
Share Capital 500000 700000 L&B 80000 120000
P&L A/c 100000 160000 P&M 500000 800000
General Reserve 50000 70000 Stock 100000 75000
Creditors 153000 190000 Debtors 150000 160000
Bills Payable 40000 50000 Cash 20000 20000
O/S Exp. 7000 5000
Total 850000 1175000 850000 1175000

Distinguish between funds flow and cash flow statement.
8. From the following balance sheets of Exe Ltd. make-out cash flow statement:
Table 5
Additional Information:
Depreciation of Rs. 10,000 and Rs. 20,000 have been charged on plant and land buildings
in 2004.
An interim dividend of Rs. 20,000 has been paid in 2004.
Rs. 35,000 Income tax was paid during 2004.
Define funds flow. Explain its importance.
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UNIT V
9. From the data Calculate: Gross Profit Ratio Net Profit ratio Return on total assets
Inventory turnover Working capital turnover Net worth to Debt

Table 6
Particulars Amount
Sales 25,20,000
Cost of sale 19,20,000
Net Profit 3,60,000
Inventory 8,00,000
Current Liabilities 6,00,000
Other Current Assets 7,60,000
Fixed Assets 14,40,000
Net worth 15,00,000
Debt 9,00,000
Define ratio analysis. Explain the classification of ratio analysis with suitable formulas.
10. Calculate the operating ratio from the following data shown in Table 6 .
Table 7
Items in Lakhs)
Sales 17874
Sales Returns 4
Other Incomes 53
Cost of Sales 15440
Administration and Selling Expenses 1843
Depreciation 63
Interest Expenses operating) 456
Explain the significance of financial statement analysis.
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