Hall Ticket No Question Paper Code: CMB002
INSTITUTE OF AERONAUTICAL ENGINEERING
(Autonomous)
MBA I Semester End Examinations (Supplementary) July, 2017
Regulation: IARE-R16
FINANCIAL ACCOUNTING AND ANALYSIS
(Master of Business Administration)
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. Discuss the meaning of Accounting and its importance to various users of Accounting Information.

Demonstrate the meaning and significance of the following GAAPs:
i. Separate Entity Concept.
ii. Dual Aspect Concept.
iii. Accural Concept.
iv. Conservatism Principle.
2. Describe the Meaning and various stages of Accounting Cycle.
Classify the following items into asset, liability, income and Expense:
i. Copyrights
ii. Preliminary Expenses
iii. Pre-paid expenses
iv. Outstanding expenses
v. Bank Overdraft
vi. Sales
vii. Goodwill
viii. Stock
ix. Tax payable
x. Royalty Paid
xi. Accrued Commission
xii. Salaries
xiii. Unearned interest
xiv. Wages
UNIT II
3. Ms. Arora set up Ace Marketing Ltd., to provide consultancy. During a short period the company
completed the following transactions. Prepare Journal entries to record the transactions.
Page 1 of 6
i. Ms. Arora invested cash in Ace's share capital Rs. 20,000
ii. Billed customers for services provided Rs. 5,600
iii. Paid assistant's salary Rs. 600
iv. Bought computer on credit Rs. 4,400
v. Received cash from customers billed earlier Rs. 1,350
vi. Took a bank loan Rs. 5000
vii. Paid creditors Rs. 2,000
Time Value company provides training on time management. The following are the account
balances of the company on September 30, 2016. Prepare a Trial Balance.
Table 1
Accounts Receivable Rs.1,200 Prepaid Insurance Rs.1,400
Building Rs.15,000 Retained Earnings
Cash Rs.1,500 Revenue from services Rs.12,500
Creditors Rs.2,300 Rent Expense Rs.1,000
Dividends Rs.750 Salaries Expense Rs.1,600
Electricity Expense 500 Share capital Rs.7,500
Office Equipment Rs.3,000 Telephone Expense Rs.1,050
4. On January 2012, X Ltd., purchased a second-hand machine for Rs. 80,000 and spent Rs.
20,000 on its cartage, repairs and installation. The residual value at the end of its expected
useful life of 4 years is estimated at Rs. 40,000. On September 30, 2013, this machine is sold for
Rs. 50,000. Depreciation to be provided according to Straight Line Method. Prepare Machinery
account for the first three years assuming that the accounts are closed on March 31, each year.

Prepare purchases book and purchase returns book in the books of Ms Soundarya Enterprise
from the following transactions:
Table 2
Date Transaction
12/5/16 Goods of MRP Rs.25,000 purchased from Naveen Enterprises trade discount.
14/5/16 Goods valuing Rs.1,100 returned to Naveen Enterprises.
Goods of MRP Rs.44,000 purchased from Satish Enterprises trade discount.
19/5/16 Goods of cost Rs.3,200 returned to Satish Enterprises.
20/5/16 Goods costing Rs.19,000 purchased in cash from Naveen Enterprises.
21/5/16 Goods costing Rs.11,000 purchased from Telelink Ltd.
Page 2 of 6
UNIT III
5. The following transactions occur in the purchase and issue of a material:
Table 3
2016
January 1 Opening stock Nil
January 1 Purchases 100 units Rs.30 per unit
January 15 Issued 50 units
February 1 Purchases 200 units Rs.40 per unit
February 15 Issued 100 units
February 20 Issued 100 units
March 1 Purchases 150 units Rs.50 per unit
March 15 Issued 100 units
Prepare stores ledger under FIFO method from the above transactions
Discuss the meaning and types of Share Capital found in a balance sheet.
6. D Ltd invited application to issue 10,000 equity shares of face value Rs.10 each at par. The
amount to be paid as to Rs.4 at the time of application, Rs.2.50 on allotment, and the remaining
amount on first and final call. The company received the application for 10,000 shares all the
shares were allotted, the amount due on allotment as well as on first and final call was received
in time in full. Pass necessary journal entries in the books of D Ltd.
Discuss the meaning and types of Debentures.
UNIT IV
7. Following are the comparative balance sheets of Novo Company as at December 31.
Table 4
Liabilities 2014 2015 Assets 2014 2015

Share capital 70,000 74,000 Goodwill 10,000 5,000
Profit/loss 10,040 10,560 Land 20,000 30,000
Debentures 12,000 6,000 Trade Debtors (goods) 14,900 17,700
Trade -Creditors 10,360 11,840 Stock-in-trade 49,200 42,700
Provision for doubtful debts 700 800 Cash 9,000 7,800
1,03,100 1,03,200 1,03,100 1,03,200
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Additional Information:
i. Dividends were paid totaling Rs.3,500.
ii. Land was purchased for Rs.10,000 and amount provided for the amortization of goodwill
totaled Rs. 5,000.
iii. Debenture loan was repaid Rs. 6,000.
Prepare funds flow statement of Novo Company.
Describe the meaning of Funds Flow Statement. Compare Funds Flow with Income statement.
Explain the uses of Funds flow statement.
8. The Balance Sheets of VXL Limited as at December 31 of two years are given below:
Table 5
Assets 2016 2015

Cash Balances 60,000 50,000
Trade debtors 100,000 75,000
Inventory 120,000 140,000
Land 80,000 100,000
Plant and Machinery 250,000 200,000
Total 610,000 565,000
Liabilities and Capital
Trade Creditors 40,000 30,000
Debentures 90,000 150,000
Provision for depreciation on Plant 80,000 60,000
Equity Share Capital 240,000 200,000
Retained Earnings 160,000 125,000
Total 610,000 565,000
Cash dividends of Rs.25,000 have been paid during the year.
Prepare a Cash flow statement for VXL Limited.
Describe the meaning of cash flow statement. Compare funds flow with cash flow statement.

UNIT V
9. Calculate the following ratios from the given balance sheet:
i. Current ratio
ii. Fixed Assets to Net worth ratio
iii. Debt equity ratio
iv. Return on capital employed
Page 4 of 6
Table Balance Sheet
Liabilities Rs. Assets Rs.
600 shares of Rs.100 each 60,000 Land 40,000
General Reserve 35,000 Plant 20,000
Dividend Equalisation Reserve 5,000 Machinery 27,500
Long-term loans 20,000 Investments 25,000
Bills payable 30,000 Inventories 30000
Provision for tax 5,000 Bills receivable 13,500
Profit loss A/c
Balance(cr) Last Year 1,000
Current year 20,000 21,000 Cash and bank 12,000
Preliminary expenses 8,000
176,000 176,000
Describe the meaning and types of Financial Statements.
10. The following Trading and Profit and Loss Account is given:
Table Trading and Profit and Loss A/c. For the year ending 31st March 2016
Rs. Rs.
To Opening stock 76,250 By Sales 500,000
To Purchases 315,250 By Closing stock 98,500
To Carriage 2,000
To Wages 5,000
To Gross profit 200,000
598,500 598,500
To Administrative expenses 100,000 By Gross profit 200,000
To Selling distribution expenses 13,000 By Non operating incomes 6,000
To Financial expenses 7,000
To Other non-operating expenses 2,000
To Net profit 84,000
206,000 206,000
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Calculate:
i. Gross Profit ratio
ii. Net Profit ratio
iii. Operating ratio
iv. Operating profit ratio
v. Current ratio
vi. Stock turnover ratio
Describe the meaning and classification of Ratios.