USN
18MBA13
First Semester MBA Degree Examination,
Accounting for Managers
Model Question Paper-2
Time: 3 hrs. Max. Marks: 100
Note: 1. Answer any FOUR full questions from Part-A.
2. Part-B Case Study is compulsory.
Part-A
1. a.List the characteristics of Accounting principles. Marks)
b. "Financial statements are the only basis for measuring the performance of a company". Comment.
Marks)
c. Show the accounting equation on the basis of the following transactions: (10 Marks)
1. Y started business with cash Rs.90,000
2. Purchased goods on credit Rs. 50,000
3. Purchased furniture for cash Rs. 10,000
4. Sold goods costing Rs. 20,000 for Rs. 40,000
5. Sold goods costing Rs. 20,000 on credit for 42,000
6. Drawn for personal used Rs. 5000
7. Paid for rent Rs. 1000
8. Paid for salaried Rs. 3000
9. Paid to creditors Rs. 40,000
10. Received from debtors Rs. 12,000
2.a State the differences between Provisions and Reserves. Marks)
b Is accrual basis of accounting is superior to cash basis of accounting in meeting the economic decision
making needs of the users of financial statements? Why or Why not? Marks)
c. On 01st January, 2015, the following were the ledger balances of Gopal and Co.: Cash in hand Rs.
Cash at bank Rs. 21, Soni Rs Zahir Rs. Stock Rs. 12,
Prasad Rs. Sharma Rs. Lall Rs. Ascertain capital. (10 Marks)
Transactions during the month were;
2015 Jan. 2. Bought goods of Prasad Rs.
Jan 3. Sold to Sharma Rs.
Jan 5. Bought goods of Lall for cash, paid by cheque Rs.
Jan 7. Withdraw cash for personal use Rs.
Jan 13. Received from Zahir in full settlement Rs.
Jan 17. Paid to Soni in full settlement Rs.
Jan 22. Paid cash for stationery Rs.
Jan 29. Paid to Prasad by cheque Rs.
Discount allowed by him Rs.
Journalize the above transactions.
3.a. What is an accounting cycle? Marks)
b. What is IFRS? State the objectives of IFRS Marks)
c ABC Ltd. Purchased secondhand machinery on 1st April 2007 for Rs. 3,70,000 and installed it at a
cost of Rs. 30,000. On 1st Oct. 2008 it purchased another machinery for Rs. 1,00,000 and on 1st Oct.
2009, it sold off the first machine purchased in 2007, for Rs. 2,80,000.
On the same date it purchased a machinery for Rs. 2,50,000. On 1st Oct. 2010, the second machinery
purchased for Rs. 1,00,000 was sold off for Rs. 20,000.
In the beginning depreciation was provided on machinery at rate of 10%p.a. on the original cost each
year on 31st March. From the year 2008-09, however, the company changed the method of providing
depreciation and adopted the written down value method, the rate of depreciation being 15%.
Give machinery A/c for the period 2007-11. (10 Marks)
4 a. Who can become Forensic Accountant? Marks)
b. What are the deductions under Section 80C of Income tax Act for the Current A.Y? Marks)
c. The following Trial Balance has been prepared wrongly. You are asked to prepare the trial balance
correctly. (10 Marks)
Name of accounts Debit balance Credit balance
Cash in hand
Purchases returns
Wages
Establishment expenses
Capital
Carriage outward
Discount received
Commission earned
Machinery
Stock
Creditors
Sales
Purchases
Bank overdraft
Grand total

4,000
8,000
12,000
22,000

1,200
800




28,000
14,000
58,000
2,000




2,000


20,000
10,000
12,000
28,000


58,000
5. a State the drawbacks of the ratio analysis? Marks)
b. Identify the type of account and state the reasons for the following terms Marks)
I Depreciation
Ii Wages Iii Standard Chartered Bank
iv Furniture v Goodwill vi Salaries
vii Discount paid viii Building ix Machinery
x Commission paid xi Bad debts xii Advance mobile charges
xiii. Canara Bank xiv. Discount received
c.. From the following particulars pertaining to Assets and Liabilities of a company calculate:
i. Current Ratio
ii. Liquidity Ratio
iii. Proprietary Ratio
iv. Debt-equity Ratio
v. Capital Gearing Ratio (10 Marks)
Liabilities Rs. Assets Rs.
5000 Equity shares of Rs. 10 each
2000 Preference shares of Rs. 100
each
4000 Debentures of Rs. 100 each
Reserves
Creditors
Bank overdraft
500000
200000
400000
300000
150000
50000
Land Building
Plant Machinery
Debtors
Stock
Cash Bank
Pre paid expenses
500000
600000
200000
240000
55000
5000
1600000 1600000
6a. State the Income tax slab rate of an individual for the Current Assessment Year. Marks)
b. "Balance Sheet is a statement, but not an account". Comment. Marks)
c. On January 2017 Patil Stores cash book showed debit balance of cash `1,550 and bank (10 Marks)
`13,575. During the month of January following business was transacted.
1 Jan Purchased office typewriter for cash cash sales `1,315
3 Jan Deposited cash `500
4 Jan Received from Jajee a cheque for `2,550 in part payment of his account
6 Jan Paid by cheque for merchandise purchased worth `1,005
8 Jan Deposited into bank the cheque received from Jajee.
10 Jan Received from Hayat Khan a cheque for `775 in full settlement of his account
and allowed him discount `15.
12 Jan Sold merchandise to Winston Bros. for `1,500 who paid by cheque which
was deposited in the bank.
16 Jan Paid Satish `915 by cheque, discount received
27 Jan Paid to Kiran by cheque `650
30 Jan Paid salaries by cheque `1,750
31 Jan Deposited into bank the cheque of Hayat Khan.
31 Jan Drew from bank for office use `250.
You are required to enter the above transactions in 3 column cash book and balance it.
7a. 'Liquidity ratio plays a key role in Banking Industry'. Comment. Marks)
b. Distinguish between Capital and Revenue receipt. Marks)
c. . Prepare cash flow statement by indirect method of X ltd. From the following: (10 Marks)
Capital Liabilities 1.1.06 31.12.06 Assets 1.1.06 31.12.06
Share capital
Reserves Surplus
Reserve for contingency
Dep fund
Debenture
Bills payable
Outstanding expenses
4,00,000
55,000
1,00,000
60,000
1,60,000
1,40,000
30,000
4,00,000
90,000
70,000
70,000
1,00,000
1,10,000
50,000
Land Building
Plant Machinery
Stock
Debtor
Cash Bank
Temporary
Investments
Prepaid expenses
2,90,000
2,10,000
1,20,000
1,00,000
60,000
1,25,000
40.000
2,10,000
2,75.000
1,85,000
70,000
55,000
75,000
20,000
9,45,0000 8,90,000
9,45,0000 8,90,000
Additional Details:
i. A Plant costing Rs.20000 with accumulated depreciation of Rs.8000 was sold for Rs.10000
and bought a new plant for Rs.85000
ii. A part of Building was sold for Rs.150000
iii. Rs.60000, debenture were redeemed by purchase from open market Rs.95
iv. Rs.50000 investment were sold at 15% higher than book value
v. 25% dividend was paid in cash
vi. Rs.30000 was utilized from contingency reserve for settlement of previous tax liability
Part-B
8. (Case Study)
The following is the trial balance of Mr. X of Bombay as on 31st Dec. 2017. Prepare a trading and profit
and loss account for the year ended 31st Dec. 2017 and the balance sheet as on that data after taking into
consideration the following adjustments.
The authorized capital of the company was Rs.1000000 divided into Rs.500000 preference shares of
Rs.100 each and Rs.500000 equity shares of Rs.100 each. Rs.75 per share was called up on 3200 equity
shares by the director and the amount was fully paid.
Adjustments:
i. Depreciation to be provided on Land and building is Rs.10000 and on plant and machinery Rs.25000
ii. Increase reserve for bad and doubtful debts to
iii. Closing stock is valued at Rs.340000
Trial Balance as on 31st Dec. 2017
Particulars Dr Cr
Equity Share capital 240000
preference share capital 500000
Debentures 160000
Land Building (at cost) 550000
Plant Machinery (at cost) 350000
Good will 190000
Resave for bad debts 12000
P L Account (1.1.2017) 265000
Sales revenue 1465500
Purchases 1200600
Selling expenses 45000
Distribution expenses 24450
Bank charges 3500
Share transfer fee 2500
Preliminary expenses 55000
Share premium A/C 60000
Depreciation reserves (1.1.2017)
Land Building
Plant Machinery

110000
120000
Trade investment 185000
General reserve 125000
Other investment 75000
Stock (1.1.2017) 230000
Sundry creditors 165000
Sundry Debtors 467000
Bank Overdraft 184000
Management expenses 37000
Office expenses 23450
Income from investment 28000
TOTAL 3437000 3437000
You are require to compute
Gross Profit Marks)
Net Profit Marks)
Prepare Balance Sheet Marks)