DISTANCE EDUCATION
M.B.A. DEGREE EXAMINATION, MAY 2017.
Second Semester
FINANCIAL AND MANAGEMENT ACCOUNTING
(2012-13 Academic Year and 2013 Calendar Year only)
(English Medium Only)
Time Three hours Maximum 100 marks
SECTION A — 8 40 marks)
Answer any FIVE questions.
All questions carry equal marks.
1. What are accounting standards? What are its need and
importance?
2. What is financial statement analysis? Who are interested
in this analysis?
3. Briefly describe the different 'internal' and 'external'
sources and applications for cash.
4. Explain the meaning the methods of capital rationing.
5. Following items appear in the Balance Sheet of a
Company as on 31st December 2010
Current Assets Rs.
Stock-in-trade 1,00,000
Bank Balance 50,000
Sundry Debtors 2,50,000
Advances 20,000 Rs. 4,20,000
Sub. Code
21
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Current Liabilities
Sundry Creditors 1,75,000
Advance received against orders 35,000
Rs. 2,10,000
Calculate the current ratio.
State whether each of the following transactions
would affect the current ratio favourably or
otherwise. Each transaction is to be treated
independently.
Paid Rs. 30,000 to a creditor
Received Rs. 20,000 from a customer
Paid cheque of Rs. 25,000 for the purchase of
machinery.
6. Extracts from Balance Sheets
As on 30.6.2011 As on 30.6.2012
Rs. Rs.
Equity Share Capital 2,00,000 3,00,000
Share Premium A/c 20,000 30,000
Debentures 1,00,000 1,50,000
Additional information
Debentures worth Rs. 30,000 were redeemed dining
the year.
Prepare necessary accounts to find out
sources/application of funds.
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7. The Balance Sheets of X Ltd. As on 1.1.11 and 31.12.11
are given below
Liabilities 1.1.11 31.12.11 Assets 1.1.11 31.12.11
Rs. Rs. Rs. Rs.
Share Capital 1,25,000 1,53,000 Cash 10,000 47,000
Bank loan 40,000 50,000 Debtors 30,000 50,000
Loan from financial Stock 35,000 25,000
Institution 25,000 Machinery 80,000 55,000
Creditors 40,000 44,000 Land 40,000 50,000
Profit and Buildings 35,000 60,000
Loss A/c 1,00,000 1,20,000 Goodwill 1,00,000 80,000
3,30,000 3,67,000 3,30,000 3,67,000
Prepare a Cash Flow Statement.
8. Calculate the pay-back periods of the following projects
each requiring a cash outlay of Rs. 1,00,000. Suggest
which projects are acceptable if the standard pay-back
period is 5 years.
Year Project A Project B Project C
Rs. Rs. Rs.
1 30,000 30,000 10,000
2 30,000 40,000 20,000
3 30,000 20,000 30,000
4 30,000 10,000 40,000
5 30,000 5,000
SECTION B — 15 60 marks)
Answer any FOUR questions.
All questions carry equal marks.
9. Explain the nature and scope of management accounting.
10. Define capital budgeting. What is its importance? What
are the different methods of capital appraisal?
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11. Mr. Mano keeps his books of accounts under single entry
system. His financial position on 31.12.2013 and
31.12.2014 was as follows
Particulars: 2013
Rs.
2014
Rs.
Cash 9,860 800
Stock in trade 38,520 57,020
Plant and Machinery 54,420 61,000
Bills Receivable 16,480
Sundry Debtors 24,840 43,940
Sundry Creditors 72,040 80,000
Furniture 4,960 5,220
Drawings 5,000
During the year he introduced additional capital of
Rs. 20,000.
From the above particulars prepare a statement of Profit
and Loss of Mr. Mano for the year ended 31.12.2014.
12. Given the following information for ABC company at the
end of 2006, determine balances for the income statement
and the balance sheet.
Net sales Rs. 1,00,000
Debtors Turnover Ratio based on net sales 2
Inventory Turnover Ratio 0.8
Debts Assets Ratio 0.6
Net Profit Margin
Gross Profit Margin 25%
Return on Investment
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13. Prepare a Fund Flow Statement from the following
particulars
Balance Sheet of X Co. Ltd.
2011 2010
Rs. Rs.
Assets
Cash 36,000 60,000
Debtors 1,08,000 1,00,000
Stock 1,60,000 1,40,000
Investment (marketable temporary) 20,000
Fixed assets net 2,92,000 1,79,000
Goodwill 20,000
5,96,000 5,19,000
Liabilities
Trade creditors 1,70,000 1,94,000
Accrued expenses 38,000 26,000
Mortgages 60,000 40,000
Share capital 2,60,000 2,00,000
Retained earnings 68,000 59,000
5,96,000 5,19,000
Additional information:
Depreciation provided during 2011 amounted to
Rs. 27,000
Dividends paid in 2011 amounted to Rs. 14,000
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14. A large retail store makes 25% of its sales for cash and
remainder on 30 days' terms. Due to faulty collection
practice, there have been losses from bad debts to the
extent of of credit sales on an average in the past. The
experience of the company tells that normally 60% of
credit sales are collected in the month following the sale,
25% in the second following month and 14% in the third
following month. Sales in the preceding three months of
2012 have been Jan. Rs. 80,000, Feb. Rs. 1,00,000 and
March Rs. 1,40,000. Sales for the next three months are
estimated as April, Rs. 1,50,000, May Rs. 1,10,000 and
June Rs. 1,00,000.
Prepare a schedule of the expected cash collections during
the month April, May and June 2012 for the presentation
to the Finance Dept. What will be the cash receipts if the
credit policy is enforced strictly so that there are no
overdue accounts and bad debts?
15. Modern Electronics Co. Ltd. are considering a purchase of
an machine. Two machines A and B are available, each
costing Rs. 50,000. In comparing the profitability of these
machines a discount rate of 10% is to be used. Earnings
after taxation are expected to be as follows
Year Machine A Cash Flow Machine B Cash Flow
1 15,000 5,000
2 20,000 15,000
3 25,000 20,000
4 15,000 30,000
5 10,000 20,000
You are also given the following data
PV of Re. 10% discount 0.909 0.826 0.751 0.683 0.621
Year 1 2 3 4 5
Evaluate the projects using the pay-back period,
the accounting rate of return, the net present value
and the profitability index at 10% discount factor.