M.C.A.-R/WE DEGREE EXAMINATION, APRIL 2016
Second Semester
ACCOUNTING AND FINANCIAL MANAGEMENT
(2012 onwards)
(Common for M.C.A. (R)/M.C.A.
Time 3 Hours Maximum 75 Marks
Part A (10 2 20)
Answer all questions.
1. What is money measurement concept?
2. State any two limitations of trial balance.
3. What is Margin of safety?
4. What are the uses of cost sheet?
5. What is material variance?
6. What are the advantages of preparing sales budget?
7. What is profit maximization?
8. What is payback period?
9. What is stock dividend?
10. What is opportunity cost of capital?
Sub. Code
541205/
545205
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Part B 5 25)
Answer all questions.
11. Prepare trading and profit and loss account from
the information given below
Rs.
Opening stock 3,600
Purchases 18,260
Wages 3,620
Closing stock 4,420
Stock 32,000
Carriage on purchases 500
Carriage on sales 400
Rent (factory) 400
Rent (office) 500
Sales returns 700
Purchase returns 900
General expenses 900
Discount to customers 360
Interest from bank 200
Or
Distinguish between trial balance and balance sheet.
12. From the following information, prepare a
summarised Balance sheet as at 31st March, 2014
Working capital Rs. 120,0000
Reserve and surplus Rs. 80,000
Bank overdraft Rs. 20,000
Assets (Fixed)-proprietary Ratio 0.75
Current ratio 2.5
Liquid ratio 1.5.
Or
What is costing? Give its basic principles.
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13. Payoff Ltd. is producing articles mostly by manual
labour and is considering to replace it by a new
machine. There are two alternative models M and N
of the new machine. Prepare a statement of
profitability showing the pay-back period from the
following information
Machine M Machine N
Estimated life of machine 4 years 5 years
Cost of machine Rs. 9,000 Rs. 18,000
Estimated savings in scrap Rs. 500 Rs. 800
Estimated savings in direct wages Rs. 6,000 Rs. 8,000
Additional cost of maintenance Rs. 800 Rs. 1,000
Additional cost of supervision Rs. 1,200 Rs. 1800
Or
Distinguish between standard cost and estimated
cost.
14. How do you justify profit-maximization objective of
financial management. What are the defects of
profit-maximization?
Or
From the following information calculate Pay back
period Initial investment Rs 20,000.
Year Cash inflow

1 5,000
2 6,000
3 4,000
4 4,000
5 4,000
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15. What do you mean by optimum capital structure?
Discuss briefly.
Or
Velvet Corporation's outstanding preferred stock
currently yields 11%. Velvet can issue new $100 par
preferred with an 11% dividend, but will incur
flotation costs of 5%. Find the cost of newly issued
preferred stock.
Part C 10 30)
Answer any three questions.
16. The Trial Balance of Mr. X as on 31st March 2015 was as
follows
Dr. Cr.
Rs. Rs.
Purchases 1,62,505
Sales 2,52,400
Reserve for doubtful debts 5,200
Sundry debtors 50,200
Sundry creditors 30,526
Bills payable 3,950
Opening stock 26,725
Wages 23,137
Salaries 5,575
Furniture 7,250
Postage 4,226
Power and fuel 1,350
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Dr. Cr.
Rs. Rs.
Trade expenses 5,831
Bad debts 525
Loan at 10% pa. to Ram 1st Jan. 2015 3,000
Cash on hand and at bank 10,000
Outstanding wages 2,000
Trade expenses accrued but not paid 700
Drawings account 4,452
Capital 10,000
3,04,776 3,04,776
Prepare the Trading and P L a/c for the year ended
31st March 2015 the balance sheet as on date taking into
account the following information.
Depreciation on furniture is to be charged at
10% p.a.
Sundry debtors include an item of Rs. 500 due from
a customer who has become insolvent.
Reserve for doubtful debts is to be maintained at
on Sundry debtors.
17. What are the advantages and limitations of break even
chart?
18. What are the various methods available for estimation of
working capital requirements?
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19. Balance sheet of a firm as on 31st March 2014 and
31st March 2014 were as follows
Liabilities 31.3.2014
Rs.
31.3.2015 Assets 31.3.2014
Rs.
31.3.2015
Creditors 40,000 44,000 Cash 10,000 47,000
Loan from X 25,000 Debtors 30,000 50,000
Loan from Y 40,000 50,000 Stock 35,000 25,000
Capital 1,25,000 1,53,000 Machinery 80,000 55,000
Land 40,000 10,000
Building 35,000 60,000
2,30,000 247,000 2,30,000 247,000
During the year a machine costing Rs. 10,000
(accumulated depreciation Rs. 3,000) was sold for
Rs. 5,000. The balance of provision for depreciation
against machinery as on 31st March 2014 was Rs. 25,000
and on 31st March 2015 Rs. 40,000. Net profit for the year
2014-15 amounted to Rs. 45,000. Prepare cash flow
statement.
20. Explain the various types of dividend policy.