Total No. of Questions: 6

[4] d) Interest debited by the bank on 27 Jun 2016 but no advice received e) Amount wrongly debited by the bank f) Dividend collected by the bank not recorded in cash book g) Directly deposited by customer Q.5 OR

i. ii. ii.

4000 400 6000 3000

Write a note on Cost Concept. What is Cost Accounting? Briefly explain different methods of Costing. Following details are available for two successive years for a product. Particulars Year 1 Year 2 Sales 100000 80000 Profit 12000 6000 Calculate P/V ratio, Fixed Cost, BEP, Amount of Profit if Sales are Rs. 200000, Sales in Rs. when desired Profit is Rs. 15000 and margin of safety for both the years.

Enrollment No......................................

Faculty of Management 3 7 7

End Sem (Odd) Examination Dec-2016 MS5CO03 Accounting for Managers Programme: MBA

i. ii.

What are the different objectives of Management Accounting? Explain any three. From the following balance sheet of X Ltd., prepare Cash flow statement.

2009 800000 36500 8500

Q.1

i. ii.

3 7

ii.

Assets Building Plant Stock

2009 700000 80000 25000

2010 680000 75000 21000

v

vi 2000 847000

OR

2010 800000 22000 4000

1000 Debtors Cash at Bank 827000

15000 27000 847000

10000 41000 827000

Dividend paid during the year 2010 is Rs. 10000. The changes in building and plant value are due to depreciation. From the given information of a company prepare the balance sheet. Receivable turnover ratio 4, payable turnover ratio 5, inventory turnover ratio 8, capital turnover ratio 2, fixed assets turnover ratio 8, gross profit ratio 25%, gross profit for the year Rs. 40000. Reserve & surplus Rs. 18000, Closing stock was Rs. 1000 more than opening stock. There is no long term loan or OD. ******

Maximum Marks: 60

Note: All questions are compulsory. Internal choices, if any, are indicated.

iv Liabilities Capital Profit & loss Sundry creditors Bills payable

Branch/Specialisation: Management

Duration: 3 Hrs.

iii Q.6

Total No. of Printed Pages:4

vii 7 viii ix

Which of the following concept assume that business will last indefinitely? a) Business entity b) Going concern c) Periodicity d) Conservatism The process of preparing the ledger is called a) Journalising b) Posting c) Balancing d) Totalling Management accounting involves a) Preparation of final statement b) Analysis and interpretation of data c) Recording of transaction d) Assisting the management in performing its function effectively Management accounting is highly sensitive to a) Management needs b) Investors needs c) Government needs d) Consumer needs Bank reconciliation statement is a) A part of cash book b) A part of pass book c) A statement prepared by bank d) A statement prepared by customer In which of the following methods, the amount of depreciation remains the same throughout: a) Fixed Installment Method b) Diminishing Balance Method c) Fixed and Diminishing Balance Methods d) Neither Fixed nor Diminishing Balance Method Patent is a/an a) Current asset b) Intangible fixed asset c) Tangible fixed asset d) Investment Major objective of cost accounting is to ascertain a) Cost b) Profit c) Loss d) Planning ______ cost consists of costs of direct material, direct labour and direct expenses. a) Fixed b) Variable c) Direct d) Prime

1 1 1

1

1

1

1

1 1

PTO

[3]

[2] x

A business has assets of Rs. 45600 and liability of Rs. 10000. Capital is a) 65600 b) 35600 c) 25600 d) None of these

1

Q.2

i. ii.

3 7

OR

ii.

Define Accounting. Explain rules of debit and credit. Pass the Journal entries for the following transactions: Jan 01, 2015 Raj, the proprietor of the business brought in cash of Rs. 100000 and furniture of Rs. 60000 to start the business. Jan 02, 2015 Purchased goods for Rs. 10000 in cash. Jan 13, 2015 Cheque received from Shyam of Rs. 19800 and allowed him a discount of Rs. 200. Jan 17, 2015 Purchased a Building of Rs. 200000 in cash. Jan 21, 2015 Sold goods to Ramesh for Rs. 20000 at a trade discount of 10% and availed a cash discount of 5% on half of the bill amount by making the payment immediately. Jan 24, 2015 Salary paid Rs. 5000. Jan 28, 2015 Goods given as free sample of Rs. 5000. Prepare a three column cash book from the following. Jan 01, 2014 Cash in hand Rs. 25000 and Bank O.D. Rs. 4000. Jan 05, 2014 Salary paid by cash Rs. 10000. Jan 09, 2014 Cash sales of goods worth Rs. 10000 on 10% Trade discount and 5% Cash discount. Jan 11, 2014 Deposited the amount of above sale in Bank a/c. Jan 13, 2014 Purchased goods worth Rs. 1000 and paid by Cheque. Jan 14, 2014 Received a Cheque of Rs. 4000 from Mr. X in full settlement of Rs. 4250 and deposited in the bank on the same day. Jan 15, 2014 Bank charged Rs. 80 as bank charges and interest credited Rs. 110. What is trial balance? Write down different methods of preparation of trial balance. What do you mean by final account? Explain the adjustments related to depreciation, bad debt, pre-paid expenses, outstanding expenses and accrued income in detail. The following is the Trial Balance of Mr. Shyam as on 31 Mar 2015: Particulars Dr. (Rs.) Cr. (Rs.)

3

Q.3

i. ii.

OR

ii.

Machinery Cash in hand Cash at bank Return Outwards Return Inwards Carriage on Purchases

50000 2000 6180 1000 1360 4080

Sales 177400 Purchase 81370 Opening Stock 11500 Building 80000 Carriage on sales 6400 Furniture 15000 General Expenses 6000 Insurance 1200 Capital 172000 Drawing 10490 Sundry Debtors 27000 Sundry Creditors 12600 Wages 20420 Salary 40000 Total 363000 363000 Taking into account the following adjustments, prepare Trading and Profit and Loss Accounts and also Balance Sheet on 31 Mar 2015. 1. Stock as on 31 Mar 2015 is Rs. 12400. 2. Machinery is to be depreciated @10% and Furniture @ 20%. 3. Salaries for the month 31 Mar 2015 amounting to Rs. 4500 were unpaid. 4. Insurance included a premium of Rs. 200 for the next year. 5. A provision for doubtful debts is to be created to the extent of 10% on sundry debtors.

7

Q.4

i. ii.

7

7 OR

ii.

What are the reasons for difference in cash book and pass book balances? A company purchased a Machine on Jan, 2013 for Rs. 47000 and spend Rs. 3000 on its installation. On Jul 2014 company purchased another Machine for Rs. 20000 and in Jul 2015 it sold off 1st Machine for Rs. 28000 and bought another for Rs. 25000. On Jul 2016 second Machine was sold for Rs. 2000. Depreciation provided on machine at the rate of 10% P.A. on the original cost on Dec 31 annually. In 2014, the company changed method of depreciation and adopted the WDV method at the rate of 15% P.A. with retrospective effect. Prepare the Machinery account for 4 years commencing from the date of acquisition of machine. Prepare a Bank reconciliation statement as on 30 Jun 2016 from the information given below: a) Bank Balance as per cash book as on 30 Jun 2016 120000 b) Cheques issued on 20 Jun 2016 but not yet presented 24000 c) Cheque deposited but not yet credited by the bank 10750

3 7

7

PTO

Model Solution / Scheme of Marking Q.1

i.

ii.

iii

iv

v

vi

vii

viii

ix

x.

Q.2

i.

Which of the following concept assume that business will last indefinitely? a) Business entity b) Going concern c) Periodicity d) Conservatism B The process of preparing the ledger is called a) Journalising b) Posting c) Balancing d) Totalling B Management accounting involves a) Preparation of final statement b) Analysis and interpretation of data c) Recording of transaction d) Assisting the management in performing its function effectively B or D Management accounting is highly sensitive to a) Management needs b) Investors needs c) Government needs d) Consumer needs A Bank reconciliation statement is a) A part of cash book b) A part of pass book c) A statement prepared by bank d) A statement prepared by customer D In which of the following methods, the amount of depreciation remains the same throughout: a) Fixed Installment Method b) Diminishing Balance Method c) Fixed and Diminishing Balance Methods d) Neither Fixed nor Diminishing Balance Method A Patent is a/an a) Current asset b) Intangible fixed asset c) Tangible fixed asset d) Investment B Major objective of cost accounting is to ascertain a) Cost b) Profit c) Loss d) Planning A ______ cost consists of costs of direct material, direct labour and direct expenses. a) Fixed b) Variable c) Direct d) Prime D A business has assets of Rs. 45600 and liability of Rs. 10000. Capital is a) 65600 b) 35600 c) 25600 d) None of these B Define Accounting. Explain rules of debit and credit. Definition Enumeration of three rules Explanation of each. Pass the Journal entries for the following transactions: Jan 01, 2015 Raj, the proprietor of the business brought in cash of Rs. 100000 and furniture of Rs. 60000 to start the business. Jan 02, 2015 Purchased goods for Rs. 10000 in cash. Jan 13, 2015 Cheque received from Shyam of Rs. 19800 and allowed him a discount of Rs. 200. Jan 17, 2015 Purchased a Building of Rs. 200000 in cash. Jan 21, 2015 Sold goods to Ramesh for Rs. 20000 at a trade discount of 10% and allowed a cash discount of 5% on half of the bill amount by making the payment immediately.

1

1

1

1

1

1

1

1

1

1

1 0.5 1.5 7

Jan 24, 2015 Salary paid Rs. 5000. Jan 28, 2015 Goods given as free sample of Rs. 5000. Every entry with narration 1 marks and without narration 0.5 marks Date Particulars Debit Amt Credit Amt 1-1-15 Cash A/c Dr. 100000 Furniture A/c Dr. 60000 To Raj’s Capital A/c or Capital A/c 160000 (Being the investment of cash and furniture by Raj to start the business) 2-1-15 Purchase A/c Dr. 10000 To Cash 10000 (Being the purchase of goods on cash) 13-1-15 Bank A/c Dr. 19800 Discount A/c Dr. 200 To Shyam 20000 (Being cheque received from Shyam Rs. 19800 and allowed him discount of Rs. 200) 17-1-15 Building A/c Dr. 200000 To Cash 200000 (Being building purchased in cash) 21-1-15 Ramesh A/c Dr. 18000 To Sales 18000 (Being goods sold to Ramesh Rs. 20000 at a trade discount of 10%) 21-1-15 Cash A/c Dr. 8550 Discount A/c Dr. 450 To Ramesh 9000 (Being cash received for half of the bill amount and allowed 5% CD on thereof and balance amount is unpaid) OR 21-1-15 Cash A/c Dr. 8550 Discount A/c Dr. 450 Ramesh A/c Dr. 9000 To Sales 18000 (Being goods sold to Ramesh Rs. 20000 at a trade discount of 10% and cash received for half of the bill amount and allowed 5% CD, balance amount is unpaid) 24-1-15 Salary A/c To Cash/Bank (Being Salary paid by Cash/Cheque) 28-1-15 Free sample / Advertisement A/c To Purchase A/c (being goods given as free sample)

OR

ii.

Dr.

5000 5000

Dr.

5000 5000

Prepare a three column cash book from the following. Jan 01, 2014 Cash in hand Rs. 25000 and Bank O.D. Rs. 4000. Jan 05, 2014 Salary paid by cash Rs. 10000. Jan 09, 2014 Cash sales of goods worth Rs. 10000 on 10% Trade discount and 5% Cash discount. Jan 11, 2014 Deposited the amount of above sale in Bank a/c. Jan 13, 2014 Purchased goods worth Rs. 1000 and paid by Cheque. Jan 14, 2014 Received a Cheque of Rs. 4000 from Mr. X in full settlement of Rs. 4250 and deposited in the bank on the same day. Jan 15, 2014 Bank charged Rs. 80 as bank charges and interest credited Rs. 110.

7

Every correct transaction 1 marks Date 1-1-14 9-1-14 11-1-14

Particular L/F To balance b/d To Sales A/c To Cash A/c C

14-1-14 To Mr. X 15-1-14 To interest A/c

Dis 450

Q.3

i.

ii.

OR

iii.

Bank

8550 250

700 1-2-14 To balance b/d

Cash 25000 8550

4000 110 33550 15000

Date 1-1-14 5-1-14 11-1-14 13-1-14

Particular L/F By balance b/d By Salary A/c By Bank A/c C By Purchase A/c

Dis

15-1-14 By Bank Charges 31-1-14 By balance c/d

12660 7580

Cash

Bank 4000

10000 8550 1000

15000

80 7580

33550

12660

What is trial balance? Write down different methods of preparation of trial balance. Meaning of trial balance Method Enumeration any two

1 2

What do you mean by final account? Explain the adjustments related to depreciation, bad debt, pre-paid expenses, outstanding expenses and accrued income in detail. Meaning of final account Explanation of each adjustment with example 1 mark/ without example 0.75 each

2 5

The following is the Trial Balance of Mr. Shyam as on 31 Mar 2015: Particulars Dr. (Rs.) Cr. (Rs.) Machinery 50000 Cash in hand 2000 Cash at bank 6180 Return Outwards 1000 Return Inwards 1360 Carriage on Purchases 4080 Sales 177400 Purchase 81370 Opening Stock 11500 Building 80000 Carriage on sales 6400 Furniture 15000 General Expenses 6000 Insurance 1200 Capital 172000 Drawing 10490 Sundry Debtors 27000 Sundry Creditors 12600 Wages 20420 Salary 40000 Total 363000 363000 Taking into account the following adjustments, prepare Trading and Profit and Loss Accounts and also Balance Sheet on 31 Mar 2015. 1. Stock as on 31 Mar 2015 is Rs. 12400. 2. Machinery is to be depreciated @10% and Furniture @ 20%. 3. Salaries for the month 31 Mar 2015 amounting to Rs. 4500 were unpaid. 4. Insurance included a premium of Rs. 200 for the next year. 5. A provision for doubtful debts is to be created to the extent of 10% on sundry debtors. Each adjustment 1 mark(Total 5); Trading and Profit and Loss account preparation 1 mark; Balance sheet 1 marks

Trading and Profit and Loss Account of Mr. Shyam for the year ended 31-3-15 Rs. Rs. Rs. Rs. To Opening Stock 11500 By Sales 177400 To Purchases 81370 Less: Return 1360 176040 Less: Return 1000 80370 By closing stock 12400 To Carriage on Purchase 4080 To Wages 20420 To Gross Profit tfd. 72070 . . 188440 188440 To Carriage on sale To General Expenses To Insurance (1200-200) To Salary (40000+4500) To Depreciation Machinery To Depreciation Furniture To Provision for Debts To Net Profit

6400 6000 1000 44500 5000 3000 2700 3470

By Gross Profit b/d

Balance Sheet of Mr. Shyamas on 31-3-15 Rs. Assets 172000 Building 3470 Machinery 10490 164980 Less: Depreciation Furniture Less: Depreciation Sundry Creditors 12600 Sundry Debtors Less: Outstanding Salary 4500 Closing Stock Cash in Hand Cash in Bank Prepaid Insurance . . 182080 Liabilities Capital Add: Net Profit Less: Drawing

Q.4

72070

Rs. 80000 50000 5000 45000 15000 3000 12000 27000 2700 24300 12400 2000 6180 200 . . 182080

i.

What are the reasons for difference in cash book and pass book balances? Minimum three reason each 1 mark

ii.

A company purchased a Machine on Jan, 2013 for Rs. 47000 and spend Rs. 3000 on its installation. On Jul 2014 company purchased another Machine for Rs. 20000 and in Jul 2015 it sold off 1st Machine for Rs. 28000 and bought another for Rs. 25000. On Jul 2016 second Machine was sold for Rs. 2000. Depreciation provided on machine at the rate of 10% P.A. on the original cost on Dec 31 annually. In 2014, the company changed method of depreciation and adopted the WDV method at the rate of 15% P.A. with retrospective effect. Prepare the Machinery account for 4 years commencing from the date of acquisition of machine.

3

1

2 Date Particular 1-1-13 To Bank/Cash (a) (47000+3000)

OR

ii.

Q.5

i.

ii.

Machinery Account Amt Date 50000 31-12-13

Particular By Depreciation By Balance c/d

Amt 5000 45000 50000 50000 1-1-14 To Balance b/d (a) 45000 31-12-14 By Depreciation (a) 6375 1-7-14 To Bank (b) 20000 By P & L (Change in method) 2500 By Depreciation (b) 1500 By Balance (a) 36125 By Balance (b) 18500 65000 65000 1-1-15 To Balance b/d (a) 36125 1-7-15 By Depreciation (a) 2709 To Balance b/d (b) 18500 By Bank 28000 1-7-15 To Bank/Cash (c) 25000 By P & L (a) 5416 31-12-15 By Depreciation (b) 2775 By Depreciation (c) 1875 By Balance (b) 15725 By Balance (c) 23125 79625 79625 1-1-16 To Balance (b) 15725 1-7-16 By Depreciation (b) 1179 To Balance (c) 23125 By Bank 2000 By P & L (b) 12546 31-12-16 By Depreciation (c) 3469 By Balance (c) 19656 38850 38850 Prepare a Bank reconciliation statement as on 30 Jun 2016 from the information given below: a) Bank Balance as per cash book as on 30 Jun 2016 120000 b) Cheques issued on 20 Jun 2016 but not yet presented 24000 c) Cheque deposited but not yet credited by the bank 10750 d) Interest debited by the bank on 27 Jun 2016 but no advice received 4000 e) Amount wrongly debited by the bank 400 f) Dividend collected by the bank not recorded in cash book 6000 g) Directly deposited by customer 3000 One mark each for correct transaction Bank Reconciliation Statement as on 30-6-16 Balance as per cash book (Dr.) 120000 + Cheques issued on 20 Jun 2016 but not yet presented 24000 - Cheque deposited but not yet credited by the bank 10750 - Interest debited by the bank on 27 Jun 2016 but no advice received 4000 - Amount wrongly debited by the bank 400 + Dividend collected by the bank not recorded in cash book 6000 + Directly deposited by customer 3000 Balance as per passbook (Cr.) 137850

2

2

Write a note on Cost Concept. Meaning of Cost concept Explanation

1 2

What is Cost Accounting? Briefly explain different methods of Costing. Meaning and explanation of Cost Accounting Any five methods (one mark each)

2 5

OR

ii.

Following details are available for two successive years for a product. Particulars Year 1 Year 2 Sales 100000 80000 Profit 12000 6000 Calculate P/V ratio, Fixed Cost, BEP, Amount of Profit if Sales are Rs. 200000, Sales in Rs. when desired Profit is Rs. 15000 and margin of safety for both the years. One mark each for both correct (formula and answer) and 0.5 each if only formula is correct P/V ratio = (Change in Profit / Change in Sales)*100 = (6000/20000)*100 =30% Fixed Cost = Sales x PV ratio – Profit = 10000*30% - 12000 = 18000 BEP = Fixed cost / PV ratio = 18000 / 30% = 60000 Amount of Profit if Sales are Rs. 200000 Profit = Sales * PV ratio * Fixed cost = 200000*30%*18000 = 42000 Sales in Rs. when desired Profit is Rs. 15000 Sales = (Fixed cost + Desired Profit) / PV ratio = (18000+15000) / 30% = 110000 Margin of safety MOS I year = Actual Sales – BE Sales = 100000 – 60000 = 40000 MOS II year = 80000 – 60000 = 20000

Q.6

i.

What are the different objectives of Management Accounting? Explain any three. One mark for each objective

ii.

From the following balance sheet of X Ltd., prepare Cash flow statement.

Liabilities Capital Profit & loss Sundry creditors Bills payable

2009 800000 36500 8500 2000

2010 800000 22000 4000 1000

847000

827000

Assets Building Plant Stock Debtors Cash at Bank

2009 700000 80000 25000 15000 27000 847000

3

2010 680000 75000 21000 10000 41000 827000

Dividend paid during the year 2010 is Rs. 10000. The changes in building and plant value are due to depreciation. Format of Cash flow statement Operating Activity Investing Activity Finance Activity Cash flow statement of X Ltd. Particular Amount 1. Cash flow from operating activity Difference between opening and closing balance of P & L (14500) (22000-36500) Add: Depreciation on building 20000 Depreciation on Plant 5000 Dividend Paid 10000 Decrease in Debtors 5000 Decrease in Stock 4000 Less: Decrease in creditors (4500) Decrease in Bills Payable (1000) Cash flow from operating activity 24000

2 3 1 1

2. Cash flow from investing activity 3. Cash flow from finance activity 4. Net Increase / Decrease in Cash and Cash Equivalent Add: Cash and Cash equivalent at the beginning 5. Cash and Cash equivalent at the end of period OR

ii.

NIL (10000) 14000 27000 41000

From the given information of a company prepare the balance sheet. Receivable turnover ratio 4, payable turnover ratio 5, inventory turnover ratio 8, capital turnover ratio 2, fixed assets turnover ratio 8, gross profit ratio 25%, gross profit for the year Rs. 40000. Reserve & surplus Rs. 18000, Closing stock was Rs. 1000 more than opening stock. There is no long term loan or OD. One mark for each item of balance sheet GP Ratio = (GP / Sales) * 100 ; 25 = (40000 / Sales) * 100; Sales = 160000 COGS = Sales – GP = 160000 – 40000 = 120000 Receivable turnover Ratio = Total Sales / Receivables; 4 = 160000 / Receivables; Receivables = 40000 Inventory Turnover Ratio = COGS / Average Stock; 8 = 120000 / Average Stock; Average Stock = 15000 Average Stock = (Opening Stock + Closing Stock) / 2; 15000 = (X + (1000+X)) / 2; X = 14500 i.e. Opening Stock and Closing Stock = 15500 COGS = Opening stock + Purchase – Closing Stock; 120000 = 14500+Purchase15500; Purchase = 121000 Creditor Turnover Ratio = Purchase / Creditors; 5 = 121000/Creditors; Creditors = 24200 Fixed Asset Turnover Ratio = Sales / Fixed Assets; Fixed Assets = 20000 Capital Turnover Ratio = Sales / Capital; Capital = 80000 Balance Sheet Liabilities Rs. Assets Rs. Capital 80000 Fixed Assets 20000 Reserve and Surplus 18000 Debtors 40000 Creditors 24200 Closing Stock 15500 Cash(Balancing Figure)46700 122200 122200