USN

05MBA14

First Semester MBA Degree Examination, May/June 2010 Accounting for Managers
Time: 3 hrs. Max. Marks: 100 Note: 1. Answer any Four full questions from Q.No.l to Q.No.7. 2. Q.No. 8 is compulsory. 1 a. What is Bookkeeping? (03Marks) b. Journalisethe following transactionsin the books of a trader: Debit Balanceson Jan 1, 2008. Cash in handRs 8000 ; Cashat Bank Rs 25,000 ; Stock of Goods Rs 20,000 ; FurnitureRs - 2000 ; BuildingsRs 10,000 ; Sundry debtors: Vijay Rs 2000, Anil-

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Rs 1000 and Madhu - Rs 2000. Credit Balances on Jan 1, 2008. Sundry creditors: Anand Rs. 5000 ; Loan from Babu - Rs 10,000. Following were further transactions in the month of January 2008. (07Marks) Jan 1: Purchased goods worth Rs 5000 for cash less 20% trade discount and 5% cash discount. Jan 4: Received Rs 1980from Vijay and allowed him Rs 20 as discount. Jan 8: Jan 12: Jan 15 : Jan 31: Purchase plant from Mukesh for Rs 5000 and paid Rs 100 as cartage for bringing the plant to factory and another Rs 200 as installation charges. Sold goods to Rahim on credit Rs 600. Rahim became an insolvent and could pay only 50 paise in a rupee. Withdrew goods from business for personal use Rs 200. (10 Marks) (03 Marks)

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c. Explain the need and significance of auditing of a company account.

a. What are contraentries? b. Prepare stocksledger Alc usingLIFOmethod of pricing: 1st Sept.2004.Opening balance300 kgs @ Rs 25 per k! ;

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@ Rs 26.60 ; 4th Sept 2004. Issued 220 kg ; 10 Sept 2004. Issued 440 kgs ; 20thSept 2004. Purchased 490 kgs @ Rs 23 ; 25th Sept 2004. Issued 300 kgs ; 26th Sept 2004. Surplus 20 kgs returned to stores out of issues on 4thAugust. (07 Marks) c. From the following Balance sheet of 'X' Ltd, prepare for 2007. (10 Marks) i) Schedule of changes in working capital. ii) Funds flow statement.
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3rdSept 2004.Purchased 500 kgs

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Liabilities Equity share capital 9% redeemable preference shares Capital reserve General reserve Profit & loss Ale Proposed Dividend Sundry creditors B/P Liability for expenses Provision for Tax Total

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31stMar 31stMar Assets 31stMar 31stMar 2006 2007 2006 2007 150 200 Goodwill 50 40 75 50 Land & 100 85 Buildings 10 Plant 40 100 20 25 Investments 10 15 15 24 Sundry Debtors 70 85 21 25 Stock 39 55 13 24 BIR 10 15 8 Cash in hand 10 5 7 15 Cash at Bank 18 5 4 20 339 25 Preliminary expenses 409 8 339 5 -409

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Additional Information: i) A part of landwas sold out in 2007and the profit was creditedto capital reserve. H) A machine has been sold for Rs 5000 [Written down value of the machinewas Rs 6000]. DepreciationofRs 5000 was chargedon plant in 2007. iii) An interim dividendofRs 10,000has been paid in 2007. iv) An amount of Rs 1000has been receivedby way of dividendon investmentin 2007.

a. What is DPS? Distinguishbetween DPS and EPS. (03Marks) b. Explain the differentaccounting concepts. (07Marks) c. Raj Enterprisespurchasedsecond handmachineryon 1st April 1997 for Rs 3,70,000and installed at a cost of Rs 30,000. On 1st Oct 1998,it purchased another machine for Rs 1,00,000and 1st Oct 1999, it soldoff the first machinepurchased in 1997for Rs 2,80,000. On the same date it purchased a machinery for Rs 2,50,000. On 1st Oct 2000, the second machinerypurchasedfor Rs 1,00,000was sold off for Rs 20,000. In the beginning depreciation was provided on machinery at the rate of 10% p.a. on the
original cost each year on 31st March. From the year 1998 - 99, however the trader changed the

method of providing depreciation and adopted written down value method, depreciation rate

being15%p.a.Preparemachinery accountforthe period1997- 2001.

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a. Distinguish between trade discount and cash discount. b. Enter the following transactions in a three column cash book. 2007 June 1 3 4 5 8 18 Cash Balance I Bank Balance

(10 Marks) (03 Marks) (07 Marks) Rs 1000

Goods sold 700 Paid into bank 5500 5000 Paid to Swamy by cheque Rs 1250. Discount received Rs 125 300 Paid wages Received from Jain in cheque and sent to bank Rs 600, discount allowed Rs 30 20 Drawn from bank 500 22 Paid office salary in cash 400 28 Sold shares for cash and banked the same 800 29 Paid rent by cheque 100 30 Paid into bank 750 30 Cheque of Rs 100 is issued for rent dishonoured due to difference in signature c. With the help of the following ratios regarding Indus Films, draw the balance sheet of the company for the ear 2008 : (10 Marks) Current Ratio 2.5 Li uidi Ratio 1.5 Net workin ca ital Rs 3,00,000 Stock turnover ratio (cost of sales I cIosin stock) 6 times Gross rofit ratio 20 ercent Fixed Assets turnover ratio (on cost of sales) 2 times Debt collection eriod 2 months Fixed assets to shareholdersnet worth 0.80 Reserve and Surolus to caDital 0.50

a. What is managementreporting? (03 Marks) b. Show the accountingequation on the basis of the followingtransactions: i) Started businesswith Rs 10,000; ii) Purchased goodsfor cash Rs 3000 ; Hi) Purchased goods on credit Rs 4000 ; iv) PaidsalaryRs 200 ; v) Withdrewcashforpersonaluse Rs 300 ; vi) Received commissionRs 300; vii) Sold goods costingRs 1500on credit for Rs 200 ; viii) Further capital introduced Rs 2000 ; ix) Cash receivedfrom debtors Rs 800 ; x) Bank load receivedRs 3000. (07Marks) 20f4

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c. The foil
Liabilities Share Capital General Reserve Profit & Loss Alc Bank Loan [long term] Sundry Creditors Provision for taxation

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2006 (Rs) 2,00,000 50,000 30,500 70,000 1,50,000 30,000 5,30,500

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Assets Land & Buildings Machinery Stock Sundry Debtors

2006 d 2007
2007 (Rs) 1,90,000 1,69,000 74,000 64,200 600

2007 (Rs) 2,50,000 60,000 30,600

2006 (Rs) 2,00,000 1,50,000 1,00,000 80,000 500

1,35,200 Cash 35,000 Bank

Goodwill
5,10,800

8,000
5,000 5,10,800

5,30,500

Additional Information: Duringthe year ended Dec 2007 : i) DividendofRs 23,000 was paid. ii) Assets of another company were purchased for a consideration of Rs 50,000 payable in shares. Thefollowing assets werepurchased: Stock- Rs 20,000 ; Machinery- 25,000. iii) Machinerywas further purchasedRs 8000. iv) epreciation written off on machinery Rs 12,000. v) Income tax providedduring the year Rs 33,000. vi) Loss of sale of machineryRs 200 was written off to general reserve. You are required to prepare a cash flow statement. (10Marks) a. Explain doubleentry system of bookkeeping. (03Marks) b. Prepare a trial balance from the followingitems: (07Marks)
Purchases ReserveFund Sales Return Outwards Return Inwards
OpeninJ1; stock

Closing stock Expenses Bank balances

OutstandinJ1;expenses

Assets Creditors Debtors Capital

60,000 20,000 1,00,000 1,000 2,000 30,000 40,000 20,000 5,000 2,000 50,000 30,000 80,000 94,000

c. Discussthe variousmethods of inventoryvaluation. 7

(10Marks)

a. What do youmeanby director's report? (03Marks) b. Define a preferenceshare. Explainthetypes of preferenceshares. (07Marks) c. From the followingtrial balance of Sri. Kantesh, prepare Profit & Loss Alc and Balance Sheetfor the year ended31SI Dec 2008.
Trial Balance as on 31 sl December 2008.

Debit Rs Credit Rs Capital 15,000 3,250 Drawing Stock 17,445 Sales Returns 554 Purchase Returns 840 1,240 Carriage Inwards Deposit with Nayak 1,375 130 Rent Outstanding 725 Carriage outwards Loan to Shah (a25% given on 1.1.2008 1,000

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Interest on loan to Shah received Rent Purchases Debtors Advertisement Bad debts Creditors Patents Discount allowed Wages Reserves for Doubtful debts Sales Cash Goodwill 25 820 12,970 4,000 954 400 3,000 500 330 754 1,200 27,914 62 1,730 48, I09 48,109

Adjustments: i) The managerof Sri Kantesh is entitled to a commissionof 10% of the net profits calculated after chargingsuch commission. ii) Increase bad debts by 600 Rs. Reserve for doubtful debts is to be 10% and reserve for discounton debtors 5%. iii) Stock valued at Rs 1500 was destroyed by fire on 25.12.2008, but the insurance company admitteda claim for Rs 950 onlyand paid in 2009. iv) Rs 200 out of advertisementexpensesis to be carriedforward to the next year. (10Marks) The comparativeBalance Sheets and Profit and Loss statement for Aditya Grains Merchants are given below: Aditya Grains Merchants c tive Balance SheetsDecember31
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2007 (Rs) 2006 (Rs) Liabilities & Capital Bank borrowing Creditors Outstanding expenses Total current liabilities Owner's capital Total Assets Cash Debtors Stock Expenses paid in advance Total Current Assets Buildings, Furniture etc net Total 12,300 1,03,006 5,843 1,21,149 2,28,220 3,49,369 54,485 33,638 1,20,725 4,311 2,13,159 1,36,210 3,49,369 8,610 64,427 3,797 76,834 2,14,019 2,90,853 16,218 60,495 90,526 2,269 1,69,508 1,21,345 2,90,853

2005 (Rs) 2,460 63,622 1,921 68,003 2,14,339 2,82,342 29,179 54,364 83,454 1,299 1,68,296 1,14,046 2,82,342

SummarizedProfit& Loss Statements

2005 (Rs) Sales 4,28,253 Cost of goods sold 2,58,703 1,69,550 Gross profit Exoenses 1,47,802 I Net profit 21,748 i) Calculate various ratios. ii) Comment on the performance and indicate areas which require investigation.

(20 Marks)

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