Name:

Roll Number:
Drive:
Program and Semester
Subject Code and Name

Sourav Biswas
1311005099
WINTER 2013
MBA: 1
MB0041- FINANCIL AND
MANAGEMENT ACCOUNTING

LC CODE
ANSWER 1)
Salary a/c
Cash a/c

Nominal
Real

Salary is an expense
Cash is going out

Debit
Credit

Rent a/c
Bank a/c

Nominal
Personal

Rent is an expense
Bank is the giver

Debit
Credit

Drawings a/c
Purchase a/c

Personal
Nominal

Subramanya is the receiver

Decrease is stock

Debit
Credit

Adv to
suppliers a/c
Cash a/c

Personal
Real

Suppliers are the receivers

Cash is going out

Debit
Credit

Cash a/c
Advance from
customer a/c

Real a/c
Personal a/c

Cash is coming in
Customers are the givers

Debit
Credit

Interest on
loans a/c
Cash a/c

Nominal
Real

Interest is expense
Cash is going out

Debit
Credit

Loan a/c
Cash a/c

Personal
Real

Lender is the receiver

Cash is going out

Debit
Credit

Bank a/c
Bank interest
a/c

Personal
Nominal

Bank is the receiver

Bank interest is an income

Debit
Credit

ANSWER 2)

ACCOUNT
1. Stock

DEBIT BALANCE
Rs.
8250

2. Purchase

12750

3. Return outward

700

4. Return inward

1590

5. Discount received

800

6. Discount allowed

800

7. Wages and salaries

2500

8. Rent and rates

1850

9. Sundry debtors

7600

10. sundry creditors

7250

11. Carriage charge

700

12. Bills payable

690

13. Scooty

1750

14. Capital

CREDIT BALANCE
Rs.

10000

15. Sales
15900
16. Bank overdraft
2450

TOTAL BALANCE
37,790

ANSWER 3)

37, 790

LEDGER ACCOUNTS
Furniture and Fittings a/c

Dr

Cr

Particular

Rs

Particular

Rs

To bal b/d

10000

By depreciation
By bal c/d

1000
9000

Total

10000

Total

10000

To bal b/d

9000
Buildings a/c

Dr

Cr

Particular

Rs

Particular

Rs

To bal b/d

500000

By depreciation
By bal c/d

50000
450000

Total

500000

Total

500000

To bal b/d

450000

Bad debt a/c

Dr
Particular
To bal b/d

Cr
Rs
2000

Particular
By bal c/d

Rs
3000

Total

3000

To Sundry Debtors 1000

TOTAL

To bal b/d

3000
3000

Sundry Debtors a/c

Dr

Cr

Particular
To bal b/d
To bal c/d
Total

Rs
25000

To bal b/d

24000

25000

Dr

Particular
By bad debt
By bal c/d
Total

Rs
1000
24000
25000

Taxes and Insurance a/c

Cr

Particular

Rs

Particular

Rs

To bal b/d
To bal c/d

5000

By prepaid taxes
and insurance
By bal c/d

2000

Total

5000

Total

5000

To bal b/d

3000

3000

Prepaid taxes and Insurance a/c

Dr

Cr

Particular

Rs

Particulars

Rs

To taxes and
insurance
Total

2000

By bal c/d

2000

2000

Total

2000

To bal b/d

2000
Salaries a/c

Dr

Cr

Particular

Rs

Particular

Rs

To bal b/d
To outstanding
salaries
Total

20000
5000

By bal c/d

25000

25000

Total

25000

To bal b/d

25000

Dr
Cr

Outstanding salaries

Particulars

Rs

Particulars

Rs

To bal c/d

5000

By salaries

5000

Total

5000

Total

5000

By bal b/d

5000

Depreciation a/c
Dr

Cr

Particular

Rs

Particular

Rs

To furniture and
fittings
To buildings
Total

1000
50000

By bal c/d

51000

51000

Total

51000

Dr

Commission received in advance a/c

Cr

Particular

Rs

Particular

Rs

To bal c/d

1000

By commission

1000

Total

1000

Total

1000

By bal b/d

1000

To bal b/d

Adjusted Trial balance

Debit balances

Rs

Adjustments

Adjusted amount
Rs

Furnitures and
fittings

10000

-1000

9000

Buildings

500000

-50000

450000

Sales returns

1000

Bad debts

2000

+1000

3000

Sundry Debtors

25000

-1000

24000

Purchase

90000

90000

Advertising

20000

20000

1000

Cash

10000

10000

Taxes and
Insurance
General Expense

5000

Salaries

20000

+5000

25000

Depreciation
Prepaid Taxes and
Insurance
TOTAL

1000+50000
2000

51000
2000

Credit balances

Rs

Bank overdraft

16000

16000

Capital account

400000

400000

Purchase Return

4000

4000

Sundry Creditors

30000

30000

Commission

5000

Sales

235000

Outstanding
salaries
Commission
received in
advance
TOTAL

5000

5000

1000

1000

-2000

7000

7000

690000

690000

3000

695000

-1000

4000
235000

695000

ANSWER 4)
Infosys

Technologies
Trend

Ltd

Analysis

Particulars

2010-11

2009-10

2008-09

2007-08

2006-07

Revenue

27,501

22,742

21,693

16,692

13,893

Operating
Profit(PBIDT
)
PAT from
ordinary
activities

8,968

7,861

7,195

5,238

4,391

6,835

6,218

5,988

4,659

3,856

Trend Ratios

Revenue

197.95

163.69

156.14

120.15

100

Operating
Profit(PBIDT
)
PAT from
ordinary
activities

204.24

179.03

163.86

119.29

100

177.26

161.26

155.29

120.82

100

Q5. Give the meaning of cash flow analysis and put down the objectives of
cash flow analysis. Explain the preparation of cash flow statement.
Ans: Cash flow analysis is an important tool of financial analysis. It is the process
of understanding the change in position with respect to cash in the current year and
the reasons responsible for such a change. Incidentally, the analysis also helps us to
understand whether the investing and financing decision taken by the company
during the year are appropriate are not. Cash flow analysis is presented in the form
of a statement. Such a statement is called a cash flow statement.

OBJECTIVES:
Cash flow analysis is done with the objective of understanding some of the
following important questions:
What is the change in the cash position of the firm for the current year as compared
to the previous year?
How good was the liquidity position of the firm?
What were the sources of cash during the current year?
How much cash was generated from operations?
What were the applications of cash during the current year?
How much cash was spent on investment activities, such as purchase of new plant
and machinery, purchase of land?
PREPARATION OF CASH FLOW STATEMENT
The preparation of cash flow statement is similar to the preparation of fund flow
statement. It requires the identification of the sources of cash and the uses of cash.
A source of cash is a transaction which brings an inflow of cash. An application of
cash is a transaction which leads to an outflow of cash
Following is the list of transactions that results in a source of cash or application of
cash.
Sources of cash:
Cash from operations
Proceeds of issue of
Equity shares
Preference shares
Proceeds of issue of
Debentures
Bonds
Raising long-term debts from banks and financial institutions
Raising mortgage loans (long-term)
Sale of assets
Tangible assets like land, buildings, equipments, machinery, vehicles, etc.
Intangible assets like patent rights, copyrights, brand name

goodwill, licences, etc.

Sale of investments like shares, bonds, debentures, etc.
Applications or uses of cash:
Cash lost in operations (adjusted net loss)
Buy back of equity shares
Redemption of redeemable preference shares
Redemption of redeemable bonds or debentures
Repaying of long-term debts from banks and financial institutions
Repaying of mortgage loans (long-term)
Purchasing of assets
Tangible assets like land, buildings, equipments, machinery, vehicles, etc.
Intangible assets like patent rights, copyrights, brand names, goodwill,
licences, etc.
Purchasing of investments like shares, bonds, debentures, etc.
It may be noted that the sources of cash increase the cash balance and applications
of cash decrease the cash balance.

Q6. Write the assumptions of marginal costing. Differentiate between

absorption costing and marginal costing.
Ans: Assumptions :
Segregation of cost into fixed and variable The whole principle of marginal
costing is based on the idea that some costs vary with production while some
costs dont. Therefore, it is assumed that a clear bifurcation between fixed
and variable costs is possible. Even if some costs do not entirely qualify as
fixed or as variable, it is still possible to separate such mixed cost with
respect to the amount, which remains fixed and the amount which varies
with production.
Volume is the only factor which influences the cost

It is assumed that other factors like the demands, tastes, and preferences of
consumers, availability of substitute products, availability and price of inputs, etc.
are constant. Hence, volume is the only factor which influences the cost.
Constant selling price It is assumed that the selling price will be constant
for any level of sales.
Constant total fixed cost It is assumed that the total fixed cost will be
constant for any level of production.
Constant variable cost per unit It is assumed that the variable cost per unit
will be constant for any level of production.
No closing stock . It is assumed that the firm will be able to sell all its production.
All the units produced would be sold. Hence, there would be no opening and
closing stocks.
Linear relationship between costs and revenues
It is assumed that the costs and revenues are linearly related to volume. The
change in costs and revenues is proportionate to the change in volume
(number of units sold).
ANS 6 b)

Absorption Costing

Marginal Costing

It is known as full costing. Both fixed and variable

are included to ascertain the cost.

Only variable costs are included. Fixed costs are

recovered from contribution.

Different unit costs are obtained at different levels

of output because of fixed expenses remaining the
same.

Marginal cost per unit remains same at different

levels of output because variable expenses vary in
the same proportion in which output varies

Difference between sales and total cost (marginal

cost and fixed cost) is profit

Difference between sales and marginal cost is

contribution and difference between contribution
and fixed cost is profit or loss.

A portion of fixed cost is carried forward to the next

period because closing stock of work-in-progress
and finished goods are valued at the cost of
production, which is inclusive of fixed cost.

Stock of work-in-progress and finished goods are

valued at marginal cost. Fixed cost of a particular
period is charged to that very period and is not
carried over to the next period.

The apportionment of fixed expenses on an

arbitrary basis gives rise to over or under
absorption of overheads.

Products are charged only with variable cost, hence

marginal costing does not lead to over or under
absorption of fixed overheads

It affects managerial decisions in certain areas.

E.g., whether to accept the export order or not,
whether to buy or manufacture, etc.

It is very helpful in taking managerial decisions. It

considers the additional cost involved, assuming
fixed expenses to remain constant.

Costs are classified according to functional basis

such as production cost, office and administrative
cost, and selling and distribution costs.

Costs are classified according to the behaviour of

costs fixed costs and variable costs.

It fails to establish relationship of cost, volume, and

profit.

CVP relationship is an integral part of marginal

costing.