1. Assure you have just started a mobile store.

You sell mobile sets and currencies of

airtel……………………………

Stock Capita Creditor

Particulars Hand Debtors Cash
l s
set vouchers
Started business with cash       40000 40000  
purchased nokia handsets 25000     -25000    
purchased BSNL and Reliance recharge vouchers   5000   -5000    
sold a handset for 6000 costing 5850 -5850     6000 150  
Sold recharge vouchers of 1500 profit 6%   -1500   1590 90  
Puchased a second hand cell on crerdit 3000         3000
sold a handset for 10000 costing 9150 -9150     10000 850  
Repair work of the second hand set       -1000 -1000  
Sold the hand set for 5000 -3000     5000 2000  
Sold a hand set on credit for 10000 costing 9500 on
credit -9500   10000   500  
Realised 70% from the customer     -7000 7000    
Customer became bad debt     -3000   -3000  
  500 3500 0 38590 39590 3000
  42590 42590

2. List the accounting Standards as issued by ICAI. Write short note on IFRS

Accounting Standards (ASs)

AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring after the Balance Sheet Date
AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies
AS 6 Depreciation Accounting
AS 7 Construction Contracts (revised 2002)
AS 8 Accounting for Research and Development
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003),
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 (revised 2005) Employee Benefits Limited Revision to Accounting Standard (AS) 15, Employee Benefits (revised
2005)
AS 15 (issued 1995) Accounting for Retirement Benefits in the Financial Statement of Employers
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18, Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income.
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions,Contingent` Liabilities and Contingent Assets
AS 30 Financial Instruments: Recognition and Measurement and Limited Revisions to AS 2, AS 11 (revised 2003), AS 21,
AS 23, AS 26, AS 27, AS 28 and AS 29
AS 31, Financial Instruments: Presentation
Accounting Standard (AS) 32, Financial Instruments: Disclosures, and limited revision to Accounting Standard (AS) 19,
Leases
IFRS
The IFRS Foundation is an independent, not-for-profit private sector organisation working in the public interest. Its
principal objectives are:
 to develop a single set of high quality, understandable, enforceable and globally accepted international financial
reporting standards (IFRSs) through its standard-setting body, the IASB;
 to promote the use and rigorous application of those standards;
 to take account of the financial reporting needs of emerging economies and small and medium-sized entities
(SMEs); and
 to bring about convergence of national accounting standards and IFRSs to high quality solutions.

The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests
with its Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of
the organisation. The Trustees are publicly accountable to a Monitoring Board of public authorities.
Standard-setting
The IASB (International Accounting Standards Board)
The IASB is the independent standard-setting body of the IFRS Foundation. Its members (currently 15 full-time
members) are responsible for the development and publication of IFRSs, including the IFRS for SMEs and for approving
Interpretations of IFRSs as developed by the IFRS Interpretations Committee (formerly called the IFRIC). All meetings of
the IASB are held in public and webcast. In fulfilling its standard-setting duties the IASB follows a thorough, open and
transparent due process of which the publication of consultative documents, such as discussion papers and exposure
drafts, for public comment is an important component. The IASB engages closely with stakeholders around the world,
including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession.
The IFRS Interpretations Committee
The IFRS Interpretations Committee (formerly called the IFRIC) is the interpretative body of the IASB. The Interpretations
Committee comprises 14 voting members appointed by the Trustees and drawn from a variety of countries and
professional backgrounds. The mandate of the Interpretations Committee is to review on a timely basis widespread
accounting issues that have arisen within the context of current IFRSs and to provide authoritative guidance (IFRICs) on
those issues. Interpretation Committee meetings are open to the public and webcast. In developing interpretations, the
Interpretations Committee works closely with similar national committees and follows a transparent, thorough and open
due process.
3. Cash Book

Dr In the books of M/s Tuglak& Co. Cash Book   Cr

L V Dis L V Dis
Date Partriculars F N Cash Bank c Date Partriculars F N Cash Bank c
2011       2011      
5000
1-Jan To, Balance B/d   0   1-Jan By, Balance B/d     20000  
1000 1000
2-Jan To, Cash ©   0 2-Jan By, Bank © 0  
5-Jan To, Mohan   1175   3-Jan By, Hari   200  
6-Jan To, Shyam   700   100 4-Jan By, Purchase     1980 20
7-Jan To, Cash ©   700 7-Jan By, Bank © 700  
10-
Jan To, Hari   25   8-Jan By, Typewriter   250  
11-
Jan To, Shyam   820 9-Jan By, Shyam     700  
12- 1000
Jan To, Bank ©   0   9-Jan By, Charges     10  
18- 12-
Jan To, Bills Receivable   990 Jan By, Cash ©   10000  
28- 20-
Jan To, Commission   500 Jan By, Bills Payable     5000  
29- 22-
Jan To, Ramesh   250 Jan By, Drawings   1000  
30- 24-
Jan To, Loan Repayment   2000 3000 Jan By, Trade Exp   2000  
31- 25-
Jan To, Interest   30 Jan By, Drawings     1500  
26-
        Jan By Machinery     5005  
27-
        Jan By, furniture     1575  
31-
        Jan By, Rent     220  
31-
        Jan By, Bank Charge     50  
31- 2975 31- 4975
Jan To, Balance c/d   0 Jan By, Balance c/d   0  
6390 4604 6390
      0 0 100     0 46040 20
                           

4. BSC in Indian Company

Tata Motors is the first Indian company to be inducted in the Balance Scorecard Hall of Fame.
Joins the thirty-member elite club of organisations including Hilton Hotels, BMW Financial Services, US Army, Korea
Telecom, Norwegian Air Force and the city of Brisbane for achieving excellence in company performance.

The commercial vehicle business unit (CVBU) of Tata Motors, India's largest automobile manufacturer, has been
inducted in the exclusive club of organisations and corporate houses recognised by the prestigious Balanced Scorecard
Collaborative, Inc for achieving excellence in overall company performance. The coveted Steuben crystal 'Rising Star'
trophy was presented to the company at the Balanced Scorecard Asia Pacific Summit held at Gold Coast, Queensland
Australia.
Tata Motors-CVBU has been recognised for having achieved a significant turnaround in its overall performance. The
implementation of the Balanced Scorecard has enabled greater focus on different elements of operational performance.
Defining, cascading and communicating strategies across the organisation have brought about transparency and
alignment. The scorecard incorporates SQDCM (safety, quality, delivery, cost and morale) and VMCDR (volume, market
share, customer satisfaction, dealer satisfaction and receivables).
Ravi Kant, executive director, CVBU, Tata Motors, said, "While we were conscious of the benefits of the Balanced
Scorecard when we began implementing it three years back, we are extremely pleased that it has helped us achieve
significant improvements in our overall performance. I am quite positive that the BSC will play an important part in our
objective to become a world-class organisation."
Balanced Scorecard Collaborative president Dr David P Norton said, "We created the Hall of Fame to publicly
acknowledge the hard work and remarkable results of implementing the Balanced Scorecard to create the strategy-
focused organisation. The Balanced Scorecard Hall of Fame pays tribute to the success that each organisation has
attained."
Tata Motors- CVBU shares the honour with the city of Brisbane and Korea Telecom (KT).
The Balanced Scorecard (BSC) concept-created by Dr Robert S Kaplan and Dr David P Norton in 1992, has been
implemented in thousands of corporations, organisations, and government agencies worldwide. Based on the simple
premise that "measurement motivates," the BSC puts strategy at the centre of the management process, allowing
organisations to implement strategies rapidly and reliably.
Balanced Scorecard Collaborative, Inc. is a new kind of professional services firm dedicated to the worldwide awareness,
use, enhancement, and integrity of the Balanced Scorecard as a value-added management process.
Tata Motors range of commercial vehicles spans over 135 models and can haul loads ranging from 2 to 40 tonnes. The
product portfolio also includes 12 to 60-seater buses, tippers and tractor-trailers. Tata Motors vehicles meet the
stringent Euro emission norms. The company currently has an export base in most parts of South Asia, Africa, Middle
East and Europe. Tata Motors recently crossed the 3-million production milestone.

5.
Schedule of change in working capital
Effect in working Capital
Particulars 2007 2008 Increase Decrease
Current Assets      
Cash 114000 126000 12000  
Short term investment 20000 42400 22400  
debtors 50000 60000 10000  
Stock 28000 38000 10000  
(A) 212000 266400    
Current Liabilities      
Creditors 30000 40000   10000
Bills Payable 10000 20000   10000
(B) 40000 60000    
Net working capital (A-B) 172000 206400    
Increase in working capital 34400   34400
  206400 206400 54400 54400

Adjusted P/L A/c

Partriculars Rs Partriculars Rs
dividend paid 11600 By balance b/d 130000
Depreciation on building 32000 profit on sale of investment 4800
Depreciation on machinery 20000 Fund from operation 65200
loss on sale of machinery 2000  
     
To, Balance c/d 134400  
  200000 200000
       
   Fund flow statement  
Source Rs Application Rs
Loan taken 100000 increase in working capital 34400
share issued at premium 84000 dividend paid 11600
Sale of investment 20800 purchase of building 192000
sale of machinery 6000 purchase machinery 70000
Fund from operation 65200    
Sale of machinery 32000    
       
  308000   308000
       

6.
Cash budget is n estimation of the cash inflows and outflows for a business or individual for a specific period of time.
Cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular operations and/or whether
too much cash is being left in unproductive capacities.
A cash budget is extremely important, especially for small businesses, because it allows a company to determine how
much credit it can extend to customers before it begins to have liquidity problems.
For individuals, creating a cash budget is a good method for determining where their cash is regularly being spent. This
awareness can be beneficial because knowing the value of certain expenditures can yield opportunities for additional
savings by cutting unnecessary costs.
For example, without setting a cash budget, spending a dollar a day on a cup of coffee seems fairly unimpressive.
However, upon setting a cash budget to account for regular annual cash expenditures, this seemingly small daily
expenditure comes out to an annual total of $365, which may be better spent on other things. If you frequently visit
specialty coffee shops, your annual expenditure will be substantially more.

The importance of cash budget may be summarized as follow:-

(1) Helpful in Planning. Cash budget helps planning for the most efficient use of cash. It points out cash surplus, or
deficiency at selected point of time and enables the management to arrange for the deficiency before time or to plan for
investing the surplus money as profitable as possible without any threat to the liquidity.
(2) Forecasting the Future needs. Cash budget forecasts the future needs of funds, its time and the amount well in
advance. It, thus, helps planning for raising the funds through the most profitable sources at reasonable terms and costs.
(3) Maintenance of Ample cash Balance. Cash is the basis of liquidity of the enterprise. Cash budget helps in maintaining
the liquidity. It suggests adequate cash balance for expected requirements and a fair margin for the contingencies.
(4) Controlling Cash Expenditure. Cash budget acts as a controlling device. The expenses of various departments in the
firm can best be controlled so as not to exceed the budgeted limit.
(5) Evaluation of Performance. Cash budget acts as a standard for evaluating the financial performance.
(6) Testing the Influence of proposed Expansion Programme. Cash budget forecasts the inflows from a proposed
expansion or investment programme and testify its impact on cash position.
(7) Sound Dividend Policy. Cash budget plans for cash dividend to shareholders, consistent with the liquid position of
the firm. It helps in following a sound consistent dividend policy.
(8) Basis of Long-term Planning and Co-ordination. Cash budget helps in co-ordinating the various finance functions,
such as sales, credit, investment, working capital etc. it is an important basis of long term financial planning and helpful
in the study of long term financing with respect to probable amount, timing, forms of security and methods of
repayment.
Set 2
1.
Current
Year Current Assets Liabilities Current Ratio
2009 12000 11000 1.090909091
2010 24100 16000 1.50625
Year Quick Assets Quick Liability Quick ratio
2009 6500 11000 0.590909091
2010 12700 16000 0.79375
Average
Year Credit Sales Debtors Debtors Turn over
2009 43000 4500 9.555555556
2010 69000 6100 11.31147541
Debtors Debt Collection
Year Year in days Turnover period
2009 365 9.555555556 38.19767442
2010 365 11.31147541 32.26811594
Cost of goods Stock Turnover
Year sold Inventory period
2009 32500 5500 5.909090909
2010 57000 11400 5

2.
Job Costing:
This is a product related classification of costing system. The cost is ascertained for each job or work order processed.
This systems is used where most of the manufacturing activities are planned and carried out for distinct jobs or
customers. The utility of this method increases when there is great variability in nature of jobs or work orders processed.
Batch Costing :
This method determines the cost associated with each batch pf products manufactured. This differs from job or work
order costing in the variability of the production batches. In this case the production batches consist of mostly standard
products or components. What varies is mostly the size of batches and the timing of their processing.
Process Costing:
In this method of costing the costs are determined for various different manufacturing activities or processes. These
costs are the assigned to different products on the basis of some criteria like quantity processed or the time taken for
processing. This method of costing is suitable for manufacturing units that use continuous processes or mass production
techniques. This method is particularly suitable where there are many different products and process routes, where
output of one process becomes input for another.
Operation Costing:
This method is similar to the process costing. However the products manufactured have limited variation. For example a
cement plant may use this method.
Multiple costing:
Most of the organizations use a combination of different costing method rather than just one method. Multiple costing
refers to such combinations of different methods.

3.
Variable costs are costs that can be varied flexibly as conditions change. In the John Bates Clark model of the firm that
we are studying, labor costs are the variable costs. Fixed costs are the costs of the investment goods used by the firm, on
the idea that these reflect a long-term commitment that can be recovered only by wearing them out in the production
of goods and services for sale.
The idea here is that labor is a much more flexible resource than capital investment. People can change from one task
to another flexibly (whether within the same firm or in a new job at another firm), while machinery tends to be designed
for a very specific use. If it isn't used for that purpose, it can't produce anything at all. Thus, capital investment is much
more of a commitment than hiring is. In the eighteen-hundreds, when John Bates Clark was writing, this was pretty
clearly true. Over the past century, a) education and experience have become more important for labor, and have made
labor more specialized, and b) increasing automatic control has made some machinery more flexible. So the differences
between capital and labor are less than they once were, but all the same, it seems labor is still relatively more flexible
than capital. It is this (relative) difference in flexibility that is expressed by the simplified distinction of long and short
run.
Of course, productivity and costs are inversely related, so the variable costs will change as the productivity of labor
changes.
Here is a picture of the fixed costs (FC), variable costs (VC) and the total of both kinds of costs (TC) for the productivity

Output produced is measured toward the right on the horizontal axis. The cost numbers are on the vertical axis. Notice
that the variable and total cost curves are parallel, since the distance between them is a constant number -- the fixed
cost.

4.
20500
Sundry debtors 0
Less Bad debt 5000
less PBD 20000
18000
0

Date Particulars LF Dr Cr
Bad debt A/c ………………………………………………………. Dr 5000
To, Debtors A/c 5000
P/L A/c ………………………………………………………………… 5000
Dr 5000
To Bad debt A/c
P/L A/c ……………………………………………………………….. Dr 20000
To, Provision for bad debt A/c 20000
 Dr Bad Debt A/c Cr
L Dat L
Date Partriculars F Rs e Partriculars F Rs
  To P/L A/c 5000   By, Debtors A/c   5000
           
           
    5000     5000
               

Dr P/L A/c Cr
L Dat L
Date Partriculars F Rs e Partriculars F Rs
  To Bad debt A/c 5000      
2000
  To, PBD 0      
           
2500
    0      
               

  Balance Sheet  
Liability Rs Assets Rs
       
20500
    Sundry debtors 0
LES
    S Bad debt 5000
LES
    S PBD 20000
18000
      0
       

6.
Accounting plays a very important role in all businesses but it is not just the business itself that finds accounting
information useful. There are other stake holders who rely on accounting information to make decisions. These
stakeholders include:
1. Shareholders - Shareholders use the balance sheet and profit and loss account produced by limited companies to
decide if they are going to increase or decrease their holding.
2. Management - Management in every level of the business from director level to supervisor level rely on accounting
information to do their job properly. They all use the same information for different purposes. For example, directors
use it for strategic purposes and middle management can use it to see if they are meeting their financial targets.
3. Suppliers - Along with other data suppliers will look at a company's balance sheet and profit and loss account to see if
and how much credit they are willing to give to present and potential customers.
4. Lenders - Similar to suppliers lenders also need to make sure a company is in a healthy financial situation before they
start to lend money.
5. Government - Governments use the information provided by a company about its finances to levy tax on the profits.
6. Customers - Before another company becomes a customer or enters into a joint venture, they will look at the
company's finances to make sure the company is not in trouble and that their supplies are not about to dry up.
7. Employees - Employees also have an interest in how well their employer is doing so use financial accounting
information for this purpose.