MBA- I semester MB0041- Financial & Management Accounting 4 Credits Book ID- ( B1130 Assignment !

!et 1- ("0 Marks #ote$ Ans%er all t&e 'uestions( )1( Accounting *rinci+les are t&e rules ,ased on %&ic& accounting takes +lace and t&ese rules are uni-ersall. acce+ted( /0+lain t&e +rinci+les o1 materialit. and +rinci+les o1 1ull disclosure( /0+lain %&. t&ese t%o +rinci+les are contradicting eac& ot&er( 2our ans%er s&ould ,e su,stantiated %it& rele-ant e0am+les( (10 Marks Ans( *rinci+les o1 Materialit.$ - While important details of financial status must be informed to all relevant parties, insignificant facts, which do not influence any decisions of the investors or any interested group, need not to b e communicated. Such less significant facts are not regarded as material facts. What is material and what is not material depends upon the nature of information and the party to whom the information is provided. While income has to be shown for income tax purposes, the amount can be rounded off to the nearest ten and fraction does not matter. The statement of account sent to a debtor contains all the details regarding invoices raised, amount outstanding during a particular period. *rinci+les o1 Full disclosure$ - The business enterprise should disclose relevant information to all the parties concerned with the organization. It means that any information of substance or of interest to the average investors will have to be disclosed in the financial statements. The company Act !"# re$uires that income statement and balance sheet of a company must give a fair and true view of the state of affairs of the company. %ull discloser of all relevant facts in accounts is the necessity in order to ma&e accounting record useful. It is not a new thing , but is based on convention. 'ven in older times people used to spea& truth and in full was incorporated in accounts too. Thus, full discloser is a very important convention. %or examples( ) a hotel should report the building of a new wing, or the future ac$uisition of another property. A restaurant facing a lawsuit from a customer who was in*ured by tripping over a frayed carpet edge should disclose the contingency of the lawsuit. Similarly, is accounting practices of the current financial statements were changed and differ from those previously reported, the changes should be disclosed. +hanges from one period to the next that affect current and future business operations should be reported if possible. +hanges of this nature include changes made to the method used to determine depreciation expenses or to the method of inventory valuation, such changes would increase or decrease the value of ending inventory,

cost of sale, gross margin and net income or loss. All changes disclosed should indicate the dollar effects such disclosures have on financial statements. ) 3( 4ournali5e t&e ,elo% transactions6 +re+are rele-ant ledger accounts and 1inall. trial ,alance( ( ( "7"73 8 19 Marks M:s ;entak /nter+rise *-t <td( Started business with cash .s. -,,,,,,, /oods .s. ,,,,,,, %urniture .s. ",,,,, 0pened +urrent Account with .s. ,,,,,,, 1laced an order with .iti& for the supply of goods of the list price of .s. , ,,, ,,. In this connection, we paid !2 of the list price as an advance by che$ue. .iti& supplied goods of the list price of .s. , ,,,,,, less -2 trade discount. 1ac&ing and delivery charges .s. ,,,,. 1urchased goods from 5urali of the list price of .s. ,,,,,,, less -2 trade discount and paid him by che$ue under a cash discount of "2 .eceived an order from Shyam for supply of goods of the list price of .s. , ,,,,,, with an advance of ,2 of list price. Supplied the above goods at ,2 trade discount. 1ac&ing and delivery charges .s. ,,,. /oods costing .s. 7,,,,, sold to 5r 8 at a profit of -,2 on sales less ,2 trade discount and -2 cash discount /oods 9cost .s. 3,,,,, Sales 1rice .s. 4,,,,: ta&en away by the proprietor for his personal use. Shyam became insolvent and paid 7, paise in a rupee in full and final settlement 1aid .iti& 7,2 on account. .-,, /oods 9+ost .s. 3,,,, , Sales 1rice .s. 4,,,,: stolen .-,, 1aid ;ife Insurance 1remium .s. ,,,,. .-,, +ash embezzled by an employee .s. ,,,,.

, ., .-,, ! , ., .-,, ! ,-., .-,, ! ,3., ! ,4., ! ,"., ! ,#., ! ,6., ! ,7., ! ,!., ! ,., ! ., ! -., ! 3., ! .-,, .-,, .-,, .-,, .-,, .-,, .-,, .-,,

Ans(

4ournal /ntr. o1 M:s ;entak /nter+rise *-t <td(

<ate

1articular

, ., .-,,! +ash A=c ) <r. /oods A=c <r %urniture A=c <r To capital A=c 9>eing cash , goods ? furniture brought in as capital: , ., .-,,! >an& A=c ) <r. To cash A=c 9>eing the current A=c opent with .s. ,,,,,: , ., .-,,! .iti& A=c ) <r. To >an& A=c 9>eing advance paid to .iti&: ,3., .-,,! 1urchase A=c ) <r. %rieght A=c <r. To Trade <iscount To .iti& A=c 9>eing goods purchase on credit: ;ist 1rice ;ess( Trade <iscount @ -2 .s. ,,,,, .s. -,,, .s. 77,,, Add( 1ac&ing ? <elivery +harge .s. ,,, .s. 7!,,, ,4., .-,,! 1urchase A=c ) <r. To >an& A=c To <iscount A=c To Trade <iscount 9>eing goods purchase against che$ue: ;ist 1rice ;ess( Trade <iscount @ -2 ;ee( +ash <iscount "2 .s. .s. .s. .s. .s. ,,,,, -,,, 77,,, 44,, 73#,,

;. <ebit %. Amount 9in .s.: -,,,,, ,,,,, ",,,,

+redit Amount 9In .s.:

3",,,, ,,,,, ,,,,, !,,, !,,, ,,,,, ,,, -,,, 7!,,,

,,,,, 73#,, 44,, -,,,

,"., .-,,! +ash =A=c <r. To Shyam A=c 9>eing an advance received from Shyam: ,#., .-,,! Shyam A=c Trade <iscount To %rieght A=c To Sales A=c 9>eing goods sold on credit: ;ist 1rice ;ess( Trade <iscount @ ,2 <r. <r.

,,,, ,,,, ! ,,, ,,,, ,,, ,,,,,

.s. .s. .s. Add( 1ac&ing ? <elivery +harge .s. .s.

,,,,, ,,,, !,,,, ,,, ! ,,,

<edger
Capital A/c Date 31-01-09 Particulars To, Balance C/d Amoun t Date 01-01350000 09 Particulars By, Cash A/c By, Goods A/c By, Furniture A/c Amoun t 200000 100000 50000 350000 350000

Total

350000

Total 01-2-09 By, Balance B/d

Cas A/c Date 01-01-09 05-01-09 0&-01-09 09-01-09 Particulars To, Capital A/c To, !hya" A/c To, !ales A/c To, !hya" A/c Amoun t 200000 10000 '%$&2 $%'00 Date 01-0109 10-0109 12-0109 13-0109 31-0109 Total Particulars By, Ban A/c By, #iti A/c By, (ra)in* A/c By, +oss ,y -",..le"ent A/c By, Balance C/d Amoun t 100000 $%000 1000 1000 193%&2 359!"2

Total 01-2-09 To, Balance B/d

359!"2 193!"2

Date 01-01-09

Particulars To, Capital A/c

Total

#toc$ A/c Amoun t Date 100000 0'-01-09 11-01-09 31-01-09 100000 Total

Particulars By, (ra)in* A/c By, !tolen A/c By, Balance C/d

Amoun t 3000 3000 9%000 100000

01-2-09

To, Balance B/d

9!000

Date 01-01-09 Total 01-2-09

Particulars To, Capital A/c

%urniture A/c Amoun t Date 50000 31-01-09 50000 Total 50000

Particulars By, Balance C/d

Amoun t 50000 50000

To, Balance B/d

Date 01-01-09

Particulars To, Cash A/c

Total 01-2-09 To, Balance B/d

Ban$ A/c Amoun t Date 100000 01-01-09 01-01-09 31-01-09 100000 Total "!00

Particulars By, #iti A/c By, /urchase A/c By, Balance C/d

Amoun t 9000 '3$00 &%00 100000

&iti$ A/c Date 01-01-09 03-01-09 10-01-09 31-01-09 Total Particulars To, Ban A/c To, Trade (iscount To, Cash A/c Amoun t Date 9000 03-01-09 12000 $%000 1$000 101000 Particulars By, /urchase A/c By, Frie*ht A/c Amoun t 100000 1000

Total 01-2-09 By, Balance B/d

101000 1'000

Date 03-01-09

Particulars To, /urchase A/c

Purc ase A/c Amoun t Date Particulars 100000 31-01-09 By, Balance C/d

Amoun t 200000

0%-1-09 Total 01-2-09

To, Ban A/c

100000 200000 200000

Total

200000

By, Balance B/d

Date 05-01-09 0$-01-09 09-01-09 09-01-09 Total

Particulars To, Cash A/c To, Trade (iscount To, Cash A/c To, Bad de,ts A/c

# yam A/c Amoun t Date 10000 0$-01-09 10000 $%'00 1$200 101000

Particulars By, !ales A/c By, Frie*ht A/c

Amoun t 100000 1000

Total

101000

#ales A/c Date 31-00109 Total Particulars To, Balance C/d Amoun t Date Particulars By, !hya" A/c By, Cash A/c Amoun t 100000 9$000 19'000 19'000

19$000 0$-01-09 0&-01-09 19'000 Total 01-2-09

By, Balance B/d

Date 0$-01-09 Total

Particulars To, !hya" A/c

%rie( t A/c Amoun t Date 1000 03-01-09 1000 Total

Particulars By, #iti A/c

Amoun t 1000 1000

Date 0$-01-09

Particulars To, !hya" A/c

Trade Discount A/c Amoun t Date Particulars 10000 03-01-09 By, #iti A/c

Amoun t 12000

0&-01-09 31-01-09 Total

To, !ale A/c To, Balance C/d

10000 0%-01-09 %000 2!000 Total 01-2-09

By, /urchase A/c

12000 2!000

By, Balance B/d

!!00

Date 0&-01-09 31-01-09 Total

Particulars To, !ale A/c To, Balance C/d

Cas Discount A/c Amoun t Date Particulars 1&2' 0%-01-09 By, /urchase A/c 2$&2 !!00 Total 01-2-09 By, Balance B/d

Amoun t %%00 !!00 2'"2

Date 0'-01-09 12-01-09 Total 01-2-09

Particulars To, Goods A/c To, Cash A/c

Dra)in( Discount A/c Amoun t Date Particulars 3000 31-01-09 By, Balance C/d 1000 !000 Total !000 Bad De*t A/c Amoun t Date 1$200 31-01-09 1'200 Total 1'200

Amoun t %000 !000

To, Balance B/d

Date 0$-01-09 Total 01-2-09

Particulars To, !hya" A/c

Particulars By, Balance C/d

Amoun t 1$200 1000

To, Balance B/d

Date 11-01-09 Total

Particulars To, Goods A/c

#tolen A/c Amoun t Date 3000 31-01-09 3000 Total

Particulars By, Balance C/d

Amoun t 3000 3000

01-2-09

To, Balance B/d

3000

Date 13-01-09 Total 01-2-09

Particulars To, Cash A/c

+oss *y ,m*e--lement A/c Amoun t Date Particulars 1000 31-01-09 By, Balance C/d 1000 Total 1000

Amoun t 1000 1000

To, Balance B/d

=rial Balance
Accounts (e,it Balance Capital Cash !toc Furniture Ban /urchase #iti !ales Trade (iscount Cash (iscount (ra)in* (iscount Bad (e,ts !tolen +oss ,y -",e..le"ent De*it Credit 350000 193%&2 9%000 50000 &%00 200000 1$000 19$000 %%00 2$&2 %000 1$200 3000 1000 5'90"2 5'90"2

) 3( /0+lain an. t%o t.+es o1 errors t&at are disclosed ,. trial ,alance %it& e0am+les and recti1ication entr.( #ote - A-oid gi-ing e0am+les gi-en in t&e sel1 learning material( Ans( =.+es o1 /rrors t&at are disclosed ,. trial ,alance$ - Accountants prepare trial balance

to chec&s this correctness of accounts. If total of debits balances does not agree with the total of credit balances, it is a clear cut indication that certain errors have been committed while recording the transactions the boo&s of original entry or subsidiary boo&s. All errors of accounting procedure can be classified as errors of principle( ) When a transaction is recorded again the fundamental principles of accounting, it is an error of principle. %or 'xample A if revenue expenditure is treated as capital expenditure or vice versa. Clerical /rror$ - 'rrors of 0mission A when a transaction is either wholly or partially not recorded in the boo&s, it is an error of omission. /rror o1 Commission$ - When an entry is inco,!rrctly recorded either wholly or partially incorrect posting, calculation, casting or balancing. Com+ensating errors$ - Sometimes an error is counter)balanced by another in such a way that is not disclosed by the trial balance. Correction o1 /rrors in ne0t accounting +eriod( As stated earlier, that it is advisable to locate and rectify the error before preparing the final accounts for the year. >ut in certain cases when after considerable search, the accountant fails to locate the error and he is in a hurry to prepare the final accounts of the business for filing the return for sales tax or income tax purposes, he transfers the amount of difference of trial balance to a newly opened Bsuspense AccountC In the next accounting period as and when the errors are located these are corrected with references to suspense account. When all the error are disclosed and rectified the suspense account shall be closed automatically. Those errors which do not affect the trial balance canDt be corrected with the help of suspense account. For /0am+le ) It is found that debit total of trial balance was less by .s. ",,=) for the reason that wilsonDs account was not debited with .s. ",,=) the following rectifying entry is re$uired to be passed. %rom the point of view of rectification of the error, these can be divided into - groups( 'rror affecting one account only 'rrors affecting two or more accounts 'rrors affecting one account( ) +asting error , error of posting, carry forward, balancing, 0mission from Trial balance.

Such errors should first of all be located and rectified. These are rectified either with the help of *ournal entry of by giving an explanatory note in the account concerned. .ectification( ) All types of errors in accounts can be rectified at two stages( ) . >efore preparation of the final accounts -. After 1reparation of the final accounts 'rrors rectified within the accounting period. The 1roper method of correction of an error is to pass *ournal entry in such a way that it corrects the mista&e that has been committed also gives effect to the entry that should have been passed, >ut while errors are being rectified before the preparation of final accounting.

)4( <et us assume .ou &a-e ,een recentl. a++ointed as Management Accountant o1 a small ,ut u+coming 1irm( 2our immediate su+er-isor &as asked .ou to +re+are certain 1inancial ratios 1rom t&e ,alance s&eet o1 one o1 t&eir clients M:s ;inod /nter+rise( <ia,ilities '$uity Share +apital 72 1ref Share +apital .eserve %und #2 <ebentures Sundry +reditors 1 ? ; account Eear -,,,) ,,, Eear -,, )-,,,, =otal Amount ",,,, ,,,, 4,,,, -,,,, 3,,,, Assets %ixed assets Investments Stoc& Sundry <ebtors >an& >alance 1reliminary expenses Amount 76",, -",,, 3,,,, 3",, 6,,,

- ,,, 1>1000

7,,, 1>1000

The director intent to transfer a sum of .s.",,, out of the current yearDs profit to provision for tax. The financial ratios needed are(

a. .eturn on capital employed b. +urrent ratio c. %ixed assets to networth d. <ebt ) '$uity ratio e. .eturn on ownerDs capital. 9 , 5ar&s: Ans( (a ?eturn on Ca+ital /m+lo.ed F %ixed asset G Investment G +urrent Asset A +urrent ;iability F 76",, G -",,, G 3,,,, G 3",, G 6,,, A 3,,,, F .s. 33,,,=) (, Current ?atio F Current Assets Current Liability 3,,,, + 3",, + 6,,, = 3,,,, ",",, = 3,,,, = .#73

(c Fi0ed Assets to net %ort& Fixed Assets = Shareholders fund 76",, = ",,,, + ,,,, (d De,t-/'uit. ratio Fixed equity Internal equity -,,,, = ",,,, + ,,,, =

76",, = .4"7 #,,,,

-,,,, = ,.333 #,,,,

(e ?eturn on o%ner@s Ca+ital Het 1rofit = ,, Share holders e$uity - ,,, = ,, = 4",,,,

) 9( A 1riend o1 .ou &as a++roac&ed to &el+ &im out in setting &is ,ooks o1 accounts in order( An1ortunatel. &e is struck %it& di11erence in trial ,alance( Bel+ &im in redra1ting t&e trial ,alance( !l(no *articulars Stoc& on <ec,-,,7 +apital +ash in hand >an& 0verdraft Sales ,#, # 6 7 ! , 1urchases .eturns inward -, .eturns outward +arriage outward +arriage inward !, Salaries 3 4 " # 6 7 Wages Sundry debtors Sundry creditors Stoc& on st Ian -,,# ", ;and and building ,,, -,, 1lant and machinery !,, -, Trade expenses ,!, 3C96 3C96 #,, 3, ##, #, 3,, 36, 3#, !4, -, !#, -, 3#, 4, -#, 4,, 3, 4,, Dr 3 st ,, 3, 3 4 " 4", , 4,, !, 3-, -3#, 4,, !-, Cr

940 Ans$S.H. 1articular

940

=rial Balance ;.%. <r. 9.s.:

Amount +r. 9.s.: 34",

Amount

3 4 " # 6 7 ! , 3 4

+apital +ash in hand >an& 0verdraft Sales 1urchases .eturn Inward .eturn 0utward +arriage 0utward +arriage Inward Salaries Wages Sundry <ebtors Sundry +reditors 0pening Stoc& on , ., .-,,# ;and ? >uilding 1lant ? 5achinery Trade 'xpenses

4,, !3-, -3#4,, ,#4,, 34,, -!#, -3#, 4-#, !#,, 3##, #3,, 363#, !4 -,

" # 6

",,, -,!,, -,!, -!!4!, -!!4!,

) "( /0+lain t&e accounting treatment o1 ,ad de,t and +ro-ision 1or dou,t1ul de,ts %it& suita,le e0am+le( Ans$- First let@s distinguis& ,et%een a ,ad and a dou,t1ul de,t( A debt owing to a business that is not expected to be paid is a bad debt. A doubtful debt is a debt, which the business considers may not be paid. The <istinction is important because the accounting treatment differs, as shown below <ouble 'ntry. >ad and <oubtful debts from part of the double entry boo& &eeping system. Hote that the general principles of double entry boo& &eeping are not covered here but form part of the I+5 Accounting unit. Accounting Treatment for >ad <ebts( ) If we decide that there is no probability of collecting an overdue amount, we need to reduce the balance sitting on that customerDs account to zero. We do not want to show a balance owing that in act will never be recovered because this would be over stating our debtors and therefore overstating our assets. We need to reflect this expense in our accounts and therefore transfer the balance to the profit and loss account. The 'ntries are as follows( ) <ebit( >ad debt A=c +redit( +ustomerDs account Transferring to the final account( <ebit( 1rofit and loss account +redit( >ed debt account. Accounting Treatment for doubtful debts( A doubtful debt may not turn into a bad debt. In fact, it may not be possible to isolate specific customers when computing an amount which may turn bad. >ut however we arrive at this figure, prudence dictates that we should provide for this in our final accounts. The accounting entries will be as follows( ) <ebit( 1rofit and loss account +redit( 1rovision for bad debts The 1rovision will be shown on the balance sheet as a deduction from debtors. Increases to the provision in subse$uent year will be debited to the profit and less account. The procision will be calculated after all bad debts have been written off. Hote that the auditor pay particular attention to bad debt provisions because of the ease with which they can be used to manipulate profit and

crate a hidden reserve. 'xample( ) Alice >eeton runs a food and drin& business. Jer customer are given #, days credit. Alice is about to prepare her accounts as at the year ending 3, Iune -,,,. Alice has run a number of promotions this year and has determined that the provision for bad debts will need to be increased from -2 to 32 of her debtors. The net debtors for last year were -7,,,,. <ebtors are currently 3-,!,,. 3 3
st st

5arch % -",, 5ay A Ward 4,,

Show all the relevant entries in the accounts. The profit and loss account shows the expenses incurred the bad debts and increase in the provision for bad debts.

MBA- I semester MB0041- Financial & Management Accounting 4 Credits Book ID- ( B1130 Assignment !et 3- ("0 Marks #ote$ Ans%er all t&e 'uestions( )1( =&e Balanced !core Card is a 1rame%ork 1or integrating measures deri-ed 1rom strateg.( =ake an Indian com+an. %&ic& &as ado+ted ,alance score card success1ull. and e0+lain &o% it &ad deri-ed ,ene1its out o1 t&is 1rame%ork( Ans$- 'very +orporate 'ntity can reveal its performance through income statement and position statement. These statements have remained static over a long period of time. These can easily measure the tangible aspect of business but unable to reveal anything about the intangible aspect of the business ) the solution lies in implementing the techni$ue of >alanced Scorecard to evaluate a companyKs performance >alanced Scorecard)))An introduction and its perspectives Laplan and Horton observed that due to the involvement of numerable variables in the attainment of corporate goals it was becoming increasingly difficult for management to obtain a perfect balance between the operational and financial factors. In order to resolve this problem they developed the balanced scorecard approach, which supplemented traditional financial measures with criteria that measured performance from the perspective of customers, internal business processes, and learning and growth. This approach enables companies to trac& financial results while simultaneously monitoring progress in building the capabilities and ac$uiring the intangible assets they need for future growth. It provides a framewor& involving critical indicators or &ey business factors to balance the long) term and short)term ob*ectives. It lin&s and balances financial and non)financial indicators, tangible and intangible measures, internal and external aspects, performance drivers and outcomes. It also balances the external measures li&e shareholders, customers and internal measures li&e critical business processes, innovation, learning, and growth. It considers results from past efforts and the measures that drive future performance. .ecognizing some of the wea&nesses and vagueness of previous management approaches, this approach was developed in the early !!,Ks by <rs. .obert Laplan 9Jarvard >usiness School and <avid Horton 9>alanced Scorecard +ollaborative:. The balance scorecard approach provides a clear prescription as to what companies should measure in order to BbalanceC the financial perspective. The balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action. BThe balanced score card retains traditional financial measures. Hut financial measures tell the story of past events, an ade$uate story for term capabilities and customer relationships were no critical for success.

The Score card suggest that we view the organization from four perspective( ) a. The ;earning and growth perspectives( ) b. The >usiness 1rocess perspective( ) c. The customer 1erspective( ) d. The %inancial 1erspective( ) Indian Com+an. ada+ted Balance score card The balanced scorecard is a framewor& for integrating the measures derived from the vision and strategy of an organization with the financial measures of its past performance. The ob*ective and measures are drawn from four perspectives( %inancial, +ustomer, Internal business process and learning and growth. The concept is still new to Indian +orporate, through it was developed some time ago in !!-. In the India +ontext, 0rganization li&e the 5urugappa group and the 5ahindras have adopted the >alanced scorecard. >ut overall there are not more 4)" 0rganization in Indian That are using this techni$ue. %rom the above points, It becomes cl3ear that the >alanced scorecard techni$ue offers numerous advantages to the organization using it. >ut as far as corporate India is concerned, there is little awareness among the organization about this newly used tool of performance measurement with the integration of the financial mar&ets worldwide, it is high time for the Indian companies to implement this techni$ue at the earliest. As for as the implementation aspect is concerned, it ta&es approximately six months to a year which is not a very long period. Therefore, it is advised that the organization should comne forward and realize the true potential of >alanced scorecard.

) 3( D&at is Du*ont anal.sisE /0+lain all t&e ratios in-ol-ed in t&is anal.sis( 2our ans%er s&ould ,e su++orted %it& t&e c&art( Ans$- DA *F#= A#A<2!I! A method of performance measurement that was started by the <M10HT corporation in the !-,s. With this method, assets are measured at their gross boo& value rather thin at net boo& value in order to produce a higher return on e$uity 9.0':. It is also &nown as B<M 10HT identy.C

The <u 1ont analysis can be depicted via the following chart(

DA *F#= CBA?=

The apex of the <u pont chart is the teturtn on total assets 9.0TA: defined as the product of the net profits margin 9H15: and total assets turnover ratio 9TAT.:. Het 1rofit Het 1rofit Het Sales = Total Asset Het Sales Total Assets

Such decomposition helps in understanding how the return on total assets is influenced by the net profit margin and the total assets turnover ratio. A manager has basically three ways of improving operating performace in terms of .0A and .0'. These are ( ) Increase capital asset turnover Increase operating profit margins +hange financial leverage

'ach of these primary drivers is impacted by the specific decisions on cost control, efficiency, productivity, mar&eting choices etc. ) 3( *re+are Funds Flo% statement 1rom t&e 1ollo%ing ,alance s&eets and additional in1ormation <ia,ilities 1CCG 6",,, '$ Share capital ,, -",,, 32 debentures ,, 4,, 1rofit and loss a=c ,,, 4,, /eneral reserve ,,, ",, +reditors ,,, 3,, >ills payable ,,, ",, 1rovision for tax ,,, 1rov for dep on land and ,,,, building ,, 1CCC !,,,,, -,,,,, ",,,,, ",,,,, #,,,,, -,,,,, #,,,,, 4,,,, Assets /ood will 1lant ? 5achinery ;and ? building Investments <ebtors Stoc& >ills receivable >an& 1reliminary expenses 1CCG -,,,,, 3",,,, #",,,, 4,,,,, ",,,,, 7,,,,, 6,,,,, 4,,,,, ,,,,, 1CCC ",,,, 4",,,, #"!,,, 47,,, 3,,,,, !,,,,, ",,,,, 3,,,,, 7,,,,

=otal Additional information

1310000

14G000 0

131000 0

14G0000

. 1rovision for depreciation on 1?5 was .S4,,,,, o 3 st 5arch !!7 and .s.4",,,, on 3 st 5arch !!! -. 5achinery costing .s.3#,,, 9acc dep .s -,,,,: was sold for .s.-,,,,, 3. Investment costing .s.3,,,, were sold at a profit of -,2 on cost 4. Tax of .s.3,,,, were paid 9-, mar&s: Ans$!tatement o1 c&ange in Dorking Ca+ital
Particular Current Assets (e,tors !toc Bills recei0a,le Ban Total Current Assets 1A2 Current +ia*ilities Creditors Bills /aya,le Total Current +ia,ilities1B2 1or$in( Capital 2A-B3 4et Decrease in 1or$in( Capital Total 199. &s/ 1999 &s/ 0ncreas e Decrease

50000 '0000 &0000 %0000 2!0000

30000 90000 50000 30000 200000

-20000 10000 -20000 -10000

50000 30000 .0000 1'0000

$0000 20000 .0000 120000 %0000 1'0000

-10000 10000

1'0000

%0000 '0000

-'0000

AdHusted *ro1it & <oss A:c

Particular To *ood)ill )ritten o33 To /reli"inary e5pense )rite o33 To loss on !ale o3 "achine To trans3er o3 reser0e To pro0ision 3or ta5 To pro0ision 3or depreciation on land 4 Buildin* To pro0ision 3or depreciation on /lant 4 7achinary To /ro3it 4 loss A/c Dr/ Amount 2&s3 5000 2000 %000 10000 %0000 1&000 Particular By /ro3it 4 loss A/c By /ro3it on !ale o3 6n0est"ent By 3und 3ro" operation Cr/ Amount 2&s3 %0000 $000 122000

%0000

50000 1'.000 1'.000

Fund Flo% !tatement

#ources 6ssue o3 !hares !ale o3 7achine !ale o3 6n0est"ent Funds 3ro" operation (ecrease in 8or in* Capital Dr/ Amount 2&s3 Applications Cr/ Amount 2&s3 50000 1%1000 9000 13'000 30000 3'.000

#ede"ption o3 150000 de,entures 20000 /urchase o3 /lant 3$000 /urchase o3 +and 122000 /urchase o3 6n0est"ent %0000 Ta5 /aid 3'.000

) 4( =&e standard cost o1 a certain c&emical mi0ture is$ 39I Material A at ?s(39 +er kg "9I Material B at ?s(3" +er kg A standard loss o1 9I is e0+ected in +roduction During a +eriod t&ere is used$ 139kg o1 Material A at ?s(3> +er kg and 3>9kg o1 Material B at ?s(34 +er kg =&e actual out+ut %as 3"9 kg Calculate a( Material cost -ariance ,( Material +rice -ariance c( Material mi0 -ariance d( Material .ield -ariance Bint$ Ase net standard out+ut (deduct t&e loss

Ans$-( 5aterial Standard SN &g 4, -#, 4,, S. .s -" 3# S+ .s 3",, !3#, -7#, Actual AN &g -" -6" 4,, A. .s -6 34 A+ .s 336" !3", -6-"

5aterial A 5aterial > Total ;ess ( ;oss -, "2 37,

( a Material cost -ariance F standard cost A Actual +ost

F SN O S. A AN O A. 5aterial A 5aterial > F 4, O -" A -" O -6 F 3",, A 336" F -" 9%av: F -#, O 3# A -6" O 34 F !3#, A !3", F , 9%av:

( , Material +rice ;ariance 5aterial A 5aterial >

F 9Standard 1rice A Actual 1rice: O Actual Nuantity

F 9S1 ) A1: O AN F 9-" A -6: O -" F -", 9Adv: F 93# A 34: O -6" F "", 9%av:

( c Material Mi0 ;ariance F 9.evised standard $uantity for each material A Actual 5aterial mix variance $uantity for each material: O standard price .evised Standard Nuantity 9.SN: = Total weight of actual mix Standard Nuantity Total weight of Standard mix

4,, 4, 4,, F 4, 5aterial 5ix Pariance of 5aterial A F 9 4, A -": O -" F 36" 9%av: 4,, = -#, .SN of 5aterial > 4,, F -#, 5aterial 5ix Pariance of 5aterial > F 9-#, ) -6": O 3# F "4, 9Adv: .SN of 5aterial A =

( d Material 2ield ;ariance output 5aterial A 5aterial >

F 9Standard yield A Actual yield: O Standard rate per unit of

F 937, A 3#": O -" F 36" 9%av: F 937, A 3#": O 3# F "4, 9%av: