Spring 2010

Master of Business Administration- MBA Semester 1

MB0041 – Financial Management & Accounting - 4 Credits
(Book ID: 1130)
Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

1. What is accounting cycle? List the sequential steps involved in Accounting cycle?
2. A. Bring out the difference between Indian GAAP and US GAAP norms?
B. What is Matching Principle? Why should a business concern follow this principle?
3. Prove that the accounting equation is satisfied in all the following transactions of Mr. X
(a) Commence business with cash Rs.50000
(b) Paid rent in advance Rs.1000
(c) Purchased goods for cash Rs.18000 and Credit Rs.20000
(d) Sold goods for cash Rs.25000 costing Rs.22000
(e) Paid salary Rs.5000 and salary outstanding is Rs.3000
(f) Bought moped for personal use Rs.20000
4. Following are the extracts from the Trial Balance of a firm as on 31st March 20X7

Dr Cr
Sundry Debtors 2,05,000
Provision for Doubtful Debts 10,000
Provision for Discount on Debtors 1,800
Bad Debts 3,000
Discount 1,000
Additional Information:
1) Additional Bad Debts required Rs.4,000
2) Additional Discount allowed to Debtors Rs.1,000
3) Maintain a provision for bad debts @ 10% on debtors
4) Maintain a provision for discount @ 2% on debtors
Required: Pass the necessary journal entries and show the relevant accounts including final
accounts.
5. A. Bring out the difference between trade discount and cash discount. (5 Marks)
 Spring 2010

B. Explain the term (1) asset (2) liability with the help of examples.
6. A fresh MBA student joined as trainee was asked to prepare Trial balance. He was unable to
submit a correct trial balance. You, as a senior accountant find out the errors and rectify them.
After redrafting the trial balance prepare trading and Profit and loss account.
Particulars Debit Credit
Capital 7,670
Cash in Hand 30
Purchases 8,990
Sales 11,060
Cash at bank 885
Fixtures and Fittings 225
Freehold premises 1.500
Lighting and Heating 65
Bills Receivable 825
Return Inwards 30
Salaries 1.075
Creditors 1890
Debtors 5,700
st
Stock at 1 April 2007 3,000
Printing 225
Bills Payable 1,875
Rates, taxes and insurance 190
Discount received 445
Discount allowed 200
21,175 21,705
Adjustments:
1) Stock on hand on 31st March 2008 was valued at Rs.1800
2) Depreciate fixtures and fittings by Rs.25
3) Rs.35 was due and unpaid in respect of salaries
4) Rates and insurance had been paid in advance to the extent of Rs.40
 Spring 2010

Master of Business Administration- MBA Semester 1

MB0041 – Financial Management & Accounting - 4 Credits
(Book ID: 1130)
Assignment Set- 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

1. Uncertainties inevitably surround many transactions. This should be recognized by

exercising prudence in preparing financial statement. Explain this concept with the help
of an example.
2. A. When is the change in accounting policy recommended and what are the disclosure
requirements regarding the change in accounting policy?
B. Explain IFRS.
3. Journalise the following transactions:
01.01.09 Bought goods for Rs.10,000
02.01.09 Purchased goods from X Rs.20,000
03.01.09 Bought goods from Y for Rs.30,000 against a current dated cheque
04.01.09 Purchased goods from Z [price list price is Rs.30,000 and trade
discount is 10%]
05.01.09 Bought goods of the list prce of Rs.1,25,000 from M less 20% trade
discount and 2% cash discount. Paid 40% of the amount by cheque
06.01.09 Returned 10% of the goods supplied by X
07.01.09 Returned 10% of the goods supplied by Y

4. Bring out the difference between Funds Flow Statement and Cash Flow Statement.
Mention up to what point in time they are similar and from where the differences begin.

5. A. Determine the sales of a firm with the following financial data

Current Ratio 1.5
Acid test ratio 1.2
Current Liabilities 8,00,000
Inventory Turnover ratio 5 times

B. What is Du-Pont chart?

 Spring 2010

6. From the following data calculate the:

1. Break-even point expressed in terms of sale amount/revenue
2. Number of units that must be sold to earn a profit of Rs.60,000 per year

Sales price (per unit) Rs.20

Variable manufacturing cost per unit Rs.11
Variable selling cost per unit Rs.3
Fixed factory overheads (per year) 5,40,000
Fixed selling cost (per year) 2,52,000