MS-04

Management Programme

ASSIGNMENT FIRST SEMESTER 2013

MS - 04: Accounting and Finance for Managers

School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI 110 068

ASSIGNMENT Course Code : MS-4 Course Title : Accounting and Finance for Managers Assignment Code : MS-04/TMA/SEM-I/2013 Coverage : All Blocks Note : Attempt all the questions and submit this assignment on or before 30th April, 2013 to the coordinator of your study center. 1. Explain in detail the various accounting concepts and discuss the application of these concepts in the preparation of financial statements.
2. Fairdeals Ltd. presents the balance sheets as at 31.12.2009 and 31.12.2010 as follows:

Assets Fixed Assets at cost Less: Depreciation Investments Marketable Securities Inventories Book Debts Cash and Bank Preliminary Expenses Liabilities Share Capital Reserve and Surplus Profit and Loss Account 13.5% Debentures (Convertible) Mortgage Loan Current Liabilities

31.12.09 Rs. 31,30,000 6,80.000 24,50,000 12,50,000 60,000 4,10,000 5,30,000 1,20,000 1,00,000 49,20,000 20,00,000 4,20,000 3,80,000 10,00,000 3,00,000 8,20,000 49,20,000

31.12.10 Rs. 36,05,000 8,20,000 27,85,000 13,50,000 30,000 5,20,000 5,05,000 1,40,000 50,000 53,80,000 25,00,000 4,70,000 4,00,000 8,00,000 2,50,000 9,60,000 53,80,000

You are informed that during 2010 (i) Rs. 2,00,000 of debentures were converted into shares at par; (ii) Rs. 1,00,000 shares were issued to a vendor of fixed assets; (iii) A machine costing Rs. 50,000 book value Rs. 30,000 as at 31st December, 2009 was disposed off for Rs. 20,000; (iv) Rs. 30,000 of marketable securities (cost) was disposed off for Rs. 36,000. You are required to prepare a schedule of working capital changes and funds flow statement of the company for 2010.

3. An Analysis of S Ltd. cost records give the following information. Variable Cost Fixed Cost (% of Sales) Rs. Direct Material 32.8% Direct Labour 28.4 Factory Overhead 12.6 1,89,000 Distribution Overhead 4.1 58,400 Administration Overhead 1.1 66,700 Budgeted sales for the next year is Rs. 18, 50,000. You are required to determine: (a) Break even sales value (b) Profit at the budgeted sales volume (c) Profit if actual sales: (i) drop by 10% (ii) increase by 5% from the sale. 4. Briefly explain the following a) Rolling budget b) Performance budgeting c) Zero base budgeting d) Measures of financial beverage 5. What is capital structure? Explain the features and determinants of an appropriate capital structure.