Company Accounts , Cost and Management Accounting

(June 2013) C.S. Executive (G-1) Paper : Company Accounts, Cost and Management Accounting

Disclaimer Clause : These solutions are prepared by expert faculty team of Resonance. Views and answers provided may differ from that would be given by ICSI due to difference in assumptions taken in support of the answers. In such case answers as provided by ICSI will be deemed as final.

ONANCE

CS-EXECUTIVE - 1

.. (ii) Again.2 . provides that where a public company proposes to increase its subscribed at any time after the expiry of ...2. That means the Shareholders’ fund maintain as it is & no capital reduction is made.Capital Profits.. but is not a .. (iv) False : In case of inadequacy of profits or absence of profits in any year. (v) International Accounting Standards are issued by the .... (iii) Goodwill is an intangible asset.. Such unrealised profit has to be eliminated from the consolidated balance sheet in the following manner... the existing shareholders have the right to be offered further issue of shares to them. ONANCE CS-EXECUTIVE . it will disappear from the foot note of individual company’s balance sheet. (c) The amount received on forfeited shares (b) Managerial remuneration (c) Carrying amount (b) Capital Loss (b) Preliminary expenses Re-write the following sentences after filling-in the blank spaces with appropriate word(s)/figure(s) : (i) Section 81 of Companies Act. This statement is false because such shares can be redeemed either out of the profits of the company which would otherwise available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of redemption. But it is important to note here that the minority shareholders will not be affected in any way. Cost and Management Accounting 1(a). all items of the capital reserves including reserves created by revaluation of assets shall be excluded.. losses. year(s) from the first allotment of shares whichever is earlier..Company Accounts . (v) False : Redemption of preference shares amounts to reduction in the capital of the company. it should satisfy certain conditions. (i) False : Section 81 of the Companies Act provides that such further issue of shares should first be offerred to the existing shareholders of the company in proportion to the shares which they already hold. by the holding company to its subsidiary or vice versa) at a profit and a part of it remains unsold at the end of the year. as it appears as actual liability in the consolidated balance sheet. such declaration dividend sall not be made except in accordance with such rules as may be made by the central government in this behalf and where any such declaration is not accordance with such rules. any company proposes to declare out of the accumulated profits earned by the company in previous years and transferred by it to the reserves..... If the contingent liability is in respect of a transaction between the company in the group and outside third party (external contingent liability). ” Profits earned by a company in previous year and transferred by it to the reserves” shall mean the total amount of the net profits after the tax. (i) (ii) (iii) (iv) (v) 1(c). (ii) Preliminary expenses being of capital nature may be written off against . the same should be deducted from the value of stock-in-trade of the company concerned. In other words....International Accouting Standard Board . (iii) True : If goods are sold by one company to the other (i.. (i) The unrealised profits should be deducted from the current revenue profits of the company which sold the goods. transferred to reserves as at the biginning of the year for which the dividend is to be declared .. asset...Fictitious.. 1(b)... Thus the company is under legal obligation to offer first the further issue of shares to its existing shareholde` But the share holders have the option either to accept it or to reject it or to renounce it. (ii) True : The treatment of the contingent liability on consolidation depends on its nature. such declaration shall not be made except with the previous approval of the central government. For the purpose of this rule. But if the contingent liability is in respect of transaction between holding and subsidiary companies (internal contigent liability). 1956. and in computing the said amount.e. year(s) of its formation or at any time after the expiry of . (iv) Accumulated losses of the subsidiary company upto the date of acquisition of shares by the holding company are called .Pre acquisition. it will appear as a ‘note’ to the consolidated balance sheet. the unrealised and such goods remaining unsold must be provided for.1.

000 20.00.g. Thus for example. 1999.000 × 10%) Profit available for Equity Shareholders (ii) Calculation of Expected Rate of Profit (`) 4. preference shares or debentures may be issued for the purpose. reserves which are free for distribution as dividend) and includes balance of securities primium account .000 52.3 .67 = 2(b).000 5.000 6.000 1.000 2.88. the Central Government has allowed indian companies to buy-back their shares from the open market.88. employees’ stock option or other securities as may be notified by the Central Government from time to time) out of: (i) its free reserves (i.76% ExpectedRate of Profit (iii) Yield Value Per Share = NormalRate of Return  Paid up Value per share 44. When a company has substantial cash resources.e. no buy-back of any kind of shares or other specified securities shall be made out of proceeds of the earlier issue of same kind shares or same kind of other securities.08. Buy back of shares enables the company to go back to its shareholdrs and offers to purchase from them the shares they hold. (40 : 30 : 30) Net Liability 20. Valuation of Shares as Per Yield Basis (i) Calculation of Profit available for Equity Shareholders Expected Profits (Before Tax) Less : Tax Rate (35%) Profit after Tax Less : Transfer to General Reserve (20%) Less : Preference Share Dividend (2. Cost and Management Accounting 2(a). it may like to buy its own shares from the market particularly when the prevailing rate of its shares in the market is much lower than the book value or what the company perceives to be its true value.000 4.000 5. Through the introduction of Section 77A in the Companies Act.500 4.000 10. Section 77A of the Companies (Amendment) Act.000  100 4.000 10.40.500 5.Company Accounts .500 500 2(c).000 C (30%) Shares 15.000 4.000 = 44.000 1.e. or/and (ii) The proceeds of any sharesor other specified securities.60. ONANCE CS-EXECUTIVE .000 Profit For Equity Share Holders Expected Rate of Profit = Paid Up Equity Share Capital  100 = 1. However. 1999 states that a company may purchase its own shares or other specified securities subject to sub section (2) of this section & 77 B (e.000 B (30%) Shares 15.000 2. 1956 by te Companies (Amendment) Act.76 7 20 = ` 15.000 10.00. Net Liability of Underwriters K (40%) Shares Gross Liability in agreed ratio of (40 : 30 : 30) Less : Marked Applications Balance Left Less Unmarked applications in the ratio of Gross Liability i. if equity shares are to be bought back.000 10.20.

000 10. (1) Ratio of Share Capital held by H Ltd.50.000 4. in Additional Pre-acquisition Proft Accumulated loss as on 31-3-11 Less : Accumulated balance on 31-3-12 Profit made in 2012-13 Add : Loss of stock by fire (6. (` ) Total Pre-acquisition loss 1. 8 Months) 54.’s share-3/4 of ` 1.000 72.500 10.500 8 12 36.000) Adjusted Profit Profits for pre-acquisition period.000 goods supplied is ` 2.2011 to 31.’s share 3/4 of 14.’s share i.000  1. and Minority Interest in Subsidiary 3 : 1 (2) Share of H Ltd..00. in Post-acquisition Profit Total profits for post-acquisition period : (From 1.000 (5) Minority Interest Paid up equity capital held Less : 1/4 of ` 1.000 14.Company Accounts .50. : Less : Paid up equity held Share in pre-acquisition loss (–) Pre-acquisition profit Goodwill 1.000 1.000 54.000 4.02.000 : 2.8.000  10. ONANCE CS-EXECUTIVE .000 (4) Share of H Ltd.4. from 1.000 25.000 (or 10%) Profit on stock of ` 10.000 25.000 50.50.000 4 12 18.000 27.000 – 2.50.20.2011 to 1-8-2011 (4 months) : 54.000 Unrealised profit on stock = ` 1.000 1.4 .000 (10 % of Rs.000 H Ltd.e.12.2012 i.000.000 1.10. Cost and Management Accounting 3(a).12.500 (To be added to the cost of control (or goodwill) or deducted from capital reserve) (3) Share of H Ltd.000 48. 3/4 or ` 36.000 1.000 (7) Calculation of Unrealised Profit Profit on ` 20.000 50. in Pre-acquisition (Capital) Loss of S Ltd.000 ) 20..500 1.e.000  H Ltd.000 1.000 (accumulated loss) (6) Cost of Control Cost of shares in S Ltd.00.3.000  Less : Loss of stock by fire H Ltd. that is.

000 70.000 2.000 1.000 ONANCE CS-EXECUTIVE .00. Share holder’s fund (a) Share Capital (b) Reserve & Surplus 2. Ltd. Less : Unrealised Profit 6 7 8 9 10 5. and its subsidiary S.00.000 45.000 72. S. Equity & Liabilities 1.000 8. Less : Inter-Company owing 25.Company Accounts .Ltd.00.000 3. Ltd. Share Capital 10.20.000 5.5 .000.06.00.000 25.000 40.000 27.07.000 1. Current Liabilities (a) Trade Payable Total II.00.000 20. Long Term Borrowings 6% Debentures Less : Held by H.00.000 80.000 1. Equity Shares of `10 each fully paid up 2.000 1.000 1.71.000 2. Trade Payable Creditors : H.00.000 (` ) 5.000 1.000 1.29.000 60.06. Ltd.000 1. Current Assets (a) Inventories (b) Trade Receivables (c) Cash & Cash equivalents Total Notes to Accounts: 1. Reserve & Surplus General Reserves Profit and loss A/c : H. as on 31 March 2012 Particulars Note Figures related Figures related No.000 40. to Current to Previous Reporting Reporting Period Period (` ) (` ) 1 2 3 4 5 5. Ltd.00.000 75. Assets 1.000 I. Cost and Management Accounting Consolidated Balance Sheet of H. Other Non Current Liabilities Minority Interest 5.000 8.00.000 4. Ltd.71. Non Current Assets (a) Fixed Assets (i) Tangible (ii) Intangible 2. 1. Share in S Ltd.00.06.000 25.000 40. Non Current Liabilities (a) Long term borrowings (b) Other Non Current Liabilities 3.000 1.000 1.

Shares A/c To Pre.00.000 30. Shareholders A/c (Being Redemption of Pre.000 40. 3. Dr. 1.00. Inventories Stock : H Ltd.F.00. S. Ltd. Cash & Cash equivalents Cash : H.000 (iii) Dr. (Being Pre. Amounts In (`) 1. of Pre.000 90. Ltd.6 . to CRR A/c) Securities Premium Reserve A/c To Premium on Red. 3(b).000 1.Company Accounts . Shares were paid off) Dr. of Pre. Trade Receivables Debtors : H. Amounts In (`) 1. 1.000 7. L.000 1.000 (ii) Dr.000 1.50. Ltd.10.29.50.000 Journal Entries Date (i) Particulers 12% Red.000 70.10. Tangible Fixed Assets Others : H.000 60.000 1.000 10. Intagible Fixed Assets Goodwill 72.000 (iv) Dr.) Pre.000 75.000 20.000 10. Reserves were trans. 90.000 5.000 1.10. Dr. S Ltd.00. To Capital Redemption Reserve A/c (Being Acc.000 8.000 1.30. S.000 72.000 1. Cost and Management Accounting 6. Preference Share Capital A/c Premium on Red. S. Ltd. Shares A/c (Being Premium on redemption of pre.000 ONANCE CS-EXECUTIVE .00. Ltd.000 Cr. Shareholders A/c To Bank A/c. Share were due) Reserves A/c. Less : Unrealised Profit 9.000 25. shares were written off.00.000 5. 10. Less : Inter-company owings 10. Ltd.

7 . (ii) 1. To Share Capital A/c (Being Transfer of Share application money to Share Capital account at the time of allotment) Share Allotment A/c.) Dr.000 90. To Share Capital A/c. Cost and Management Accounting 4(a). To Share Capital A/c.200 2. (Discount allaved on reissued charged to share forfeiture a/c and Balance transfer to Capital Reserve A/c.000 12.000 90.760 1.000 (iii) 12. Securities Premium Reserve A/c.Company Accounts . To Capital Reserve A/c.200 3. Dr. 90.000 2.000 (v) Share Capital A/c (600 × 8) Dr.440 1.000 Share Application A/c Dr. L.440 (vi) 58.000 shares @ ` 3 per share) Dr. To Share Allotment A/c To Share I Call A/c To Share Forfeiture A/c (B/F) (Being 600 Shares were forfeited of Ramesh) Share II & Final Call A/c.F. (Being Amount Due on 29.800 (vii) Share Capital A/c (900 × 10) Dr.800 1. To Share Capital A/c To Securities Premium Reserve A/c. Amounts In (`) 60. (600 × 2) Dr. To Share Capital A/c (Being Amount due on first call of 30.50.000 60.000 Cr.800 1.500 (viii) 4. To Share I Call A/c To Share II & Final Call A/c To Share Forfeiture A/c (B/F) (Being 900 Shares were Forfeited of Mohan) Share Forfeiture A/c. Dr. Amounts In (`) 60.000 (iv) Dr.700 1. (Being Allotment money on account of share capital due on Allotment) Share Application A/c To Share Allotment A/c (Being Surplus Money On Application adjusted towards allotment) Share I call A/c.240 ONANCE CS-EXECUTIVE .400 Shares @ `2 Per share on II & Final Call) Dr. 9.800 58. Date (i) Particulers Journal of A Company ltd. 4.800 4.

.500 57. Particulars To Share Application (45.) 85.000  720 Shares 30..98. Cost and Management Accounting Dr.....000 ` 1440 1200 240 So.000 × 2) To Share Allotment To Share I Call A/c To Share II and Final Call A/c To Share Capital A/c CASH BOOK (Bank Column) Amounts Particulars (in `) 90.540 2..35./Fig. Current Assets (c) Cash & Cash equivalents Total Notes to Accounts: 1.500 62.60.60.98. Reserve & Surplus Capital Reserve Securities Premium Reserve 3.8 .Company Accounts .500 3. Equity & Liabilities 1. Assets 1. Cash & Cash Equivalents Bank 3 3.78. Amounts (in `) 18. 2.240 By Balance C/d (Bal...540 Working Notes : (i) Calculation of excess application money received From Ramesh Allotment of 600 Prorata basis to Ramesh Then he must have applied For : 600  36.78.800 62. Shareholder’s fund (a) Share Capital (b) Reserve & Surplus Total II. to Current to Previous Reporting Reporting Period Period ` ` 1 2 2.540 3.000 10.60.700 Equity Shares of `10 each fully paid up Share forfeiture A/c.040 3. Share Capital 29.540 Cr. he paid application money on 720 Shars @ ` 2/.540 Balance Sheet of A Company Ltd.000 1500 2.Share Less : Application money on alloted Shares (600 × 2) Excess application money adjusted towards allofment (ii) Allofment due from Ramesh Allofment money Payable on 600 Shares Including Premium (600 × 5) Less : Excess application money adjusted towards allofment (i) Allotment money not paid by Rqmesh 3000 240 2760 ONANCE CS-EXECUTIVE .040 3.000 By Share Application A/c (9000 × 2) 1.540 3.60.240 58. As on .. Particulars Note Figures related Figures related No..800 3.97.540 I.60.000 3.

the profit or toss of such a business for the period from the date of purchase of the business to the date of incorporation of the company. ONANCE CS-EXECUTIVE . NATURE OF PROFIT OR LOSS PRIOR TO INCORPORATION The profit or loss prior to incorporation is regarded as of capital nature because a company can not do any business before its incorporation. the unwritten off amount of such loss is shown on the Assets side of the Balance Sheet under the Subheading of ‘Other Non Current Assets’. 4440 1200 3240 MEANING OF PROFIT OR LOSS PRIOR TO INCORPORATION When a running business is taken over by the promoters of a company as at a date prior to the date of incorporation of company.Company Accounts . is called ‘Profit or Loss prior to incorporation’. Cost and Management Accounting (iii) Calculation of the total amount received as allotment money Total amount Payable as alotment (Includiry Premium) on 30000 share @ ` 5 Per Share 1.9 .50. ACCOUNTING TREATMENT OF PROFIT OR LOSS PRIOR TO INCORPORATION The accounting treatment of profit or loss prior to incorporation is summarised as follows: Profit or Loss Accounting Treatment (a) Profit Prior to Incorporation it is credited to Capital Reserve A/c and the balance of Capital Reserve A/c is shown on liabilities side of the Balance Sheet under the Sub heading ‘Reserves and Surplus. or It is credited to Goodwill A/c (if Good will has been debited as an asset at the time of acquisition of business) (b) Loss Prior to Incorporation It is debited to Goodwill A/c or It is debited to Capital Reserve A/c (if Capital Reserve has been credited at the time of acquisition of business) It is debited to ‘Loss Prior to Incorporation A/c’ and is written off out of the profits of the company over a period of number of years say 3 to 5 yea` Untill such loss is completely written off.000 Less : Received along with application money 12.000 138000 Less : Not Paid by Ramesh (ii) 2760 Allotment money received on 29400 Shares 135240 (iv) Capital reserve has been calculated as under : Total forfeited money relating to 1200 shares re-issued [` 1440 (Ramesh) + ` 3000 (Mohan)] Less : Discaunt on reissue of Shares Amount to be transferred to Capital Reserve 4(b).

Company Accounts .000     10. Particulars Note Figures related Figures related No. (iv) True : Marginal costing is different from direct costing as in marginal costing only variable cost are charged to production but in direct costing only fixed cost is charged to production.000 2. Current Liabilities (a) Current Liabilities Total II.25.Finished Goods     10.00. Current Assets (a) Inventories (b) Trade Receivables (c) Cash & Cash equivalents Bank Total Notes to Accounts: 1.5 (a) (i) True : Cost sheet is details presentation of various element of cost & profit . (b) (i) (b) Labour turnover (ii) (d) None of the above (iii) (d) All of the above (iv) (a) LIFO (v) (a) Short range (c) (i) Cost Sheet (ii) Ordering and Carrying Cost (iii) Overabsorption (iv) Profit & Loss A/c (v) Quantity of Material 6. Assets 1.15. Non Current Assets (a) Fixed Assets (i) Tangible 2. Non Current Liabilities (a) Long term borrowings 3.50.000 5.000 21. fixed cost is also relevant for make & buy decision as time to increase in production extra fixed cost will be incurred. to Current to Previous Reporting Reporting Period Period (` ) (` ) I.000 3. Equity & Liabilities 1.000 1.000 5.10.00. (ii) False: ZBB is not based on incremental approach.75.10 .000 4. (iii) True : At full capacity.00. Cost and Management Accounting Q. Share holder’s fund (a) Share Capital (b) Reserve & Surplus 2.000 1.000 3.(a) Balance Sheet of Genius Ltd.000 21.25. Inventories Stock .000 5.75. It is same as statement of cost & Profit.00. (v) False : Management accounting does not have set rules and regulation and not baesd on double entry system.000 ONANCE CS-EXECUTIVE .25.Raw Material Stock . In ZBB method budgets are prepare from zero.50.

00.50.50.000 × 4/12  ` 2.000 3  Long term Loan = 5.000 v.000  iii.000 iv. Fixed Assets to Current Assets = 1 : 1  Fixed Assets 1  Current Assets 1 10.000 CS-EXECUTIVE .00.25. Cost and Management Accounting Working Notes : i.11 ONANCE .000 × 2 Turnover (Sales) = `21. Stock of Raw Material = Consumption of Raw Material × 4/12  6.50.000 1  Turnover 2 Turnover = 10.75.000 / 2 Current Liabilities = ` 5.50.000 × 40/100  ` 6.000 1  Current Assets 1  Current Assets = ` 10.25. Fixed Assets/Turnover ratio = 1 : 2  Fixed Assets 1  Turnover 2 10.25.10.000 vi.000 2  Current Liabilitie s 1  Current Liabilities = 10.000 – 5.75.000 ii.000  ` 15.000 viii. Current Ratio 2  Current Assets 2  Current Liabilitie s 1 10.50.000 / 3 Long term Loan = ` 1. Gross Profit Ratio = 25%  Gross Pr ofit  Sales  Gross Pr ofit 100 25 100  Gross Pr ofit  21. Cost of Goods Sold = Sales – Gross Profit  21.30.30. Long terms Loan to Current Liabilities = 1 : 3  Long term Loan 1  Current Liabilitie s 3 Long term Loan 1  5.25.50.000 vii.000  Gross Profit = ` 5.Company Accounts .25.75. Consumption of Raw Material = 40% of COGS  15.00.

000 2.000 + 5.5 Reserve xii. It means a system under which cost per unit includes fixed expenses.000 – 1.50.75.25. Finished Goods = 20% of Turnover at Cost (COGS)  15.25.000 = 2. Thus Absorption costing is “a principle whereby fixed as well as variable costs are alloted to cost units ”.000 xv.00.000 Share Capital + Reserve = 21.10.000 x.5 × 4.12 .000 + 10.Company Accounts .50.00.00. Thus we can say marginal costing rewards sales where as absorption cost rewards production.75.00.000 xiv.000 – 5. xi & xii Share Capital + Reserve = 14.00.75. Share Capital = 2. Debt Collection Period = 2 Months Debt Collection Period  Debtors  Sales  12 2  Debtors  21. ONANCE CS-EXECUTIVE . Fixed factory overhead under direct or marginal costing is not included in inventory.000 Reserve = 14.By help of working note no.000  12 Debtors = ` 3.00.50.5 Reserve + Reserve = 14.000 + Bank Bank = ` 1.000 = 10. Share Capital to Reserve = 5 : 2 Share Capital 5   Re serve 2 2 Share Capital = 5 Reserve Share Capital = 5/2 Reserve Share Capital = 2.000 × 20/100  ` 3. Profit emerges only after charging all costs minus fixed and variable. While evaluating inventory only direct materials. all manufacturing costs.000/3.5 Reserve = ` 4.000 + 3. It is treated as a period cost and charged against revenue when incurred. Under absorption costing.000 xi.000 6.75. In marginal costing also this is true. (b) Under marginal costing only factory overheads costs that tend to vary with volume are changed to product cost in addition to prime cost.000 + 3. Cost and Management Accounting ix.00. only profit is ascertained by charging the fixed expenses costs to contribution. sometimes called full or conventional costing.000 xiii.000  Share Capital + Reserve = ` 14. both fixed and variable are charged in product costs.15.50.15.00. Share Capital + Reserve + Long Term Loan + Current Liabilities = Fixed Assets + Current Assets Share Capital + Reserve + 1. direct labour and variable factory overhead are included and are considered as product costs. especially fixed production overheads in addition to the variable cost.50.5 Reserve = 14. Current Assets = Stock RM + Stock FG + Debtors + Bank 10.5 Reserve Share Capital = 2.000 3.00.00.000 Share Capital = 10.

5 6 (26) (409.5 (190) (200) 0.5 (Nil) 314.5 18 18 26 (1) 314.13 .(a) Cash Flow Statatement for the year ended 31/3/2013 Particulars (A) Cash Flow From Operating Activities Net profit during the year Adjustments : Depreciation on Freehold Building Depreciation on Machinery & Plant Depreciation on Furniture & Fittings Interim Dividend Charged Dividend Proposed Interest Charged Preliminary expenses written off Operating Profit before changes in working capital Increases in Trade Payable Decreases in Inventories Decreases in Trade Receivables Increases in Prepaid Expenses Cash generated from operating activities Less : Taxes Paid (A) Net Cash From Operating Activities (B) Cash Flow From Investing Activities Purchase of Freehold Building Purchase of Machinery & Plant Sale of Furniture & Fittings Dividend Received Purchase of Investment in Shares (B) Net Cash Used in Investing Activities (C) Cash Flow From Financing Activities Interim dividend paid Dividend paid Issue of Share Capital Loan Taken Interest paid on loan (C) Net Cash From Financing Activities (A + B + C) Changes in Cash & Cash Equivalents Add : Opening Balances of Cash & Cash Equivalents Closing Balances of Cash & Cash Equivalents Amounts (in `’000) 20 30 50 0.Company Accounts .5) (60) (90) 200 50 (3) 97 2 (114) (112) Amounts (in `’000) ONANCE CS-EXECUTIVE . Cost and Management Accounting 7.5 60 80 3 10 253.

14 . Amounts (in `’000) 60 60 Cr.5 6 7 Cr. Particulars To Investment in Shares A/c./Fig) Dr. (12. Particulars To Balance B/d General Reserve Account Amounts Particulars (in `’000) 20 By Balance B/d 30 50 Goodwill Account Amounts Particulars (in `’000) 150 By General Reserve A/c. A/c. Amounts (in `’000) 6 6 Cr. 1.000 × 2. Particulars To Balance B/d To Cash A/c.5%) 30 190 By Balance C/d. 170 ONANCE CS-EXECUTIVE . Particulars To Cash A/c.5 . To Balance C/d Dr. 540 Furniture & Fittings Account Amounts Particulars (in `’000) 7 By Dep. Particulars To Cash A/c. Account Amounts Particulars (in `’000) 100 By Dividend Received 26 By Balance C/d 126 Interim Dividend Account Amounts Particulars (in `’000) 60 By P&L A/c.000 × 5%) By Cash A/c. 80 By P&L A/c. 60 Provision for Final Dividend Account Amounts Particulars (in `’000) 90 By Balance B/d. Dr.) Dr. Cost and Management Accounting Working Notes : Dr. Amounts (in `’000) 20 130 150 Dr.000 × 10%) 200 By Balance C/d. By Balance C/d 150 Cr. Investment in Shares A/c. Particulars To Balance B/d To Cash A/c. Particulars To Goodwill A/c.Company Accounts ./Fig) By Balance C/d 7 Dividend Received Account Amounts Particulars (in `’000) 6 By Cash A/c. Particulars To Balance B/d Dr. Amounts (in `’000) 50 50 Cr. Dr./Fig) Freehold Building Account Cr. Amounts (in `’000) . Amounts (in `’000) 50 490 540 Cr. A/c (10. (Bal.00./Fig. A/c (5.190 Machinery & Plant Account Amounts Particulars (in `’000) 340 By Dep.00. Amounts (in `’000) 90 80 170 Dr. Amounts Particulars Amounts (in `’000) (in `’000) 1. To Balance C/d. (Bal. Amounts (in `’000) 6 120 126 Cr. 6 Cr.160 1.190 1.000 By Dep. (Bal. Particulars To Balance B/d To Cash (Bal.

08 19. (2) Expenses are classified to ascertain prime cost.8(a) FLEXIBLE BUDGET 60% (i) Fixded Expenses Wages & Salaries Rent. Salaries etc.50 30 CAPACITY (` in lakh) 75% 90% 9. Q.4 ONANCE CS-EXECUTIVE .6 48.2 95 180 146.55 30.6 (iii) VARIABLE EXPENSES Material Labour Other Expenses Total (C) SALES Total Cost (A + B + C) PROFIT 26. (b) Closing Balance (in `’000) 2 (114) (112) Cost Sheet and Production Account The following are the points of distinction between cost sheet and production account: Cost sheet (1) It is prepared as a statement.Company Accounts . It is based on actual figures. Hence no comparison is possible.48 9.90 3.40 6.60 7. (5) It is prepared for each job and sometimes for the whole factory. Expenses are not classified. Rate & Takes Depreciation Sundry Administration Expenses Total (A) 9.36 21. etc.85 8.40 6.8 4.50 30 9. No figures of previous period are provided.40 6.60 7.6 4.56 3.69 4.6 11.72 142. total cost.48 4.48 4.8 158 100 200 151.18 3. figures of previous period are provided.04 24.4 43.4 40.80 18 3.56 3.15 . It is prepared for each production department. Sundry Administration Expenses Total (B) 3.2 9.06 36.50 30 100% 9.50 6.50 6.50 6.2 39.2 9.80 2. Cost and Management Accounting In this question Cash & Cash equivalents are : Opening Balance (in `’000) Cash 1 Bank Overdraft (115) (114) 7.50 7. factory cost.60 7.6 33. (4) It is based on actual and estimated figures ’ of expenses.85 75 150 124.40 6.48 60 120 108 12 32. Production Account It is prepared as an account. (3) To enable comparison.8 25.60 7.50 30 (ii) SEMI VARIABLE EXPENSES Mantenance & Repairs Intirect cabour Sales Dept.50 6.36 21.

Company Accounts .20.000 – 180.000 P / v Ratio 50 (iii) For Whole year Break Even Point (Value) = Margin of Safety (Value) = F  100 = 1.000  (–30.8(b) First Half Year Sales Fixed Expenses Profit/(Loss) 3.000 P/v Ratio 50 Actual Sales – BEP Sales = 300.000 Break Even Point (Value) = Margin of Safety (Value) (ii) = Sales for second half year Sales = Contributi on 90.000 × 100 = ` 3.000 – 360.000 F 90. Cost and Management Accounting Q.000 = ` 120.000 60.00.000  100   100 = ` 180.000  60.16 .000 Second Half Year ? 90.80.60.000 = ` 60.000  100   100  50% Sales 300.000 ONANCE CS-EXECUTIVE .000 90.000 P / v Ratio 50 420.000 )  100   100 = ` 1.000) (i) For fist half year Profit Volume Ratio = F P 90.000 (30.

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