ASSIGNMENT

NAME
:
ROLL NO.
:
DRIVE
:
SEMESTER
:
SUBJECT CODE & NAME :
BKI ID

AJIT KUMAR THAKUR

1502000803
SPRING 2015
MBA/MBADS/MBAFLEX/MBAHCSN3/PGDBAN2
MB0041- FINANCIAL AND MANAGEMENT
ACCOUNTING
B1624

1. Analyze the following transaction under traditional approach.

18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000
19.1.2011 Paid Ramu by cheque Rs.1,50,000
20.1.2011 Paid salary Rs. 30,000
20.1.2011 Paid rent by cheque Rs. 8,000
21.1.2011 Goods withdrawn for personal use Rs. 5,000
25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000
26.1.2011 Received an advance from customers Rs. 3,00,000
31.1.2011 Paid interest on loan Rs. 5,000
31.1.2011 Paid instalment of loan Rs. 25,000
31.1.2011 Interest allowed by bank Rs. 8,000
Ans :Date

Accounts Involved

Nature of Account

Affects

18.1.11

Cash a/c
Sanjays a/c
Ramus a/c
Bank a/c
Salary a/c
Cash a/c
Rent a/c
Bank a/c
Advance to suppliers a/c
Cash a/c
Cash a/c
Advance from customer a/c
Interest on loan a/c
Cash a/c
Loan a/c
Cash a/c
Bank a/c
Bank interest a/c

Real
Personal
Personal
Personal
Nominal
Real
Nominal
personal
Personal
Real
Real
personal
Nominal
Real
Personal
Real
Personal
Nominal

Cash(Cheque)is coming
Sanjay is the giver
Ramu is the Receiver
Bank is the giver
Salary is expenses
Cash is going out
Rent is an expenses
Bank is the giver
Suppliers are receivers
Cash is going out
Cash is coming
Customers are givers
Interest is expenses
Cash is going
Lender is receiver
Cash is going out
Bank is the receiver
Bank interest is an income

19.1.11
20.1.11
20.1.11
25.1.11
26.1.11
31.1.11
31.1.11
31.1.11

Debit/
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit

2 The trial balance of Nilgiris Co Ltd., as taken on 31st December, 2002 did not tally and the difference
was carried to suspense account. The following errors were detected subsequently.
a) Sales book total for November was under cast by Rs. 1200.
b) Purchase of new equipment costing Rs. 9475 has been posted to Purchases a/c.
c) Discount received Rs.1250 and discount allowed Rs. 850 in September 2002 have been posted to wrong
sides of discount account.
d) A cheque received from Mr. Longford for Rs. 1500 for goods sold to him on credit earlier, though entered
correctly in the cash book has been posted in his account as Rs. 1050.
e) Stocks worth Rs. 255 taken for use by Mr Dayananda, the Managing Director, have been entered in sales day
book.
f) While carrying forward, the total in Returns Inwards Book has been taken as Rs. 674 instead of Rs. 647.
g) An amount paid to cashier, Mr. Ramachandra, Rs. 775 as salary for the month of November has been debited
to his personal account as Rs. 757. Pass journal entries and draw up the suspense account.
Journal entries of all the transactions Suspense account with Conclusion
Ans:

Journal proper of Nilgiris co Ltd

Date

Particulars

31.12.2002

Suspense a/c Dr
To sales a/c
(Being under casting of sales book rectified)
New Equipment a/c Dr
To Purchase a/c
(Being wrong debit given to purchase account rectified)
Discount allowed a/c Dr
Suspense a/c Dr
To Discount received a/c
(Being discount received and discount allowed posted to wrong
sides of discount account rectified)

31.12.2002

31.12.2002

31.12.2002

31.12.2002

31.12.2002

31.12.2002

Suspense a/c Dr
To Longfords a/c
(Being short credit given to Longford rectified)
Sales a/c Dr
To Return inward a/c
(Being stock used for personal purpose wrongly credited to sales
a/c rectified)
Suspense a/c Dr
To Return inwards a/c
(Being excess debit given to returns inwards a/c to the extent of Rs
27, now rectified )
Salary a/c Dr
To Ramachandras a/c

L
F

Debit
Rs.
1200

Credit
Rs.
1200

9475

9475

1700
800
2500

450

450

255
255

27
27

775
757

To Suspense a/c
(Being the wrong debit of salary to the personal accont of
Ramachandra now rectified)

18

Suspense Account
Particulars
To sales A/c
To Discount received a/c
To Longford a/c
To Returns inward a/c

Amount
1200
800
450
27

Particulars
By sales A/c
By salary A/c
By Balance c/d

Amount
255
18
2204

Total

2477

Total

2477

3. From the given trial balance draft an Adjusted Trial Balance.

Trial Balance as on 31.03.2011

Adjustments:
1. Charge depreciation at 10% on Buildings and Furniture and fittings.
2. Write off further bad debts 1000
3. Taxes and Insurance prepaid 2000
4. Outstanding salaries 5000
5. Commission received in advance1000
Preparation of ledger accounts
Preparation of trial balance

Ledger accounts

Ans:

Dr

Furniture and fittings a/c

Cr

Particulars

Rs.

Particulars

Rs.

To balance b/d

10000

By depreciation a/c
By balance c/d

1000
9000

Total

10000

Total

10000

to balance b/d

9000

Dr

Buildings a/c

Cr

Particulars

Rs.

Particulars

Rs.

To bal b/d

500000

Total

500000

By Depreciation
By bal c/d
Total

50000
450000
500000

To bal b/d
Dr
Particulars
To bal b/d
To Sundry Debtors
Total
To bal b/d
3000
Dr

450000
Bad debts a/c
Rs.
2000
1000
3000

Cr
Particulars
By bal c/d

Rs.
3000

Total

3000

Sundry debtors a/c

Cr

Particulars

Rs.

Particulars

Rs.

To bal b/d
To bal c/d

25000

By Bad Debts
By bal c/d

1000
24000

Total

25000

Total

25000

To bal b/d

24000

Dr

Taxes and insurance a/c

Cr

Particulars

Rs.

Particulars

Rs.

To bal b/d
To bal c/d

5000

By Prepaid taxes and

Insurance
By bal c/d

2000
3000

Total

5000

To bal b/d

3000

Dr.

Total

5000

Prepaid taxes & insurance a/c

Cr.

Particulars

Rs.

Particulars

Rs.

To taxes & insurance

2000

By bal c/d

2000

Total

2000

Total

2000

To bal b/d

2000
Salaries a/c

Dr

Cr

Particulars

Rs.

Particulars

Rs.

To bal b/d
To Outstanding Salaries

20000
5000

By bal b/d

25000

Total

25000

Total

25000

Total

25000

Dr

Outstanding salaries a/c

Cr

Particulars

Rs.

Particulars

Rs.

To bal c/d

5000

By salaries

5000

Total

5000

Total

5000

By bal b/d

5000

Particulars

Rs.

Particulars

Rs.

To Furniture and fittings

1000

To Buildings

50000

By bal c/d

51000

Total

51000

Total

51000

To bal b/d

51000

Dr

Depreciation a/c

Dr

Commission a/c
Particulars

Rs.

To commission received in
advance
To bal c/d

1000
4000

Total

5000

Cr
Cr
Particulars

Rs.

By bal b/d

5000

Total

5000

By bal b/d

Dr

4000

Commission received in advance a/c

Particulars

Rs.

To bal c/d
Total

1000
1000

Cr

Particulars

Rs.

By commission

1000

Total

1000

By bal b/d

1000

as on 31.03.2011
Debit balances
Furniture and Fittings

Rs.
10000

Adjustments
-1000

Adjusted amount
9000

Buildings

500000

-50000

450000

Sales Returns

1000

Bad Debts

2000

+1000

3000

Sundry Debtors

25000

-1000

24000

Purchases

90000

90000

Advertising

20000

20000

Cash

10000

10000

Taxes and Insurance

5000

General Expenses

7000

Salaries

20000

1000

-2000

3000
7000

+5000

25000

Depreciation

1000+50000

51000

Prepaid Taxes and Insurance

2000

2000

TOTAL

690000

690000

Credit balances
bank over draft

Rs.
16000

Adjustments

Capital account

400000

400000

Purchase return

4000

4000

Sundry creditors

30000

30000

Commission

5000

Sales

235000

-1000

Adjusted amount
16000

4000
235000

Adjusted
Trial Balance

Outstanding salaries

5000

5000

Commission received in advance

1000

1000

Total

690000

690000

4. Compute trend ratios and comment on the financial performance of Infosys

Technologies Ltd. from the following extract of its income statements of five years .

Source: Infosys Technologies Ltd. Annual Report)

Preparation of trend analysis
Preparation of trend ratios
Conclusion
Ans
Infosys Technologies Ltd
Trend Analysis
Particulars
Revenue
Operating profit (PBIDT)
PAT from ordinary activities

Revenue
Oprating profit(PBIDT)
PAT from ordinary activities

2010-11
27501
8968
6835

2009-10
22742
7861
6218

Trend Ratios
197.95
163.69
204.24
179.03
177.26
161.26

2008-09
21693
7195
5988

156.14
163.86
155.29

2007-08
16692
5238
4659

120.15
119.29
120.82

2006-07
13893
4391
3856

100
100
100

Comment: The Revenue and Operating Profit (PBIDT) have almost doubled in
four years. The PAT from ordinary activities has increased by 77.26% in the same
period
5. Give the meaning of cash flow analysis and put down the objectives of cash flow
analysis. Explain the preparation of cash flow statement.?
Meaning of cash flow analysis .?
Objectives of cash flow analysis .?
Explanation of preparation of cash flow analysis .?
Ans: Meaning of cash flow analysis - Cash flow analysis is an important tool of financial analysis.
It is the process of understanding the change in position with respect to cash in the current year and the reasons
responsible for such a change.
The analysis also helps us to understand whether the investing and financing decision taken by the company
during the year are appropriate are not.

Cash flow analysis is presented in the form of a statement. Such a statement is called a cash flow statement
Objectives of cash flow analysis Cash flow analysis is done with the objective of understanding some of the following important questions
What is the change in the cash position of the firm for the current year as compared to the previous year?
How good was the liquidity position of the firm?
What were the sources of cash during the current year?
How much cash was generated from operations?
What were the applications of cash during the current year?
How much cash was spent on investment activities, such as purchase of new plant and machinery, purchase of
land?

The preparation of cash flow statement is similar to the preparation of fund flow statement.
It requires the identification of the sources of cash and the uses of cash. A source of cash is a transaction which
brings an inflow of cash. An application of cash is a transaction which leads to an outflow of cash. It may be
noted that the sources of cash increase the cash balance and applications of cash decrease the cash balance.

6. Write the assumptions of marginal costing. Differentiate between absorption costing and
marginal costing. Assumptions of marginal costing (all 7 points), Differences of marginal and
absorption costing (Includes all 8points) ?

Ans:

Marginal costing

is based on the following assumptions: -

1. Segregation of cost into fixed and variable

2. Volume is the only factor which influence the cost
3. Constant total fixed cost
4. Constant selling price
5. Linear relationship between cost and revenues
6. No closing stock
7. Constant variable cost per unit

Differences between absorption costing and marginal costing:-

Absorption Costing:
1. It is known as full costing. Both fixed and variable are included to ascertain the cost.
2. Different unit costs are obtained at different levels of output because of fixed expenses remaining
the same.
3. Difference between sales and total cost (marginal cost and fixed cost) is profit.
4. A portion of fixed cost is carried forward to the next period because closing stock of work-inprogress and finished goods are valued at the cost of production, which is inclusive of fixed cost.
5. The apportionment of fixed expenses on an arbitrary basis gives rise to over or under absorption of
overheads
6. It affects managerial decisions in certain areas. E.g., whether to accept the export order or not,
whether to buy or manufacture, etc.
7. Costs are classified according to functional basis such as production cost, office and administrative
cost, and selling and distribution costs.
8. It fails to establish relationship of cost, volume, and profit.

Marginal Costing:
1. only variable costs are included. Fixed costs are recovered from contribution.
2. Marginal cost per unit remains same at different levels of output because variable expenses vary in
the same proportion in which output varies.
3. Difference between sales and marginal cost is contribution and difference between contribution and
fixed cost is profit or loss.
4. Stock of work-in-progress and finished goods are valued at marginal cost. Fixed cost of a particular
period is charged to that very period and is not carried over to the next period.
5. Products are charged only with variable cost, hence marginal costing does not lead to over or
under absorption of fixed overheads.
6. It is very helpful in taking managerial decisions. It considers the additional cost involved, assuming
fixed expenses to remain constant.
7. Costs are classified according to the behaviour of costs fixed costs and variable costs.
8. CVP relationship is an integral part of marginal costing.

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