KNT/KW/16/4468

Master of Business Administration (M.B.A.) Semester—I (C.B.C.S.) Examination

ACCOUNTING FOR MANAGERS
Compulsory Paper—3
(Elective)
Time : Three Hours] [Maximum Marks : 80
N.B. :— (1) All questions are compulsory.
(2) All questions carry equal marks. (16 marks each)
1. (A) Explain the importance, objectives and principles of Financial Accounting.
OR
(B) Elaborate the importance of Bank Reconciliation Statement. Mention the various reasons
due to which balance as per Pass Book and Cash Book differs.
2. (A) From the following trial balance of Octave Company Ltd. prepare Trading and Profit and
Loss A/c for the year ended 31st March, 2013 and Balance Sheet as on the date :
Trial Balance as on 31-3-2013
Particulars Amount Particulars Amount
Opening stock 75,000 Return outward 10,000
Purchases 2,45,000 Sales 3,40,000
Wages 30,000 Discount 3,000
Carriage 950 P & L A/c (1-4-12) 16,350
Furniture & Fixtures 17,000 Share Capital 1,00,000
Salaries 7,500 General Reserve 15,500
Trade expenses 6,050 Bills payable 7,000
Interim dividend 9,000 Creditors 17,500
Dividend tax paid 1,350
Book debts 28,500
Plant & Machinery 29,000
Cash at Bank 46,200
Patents 4,800
Bills Receivable 5,000
Rent 4,000
5,09,350 5,09,350

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 Adjustments :—

(1) Stock as on 31st March, 2013 was valued at Rs. 88,100/-.

(2) Make a provision of income tax @ 30% on profit.

(3) Depreciate plant and machinery @ 15%, furniture @ 10% and write off
patents @ 5%.

(4) Outstanding rent amounted to Rs. 800.

(5) The Board of Directors recommended a dividend @ 15% after transferring Rs. 2000
to General Reserve.

(6) Provide Rs. 3,100 for doubtful debts.

(7) Make a provision for manager’s remuneration for Rs. 5,200/-.

OR

(B) Camway Ltd. has an authorised capital of 10,000 equity shares of Rs. 10/- each and 3,000
5% preference shares of Rs. 100/- each. Prepare Trading and Profit and Loss Account for
the year ended 31st March, 2014 and Balance Sheet as on the date after taking into account
following adjustments and trial balance.

Adjustments :—

(1) Closing Stock Rs. 3,26,300/-.

(2) Make a provision for Bad debts Rs. 7,500/-.

(3) A dividend of 10% on equity capital is proposed by Board of Directors.

(4) Depreciate vehicle @ 20% on cost.

(5) Rs. 30,000 to be transferred to General Reserve.

(6) Provide for the balance of preference dividend.

(7) Provide for manager’s remuneration @ 5% on profits remaining after charging such
commission.

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 Trial Balance as on 31-3-2014
Particulars Amount Particulars Amount
Purchases 11,06,700 Equity Capital 10,00,000
Opening Stock 2,91,450 5% Preference Capital 2,00,000
Preference dividend 5,000 Sales 16,08,000
Wages 1,63,280 Provision for Bad debts 6,000
General Exp. 58,950 Interest 10,000
Vehicle (Cost : Rs. 1,80,000) 92,400 Creditors 2,56,500
Debtors 2,83,700 P & L A/c (1-4-13) 69,500
Insurance 12,170
Land 8,80,000
Bad debts 7,700
Investments 58,000
Salaries 78,900
Bank balance 81,750
Directors fees 30,000
31,50,000 31,50,000

3. (A) From the following information, prepare Cash Flow Statement for Pioneer Ltd. :
Balance Sheet
Particulars 31-03-2015 31-03-2014
Share Capital 7,00,000 5,00,000
Reserves and Surplus 3,50,000 2,00,000
Long term borrowings (Bank loan) 50,000 1,00,000
Bills payable 45,000 50,000
Outstanding rent 7,000 5,000
Proposed dividend 70,000 50,000
Provision for tax 50,000 30,000
Total 12,72,000 9,35,000

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 Balance Sheet
Particulars 31-03-2015 31-03-2014
Equipments 2,30,000 2,00,000
Furniture 2,70,000 3,00,000
Patents 95,000 1,00,000
Investments 1,00,000 —
Inventories 1,30,000 50,000
Bills Receivable 1,20,000 80,000
Cash Balance 27,000 5,000
Bank Balance 3,00,000 2,00,0000
Total 12,72,000 9,35,000
Adjustments :—
(1) During the year, equipment costing Rs. 80,000 was purchased.
(2) Loss on Sale of equipment Rs. 5,000.
(3) Depreciation of Rs. 15,000 and Rs. 3,000 was charged on equipments and furniture
respectively.
OR
(B) From the following information, compile the Balance Sheet of ABB Co. Ltd. :
(1) Paid up capital — Rs. 50,000/-
(2) Plant & Machinery — Rs. 1,25,000/-
(3) Total Sales p.a. — Rs. 5,00,000/-
(4) Gross Profit — 25%
(5) Annual Credit Sales — 80% of net sales
(6) Current Ratio — 2
(7) Inventory Turnover ratio — 4 times
(8) Fixed Assets Turnover — 2
(9) Sales returns — 20% of sales.
(10) Average Collection period — 73 days
(11) Bank credit to Trade credit ratio = 2
(12) Cash to inventory — 1 : 15
(13) Total debt to current liabilities ratio = 3

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4. (A) From the following information, prepare Flexible Budget for 60%, 70%, 80% and 100%
production capacity and ascertain profit :

Particulars Amount

Variable Exp. (at 50%)

Materials 1,80,000

Wages 1,60,000

Other Expenses 1,50,000

Particulars Amount

Semi-variable Exp. (at 50%)

Machine repairs 40,000

Salary 25,000

Commission 30,000

Maintenance Exp. 32,000

Fixed Cost :

Rent 28,000

Salary 20,000

Semi-variable exp. will remain constant between 40% to 70% capacity. It will increase
by 10% of the above figures between 70% to 85% capacity and further increase by
20% of the above figures after 85% capacity. Sales at various capacities are at 60%—
Rs. 4,10,000, at 70% — Rs. 4,60,000/-, at 80% — Rs. 4,90,000 and at 100%
Rs. 6,60,000/-.

OR

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 (B) Prepare a cash budget for the 1st quarter ending on June 30, 2014 from the following
information :
Months Sales Materials Wages Overhead
February 1,40,000 96,000 30,000 17,000
March 1,50,000 90,000 30,000 19,000
April 1,60,000 92,000 32,000 20,000
May 1,70,000 1,00,000 36,000 22,000
June 1,80,000 1,04,000 40,000 23,000
Additional Information :—
(1) Debtors — 10% of sales are for cash, 50% of credit sales are collected next month and
the balance in next of the following month.
(2) Creditors are allowed a period of 2 months.
(3) Lag in payment of wages is 1/4th month and overhead is 1/2 month.
(4) Cash Balance on 1st April, 2014 — Rs. 60,000.
(5) Plant and Machinery will be installed in the month of February at a cost of
Rs. 96,000. The monthly installment of Rs. 2,000 is payable from April onwards.
(6) Dividend @ 5% on preference capital of Rs. 2,00,000 is payable in June.
(7) Advance to be received for sale of vehicle Rs. 9,000 in June.
(8) Dividend from investment of Rs. 1,000 is to be received in June.
(9) Advance income tax to be paid in June Rs. 2,000/-.

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