DR.N.G.P.

ARTS AND SCIENCE COLLEGE (AUTONOMOUS)

PG DEGREE EXAMINATION
FACULTY: COMMERCE PROGRAMME: M.COM
YEAR: II SEMESTER: IV
SUBJECT: MANAGEMENT ACCOUNTING MAXIMUM MARKS: 75

Section A - (5x5=25 Marks)

Answer All Questions: Each question carries 5 Marks

1) (a) Explain the objectives of Management Accounting.

(OR)
(b) From the following Profit & Loss account of Jeevan Ltd for the year ending 31st December
1999 and 1998.You are required to prepare a Comparative Income Statement for the years 1999
& 1998
Particulars 1998 1999 Particulars 1998 1999
(Rs.) (Rs.) (Rs.) (Rs.)
To cost of goods sold 5,50,000 6,05,000 By Net Sales 10,00,0 12,00,0
00 00
To Administrative Expenses 80,000 1,00,000
To Selling Expenses 60,000 80,000
To Interest 40,000 50,000
To Income Tax 50,000 80,000
To Net Profit 2,20,000 2,85,000
Total 10,00,000 12,00,000 Total 800 1000
2) (a)From the following details, You are required to prepare trading and profit and Loss a/c:
Cost of goods Sold-Rs.16,00, 000
Gross profit Ratio-20%
Administration Expenses ratio-7%
Selling and Distribution Expenses ratio-5%
Non-operating income to Sales-8%
Financial Expenses are equal to Selling and Distribution Expenses
(OR)
(b) Suman Bros. furnishes the following details for the year 2007:
Sales-Rs.5, 00,000
Gross Profit-Rs.2,60,000
Administration Expenses-Rs.50,000
Selling Expenses-Rs.40,000
Financial Expenses-Rs.20,000
Dividend received-Rs.20,000
Preliminary Expenses Written off-Rs.5,000
Provision for Income tax-Rs.15,000
Calculate Net Profit Ratio
3) (a) Calculate Funds from Operations from the following Profit and Loss a/c
Particulars (Rs.) Particulars (Rs.)
To Administration Expenses 25,000 By Gross Profit 2,15,000

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 To Selling Expenses 16,000 By gain on sale of Machinery 4,000
To Depreciation 26,000 By Interest on Investments 5,000
To Loss on sale of building 6,000
To Goodwill written off 5,000
To Discount on issue of 2,000
Debentures
To net profit 1,44,000
Total 2,24,000 Total 2,24,000
(OR)
(b) From the following Details, Ascertain operating profit before working capiyal changes for
the year 2002-03:
Particulars Rs.
Interest on Investments 22,000
Depreciation on fixed Asset 90,000
Profit on sale of building 60,000
Loss on sale of machinery 8,000
Discount on issue of debentures written off 10,000
Patent rights written off 15,000
Net profit for the year 2002-03 1,15,000
4) (a) From the following Details. Find out (a) Profit Volume Ratio,(b) Break-Even Sales and
(c) Margin of Safety.
Sales-Rs.1, 00,000
Total Cost-Rs.80, 000
Fixed Cost-Rs.20, 000
Net profit-Rs.20, 000
(OR)
(b) You are given the following data for the year 2007 of a concern:
Variable Cost-Rs.6, 00,000
Fixed Cost-Rs.3, 00,000
Net profit-Rs.1, 00,000
Sales-Rs.10, 00,000
Find (a) P.V.Ratio (b) B.E.P. (c) Profit when sales is Rs.12,00,000 and (d) Sales in rupees
to earn a profit of Rs.2,00,000
5) (a) Rajan supplies components to I.C.F. on Contract basis. For the year 2007,He agrees to
supply 20,000 units at Rs.80 per unit. The following were his costs during 2006 for supply of
15,000 units.
Materials : Rs.8 per unit
Wages : Rs.22 per unit
Factory Overheads : Rs. 20 per unit (60% Fixed)
Other Expenses : Rs.5 (per unit) (100% fixed)
Prepare budget for the year 2007,Showing clearly the budgeted profit.
(OR)
(b) The following budget estimates are available from a factory working at 50% of its
capacity:
Variable Expenses Rs.60,000

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 Semi Variable Expenses-Rss.20, 000
Fixed Expenses Rs.10, 000
Prepare a budget for 75% of the capacity assuming that semi-variable expemnses increases
by 10% for every 25%.

Section – B (5x8 =40 Marks)

Answer All Questions: Each question carries 8 Marks

6) (a) Describe the different types of financial statement analysis.

(OR)
(b) Explain the procedure for analysis and interpretation of financial statements

7) (a) From the following details prepare statement of proprietary funds with as details as
possible.
Stock Velocity – 6
Capital turnover ratio-2
Fixed assets turnover ratio-4
Gross profit turnover ratio-20%
Debtors Velocity-2 Months
Creditors Velocity-73 days
The Gross Profit was Rs.60, 000. Reserves and Surplus amount to Rs.20,000.Closing Stock
was Rs.5,000 in excess of Opening stock.

(OR)
(b) From the following information make out a statement of Proprietors funds with as many
details as possible:
(c) Long-term loans-Rs.50,000
(d) Working Capital-Rs.80,000
(e) Reserves to capital- 1:2
(f) Current ratio- 2 times
(g) Liquid ratio-1:4 times
(h) Fixed assets to proprietors funds 0.6
(i) There are no fictitious or intangible assets

8 (a) From the following Balance Sheet make out (i) Statement of changes in working
capital,(ii) Funds Flow Statement
Balance Sheet of pratima & Co. Ltd.

Liabilities 30-6-1987 30-6-1988 Assets 30-6-1987 30-6-1988

Rs. Rs. Rs. Rs.
Equity Share capital 1,80,000 2,00,000 Goodwill 24,000 20,000
Reserve Fund 28,000 36,000 Buildings 80,000 72,000
P & L A/c 39,000 24,000 Machinery 74,000 72,000
Trade Creditors 16,000 10,800
Bank overdraft 12,400 2,600 Investments 20,000 22,000

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 Provision for 32,000 34,000 Inventories 60,000 50,800
Taxation
Provision for 3,800 4,200 Debtors 40,000 44,400
doubtful debts
Cash 13,200 30,400
Total 3,11,200 3,11,600 Total 3,11,200 3,11,600
i) Depreciation charged on machinery Rs.10, 000 and on buildings Rs.8, 000.
ii) Investments sold during the year Rs.3, 000.
iii) Rs.15, 000 interim dividend paid during January 1988.
iv) Taxes paid during the year Rs.30, 000.

(OR)
st
(b) Balance sheet of Malar Ltd. as on 31 Dec.1985-86 were as follows.prepare a Cash Flow
statement for the year ended 31-12-1986.
Liabilities 1985 1986 Assets 1985 1986
Rs. Rs. Rs. Rs.
Share capital 20,000 20,000 Goodwill 2,400 2,400
General reserve 2,800 3,600 Investments 2,000 2,200
Profit and Loss A/c 3,200 2,600 Inventories 6,000 4,680
Sundry creditors 1,600 1,080 A/c Receivable 4,000 4,440
Outstanding 240 160 Land 8,000 7,200
Expenses
Provision for Tax 3,200 3,600 Buildings 7,400 7,200
Provision for bad 80 120 Bank Balance 1,320 3,040
debts
Total 31,120 31,160 Total 31,120 31,160
Following additional information has been supplied:

i) A piece of land has also been sold for Rs.800

ii) Deperciation amounting to Rs.1,400 has been charged on building
iii) Provision for taxation has been made for Rs.3,800 during the year.

9) (a) You are given the following data for the year 1986 for a factory.

Output; 40,000 units

Fixed Expenses: Rs.2, 00,000
Variable cost per unit: Rs.10
Selling price per unit: Rs.20
How many units must be produced and sold in the year 1987,if it is anticipated that selling
price would be reduced by 10%,Variable cost would be Rs.12 per unit and fixed cost will
increase by 10%.The factory would like to make a profit in 1987 equal to that of the profit in
1986.
(OR)

(b) The sales turnover and profit during two years were as follows:

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 Year Sales Rs. Profit Rs.

2007 1,40,000 15,000

2008 1,60,000 20,000

Calculate:

i) P/V Ratio
ii) Break-Even Point
iii) Sales required to earn a profit of Rs.40,000
iv) Fixed Expenses and
v) Profit when sales are Rs.1,20,000
10) (a) From the following data forecast the cash position at the end of April, May and June
1998.
Month 1998 Sales (Rs.) Purchases (Rs.) Wages (Rs.)
February 1,80,000 1,24,800 12,000
March 1,92,000 1,44,000 14,000
April 1,08,000 2,43,000 11,000
May 1,74,000 2,46,000 10,000
June 1,26,000 2,68,000 15,000
Additional Information:

1) XYZ Company wishes to arrange O.D.facilities with its bankers during the period
April-June, When it will be manufacturing mostly for stock.
2) 50 % of credit sales is realised in the month following the sale and the other 50 % in
the second month following. Creditors are paid in the month following the month of
purchase.
3) Wages are paid at the end of the respective month.
4) Cash at bank-1st April –Rs.25, 000.
(OR)
(b) Quick Products Ltd.sells two products X and Y in two divisions North and South. The
following were the budgeted and actual sales for the year 1999.
Particulars Budget Actuals
North South North South
Units Rs. Units Rs. Units Rs. Units Rs.
Per Per Per Per
Unit Unit Unit Unit
Product X 500 180 300 180 600 180 400 180
Product Y 300 430 200 430 200 430 150 430
For the year 2000, the board of directors has approved the proposal of sales department to
increase the price of X to Rs.200 and decrease the price of Y to 400.The sales estimates from
the divisional managers were as follows:
North : X 800 Units Y 500 Units
South : X 600 units Y 300 Units
An intensive advertising campaign proposed by advertising consultants is expected to result
in additional sales of 20% of each product in each division over the estimated sales. Prepare

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the sales budget for the year 2000 and present it together with the budgeted and actual sales
for 1999.
Section – C (1x10 =10 Marks)
Compulsory answer the Question: Question carries 10 Marks
11) Discuss about how budgetary control a tool in the hands of management.

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