Code No: 14MBA

R7

M.B.A. I Semester Supplimentary Examinations, Jul/Aug 2008 FINANCIAL ACCOUNTING AND ANALYSIS ---Time: 3 hours Max Marks: 60 Answer any FIVE Questions All Questions carry equal marks

1. Write short notes on: (a) Accounting (b) Accountancy (c) Account. 2. Describe the Accounting cycle. 3. On 1st January 1998, a merchant purchased a furniture costing Rs. 55,000. It is estimated that its working life is 10 years at the end of which it will fetch Rs. 5000. Additions are made on 1st January, 1999 and 1st July, 2001 to the value of Rs. 9500 and Rs. 8400 (Residual values Rs. 500 and Rs. 400 respectively). Show the Furniture Account for the first four years, if depreciation is written off according to the straight line method. 4. The Balance Sheet of a partnership was as follows: Balance Sheet Liabilities Rs. Assets Rs. Capitals : Goodwill 15000 a. Rs. 70000 Plant 80000 b. Rs. 40000 Furniture 5000 c. Rs. 30000 140000 Stock 50000 Sundry Creditors 60000 Sundry Debtors 30000 Prepaid expenses 2000 Bank Balance 18000 200000 200000 It was proposed to form a company to acquire business. For the purpose of the acquisition, the Assets were revalued as under: Plant Rs. 64000; Furniture Rs. 4500; Stock Rs. 45000; Debtors Rs. 28500; Prepaid expenses Nil. It was ascertained that the profits before charging remuneration for partners for the past five years has been as follows: Rs. 25,000 : Rs. 30,000 ; Rs. 28,000 ; Rs. 32,000 ; Rs. 35,000. Included in these profits were non-recurring items averaging Rs. 3000 but from the nature of the business such income was found to arise every year and the promoters agreed that a figure of Rs. 1,000 should be allowed as Profit from this source. Similar business paid a dividend of 8% p.a. on their Ordinary shares and the 1 of 2

Code No: 14MBA

R7

partners who would be the Directors of the company should be paid a remuneration of: A. Rs. 6000; B. Rs. 5000; and C. Rs. 4000 per annum. Ascertain the value of goodwill at 5 years purchase of Super Profits. 5. X Ltd. Issued 15% 10,000 debentures of Rs.100 each for subscription. The debenture money is payable as follows: Rs.25 on application, Rs.35 on allotment and Rs.40 on call. A person who holds 250 debentures failed to pay the amount due at the time of allotment. He however, paid this amount with the call money. Another person who is holding 300 debentures paid call money in advance at the time of allotment. Give journal entries in the books of the company and show bank account and 15% debentures account. 6. What are ‘paid costs’ and ‘unpaid costs’ ? Give examples for these costs. State the relevance of these costs in the preparation of funds flow statement. 7. Explain the advantages and limitations of financial statement analysis. 8. To what extent the Accounting Standards are honoured and implemented by Indian Corporate Sector ? Examine.

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