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APRIL 2014 72221/MAM2E

Time : Three hours Maximum : 75 marks

SECTION A — (10 × 2 = 20 marks)

Answer any TEN questions.

1. What is management accounting?

2. List out the functions of management accounting.

3. What are financial statements?

4. What is a comparative financial statement?

5. What are profitability ratios?

6. Bring out the significance of turnover ratios.

7. What are the benefits of fund flow statement?

8. What do you understand by cash from operation?

9. Define budgetary control.

10. What do you mean by capital structure?

11. Explain the meaning of ‘pay back’ period.

12. What do you understand by Net present value?

SECTION B — (5 × 5 = 25 marks)

Answer any FIVE questions.

13. Distinguish between management accounting and cost

accounting.

14. Describe the different types of financial statement analysis.

15. From the following information find out:

(a) Current assets.

(b) Current liability

(c) Value of inventory.

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(i) Current ratio 3.5

(ii) Liquid ratio 2.5

(iii) Working capital Rs. 1,00,000.

16. What is a cash flow statement? What are its uses?

17. A projects costs Rs. 15,60,000 and yields annually a profit of

Rs. 2,70,400 after depreciation of 12% p.a. but before tax at 25%.
Calculate pay-back period.

18. Calculate the degree of financial leverage for the following firm.

Output (units) 60,000; Fixed costs Rs. 7,000;

Variable cost per unit (Rs) 0.20; Interest on borrowed capital

(Rs) 4,000. Selling price per unit (Rs) 0.60.

19. What are the advantages of budgetory control?

SECTION C — (3 × 10 = 30 marks)

Answer any THREE questions.

20. Explain the objectives and uses of management accounting.

21. Explain the importance of financial statement analysis.

22. Calculate the following ratios :

(a) Gross profit ratio
(b) Net profit ratio
(c) Stock turnover ratio
(d) Earning per share.

Profit and Loss account.

Rs. Rs.
To opening stock 20,000 By sales 4,00,000
To purchases 2,40,000 By closing stock 30,000
To wages 60,000 By profit on sale of
To carriage inward 10,000 investment 4,000

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Rs. Rs.
To salaries 40,000 By interest on
To debenture interest 10,000 investment 6,000
To loss on sale of machinery 5,000
To net profit 55,000
4,40,000 4,40,000

Share capital 20,000 share of Rs.10 per share.

23. From the following balance sheet prepare fund flow statement.
Liabilities 2008 2009 Assets 2008 2009
Rs. Rs. Rs. Rs.
Share capital 60,000 65,000 Goodwill 30,000 25,000
Profit and Plant 60,000 50,000
loss a/c 34,000 26,000 Current
Current liability 12,000 3,000 assets 16,000 19,000
1,06,000 94,000 1,06,000 94,000

Additional information :
(a) Depreciation Rs. 2,000 p.m. was charged to profit and loss
a/c
(b) Dividend Rs. 12,000 was paid during the year.

24. Alpha company wants to buy either machine A or machine B

under net present value method. Give your suggestion.
Year Annual cash flow Present values of Re. 1 at 10%
A B
Rs. Rs.
1 40,000 1,20,000 0.91
2 1,20,000 1,60,000 0.83
3 1,60,000 2,00,000 0.75
4 2,40,000 1,20,000 0.68
5 1,60,000 80,000 0.62

Each machine require initial investment of Rs. 5,00,000

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