Download JNTUH MBA 2018 Jan 2nd Semester Financial Accounting and Analysis Question Paper

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Question Paper Code: CMB002

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MBA I Semester End Examinations (Regular) - January, 2018

Regulation: .-R16

Financial Accounting and Analysis

(MASTER OF BUSINESS ADMINISTRATION)

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Answer ONE Question from each Unit

All Questions Carry Equal Marks

All parts of the question must be answered in one place only

Max Marks: 70

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UNIT I

1. (a) Demonstrate the meaning and significance of the following accounting concepts and conventions:
   1. Matching concept
   2. Going concern concept
   3. Convention of consistency
   4. Convention of materiality [7M]
   (b) Describe the different types of transactions. Explain the classification of accounts and rules of double entry system for each category of accounts. [7M]

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2. (a) Discuss the meaning of book keeping and accounting. Explain the main functions of accounting. [7M] (b) Classify the following into personal, real and nominal accounts:
   1. Drawings A/c
   2. Discount A/c
   3. Salary A/c
   4. Reserve for doubtful debt A/c
   5. Prepaid rent A/c

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   6. Sales A/c
   7. Bad debt A/c
   8. Creditors A/c
   9. Capital A/c
   10. Purchases A/c

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   11. Patent rights A/c
   12. Bank overdraft A/c
   13. Outstanding commission A/c
   14. Machinery A/c [7M]

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UNIT II

1. (a) In the trial balance given below, some accounts have been included in the wrong column (debit or credit). As a result, the balance is not matching. Prepare the correct trial balance. Also find out the missing figure of retained earnings. [7M]
   

   Accounts	Debit (Rs)	Credit (Rs)
   Cash	7,500
   Salaries payable		900
   Taxes payable		3,000
   Accounts receivable	16,500
   Inventory	21,000
   Capital stock		60,000
   Long term debt		34,000
   Land	6,000
   Buildings (net)	60,000
   Other assets	2,000
   Accounts payable		7,000
   Dividends payable		2,500
   Retained earnings		?
   Total	90,000	130,400

   
   (b) The trial balance of Mr.X as on 31 December, 2015 was as follows: [7M]
   

   Debit Balance Rs.	Credit Balance Rs
   Purchases 162,505	Sales 252,40
   Sundry debtors 50,200	Provision for doubtful debts 5,20
   Opening stock 26,725	Sundry creditors 30,52
   Wages 23,137	Bills payable 3,95
   Salaries 5,575	Outstanding wages 2,00
   Furniture 7,250	Trade expenses accrued but not paid 70
   Postage 4,226	Capital account 10,00
   Power and fuel 1,350
   Trade expenses 5,831
   Bad debts 525
   Loan at 10% per annum to Ram 1st Sept.2015 3,000
   Cash on hand and at bank 10,000
   Drawings account 4,452
   304,776	304,77

   
   Prepare the trading and profit and loss account for the year ended 31 December, 2015 and the balance sheet as at that date taking into account the following information:
   • Depreciation on furniture is to be charged at 10% per annum.

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   • Provision for doubtful debts is to be maintained at 5% on sundry debtors.
   • Stock as at 31 December, 2015 was Rs.12,550
2. (a) A firm purchases a truck for a sum of Rs.100,000 on 1 January, 2015. It charges 20% depreciation per annum on December, 31 according to the diminishing balance method. The truck was sold on 1 July, 2016 for a sum of Rs.80,000. Prepare the truck account for 2015 and 2016. [7M] (b) Prepare sales book and sales returns book in the books of M/s Aishwarya enterprises from the following transactions: [7M]
   

   Date	Transaction
   13/5/16	Goods of MRP Rs.55,000 sold to Naveen enterprises @20% trade discount.
   16/5/16	Goods of MRP Rs.49,500 sold to Ram enterprises @10% trade discount.
   21/5/16	Goods of value Rs.5,000 returned by Nitish enterprises
   22/5/16	Goods of value Rs.15,400 sold to Nitish enterprises on cash.
   24/5/16	Goods of value Rs.16,500 sold to Simson Ltd.
   26/5/16	Goods of value Rs.1,500 returned by Ram enterprises
   1/6/16	Goods of value Rs.4,500 returned by Simson Ltd.

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UNIT - III

1. (a) The following transactions occur in the purchase and issue of a material: [7M]
   

   2016 April
   1	Opening stock 100 units@Rs.500
   5	Purchases 600 units @ Rs.6 per unit
   6	Issued 250 units
   8	Purchases 500 units @Rs.7 per unit
   10	Issued 400 units
   12	Purchases 600 units @ Rs.8 per unit
   30	Issued 500 units

   
   Prepare stores ledger under LIFO method from the above transactions (b) Discuss the meaning and types of preference shares. [7M]
2. (a) J.K. Ltd invited application to issue 30,000 equity shares of face value Rs.10 each at 10% premium. The amount to be paid as to Rs.6 at the time of application, Rs.4 (including premium) on allotment, Re.1 per share on first and final call. The company received the application for 35,000 shares applicants for 5,000 shares were refused allotment and remaining applicants were given allotment. One shareholder holding 300 shares paid only the application money. Rest of the shareholders paid the due amount in time. Show the necessary journal entries. [7M] (b) Discuss the meaning and modes of redemption of debentures. [7M]

UNIT - IV

1. (a) From the following balance sheets of Joshwa company Ltd as on 31 December, 2014 and 2015, prepare funds flow statement for the year ended 31 December, 2015: [7M]
   

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   Liabilities	2014 (Rs.)	2015 (Rs.)	Assets	2014 (Rs)	2015 (Rs.)
   Share capital	1,00,000	100,000	Goodwill	12,000	12,000
   General reserve	14,000	18,000	Building	40,000	36,000
   Profit/loss	16,000	13,000	Plant	37,000	36,000
   Creditors	8,000	5,400	Investments	10,000	11,000
   Bills payable	1,200	800	Stock	30,000	23,400
   Provision for taxation	16,000	18,000	Bills receivable	2,000	3,200
   Provision for doubtful debts	400	600	Debtors	18,000	19,000
   			Cash at bank	6,600	15,200
   	155,600	155,800		155,600	155,800

   
   Additional information:
   • Depreciation charged to plant Rs.4,000.
   • Provision for taxation of Rs.19,000 was made during the year 2015.
   • Interim dividend of Rs.8,000 was paid during the year 2015.
   (b) Describe the meaning of funds from operations and its computation procedure. [7M]

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2. (a) The balance sheets of XYZ Limited as on 31 March, 2015 and 2016 were as follows: [7M]
   

   	2015	2016
   Assets:
   Land and buildings	80,000	120,000
   Plant and machinery	500,000	800,000
   Stock	100,000	75,000
   Sundry debtors	140,000	150,000
   Prepaid expenses	14,000	12,000
   Cash at bank	16,000	18,000
   	8,50,000	11,75,000
   Liabilities and capital:
   Share capital	500,000	700,000
   Profit & loss account	100,000	160,000
   General reserve	50,000	70,000
   Sundry creditors	163,000	200,000
   Bills payable	30,000	40,000
   Outstanding expenses	7,000	5,000
   	850,000	1175,000

   
   Additional information:
   • Rs.50,000 depreciation has been charged on plant and machinery during the year,2016
   • A piece of machinery was sold for Rs.8,000 during 2016. It had cost Rs.12,000, depreciation of Rs.7,000 has been provided on it.
   Prepare cash flow statement of XYZ Limited (b) Discuss the usefulness of cash flow statement. Explain the types of cash transactions recorded in cash flow statement. [7M]

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UNIT – V

1. (a) The Summarised balance sheet of PAI traders Ltd for the year ended 31 March, 2016 is given below: [7M]
   

   Capital and liabilities	Rs.in Lakhs	Assets	Rs. in Lakhs
   Equity share capital	140	Fixed asset (at cost)	210
   Less: Depreciation			25
   Reserves and surplus	45	Current Assets:	185
   Profit and loss account	20	Stock	25
   Provision for taxation	10	Debtors	30
   Sundry creditors	40	cash	15
   	255		255

   
   The following further particulars are also given for the year:
   

   	Rs.in Lakhs
   Sales	120
   Earnings before interest and tax (EBIT)	30
   Net profit after tax (PAT)	20

   
   Calculate the following for the company :
   1. Current ratio.

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   2. Liquid ratio
   3. Profitability ratio.
   4. Debtor's turnover
   5. Stock turnover
   6. Return on equity

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   (b) Discuss the meaning and types of financial statement analysis [7M]
2. (a) The following is the profit and loss account of Rupa & Co for the year ended on March 31, 2016: [7M]
   

   	Rs.	Rs.
   Net sales		3,000,000
   Less: cost of goods sold
   Opening stock	500,000
   Add: purchases	2,000,000
   Less: closing stock	700,000
   		1,800,000
   Gross Profit		1,200,000
   Less: operating expenses		480,000
   Operating profit		720,000
   Less: Interest charge		180,000
   Profit before tax (PBT)		540,000

   
   Additional Information:
   

   	Rs.
   Current assets	975,000
   Current liabilities	600,000
   Fixed assets	525,000

   
   

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   From the above particulars, calculate the following ratios:
   1. Cost of goods sold ratio
   2. Stock turnover ratio
   3. Operating ratio
   4. Assets turnover ratio
   5. Operating profit ratio

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   6. Return on capital employed.
   (b) Demonstrate the meaning, significance and computation of turnover ratios. [7M]