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Enrolment No.
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA (International Business) — SEMESTER 1 - EXAMINATION - SUMMER 2019
Subject Code:1519301
Subject Name: International Accounting Practices
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Time: 02:30 PM To 05:30 PM
Instructions:
- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
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Q.1 Explain the terms (Marks 14)
- Steeped Fixed Cost
- Greenfield Investment
- Bad Debts
- Preproduction Cost
- XBRL
- Tax Haven
- Authorized Share Capital
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Q.2 (a) Journalize following transactions in the Book of Mr. Poorash for the month of March-2018 (Marks 07)
March-1 : He started business with Cash of ? 1,00,000, Stock of Goods of ? 50,000 and Furniture of ? 80,000.
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March-5 : Taken a loan from a friend Chanakya of ? 50,000.
March-10: Purchased goods of ? 50,000 from Sikandar at 12% trade discount
March-15 : Sold goods to Rashi of ? 50,000.
March-17 : Purchased goods of ? 340,000 from Bharat Ltd. at a trade discount of 10% and cash discount of 5% and paid half the amount by cheque.
March-25: Paid ? 42,500 cash to Sikandar to settle his account. And Necessary cash was paid to Bharat Ltd. after deducting discount of ? 3500 to settle the account.
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(b) Briefly discuss the scope and importance of International Accounting. (Marks 07)
OR
(b) Explain Separate Entity Concept and Going Concern Concept with appropriate Examples. (Marks 07)
Q.3 (a) What do you understand by Tax Neutrality and Tax Equity. Explain the forms of Tax Neutrality in brief. (Marks 07)
(b) The following information from the Accounts of M/S Mafatlal and Sons is provided. (Marks 07)
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| Particular | Sales (in ?) | Profit (in ?) |
|---|---|---|
| Year 2011 | 1,20,000 | 8,000 |
| Year 2012 | 1,40,000 | 13,000 |
Find out:
- Profit Volume Ratio
- Break Even Point
- Profit when sales are ? 1,80,000
- Sales required to earn a Profit of ? 12,000
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Date:09/05/2019 Total Marks: 70
Q.3 (a) Differentiate Financial Accounting and Cost Accounting (Marks 07)
(b) From the following annual account of New Horizon Limited you are required to calculate the following ratios and comment on the result. (Marks 07)
- Gross Profit Ratio
- Net Profit Ratio
- Debt Collection Period
- Current Ratio
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Balance Sheet as on 31st March, 2018
| Amount in ? 000 | Amount in ? 000 | ||
|---|---|---|---|
| Share Capital | 450 | Fixed Assets (Net of Depreciation) | 875 |
| Retained Earnings | 240 | Stocks | 310 |
| Total (A) | 690 | Debtors | 770 |
| 12% Debenture | 700 | Bank Balance | 100 |
| Trade Creditors | 620 | ||
| Proposed Dividend | 45 | ||
| Total (B) | 1365 | ||
| Total (A + B) | 2055 | Total | 2055 |
Extracts from year’s Profit & Loss Account:
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| Sales for the year | ? 31,00,000 |
| Gross Profit | ? 17,25,000 |
| Expenses | ? 8,05,000 |
| Depreciation | ? 2,50,000 |
Q.4 (a) Apple International Ltd. is manufacturing a product which passes through two process i.e. P-1 and P-2. The following information is obtained from the accounts for the week ending 31st October, 2015: (Marks 07)
| Items | P-1 (In ?) | P-2 (In ?) |
|---|---|---|
| Direct Material | 26,000 | 19,800 |
| Direct Wages | 20,000 | 30,000 |
| Output (in Units) | 9,500 | 8,400 |
Production overhead are 100% of Direct Wages
10,000 units at ? 3 each were introduced to P-I. There was no stock of material or work-in-progress at the beginning or at the end of the period.
The output of each process passes direct to the next process and finally to finished stock. The following additional data are obtained:
| Process | Normal loss | Value Per Unit |
|---|---|---|
| P-1 | 5% | ? 2 |
| P-II | 10% | ? 4 |
Prepare Process Accounts along with Abnormal Gain / Loss Accounts.
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Q-4 (b) The following particulars are obtained from the books of M/S Prerna & Co. for the year 2016. (Marks 07)
| Particular | Amount ? |
|---|---|
| Direct Materials | 15,00,000 |
| Direct Wages | 8,00,000 |
| Works Overheads | 10,00,000 |
| Office Overheads | 3,00,000 |
| Selling Overheads | 4,00,000 |
| Sales | 45,00,000 |
Workout the price the company should quote for a product in the year 2017, which is estimated will require an expenditure of ? 2,00,000 in Direct Materials and ? 1,60,000 in Direct Wages. (Office and Selling overheads are based on works cost, whereas the works overheads are based on the direct wages.)
Prepare the cost sheet for the year 2016 and tender cost sheet for the year 2017 showing the price at which the units will be sold so as to earn the same rate of profit on cost as in the year 2016.
OR
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Q4 A company expects to have ? 37,500 cash in hand on 1st April, and requires to prepare an estimate of cash position during the three months i.e. April to June. The following information is supplied. (Marks 14)
(Amount in ?)
| Month | Sales | Purchase | Wages | Factory Expenses | Office Expenses | Selling Expenses |
|---|---|---|---|---|---|---|
| February | 75,000 | 45,000 | 9,000 | 7,500 | 6,000 | 4,500 |
| March | 84,000 | 48,000 | 9,750 | 8,250 | 6,000 | 4,500 |
| April | 90,000 | 52,500 | 10,500 | 9,000 | 6,000 | 5,250 |
| May | 1,20,000 | 60,000 | 13,500 | 11,250 | 6,000 | 6,570 |
| June | 1,35,000 | 60,000 | 14,250 | 14,000 | 7,000 | 7,000 |
Other information:
- Period of Credit allowed by suppliers are 2 months
- 20% of sales are for cash and period of credit allowed to customers for credit is one month
- Delay in payment of all expenses is 1 month
- Income tax of ? 57,500 is due to be paid on June 15th
- The company is to pay dividends to shareholders and bonus to workers of ? 15,000 and ? 22,500 respectively in the month of April.
- Plant has been ordered to be received and paid in May. It will cost ? 1,20,000.
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Q.5 Prepare flexible budget for 50% and 75% capacity, find out profit and give your recommendations to management. (Marks 14)
OR
Q.5 The Trial Balance of Balaji Wafers Pvt. Ltd., Rajkot as on 31-3-2010 was as under. Prepare Final Accounts as per companies Act. (Marks 14)
(Amount in ?)
| Particular | Debit | Particular | Credit |
|---|---|---|---|
| Opening stock | 40,000 | Equity Share Capital | 12,00,000 |
| Purchases | 16,60,000 | 12% Preference Share Capital | 3,00,000 |
| Good Return | 80,000 | 10% Redeemable Debenture | 3,00,000 |
| Land and building | 10,00,000 | Sales | 31,00,000 |
| Plant and machinery | 6,00,000 | Goods return | 60,000 |
| Debtors | 4,00,000 | creditors | 1,00,000 |
| Octroi | 1,80,000 | Loan of director | 40,000 |
| Selling and distribution exp. | 40,000 | Interest of investment | 16,000 |
| Carriage outward | 16,000 | Staff pension fund | 16,000 |
| Wages | 6,80,000 | Billspayable | 20,000 |
| Administrative exp. | 1,70,000 | Fixed deposit | 48,000 |
| Vehicles | 1,20,000 | General reserve | 1,40,000 |
| Telephone deposit | 20,000 | Share forfeiture a/c. | 20,000 |
| Director’s fees | 20,000 | Profit and loss a/c (1-4-2009) | 1,60,000 |
| Interest on debenture | 12,000 | ||
| Investments | 3,00,000 | ||
| Discount on debenture | 80,000 | ||
| Loose tools | 12,000 | ||
| Bills receivable | 40,000 | ||
| Cash and bank | 50,000 | ||
| Total | 55,20,000 | Total | 55,20,000 |
Additional Information:
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- Authorised capital of the company is 13,000 equity shares of ? 100 each and 12% 3000 preference shares of ? 100 each.
- Closing stock is valued at ? 1,380,000
- Depreciate Land and Building by 10%, Plant and Machinery by 20% and vehicles by 30%.
- Interest receivable on investments is ? 24,000.
- Provide bad debts reserve on debtors by 10%.
- Transfer ? 50,000 to general reserve.
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| Costs | At 60% | At 80% | At 100% |
|---|---|---|---|
| Direct Material | 90,000 | 1,20,000 | 1,50,000 |
| Direct Wages | 1,20,000 | 1,60,000 | 2,00,000 |
| Factory Overheads | 70,000 | 80,000 | 90,000 |
| Administrative Overheads | 30,000 | 35,000 | 40,000 |
| Selling and Distribution Expenses | 50,000 | 58,000 | 66,000 |
The company is presently working at 50% capacity. The sales value of production at current prices is ? 3,20,000. It is anticipated that a 5% discount in the selling price will enable the company to improve its competitive position, thereby enabling it to operate at 75% capacity.
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