Subject Code: 3519901
GUJARAT TECHNOLOGICAL UNIVERSITY
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MBA (PART TIME) SEMESTER 01 - EXAMINATION — SUMMER-2018
Subject Name: Accounting For Manager
Date: 30/04/2018
Time: 10:30 AM To 01:30 PM
Total Marks: 70
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Instructions:
- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
Q.1 Explain following terms in brief. (14 Marks)
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- Fictitious assets
- Contingent liability
- Book keeping
- GAAP
- Capital reserves
- Trial balance
- Managerial accounting
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Q.2 What is Computerized accounting? Explain its significance. (07 Marks)
Journalize the following transactions of Itd for the month of march, 2015. (07 Marks)
- Jatin started business with cash Rs:50000, Furniture Rs.5000, Motor Rs. 40000, Goods Rs.20000, Machinery Rs.10000, Building Rs.60000, 10% loan Rs. 10000 from ICICI bank, Creditors Rs.9000.
- Purchased goods of Rs.30000 from Mallika Distributors on credit at 10% trade discount.
- Sold goods costing Rs. 15000 purchased from Mallika Distributors, after adding 20% profit to Sangita at 10% trade discount.
- Received Income Tax refund Rs. 120 And Received sales Tax refund Rs.100
- Purchased Machinery for Rs. 5000 from Rivera Co. and paid for it through cheque. Paid Rs.150 as wages in cash for installing the machine.
- Received personal dividend Rs.700, which was deposited in business bank account.
- Sold goods of cost price Rs.5000 for cash so as to earn 20% profit on sales price.
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OR
(b) A company purchased a machine for Rs.380000 on 1-1-97 for instalment cost Rs. 20000. Depreciation is provided on Reducing Balance Method at 10%p.a. The accounting year ends on 31-12 every year. On 1-7-98 other machine was purchased at a cost of Rs. 38000 for which instalment charges of Rs.5000. On 1-7-99 ¼ of the machine purchased on 1-1-97 and ? of the machine purchased on 1-7-98 were sold at book value. (07 Marks)
Q.3 (a) Distinguish between Financial Accounting and Management Accounting. (07 Marks)
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(b) Perform trend analysis of Reliance industries Itd from the following information (07 Marks)
(Rs in crore)
| Details | 2001-02 | 2000-01 | 99-00 | 98-99 | 97-98 |
|---|---|---|---|---|---|
| Turnover | 57120 | 28008 | 20301 | 14553 | 13404 |
| Total income | 57902 | 28391 | 20988 | 15161 | 13740 |
| EBDIT | 8658 | 5562 | 4746 | 3318 | 2887 |
| Depreciation | 2816 | 1565 | 1278 | 855 | 667 |
| Profit after tax | 3243 | 2646 | 2403 | 1704 | 1653 |
| Taxes paid | 10470 | 4277 | 3719 | 2893 | 3021 |
| Equity dividend % | 47.5 | 42.5 | 40 | 38 | 35 |
OR
Q.3 (a) Write short note on: (1) Money measurement concept (2) Going concern concept. (07 Marks)
(b) ABC Corporation purchased an equipment for Rs.2,00,000/-. The equipment was expected to be useful for six years, or 1,500 hours, with an estimated residual value of Rs.20,000 at the end of that time. The equipment logged 200 hours in the first year. The equipment is expected to produce 5000 units during a year. You are required to compute depreciation expense for the first year under each of the following methods:(1) Straight line method, (2) Machine hour method (3) Sum of the years digits method and (4) Production Units method (07 Marks)
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Q.4 (a) What do you mean by the term 'depreciation'? What are its causes? Why do firms provide depreciation? (07 Marks)
(b) Prepare a common-size balance sheet from following data and interpret the same (07 Marks)
| Assets | 2006 | 2007 |
|---|---|---|
| Fixed Assets ( Net) | 120000 | 175000 |
| Stock | 20000 | 25000 |
| Debtors | 50000 | 62500 |
| Bills receivable | 10000 | 30000 |
| Prepaid expense | 5000 | 6000 |
| Cash at bank | 20000 | 26500 |
| Cash in hand | 5000 | 15000 |
| Total | 230000 | 340000 |
| Liabilities | 2006 | 2007 |
|---|---|---|
| Equity capital | 100000 | 165000 |
| Preference share capital | 50000 | 75000 |
| Reserves | 10000 | 15000 |
| P&L account | 7500 | 10000 |
| Bank overdraft | 25000 | 25000 |
| Creditors | 20000 | 25000 |
| Provision for tax | 10000 | 12500 |
| Total | 230000 | 340000 |
OR
Q.4 (a) What is the managerial need of a Cash Flow Statement? How is it prepared? (07 Marks)
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(b) The following is the balance sheet of XYZ Itd as on 31-12-2003. You are required to calculate Gross profit ratio, Net profit ratio, Stock turnover ratio, Debtors ratio (use 300 days), Current ratio, Liquid ratio, Return on shareholders’ fund. (07 Marks)
Balance sheet
| Liabilities | Rs | Assets | Rs |
|---|---|---|---|
| Equity share capital | 5,00,000 | Goodwill | 30,000 |
| 10% debentures | 3,00,000 | Land and building | 3,40,000 |
| Creditors | 70,000 | Machinery | 2,60,000 |
| Bills payable | 40,000 | Stock | 50,000 |
| Unpaid wages | 20,000 | Debtors | 90,000 |
| Bills receivable | 30,000 | ||
| Bank balance | 70,000 | ||
| Pre-paid salary | 50,000 | ||
| Preliminary expenses | 10,000 | ||
| Total | 9,30,000 | Total | 9,30,000 |
Additional information:
Stock (1-1-2003) Rs. 40,000, Sales Rs 8, 00,000. , Gross profit Rs. 3,80,000 Debenture interest Rs 40,000, other administrative expenses Rs. 50,000, Selling and Distribution Expenses Rs. 20,000, Rate of income tax 50%.
Q.5 Prepare final accounts of Kiran from Trial Balance on 31-3-2004. (14 Marks)
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| Particulars | Debit | Credit | Particulars | Debit | Credit |
|---|---|---|---|---|---|
| Capital & Drawing | 10,000 | 60,400 | Carriage outward | 500 | |
| Goodwill (1-4-2003) | 30,000 | Bad debt & Bad debt reserve | 1400 | ||
| Addition to Goodwill(1-10-2003) | 5000 | Discount | 1800 | 900 | |
| Stock | 13,000 | Interest received in advance | 200 | ||
| Purchase and sales | 72,000 | 1,25,000 | Rent(Till 30-9-2004) | 2400 | |
| Goods returned | 2,000 | 5,000 | Insurance premium | 900 | |
| Creditors & Debtors | 20,500 | 10,000 | Salary | 18500 | |
| Typewriter | 5,000 | Cash balance | 27,500 | ||
| Wages | 1200 | Bills | 2900 | 6000 | |
| Pre-paid commission | 200 | Goods withdrawn for personal use | 800 | ||
| Discount reserve on debtors | 300 |
Adjustments:
- Closing stock is Rs.16000 whose market value is Rs. 25,000.
- Rs.1800 for electricity charges for factory are outstanding.
- Depreciation @ 5 % is to be calculated on Typewriter.
- Write off Rs 400 as bad debts and create bad debt reserve.
- Create reserve on debtors at 2% on debtors.
- Goods of the value of Rs 1000 were stolen. Insurance company has accepted the claim for full amount.
- The stock of Rs 6000 was remaining to be recorded as purchases.
- Tuition fees of daughter are paid by giving goods worth Rs. 5000.
- Insurance premium includes Rs 600 for the year ended on 30-12-2004.
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OR
Q.5. From the following trial balance as on 31-3-2004 of Mr. Ajit, you are required to prepare final accounts. (14 marks)
| Names of account | Debit (Rs) | Credit (Rs) |
|---|---|---|
| Stock(1-4-2003) | 45000 | |
| Salary (up to 28-2-2004) | 14300 | |
| Capital and drawing | 10000 | 100000 |
| Debtors and creditors | 70000 | 40000 |
| Leasehold premises ( 1-10-2003 for 5 years) | 40000 | |
| Carriage inward | 500 | |
| Carriage outward | 1200 | |
| Office expenses | 800 | |
| Discount | 1700 | 1900 |
| Bad debt and bad debt reserve | 1400 | 2900 |
| Cash and bank | 2500 | 3000 |
| Wages | 15000 | |
| Purchases and sales | 100000 | 250000 |
| Return accounts | 9000 | 10000 |
| Commission | 700 | |
| Machineries | 25000 | |
| 10% investments (30-9-2003) | 70000 | |
| Interest received on investments | 1500 | |
| Insurance premium ( up to 1-7-2004) | 3600 | |
| Total | 410000 | 410000 |
Adjustments:
- Value of closing stock is Rs 20000 out of which value of 90% stock is 10 % less and value of 10% stock is 90% more.
- Depreciate machineries at 10%. Interest on capital and drawing is 10%.
- During the year goods worth Rs 2000 were distributed as sample.
- Goods burnt by fire Rs 5000 and Insurance company accepted a claim of Rs 4000.
- Bad debt of Rs 2000 and Bad debt reserve of 5% is required to be provided on debtors.
- Commission is due but not received Rs 1300. Outstanding office expenses Rs 200.
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