Seat No.: Enrolment No.
GUJARAT TECHNOLOGICAL UNIVERSITY
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MBA - SEMESTER 1- EXAMINATION - SUMMER 2018Subject Code: 3519201 Date: 30/04/2018
Subject Name: Accounting for Managers (AFM)
Time: 10.30 AM To 1.30 PM Total Marks: 70
Instructions:
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- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
Q.1 Explain following terms. 14
(a) What do you mean by financial accounting?
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(b) Differentiate between accrual basis of accounting and cash basis of accounting.
(c) Explain entity concept.
(d) Explain the causes of depreciation.
(e) Explain gross profit ratio.
(f) Advantages of computerized accounting.
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(g) Explain meaning and features of GAAP.
Q.2 Explain users of financial accounting details. 07
Journalise the following transactions for April, 2017. 07
April 1- Mohan commenced business with cash Rs. 20,00,000.
April 2 - Deposited into bank Rs. 17,00,000.
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April 4 - Bought furniture for office for cash Rs. 60,000.
April 13 - Goods sold to Gopal on credit Rs. 1,00,000.
April 15 - Bought goods from Ram on credit Rs. 1,10,000.
April 28 - Paid Ram in full settlement Rs. 1,06,000.
April 30 - Paid rent Rs. 20,000.
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Q.3 XYZ Co. purchased machinery as follows: 07
| Date of Purchase | Cost of Machine (Rs.) |
|---|---|
| 1.4.2006 | Rs. 60,000 |
| 1.10.2006 | Rs. 40,000 |
| 1.7.2007 | Rs. 20,000 |
On 1.1.2008 one-third of the machinery which was purchased on 1.4.2006 became obsolete and was sold for Rs. 6,000. The machinery was to be depreciated by straight line method at 10% p.a.
Show how the Machinery Account would appear in the ledger of the Company for the years 2006, 2007 and 2008. Assume that the accounting year of the Company ends on 31st December every year.
Q.3 Differentiate between periodic inventory system and perpetual inventory system. 07
Total current liabilities are Rs. 80,000 current ratio is 2.5:1. Liquid ratio 1.5:1. Total current assets include stock, debtors and cash only. Cash is 2/3 of debtors. Calculate debtors & cash. 07
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OR
Explain trend analysis with hypothetical example. 07
Q.4 Ashok Patel runs a computer supplies company. One of the items stocked is the ‘Zap’ data disk, had following inventory balance for January, 2017. 07
January 1 - Opening inventory 10 units at a cost of Rs. 3.50 each
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January 7 - Bought 20 units at a cost of Rs. 3.60 each
January 15 - Sold 36 units
January 21 - Bought 20 units at a cost of Rs. 3.75 each
January 31- Sold 25 units
Calculate closing stock on 31st January, 2017 using perpetual inventory valuation system using FIFO and LIFO method.
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Q.4 Explain the significance and importance of IFRS. 07
From the following Balance Sheets of Amrit Limited as at March 31, 2014 and 2015, prepare a comparative balance sheet: 14
| Particulars | 31 March, 2015 | 31 March, 2014 |
|---|---|---|
| I. Equity and Liabilities | ||
| 1 Shareholders’ Funds | ||
| a) Share capital | 20,00,000 | 15,00,000 |
| b) Reserve and surplus | 13,00,000 | 14,00,000 |
| 2 Non-current Liabilities | ||
| Long-term borrowings | 19,00,000 | 16,00,000 |
| 3 Current liabilities | ||
| Trade payables | 3,00,000 | 2,00,000 |
| Total | 55,00,000 | 47,00,000 |
| II. Assets | ||
| 1 Non-current assets | ||
| a) Fixed assets | ||
| - Tangible assets | 20,00,000 | 15,00,000 |
| - Intangible assets | 19,00,000 | 16,00,000 |
| 2 Current assets | ||
| - Inventories | 13,00,000 | 14,00,000 |
| - Cash and Cash Equivalents | 3,00,000 | 2,00,000 |
| Total | 55,00,000 | 47,00,000 |
OR
Q.4 (a) Explain vertical format of balance sheet. 07
(b) Following are the balance sheets of a Vijay & son: 07
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| Liabilities | 1-1-15 | 31-12-15 | Assets | 1-1-15 | 31-12-15 |
|---|---|---|---|---|---|
| Creditors | 36,000 | 41,000 | Cash | 4,000 | 3,600 |
| Loan from Partner | - | 20,000 | Debtor | 35,000 | 38,400 |
| Loan from Bank | 30,000 | 25,000 | Stock | 25,000 | 22,000 |
| Capital | 1,48,000 | 1,49,000 | Land | 20,000 | 30,000 |
| Building | 50,000 | 55,000 | |||
| Machinery | 80,000 | 86,000 | |||
| 2,14,000 | 2,35,000 | 2,14,000 | 2,35,000 |
During the year Rs. 26,000 paid as dividend. The provision made for depreciation against machinery as on 1.1.15 was Rs. 27,000 and on 31.12.15 Rs 36,000. Prepare a cash flow statement.
From the following ledger balances of Mr. Dinesh, prepare a trading account, P&L account for the current year ended 31st March 2013 and a balance sheet as on that day, after making the necessary adjustments: 14
| Dinesh’s capital | Rs. 8,00,000 |
| Dinesh’s drawings | Rs. 60,000 |
| Plant and machinery (1.4.2012) | Rs. 2,00,000 |
| Plant and machinery additions (1.7.2012) | Rs. 50,000 |
| Stock on 1.4.2012 | Rs. 1,50,000 |
| Purchases during the year | Rs. 8,20,000 |
| Carriage on purchases | Rs. 20,000 |
| Furniture and fixtures | Rs. 2,00,000 |
| Carriage on sales | Rs. 25,000 |
| Sundry expenses | Rs. 8,000 |
| Printing, stationery and postage | Rs. 12,000 |
| Rent, rates and taxes | Rs. 40,000 |
| Bad debts | Rs. 5,000 |
| Sundry creditors | Rs. 95,000 |
| Sales | Rs. 12,00,000 |
| Purchase returns | Rs. 10,000 |
| Provision for bad and doubtful debts (1.4.2012) | Rs. 8,000 |
| Commission received | Rs. 16,000 |
| Sundry debtors | Rs. 52,000 |
| Insurance charges | Rs. 10,000 |
| Salaries | Rs. 2,10,000 |
| Cash in hand | Rs. 62,000 |
| Cash at bank | Rs. 2,05,000 |
Adjustments are required for the following:
- Closing stock on 31.3.2013 was valued at Rs. 1,40,000.
- Create provision for bad and doubtful debts at the rate of 5 per cent on sundry debtors.
- Provide for depreciation on furniture & fixtures at 10 per cent per annum and on plant and machinery at 20 per cent per annum.
- Insurance paid in advance is Rs. 1,000.
- Commission receivable in arrears is Rs. 5,000.
- Salaries payable are Rs. 15,000.
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OR
You are required to prepare vertical format of P&L, balance sheet and note of accounts from the following trial balance of Mehul Company Ltd. for the year ended 31st March, 2012 14
Mehul Company Ltd. Trial Balance as at 31st March, 2012
| Particulars | Dr. (Rs.) | Cr. (Rs.) |
|---|---|---|
| Stock | 68,000 | |
| Furniture & Fixtures | 50,000 | |
| Discount | 4,000 | |
| Loan to Directors | 8,000 | |
| Advertisement | 2,000 | |
| Bad Debts | 3,500 | |
| Commission | 12,000 | |
| Purchases | 231,900 | |
| Plant and Machinery | 86,000 | |
| Rentals | 2,500 | |
| Current Account | 4,500 | |
| Cash | 800 | |
| Interest on Bank Loan | 11,600 | |
| Preliminary Expenses | 1,000 | |
| Wages | 90,000 | |
| Consumables | 8,400 | |
| Freehold Land | 1,54,600 | |
| Tools and Equipments | 24,500 | |
| Goodwill | 26,500 | |
| Debtors | 28,700 | |
| Bills Receivables | 15,300 | |
| Dealer Aids | 2,100 | |
| Transit Insurance | 3,000 | |
| Trade Expenses | 7,200 | |
| Distribution Freight | 5,400 | |
| Debentures Interest | 2,000 | |
| Equity Shares Capital (Shares of Rs.10 each) | 2,50,000 | |
| 11% Debentures | 50,000 | |
| Bank Loans | 64,500 | |
| Bills Payable | 12,500 | |
| Creditors | 15,600 | |
| Sales | 4,26,800 | |
| Rent Received | 4,600 | |
| Transfer Fees | 1,000 | |
| Profit & Loss Appropriation Account | 13,900 | |
| Provision for Depreciation on Plant & Machinery | 14,600 | |
| 8,53,500 | 8,53,500 |
Additional Information:
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- Closing stock as on 31st march, 2012, Rs.82,300.
- Depreciation on furniture & fixtures @5%, Freehold land @2% and Tools and Equipments @5% to be provided.
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