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GUJARAT TECHNOLOGICAL UNIVERSITY
MBA — SEMESTER 01- - EXAMINATION - WINTER 2015
Subject Code: 810001 Date: 17/12/2015
Subject Name: Accounting for Managers
Time: 10.30 AM TO 05.30 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 (A) From the following detail of ILSRM Itd. Prepare vertical form of balance sheet. 07
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| Assets | Amount | Liability | Amount |
|---|---|---|---|
| Plant | 20,00,000 | Share capital | 30,00,000 |
| Debtors | 6,00,000 | 12% debenture | 15,00,000 |
| Stock at cost | 6,00,000 | Interest accrued on debenture | 90,000 |
| Cash balance | 3,00,000 | General reserves | 5,00,000 |
| Bank balance | 4,00,000 | Provision for tax | 2,00,000 |
| Discount on issues of shares | 1,00,000 | Provision for depreciation on plant | 2,00,000 |
| Bills receivables | 1,00,000 | Provision for doubtful debt | 15,000 |
| Long term investment | 25,00,000 | Profit & loss a/c | 1,00,000 |
| Motor car | 1,00,000 | Creditors | 7,00,000 |
| Interest accrued on investment | 25000 | Bills payable | 4,00,000 |
| Accrued expenses | 20,000 | ||
| 68,25,000 | 68,25,000 |
(B) Discuss qualitative characteristics of financial statement 07
Q: 2 (A) journalize the following transaction in the book of Mr. Ram. 07
- 1.4.1 Business started with cash in hand 10,000 rs : cash at bank 50,000 rs : stock 2,00,000 rs : Land 10, 00,000 rs : loan from Mr. X 60,000 rs : loan from Mr Y 20,000 rs
- 5.4.1 Received 1900 rs from Mr. Laxman in full settlement of his a/c pf 2000 rs
- 6.4.1 Received 2900 rs from Mr. Bharat on his a/c for 3000 rs
- 7.4.1 Withdrew 1000 rs for personnel use.
- 8.4.1 Paid income tax by cheque 3000 rs
- 9.4.1 Salary due to clerk 1000rs
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(B) Discuss IFRS in detail. 07
OR
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(B) What is trial balance? What are the different errors which are not disclosed by Trial balance? 07
Q: 3 (A) M Ltd. which depreciates its machinery @ 10% per annum according to diminishing balance method, had on 1st April, 2012 " 4, 86,000 balance in its machinery account. During the year ended 31st March, 2013, the machinery purchased on 1st April, 2010 for * 60,000 was sold for * 40,000 on 1st October, 2012 and a new machinery costing * 70,000 was purchased and installed on the same date; installation charges being * 5,000.
The company wants to change its method of depreciation from diminishing balance method to straight line method w.e.f. 1st April, 2010 and adjust the difference before 31st March, 2013, the rate of depreciation remaining the same as before.
Show the machinery account for the year ended 31st March, 2013. 07
(B) Discuss AS-13 for investment. Give example of right issues and bonus in it. 07
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OR
Q: 3 (A) following are the details of receipts and issues of material LIMSR. 07
| Receipts | Issues | ||
|---|---|---|---|
| 1 January balance | 50 units @ 4 per unit | 10 January issues | 70 units |
| 5 January purchase | 40 units @ 3 per unit | 12 January issues | 10 units |
| 8 January purchase | 30 units @ 4 per unit | 20 January issues | 20 units |
| 15 January purchase | 20 units @ 5 per unit | 24 January issues | 10 units |
| 26 January purchase | 40 units @ 3 per unit | 31 January shortage | 5 units |
The firms follows the perpetual inventory system for maintaining its store records. You are required to calculate the value of inventory on January 31 using
- (LIFO)
- (FIFO)
- (Weightage Average Method)
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(B) Discuss AS-9 for revenue recognition 07
Q: 4 (A) Following are balance sheet of MILRS ltd. Year ending 2004 & 2005 07
Balance sheet as‘of'march, 31
| Particulars | 2004 | 2005 |
|---|---|---|
| Share capital | 6,75,000 | 7,87,500 |
| General reserves | 2,25,000 | 2,81,250 |
| Capital reserves (_profit of sale of investment ) | - | 11,250 |
| Profit & loss account | 1,12,500 | 2,25,000 |
| 15 % debentures | 3,37,500 | 2,25,000 |
| Accrued expenses | 11,250 | 13,500 |
| Creditors | 1,80,000 | 2,81,250 |
| Provision dividends | 33,750 | 38,250 |
| Provision for tax | 78,750 | 85,500 |
| Total | 16,53,750 | 19,48,500 |
| Fixed assets | 11,25,000 | 13,50,000 |
| Less : Accumulated depreciation | 2,25,000 | 2,81,250 |
| Net fixed assets | 9,00,000 | 10,68,750 |
| Long term investment at cost | 2,02,500 | 2,02,500 |
| Stock at cost | 2,25,000 | 3,03,750 |
| Debtors ( net of provision of doubtful debt 45000 and 56250 | 2,53,125 | 2,75,625 |
| Respectively for 2004 and 2005 year ) | ||
| Bills receivables | 45,000 | 73,125 |
| Prepaid expenses | 11,250 | 13,500 |
| Miscellaneous expenses | 16,875 | 11,250 |
| Total | 16,53,750 | 19,48,500 |
- During the year 2004-05 fixed assets with net book value of 11,250 (accumulated depreciation 33750 rs ) was sold for 9000 rs
- During the year 2004-05 investment costing 90,000 were sold and also investment costing of 90,000 were purchased.
- Debentures were retired with 10% premium
- Tax of 61,875 was paid for 2003-04 year
- The proposed dividends for 2003-04 was paid in 2004-05
- During the year 2004-05 bad debt of 15,750 were written off against the provision of doubtful debt account.
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Prepare fund flow statement (statement of changes in financial position on working capital basis) for the year ending March 31, 2005.
(B) Discuss the features of corporate balance sheet 07
OR
Q: 4 (A) ILMRS LTD (Balance Sheets As of December 31) prepare common size statement And comment on increase / decrease of assets and liability 07
| Assets | 2010 | 2009 | Liability | 2010 | 2009 |
|---|---|---|---|---|---|
| Cash | 20000 | 17000 | Accounts payable | 40000 | 38000 |
| Marketable securities | 20,000 | 22,000 | Salaries payable | 2000 | 3000 |
| Notes receivable | 4,000 | 3,000 | Taxes payable | 4000 | 2000 |
| Accounts receivable | 50,000 | 56,000 | 8 % bonds | 100000 | 100000 |
| Merchandise inventory | 70,000 | 43,000 | 6%Preference shares | 50000 | 50000 |
| Prepaid expenses | 4000 | 4000 | Equity shares | 150000 | 125000 |
| Plant & machinery | 340000 | 310000 | Retained earnings | 162000 | 137000 |
| 508000 | 455000 | 508000 | 455000 |
(B) Discuss profitability ratios with formula and examples 07
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Q : 5 (A) From the following details. Fill up the profit & loss account and balance sheet. 07
Profit & loss account
| Particular | Dr | Particular | Cr amount |
|---|---|---|---|
| To Cost of goods sold | 6,00,000 | By sales | 20,00,000 |
| To operating expenditure | ? | ||
| To Earnings before interest & tax | ? | ||
| Total | Total | ||
| To income tax | Earnings before interest and tax | ||
| To debenture interest a/c | 10,000 | ||
| To net profit | |||
| Total | Total |
Balance sheet
| Liabilities | Amount | Assets | Amount |
|---|---|---|---|
| Capital | ? | Fixed assets | ? |
| Reserves | ? | Cash | ? |
| Net worth | ? | Stock | ? |
| 10% debentures | Debtors | 35,000 | |
| Creditors | 60,000 | ||
| Total | Total |
Additional information:
- Net profit to sales 5%
- Current ratio 1.5: 1
- Return on net worth 20%
- Inventory turnover ratio 15 times (based on cost of goods sold)
- Share capital to reserves 4: 1
- Income tax 50%
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(B) Explain trend analysis with hypothetical examples 07
OR
Q: 5 (A) SRL limited gives you following details. 07
Current ratio 2.5:1
Debt equity ratio 1: 1.5
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Return on total assets 15%
Total assets turnover ratio 2
Gross profit ratio 20%
Stock turnover ratio 7
Current market price of company’s equity share 16 rs
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Net working capital 4, 50,000
Fixed assets 10, 00,000
Opening stock 3, 80,000
20,000, 9% preference share of 10 rs each
60,000 equity shares of 10 rs each
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You are required to calculate following ratio
- Quick ratio
- Fixed assets turnover ratio
- Proprietary ratio
- Earnings per share ratio
- Price earning ratio
- Price earning ratio when market price of share is 20 rs
- Price earning ratio when market price of share is 12 rs
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(B) Explain GAAP principles 07
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