MB0041- FINANCIAL AND MANAGEMENT ACCOUNTING

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Fall 2014

MB0041- FINANCIAL AND MANAGEMENT ACCOUNTING

Q1. Analyze the following transaction under traditional approach.

18.1.2011 Received a cheque from a customer, Sanjay at 5 p.m. Rs.20,000

19.1.2011 Paid Ramu by cheque Rs.1,50,000

20.1.2011 Paid salary Rs. 30,000

20.1.2011 Paid rent by cheque Rs. 8,000

21.1.2011 Goods withdrawn for personal use Rs. 5,000

25.1.2011 Paid an advance to suppliers of goods Rs. 1,00,000

26.1.2011 Received an advance from customers Rs. 3,00,000

31.1.2011 Paid interest on loan Rs. 5,000

31.1.2011 Paid instalment of loan Rs. 25,000

31.1.2011 Interest allowed by bank Rs. 8,000

Analysis of transaction –with accounts involved-nature of account-affects and debit/credit

Answer:

Analysis of Transaction under Traditional Approach

Q2. The trial balance of Nilgiris Co Ltd., as taken on 31st December, 2002 did not tally and the  difference was carried to suspense account. The following errors were detected  subsequently.

a) Sales book total for November was under cast by Rs. 1200.

b) Purchase of new equipment costing Rs. 9475 has been posted to Purchases a/c.

c) Discount received Rs.1250 and discount allowed Rs. 850 in September 2002 have been  posted to wrong sides of discount account.

d) A cheque received from Mr. Longford for Rs. 1500 for goods sold to him on credit earlier,  though entered correctly in the cash book has been posted in his account as Rs. 1050.

e) Stocks worth Rs. 255 taken for use by Mr Dayananda, the Managing Director, have been  entered in sales day book.

f) While carrying forward, the total in Returns Inwards Book has been taken as Rs. 674  instead of Rs. 647.

g) An amount paid to cashier, Mr. Ramachandra, Rs. 775 as salary for the month of November  has been debited to his personal account as Rs. 757.

(Pass journal entries and draw up the suspense account, Journal entries of all the transactions, Suspense account with Conclusion)

Answer:

Solution:                                                                             Nilgiris Co Ltd

Date

Particulars

LF

Debit Rs.

CreditRs.

Q3 From the given trial balance draft an Adjusted Trial Balance.

Trial Balance as on 31.03.2011

Debit balances	Rs.	Credit balances	Rs.
Furniture and Fittings	10000	Bank Over Draft	16000
Buildings	500000	Capital Account	400000
Sales Returns	1000	Purchase Returns	4000
Bad Debts	2000	Sundry Creditors	30000
Sundry Debtors	25000	Commission	5000
Purchases	90000	Sales	235000
Advertising	20000
Cash	10000
Taxes and Insurance	5000
General Expenses	7000
Salaries	20000
TOTAL	690000	TOTAL	690000

Adjustments:

1. Charge depreciation at 10% on Buildings and Furniture and fittings.

2. Write off further bad debts 1000

3. Taxes and Insurance prepaid 2000

4. Outstanding salaries 5000

5. Commission received in advance1000

(Preparation of ledger accounts, Preparation of trial balance )

Solution:
		Ledger accounts
	Furniture and fittings a/c
Dr.				Cr.
Particulars		Rs.	Particulars	Rs.
To bal b/d		10000	By Depreciation	1000
			By bal c/d	9000
Total		10000	Total	10000
To bal b/d		9000

Buildings a/c

Q4. Compute trend ratios and comment on the financial performance of Infosys Technologies Ltd. from the following extract of its income statements of five years. (in Rs. Crore)

(Source: Infosys Technologies Ltd. – Annual Report)

(Preparation of trend analysis, Preparation of trend ratios, Conclusion)

Solution:

Infosys Technologies Ltd.

Trend Analysis

Particulars	2010-11	2009-10	2008-09	2007-08	2006-07
Revenue	27,501	22,742	21,693	16,692	13,893

Q5. Give the meaning of cash flow analysis and put down the objectives of cash flow analysis. Explain the preparation of cash flow statement.

(Meaning of cash flow analysis, Objectives of cash flow analysis, Explanation of preparation of cash flow analysis)

Answer:

Meaning of Cash Flow Analysis

Cash flow analysis is an important tool of financial analysis. It is the process of understanding the change in position with respect to cash in the current year and the reasons responsible for such a change. Incidentally, the analysis also helps us to understand whether the investing and financing decision taken by the company during the year are appropriate are not. Cash flow analysis is presented in the form of a statement. Such a statement is called a cash flow statement.

Q6. Write the assumptions of marginal costing. Differentiate between absorption costing and marginal costing.

(Assumptions of marginal costing (all 7 points), Differences of marginal and absorption costing (Includes all 8 points)

Answer:

Assumptions of Marginal Costing

Marginal costing is based on the following assumptions:

1.      Segregation of cost into fixed and variable

The whole principle of marginal costing is based on the idea that some costs vary with production while some costs

Dear students get fully solved  SMU MBA Fall 2014 assignments

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