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ASSIGNMENT
Course Code :
MS-04
Course Title :
Accounting and Finance for
Managers
Assignment Code :
MS-04/TMA/SEM-I/2017
Coverage :
All Blocks
Note : Attempt all the
questions and submit this assignment on or before 30th April, 2017 to the
coordinator of your study center.
Question.1. “ Accountancy is an Information System” do you agree?
Substantiate your answer with reasons. How does an Accountant help in planning
and controlling a large commercial organisation? Explain.
Answer:Accounting is a
service activity. Its function is to provide qualitative information, primarily
financial in nature, about economic entities and that is intended to be useful
in making economic decisions. It is universally accepted that making available the
qualitative accounting information is an objective as these are the basis to
make decision by its users. The accounting information is expected by its users
is provided through financial statements. We can say that accounting
information refers to the financial statements so generated are the Income
statements, that is, profited loss profit and loss account and position
Balance Sheet as on 31
March, 2017
|
Liabilities
|
Rs
|
Assets
|
|
Rs
|
|
Proprietors Capital
|
1,00,000
|
Cash
|
|
20,500
|
|
Outstanding Liabilities
|
17,000
|
Stock
|
|
50,500
|
|
|
|
Sundry debtors
|
|
26,000
|
|
|
|
Furniture
|
25,000
|
|
|
|
|
Dep
|
5,000
|
20,000
|
|
|
1,17,000
|
|
|
1,17,000
|
Sales and salaries for
different months are expected to be as under:
|
Months
|
Sales
|
Salaries
|
|
April
|
80,000
|
3,000
|
|
May
|
52,000
|
2,500
|
|
June
|
50,000
|
35,000
|
|
July
|
75,000
|
4,000
|
|
August
|
90,000
|
4,000
|
|
Sepetmebr
|
35,000
|
3,000
|
|
October
|
25,000
|
3,000
|
The other expenses per month are:
Rent Rs. 1,000, Depreciation Rs. 1,000, Misc. Expenses Rs. 500 and Commission
1% of sales.
Of the sales, 80% is on
credit and 20% for cash. 70% of the credit sales are collected in one month and
the balance in two months. Debtors on March 31, 2017 represent Rs. 6,000 in
respect of sales of February and Rs. 20,000 in respect of sales of March. There
are no debt losses. Gross profit on sales on an average is 30%. Purchases equal
to the next month’s sales are made every month and they are paid during the
month in which they are made. The firm maintains a minimum cash balance of Rs.
10,000. Cash deficiencies are made up bank loans which are repaid at the
earliest availableopportunity and cash in excess of Rs. 15,000 is invested in
securities (Interest on bank loans and securities is to be ignored).
Outstanding liabilities remain unchanged.
Answer:
Question.3. Taking a suitable example and explain how the semi-variable
costs will be segregated into fixed and variable using the Scattergraph Method.
Answer:Several methods
are used for segregating semi-variable costs into fixed and variable. There are
four major techniques that are found in practice and they may be listed as
follows:
1.
High and Low Points Methods:This
approach considers the difference in total cost between two different volumes,
and divides the incremental cost by the volume. As the words ‘high’ and ‘low’
imply, the two levels of volume chosen are the
Question.4. Aditi Ltd. is considering the selection of one a pair of
mutually exclusive investment projects. Both would involve purchase of
machinery with a life of 5 years.
Project 1 would generate
annual cash flows (receipts less payments) of Rs. 2,00,000; the machinery would
cost Rs. 5,56,000 and have a scrap value of Rs. 56,000.
Project 2 would generate
annual cash flows of Rs.5,00,000; the machinery would cost Rs. 16,16,000 and
have a scrap value of Rs. 4,31,000.
Company use the straight
line method for providing depreciation. Its cost of capital is 15% per annum.
Assume that annual cash flows arise on the anniversaries of the initial outlay,
that there will be no price changes over the project lives and that acceptance
of one of the projects will not alter the required amount of working capital.
You are required to:
(a) Calculate for each
project:
(i) the accounting rate or
return (ratio, over project life, of average accounting profit to average book
value of investment) to nearest 1%.
(ii) the net present value
(iii) the internal rate or
return (D.C.F. yield) to nearest 1%, and
(iv) thepay back period to
one decimal place, and
(b) State which project you
would select for acceptance, if either, giving reasons for your choice of
criterion to guide the decision. Ignore taxation.
Answer: N
Question.5. “ Dividend can be paid only out of profits”. Explain this
statement and also discuss your role as a Finance Management in matters of
dividend policy?
Answer:Dividend
decision is highly important for a firm.
It is required to plan to maximize the owner’s wealth. It is the responsibility of the management to
make the owner aware of the objectives and the implications of the dividend
policy so that the market reaction is favourable. It is a continuous activity spread over a
Dear
students get fully solved assignments
Send
your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call
us at : 08263069601
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