Management Accounting
October 2008
Time: 3 Hours
Marks: 100
NB:
- Questions No. 1 is compulsory and carries 20 marks.
- Attempt any five from the rest questions, each carrying 16 marks from remaining questions.
- Working notes should form part of your answer.
- Proper presentation and neatness is essential.
- Use of simple calculator is allowed
- Q.1 ABC Ltd. provides you following Balance - sheets as on 31 st March: 20
Trading and Profit and Loss Account for the year ending on 31st March, 2007 - The following information is given for the year ended on 31st March, 2007.
- 10% Preference shares were redeemed out of fresh issue of Equity shares on 1st April, 2006.
- Partly paid Equity shares were converted into a fully paid shares by utilizing Rs. 4,00,000 from Profit and Loss A/c during the year.
- Interim dividend of Rs. 1,00,000 was paid.
- Depreciation was charged during the year Rs. 2,00,000.
- Fixed Assets were revalued in excess of book value and amount was credited to Profit and Loss A/c.
- Dividend on Equity shares paid for the year 2005-08 Rs. 2,00,000.
- Tax paid Rs. 5,50,000.
- Q 2. You are required to prepare a statement showing the working capital required to finance the level of activity of 12,000 Units per year from the following information: 16
- Raw materials are in stock on an average for 2 months
- Materials are in process on an average for half a month.
- Finished goods are in stock on an average for one month.
- Credit allowed by the suppliers is 1½ months of purchase of raw materials and credit allowed to the customers is 2 ½ months.
- Lag in payment of wages and overheads is one month.
- Cash and Bank balance is expected to be 10% of Net working Capital before considering the Cash and Bank balance.
- Activities are spread evenly through out the year:
- Cost Per Unit:
- Profit is 20% on selling price.
- Q 3. The following is financial information of ZN Ltd. for 3 years ended on 31st December every year. 16
- You are required to prepare vertical Trend Financial Statement taking 2005 as the Base.
- Q 4. Complete the following Balance-sheet from the information given below: 16
- Following information is available:
-
- Gross profit ratio is 25% and which is Rs. 12,00,000.
- Operating expenses (including Debenture interest) Rs. 8,00,000.
- Rate of Income Tax is 50%.
- Purchases and Sales are on credit basis.
- Debtors Turnover Ratio (Sales / Debtors) = 12 times.
- Creditors Turnover Ratio (Cost of sales / creditors) = 12 times
- Earning per share Rs. 20
- Stock Turnover Ratio = 10 times
- Debt Equity Ratio 0.25 : 1
- Current Ratio 2 : 1.
- Q.5 Prepare a Comparative Revenue Statement in Vertical Form from the following details: 16
- Q.6 Telestar Ltd. gives you the following Balance - Sheets for the year ended 31 st March, 2006 and 2007. Prepare a Cash Flow Statement for the year ended 31st March, 2007 as per As - 3 by indirect method. 16
- Other information for the year ended 31st March,2007
- (1) The company has paid Interim dividend of 5 %on Equity shares.
- (2) Preference shares were redeemed during the year at 10% premium.
- (3) Income Tax paid during the year Rs. 15,000.
- Q.7 From the following information calculate: 16
- (a) Return on Capital Employed.
- (b) Debtors turn over ratio (in Times)
- (c) Stock - working capital ratio
- (d) Current ratio
- (e) Proprietory ratio (on the basis.of Total Fund)
- Some of relevant balances as on 31st March, 2007 are given below:
Other information for the year 2006-07 - Q.8 The following information regarding Maruti car Ltd. for the year ended 31st March.2007 is given to you. 16
- Rearrange above information in Vertical Form suitable for analysis.
- Q.9 (a) From the following information calculate the amount of Creditors 0pening Stock and Closing Stock: 5
- Opening Stock is more by Rs. 6,000 than Closing Stock.
- (b) Working Capital is Rs. 3,00,000.Quick Ratio is 1.25 : 1.and Current Ratio is 2:1.The Bank Overdraft is Rs.20,000.Non quick assets includes closing stock only.Calculate Closing Stock. 4
- (c) Write short notes on : (any two) 6
- i Fund Flow Statement and Cash Flow Statement.
- ii Limitations of Ratio Analysis.
- iii Trend Analysis.
-
- iv MIS Reporting.
| Liabilities | 2006 Rs. | 2007 Rs. | Assets | 2006 Rs. | 2007 Rs. |
| Equity Share Capital | 15,00,000 | 24,00,000 | Fixed Assets | 30,00,000 | 31,00,000 |
| 10% Preference Share Capital | 20,00,000 | 15,00,000 | Investments | 22,60,000 | 28,00,000 |
| Profit & Loss A/c | 20,08,000 | 20,58,000 | Inventory | 9,20,000 | 8,00,000 |
| 15% Debentures | 3,00,000 | 10,00,000 | Debtors | 12,00,000 | 11,00,000 |
| Bank Loan (Long Term) | 4,40,000 | - | Bills Receivable | 5,75,000 | 6,00,000 |
| Creditors | 12,48,000 | 8,60,000 | Cash | 2,21,000 | 5,48,000 |
| Provision for Tax | 4,80,000 | 7,30,000 | |||
| Proposed Dividend | 2,00,000 | 4,00,000 | |||
| Total | 81,76,000 | 89,48,000 | Total | 81,76,000 | 89,48,000 |
Prepare fund flow statement and statement showing changes in working capital in detail for the year ended on 31st March, 2007.
| Raw Material | Rs. 10 |
| Wages | Rs. 5 |
| Total Cost | Rs. 30 |
| Particulars | 2005 Rs. | 2006 Rs. | 2007 Rs. |
| Share Capital | 1,50,000 | 1,80,000 | 1,90,000 |
| Gross profit | 3,50,000 | 3,50,000 | 4,00,000 |
| Current liabilities | 40,000 | ? | ? |
| Fixed Assets | 2,40,000 | 2,50,000 | 2,35,000 |
| Long Term Loan | 1,00,000 | ? | 1,20,000 |
| Cost of Goods Sold | ? | 4,00,000 | 3,00,000 |
| Working Capital | 60,000 | 4,50,000 | 1,40,000 |
| Net Worth | 2,00,000 | 2,20,000 | 2,55,000 |
| Current Assets | ? | 1,20,000 | 2,00,000 |
| Sales | 5,50,000 | 7,50,000 | ? |
| Capital Employed | 3,00,000 | ? | ? |
| Reserve and Surplus | ? | 40,000 | 65,000 |
| Liabilities | Rs. | Assets | Rs. |
| Equity Share Capital (Rs.100 each) | ? | Fixed Assets | ? |
| Reserve and Surplus | ? | Current Assets | |
| 20% Debentures | 5,00,000 | Stock | ? |
| Current Liabilities | Debtors | ? | |
| Sundry Creditors | ? | Bank / Cash Balance | ? |
| Provision for Tax,(Current Year) | ? | ||
| ? | ? | ||
| Nilkamal Ltd. | |||||
|---|---|---|---|---|---|
| Trading, Profit and Loss Account for the year ended 31st March | |||||
| Particulars | 2006 Rs. | 2007 Rs. | Particulars | 2006 Rs. | 2007 Rs. |
| To Opening Stock | 2,25,000 | 3,00,000 | By Sales | 45,00,000 | 60,00,000 |
| To Purchases | 22,50,000 | 32,10,000 | By Closing Stock | 3,00,000 | 3,60,000 |
| To interest on Debenture | 1,50,000 | 1,50,000 | By Dividend | 12,000 | 39,000 |
| To Depreciation: | By Profit on Sale of Machinery | 24,000 | |||
| 15,000 | 15,000 | ||||
| 36,000 | 30,000 | ||||
| To Administrative Expenses | 2,94,000 | 4,41,000 | |||
| To Selling Expenses | 4,56,000 | 7,53,000 | |||
| To Carriage Outward | 75,000 | 3,15,000 | |||
| To Loss by Fire | 15,000 | ||||
| To Wages | 1,95,000 | 3,00,000 | |||
| To Provision for Tax | 5,70,000 | 4,35,000 | |||
| To Net Profit | 5,70,000 | 4,35,000 | |||
| 48,36,000 | 63,99,000 | 48,36,000 | 63,99,000 | ||
| Liabilities | 31-3-06 Rs. | 31-3-07 Rs. | Assets | 31-3-06 Rs. | 31-3-07 Rs. |
| Equity Share Capital | 1,20,000 | 1,20,000 | Land | 2,10,000 | 2,70,000 |
| 5% Preference Share Capital | 90,000 | 60,000 | Building | 2,85,000 | 2,70,000 |
| General Reserve | 30,000 | 42,330 | Stock | 27,000 | 36,300 |
| Profit and Loss Account | 15,240 | 28,080 | Debtors | 40,440 | 38,460 |
| Provision for Tax | 17,000 | 8,000 | Prepaid Expenses | 25,880 | 17,000 |
| Creditors | 3,37,920 | 3,81,990 | Bank Balance | 15,840 | 3,240 |
| Misc Expenditure | 6,000 | 5,400 | |||
| 6,10,160 | 6,40,400 | 6,10,160 | 6,40,400 |
| Particulars | Amount (Rs.) |
| Equity share capital (of Rs. 10 each) | 2,00,000 |
| 6% Preference share capital | 1,00,000 |
| 8% Debentures | 1,50,000 |
| Debtors | 18,000 |
| Creditors | 15,000 |
| Cash in hand | 20,000 |
| Bills receivable | 12,000 |
| Bank Overdraft | 8,000 |
| Reserves and Surplus | 43,000 |
| Closing Stock | 32,500 |
| Provision for taxation | 35,000 |
| Proposed dividends | 10,000 |
| Particulars | Amount (Rs.) |
| Sales | 10,00,000 |
| Cost of Sales | 7,50,000 |
| Net profit before Tax | 1,00,000 |
| Rs. | |
| Sales | 75,00,000 |
| Purchases | 50,00,000 |
| Opening Stock (01/04/2006) | 5,00,000 |
| Closing Stock (31/03/2007) | 7,50,000 |
| Return Inward | 75,000 |
| Carriage Outward | 57,000 |
| Carriage Inward | 50,000 |
| Return Outward | 50,000 |
| Salesmen Salary | 75,000 |
| Advertising and Publicity | 2,52,000 |
| Salesmen Travelling Allowance | 7,500 |
| Office Salary | 4,00,000 |
| Computer Repairs and Maintenance | 84,000 |
| Rent, Rates, Taxes | 4000 |
| Printing and Stationery | 400 |
| Bad Debts | 75,750 |
| Purchase of Computer | 40,000 |
| Dividend on Shares (Cr) | 10,000 |
| Staff Welfare Expenses | 44,000 |
| Interest (Dr.) | 50,000 |
| Loss on Sales of Shares | 1,25,000 |
| Cost of Sales | Rs.3,25,000 |
| Gross Profit Ratio | 35% |
| Stock Turn Over ratio | 2.5 |
| Creditors Turnover Ratio (On Purchaes) | 8 |
