Tuesday, February 17, 2009

October 2008

Management Accounting

Time: 3Hours                                                Marks: 100


N.B:
1. Questions No. 1 is compulsory and carries 20 marks.
2. Attempt any five from the rest questions,each carrying 16 marks
from remaining questions.
3. Working notes should form part of your answer.
4.Proper presentation and neatness is essential.
5. Use of simple calculator is allowed.

Q.1.
ABC Ltd. provides you following Balance-sheets as on 31st March: (20)

Trading and Profit and Loss Account for the year ending on 31st March, 2007
Liabilities 2006 Rs. 2007 Rs. Assets 2006 Rs. 2007Rs.
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 6,00,00
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


The following information is given for the year ended on 31st March, 2007:
  1. 10% Preference shares were redeemed out of fresh issue of Equity shares on 1st April, 2006.
  2. 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.
  3. Interim dividend of Rs. 1,00,000 was paid.
  4. Depreciation was charged during the year Rs. 2,00,000.
  5. Fixed Assets were revalued in excess of book value and amount was credited to Profit and Loss A/c.
  6. Dividend on Equity shares paid for the year 2005-08 Rs. 2,00,000.
  7. Tax paid Rs. 5,50,000.

Prepare fund flow statement and statement showing changes in working capital in detail for the year ended on 31st March, 2007.



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)
1. Raw materials are in stock on an average for 2 months
2. Materials are in process on an average for half a month.
3. Finished goods are in stock on an average for one month.
4. Credit allowed by the suppliers is 1½ months of purchase of raw materials and credit allowed to the customers is 2 ½ months.
5. Lag in payment of wages and overheads is one month.
6. Cash and Bank balance is expected to be 10% of Net working
7. Capital before considering the Cash and Bank balance.
8. Activities are spread evenly through out the year:

Cost Per Unit:
Raw Material - Rs. 10
Wages - Rs. 5
Total Cost - Rs. 30
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)
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 2,35,00
Long Term Loan 1,00,000 ? 1,20,000
Cost of Goods Sold ? 4,00,000 3,00,00
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

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)

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) ?
? ?


Following information is available:

1. Gross profit ratio is 25% and which is Rs. 12,00,000.
2. Operating expenses (including Debenture interest) Rs. 8,00,000.
3. Rate of Income Tax is 50%.
4. Purchases and Sales are on credit basis.
5. Debtors Turnover Ratio (Sales / Debtors) = 12 times.
6. Creditors Turnover Ratio (Cost of sales / creditors) = 12 times
7. Earning per share Rs. 20
8. Stock Turnover Ratio = 10 times
9. Debt Equity Ratio 0.25 : 1
10.Current Ratio 2 : 1.


Q.5.
Prepare a Comparative Revenue Statement in Vertical Form from the following details:(16)



Nilkamal Ltd.
Trading, Profit and Loss Account for the year ended 31st March
Particulars 2006 Rs. 2007Rs. 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 -
Furniture 15,000 15,000
Machinery 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


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)

Liabilities 31-3-06 Rs. 31-3-07Rs. Assets 31-3-06Rs. 31-3-07Rs.
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
Total 6,10,160 6,40,400 Total 6,10,160 6,40,400


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:
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


Other information for the year 2006-07:

Particulars Amount (Rs.)
Sales 10,00,000
Cost of Sales 7,50,000
Net profit before Tax 1,00,000


Q.8.
The following information regarding Maruti car Ltd. for the year ended 31st March.2007 is given to you. (16)



particulars 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


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)



Cost of Sales Rs.3,25,000
Gross Profit Ratio 35%
Stock Turn Over ratio 2.5
Creditors Turnover Ratio (On Purchaes) 8


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.

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