GUJARAT UNIVERSITY
MCA Semester II
Accounting and Financial Management
24th July, 1995 SECTION I
Q-1 Attempt any three questions: 9
(1) Distinguish between (any one)
(i) Marginal Costing and Absorption Costing
(ii) Variable cost and fixed cost
(2) State whether following statements are TRUE OR FALSE.
(i) Sales Budget is the starting point of Budgetary control.
(ii) Fixed Assets changes its form frequently.
(iii) Agreed trial balance is the proof of correctness of Accounts.
(3) Multiple choice
Select the most appropriate phrase:
(i) Payback period is useful when
(a) Liquidity under question
(b) Profit is critical
(c) Time value of money is important
(ii) Working Capital is the difference of
(a) Current Assets and Fixed Assets
(b) Fixed Assets and Current liabilities
(c) Current Assets and current Liabilities
(iii) Salary paid to Shri Shantilal, the concerned Accounts are
(a) Real & Nominal
(b) Personal & Real
(c) Nominal & Personal
(4) Select the appropriate answer from the bracket
(i) Assets purchased in the year 1992 at the cost of Rs.5,00,000, estimated life of the assets assumed
10 years, depriciation accounted for the year 1994 is Rs.50,000, method of depreciation is (written down value, straight line method , unit of output)
(ii)Goodwill is the assets (Real & tangible, Real & intangible, tangible & fictitious)
(iii) In a factory against standard hours of 10,000 actual hours spent 12,000, against standard labour cost of Rs.5 per hour actual rate paid is Rs.4. Variance calculated Rs.10,000 (Adverse) is (Labour Cost Variance, Rate Variance, Labour Efficiency Variance).
(5) Match item from table(1) and Table(2)
Table (1) Table (2)
1. Tax planning & Budgetory Control Working 1. Fixed Assets
Capital Management etc.
2. Not for Sales 2. Management Accounting
3. Rent paid to Shri Ratilal debited to 3. Errors of principle
Shri Kantilal
4. Internal Rate of Return 4. DCF method
5. Current Ratio 5. Test of Profitability
6. Debit what comes, credit what goes 6. Nominal Accounts
7. Test of Solvency
8. Real Accounts
9. Errors of Commission
10. Cost Accounting
Q-2 Prepare the Final Accounts of Ronak Enterprise as on 31-3-1995, considering the following Trial Balance 8 Debit Credit
Rs. Rs.
Capital --- 50,00,000
Opening Balance 14,00,000 ---
Sales & Purchases 80,00,000 1,25,00,000
Debtors & Creditors 40,00,000 2,00,000
Salary 4,00,000 ---
Plant & Machinery 30,00,000 ---
Furniture & Fixtures 10,00,000 ---
15% Bank of Baroda Loan --- 5,00,000
Postages & Telegram 1,40,000 ---
Stationary & Printing 1,20,000 ---
Rates & Taxes 40,000 ---
Interest on Bank Loan 50,000 ---
Bank Balance 50,000 ---
-------------- ---------------
1,82,00,000 1,82,00,000
======== =========
Adjustments:
(1) Closing Stock as on 31-3-95 Rs. 5,00,000
(2) Outstanding expenses:
Rates & Taxes Rs.10,000
Postages & Telegram Rs. 50,000
(3) Provide Depreciation @ 20% on Plant & Machinery, @10% on furniture & fixtures .
(4) Provide Bad debts @2% on debtors.
OR
Q-2 Discuss the process of estimating working capital needs bared on the components of an
Operating cycle. 8
Q-3 Following condensed financial Statements of the Infotech Ltd. Relate to the accounting year ending on
March 31st
Profit and Loss A/c
For the year ended on 31st March (Rs. In lacs)
1994 1995 1994 1995
To Opening Stock 15 15 By Net Sales 150 180
To Net Purchases 90 115 By Closing Stock 15 20
To Gross Profit 60 70
----- ---- ---- -----
165 200 165 200
=== === === ===
To Admn & Sales Exps 16 12 By Gross Profit 60 70
To Deprication 4 5 By Misc. income 5 8
To Interests 5 6
To Prov. For Taxes 20 30
To Net Profits 20 25
---- ---- ---- ----
65 78 65 78
=== === === ===
Balance Sheet
As on 31st March (Rs. In Lacs)
Liablities 1994 1995 Assets 1994 1995
Equity Capital 50 50 Fixed Assets (Gross) 100 120
Reserves 10 35 Less: Acc Depriciation 40 45
14% Debentures 15 15 Net Fixed Assets 60 75
Curr. Liabilities 25 30 Current Assets 40 55
94 95
Stock 15 20
Debtors 15 23
Cash & Bank 10 12
---- ----- ----- -----
100 130 100 130
=== === === ===
Calculate the following ratios and give your comments on each of them for the changes occurred for the year ended on 31st March,1995
(1) Current Ratio (2) Net Profits Ratio (3) Operating Ratio
(4) Debt-equity Ratio (5) Stock Turnover Ratio (6) Average Age of Debtors
OR
Q-3 Answers the following (Any Two)
(1) Explain errors not affecting the trial balance.
(2) Compare the straight line method with written down method.
(3) Explain factors affecting working capital requirements.
SECTION II
Q-4 Attempt the following (Any Three) 9
(1) Zabak Ltd. Maintains its stores ledger on LIFO basis . Based on transactions during the period
Of May 95. Find out its closing balance.
Data Transaction
1 Receipts 10,000 kgs @ Rs.20
7 Receipts 40,000 kgs @ Rs.30
8 issue 30,000 kgs
19 issue 50,000 kgs
23 Receipts 15,000 kgs @ Rs.25
26 issue 10,000 kgs
(2) Binaka Ltd. Provides following figures. Find out (1) P/V ratio (2) Break Even Point
(3) Sales when company wants to earn profits of Rs. 20,00,000.
Year Sales Profit
Rs. Rs.
1993 50,00,000 6,00,000
1994 1,00,00,000 10,00,000
(3) Lara System Ltd. Has following capital structure. Find out weighted Average cost of capital.
Capital structure Rs. Cost of Capital
Equity shares 40,00,000 12%
10% Pref. Shares 5,00,000 10%
18% Debenture 5,00,000
-------------
50,00,000
========
Taxbracket assume at 50%
(4) Complete balance sheet figures:
Liabilities Rs. Assets Rs.
Share Capital 40,00,000 Fixed Assets 30,00,000
Reserves 10,00,000 Current Assets
Current Liabilities 10,00,000 Inventories ?
Debtors ?
------------ ------------
60,00,000 60,00,000
======= =======
Liquidity Ratio 2:1
Q-5 Find out internal Rate of Return of Banzara Ltd. From following data:
Year Cashflow Year Cashflow
(Rs.) (Rs.)
1 16,000 6 20,000
2 16,000 7 25,000
3 16,000 8 40,000
4 16,000 9 25,000
5 16,000 10 10,000
Rate of Return between (10% and 15% return)
PV factor for 10% and 15% are as under:
PV factor/Years 1 2 3 4 5 6 7 8 9 10
@10% 0.909 0.846 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386
@15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247
OR
Q-5 (a) The Asha Systems Ltd. Has a cash on hand of Rs. 25,000 on 1st July,1995. If requires you to prepare an
estimate of cash position for the three months period July, August and September, 1995. The following
information are available:
Particulars May June July August September
Rs. Rs. Rs. Rs. Rs.
Sales 50,000 56,000 60,000 80,000 90,000
Purchases 30,000 32,000 35,000 40,000 40,000
Wages 6,000 6,500 7,000 9,000 9,500
Factory Exps 5,000 5,500 6,000 7,500 8,000
Office Exps 4,000 4,000 4,000 4,000 4,000
Sales Exps 3,000 3,000 3,500 4,500 4,500
Additional Information:
(1) 60% of the sales are on credit for one month.
(2) Suppliers supply goods on one month credit terms.
(3) Wages and other expenses are paid in the month in which they are incurred.
(4) Rs. 5,000/- to be paid as Advance Income in the month of September,1995.
(5) The company will pay bonus to workers in the month of August, 1995 worth Rs. 20,000.
(b) Discuss the advantages of Budgeting. 2
OR
Q-5 (a) The following details are taken from the financial records of the Cosmos Ltd. For the year ended
31st March,1995. You are required to calculate the total cost of production at 80%, 90% and 95% of capacity. While fixed Overheads remain constant, Semi-variable overheads remain constant upto 80% of capacity, increase by 10% between 80% and 90% of capacity and increase by 20% between 90% and 100%. Capacity.
The cost details at 60% capacity utilization:
Fixed Overheads Rs. In lacs
Wages & Salaries 8.4
Rates & Taxes 5.6
Depreciation 7.0
Sundry Overheads 9.0
Semi-variable Overheads
Maintenance 2.5
Indirect labors 10.0
Selling expenses 3.0
Sundry expenses 2.5
Variable Overheads
Materials 24.0
Labour 26.0
Other Expenses 4.0
(b) Discuss the essentials of Budgeting
Q-6 Alpha Computers Ltd. Is presently considering an investments in a capital project. The project details are as under:
Project Cost = Rs. 2,60,000
Project life = 4 years
Scrap Value at the end = Rs. 20,000
Projected Operating results
Year Profit
1 Rs. 10,000
2 Rs. (20,000) Loss
3 Rs. 30,000
4 Rs. 42,000
The depreciation is provided under the straight line method.
Evaluate the project under the following methods:
Payback Period
Accounting Rate of Return
Net Present Value Assuming the required rate of return is 14%
