Tuesday, December 28, 2010

MCA - Accounting & Financial Management - 2001

Gujarat University

MCA Semester II
ACFM

Date: 26th July, 2001                                                                                                                                     Marks:50

Instructions:
1.      Attempt both the sections in separate answer-books.
2.      Right-hand figures indicate marks.

Section I


Q-1 a) Answer the following:
            State the divisions of a journal and explain its importance.                                                               [3]

OR

        a) Briefly explain the errors not disclosed by the trial balance.                                                              [3]
        b) Answer the following (any two):                                                                                                       [5]
            (1) Following details relate to the ABC Ltd.
                                                            Opening Balance         Closing Balance
            Raw materials                         190                              210
            Work-in-progress                    80                                100
            Finished goods                        200                              240
            Additional information:
i.                    Total purchases Rs.3,600
ii.                  Total manufacturing expenses including depreciation Rs. 720.
iii.                Total administrative expenses Rs.420.
Assuming 360 operating days calculate:
(i) RM waiting period             ii) Process time            iii) Delay in dispatching the finished goods
            (2) Following details relate to the PQR Ltd.:
2000                                2001
Sales                Rs. 40,000       60,000
Profits             Rs.8,000          16,000
Answer the following:
i)                    Calculate the amount of the fixed cost.
ii)                  Calculate the profit-volume ratio
iii)                Calculate the break-even point in rupees.
  (3) The following details relate to the RST Ltd.:
            Standard Cost             Actual Data
            0.250 Kg. Per unit       Production = 40,000 units
            Price: Rs.20 per kg.     Total purchases = Rs.2,18,400
                                                Total purchases = 10,400 units
            Calculate the following:
i)                    Materials cost variance
ii)                  Materials price variance
iii)                Material usage variance

Q-2  The trial Balance of the IT Ltd. as on 31-3-01 is as under:                                                                    [8]
            Particulars                                           Dr. Balance(Rs.)                     Cr.Balance(Rs.)
            Share Capital                                       -                                               12,000
            Reserves                                              -                                               6,500
            15% Debentures (raised on 1-1-01)    -                                               30,000
            Fixed Assets                                       70,000                                     -
            Purchases and Sales                            30,000                                     1,00,000
            Carriage Inwards                                8,000                                       -
            Carriage Outwards                              1,800                                       -
            Administrative Exp.                            19,300                                     -
            Debtors & Creditors                           9,700                                       11,000
            Stock (1-4-00)                                     9,800                                       -
            Cash and Bank                                    10,000                                     6,000
            Commission                                        400                                          1,000
            Investments                                         7,500                                       -
                                                                        ---------                                     ----------
                                                Total                1,66,500                                  1,66,500
                                                                        ----------                                    -----------
            Additional Information:
1.      The closing stock was 10,000
2.      Unpaid administrative expenses Rs.1,000.
3.      Commission received in advance Rs.200.
4.      Depreciation to be provided on fixed assets @10%.
5.      Provide 2% as provision for bad debt on debtors.
Prepare the final accounts.

OR

Q-2 Answer the following any two:                                                                                                               [8]
1.      Briefly explain the following methods of pricing materials issued to production:
i)                    Briefly explain the following methods of pricing materials issued to production:
i) LIFO            ii) FIFO           iii) Weighted Average
ii)                  Distinguish between straight line and written down value method of depreciation.
iii)                Briefly explain the significance of the computerized accounting in the modern business.

Q-3  Following condensed financial statements relate to the XYZ Ltd.                                                       [8]
                        Dr.                               Rs.                   Cr.                               Rs.
                        To Opening Stock       9,000               By Sales                      30,000
                        To Purchases               20,000             By closing Stock         5,000
                        To Gross Profits          6,000
                                                            ---------                                                 ----------
                                                            35,000                                                 35,000
                                                            ---------                                                 ----------
                        To Adm Exp.              1,500               By Gross Profit           6,000
                        To Depreciation          1,000
                        To Interest                   800
                        To Taxes                      1,200
                        To Net profits             1,500
                                                            --------                                                  ----------
                                                            6,000                                                   6,000
                                                            =====                                                 =====
                                                Balance Sheet as on 31-3-01
                        Liabilities                    Rs.                   Assets                          Rs.
                        Share Capital               8,000               Net Fixed Assets        15,000
                        Reserves                      3,000               Current Assets            :
                        10% Debentures          8,000               Stock                           5,000
                        Current Liab.               6,000               Debtors                       4,000
                                                                                    Cash in Bank               1,000
                                                            ---------                                                 ----------
                                                            25,000                                                 25,000
                                                            =====                                                 ======
                        Calculate the following ratios:
                        (i) Current Ratio          (ii) Quick Ratio           (iii) Net profit Ratio
                        (iv) Rate of return on investment                    (v) Debt equity ratio
                        (vi) Interest Coverage ratio                             (vii) Total Assets Turnover
                        (viii) Inventory turnover

OR

Q-3 Answer the following (any two):                                                                                                                        [8]

1.      Explain the limitations of ratio analysis.
2.      Explain any four factors affecting working capital needs.
3.      Briefly explain the managerial uses of the break-even analysis.

Section II


Q-4 Answer the following (any three):                                                                                                           [9]

(1)   A firms after tax cost of capital of the specific source is as follows:
Cost of debt 8%
Cost of preference capital 14%
Cost of equity 17%
The following is the capital structure:
Debt                                        Rs.3,00,000
Preference share capital          Rs.2,00,000
Equity capital                          Rs.5,00,000
                                                ----------------
                                                Rs. 10,00,000
Calculate the weighted average cost of capital.
(2)   How would you distinguish between traditional and sophisticated techniques of capital budgeting?
(3)   What is budget? Explain its significance.
(4)   Calculate the cost of preference share capital of Dolly Ltd.
·         14% preference share capital is Rs.5,00,000 (Share of Rs. 50 each)
·         payable at par after 10 years
·         the issue cost is 5% on face value
·         corporate tax rate is 50%.
(5)   “Only Retained Earning” is cost free source of finance. Do you agree with this statement? Why?
(6)   Distinguish between net present value and Internal rate of Return.

Q-5 For production of 10,000 units of electronic automatic irons, the following are budgeted expenses:   [8]
                                                                        Per unit Rs.
            Direct Material                                    60
            Direct Labour                                      30
            Variable Overheads                            25
            Fixed Overheads (Rs. 1,50,000)         15
            Variable expenses (Direct)                  05
            Selling expenses                                  15 (10% fixed)
            Administrative expenses                     05 (Rs.50,000 rigid all level of production)
            Distribution expenses                          05 (20% fixed)
                                                                        -----
            Total cost of sale per unit                    160
                                                                        -----
            Prepare a flexible budget for production 10,000 units and 6,000 units.

OR

Q-5  M/s ABC limited wishes to arrange overdraft facilities with its bankers during the period April-June, 2001.
        Prepare a cash budget for the above period from the following data, indicating the extent of the bank facilities
        the company will require at the end of each month.                                                                               [8]
            Month             Total Sales (Rs)           Purchases (Rs.)            Wages (Rs.)
            February          1,80,000                      1,80,000                      12,000
            March              1,92,000                      1,44,000                      14,000
            April                1,08,000                      2,43,000                      11,000
            May                 1,74,000                      2,46,000                      10,000
            June                 1,26,000                      2,68,000                      15,000
            Additional information:
1.      50% of the credit sales are realized in the month following the sale and the remaining 50% in the second month following the sales. The cash sales is 20% of Total sales of each month.
2.      Creditors are paid in the month following the month of purchase.
3.      Assume total wages are paid on 1st of next month.
4.      Cash at bank on 1st April, 2001 is Rs. 25,000.

OR

Q-5 Write a note on the advantages and limitations of budgeting.                                                                [6]

Q-6 A company is considering an investment proposal to install new milling controls. The project will cost Rs.
       50,000. The facility has a life expectancy of 5 years and no salvage value. The company’s tax rate is 55%. The
       firm uses straight-line depreciation. The estimated cash flow before tax & depreciation from the proposed    
       investment proposal are as follows:
            Year    CFBS &T
1                    Rs. 10,000
2                    ”  11,000
3                    “  15,000
4                    “  16,000
5                    “  30,000
Compute the following:
i.                    Pay back period
ii.                  Accounting Rate of return
iii.                Net present value @10%
iv.                Profitability index
Year    1          2          3          4          5
            0.909   0.826   0.751   0.683   0.621

OR

Q-6 What is pay back period? Is it calculated using after-tax profit or cash flows? Why? What are the merits of pay
        back period?

OR

Q-6  What is internal Rate of return? Explain this technique with appropriate example.

MCA - Accounting & Financial Management - 2000

Gujarat University

MCA Semester II

ACFM


Date: 24th July, 2000                                                                                                                         Marks: 50

Instructions:
1.      Answer to the two sections must be written in separate answer books.
2.      Figures to the right indicate full marks of the question.

Section I


Q-1 Answer the following  (any three)                                                                                                           [9]

i)                    Division of Subsidiary books.
ii)                  State the limitation of ratio analysis.
iii)                Distinguish between fixed assets and fictitious assets.
iv)                Give debit-credit rule for Nominal A/C, Personal A/C and Real A/C.
v)                  Whether the following sequence for preparation of final A/C is correct or not? If not, correct it.
Subsidiary Books à Vouchers à Trial Balance à Balance à TransactionsàLedger Book à Adjustment à  Final accounts
vi)                Distinguish between profit & loss A/C and Balance sheet.

Q-2 The following details are extracted from ledger of XY Ltd.                                                                  [8]
            Trial Balance (As on 31-3-2000)
            Debit                           Rs.                               Credit                                      Rs.
            Investments                 15,000                         Capital                                     3,00,000
            Opening Stock                        37,500                         16% Loan                                75,000
            Machinery                   2,10,000                      Sales                                        3,75,000
            Furniture                     57,000                         Commission                            15,000
            Purchases                    2,61,000                      Creditors                                 1,05,000
            Debtors                       2,02,500                      Bank                                        27,000
            Wages                         21,000                         Goods return                           3,000
            Carriage Inward          15,000
            Carriage Outward       6,000
            Salaries                        33,000
            Printing                       13,500
            Rent, Rates & taxes    15,000
            Cash                            12,000
            Goods return               1,500
                                                ------------                                                                     -----------
                                                9,00,000                                                                      9,00,000         
                                                =======                                                                    ======
            Addition Information:
1.      The closing stock was of Rs.48,000 but realize value is Rs.45,000
2.      Interest on 16% loan yet to be recorded.
3.      Write off Rs.12,500 as bad debts  & provide doubtful reserve @10%.
4.      Depreciate Machineries @12% & furniture @10%. Prepare the final accounts.

Q-3 Attempt (any three):                                                                                                                                [8]
a)      Define Depreciation and discuss atleast two important methods of depreciation with appropriate illustration.
b)      “Ratio Analysis is useless exercise”. Do you agree with this statement? Why?
c)      Distinguish between FIFO and LIFO methods of Inventory.
d)     Briefly discuss the factors affecting the working capital needs.
e)      Write short note on: Gross and Net Working Capital

OR

Q-3 The Summarized Balance Sheet and Profit & Loss a/c of AB are as under:                                          [8]
                                    Balance Sheet as on 31-3-2000
            Liabilities                                Rs.                   Assets                                      Rs.
            Equity Capital                         80,000             Land & Building                     1,00,000
            Gen. Reserve                           35,000             Plant & Machines                    40,000
            Profit & loss A/c                     35,000             Furniture                                 20,000
            15% Debentures                      40,000             Stock                                       30,000
            Creditors                                 30,000             Debtors                                   20,000
            Bills Payable                           20,000             Cash                                        30,000
            Bank Overdraft                       10,000             Misc Expenses                        10,000
                                                            ----------                                                            ------------
                                                            2,50,000                                                          2,50,000
                                                            ======                                                           =======
                                    P & L A/s for the year ended on 31-3-2000
            Dr                                                                                                                    Cr
            To opening stock                     20,000             By Sales                                  2,40,000
            To purchases                           1,10,000          By closing Stock                     30,000
            To Gross profit                        1,40,000
                                                            -----------                                                          ------------
                                                            2,70,000                                                          2,70,000
                                                            ======                                                           =======
            To Adm Exp A/c                    30,000             By gross profit                        1,40,000
            To Sales Exp. A/c                   14,000             By commission                        20,000
            To Depreciation A/c                20,000
            To Interest A/c                        6,000
            To Taxes                                  30,000
            To Net profit                           60,000
                                                            ---------                                                             -------------
                                                            1,60,000                                                          1,60,000
                                                            ======                                                           =======
            Calculate the following ratios and comment on each ratio by comparing with industry ratio which is
mentioned in bracket:
i)                    Gross profit Ratio (45%)
ii)                  Net Profit Ratio (25%)
iii)                Stock turnover (3.5)
iv)                Current Ratio (1.5:1)
v)                  Acid Test Ratio (1:1)
vi)                ROI (40%)
vii)              Debt Equity Ratio (1.5 : 1)
viii)            Debtors Ratio (50 days)

Section II


Q-4 Answer the following (any three):                                                                                                           [9]

a)      The following transactions occur for purchase and issue of materials:
Jan- 2000               Transaction                  Units               Rate per unit
1                            Opening Balance         100                  Rs. 4.50
2                            Purchased                    4000                Rs.4.00
5                            Purchased                    500                  Rs.5.00
10                          Issued                          2000
17                          Purchased                    6000                Rs.6.00
19                          Issued                          4000
24                          Issued                          1000
27                          Issued                          2000
29                          Purchased                    5000                Rs.5.50
31                          Issued                          3000
From the above particulars prepare the stores ledger account by adopting FIFO method of changing material issue.
b)      From the following information determine (i) P/V ratio (ii) BEP  (iii) Margin of Safety:
Sales                      Rs.5,00,000
Variable cost         Rs.3,00,000
Fixed cost             Rs.1,00,000
c)      Compute the weighted average cost of capital of xyz Ltd. on the basis of following information:
Sr.  Source of Finance       Cost of Capital            Book Value     Market Value
                                                      (%)                  (Rs.)                (Rs.)
1    Long term debt                       10                    18,00,000        20,00,000
2.   Preference Shares                    12                    4,00,000          6,00,000
3.   Equity shares                           15                    60,00,000
4.   Retained Earning                    15                    20,00,000        1,00,00,000
      Tax bracket is 50%
d)     Cost price of as machine = Rs. 1,00,000
Installation charges = Rs. 1,00,000
Scarp value            Rs. 20,000
Estimated life        5 yrs.
Calculate depreciation for first two years under I) SML ii) WDV.
e)      Explain following concept:
i) P/V ratio                        ii) Margin of Safety    iii) BEP

Q-5 a) The following information is extracted from the cost record of James Co. Ltd. You are asked to calculate
Material Cost Variances.                                                                                                                     [6]
            Standard                                                                     Actual
Type    Kg.                  Price    Total                Type    Kg.                  Price    Total
x          10,000             10        1,00,000          x          11,000             9          99,000
y          12,000             12        1,44,000          y          13,000             13        1,69,000
z          18,000             10        1,80,000          z          17,000             11        1,87,000
            ---------                         -----------                      ---------                         -----------
            40,000                         4,24,000                      41,000                         4,55,000
       b) Write short notes on (any one):                                                                                                           [2]
            i) Sales Budget            ii) Costs budget           iii) Flexible budget      iv) production budget

OR

Q-5  With the following data for a 60% activity prepare 5 budget for production at 80% and 100% capacity:      
         Production at 60% activity 600 units
         Material Rs.125 per unit, Labour Rs. 100 per unit
         Direct Exps. Rs. 50 per unit
         Factory Exp. Rs.60,000 (40% fixed)
        Adm. Exp. Rs.80,000 (40% variable)
         S & D Exp. Rs. 1,00,000 (50% fixed)

OR

Q-5  Define the term ‘budget’ as used in cost accounting explain what is meant by “budgetary control”.  [8]

Q-6 A large sized chemical company is considering investing in a project that costs Rs.4,00,000. Tax rate is
       50%. The company uses straight-line method of depreciation and proposed project has cash flows as
       follows: (Before Depreciation & tax)                                                                                                      [8]
            Years                           1                      2                      3                      4                      5
            Cash flows (Rs.)         1,60,000          1,80,000          2,00,000          2,20,000          2,50,000
            Determine the following:
            i) Pay back period       ii) Average Rate of return       iii) Net Present value at 15% iv) Profitability Index
at 15%
Discount factors:
0.870, 0.756, 0.658, 0.572, 0.497
OR
Q-6 Explain the following with relevant illustration (any two):                                                                     [8]
1.      Pay back period
2.      Average rate of return
3.      Net present value
4.      Internal rate of return
5.      Profitability index