USN 10MBA14

First Semester MBA Degree Examination, June 2012

Accounting for Managers
2. Any revealing of identification, appeal to evaluator and /or equations written eg, 42+8 = 50, will be treated as malpractice.

Time: 3 hrs. Max. Marks:100

Note: 1. Answer any FOUR full questions, from Q.No. 1 to 7.
2. Q.No. 8 is compulsory.

1 a. What is a personal account? What are the types of personal account? (03 Marks)
b. What is cash book? What are the different types of cash book? How is the cash book
Important Note : 1. On completing your answers, compulsorily draw diagonal cross lines on the remaining blank pages.

different from a petty cash book? (07 Marks)

c. From the following information prepare a Stores Ledger Account under LIFO method.
(10 Marks)
Date Purchase Date Issue
1-1-2011 Opening stock 1000 units at Rs 5/- each 8-1-2011 Issued 1000 units
4-1-2011 Purchase 900 units at Rs 6/- each 21-1-2011 Issued 500 units
11-1-2011 Purchase 1000 units Rs 6.50 each 25-1-2011 Issued 400 units
28-1-2011 Purchase 200 units at Rs 7/- each
31-1-2011 Shortage of 20 units

2 a. What are the branches of accounting? (03 Marks)

b. What is window dressing? What are the reasons for window dressing? (07 Marks)
c. Analyse the effects of the following transactions on the accounting equation :
1. Mr. Kishan commenced business with Rs 3000 in cash Rs 2000 Inventory and Rs 2000
in furniture.
2. He opens as current account with bank of India and deposits Rs 2500.
3. Purchased goods worth Rs 5000 on credit.
4. Sold goods costing Rs 2000 for Rs 2500 on credit.
5. Made a payment of Rs 500 for office expenses.
6. Paid Rs 2000 to trade credit.
7. Received interest income Rs 5000.
8. Fixed deposit is opened for Rs 5000 with SBI.
9. Received Rs 500 from Trade debts.
10. Paid interest expenses of Rs 800. (10 Marks)

3 a. What is inventory turnover ratio? How it is calculated? (03 Marks)

b. What is fund flow statement? How it is different from cash flow statement? (07 Marks)
c. Enter the following transactions in a three column cash book of Mr. Kishore.
Feb 1 Cash balance Rs 3000 and at Bank Rs 10,000
Feb 2 Cash received from Mr. Rakesh Rs 1950 in full settlement of Rs 2000.
Feb 5 Purchased goods and paid by cheque Rs 1000
Feb 6 Received a cheque from Rajesh Rs 2000
Feb 7 Deposited the cheque in the bank
Feb 11 Paid rent in cash Rs 500.
Feb 14 Paid Mr. Ganesh Rs 580 by a cheque and he allowed discount Rs 20.
Feb 18 Cash withdrawn from bank for office use Rs 1000
Feb 19 Stationery purchased Rs 100.
Feb 24 Draw from bank for personal use Rs 500.
(10 Marks)
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4 a. What is a debit note and a credit note? (03 Marks)

b. What are the basic ingredients of Board of Directors Report? (07 Marks)
c. Record the following transactions in the Journal of Mr. X. (10 Marks)
2011 Jan 1 Started business with Rs 1,00,000
8 Purchased goods worth Rs 50,000 less 20% trade discount and 5% cash
12 Bought 100 shares of Bharat Ltd at Rs 15/- per share brokerage paid Rs 25/-.
16 Purchased a motor car in exchange of goods Rs 20,000 and cash Rs 30,000
20 Sold goods to Mr Y for Rs 60,000 in cash
22 Purchased goods from Ram Rs 25,000
26 Goods distributed as free samples Rs 1000
29 Mr. Y became insolvent and only as dividend of 50 paise is recovered
from his estate.
30 Cash Rs 5000 is withdrawn by the proprietor for personal use.
31 Paid into Bank Rs 5000.

5 a. What is WDV method of depreciation? (03 Marks)

b. Explain Dupoint analysis. (07 Marks)
c. A firm purchased a plant on 1-7-2005 for Rs 90,000 on its enaction on 30-6-2008. Part of
the plant purchased on 1-7-2005 for Rs 50,000 is sold for Rs 30,000. Depreciation is written
off at 10% P.a. The firm closes the books on 31st December every year. Prepare for plant
account under straight line method. (10 Marks)

6 a. What is going concern concept? (03 Marks)

b. What are the uses of ratio analysis? (07 Marks)
c. The working capital of ABC Ltd has determined in recent years and now stands as under :
Current Liabilities Amt (Rs) Current Assets Amt (Rs)
Creditors 4,90,000 Inventory 5,60,000
Bank loan 2,10,000 Debtors 3,50,000
Cash 70,000
Total 7,00,000 Total 9,80,000
1) Compute current and quick ratios.
2) A further bank loan of Rs 50,000 against debtors is under negotiation. Assuming that the
loan is received, calculate the revised current and quick ratio.
3) There is also a negotiation going on for discounting the debtors Rs 3,50,000 for
Rs 3,15,000 in a collective agency for immediate agency. Also absolute stock worth Rs
1,25,000 is being sold for Rs 80,000 of the cash to be realized by the two transaction,
the bank loan is proposed to be reduced to Rs 1,00,000. Calculate the current ratio after
the transactions are put through. (10 Marks)

7 a. What is FIFO? Write its uses. (05 Marks)

b. Following are the balance sheets of a company :
Liabilities 2007 2008 Assets 2007 2008
Equity capital 50,000 53,000 Cash 20,000 25,000
Long term loan 14,000 13,000 Debtors 24,000 27,000
Retained earnings 28,000 37,000 Stock 31,000 32,000
Accumulated depreciation 21,000 25,000 Other C.A 8,000 7,000
Creditors 20,000 21,000 Fixed Assets 50,000 58,000
Total 1,33,000 1,49,000 Total 1,33,000 1,49,000
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Prepare fund flow statement :

Additional information :
1) Fixed assets costing Rs 12,000 were purchased during 2008 for cash.
2) Fixed assets original cost Rs 4,000, (accumulated depreciation Rs 1500) were sold at
book value (Rs 2500).
3) Depreciation for the year amounted to Rs 5,500.
4) Dividend paid during the year Rs 3,000. (15 Marks)

8 From the following balances, prepare trading and profit and loss account and balance sheet as
on 31-3-2008.

Particulars Rs Particulars Rs
Building 15,000 Capital 20,000
Investments 10,000 Sales 1,40,000
Furniture 1,000 Returns 1,000
Car 8,000 Creditors 4,800
Purchases 94,000 Discount 500
Returns 500 Provision for doubtful debts 300
Debtors 15,000
Expenses 800
Cash in hand 300
Cash at bank 4,700
Rent paid 4,000
Commission 1,400
Rates and taxes 600
Bad debts 200
Insurance 400
Discount 700
Opening stock 10,000
Total 1,66,600 1,66,600
Adjustments :
1) Outstanding expenses, commission Rs 100, rent Rs 400.
2) Insurance prepaid Rs 50.
3) Maintain provision for doubtful debts at 5% on debtors.
4) Stock on 31-3-2008 Rs 15000.
5) Interest on investments at 5% due, but not received.
6) Depreciate car by 10%, furniture by 2% and building by 3%.
7) Provide interest on capital at 5%. (20 Marks)

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