mb0041 smu mba summer 2014 Ist sem assignmenta

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ASSIGNMENT DRIVE SUMMER 2014

PROGRAM MBADS / MBAHCSN3 / MBAN2 / PGDBAN2 / MBAFLEX SEMESTER I

SUBJECT CODE & NAME MB0041 & FINANCIAL AND MANAGEMENT ACCOUNTING

Note –Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1. Inventory in a business is valued at the end of an accounting period, at either cost or market price, whichever is lower. This is accepted convention or a practice in accounting.

Give a small introduction on accounting conventions and elucidate all the eight accounting conventions. (Introduction of accounting convention, Explanation of all the 8 types of conventions) 2, 8

Answer:

Accounting Conventions

Accounting conventions are the rules based on which accounting takes place and these rules are universally accepted. There are many types of accounting conventions, namely convention of income recognition, convention of expense, convention of matching cost and revenue, convention of historical cost, convention of full disclosure, convention of double aspect, convention of modifying, convention of materiality, convention of consistency, and convention of

Q2. Write down a table with the accounts involved / the nature of account/its affects/ debit or credit. Please have the transactions given below and prepare the table as per the instructions given above for each transaction.

a. 1.1.2011 Sunitha started his business with cash Rs. 5,00,000

b. 2.1.2011 Borrowed from Malathi Rs. 5,00,000

c. 2.1.2011 Purchased furniture Rs. 1,00,000

d. 4.1.2011 Purchased furniture from Meenal on credit Rs. 1,50,000

e. 5.1.2011 Purchased goods for cash Rs. 50,000

f. 6.1.2011 Purchased goods from Ram on credit Rs. 2,50,000

g. 8.1.2011 Sold goods for cash Rs. 1,25,000

h. 8.1.2011 Sold goods to Shyam on credit Rs. 55,000

i. 9.1.2011 Received cash from Shyam Rs. 25,000

j. 10.1.2011 Paid cash to Ram Rs. 90,000

(Filling in all the details in the table for all the transactions. Each transaction carries one mark (1*10=10)

Answer:

Sl.	Accounts	Nature of	Affects	Debit/
No.	Involved	Account		Credit
a	Cash a/c	Real	Cash is coming in	Debit
	Capital a/c	Personal	Sunita is the giver	Credit

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Q3. The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000. 10 marks Summer 2013

Sundry Debtors Rs.160000

Bad Debts written off Rs 9000

Discount allowed to Debtors Rs. 1800

Reserve for Bad and doubtful Debts 31-12-1999 Rs. 16500

Reserve for discount on Debtors 31-12-1999 Rs. 3200

You are required to provide the bad and doubtful debts at 5% and for discount on debtors at 2%. Show the adjustments for bad debts, bad debts reserve, discount account, and provision for discount on debtors.

Answer.

Solution:

Date		Particulars			LF	Debit	Credit
						Rs.	Rs.
2000    Dec,		RBD  account	Dr
31st		To Bad Debts account				9000
		(Being bad debts written off against existing RBD)					9000

Q4. The reports prepared in financial accounting are also used in the management accounting. But there are few major differences between financial accounting and management accounting.Explain the differences between financial accounting and management accounting in various dimensions. (Writing down all the differences between the financial and management accounting)

Answer:

	Dimension	Financial accounting	Management accounting
	Users	The primary users of financial	The primary users of
		accounting information are	management accounting are
		external users like shareholders,	internal users like top, middle,
		creditors, government authorities,	and lower level managers.
		employees, etc.

Q5 Draw the Balance Sheet for the following information provided by Sandeep Ltd..

a. Current Ratio : 2.50

b. Liquidity Ratio : 1.50

c. Net Working Capital : Rs.300000

d. Stock Turnover Ratio : 6 times

e. Ratio of Gross Profit to Sales : 20%

f. Fixed Asset Turnover Ratio : 2 times

g. Average Debt collection period : 2 months

h. Fixed Assets to Net Worth : 0.80

i. Reserve and Surplus to Capital : 0.50

 (Preparation of Balance sheet (Includes all the ratios) 10

Solution:  The Balance Sheet is given below:

Liabilities	Rs.	Assets	Rs.
Captal	500000	Fixed Assets	600000
Reserves and Surplus	250000	Inventories	200000
Long-term Debt	150000	Debtors	250000

Q6. Write the main differences between cash flow analysis and fund flow analysis.

Following is the balance sheet for the period ending 31st March 2011 and 2012. If the current year’s net loss is Rs.38,000, Calculate the cash flow from operating activities.

(Differences between cash flow and fund flow analysis, Preparation of statement showing cash flow from operating activities) 4, 6

Difference between Funds Flow Statement and Cash Flow Statement

	Basis of Difference	Funds Flow Statement	Cash Flow Statement
1.	Basis of Analysis	Funds flow statement is based on broader concept i.e. working capital.	Cash flow statement is based on narrow concept i.e. cash, which is only one of the elements of working capital.

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