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120 Financial Management Accounting - May 2007 Testpapers
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M.B.A. DEGREE EXAMINATION, 2007
( TWO YEAR PROGRAMME )
( ENGLISH MEDIUM )
( FIRST YEAR )
( PAPER - II )
120. FINANCIAL AND MANAGEMENT ACCOUNTING
May ] [ Time : 3 Hours
Maximum : 75 Marks
Answer any FIVE questions.
Each question carries THREE marks.
1. (a) State any three functions of management accounting.
(b) What is capital budgeting ?
(c) What are common - size financial statements ?
(d) What is cash - flow analysis ?
(e) What is zero - base budgeting ?
(f) What is percentage analysis ?
(g) What is discounted cash - flow method ?
(h) What is break - even analysis ?
Answer any THREE questions.
All questions carry equal marks.
2. What are the tools and techniques used in management accounting ? Explain any two of them.
3. Explain the basic components of capital budgeting analysis.
4. How far financial statements would be useful for the management ? - Explain.
5. What significance information are brought out by funds - flow statement ? State its limitations.
6. What is principal budget factor ? Give a list of such factors.
Answer any ONE question.
7. On 31st March, 2007 the following trial balance was prepared from the books of a trader :
|Plant and machinery||80,000||-|
|Provision for doubtful debts||-||525|
|Rent, rates and taxes||10,000||-|
|Cash in hand||900||-|
|Cash at bank||6,000||-|
|Furniture and fittings||20,000||-|
The following adjustments are required :
(a) Closing stock is Rs. 35,000.
(b) Depreciation on plant and machinery at 15 % p.a. and on furniture and fittings at 10 % p.a. are to be provided.
(c) Provision for doubtful debts is to be adjusted to Rs. 500.
(d) Interest on capital is to be allowed at 10 % p.a.
(e) 15 % of the profit remaining after providing for interest on capital Is to be carried to general reserve. Prepare the final accounts of the trader for the year ended 31st March, 2007
8. Following is the balance sheet of ABC Company Limited as on December - 31, 2006 :
|Equity share capital||20,000||Goodwill||12,000|
|Capital reserves||4,000||Fixed assets||28,000|
|8 % loan on mortgage||16,000||Stocks||6,000|
|Tax provisions :||Cash||6,000|
|P & L a/c :|
|Current profits after tax and interest on fixed deposits 12,000|
|Less : Transfers|
|Dividend 2,000 6,000||6,000|
Sales amounted to Rs. 1,20,000. Calculate the ratio for
(a) Testing liquidity and
(b) Testing solvency.
9. Balance sheets of Messrs. Red and Blue as on 1-1-2006 and 31-12-2006 were as follows :
During the year a machine costing Rs. 10,000 (accumulated depreciation Rs. 3,000) was sold for Rs. 5,000. The provision for depreciation against machinery as on 1-1-2006 was Rs. 25,000 and on 31-12-2006 Rs. 40,000.
Net profit for the year amounted to Rs. 45,000.
You are required to prepare funds - flow statement.
( Compulsory )
10. A firm annually manufactures 10,000 units of a product at a cost of Rs. 4 per unit and there is a home market for consuming the entire volume of production at the sale price of Rs. 4·25 per unit. In the year 2006, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of Rs. 3·72 per unit. The analysis of the cost per 10,000 units is :
Materials - 15,000
Wages - 11,000
Fixed over - heads - 8,000
Variable over - heads - 6,000
The foreign market is explored and it is found that this market can consume 20,000 units of the product, if offered at a sale price of Rs. 3·55 per unit. It is also discovered that for additional 10,000 units of the product (over initial 10,000 units) fixed over - heads will increase by 10 per cent.
Is it worthwhile to enter the foreign market ? - Decide.
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