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Management Accounting - March 2005
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March – 2005
Time: 3 Hours
Q.1. Brijesh started business by introducing capital of Rs. 1,00,000 on 1-4-2004. He has taken Term Loan from Bank of India of Rs. 4,00,000 at 12% interest & purchased premises of Rs. 3,00,000 & Furniture & Equipment of Rs. 1,50,000. His projected Trading & Profit & Loss Account for the first year ended 31st March, 2005 is as follows :-
|To Opening Stock||--||By Sales|
|To Purchases||Cash Sales||1,70,000|
|Cash Purchases||50,000||Credit Sales||8,50,000|
|7,00,000||Less : Returns||20,000||10,00,000|
|Less : Returns||10,000||6,90,000||By Closing Stock||50,000|
|To Gross Profit c/d.||3,00,000|
|To Administrative Expenses||60,000||By Gross Profit b/d||3,00,000|
|To Selling Expenses||1,00,000||By Profit on sale of Equipment||5,000|
|To Interest on Bank Loan||48,000||(Cost of Equipment sold Rs. 20,000)|
|To Depreciation on Equipment||30,000|
|To Net Profit||67,000|
Prepare Cash Flow Statement for the year ended 31st March, 2005 as per AS-3 & calculate cash & Bank Balance as on that date. Use Indirect Method. Balances on 31st March, 2005 expected are Debtors Rs. 1,50,000. Creditors Rs. 50,000. Last quarter Interest on Bank loan is not yet paid. Reconcile your answer by preparing projected Balance Sheet (in vertical form) as at 31st March, 2005. (16)
Q.2. The Balance Sheets of Chetan Ltd. as at 31st March, 2003 & 2004. (16)
|31-3-2003 Rs.||31-3-2004 Rs.|
|Equity Share Capital (shares of Rs. 10 each fully called)||10,00,000||14,50,000|
|Less: Calls-in-Arrears (Rs. 2 per share)||5,000||--|
|Add: Share Forfeiture Balance (Rs. 8 per share)||8,000||1,600|
|Paid up Equity Capital||10,03,000||14,51,600|
|8% Redeemable Preference Share Capital||5,00,000||4,00,000|
|Capital Reserve (Net profit on Forfeited Shares reissued)||--||16,500|
|Profit & Loss Account||1,50,000||7,42,900|
|Fixed Assets (At cost Less Dep.)||12,00,000||20,00,000|
Other Information :-
(1) During the year Equity shares on which calls were in arrears have been forfeited.
(2) Part of the forfeited shares have been reissued at Rs. 7 per share.
(3) Bonus shares are issued by using securities premium of Rs. 60,000 and General Reserve of Rs. 1,40,000.
(4) Depreciation on Fixed Assets for the year was Rs. 1,80,000.
(5) Investments costing Rs. 75,000 were sold at Rs. 1,00,000.
Prepare Fund Flow Statement for the year ended 31st March, 2004.
Q.3. From the following information, you are required to prepare a Balance-Sheet in Horizontal form : (16)
|Stock Turnover Ratio||9 times (Based on Closing Stock)|
|Gross Profit Ratio||25%|
|Debtors collection period||1.5 months|
|Reserves and surplus to share capital||0.2|
|Cost of Goods sold to Fixed Assets||1.2|
|Capital Gearing (Long term Loans to Share Capital)||0.6|
|Fixed Assets to shareholders Funds||1.25|
|Sales for the year (All are on Credit Basis)||Rs. 12,00,000|
Current Assets consisted of Cash, Stock & Debtors only. The company has not issued pref. shares. There are no Bank Overdraft & Fictitious Assets.
Q.4. Maza Ltd. was formed and incorporated on 1st April, 2002. You are given following trial balance as on 31st March, 2003 & 31st March, 2004. You are required to prepare vertical statement for both the years in columnar form. (16)
|31st March, 2003||31st March, 2004|
|Dr. (Rs.)||Cr. (Rs.)||Dr. (Rs.)||Cr. (Rs.)|
|Land and Building||25,50,000||--||25,50,000||--|
|Cash & Bank Balance||1,00,000||--||1,00,000||--|
|P/L Opening Bal.||--||--||--||7,44,000|
Adjustment : (1) Closing Stock as on 31st March, 2004 is Rs. 4,00,000.
Q.5. a) Horizon Ltd. engaged in the following transactions. Identify whether it is (a) an Operating (b) an Investing (c) a Financing (d) none of the above. (5)
(1) Dividend paid. (2) Interest paid. (3) Issued long term bonds. (4) Purchased long term investment. (5) Equipment sold. (6) Dividend received on shares held. (7) Purchased land. (8) Received cash from customers. (9) Wages paid to workers. (10) Issued bonus shares out of general reserves.
b) Given below are some of the information of Parekar Ltd. as on 31st March, 2004. (6)
|Outstanding Manufacturing Exp.||17,000|
|Bills Payable & Creditors||38,000|
|Income earned but not received||6,000|
|Prepaid traveling expenses||4,000|
Using above data calculate current ratio and liquid ratio and comment on it. (6)
c) Calculate Return on Capital employed and Return on Proprietor’s Fund from following information. (5)
|Profit & Loss A/c||1,50,000 (Cr.)|
|Operating Profit||3,50,000 (Before Interest & Tax)|
|Long Term Loan||2,00,000 (at 12% p.a. Interest)|
|Tax Rate is 30%.|
Q.6. Chinmag is carrying on trading business in India and gives the following information. (1) Estimated sales in year Rs. 12,00,000. (2) His Administrative & Selling expenses are estimated as fixed expenses Rs. 2,000 per month and variable expenses equal to 5% of his turnover. (3) He expects to fix sale price for each product which will be 25% in excess of his cost of purchase. (4) He expects to turnover his stock four times in the year. (5) The sales & Purchases will be evenly spread throughout the year. 20% of sales will be on cash and balance on credit and allowed 2 months credit. He also expects one month credit from his suppliers. (6) Cash Balance = Fixed and variable expenses for one month.
Calculate his average working capital and prepare his income statement for the year. (16)
Q.7. Vinod Honorable Ltd. presents you with their summarized Profit & Loss A/c with the request to convert the same into a common size statement in vertical form after incorporating the information given there under & briefly comment on it. (16)
Profit and Loss Account for the year ended 31-12-2004
|To Opening Bal. B/d.||1,00,000||By Sales||10,00,000|
|To Opening Stock : Raw|
Material Finished goods
|By Dividend received||2,00,000|
|To Purchases : Raw|
Material Finished goods
|By Closing Stock : Raw|
Material Finished goods
|To Manufacturing Exp.||1,00,000|
|To Establishment Exp.||2,82,000|
|To Interim Dividend||35,000|
|To Provision for Tax||75,000|
|To Audit fees||2,500|
|To Directors Fees||2,000|
|To Preliminary Expenses||5,000|
|To Salaries & Wages||1,00,000|
|To Depreciation on : Delivery|
Van Building for Office
|To Int. on Secured Loan||10,000|
|To Selling & Distribution Exp.||75,000|
|To Loss on Sales of Fixed Assets||10,000|
|To Transfer to General Reserve||10,000|
|To Proposed Dividend||55,000|
|To Balance c/d||76,000|
Other Information : Establishment expenses include a sum of Rs. 12,000 written-off as bad debts.
Q.8. Complete the following comparative statement of Mahesh Pvt. Ltd. by ascertaining the missing figures and underline the missing figures ascertained. (16)
|Particulars||2003 Rs.||2004 Rs.||Absolute Increase/Decrease Rs.||Increase/Decrease %|
|Cost of Goods Sold : Opening Stock||?||60,000||+10,000||?|
|Cost of Goods Sold||?||?||+97,500||+25%|
|(a) Administrative Exp.||40,000||?||?||+100%|
|(b) Financial Exp.||60,000||72,000||?||?|
|(c) Selling Exp.||?||1,50,000||+1,00,000||+200%|
|Total Operating Exp.||?||?||?||?|
|Net Profit Before Tax||60,000||1,10,500||?||?|
|Provision for Tax||?||?||?||?|
|Net Profit after Tax||36,000||?||+27,000||+75%|
Q.9. Write note on any four: (16)
a) Liquid Assets.
b) Contingent Liabilities.
c) Cash Flow v/s Fund Flow.
d) Trading on equity.
e) Debtors Turnover Ratio & Creditors Turnover Ratio.
f ) Selection of Accounting Software.
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