Seat No.

Enrolment No:

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA 1ST Semester Examination
Subject Code
: 2810001
Subject Name
: Accounting for Managers
Date
:
Time Duration : 3 Hours
Instructions
Attempt all questions.
Make suitable assumptions wherever necessary.
Figures to the right indicate full marks.
Scientific calculator & statistical table are permitted.

Q 1 (A)

Total Marks : 70

In each of the following one of the alternatives is correct, indicate the correct one

1.Given a purchases invoice showing 5 items of 80 each, less trade discount of 25 per cent and cash
discount of 5 per cent, if paid within the credit period, your cheque would be made out for:
A. 285
B. 260
C. 280
D. None of these
2. Given opening debtors of 11,500, Sales 48,000 and receipts from debtors 45,000, the closing
debtors should total:
A. 8,500
B. 18,500
C. 14,500
D. 83,500
3. Given opening capital of 16,500, closing capital as 11,350 and drawings were 3,300, then:
A. Loss for the year was 1,850
B. Profit for the year was 8,450
C. Loss for the year was 8,450
D. Profit for the year was 1,850
4. You are to buy an existing business which has assets valued at buildings 50,000, Motor vehicles
15,000, Fixtures 5,000 and Stock 40,000. You are to pay 140,000 for the b usiness. This means
that:
A. You are paying 40,000 for Goodwill
B. Buildings are costing you 30,000 more than their value
C. You are paying 30,000 for Goodwill
D. You have made an arithmetical mistake
5. Which of the following is incorrect?

(B)

Explain the following terms (Any Three)

1 Sundry Debtors
2 Prepaid Expenses
3 Share Capital
4 Drawings

(C)

Match the following

(i) AS-17
(ii) AS-18
(iii) AS-19
(iv) AS-20

(D)

Q 2 (A)

(A) Related Party Transaction

(B) Segment Reporting
(C) Earnings Per Share
(D) Accounting For Leases

Recognize the accounting concept in the following :

(i) The transactions are recorded at their original cost.
(ii) The business will run for an indefinite period.
(iii) Every transaction has two effects to be recorded in the books of accounts.
(iv) Accounting treatment once decided should be followed period after period.
(i) Fill in the blanks :

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value, whichever is less, is based on concept.

(iii) The
discount is never entered in the books of accounts.

(ii) State with reasons whether the following statements are True or False :
(i) Accounting policies can be changed from year to year.
(ii) Prudence is the concept to anticipate and recognize losses.
(iii) Agreement of trial balance would also assure accounting accuracy.
(iv) Income received in advance is an asset.
Q 2 (B)

Mr. Arvindkumar had a small business enterprise. He has given the trial balance as at 31st March
2012
Debit (Rs)
Credit (Rs)
Particulars
Mr. Arvinkumars Capital
1,00,000
Machinery
36,000
Depreciation on machinery
4,000
Repairs to machinery
5,200
Wages
54,000
Salaries
21,000
Income tax of Mr. Arvindkumar
1,000
Cash in had
4,000
Land & Building
1,49,000
Depreciation on building
5,000
Purchases
2,50,000
Purchase returns
3,000
Sales
4,98,000
Citi Bank Accrued
7,600
Income Salaries
3,000
outstanding Bills
4,000
receivables
30,000
Provision for doubtful debts
10,000
Bills payable
16,000
Bad debts
2,000
Discount on purchases
7,080
Debtors
70,000
Creditors
62,520
Opening stock
74,000
Total
7,08,200
7,08,200
Additional information:
(1) Stock as on 31st March 2012 was valued at Rs 60,000
(2) Write off further Rs 6,000 as bad debt and maintain a provision of 5% on doubtful debt.
(3) Goods costing Rs 10,000 were sent on approval basis to a customer for Rs 12,000 on 30th March,
2012. This was recorded as actual sales.
(4) Rs 2,400 paid as rent for office was debited to Landlords A/c and was included in debtors.
(5) General Manager is to be given commission at 10% of net profits after charging his commission.
(6) Works manager is to be given a commission at 12% of net profit before charging General
Managers commission and his own.
You are required to prepare final accounts in the books of Mr. Arvindkumar.

OR
Q 2 (B)

(i)Journalise the following transactions in the books of a trader :

(i) 1st March 2012, paid quarterly interest on borrowed amount of ` Rs20,000 at 12% p.a.
(ii) 10th March 2012, Goods destroyed by fire for ` Rs6, 000, for which there is no insurance
coverage.
(iii) 15th March 2012, Received commission for ` Rs 5,000.
(iv) 21 st March 2012, paid transportation charges for machinery of ` Rs1,000 and installation charges
for ` Rs 1,500.
(ii) Find out the accounting equation from the following assets and liabilities of Bholu as on 31 st
March, 2012 :
Land and Building ` Rs 21,00,000 :
Plant and Machinery ` Rs 3,60,000
Investment ` Rs 1,00,000
:
Prepaid Insurance ` Rs 4,000

Stock ` Rs 70,000
Creditors ` Rs 1,30,000
Cash in hand ` Rs 30,000
Outstanding Salary ` Rs 10,000

:
:
:

Debtors ` Rs 1,50,000
Bank loan ` Rs 4,50,000
Bills payable ` Rs 36,000

Q 3 (A)

On 1 April, 2010, Som Ltd. purchased a machine for Rs 66,000 and spent Rs 5,000 on shipping and
forwarding charges, Rs 7,000 as import duty, Rs 1,000 for carriage and installation, Rs 500 as
brokerage and Rs 500 for an iron pad. It was estimated that the machine will have a scrap value of Rs
5,000 at the end of its useful life which is 15 years. On 1 January, 2011 repairs and renewals of Rs
3,000 were carried out. On 1 October, 2012 this machine was sold for Rs 50,000. Prepare Machinery
Account for the 3 years.

Q 3 (B)

Why are the COGS for the perpetual and periodic inventory system the same when using FIFO? Why
is it different when using LIFO?

OR
Q 3 (A)

A second hand machine was purchased on 1.1.2007 for Rs 4, 00,000 overhauling and installation 7
expenses for the same machine amounted to Rs 1, 00,000. Another machine was purchased for ` Rs 2,
00,000 on 1.7.2007.
On 1.7.2009, the machine installed on 1.1.2007 was sold for Rs 2, 50,000. Dismantling charges for
the machine sold on 1.7.2009 was Rs10, 000. On the same date, another machine was purchased for
Rs 8, 00,000 and was commissioned on 30.9.2009. The company had adopted calendar year as its
nancial year. Under the existing practice, the company provides depreciation @ 10% p.a. on original
cost. In 2010, it has been decided that depreciation will be charged on the diminishing balance @
15% p.a. The change is not to be made with retrospective effect.
Show Machine Account for 2007-2011.

Q 3 (B)
Q 4 (A)

Explain the important provision of AS-10 (Accounting for Fixed Assets).

Using the following data, prepare the Balance Sheet:

Gross profits
Shareholders Funds
Gross Profit Margin
Credit Sales to Total Sales
Total Assets turnover
Inventory turnover
Average collection period (a 360 days year)
Current ratio
Long-term Debt to Equity

Q 4 (B)

Rs 54,000
Rs 6,00,000
20%
80%
0.3 times
4 times
20 days
1.8
40%

Financial Statements are the most important part of financial reporting Discuss the above statement
giving the objectives of financial statement and the contents of the various components of the
financial statements.

OR

Q 4 (A)

JKL Limited has the following Balance Sheets as on March 31, 2012 and March 31, 2011:
Balance Sheet
(Rs in Lakhs)
Particulars
March 31, 2011
March 31, 2012
Source of Funds:
2,377
1,472
Shareholders Fund
Loan Funds
3,570
3,083
5,947
4,555
Application of Funds:
3,466
2,900
Fixed Assets
Cash and bank
489
470
Debtors
1,495
1,168

Stock
Other Current Assets
Less: Current Liabilities

2,867
2,407
1,567
1,404
(3,937)
(3,794)
5,947
4,555
The Income Statement of the JKL Ltd. for the year ended is as follows:(Rs in Lakhs)
March 31,
March 31, 2012
2011
Sales
22,165
13,882
Less: Cost of Goods sold
20,860
12,544
Gross Profit
1,305
1,338
Less: Selling, General and Administrative expenses
1,135
752
Earnings before Interest and Tax (EBIT)
170
586
Less: Interest Expenses
113
105
Profits before Tax
57
481
Less: Tax
23
192
Profits after Tax (PAT)
34
289
Required:
1. Calculate for the year 2011-12:
(a) Inventory Turnover Ratio
(b) Financial Leverage
(c) Return on Investment (ROI)
(d) Return on Equity (ROE)
(e) Average Collection period.
2. Give a brief comment on the Financial Position of JKL Limited.
Q 4 (B)

Discuss Income Recognition & Accrual Income (AS-9)

Q 5 (A)

Sudhir Company sold 20,000 crates of a soft drink at Rs. 120 during the year. Its beginning inventory
consisted of 1,000 crates at Rs. 70 per crate. The following purchases were made during the year;
5,000 crates @Rs. 75; 8,000 Crates @ Rs. 76; 9,000 crates @ Rs. 80. Operating expenses were Rs. 3,
65,000. Income tax is payable at 30 per cent.
Calculate Net Profit using the FIFO and LIFO methods.

Q 5 (B)

Show format of balance sheet in vertical form and explain features of balance sheet.
OR

Q 5 (A)

7
The following ledger balances were extracted from the books of VXL ason 31s March 2006.
Land and Building Rs. 2,00,000, 12% debentures Rs. 2,00,000, share capital Rs. 10,00,000 (equity
shares of Rs. 10 each fully paid up) Plant and Machinery Rs. 8,00,000, Goodwill Rs. 2,00,000,
Investment in shares of R Ltd. Rs. 2,00,000, General Reserve Rs. 2,00,000, Stock in trade Rs.
1,00,000, Bill receivable Rs. 1,00,000, Debtors Rs. 1,50,000, Creditors Rs. 1,00,000, Bank loans
(Unsecured) Rs. 1,00,000, Provision for taxation Rs. 55,000, Discount on issue of 12% debentures Rs.
5,000, Proposed dividends Rs. 1,00,000. You are required to prepare the Balance Sheet of company as
per Schedule-VI Part-I of the Companies Act-1956.

Q 5 (B)

The comparative balance sheet of Mishi Company as on December 31, 2009 and 2010 is as follows
Particulars
2009
2010
Shareholders Fund
Share Capital
Reserves and Surplus
Liabilities
Secured Loans
Unsecured Loans
Current Liabilities and Provisions
Total Liabilities
Total Equities and Liabilities

13700
3500
17200

13700
7600
21300

11600
10300
3900
25800
43000

5000
29800
14900
49700
71000

Assets
Fixed Assets
Investments
Inventories
Debtors
Cash
Total Assets

21500
200
10800
7000
3500
43000

Prepare common size balance sheet for Mishi Company for 2009 and 2010.

28400
300
21300
16500
4500
71000