Student Name: Chandrashekhar

Roll #
Assignment: Managerial Accounting and Analysis

1. Given here are a few situations:

a. Personal and business transactions are separately maintained.

Answer: Business Entity Concept

b. Inventory is recorded at its purchase price.

Answer: Cost Concept

c. The death of the chief executive officer of the company is not recorded in accounts.
Answer: Money Measurement Concept

d. In case of doubt, it is considered better to understate rather than overstate income.

Answer: Conservatism or Prudence Concept

e. Assets are not stated at their liquidation value.

Answer: Cost Concept

f. Financial Statements are prepared on an annual basis.

Answer: Accounting Period Concept

g. Expenses are recognized in the same period as the related revenues.

Answer: Matching Concept

h. Revenue is recognized when it is earned and expense is recognized when it is incurred.

Answer: Accrual Concept

i. The accounting records only events that affect the financial position of the entity and at the
same time can be reasonably determined in monetary terms.
Answer: Money Measurement Concept

j. Same treatment is given to comparable transactions from period to period.

Answer: Consistency Period
 Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis

REQUIRED
State the accounting assumption or principle that describes each of the given situations.

2. The manager of a company who did not have proper accounting knowledge prepared the
following balance sheet. He has wrongly classified the items under assets, liabilities and
owners’ equity.
Owner’s Equity and Liabilities Rs Assets Rs
Share Capital 10,00,000 Retained Earnings 5,00,000
Equipment 9,00,000 Land and Buildings 7,00,000
Cash 2,00,000 Long – term loan 4,00,000
Accounts Payable 2,00,000
Accounts Receivables 3,00,000
21,00,000 21,00,000

Assets INR LIABILITIES & OWNER’S INR

EQUITY
Equipment 900,000.00 Share Capital 1,000,000.00
Cash 200,000.00 Long Term Loan 400,000.00
Land and Buildings 700,000.00 Accounts Payable 200,000.00
Account Receivables 300,000.00 Retained Earnings 500,000.00
2,100,000.00 2,100,000.00

REQUIED:
Prepare the correct Balance sheet.
3. Using Accounting Equation, Answer the following independent Questions.
New Company’s assets are Rs 250 lakh and its external liabilities are of Rs 100 lakh,
determine the amount of owner’s Equity.
Owner’s Equity and Liabilities Rs Assets Rs
External Liabilities 10,000,000 Land, building & equipment’s 25,000,000
Owner’s Equity
25,000,000 25,000,000

Solution:
Owner’s Equity = Company assets-External Liabilities
= 25,000,000-10,000,000
= 15,000,000
 Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis
a) Royal Industries has total assets of Rs 100 lakh and owners’ Equity of Rs 70 lakh, Compute
the amount of external liabilities.
Owner’s Equity and Liabilities Rs Assets Rs
Owner’s Equity 7,000,000 Land, building & equipment’s 10,000,000
External Liabilities
10,000,000 10,000,000

Solution:
External Liabilities = Assets – Owner’s Equity
= 10,000,000-7,000,000
= 3,000,000

c) Small Enterprise has following amounts appearing in Balance Sheet as at 31 st December,

2015:
Capital Rs 50 lakh, Reserves and undistributed profits Rs 15 lakh, and total external liabilities
Rs 35 lakh, Determine the amount of total assets.
Owner’s Equity and Liabilities Rs Assets Rs
Capital 5,000,000
Profit 1,500,000
External Liabilities 3,500,000
10,000,000 10,000,000

Solution:
Total Assets = Capital + Profit + Liabilities
= 5,000,000 + 1,500,000+3,500,000
= 10,000,000

4. Journalize the following transactions, Post them into ledger account and Prepare a Trial
Balance
2017
March – 1 Commenced business with cash Rs.1,00,000
March – 2 Purchased goods for cash Rs. 25,000
March – 3 Purchased furniture for cash Rs. 6,000
March – 5 Purchased goods from Suresh on credit Rs. 5,000
March – 7 Sold goods for cash Rs. 30,000
March – 10 Sold goods to Mahesh on credit Rs. 25,000
March – 12 Returned goods to Suresh Rs. 500
March – 13 Mahesh returned us goods worth Rs. 500
March -15 Paid Rs. 4,450 to Suresh by cheque in full settlement of his account
Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis
March – 20 Received a cheque of Rs. 24,450 from Mahesh and gave a discount of Rs. 50
March – 25 Withdrew cash for personal use Rs. 2,500
March – 28 Paid rent of Rs. 5,000 and Salary Rs. 6,000 by cheque
Journal Entry
Date Account L.F Debit Credit
March – 1 Cash A/C Dr. 1,00,000

To Capital A/C
1,00,000
Started business with cash Rs.1,00,000
March – 2 Purchase A/C Dr. 25,000

To Cash A/C
25000
Purchased goods for cash Rs. 25,000
March – 3 Furniture A/C Dr. 6,000

To Cash A/C
6,000
Purchased furniture for cash Rs. 5,000
March – 5 Purchase A/C Dr. 5,000

To Suresh A/C
5,000
Purchased goods for cash Rs. 25,000
March – 7 To Cash A/C Dr. 30,000

Sales A/C
30,000
Sold goods for cash Rs. 30,000
March – 10 To Mahesh A/C Dr. 25,000

Sales A/C
25000
Sold goods to Mahesh on credit Rs. 25,000
March – 12 To Suresh A/C Dr. 500

Purchase Return A/C

Returned goods to Suresh Rs. 500 500

March – 13 Sales Return A/C Dr. 500

To Mahesh A/C
500
Mahesh returned us goods worth Rs. 500
March – 15 To Suresh A/C Dr. 4,500

To Bank A/C 4,450

Paid Rs. 4,450 to Suresh by cheque in full

settlement of his account
Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis
March – 20 To Bank A/C Dr. 24450

Discount allowed A/C 50

To Mahesh Account 24500

Received a cheque of Rs. 24,450 from Mahesh

and gave a discount of Rs. 50
March – 25 Withdrew A/C Dr. 2,500

To Cash A/C
2,500
Withdrew cash for personal use Rs. 2,500
March – 28 Rent A/C Dr. 5,000

Salary A/C Dr. 6,000

To Bank A/C 11,000

Paid rent of Rs. 5,000 and Salary Rs. 6,000 by

cheque

Total 2,34,450 2,34,450

LEDGER
CASH ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-01 To Capital A/C 100,000 Mar-02 By Purchases 25,000
Mar-07 To Sales A/C 30,000 Mar-03 By Furniture A/C 6,000
Mar-25 By Drawings 2,500
Mar-31 By Balance c/d 96,500
130,000 130,000
Apr-01 To Balance b/d 96,500

CAPITAL ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-31 To Balance c/d 100,000 Mar-01 By Cash A/C 100,000
100,000 100,000
Apr-01 By Balance b/d 100,000
Purchases ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-02 To Cash A/C 25,000 Mar-31 By Balance c/d 36,000
Mar-03 To Cash A/C 6,000
Mar-05 To Suresh A/C 5,000
36,000 36,000
Apr-01 To Balance b/d 36,000
Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis
SURESH ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-12 To Purchase 500 Mar-05 By Purchase A/C 5,000
Return A/C
Mar-15 To Bank A/C 4450
Mar-31 To Balance c/d 50
5000 5000
Apr-01 By Balance b/d 50
SALES ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-31 To Balance c/d 55,000 Mar-07 By Cash A/C 30,000
Mar-10 By Mahesh A/C 25,000
55000 55,000
Apr-01 By Balance b/d 55,000
MAHESH ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-10 To Sales A/C 25,000 Mar-13 Sales Return A/C 500
Mar-20 By Bank A/C 24,450
Mar-20 By Discount 50
25,000 25000
PURCHASE RETURN ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-31 To Balance c/d 500 Mar-12 By Suresh A/C 500
500 500
Apr-01 By Balance b/d 500
SALES RETURN ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-13 To Mahesh A/C 500 Mar-31 By Balance c/d 500
500 500
Apr-01 To Balance b/d 500
BANK ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-20 To Mahash A/C 24,450 Mar-15 By Suresh A/C 4450
Mar-28 By Rent A/C 5000
Mar-28 By Salar A/C 6000
Mar-31 By Balance c/d 9000
24,450 24450
Apr-01 To Balance b/d 9000
DISCOUNT ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-20 To Mahesh A/C 50 Mar-31 By Balance c/d 50
50 50
Apr-01 To Balance b/d 50
DRAWINGS ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-25 To Cash A/C 2500 Mar-31 By Balance c/d 2500
2500 2500
Student Name: Chandrashekhar
Roll #
Assignment: Managerial Accounting and Analysis
Apr-01 To Balance b/d 2500
RENT ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-28 To Bank A/C 5000 Mar-31 By Balance c/d 5000
5000 5000
Apr-01 To Balance b/d 5000
SALARY ACCOUNT
Date Particulars JF Amount Date Particulars JF Amount
Mar-28 To Bank A/C 6000 Mar-31 By Balance c/d 6000
6000 6000
Apr-01 To Balance b/d 6000

Trial Balance
S.No Particulars Debit Credit
Rs. Rs.
1 Cash Account 96500
2 Capital Account 100000
3 Purchases Account 30000
4 Furniture Account 6000
5 Suresh Account 50
6 Sales Account 55000
7 Mahesh Account
8 Purchases Return Account 500
9 Sales Return Account 500
10 Bank Account 9000
11 Discount Account 50
12 Drawings Account 2500
13 Rent Account 5000
14 Salary Account 6000
155550 155550