Professional Documents
Culture Documents
4 Credits
Q.1 Assure you have just started a Mobile store. You sell mobile sets and
currencies of Airtel, Vodaphone, Reliance and BSNL. Take five transactions and
prepare a position statement after every transaction. Did you firm earn profit or
incurred loss at the end? Make a small comment on your financial position at the
end. [10 Marks]
Answer:
We shall consider five transactions and show how they are accounted for in the books
of the business.
Transaction 1: The business receives capital in cash. Capital is a liability and cash is
an asset to the business.
Liability Asset
Capital 100000 Cash 100000
Transaction 2: Mobile Set is purchased for cash. This transaction can be reflected as
under
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Answer:
To bring uniformity in terminology, accounting concepts, conventions, and assumptions,
the Institute of Chartered Accountants of India (ICAI) established Accounting Standards
Board (ASB) in 1977. An Accounting Standard is a selected set of accounting policies or
broad guidelines.
Example: While depreciating an asset the practice of adopting straight line method or
diminishing balance method or any other method is a convention regarding the
principles and methods to be chosen out of several alternatives. There are altogether 32
accounting standards issued by ASB out of which, one standard (AS8) has been
withdrawn pursuant to AS26 becoming mandatory.
Q.3 Prepare a Three-column Cash Book of M/s Thuglak & Co. from The following
particulars: [10 Marks]
20X1 1. Cash in hand Rs. 50,000, Bank Overdraft Rs. 20,000
Jan
2. Paid into bank Rs. 10,000
3. Bought goods from Hari for Rs, 200 for each
4. Bought goods for Rs. 2,000 paid cheque for them, discount allowed
1%
5. Sold goods to Mohan for each Rs. 1.175
6. Received a cheque from Shyam to whom goods were sold for Rs.
800.Discount allowed 12.5%
7. Shyam’s cheque deposited into bank
8. Purchased an old typewriter for Rs. 200 , Spent Rs. 50 on its
repairs
9. Bank notified that Shyam’s cheque has been returned dishonored
and debited the account in respect of charges Rs. 10
10. Received a money order Rs. 25 from Hari
11. Shyam settled his account by means of a cheque for Rs. 820, Rs.
20 being for interest charged.
12. Withdrew from the bank Rs. 10,000
18. Discounted a B/E for Rs. 1,000 at 1% through bank
20. Honored our own acceptance by cheque Rs. 5,000
22. Withdrew fir personal use Rs. 1,000
24. Paid tread expenses Rs. 2,000
25. Withdrew from bank for private expenses Rs. 1,500
26. Purchased machinery from Rajiv for 5,000 and paid him by means
of a bank draft purchased for Rs. 5,005
27. Issued cheque to Ram Saran for cash purchased of furniture Rs.
1,575
28. Received a cheque for commission Rs. 500 from R.& Co. and
deposited into bank
29. Ramesh who owned us Rs. 500 became bankrupt and paid us 50
paise in the rupee
30. Received payment of a loan of Rs. 5,000 and deposited Rs. 3,000
out of into bank
31. Paid rent to landlord “Mohan” by cheque of Rs. 220
31. Interest allowed by bank Rs. 30
31. Half-yearly bank charges Rs. 50
Answer:
Answer:
The Balanced Score Card is a framework for integrating measures derived from
strategy. While retaining financial measures of past performance, the Balanced Score
Card introduces the drivers of future financial performance. (Figure 1) The drivers
(customer, internal business process, learning & growth perspectives) are derived from
the organization's strategy translated into objectives and measures.
The Balanced Score Card is more than a measurement system it can be used as an
organizing framework for their management processes. The real power of the Balanced
Score Card is when it is transformed from a measurement system to a management
system. It fills the void that exists in most management systems - the lack of a
systematic process to implement and obtain feedback about strategy
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Q.5 From the following data of Jagdish Company prepare (a) a statement of source and
uses of working capital (funds) (b) a schedule of changes in working capital
Income statement
Sales 2,40,000
Cost of goods sold 1,34,600
Gross Profit 1,05,200
Less Operating expenses: 92,000
Depreciation – machinery
20,000
Depreciation – building
32,000
Other expenses 40,000
Net profit from operation 13,200
Gain on sale on long-term 4,800
investment
Total 18,000
Loss on sale of machinery 2,000
Net Profit 16,000
Adjustments:
1) Machinery worth Rs.70000 was purchased and worth Rs.10000 was sold during the
year [Accumulated depreciation on machinery is Rs.18000 after adjusting depreciation
on machinery sold]. Proceeds from the sale of machinery were Rs.6000
2) Dividends paid during the year Rs.11600 [ 10 Marks]
Answer:
a) a statement of source and uses of working capital (funds) Adjusted Profit and Loss
Account:
To By
Depreciation – machinery & 92000 Sales of goods 105200
building
Q.6 what is a cash budget? How it is useful in managerial decision making? [10
Marks]
Answer:
A proper control over cash is very essential. Cash is an important component in any
activity. The control becomes inescapable. If cash is not properly managed or if it is
mismanaged, the ultimate result would be disastrous. In many times and in many
business situations, business failures are noticed due to the lacunae found in the cash
management. Hence cash budgeting occupies a pivotal place in the study of Financial
Management.
Cash budgeting is the process of forecasting the expected receipts known as cash
inflows, and expected payments known as cash outflows to meet the future obligations.
The written statement of receipts and payments is known as the cash budget. It is a
crystal ball which enables one to observe the future movements in cash position. It is a
mere forecast of cash position of an undertaking for a definite period of time. The period
may be daily, weekly, monthly, quarterly, semi-annually, or annually. The major two
components of cash budget would be forecast first the cash receipts and then second
forecasting the cash disbursements.
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