Code No: 14MBA R7

M.B.A. I Semester Supplimentary Examinations, Jul/Aug 2008

FINANCIAL ACCOUNTING AND ANALYSIS
----
Time: 3 hours Max Marks: 60
Answer any FIVE Questions
All Questions carry equal marks
?????

1. Write short notes on:

(a) Accounting
(b) Accountancy
(c) Account.

2. Describe the Accounting cycle.

3. On 1st January 1998, a merchant purchased a furniture costing Rs. 55,000. It is

estimated that its working life is 10 years at the end of which it will fetch Rs. 5000.
Additions are made on 1st January, 1999 and 1st July, 2001 to the value of Rs.
9500 and Rs. 8400 (Residual values Rs. 500 and Rs. 400 respectively). Show the
Furniture Account for the first four years, if depreciation is written off according
to the straight line method.

4. The Balance Sheet of a partnership was as follows:

Balance Sheet
Liabilities Rs. Assets Rs.
Capitals : Goodwill 15000
a. Rs. 70000 Plant 80000
b. Rs. 40000 Furniture 5000
c. Rs. 30000 140000 Stock 50000
Sundry Creditors 60000 Sundry Debtors 30000
Prepaid expenses 2000
Bank Balance 18000
200000 200000
It was proposed to form a company to acquire business. For the purpose of the
acquisition, the Assets were revalued as under: Plant Rs. 64000; Furniture Rs.
4500; Stock Rs. 45000; Debtors Rs. 28500; Prepaid expenses Nil.
It was ascertained that the profits before charging remuneration for partners for
the past five years has been as follows: Rs. 25,000 : Rs. 30,000 ; Rs. 28,000 ; Rs.
32,000 ; Rs. 35,000. Included in these profits were non-recurring items averaging
Rs. 3000 but from the nature of the business such income was found to arise every
year and the promoters agreed that a figure of Rs. 1,000 should be allowed as Profit
from this source.
Similar business paid a dividend of 8% p.a. on their Ordinary shares and the

1 of 2
Code No: 14MBA R7
partners who would be the Directors of the company should be paid a remuneration
of: A. Rs. 6000; B. Rs. 5000; and C. Rs. 4000 per annum.
Ascertain the value of goodwill at 5 years purchase of Super Profits.

5. X Ltd. Issued 15% 10,000 debentures of Rs.100 each for subscription. The deben-
ture money is payable as follows: Rs.25 on application, Rs.35 on allotment and
Rs.40 on call. A person who holds 250 debentures failed to pay the amount due at
the time of allotment. He however, paid this amount with the call money. Another
person who is holding 300 debentures paid call money in advance at the time of
allotment. Give journal entries in the books of the company and show bank account
and 15% debentures account.

6. What are ‘paid costs’ and ‘unpaid costs’ ? Give examples for these costs. State the
relevance of these costs in the preparation of funds flow statement.

7. Explain the advantages and limitations of financial statement analysis.

8. To what extent the Accounting Standards are honoured and implemented by Indian
Corporate Sector ? Examine.

?????

2 of 2