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ASSIGNMENT DRIVE SUMMER 2014
PROGRAM MBADS / MBAHCSN3 / MBAN2 / PGDBAN2 / MBAFLEX SEMESTER I
SUBJECT CODE & NAME MB0041 & FINANCIAL AND MANAGEMENT ACCOUNTING
Note –Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400
words. Each question is followed by evaluation scheme.
Q1. Inventory in a business is valued at the end of an accounting period, at either cost or market price, whichever
is lower. This is accepted convention or a practice in accounting.
Give a small introduction on accounting conventions and elucidate all the eight accounting conventions.
(Introduction of accounting convention, Explanation of all the 8 types of conventions) 2, 8
Answer:
Accounting Conventions
Accounting conventions are the rules based on which accounting takes place and these rules are universally accepted.
There are many types of accounting conventions, namely convention of income recognition, convention of expense,
convention of matching cost and revenue, convention of historical cost, convention of full disclosure, convention of
double aspect, convention of modifying, convention of materiality, convention of consistency, and convention of
Q2. Write down a table with the accounts involved / the nature of account/its affects/ debit or credit. Please have
the transactions given below and prepare the table as per the instructions given above for each transaction.
a. 1.1.2011 Sunitha started his business with cash Rs. 5,00,000
b. 2.1.2011 Borrowed from Malathi Rs. 5,00,000
c. 2.1.2011 Purchased furniture Rs. 1,00,000
d. 4.1.2011 Purchased furniture from Meenal on credit Rs. 1,50,000
e. 5.1.2011 Purchased goods for cash Rs. 50,000
f. 6.1.2011 Purchased goods from Ram on credit Rs. 2,50,000
g. 8.1.2011 Sold goods for cash Rs. 1,25,000
h. 8.1.2011 Sold goods to Shyam on credit Rs. 55,000
i. 9.1.2011 Received cash from Shyam Rs. 25,000
j. 10.1.2011 Paid cash to Ram Rs. 90,000
(Filling in all the details in the table for all the transactions. Each transaction carries one mark (1*10=10)
Answer:
Sl.
No.
Accounts
Involved
Nature of
Account
Affects
Debit/
Credit
a
Cash a/c
Capital a/c
Real
Personal
Cash is coming in
Sunita is the giver
Debit
Credit
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Q3. The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000. 10
marks Summer 2013
Sundry Debtors Rs.160000
Bad Debts written off Rs 9000
Discount allowed to Debtors Rs. 1800
Reserve for Bad and doubtful Debts 31-12-1999 Rs. 16500
Reserve for discount on Debtors 31-12-1999 Rs. 3200
You are required to provide the bad and doubtful debts at 5% and for discount on debtors at 2%. Show the
adjustments for bad debts, bad debts reserve, discount account, and provision for discount on debtors.
Answer.
Solution:
Date
2000
31st
Particulars
Dec,
RBD account
Debit
Credit
Rs.
Rs.
LF
Dr
9000
To Bad Debts account
(Being bad debts written off against existing RBD)
9000
Q4. The reports prepared in financial accounting are also used in the management accounting. But there are few
major differences between financial accounting and management accounting.Explain the differences between
financial accounting and management accounting in various dimensions. (Writing down all the differences between
the financial and management accounting)
Answer:
Dimension
Users
Financial accounting
Management accounting
The primary users of financial
accounting information are
external users like shareholders,
creditors, government authorities,
employees, etc.
The primary users of
management accounting are
internal users like top, middle,
and lower level managers.
Q5 Draw the Balance Sheet for the following information provided by Sandeep Ltd..
a. Current Ratio : 2.50
b. Liquidity Ratio : 1.50
c. Net Working Capital : Rs.300000
d. Stock Turnover Ratio : 6 times
e. Ratio of Gross Profit to Sales : 20%
f. Fixed Asset Turnover Ratio : 2 times
g. Average Debt collection period : 2 months
h. Fixed Assets to Net Worth : 0.80
i. Reserve and Surplus to Capital : 0.50
(Preparation of Balance sheet (Includes all the ratios) 10
Solution: The Balance Sheet is given below:
Liabilities
Rs.
Assets
Captal
500000
Fixed Assets
Reserves and Surplus
250000
Inventories
Long-term Debt
150000
Debtors
Rs.
600000
200000
250000
Q6. Write the main differences between cash flow analysis and fund flow analysis.
Following is the balance sheet for the period ending 31st March 2011 and 2012. If the current year’s net loss is
Rs.38,000, Calculate the cash flow from operating activities.
(Differences between cash flow and fund flow analysis, Preparation of statement showing cash flow from operating
activities) 4, 6
Difference between Funds Flow Statement and Cash Flow Statement
1.
Basis of Difference
Funds Flow Statement
Cash Flow Statement
Basis of Analysis
Funds flow statement is based on Cash flow statement is based on narrow
broader concept i.e. working capital.
concept i.e. cash, which is only one of the
elements of working capital.
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