LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
SUPPLEMENTARY EXAMINATION – JUNE 2008
BC 6600 - MANAGEMENT ACCOUNTS
Date : 27-06-08
Time : 9.00 – 12.00
Dept. No.
Max. : 100 Marks
SECTION – A
I. Answer all the questions:
10 x 2 = 20 Marks
1.
2.
3.
4.
5.
6.
Define Management Accounting.
State any four features of Management Accounting.
What is meant by ZBB?
Give any two limitations of Funds Flow Statement.
Give the meaning of Ratio.
Opening Stock Rs.29,000; Closing Stock Rs.31,000; Purchases Rs.2,42,000. Calculate Stock
Turnover Ratio.
7. Ascertain the Return on shareholders’ Funds from the following data:
Equity share capital
- Rs.12,00,000
Preference share capital
- Rs. 3,00,000
Reserves
- Rs. 5,00,000
Profit after tax
- Rs.10,00,000
8. Calculate funds from operations from the following P & L Account:
Particulars
To Expenses paid
To Depreciation
To Loss on sale of
building
To Discount
To Goodwill
To Net Profit
Rs.
1,00,000
40,000
Particulars
By Gross profit
By Gain on sale of
machinery
15,500
500
12,000
52,000
2,20,000
Rs.
2,00,000
20,000
2,20,000
9. You are required to prepare a production budget for the half year ending June 2007 from the
following information:
Product
S
T
Budgeted sales
Quantity
Units
20,000
50,000
Actual Stock on
31.12.2006
Units
4,000
6,000
Desired stock on
30.6.2007
Units
5,000
10,000
10. A project costs Rs.15,60,000 and yields annually a profit of Rs.2,70,400 after depreciation of 12%
p.a. but before tax at 25% Calculate Pay back period.
1
SECTION – B
II. Answer any FIVE questions only:
5 x 8 = 40 Marks
11. Bring out the limitations of Ratio Analysis.
12. State the objectives of Budgetary Control.
13. Highlight the advantages of Management Accounting.
14. From the following details, find out
(a) Current assets (b) Current liabilities (c) Liquid assets (d) Stock
Current ratio – 2.5; Liquid ratio – 1.5; Working Capital – Rs.90,000
15. Prepare a schedule of changes in working capital from the following Balance Sheets:
Liabilities
Share capital
10%Debentures
B/P
Out. Exp.
Creditors
Total
2007
50,000
10,000
18,000
6,000
33,000
2008
50,000
20,000
6,000
9,000
40,000
1,17,000
1,25,000
Assets
2007
2008
Fixed Assets
18,000
28,000
Investments:
Non-trading
10,000
10,000
Trading
8,000
9,000
Inventories
12,000
18,000
Debtors
40,000
48,000
Acc. Interest
4,000
6,000
Unexpired
Insurance
--3,000
Cash at Bank
17,000
2,000
Cash in Hand
8,000
1,000
1,17,000
1,25,000
Total
16. The summarized Balance Sheets of Nandan Ltd., as 31.12.2006 and 31.12.2007 are as follows:Liabilities
2006
2007
Assets
2006
2007
Share capital
4,50,000
4,50,000
Fixed Assets
4,00,000
3,20,000
Gl. Reserve
3,00,000
3,10,000
Investments
50,000
60,000
P&L A/C.
56,000
68,000
Inventories
2,40,000
2,10,000
Creditors
1,68,000
1.34.000
Debtors
2,10,000
4,55,000
Tax provision
75,000
10,000
Cash at Bank 1,49,000
1,97,000
Mortgage Loan
---2,70,000
Total
10,49,000
12,42,000
Total
10,49,000
12,42,000
ADDITIONAL DETAILS
1. Investments costing Rs.8,000 were sold for Rs. 8,500
2. Tax provision made during the year was Rs.9,000
3. During the year part of the fixed assets costing Rs.10,000 was sold for Rs.12,000 and the profit
was included in the P&L A/c.
You are required to prepare cash flow statement for 2007.
2
17. Draw up a flexible budget for production at 75% and 100% capacity on the basis of the following
data for a 50% activity.
Per Unit
Rs.
Materials
100
Labour
50
Variable expenses (direct)
10
Administrative expenses (50% fixed)
40,000
Selling & Distn. Expenses (60% fixed)
50,000
Present production (50% activity)
1,000 units
18. Each of the following projects requires a cash outlay of Rs.10,000. You are required to suggest the
project to be accepted if the standard pay-back period is 5 years.
Cash inflows
Year
Project X
Rs.
Project Y
Rs.
Project Z
Rs.
1
2
3
4
5
2,500
2,500
2,500
2,500
2,500
4,000
3,000
2,000
1,000
---
1,000
2,000
3,000
4,000
---
SECTION – C
III. Answer any TWO questions only:
2 x 20 = 40 Marks
19.From the following Balance Sheets made out (i) statement of changes in working capital (ii) Funds
flow statement.
Balance Sheets of Beta Ltd.
Liabilities
Eq. Share Capital
8% Redeemable
Pref. Share Capital
Capital reserve
General reserve
P&L A/c
Proposed Dividend
S. Creditors
Bills Payable
Exp. Outstanding
Pro. For Tax
Total
2006
3,00,000
2007
4,00,000
1,50,000
10,000
30,000
30,000
42,000
25,000
20,000
30,000
40,000
6,77,000
1,00,000
20,000
50,000
48,000
50,000
47,000
16,000
36,000
50,000
8,17,000
Assets
Goodwill
Land & Buildings
Plant
Investments
Debtors
Stock
Bills Receivable
Cash in hand
Cash at bank
Preliminary Expenses
2006
1,00,000
2,00,000
80,000
20,000
1,40,000
77,000
20,000
15,000
10,000
15,000
2007
80,000
1,70,000
2,00,000
30,000
1,70,000
1,09,000
30,000
10,000
8,000
10,000
Total
6,77,000
8,17,000
1. A piece of land has been sold out in 2007 and the profit on sale has been credited to capital
reserve.
3
2. A machine has been sold for Rs.10,000. The written down value of the machine was Rs.12,000.
Depreciation of Rs.10,000 is charged on plant account in 2007
3. Rs.3,000 by way of dividend on investments is received . It includes Rs.1,000 from preacquisition profit which has been credited to investment account.
4. An interim dividend of Rs.20,000 has been paid in 2007
20.The following ratios and other data relate to the financial statement of James Co. Ltd. for the year
ending 31st December 2007:
Working capital ratio (current ratio)
Acid test ratio
Working capital
Fixed assets to shareholders equity
Inventory turnover (based on closing stock)
Gross profit ratio
Earnings per share
Debt collection period
No. of shares issued
Earnings for the year on share capital
1.75
1.27
Rs.33,000
0.625
4 times
40%
Re. 0.50
73 days
20,000
25%
The company has no prepaid expenses, deferred charges, intangible assets or long-term liabilities.
You are required to draft the company’s Balance Sheet and the Profit and Loss Account.
21. A newly started company wishes to prepare cash budget from January. Prepare a cash budget for
the 6 months from the following estimated revenue and expenses.
Months
January
February
March
April
May
June
Total Sales
Materials
Wages
Production
Overhead
Rs.
Rs.
Rs.
Rs.
20,000
22,000
24,000
26,000
28,000
30,000
20,000
14,000
14,000
12,000
12,000
16,000
4,000
4,400
4,600
4,600
4,800
4,800
3,200
3,300
3,300
3,400
3,500
3,600
Selling &
Distribution
Overhead
Rs.
800
900
800
900
900
1,000
Cash balance on 1st January was Rs.10,000. A new machine is to be installed at Rs.30,000 on credit,
to be repaid by two equal installments in March and April.
Sales commission at 5% on total sales is to be paid within the month following actual sales.
Rs.10,000 being the amount of 2nd call may be received in March. Share premium amounting to
Rs.2,000 is also obtained with 2nd call.
Period of credit allowed by suppliers – 2 months
Period of credit allowed to customers – 1 month
Delay in payment of overheads – 1 month
Delay in payment of wages – ½ month
Assume cash sales to be 50% of the total sales
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