MB 0025 Set1
Transcript of MB 0025 Set1
Mb 0025 Set1 Page 1
Financial and Management Accounting -MB0025
MBA -1 SEM Assignment – Set 1
L. Megha Syam 510925494
Q1. Explain the differences between Financial Accounting and
Management Accounting. Financial accounting is the preparation and communication of financial
information to outsiders such as creditors, bankers, government, customers
and so on. Another objective of financial accounting is to give complete
picture of the enterprise to shareholders. Management accounting on the other hand aims at preparing and reporting the financial data to the
management on regular basis. Management is entrusted with the responsibility of taking appropriate decisions, planning, performance evaluation, control, management of costs, cost determination etc., For both
financial accounting and management accounting the financial data is the same and the reports prepared in financial accounting are also used in
management accounting But the following are major differences between Financial accounting and Management accounting.
Mb 0025 Set1 Page 2
Q2. Hiran, a retailer, has prepared the following balance sheets for the years ending 31st March 2004 and 2005:
Other data: The net profit for the year 2004 was Rs.40000. Hiran is paid a salary of Rs.16,000. His drawings amounted to Rs.45,200. You are required
to prepare a statement of changes in financial position, on working capital basis.
The layout for schedule of changes in Working Capital is as follows Balances as on Effect on
Schedule of changes in Working Capital is as follows: Year 2004 Year 2005 Increase Decrease
A .CURRENT ASSETS: Cash in hand & bank Sundry Debtors Stock or Inventory B. CURRENT LIABILITIES
Trade and accrued expenses Net Working Capital Decrease in Working(A-B)
4000 50000 36000 - 24000
2000 34000 34000 _ 20000
2000 16000 2000 4000 16,000
Mb 0025 Set1 Page 3
Statement of Profit and loss adjustment a/c:
Particulars Amount Particulars Amount
Salaries Funds from operations transferred to applications
16000 24000
Net profit for the year 2004
40000
Total: 40000 40000
Funds Flow Statement:
Particulars Amount Particulars Amount
Increase in capital Decrease in Working capital
5200 16000
Funds from operations
24000
Total:
Q3. Enter the following transactions in proper subsidiary book. Find
out the total of: a) Purchase book b) sales book c) purchase return book d) sales
return book.
Purchase book Date Name of
Supplier Ledger Folio
Inward Invoice No.
Amount Rs. Dr.
Jan 1 Purchased from Karthik
34000
Jan 10 Purchased from Vikas
40000
Jan 12 Purchased from Naveen
102000
Jan 15 Purchased from Brinda
100000
Jan 25 Purchased from Anand
45000
Total: 321000
.
Mb 0025 Set1 Page 4
Sales book : Date Name of
customer Ledger Folio
Out ward Invoice No.
Amount Rs. Cr
Jan 5 Sold goods to Vinay
12000
Jan 7 Sold goods to Nagaraj
10000
Jan 20 Sold Goods to Gururaj
16000
Total 38000
Sales returns Book: Date Name of
customer/debtor
Ledger Folio
Out ward Invoice No.
Amount Rs. Dr.
Jan 14 Returned good by Vinay
3000
Jan 22 Natraj returned goods
2000
Total: 5000
Purchase return book: Date Name of
Supplier/Creditor
Ledger Folio
Out ward Invoice No.
Amount Rs.
Jan 14 Returned good to Karthik
4000
Jan 22 Returned goods to Naveen
2000
Total: 6000
Mb 0025 Set1 Page 5
4a. On 01-04-2007 Mr. Gundu Rao stated business with Rs. 3, 00,000 cash and opened a bank account with Rs. 1,50,000. He purchased furniture for his
business for Rs. 25000. Goods were bought from selvaraj for Rs. 50000 on credit. He sold goods for Rs. 27000 in cash and Rs. 30000 on credit. He paid
Rs. 2500 for business expenses during April month. Rs. 10000 was withdrawn for office purpose form the back. Find out the closing balance of cash and bank.
Date Particular
s Cash A/c Dr
Bank a/c Dr
Date Particulars Cash A/c Cr
Bank A/c Cr
1-4-2007
31/04/2007
To capital a/c of Gundu Rao To bank a/c C To sales a/c
To bank Office expenses C
300000
27000 10000
150000
1-04-2007
31/04/2007
By Cash A/c C By Furniture a/c By Business Exp By Cash - Office expenses C By Balance c/d
150000 25000 2500 160500
10000 140000
337000 150000 337000 150000
01/05/2007 To Bal B/d
160500 140000
4b. Following are the extracts from the Trial Balance of a firm as on 31st
December 1998: TRIAL BALANCE
As on 31st December 1998 Particulars Dr. Cr.
Salaries A/c 10,000 Rent a/c 5,000
Additional Information: I. Salary for the month of December Rs.2000 has not yet been paid.
II. Rent amounting to Rs.1000 is still outstanding
Mb 0025 Set1 Page 6
You are required to pass the necessary adjusting entries and show how the above items will appear in the Firm’s Account
Entry:
Salary a/c Dr 2000 To Salary outstanding A/c 2000 Rent a/c Dr. 1000
To rent outstanding 1000
Trial balance Particulars Dr. Cr.
Salaries A/c
12000
Rent a/c 6000 Q5. From the following figures extracted from the book if Shri
Govind, you are required to prepare a Trading and Profit & Loss Account for the year ended 31st March, 1999 and a Balance Sheet as
on that date after making the necessary adjustment.
Mb 0025 Set1 Page 7
.
Adjustments
1. Stock on 31st March, 1999 was valued at Rs. 72,600 2. A new machine was installed during the year costing Rs. 15,400, but it
was not recorded in the books as no payment was made for it. Wages Rs. 1,100 paid for its erection has been debited to wages account. 3. Depreciate:
Plant and Machinery by 33 1/3 % Furniture by 10% Freehold property by 5%
4. Loose tools were valued at Rs. 1,760 on 31.3.1999. 5. Of the Sundry Debtors Rs. 600 are bad and should be written off. 6. Maintain a provision of 5% on Sundry Debtors for doubtful debts.
7. The manager is entitled to a commission of 10% of the net profits after charging such commission.
Ans:
Trading A/c for the year ended 31st March, 1999: Particulars Amount Total
Amount Dr. Particulars Amount Total
Amount Cr.
Purchases Less Purchase return Wages Less erection Factory Lighting Gas & Fuel Freight To gross profit transferred to P/L a/c
110000 1100 35200 1100
108900 34100 1100 2970 9900
Sales Closing Stock
231440 72600
Total 304040 304040
Mb 0025 Set1 Page 8
Profit & Loss A/c for the year ended 31st March, 1999 Particulars Amount Total
Amount Dr. Particulars Amount Total
Amount Cr.
Salaries Office exp Discount Postage & telegram Insurance Office rent Bad debts Provision for Bad debts Depreciation on Furniture Depreciation on Plant & machinery Depreciation on Free hold property Manager’s Commission To Net profit transferred to B/S
1463-880 NP*10/110
13200 2750 1320 1540 1760 2860 1260 583 550 38130 3300 13470 80723
By Balance b/d from Trading A/c Interest Received
147070 1100
Total 148170 148170
Mb 0025 Set1 Page 9
Balance Sheet for the year ended 31st March, 1999 LIABILITIES Details AMOUNT ASSETS Details AMOUNT
Shri Govind’s Capital Shri Govind’s Drawings Add net Profit Sundry Creditors Biils Payable
228800 -13200 +80723
296323 44000 5500
Cash at Bank Cash in Hand Plant and Machinery Less Dep Freehold Property Less Dep Office Furniture Less Dep Loose Tools Sundry Debtors Less provision for BD Closing Stock
99000+15400 38130 66000 5500 550 29260 583
29260 2640 76270 62700 4950 2200 72,600
Total 345823 250620
Mb 0025 Set1 Page 10
6. Differentiate between Standard Cost And Budgetary Control
Following are some of the differences identified:
1. The scope of budgetary control is wider. It is integrated plan of action, a coordinated plan in respect of all functions of an enterprise The scope of standard costing, on the other hand, is limited to the operating level. Here
too, it is further linked to costs. Budgetary control is extensive whereas standard costing is intensive in its application
2. Budgetary control deals with costs and revenues. But standard costing restricts only with costs.
3. Budgetary control takes into account all activities such as production,
sales, purchase3s, finance, capital expenditure, personnel whereas standard costing is restricted to deal with only costs.
4. Budgetary control targets are based on past actual adjusted to future trends. In standard costing, standards are based on technical assessment.
5. At the approach level, budgeted targets work as the maximum limit of
expenses above which the actual expenditure should not normally exceed. Under standard costing, standards are attainable level of performance.
6. Budget is projection of final accounts. Standard costs are projection of only cost accounts.
7. Budgetary control emphasizes the forecasting aspect of the future operations. Standard
8. Costing scope and utility is limited to only operating level of the concern.
9. In budgetary control, the degree of variance analysis tends to be much less and variances are not revealed through the accounts but are revealed
in total. But in standard costing, variances Financial and Management are analyzed in details according to their originating causes and ar3e revealed through different accounts.
10.Budgetary control is possible even in parts of expenses according to the attitude of management. A standard costing system can not be operated
in parts. All items of expenditure included in cost units are to be accounted for.