BALAJI INSTITUTE OF ENGINEERING & MANAGEMENT STUDIESDEPARTMENT OF MBA(14E00208) MANAGEMENT INFORMATION SYSTEM LAB

1.ACCOUNTING2.FINANCE3.MARKETING4.HUMAN RESOURCE MANAGEMENT5. SYSTEMS

PROBLEM 1

S.NoDATETRANSACTIONS1.1-4-2005Nandhini Kapur started Universal Business Solutions by bringing in cash of Rs.3,00,000.2.2-4-2005Ms.Kapur paid Rs.22500 in cash to purchase a computer with preloaded.Tally. The computer does not have any disposal value atuseful life of four years. All assets are to be depreciated using the Straight Line Method.3.3-4-2005Ms.Kapur opened a bank account with HDFC Bank, Bangalore for the Firm by depositing cash of Rs.1,00,000.4.4-4-2005Ms.Kapur rented an office space for Rs.2,500 per month on April 01,2005. She paid the security deposit of Rs.25,000 by cheque.5.5-4-2005Ms.Kapur hired Maya Nair as Manager (operations) on a monthly salary of Rs.7,500. She also hired Vijay Narayan as Assistant Manager (Marketing) on a monthly salary of Rs.4,500.6.10-4-2005Ms.Kapur made an arrangement with Raj Travels to receive bills, for Travel expenses, at regular intervals.7.15-4-2005Ms.Kapur issued cheques and purchases the followingfixed assets.1.A cell phone for office use for Rs.6,000 (useful life yrsii. Furniture for Rs.20,000 (useful life 8 years)iii. An air conditioner for Rs.20,000 (useful life:10 years)iv. Electrical fittings for Rs.15,000 (useful life 10 years)The above assets do not have any disposal value at the end of their useful life.8.16-4-2005Ms.Kapur obtained a mobile phone subscription form Planet Telecommunications Ltd., by paying a deposit of Rs.3,000 in cash.9.20-4-2005Ms.Kapur purchased stationery consumables worth Rs.12,500 from Global House, on credit.10.21-4-2005Ms.Kapur signed a contract with Silver Services to provideconsultancy Services at an agreed price of Rs. 75,000. She received an advance of Rs.25,000 by cheque.11.23-4-2005Ms.Kapur deposited Rs.50,000 cash in HDFC Bank.12. 25-4-2005Ms.Kapur received an invoice for Rs.6,000 from Ink and Paper Publishers for printing office stationery.13. 27-4-2005Ms.Kapur withdrew Rs.7,500 cash for personal use.14.30-4-2005Ms.Kapur paid Rs.750 in cash towards office maintenance chaged for April 2005.

STEPS TO SOLVE THE PROBLEMTRANCTION 1:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Nandhini Kapur Capital A/c Under Group : Capital Accountii. Entry of the transaction in a Receipt VoucherGateway of Tally ---- Accounting Vouchers ----F6:ReceiptPress F2 to change Voucher Date.Credit Particulars: Nandhini Kapur Capital A/c -- 3,00,000Debit Particulars: Cash (pre-defined ledger) ----- 3,00,000TRANCTION 2:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Computer Under Group : Fixed Assetsii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: Computer -- 22,500Credit Particulars: Cash (pre-defined ledger) ----- 22,500TRANCTION 3:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: HDFC Bank Under Group : Bank Accountii. Entry of the transaction in a Contra VoucherGateway of Tally ---- Accounting Vouchers ----F4:ContraPress F2 to change Voucher Date.Credit Particulars: Cash -- 1,00,000Debit Particulars: HDFC Bank ----- 1,00,000TRANCTION 4:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Security Deposit-Office Under Group : Deposits (Assets)ii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: Security Deposit-Office -- 25,000Credit Particulars: HDFC Bank ----- 25,000TRANCTION 5 & 6: No entry is required for these transactions as they are not accounting transactions.TRANCTION 7:Gateway of Tally ---- Accounts Info----- Ledgers ----- Multi Ledger -- CreateName: Cell Phone, Furniture, Air Conditioner, Electrical Fittings Under Group : Fixed Assetsii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: -- Cell Phone, Furniture, Air Conditioner, Electrical Fittings Credit Particulars: HDFC BankTRANCTION 8:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Security Deposit-Phone Under Group : Deposits (assets)Note: Ledgers can be created from the Accounting Voucher screen also. If the ledger which you are looking for is not listed in the list of ledgers, press Alt + C at the Particulars column to bring up the Ledger Creation (secondary) screen.ii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: Security Deposit Phone -- 3,000Credit Particulars: Cash ----- 3,000TRANCTION 9:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Stationery Expenses Under Group : Indirect ExpensesName: Global House Under Group : Sundry Creditors

ii. Entry of the transaction in a Journal VoucherGateway of Tally ---- Accounting Vouchers ----F7:Journal VoucherPress F2 to change Voucher Date.Debit Particulars: Stationery Expenses -- 12,500Credit Particulars: Global House ----- 12,500TRANCTION 10:Note: Ms.Kapur wants all advances from customers to be grouped separately. Hence, create a sub-group, Advance From Customers, under the predefined primary group, Current Liabilities.Gateway of Tally ---- Accounts Info----- Group----- Single Group -- CreateName: Advance from Customers Under Group : Current LiabilitiesGateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Advance Consulting Revenue Under Group : Advance from Customers

ii. Entry of the transaction in a Receipt VoucherGateway of Tally ---- Accounting Vouchers ----F6:ReceiptPress F2 to change Voucher Date.Credit Particulars: -- Advance Consulting Revenue -- 25,000Debit Particulars: HDFC Bank

TRANCTION 11: Entry of the transaction in a Contra VoucherGateway of Tally ---- Accounting Vouchers ----F4:ContraPress F2 to change Voucher Date.Credit Particulars: Cash -- 50,000Debit Particulars: HDFC Bank ----- 50,000TRANCTION 12:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Ink and Paper Publishers Under Group : Sundry Creditorsii. Entry of the transaction in a Journal VoucherGateway of Tally ---- Accounting Vouchers ----JournalPress F2 to change Voucher Date.Debit Particulars: Stationery Expenses -- 6,000Debit Particulars: Ink and Paper Publishers ----- 6,000

TRANCTION 13:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Withdrawals Under Group : Capital Accountii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: Withdrawals -- 7,500Credit Particulars: Cash ----- 7,500TRANCTION 14:Gateway of Tally ---- Accounts Info----- Ledgers ----- Single Ledger -- CreateName: Office Maintance Expenses Under Group : Indirect Expensesii. Entry of the transaction in a Payment VoucherGateway of Tally ---- Accounting Vouchers ----F5:PaymentPress F2 to change Voucher Date.Debit Particulars: Office Maintance Expenses -- 750Credit Particulars: Cash ----- 750

UNIT 2. FINANCE Capital budgeting decisions, calculation of NPV, IRR, Profitable Index, preparation of budget, calculation of cost of capital.

Meaning of Capital budgeting: Capital expenditure budget or capital budgeting is a process of making decision regarding investment in fixed assets, which are not meant for sale. Such as land building, machinery or furniture etc. Management is to desire to acquire of not to replace fixed assets in the life of overall objectives of the firm.Definitions:

Capital budgeting is long term planning for making and financing proposed capital outplace. Charles T.HorngremCapital budgeting involves the planning of expenditure for assets, the returns from which will be realize the future time period.Milton H.SpencerFeatures:

Future benefits are expected over a time period. The funds are invested for long-term activities. This involves huge investments. They are strategic investment decisions. Long-term effect on profitability. Irreversible decisions.Need:

Maintaining firms in competitive position Planning for future needs Co-ordinating the funds Cost control Organization effectivensssImportance:

Long term effect Risk & uncertainty Large funds Corporate imageTypes of Capital Budgeting Decisions:

Expansion & Diversification Replacement & Modernization Mutually exclusive investments Independent investment Contingent investment Research & Development Miscellaneous investmentComponents:

Cash outlay Cash flow Cut-off rate Ranking proposals

Process:

Project generation Project evaluation Project selection Project implementation Project control

Techniques:

There are two types of techniques are there.

Traditional TechniquesModern Techniques

1. Pay-back period1. Net present value method2. Average Rate of Return2. Internal Rate of return3.Profitability Index

1. Net present value method:

NPV method considered the time value of money. Under this method all cash inflows and outflows are discounted at a given rate. If NPV is positive the proposal is accepted. Or negative proposal is rejected. The minimum cut off rate or rate of return is determined by company or investor. If there are two project proposals, the project with the higher NPV is selected.

NPV= present value of cash inflows-original investment.

Advantages:

NPV is superior to other methods of evaluating the economic worth of investments. NPV recognizes all cash flows throughout the life of the project NPV helps to satisfy the objectives for maximizing firms values. NPV recognized the time value of money. NPV generally accepted by economists.

Disadvantages:

NPV fails to give satisfactory answer when projects under consideration involve different amounts of investments and with different economic life periods. NPV gives the same decision for mutually exclusive projects as in the case of discounted benefit-cost ratio. NPV fails to indicate the rate of return which is expected to be earned.

2. Average Rate of Return (or) Accounting rate of return:

ARR is used to measure the rate of return on an investment in a project under this method average annual profits are considered as profit after tax and depreciation. It is expressed as percentage of investment. Thus ARR is find out by dividing the average annual profit by the average investment. If there is additional working capital required by the project it should be added to original investment.

Average annual profits after tax& depreciationARR ----------------------------------------------------------- *100Average investment

Annual profitsAverage annual profits = -------------------- Number.of years

InvestmentAverage investment = ---------------- 2

3. Profitability index:

In case of profitability index the present value of cash inflows are divided by the present value of cash outflows. If the profitability index is more than one. The proposal is accepted, otherwise rejected. If there are more than one proposal the highest profitability index is selected. This method is more useful in case of projects with different cash outflow hence it is superior technique to the net present value method.

Present value of cash inflowsProfitability Index = -------------------------------------- Present value of cash outflows

Problem11. Calculate the Net Present Value & profitability Index for the following data @ 10% using MS-Excel.

Original investment = 200000

Years: 12345

Cash inflows: 90000 90000 80000 80000 60000

Steps for the Solution:1. Click on Start button2. Go to MS-Office3. Click on MS-excel4. Open new work sheet5. Enter the values6. Go to Formulas menu bar7. Click Auto sum button8. Select NPV function9. Enter the values in that window with 10%10. You will get the answer 308130 NPV= present value of cash inflows-original investment. 308130 200000

= 108130

Profitability index calculation:Present value of cash inflows Profitability Index = -------------------------------------- Present value of cash outflows308130 PI = -----------200000

= 1.54

Problem 2:Calculate the Average Rate of Return for project A & B.ParticularsProject AProject B Investment20,00030,000Expected Life4 years5 yearsProjected net cash inflows after depreciation & TaxesYearsProject AProject B 1 2,000 3,000 2 1,500 3,000 3 1,500 2,000 4 1,000 1,000 5-------- 1,000Solution:1. Enter the values in new work sheet2. According to the formula do calculations by using auto sum function Average annual profits after tax & depreciationARR ----------------------------------------------------------- *100Average investment

Annual profitsAverage annual profits = -------------------- Number of years

Project A = 6,000/4 = 1,500Project B = 10,000/5 = 2,000 InvestmentAverage investment = ---------------- 2

Project A = 20,000/2 = 10,000Project B = 30,000/2 = 15,000

Average annual profits after tax & depreciationARR ----------------------------------------------------------- *100Average investment

Project A = 1,500/10,000 *100 = 15%

Project B = 2,000/15,000*100

= 13.33%

Comment: Project A average return is higher than Project B average returns. So project A is preferable or acceptable.

Cost of Capital:

Introduction: The term Cost of Capital refers to the minimum rate of return, a firm must earn on its investment.Definition: Cost of capital is the minimum required rate of earning or the cut-off rate of capital expenditure. Solman EzraBasic aspects:

Cost of capital is not a cost Cost of capital is the minimum rate of return Cost of capital comprises of 3 components1. Return at 0 risk level2. Premium for business risk3. Financial risk EPS effect on capital structure.

Cost of capital (k) = r0 +b+f

Where k = Cost of capitalr0 = return at 0 risk levelb = premium for business riskf = Financial risk

Importance of Cost of Capital:

As a tool for evaluation of financial performance As an aspten criterian in capital budgeting As a determinant of capital mix in capital structure decision As basis for taking other financial decisions.Components of Cost of Capital:

Cost of Debt Cost of preference share capital Cost of equity Cost of retained earnings (reserves & surplus)

A. Cost of Debt: It is the rate of return which is expected by lenders. This is actually the interest rate specified at the time of issue. Debt may be issued at per (face value) at premium or at discount. It may be perpectual or irredeemable. The following of the technique is used for computing the cost of debt.

Kd= R(1-t)R = Interest ratet= Tax rate1.A company issues 9% debentures and its marginal tax rate is 50%. You are required to calculate cost of debt.R = 9% 0.09%t=50%0.50%kd= R(1-t) = 0.09 (1-0.50) = 0.09(0.50) = 0.045 *100 = 4.5%A.1 Readeemable debt or perpectual debt: If debentures are issued at discount on premium

Where t = tax rate R = interest rate on debenture n= number of years f= debenture face value p= issue price of debenture

2.A company issues 10 years 8% debentures @ 90% & its face value is 100/-. The marginal rate of cost to the company is 50%. You are required to calculate the cost of debt.

t=50% or 0.5n=10 yearsf=100p=90R = 8%

(1-0.5) [8+1/10(100-90)] ------------------------------- = 4.7% 100-90/2A.2 Irredeemable debentures:Cost of debt = (1-t)Where R = interest rate P = issue price t= tax rate3.A limited issues 9.5% irredeemable debentures @ 95. The tax rate is 50%. R = 95*9.5/100 = 9.025 p=95 t=50 or 0.59.025 = --------------- (1-0.5) 95 = 0.095(0.5) = 0.0475 = 4.75%

B. Cost of preference share capital:B.1 Irredemable preference share capital: The shares that can not be paid till the liquidation of the company are called irredeemable preference share.

D Cost of preference shares (kp) = ------------------------------------------------- (without tax) Current market price / net proceeds

Where kp = cost of preference shares D = dividend per share Net proceeds = face value of preference share floating charges

1. HFC limited issues 12% preference shares face value of 200 each. Compute cost of preference shares without tax. D=12% 200*12/100 =24CMP = 200= 24/200*100 = 12%

2. A limited company is planning to issue 14% irredeemable preference share at face value of 250 per share with estimated flotation cost 5%. What is cost of preference share with 10% dividend tax. D(1+dt)Cost of preference shares with tax (kp) = ----------- *100 Npdt= tax on preference dividendnp=face value floating charges

D = 250 * 14/100 = 35dt = 10% or 0.10np = face value floating charges = 250 12.5 = 237.535(1+0.10) = ---------------- * 100 = 16.21% 237.5

B.2.Cost of redeemable or perpectual preference shares: Dp + (F-NP/n)Kp = ---------------------- * 100 F+NP --------- 2

Where Dp= preference share dividend F = face value of preference shares N= number of years NP = net proceeds of preference share

3. A company has 10% 1,00,000 redeemable preference shares for 10 years. The underwriting or floting 5%. Calculate cost of perpectual capital.

Dp = 1,00,000 * 10/100 = 10,000f= 1,00,000NP = 1,00,000 5000 = 95,000

Dp + (F-NP/n)Kp = ---------------------- * 100 F+NP --------- 2

10,000+ 100000 -95000/10= ------------------------------------------ * 100 1,00,000 + 95,000/2

10,000 + 500= ----------------------- * 100 = 10.76 97500

C. Cost of retained earnings:

Kre = ke [(1- Ti) / (1-Tb)]

Where ke = cost of equity Ti = market tax rateTb = cost of purchase of new securities D = dividend Np = net proceeds

4. A company paid a dividend @ 2 per share. Market price is 20 per share. Income tax rate is 60% & brokerage expected to be 2%. Compute cost of retained earnings.Kre = ke [(1- Ti) / (1-Tb)]

Ke = D/np= 2/20 = 0.1Tax rate = 60% = 0.60

= 0.10 [1-0.60/1-0.20] * 100= 0.10 [ 0.40/0.98] * 1000.10 (0.4082) *100 = 4.0820

UNIT3: MARKETINGMeaning: Marketing means selling and advertising. Marketing is a comprehensive term and it includes all resources and a set of different activities necessary to direct and facilitate the flow of goods and services from producer to consumer in the process of distribution system.

Definitions: marketing is a social and managerial process by which individuals and groups obtain what they need and by creating and exchanging products and value with others. Philip Kotler

marketing is a system of integrated business activities designed to develop strategies and plans to satisfy customer wants of selected markets segments or targets.

Scope:

Goods Services Experiences Events Persons Places Properties Organizations Information Ideas

Advantages / Importance:

1. Importance of the Marketing to the society

i. Delivery of standard of living to the societyii. Decreases in distribution costiii. Increase in employment opportunitiesiv. Protection against business slumpv. Increase in national income

2. Importance of marketing to the firmi. Helpful in business planning and decision makingii. Helpful in increasing profitsiii. Helpful in communication between firm and society.

3. Importance of marketing in developed economy4. Importance of marketing in underdeveloped or developing economy5. Importance of marketing in a sellers or buyers market

CustomerSalesDealersProductsAreas

xxxxx70,000PppppFMCGSAnantapur

Yyyyy85,000QqqqqElectronicsChittoor

Zzzzz50,000RrrrrStationeryNellore

aaaaa1,20,250sssssFood itemsvijayawada

Unit 4: Human resource Management

Human resource management reflects a new philosophy, outlook, approach and strategy which views organisations manpower as its resources and assets. The values, ethics, attitudes, approaches and beliefs of the individuals operating in an organization also form a part of human resource. It is the sum total or aggregate of inherent abilities, acquired knowledge and skills represented by th talents and aptitudes of the persons working in an organization.

Definitions:

the human resource management refers to the philosophy, policies, procedures, and practice related to the management of people within the organization. Wendell L.French

personnel management is the planning, organizing, directing and controlling of th procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and societal objectives are accomplished. Edwin Flippo

Scope: Recruitment Training and development Formulation of promotion policy Job analysis Performance appraisal Job evaluation Compensation management Employee welfare

Importance:

Employee enjoy their work Employees have a sense of accomplishment in their work Employees have a high sense of belongingness to their organization and work place Employees feel that they are respected as individuals and their contributions are valued Employees have a feeling to enhance their competence and perform more challenging and satisfying tasks. Instead of spending time in satisfying their needs, employees contribute to the organizational tasks and goals.

Characterstics:

HRM is an art and a science HRM is pervasive HRM is a continuous process HRM is a service function HRM must be regulation-friendly Interdisciplinary and fast changing Focus on results People-centric Human relations philosophy An integrated concept

EmployeeRavindraChaitanyaVikramjayanth

Salary60,00075,00070,00055,000

DepartmentR & DFinanceAdministationHR

DesignationTeam leaderManagerPROManager

Unit 5: Systems

Information systems play a crucial role in todays society. For many businesses and organizations, innovations in information processes and systems are critical for competitiveness and survival. For individuals, our personal and social lives are now mediated by an ever growing array of information systems.Top of FormBottom of FormMeanings of DesignThe key to successful information systems is good design. But what makes a good design? A number of disciplines weigh in on this topic. We will look at design from a number of different perspectives. Whenever possible we will contrast good and bad designs.Different people use the word design in different contexts. When IS professionals speak of design, they are referring to business processes. Problems must be analyzed and requirements documented before solutions are designed, developed, and implemented. After all if the design does not satisfy the business need, then whats the point? However, satisfying the business need is really a baseline standard. The vilified hospital system described earlier meets the business need of registering patients. And yet its design is in other ways lacking. Similarly, fast food meets the need for feeding ones hunger. However, we want to be metaphorically better than fast food in our designs.Usability describes how easy the system is to navigate. The easier the system is to navigate, the less time a user will need to spend learning to use the system. A more usable system also leaves less room for error. Usability theory provides rules of thumb (heuristics) that document best practice conventions for designing a user interface. Graphic design refers to the visual appeal and organization of the user interface. There is obviously some overlap here with usability. Usable systems typically adhere to at least some graphic design rules. However, a usable system could be bland and uninteresting. Employing graphic design principles helps ensure that the system will have visual appeal. Designs also need to fit with the overall brand of the client. Existing colors, fonts, and logos are all a part of the brand for which the system is being created.Analytical Design describes how to best represent informationespecially quantitative informationto communicate clearly and truthfully. Every information systems project has quantitative dimensions associated with project management. These include estimating costs, time schedules, and so forth.

Systems Development Life Cycle (SDLC)Information systems are designed using the systems development life cycle (SDLC). The SDLC is to a large extent common sense spelled out in stages. First, analyze the current situation. Then specify the requirements that a solution should embody. The next stage is to design a solution (no programming yet). Then the system is developed (programmed) and tested. Finally, the system goes live for the end users as it is implemented in the business setting. To review, the five phases are:1. Analysis2. Requirements (vision of future state)3. Design4. Development5. ImplementationIn this course we will cover all five stages. However we will focus most heavily on the first three stages for two reasons. First, because that is where IS professionals tend to spend most of their time and second because it is much easier to make changes to a system when in the planning stages, than after code has already been generated.