March 2009

Master of Business Administration (MBA) Examination

I Semester

Accounting For Managers

Time : 3 Hours)                                                                                               (Max. Marks : 90

Note: Attempt any two questions from Section A and any three questions from Section B. All questions carry equal marks

(Section A)

1.         What is a Double Entry ? Mention and explain the single rule of Debit and Credit that covers all types of transactions.

2.         Define Budget. What are the uses of Budgets ? Describe different types of Budget. What are the main objectives of Budgetary Control?

3.         Discuss in brief the different methods of Cost Accounting.

4.         Differentiate between any two of the following:

(a)        Basic Accounting Concepts and Fundamental Conventions of Accounting.

(b)        Production Cost Centres and Service Cost Centres.

(c)        Capital and Revenue Expenditure and Receipt.

(Section B)

5          A company producing' a single article sells it at Rs. 10 each. The marginal. cost of production is Rs. 6 each and fixed cost is Rs. 400 per annum, calculate :

(a)        P/v Ratio,

(b)        The Break-Even Sales,

(c)        The sales to earn a profit of Rs. 500,

(d)       Profit at sales of Rs. 3,000

(e)        New Break-Event Point if sales price is reduced by 10%.

6.         From the following information of Mr. Ravi & Sons Ltd., prepare a Trading and Profit and Loss Account for the year ended 31st March, 2006 and a Balance Sheet as on that date :

Particulars                                                                                                      Amount (Rs.)

Mr. Ravi's Capital Account                                                                                      1,19,400

Mr. Ravi's Drawings Account                                                                                     10,550

Sundry Creditors                                                                                                         59,630

6% Loan Account (Loan taken)                                                                                  20,000

Cash in Hand                                                                                                                 3,030

Cash in Bank                                                                                                                18,970

Sundry Debtors                                                                                                            62,000

Bills Receivable                                                                                                             9,500

Provision for Doubtful Debt                                                                                          2,500

Fixtures and Fittings                                                                                                      8,970

Plant and Machinery                                                                                                    28,800

Stock as on 1-4-2005                                                                                                   89,780

Purchases                                                                                                                  2,56,590

Manufacturing Wages                                                                                                  40,970

Sales                                                                                                                          3,56,530

Ref urn Inwards                                                                                                             2,780

Salaries                                                                                                                         11,000

Rent and Taxes                                                                                                              5,620

Interest Paid and Discount Allowed                                                                             5,870

Travelling Expenses                                                                                                       1,880

Repairs and Renewals                                                                                                    3,370

Insurance (including Premium @Rs. 300                                                                         400

per annum paid upto 30-9-2006)                                                                                      400

Bad Debts                                                                                                                       3620

Commission Received                                                                                                   5,640

Consider the following adjustments :                                                                                    

(1)        Cost Price of the Stock as on 31-03-2006 was Rs. 1,28,960 whereas the Market Price was Rs. 1,30,000.

(2)        Manufacturing Wages include Rs. 1,200 for erection of new machinery purchased last year.

(3)        Create a provision for 5% on Sundry Debtors.

(4)        Depreciate Plant and Machinery by 5% and Fixtures and Fittings by 10% per annum.

(5)        Charge 5% Interest on Capital.

(6)        Interest on Loan for the last two months is not paid.

(7)        Commission earned but not received amounts to Rs. 600.

7.         Prepare Cash Budget of ABC & Co. for April, May and June 2007 :

Months                        Sales                Purchases        Wages             Expenses

Rs.                   Rs.                   Rs.                   Rs.

January (Actual)          8,000               4,500               2,000               500

February (Actual)        8,000               4,000               1,800               600

March (Actual)            7,500               4,200               2,200               600

April (Budgeted)        9,000               5,000               2,400               700

May (Budgeted)         8,500               4,500               2,000   .           600

June (Budgeted)         8,000               3,500               1,800               600

Additional Information :

(1)        10% of the purchases and 20% of sales are for cash.

(2)        The average collection period of the company is 1/2 month and credit purchases are paid off regularly after one month.

(3)        Wages are paid half-month and rent of Rs; 50 included in. expenses is paid monthly.

(4)        Cash Balance on 1st April may be taken at Rs. 1,500 .

8.         From the following particulars, calculate the following Material Variances and give their relationships :

(a)        Material Cost Variance                       (b)        Material Price Variance

(c)        Material Usage Variance                     (d)       Material Sub Usage Variance

(e)        Material Mix Variance.

Standard                                 Actual

Material           Qty. (kg.)        Price (Re.)       Qty. (kg.)        Price (Rs.)

A                     10                    8                      10                    7

B                     8                      6                      9                      7

C                     4                      12                    5                      11

22                                            24

9.         A company whose accounting year is the calendar year purchased on 1st April,2002, machinery costing Rs. 30,000. It purchased further machinery on 1st October, 2002 costing Rs. 20,000 and on 1st July, 2003 costing Rs. 10,000. On 1st January, 2004 one-third of the machinery which was installed on 1st April: 2002, became obsolete and it was sold for Rs. 3,000. Show how the Machinery Account would appear in the books of the company, it being given that the machinery was depreciated by the Fixed Installment Method at 10% per annum. What will be the balance in Machinery Account on 1st January, 2005?