All India Management Association (AIMA) 2007 M.B.A Marketing Management Accounting for ision Making – I - Question Paper

Capital 3,00,000
Reserves & surplus 22,500
3,22,500

2. Application of funds
Fixed assets 2,70,000
Current assets:
Sundry debtors
Closing stock
Cash and bank

22,500 37,500 26,500



86,500
Less: Current liabilities
Sundry creditors
34,000
52,500
Total 3,22,500
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18. E A complete set of financial statements normally does not consist of prospectus. A complete set of financial statement includes
Income statement
Balance sheet
Cash flow statement
Notes to balance sheet. < TOP >
19. C Proposed dividend does not come under the head ‘reserves and surplus’. It comes under current liabilities. Remaining all other choices come under reserves and surplus. < TOP >
20. A The activities that are basically related to the modifications in share capital and long-term borrowings of the company is known as Cash from financing activities. They account for cash flows generated from problem of shares, problem of debentures, loans raised, redemption of debentures, repayment of loans, etc. < TOP >
21. A
Particulars Rs. Rs.
Cash at the beginning of the period 95,000
Add : Cash inflow from operating activities 1,29,000
Total cash inflows 2,24,000
Less: Net Cash Outflow from investing activities 1,00,000
Less: Net Cash Outflow from financing activities 35,000 1,35,000
Cash at the end of the year 2007-08 89,000
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22. C The balance sheet is based on the concept that
Sources of funds = Applications of funds
Sources of funds is divided into Shareholders funds and loan funds
Therefore, Shareholders funds + Loans funds = Applications of funds
Therefore, Loan funds = Applications of funds – shareholders funds
Loan funds = Rs.90 lakh – Rs.60 lakh = Rs.30 lakh. < TOP >
23. A Sinking fund is created out of profits. It is the part of profit and should be listed under the heading “Reserves and Surplus” and not under “unsecured loans”. Short-term loans from others, short term loans from banks, short-term advances from banks and fixed deposits are unsecured loans. < TOP >
24. E Advance payment made to suppliers for raw materials is not treated as inventory in the financial statements. < TOP >
25. C
Particulars Rs. Rs.
Cash received from sales 9,28,000
Royalties received 12,500 9,40,500
Less: Cash paid to suppliers and employees 5,45,000
Less: Office rent paid 1,30,000 6,75,000

Earning:   Approval pending.