Gauhati University 2007 Post Graduate Diploma Business Management Final : -IV - Question Paper

2007
ACCOUNTING AND FINANCE FOR MANAGERS
FOURTH PAPER
Full Marks: 100
Time: three hours
The figures in the margin indicate full marks for the ques.
1. ans any 5 ques. in about 100 words each: 5×5=25
(a) List the main objectives of accounting.
(b) What is going-concern concept in accounting?
(c) Distinguish ranging from a 'trial balance' and a 'balance sheet'.
(d) Briefly mention the weaknesses commonly associated with the use of the
payback period method of investment appraisal.
(e) elaborate the limitations of using ratio analysis?
(f) explain the concept of 'networking capital' in brief.
(g) provide a specimen of 'debit note'.
(h) provide an example of 'compensating error' and show how that can be corrected.
2. ans any 3 ques. in about 200 words every. This limit is not applicable to (d)
and (e): 10×3=30
(a) State the major consideration governing the selection of accounting formula.
Support your ans with illustrations.
(b) Distinguish ranging from 'capital expenditure' and 'revenue expenditure'.
(c) Fund flow analysis is a tool in the decision-making process. discuss.
(d) Zig-Zag Limited had determined the profits for the financial year 2006-07 as
follows :
Gross Profit: Rs 37,48,000
Net Profit: Rs 18,52,000
The subsequent errors were subsequently discovered :
(i) A receipt of Rs 5,00,000 from Eskay Enterprises in amortisation of a loan
taken by them had been recorded in the books as cash sales to Eskay
Enterprises
(ii) A closing stock item had been valued at Rs. 5,60,000 instead of Rs 6,50,000
(iii)A sales return ofRs 38,000 received from Retco Enterprises was recorded as
purchase from them
compute the Gross Profit and Net Profit of the company after the
rectification of the above errors. Show your workings in detail.
(e) A limited company purchased a machine for Rs 6,00,000 on 1stJanuary, 2002. It
incurred an expenses of Rs 1,00,000 on installation of the machine. The
company decided to depreciate @ 10 percent per annum and maintain the books
on reducing balance method. On first January, 2005, the company sold the
machine for Rs 5,20,000. Show the accounting treatment in Depreciation
Account and other concerned ledger accounts for the period of 2002-05.
3. ans any 3 ques.. Descriptive answers should be in about 300 words every
while solution to the issues should be as per requirement: 15×3=45
(a) “A fair accounting presentation necessitates the full disclosure of material
information." discuss the meaning of material info as it is used in
accounting.
(b) A book-keeper has submitted you the subsequent Trial Balance wherein the totals
of the Debit and Credit balances are not equal:
You are needed to:
(i) Redraft the Trial Balance as at 31st March, 2007
(ii) Prepare a Trading and Profit & Loss Account and Balance Sheet after
taking the subsequent adjustments :
1. Stock on hand on 31st March, 2007 was valued at Rs1,800
2. Depreciate fixtures and fittings by Rs.25
3. Rs 35 was due and unpaid in respect of salaries
4. Rates and insurance prepaid up to Rs.40
(c) From the subsequent details, prepare Balance Sheet of the firm concerned:
Stock Velocity-6
Capital Turnover Ratio-2
Fixed Asset Turnover Rati0-4
Gross Profit-20%
Debt Collection Period-2 months
Creditors Payment Period-73 days
The gross profit was Rs 60,000. Closing stock was Rs 5,000 in excess of the
opening stock.
d. What is capital budgeting? Enumerate the relevant factors needed for a
capital budgeting decision.
e. From the subsequent particulars, ascertain the value of stock as on 31st
March, 2007 and also the profit for the year:
Rs
Stock as on 1.4.200Q 14,250
Particulars Dr. Cr.
Rs. Rs.
Capital - 7,670
Cash in Hand - 30
Purchases 8,990 -
Sales - 11,060
Cash at Bank 885 -
Fixtures & Fittings 225 -
Freehold Premises 1,500 -
Lighting & Heating 65 -
Bills Receivable - 825
Return Inward - 30
Salaries 1,075 -
Creditors - 1,890
Debtors 5,700 -
Rs. Rs.
Stock at first April,2006 3000 -
Printing 225 -
Bills Payable 1,875 -
Rates, Taxes and Insurance 190 -
Discount Received 445 -
Discount Allowed - 200
24,175 21,705
Purchases 76,250
Manufacturing Expenses 15,000
Selling Expenses 6,050
Administrative Expenses 3,000
Financial Charges 2,150
Sales 1,24,500
At the time of valuing stock on 31st March, 2007, a sum of Rs 1,750 was written
off on a particular item, which was originally purchased for Rs 5,000 and was sold during
the year for Rs 4,500. Barring this transaction, the gross profit earned during the year was
20 percent on sales.
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Earning:   Approval pending.