Jawaharlal Nehru Technological University Hyderabad 2010-1st Sem M.C.A -ester Supplementary s y/ust ACCOUNTING AND FINANCIAL MANAGEMENT - Question Paper

Code No: 15
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
MCA-I Semester Supplementary exams July/August 2010
ACCOUNTING AND FINANCIAL MANAGEMENT
Time: 3hours Max.Marks:60
ans any 5 ques.
All ques. carry equal Marks
- - -
1.a) describe accounting. State its functions. State the parties who should be interested
in accounting info.
b) discuss different accounting concepts and conventions with suitable examples.
2.a) elaborate the uses, limitations and assumptions of Break-Even Analysis?
b) discuss the following:
i) Contribution ii) Marginal Cost iii) Semi-Variable Cost
3. Financial Management is an integral part of the jobs of all managers. Hence it
cannot be entrusted to a staff department. explain.
4.a) What do you mean by over-capitalization and under-capitalization? Also discuss
different sources of finance.
b) What is cost of capital? Why is the wealth of equity shareholders enhanced if a
firms rate of return on its investments exceeds its cost of capital.
5. The Financial Statements of Good Luck Limited for the year 2004, reveal the
subsequent information:
Ratio of current assets to current liabilities 1.75 to 1.0
Liquidity Ratio(Debtors and Bank balance to current liabilities) 1.25 to 1.0
Issued Capital in equity shares of Rs.10/- every Rs.120000
Net Current Assets(as over current liabilities) Rs.60600
Fixed Assets(Net blocks)-Percentage of Shareholders equity as on
the closing date 60%
Gross Profit-Percentage of Turn over 20%
Annual rate of turn over of stock(based on cost on 31.12.04) 5.26 times
avg. of outstanding debtors for the year 2004 two months
Net profit(Percentage on issued share capital) 16%
On 31st December, 2004, Current assets consisted of stock, debtors and bank
balances. You are needed to reconstruct in as much details as possible:
(a) The balance sheet as on 31.12.04 and
(b) Trading and Profit & Loss a/c for the year ended 31.12.04.
Cont…2
6. From the subsequent Balance Sheet of X Company Ltd, prepare statement of
modifications in working capital, Funds Flow Statement and Cash Flow statement.
Liabilities 2003
(Rs)
2004
(Rs)
Assets 2003
(Rs)
2004
(Rs)
Share Capital 300000 350000 Goodwill 100000 80000
Debentures 150000 250000 Machinery 410000 540000
General Reserve 100000 150000 Investment(ST) 30000 80000
Profit & Loss a/c 60000 70000 Discount on problem
of debentures 5000 ---
Provision for
depreciation
on machinery
90000 130000
Cash at Bank
120000 130000
Sundry Creditors 75000 110000 Sundry Debtors 80000 190000
Bills Payable 10000 15000 Stock 40000 55000
785000 1075000 785000 1075000
During the year investment costing Rs.30000 were sold for Rs.28000. A new
machine was purchased for Rs.45000 and the payment was made in fully paid
shares.
7. A limited company is considering the purchase of a new machine which will carry
out a few operations performed by labour. X and Y are option models. From
the subsequent information, you are needed to prepare a profitability statement
and workout the pay-back period for every model.
Particulars Model X Model Y
Estimated Life five years six years
Cost of Machine 1,50,000 2,50,000
Cost of indirect material 6000 8000
Estimated savings in scrap 10000 15000
Additional cost of maintenance 19000 27000
Employees no.of needed 150 200
Wages per employee 600 600
Taxation to be regarded as 50% of profit before charging depreciation.
Which model would you recommend?
8. The Alpha Ltd is considering the purchase of new machine. 2 alternatives( A
and B) have been suggested, every having an initial cost of Rs.400000 and
requiring Rs.20000 as additional working capital at the end of I st year. The cash
flow after taxes are expected to be as follows:
Cash Inflows
Year Machine A(Rs.) Machine B(Rs.)
1 40000 120000
2 120000 160000
3 160000 200000
4 240000 120000
5 160000 80000
Which profit is more profitable? Appraise the profits through IRR. The
company's cost of capital is 10%.
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Earning:   Approval pending.