B.Com-B.COM 6th Sem MANAGEMENT ACCOUNTING(Bangalore University, Bangalore-2006)

VI Semester B.Com. Examination, June 2006
Management Accounting
 
Time:3 Hours Max Marks: 90

Section-A

1. Answer any ten questions. Each question carries 2 marks. [2 marks]
a) State any two differences between cost accounting and management accounting.
b) Mention any two objectives of management accounting.
c) Write a note on internal analysis.
d) What do you mean by Trend Analysis?
e) How do you calculate Dividend Pay Out Ratio?
f) What do you mean by Price earnings Ratio?
g) Write a note on cash from financing activities.
h) Defined Fixed flow statements.
i) What do you mean by control reports?
j) If the current ratio is 3:1, quick ratio is 1:1 and current liabilities are Rs. 1,80,000. Find quick assets.
k) If profits after interest and taxes is Rs. 25,000, Interest charged is Rs. 5,000, provision for tax is
Rs.10,000. Find interest coverage ratio.
l) If gross profit is Rs. 80,000 (25% of sales), opening stock is 29,000 (Rs. 2,000 less than closing stock)
Find stock turn over ratio.

Section-B [5 marks]
Answer any five questions. Each question carries 5 marks.
2. Prepare common size income statement and give your comments.
Year Sales cost of goods Admin. Selling Net profit
(rs in 000's) sold Expenses Expenses
31-3-2006 1000 600 150 100 150
31-3-2007 1500 750 225 175 350

3. List out any ten non-fund items.
4. How do you calculate cash from operating activities as per AS-3 under direct method?
5. State any five differences between financial accounting and management accounting.
6. Write a note on different methods of reporting.
7. The capital of a co. is as follows:
Rs.
9% preference shares of Rs. 10 each 3,00,000
Equity sahres of Rs. 10 each 8,00,000
8% debentures 10,00,000
Profit after tax 2,70,000
Equity dividend paid 20%
Market price of equity shares Rs.40

Calculate:
a) debt equity ratio
b) Capital gearing ratio.
c) Earnings per equity share.
d) Price- earnings ratio.

8. Calculate cash from financing operations for the following data:
Rs.
Issue of equity shares 5,00,000
Issue of 9% debentures 4,00,000
Redemption of pref.shares 2,50,000
Raising of long term loan 3,50,000
Repayment of BOD 2,00,000
Dividends paid 1,00,000
Interest recieved 50,000
Sale of furniture 1,00,000

9. Identify the sources and application of funds from the following transactions:
Plant and machinery as on 1st April 2006 was Rs. 4,50,000
Plant and machinery as on 31st March 2007 was Rs. 1,00,000
During the year a machinery was acquired from the vendor for Rs. 3,50,000 by issue of equity shares.
During the same period machinery costing Rs.1,50,000( depreciated value of Rs. 1,20,000)
was sold for Rs. 1,00,000 Depreciation during the year was Rs. 1,60,000

Section -C
Answer any 3 of the following each question carries 15 marks. [15 marks]

10. From the following information pertaining to Yogesh Ltd. Prepare its Trading a/c, profit and loss a/c the
Year ended 31-3-2007 and a summarized balance sheet as on that date:
Current ratio 2.5
Quick ratio 1.3
Proprietary Ratio [fixed assets/proprietary funds] 0.6
Gross profit ratio 10%
Debtor’s velocity ratio 40 days
Sales Rs. 7,30,000
Working capital Rs. 1,20,000
B.O.D Rs. 15,000
Share capital Rs. 2,50,000
Closing stock is 10% more than opening stock.
Net profit 10% of proprietary funds.

11. From the following information prepare a fund flow statement for the year ended 31-3-2007
Balance sheet
Liabilities 31-3-06 31-3-07 Assets 31-3-06 31-3-07
(rs) (rs) (rs) (rs)
equity shares of
rs.10 each 10.00 15.00 plant at WDV 15.00 18.00

Redeemable pref. Stock 6.00 3.00

Cash balances 1.00 2.00
Shares of rs.100
Each, rs 50 paid 5.00 - Miscellaneous
Expenditure 1.00 4.00
Share premium 0.25 -

Capital redemption
Reserve - 5.00

General reserve 10.00 7.00

Profit and loss a/c 2.75 3.00

Current liabilities 7.00 2.00

Provision for
Taxation 3.00 4.00

38.00 36.00 38.00 36.00

Additional information:
a) During the year the company paid rs.2,00,000 as equity dividend and rs. 56250 as preference dividend.
b) The company redeemed the preference shares at a premium of 25% after making a call of rs. 50 per share to make the shares fully paid.
c) Miscellaneous expenditure includes rs. 5,00,000 share issue and other expenses paid during the year.
d) During the year one plant whose book value was rs. 1,00,000 was sold at a loss of rs. 25,000 and the company purchased plant for rs.6,00,000
e) A sum of rs.3,50,000 has been provided for taxation for the year.

12 From the following income statement and balance sheet of Mahesh ltd. Prepare a cash flow statement as per AS-3 under direct method.
Income statement
For the year ending 31-3-2007
Rs Rs
Net sales - 4,03,200
Less: Cost of sales 3,16,800
Depreciation 9,600
Salaries 38,400
Operating Expenses 12,800
Provision for tax 14,080 3,91,680
Net operating profit 11,520
Add: Profit on sale of equipment 1,920
13,440

Add: Balance of profit brought forward 24,288
37,728

Less: Dividend paid 11,520

Profit and loss a/c balance on 31-3-2007 26,208

Balance Sheets
Liabilities 31-3-06 31-3-07 Assets 31-3-06 31-3-07
(rs) (rs) (rs) (rs)
Share capital 57,600 71,040 Land 7,680 15,360

Profit and loss a/c
Balance 24,288 26,208 Building and
Equipments 57,600 92,160

Creditors 38,400 37,440 Cash 9,600 11,520

Outstanding 3,840 7,680 Debtors 26,880 29,760
Expenses
Stock 42,240 15,360
Income tax
Payable 1,920 2,112 Advances 1,248 1,440

Accumulated
Depreciation 19,200 21,120
1,45,248 1,65,600 1,45,248 1,65,600
13. SMY Ltd. is facing the problem of working capital. Cash inflows are not matching with the cash outflows. After examining the existing situation, submit a report to the management on your findings and suggestions.

14. Prepare a comparative statement for the following data and comment:

Income statements for the year ending 31st march
( Rs. In 000’s)
2006 2007
Net sales 3,000 2,800

Less: cost of goods sold 2,100 1,800

Gross profit 900 1,000
Less: operating expenses 700 600

Operating profit 200 400

Less: non-operating expenses 250 200
(50) 200

Non-operating income 25 20

Net profit/loss (25) 220

Balance sheet
Liabilities 31-3-06 31-3-07 Assets 31-3-06 31-3-07

Equity share land and 180 240
Capital 200 300 building

Plant and
8% pref. Machinery 200 190
Share capital 100 150
Furniture 100 110

6% debentures 100 80 stock 80 130

Reserves and
Surpluses 82 100 sundry
Debtors 30 50
Sundry creditors 75 90
Cash/bank
Outstanding balance 10 30
Expenses 43 30

600 750 600 750