Management Accounting — Winter 2023

Define the following terms.

Differentiate between the accrual basis of accounting and the cash basis of accounting.

Inventory

Trial Balance

Trade Discount

Working capital

Rule of debit and credit

Users of Financial Statement

What is meant by Generally Accepted Accounting Principles (GAAP)? Differentiate between Indian GAAP and IFRS.

From the following Balance Sheet, prepare a Common Size Statement Liabilities 2002 2003 Assets 2002 2003 Rs. Rs. Rs. Rs. Share Capital 2,64,000 2,80,000 Cash in Hand 10,000 10,750 Current Liabilities 65,000 70,000 Cash at Bank 3,500 5,000 Long-term Debt 1,00,000 87,500 Bills Receivable 22,500 22,750 Bills Payable 12,500 - Sundry Debtors 90,000 85,000 Sundry Creditors 10,000 16,000 Inventories 70,000 83,000 Bank Overdraft 50,000 71,500 Fixed Assets 3,00,000 3,07,500 Prepaid Expenses 5,500 10,500 5,01,500 5,25,000 5,01,500 5,25,000

Calculate Return on Investment Ratio from the following information : Rs. 1000 Equity shares @ of Rs.l0 each 10,000 2000, 5% preference share @ of Rs. lO each 20,000 Reverses 5,000 Net profit before interest and Tax 10,000 Interest 2,000 Taxes 3,000 Page 1 of

What is Accounting? Explain giving examples various accounting concepts and conventions

From the following particulars, prepare stores Ledger Account on weight Average basis: 2003 March 1 Opening balance 200 units at Rs. 2 per unit 10 Purchased 300 units at Rs. 2.40 per unit 15 Issued 250 units. 18 Purchased 250 units at Rs. 2.60 per unit 20 Issued 200 units. 25 Purchased 300 units at Rs. 2.50 per unit 31 Purchased 100 units at Rs. 2 per unit

Explain the conceptual framework of financial statements in detail

Alpha Co. Ltd manufactured and sold 1,000 iron boxes in the year ending 31 March 2010. The summarized trading and profi t and loss account is shown as follows: Rs Rs To cost of materials 1,00,000 By Sales 5,00,000 To direct wages 1,50,000 To manufacturing expenses 80,000 To gross profit 1,70,000 5,00,000 5,00,000 To Salaries 80,000 By gross profit 1,70,000 to rent, rates , insurance 15,000 to selling expense 25,000 to general expense 30,000 to net profit 20,000 1,70,000 1,70,000 For the year ending 31 March 2011 it is estimated that 1. Output and sales will be 1,500 iron boxes. 2. Prices of raw materials will rise by 25% on the previous year’s level. 3. Wages will rise by 20%. 4. Manufacturing costs will rise in proportion to the combined cost of materials and wages. 5. Selling cost per unit will remain unaffected. 6. Other expenses will remain unaffected by the rise in output. You are required to submit a statement to the board of directors showing the price at which the iron box should be marketed so as to show a profi t of 20% on selling price.

Differentiate between periodic inventory system and perpetual inventory system

Vas Ltd. is engaged in the manufacture and sale of a consumer product. Its budget for the next year shows the following data: Rs. Selling price/unit: Variable cost/unit: Fixed costs: Rs. 50,000 Aresearch agency suggested that the fi rm shall increase its production and sale by 25% by reducing its selling price by 10%. However, the fi rm is working in its full capacity (and producing 20,000 units). In order to increase its production and sale, it has to expand its factory. The expansion would lead to an increase in the fixed by Rs. 25,000. You are required to advise the fi rm regarding the expansion.

Explain the concept of Trend Analysis with the help of an example.

From the following particulars, calculate :

P / V Ratio Page 2 of

Profit when sales are Rs. 40,000, and

CASE STUDY: The following Trial Balance was extracted from the books of XYZ corporation Particular Dr (Rs) Particular Cr (Rs) Plant and Machinery 2,00,000 Capital accounts 8,00,000 Manufacturing wages 3,45,000 Sundry creditors 4,45,60014 Salaries 1,58,500 Bank loan 1,50,000 Furniture 1,00,000 Purchase return 17,400 Freight on purchase 18,600 Sales 25,08,500 Freight on sales 21,400 Provision for doubtful debts 20,000 Buildings 2,40,000 Manufacturing expenses 95,000 Insurance and tax 42,500 Goodwill 2,50,000 General expenses 82,000 Factory fuel and power 12,800 Sundry debtors 7,82,000 Factory lighting 9,500 Opening Stock 3,42,000 Motor car 1,20,000 Purchases 10,20,000 Sales returns 31,000 Bad Debts 14,000 Interests and Bank Charges 4,000 Cash at bank 42,000 Cash in hand 11,200 39,41,500 39,41,500 Required: Prepare the trading Profit and loss accounts for the year ended 31st March 2021 and the Balance Sheet as on that date taking into consideration the following information:

Closing Stock was valued at R. 3,05,000.

Deprecate Plant and Machinery by 10% p.a., Furniture by 5% p.a. and Motor car by Rs. 10,000.

Create provision for doubtful debts at 5% on Sundry Debtors.

Acommission of 1% on the gross profit is to be provided to works manager.