Management Accounting — Summer 2022

Explain the following terms in brief:

Functions of Accounting

Trend analysis

Qualitative characteristics of financial statements

Computerized Accounting

Fundamental accounting assumptions

Rules of Real account & Nominal account.

Users of Financial Statement

Differentiate between Financial Accounting and Management Accounting.

Journalize the below entries in the books of Rajini. January 2018 1st Rajini started business with a capital of Rs. 50,000 2nd She purchased furniture for Rs. 5,000 3rd She bought goods on credit from Vinod for Rs. 8,000 14th She sold goods to Suresh for Rs. 5,000 15th She received cash from Suresh Rs. 3,000 18th She purchased goods for cash Rs. 12,000 25th She sold goods for cash Rs. 8,000 28th She paid rent Rs. 1,200. 31st She paid Vinod Rs. 3,000 on account.

Using the following data complete the balance sheet. Gross profit (20% of sales) Rs. 60000 Share capital Rs. 50000 Credit sales to total sales 80% Total assets turnover (on sales) 3 times Closing stock turnover (to cost of sales) 8 times Average collection period (for 360 days) 18 days Current ratio 1.6 Long term debt to equity 40% Balance Sheet Share capital ? Fixed assets ? Long term debt ? Stock ? Creditors ? Debtors ? Cash ? ? ? Page 1 of

What do you mean by Accounting concepts? Explain any 5 accounting concepts in detail.

You are required to prepare Vertical Profit & Loss account (with schedules) of Sanjay Industries Ltd. for the year ending 31st March, 2018. Particulars Debit Credit Stock, 1st April 2017 675000 Sales 3060000 Wages 270000 Share capital (Authorised capital 200000 900000 shares of Rs. 10 each) Discount 27000 Purchases 2205000 Carriage inward 8550 Purchase returns 90000 Patents & trademark 43200 Salaries 67500 Bills receivable 45000 Sundry expenses 63450 Bills payable 63000 Rent 36000 Debtors & Creditors 247500 157500 Plant & Machinery 261000 Furniture & Fittings 153000 Cash at bank 415800 General reserve 139500 Profit & loss account, 31st March 2017 54000 Total 4491000 4491000 Adjustments: 1. Outstanding rent amounted to Rs. 7200 while outstanding salaries Rs. 8100 at the end of the year. 2. Make a provision for doubtful debts amounting to Rs. 4590. 3. Stock on 31st March 2018 was valued at Rs. 792000. 4. Depreciate plant and machinery at 14% and furniture & fittings at 18%. 5. Amortise patents and trademarks at 5%. 6. Provide for managerial remuneration at 10% of the net profits before tax. 7. Make a provision for income tax at 35%. 8. The board of directors proposes a dividend at 10% for the year ended 31st March 2018 after transfer to General reserve at 5% of profit after tax.

‘Costing system has become an essential tool in the hands of management.’ Comment.

On 1-1-2010, Ram purchased machinery of 72,000 and spent 6,000 for Installation and 12,000 for repairs. On 30-6-2012, he sold a part of the machinery costing Rs. 18,000 for Rs. 12,000. New machinery was purchased on the same day for Rs. 30,000 and Page 2 of spent Rs. 6,000 for transportation. The depreciation was charged at 10% per annum on the original cost method. Show the machinery and depreciation account for 5 years.

Marginal costing rewards sales whereas absorption costing rewards production. Comment.

Aproduct is finally obtained after it passes through three distinct processes. The following information is available from the cost records. Process I Process II Process III Total Rs. Rs. Rs. Rs. Materials 2600 2000 1025 5625 Direct wages 2250 3680 1400 7330 Production overheads --- --- --- 7330 500units @ Rs. 4 per unit were introduced in process I. Production overheads are absorbed as a percentage of direct wages. The actual output and normal loss of the respective processes are given below: Output Normal loss as a percentage of input Value of scrap (units) (per unit) Process I 450 10% Rs. Process II 340 20% Rs. Process III 270 25% Rs. Prepare the process accounts and the abnormal gain/ loss accounts.

Write a short note on IFRS

From the following Profit and Loss account, you are required to compute cash from operations. Profit and Loss account for the year ended 31-03-2018 Particulars Rs. Particulars Rs. To Salaries 20000 By Gross profit 100000 To Rent 4000 By Profit on sale of 20000 Land To Depreciation 8000 By Income tax refund 12000 To Loss on sale of 4000 machinery To Goodwill written 16000 off To Dividend proposed 20000 To Tax provision 20000 To Net profit 40000

CASE STUDY Acompany operates a hotel. It is spread over six floors of a building excluding the ground floor with a restaurant in the sixth floor. On the ground floor, the hotel operates a sports centre including a swimming pool and a shopping arcade. The hotel has a capacity of 100 single rooms and 20 double rooms. The average occupancy of both single and double rooms is expected to be 80% throughout the year of 365 days. The rent for double room has been fixed at 125% of the rent of a single room. Cost are as under: Page 3 of Variable costs: Single rooms Rs. 220 each per day Double rooms Rs. 350 each per day Fixed costs: Single rooms Rs. 120 each per day Double rooms Rs. 250 each per day The income and costs relating to the service centres are as under:

Restaurant: Estimated average sales per day Rs. 25000 Contribution 30% of sales Fixed costs Rs. 800000 per annum.

Sports center: Average number of persons expected to use the centre per day is 50. Average contribution per day per person is Rs. 15. Fixed costs Rs. 400000 per annum

Shopping arcade: Average contribution per month is Rs. 35000 Fixed costs Rs. 400000 per annum.

Calculate the rent chargeable for single and double rooms per day in such a way that the hotel earns a margin of safety of 20% on hiring of rooms.