Seat No.: ________ Enrolment No.

___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA SEMESTER 01 EXAMINATION SUMMER 2016

Subject Code: 2810001 Date: 11/05/2016

Subject Name: Accounting For Managers (AFM)
Time: 10:30 am 01:30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.

Q.1(a) From the four alternative answers given against each of the following cases, 06
indicate the correct answer:(just state A, B, C or D)
A company had Current Assets of Rs. 4, 00,000 and Current Liabilities of Rs. 1,
00,000. Afterwards it purchased goods for Rs. 50,000 on credit. Calculate the
Current Ratio after the purchase.
A. 1:3 B. 3:1
1.
C. 4:1 D. 1:4
Goods drawn by the proprietor from the business for personal use..
A. Increases capital and decreases B. Increases assets and decreases
2. assets. expenses.
C. Decreases capital and decreases D. Increases capital and increases
assets. assets.
Outstanding expenses are related to.
3. A. Nominal account. B. Personal account.
C. Representative personal account. D. Artificial personal account.
Profit or loss on depreciation fund investment is transferred to:
4. A. Depreciation Fund A/c. B. Asset A/c.
C. Profit or Loss A/c. D. Bank A/c.
In case of Annuity Method, the amount of depreciation is:
5. A. Increasing every year. B. Fixed for all the year.
C. Decreasing every year. D. None of these.
Compound journal entry contains.
A. More than one debit entry only. B. More than one credit entry only.
6.
C. More than one debit entry or more D. None of these.
than one credit entry or both.
Q.1 (b) Define the following terms: 04
(i) Accounting Standards.
(ii) IFRS.
(iii) Provisions.
(iv) GAAP.

Q.1 (c) What do you mean by Fund Flow Statement? Discuss the importance of 04
Fund Flow Statement.

Q.2 (a) Who are the users of accounting information, and why do the users need 07
accounting information? How this information helpful to the users?

1
 (b) On the basis of following informations, calculate the following ratios: 07
(i) Net Profit Ratio

(ii) Debt Equity Ratio

(iii) Quick Ratio

Particulars Amount (in Rs.)

Paid up Capital 20,00,000

Capital Reserve 2,00,000

9 % Debentures 8,00,000

Net Sales 14,00,000

Gross Profit 8,00,000

Indirect Expenses 2,00,000

Current Assets 4,00,000

Current Liabilities 3,00,000

Opening Stock 50,000

Closing Stock is 20 % more than Opening Stock.

Informations: OR
(b) What is Balance Sheet? Show the format of Balance Sheet in vertical form 07
under revised schedule VI of Companies Act, 1956 with imaginary figures.

Q.3 (a) What do you mean by the term depreciation? What are its causes? Why do 07
firms provide depreciation?
(b) Rohan purchases a plant on 01.04.2007 for a sum of Rs. 2, 00,000 having a 07
useful life of five years. It is estimated that the plant will have a scrap value
of Rs. 32,000 at the end of its useful life. Rohan decides to charge
depreciation according to depreciation fund method. The depreciation fund
investments are expected to earn interest @ 5 % p.a. Sinking fund table
shows that Re. 0.180975 if invested yearly at 5 % p.a. produces Re. 1 at the
end of five years. The investments are sold at the end of fifth year for a sum
of Rs. 1, 30,000 and the scrap realized Rs. 34,000.
You are required to prepare the necessary accounts in the books of
Rohan.
OR
Q.3 (a) What do you understand by Trend Analysis? Explain in brief with 07
hypothetical example.
(b) From the following Balance Sheet of Shivam Ltd. on 31 st December 2012 07
and 2013, you are required to prepare:
(1) Statement of Changes in Working Capital; and

(2) Funds Flow Statement.

2
 Liabilities 31.12.13 31.12.12 Assets 31.12.13 31.12.12

Share 4,50,000 4,50,000 Plant and 3,20,000 4,00,000

Capital Machinery

General 3,10,000 3,00,000 Investments 60,000 50,000

Reserve

P & L A/c 35,000 30,000 Closing 1,95,000 2,00,000

Stock

Capital 33,000 26,000 Bills 15,000 40,000

Reserve Receivable

Debentures 2,70,000 - Sundry 4,55,000 2,00,000

Debtors

Creditors 75,000 90,000 Cash at 1,97,000 1,59,000

Bank

Bills 59,000 78,000

Payable

Provision 10,000 75,000

for
Taxation

12,42,000 10,49,000 12,42,000 10,49,000

Other details are as follows:

(1) During the year investments worth Rs. 8,000 were sold at a price of
Rs. 8,500 and new investments worth Rs. 18,000 were purchased.
(2) Net profit of the year was Rs. 62,000 after providing for depreciation
of Rs. 70,000 on Plant and Machinery and Rs. 10,000 provision for
taxation.
(3) During the year Plant and Machinery worth Rs. 10,000 were sold at a
price of Rs. 12,000 and the profit on the same was credited to Profit
and Loss Account.
(4) During the year Rs. 40,000 were paid as Dividend.

Q.4 (a) What are the various accounting concepts? Explain any four of them. 07
(b) From the following Income Statement of Malhotra Trading Company for the 07
year ending 31st March, 2012 and 2013, you are required to prepare a
Comparative Income Statement and give your comments:

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 Income Statement
For the year ended 2012 and 2013
Particulars 31.03.2012 31.03.2013
Rs. Rs.
Revenue From Operations 6,00,000 7,20,000
Add: Dividend Received 30.000 90,000
Total Revenue 6,30,000 8,10,000
Less: Cost of Goods Sold 4,20,000 5,60,000
Administration Expenses 50,000 66,000
Selling and Dist. Expenses 25,000 23,000
Interest on Debentures 12,000 12,000
Loss on Sale of Plant 6,000 4,000
Provision for Taxation 40,000 48,000
Net Profit 77,000 97,000

OR
Q.4 (a) Name AS- 9, AS-10 and AS-26. Explain any one in detail. 07
(b) From the following information, you are required to calculate the value of 07
Closing Inventory and Cost of Goods Sold assuming (a) Perpetual Inventory
System and (b) Periodic Inventory System under FIFO method.

Date Transactions Units Price Per Unit

(Rs.)
02/01/2013 Opening balance brought 100 10
forward
09/01/2013 Purchases 400 15
14/01/2013 Sales 300 -
25/01/2013 Purchases 500 20
29/01/2013 Sales 400 -

Q.5 Mr. Tushar decided to start a computer business. For this purpose he built the 14
first floor of his house at a cost of Rs. 2, 00,000 and invested a further sum of
Rs. 3, 50,000 in this business.
He wanted to start with 12 computers costing Rs. 40,000 each. He
approached ICICI Bank and secured a loan to the extent of 75 % of the cost
of computers. It was agreed that the loan will be repaid in four annual
instalments are as follows:
At the end of First Year : Rs. 90,000 + Rs. 36,000 for interest
At the end of Second Year : Rs. 90,000 + Rs. 27,000 for interest
At the end of Third Year : Rs. 90,000 + Rs. 18,000 for interest
At the end of Fourth Year : Rs. 90,000 + Rs. 9,000 for interest
He started business on 1 st April, 2002. On the same date he deposited
Rs. 3, 30,000 in the Bank. He purchased Computers and paid 25 % of the
value of computers from his bank and Rs. 3, 60, 000 out of bank loan
availed. He deposited Rs. 10,000 for the electric connection with the
Electricity Board and also deposited Rs. 1, 50,000 with the VSNL for
internet and telephone connection.
He spent Rs. 40,000 for getting the Computer Caf furnished and also
spent Rs. 6,000 in getting the pamphlets printed and distributed.
All payments were to be made by cheques and all the receipts were to be
deposited in the bank on the same day.
At the end of the year, the results were:

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 Particulars Amount
(in Rs.)
Purchases of Computer stationery like DVDs, CDs 92,000
etc.
Revenue from fees received from students of 2,70,000
Computer classes
Revenue on Account of Internet Facility 2,20,000
Revenue from sale of Computer Stationery 1,60,000
Wages paid to servant 12,000
Electricity Charges 48,000
Telephone Charges 73,000
Entertainment Expenses 7,000
General Expenses 5,200

He withdrew Rs. 5,000 by cheque each month for his personal expenses
and duly paid the bank loan.
You are required to pass the necessary journal entries in the books of Mr.
Tushar.

OR
Q.5 From the following figures extracted from the books of Mr. Rohit, you are 14
required to prepare a Trading and Profit and Loss Account for the year ended
31st March, 2014 and a Balance Sheet as on that date after making the
necessary adjustments:

Particulars Amount

(in Rs.)

Drawings 6,000

Sundry Debtors 38,200

Purchases 1,34,916

Return Inward 15,642

Bills Receivable 13,764

5 % Loan on Mortgage (01.04.2013) 17,000

Interest on Loan 400

Cash in Hand 6,100

Stock (01.04.2013) 11,678

Capital 60,000

Sundry Creditors 16,802

Sales 2,22,486

Bills Payable 5,428

Motor Vehicle 18,000

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 Cash at Bank 9,110

Land and Buildings 24,000

Bad Debts (Debit) 1,250

Carriage Outward 2,808

Provision for Bad Debts (Credit) 1,420

Return Outward 2,692

Discount Received 880

Carriage Inward 7,858

Establishment Expenses 16,194

Rent, Taxes and Insurance 7,782

Advertisement 4,528

General Expenses 8,978

Rent Received 500

Adjustments:
(i) Depreciate land and building @ 5 % p.a. and motor vehicle @ 15 % p.a.
(ii) Salaries Rs. 1,400 and rates Rs. 800 are due.
(iii) Provide provision for doubtful debts is to be maintained @ 5 % on
Sundry Debtors.
(iv) Stock in hand on 31st March, 2014 is valued at Rs. 12,500.
(v) Goods costing Rs. 1,000 were taken by the proprietor for his personal
use; no entry has been made in the books of accounts.
(vi) Prepaid insurance Rs. 350.
(vii) Provide for managers commission @ 5 % on net profit after charging
such commission.
(viii) A fire broke out on 01st April, 2014 destroying goods worth Rs. 4,700.
(ix) Goods costing Rs. 1,200 were sent to a customer on sale or return for
Rs. 1,400 on 27th March, 2014, and have been recorded in the books as
actual sales.

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