Accounting For Managers Model Question Paper-1: First Semester MBA Degree Examination

USN
18MBA13
First Semester MBA Degree Examination,

Accounting for Managers
Model Question Paper-1
Time: 3 hrs. Max. Marks: 100
Note: 1. Answer any FOUR full questions from Part-A.

2. Part-B Case Study is compulsory.
Part-A
1.a.What is Contra entry? Give example. (3 Marks)

b. How Investor will be benefited by Ratio Accounting? (7 Marks)
c. Give accounting equation for the following transactions of Hitesh for the year 2009. (10 Marks)
i. Started business with cash Rs. 18,000.
ii. Paid rent in advance Rs. 400.
iii. Purchased goods for cash Rs. 5000 and on credit Rs. 2,000.
iv. Sold goods for cash Rs. 4,000 (costing Rs. 2,400).
v. Rent paid Rs. 1,000 and rent outstanding Rs. 200.
vi. Bought motor-cycle for personal use Rs. 500.
vii. Purchased equipments for cash Rs. 500.
viii. Paid to creditors Rs. 600.
ix. Depreciation on equipment Rs. 25.
x. Business expenses Rs.400.
2.a. Distinguish between Direct and Indirect tax. (3 Marks)

b. “Human Resource Accounting is a management tool which is designed to assist the Senior
management for taking business decisions” Justify (7 Marks)
c. Record the following transaction in three column cash book. (10 Marks)
1/3/2008 opened a Bank account with capital Rs. 1, 00,000 & cash in hand Rs. 40,000.
3/3/2008 paid into Bank Rs. 10,000.
5/3/2008 Bought Goods for Rs. 3,800 and paid by cheque.
6/3/2008 Sold goods for cash Rs. 2,600 & deposited the same into the Bank.
7/3/2008 Sold goods to Mr. X an account Rs. 10,000.
10/3/2008 Paid Mr. A by cheque Rs. 240 receiving a discount of Rs.10.
15/3/2008 Received a cheque from Mr. Vikas Rs. 1080 and allowed him Discount Rs. 20.
16/3/2008 Received a cheque from Mr. Santhosh Rs. 4000.
3.a. List out any six items deductible under Section 80C. (3 Marks)
b. Briefly explain the benefits and challenges of IFRS (7 Marks)
c. From the following information prepare Cash Flow Statement by Indirect Method. (10 Marks)
COMPARATIVE BALANCE SHEET OF EXCELLENT LTD.,
Liabilities & As at As at Assets As at As at
capital 31.03.2008 31.03.2007 31.03.2008 31.03.2007
Rs. Rs. Rs. Rs.
Share Capital 50,00,000 40,00,000 Fixed Assets 31,00,000 30,00,000
Reserve & Surplus Investments 1,50,000 -
Secured Loans 15,00,000 5,00,000 Cash and Bank
Current Liabilities 35,00,000 40,00,000 Balances 2,00,000 1,25,000
50,00,000 60,00,000 Stocks, Stores, WIP 75,00,000 78,75,000
Sundry Debtors 40,00,000 35,00,000
1,50,00,000 1,45,00,000 1,50,00,000 1,45,00,000
(i) The net profit for the year after adjustment in respect of provisions for dividends and taxation
was Rs. 10,00,000
There was addition to Fixed Assets during the year amounting to Rs. 4,00,000 and Depreciation for the
year was Rs. 3,00,000
4 a. What is forensic accounting? (3 Marks)

b. Draw a table showing the Income tax slab rates for an individual (including Senior and super senior
citizen) for the Current A.Y. (7 Marks)
c. The following Trial Balance has been prepared wrongly. You are asked to prepare the trial balance
correctly. (10 Marks)
Name of accounts Debit Credit

balance (Rs.) balance (Rs.)
Cash in hand ------- 2,000

Purchases returns 4,000 ------
Wages 8,000 -----
Establishment expenses 12,000 -----
Sales returns ---- 8,000
Capital 22,000 ----
Carriage outward --- 2,000
Discount received 1,200 ---
Commission earned 800 ----
Machinery ------ 20,000
Stock ----- 10,000
Debtors 8,000 -----
Creditors ---- 12,000
Sales ---- 44,000
Purchases 28,000 ----
Bank overdraft 14,000 -----
Manufacturing expenses ----- 14,000
Loan from Ashok 14,000 ------
Carriage inward ,1000 -----
Interest on investment ---------- 1000
Grand total 1,13,000 1,13,000
5. a. What is window dressing? (3 Marks)
b. General Manufacturers had a debit of balance of Rs. 800000 in their machinery account on 1.1.2000. the
concern was charging depreciation @ 15 % p.a. on diminishing balance. On 31.3. 2000, a part of the machinery
purchased on 1.1. 1997 at a cost of Rs. 70000 was sold for Rs. 45000. New machinery was purchased for Rs.
80000 on 1.7.2000 and Rs. 6700 was spent for installation. On 31.12.2000 the concern decided to change the
depreciation method from diminishing balance method to straight line method. It was also decided to charge
dep. @ 10% p.a. under the new method. Prepare Machinery account for the year 2000. (7 Marks)
c.. Mr. A has applied for the the position of Financial Analyst at E&Y Co. Ltd. The Head of Finance
wants to assess the basic accounting skill sets of a candidate. The following information is provided in
form of ratios to Mr.A to prepare the Balance Sheet given in the under mentioned proforma
(10 Marks)
Total Assets/ Net worth = 3.5

Sales/Fixed assets = 6
Sales/Current assets = 8
Sales/Inventory = 15
Sales/Debtors = 18
Current Ratio = 2.5
Annual Sales = Rs. 25, 00,000
Balance Sheet
Liabilities Rs. Assets Rs.

Net worth ----- Fixed Assets ----
Long term Debt ----- Inventory ----
Current Liabilities ----- Debtors ----
Liquid Assets ----
----- ----
Assume you to be Mr. A, how will you prepare the Balance Sheet with necessary working notes.
6a. Being a prospective Investor, Interpret the following from the view point of Liquidity. (3 Marks)
Particulars Bank A (Rs.) Bank B (Rs.)

Current Assets 200000 800000
Fixed Assets 800000 200000
Total Assets 1000000 1000000
b. . From the information given below, calculate: (7 Marks)
(i) Current Ratio (ii) Acid test Ratio
(iii) Debt Equity Ratio
BALANCE SHEET OF ‘X’ COMPANY LTD., as on 31st December 2017
Liabilities Amount Assets Amount
Shareholders’ fund: Fixed assets 1,80,000

Equity share capital: 1,50,000 Current assets:
12% Pref. share capital: 30,000 Cash in Hand: 2,000
Reserves and surplus: 24,000 2,04,000 Cash at bank : 4,000
15% Debentures 48,000 Sundry Debtors: 10,000
Bank overdraft: 12,000 Stores: 12,000
Sundry creditors: 16,000 Stock-in-Trade: 32,000 60,000
Proposed dividend: 2,000 Preliminary expenses 48,000
Provision for taxation: 10,000 40,000
Discount on issue of Debenture 4,000
2,92,000 2,92,000
Also comment on the results of the above ratio.
c. Explain any Five Accounting Concepts with suitable examples (10 Marks)
7a. State the objectives of IFRS. (3 Marks)

b. Distinguish between Capital and Revenue expenditure (7 Marks)
c. . Prepare cash flow statement of Satyam ltd. From the following: (10 Marks)
Liabilities 1.1.06 31.12.06 Assets 1.1.06 31.12.06
Share capital 1,00,000 4,00,000 Goodwill - 20,000
8% debenture - 2,00,000 Machinery 1,25,000 4,75,000
Retained earning 60,000 90,000 Stock 20,000 80,000
Creditors 40,000 1,00,000 Debtor 30,000 1,00,000
Bills payable 20,000 40,000 Bank 50,000 1,50,000
Tax provision 30,000 40,000 Cash 25,000 45,000
2,50000 8,70,000 2,50000 8,70,000
Additional Details:
i. During 2006 the business of a sole trader was purchased by issuing share for Rs. 2,00,000. The
assets acquired from him were:
Goodwill Rs. 20,000, machinery Rs. 1,00,000 , stock Rs. 50,000 and Debtors Rs. 30,000
ii. Provision for tax charged in 2006 was Rs. 35,000
iii. The debenture was issued at a premium of 5% which is included in the retained earnings.
iv. Depreciation charged on machinery was Rs.30,000.
Part-B
8. (Case Study)
The following is the trial balance of Mr. X of Bombay as on 31st Dec. 2009. Prepare a trading and profit
and loss account for the year ended 31st Dec. 2009 and the balance sheet as on that data after taking into
consideration the following adjustments.
Adjustments:
i. Stock on 31st Dec.2009 was Rs. 10,000.
ii. Debts worth Rs. 2000 should be written off as bad.
iii. Depreciate machinery by 5% and motor vans by 15%.
iv. Provision for bad & doubtful debts should be increased by Rs. 600.
v. Commission accrued & not received Rs. 500.
vi. Goods worth Rs. 500 were used by the proprietor for his personal use.
vii. On 20th Dec. 2009, a fire broke out in the shop & goods worth Rs. 2000 were completely
destroyed. The insurance company accepted the claim for Rs. 1500 only & paid the amount on
1st Jan 2010.
Trial Balance as on 31st Dec. 2009
Particulars Dr Cr
Mr. X Capital 85000
Mr. X Drawings 7500
Stock on 1st Jan 2009 12000
Purchase & Sales 86000 170000
Returns 2000 1000
Discounts 500 700
Commission received 1000
Income Tax paid 700
Office Salaries 17300
Office Rent 2000
Advertising 1700
Sundry Debtors & Creditors 85000 30000
Provision for doubtful debts 3000
Manufacturing Wages 8600
Bills Receivable & Payable 5000 5000
Carriage 600
Machinery 40000
Motor Vans 7000
Land & Buildings 10000
Office Expenses 1500
Cash at Bank 6000
Cash in hand 2300
TOTAL 295700 295700
You are require to compute
(i) Gross Profit (5 Marks)

(ii) Net Profit (7 Marks)
(iii) Prepare Balance Sheet (8 Marks)
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USN

First Semester MBA Degree Examination,

Note: 1. Answer any FOUR full questions from Part-A.

1.a.What is Contra entry? Give example. (3 Marks)

2.a. Distinguish between Direct and Indirect tax. (3 Marks)

4 a. What is forensic accounting? (3 Marks)

Name of accounts Debit Credit

Cash in hand ------- 2,000

Total Assets/ Net worth = 3.5

Liabilities Rs. Assets Rs.

Particulars Bank A (Rs.) Bank B (Rs.)

Shareholders’ fund: Fixed assets 1,80,000

7a. State the objectives of IFRS. (3 Marks)

You are require to compute

(i) Gross Profit (5 Marks)

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