St. Joseph’s College of Commerce M.Com. 2015 I Sem Accounting For Decision Making Question Paper PDF Download

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St. Joseph’s College of Commerce (Autonomous) 
End Semester Examinations – Sept/Oct. 2015
M.COM(I.B.) – I SEMESTER
P4 15 MC 102: ACCOUNTING FOR DECISION MAKING
Duration: 3 Hours                                                                                              Max. Marks: 100
SECTION – A
I. Answer any SEVEN questions.  Each carries 5 marks.                                    (7×5=35)
  1. State which of the following would result in inflow/outflow of cash or cash equivalents:

Sl. No. Items Effect on Cash or Cash Equivalents
1 Purchase of Stock-in-trade for cash  
2 Sale of goods costing Rs. 10,000 for Rs. 12,000 for cash  
3 Sale of goods on credit  
4 Purchase of a fixed asset by issue of shares  
5 Sale of a fixed asset (book value Rs. 15,000) at a loss of Rs. 5,000.  
6 Cash received from trade receivable Rs. 9,000 and allowed discount Rs. 1,000.  
7 Shares issued for cash.  
8 Issue of fully paid bonus shares  
9 Redemption of Debentures by converting them into equity shares  
10 Writing off bad debts against the provision for doubtful debts  
  2. Extracts of Balance Sheets are given below:

Particulars 31/12/14 31/12/15
Balance of P&L A/c 1,00,000 1,50,000
Additional information    
1) Depreciation charged on assets   10,000
2)  Preliminary expenses written off   5,000
3)  Amount transferred to dividend Equalization fund   15,000
4)  A plant having a book value of Rs. 60,000 was sold for   65,000
5)  Interim dividend paid   10,000

Calculate funds from operation.

 
  3. Following is the Balance Sheet of Sunshine Ltd., for the year ending December 31, 2014:

 

 

 

Balance Sheet

Liabilities Rs. Assets Rs.
Equity Share Capital 5,00,000 Land and Building 3,50,000
5% Debentures 2,00,000 Plant and Machinery 2,50,000
Bank Loan (Long term) 1,50,000 Cash in hand 25,000
Sundry Creditors 75,000 Cash at Bank 55,000
Bills Payables 50,000 Sundry Debtors 85,000
Outstanding Expenses 5,000 Bills Receivables 1,05,000
    Stocks 1,00,000
    Prepaid Expenses 10,000
  9,80,000   9,80,000

From the information given above, calculate:

(i)                 (a) Current Ratio (b) Acid test Ratio  (c) Absolute Liquid Ratio

(ii)              Comment on the short term financial position.

 
  4. The following information at 50% capacity is given. Prepare a flexible budget and forecast the     profit or loss at  90% capacity.

Particulars Expenses at 50% capacity                       (Rs)
Fixed Expenses:  
Salaries 50,000
Rent and Taxes 40,000
Depreciation 60,000
Administrative Expenses 70,000
Variable Expenses:  
Materials 2,00,000
Labour 2,50,000
Others    40,000
Semi-Variable Expenses  
Repairs 1,00,000
Indirect Labour 1,50,000
Others 90,000

It is estimated that fixed expenses will remain constant at all capacities. Semi-Variable expenses will not change between 45% and 60% capacity, Semi-Variable expenses but they will rise by 10% between 60% and 75% capacity, a further increase of 5% when capacity crosses 75%

 

Estimated sales at 90 percent  level of capacity is 15,00,000:

 
  5. A firm purchased Machinery I on 01/01/2014 for Rs.58,200 and spent Rs.1,800 on installation.  On 01/07/2014 Machinery II was purchased for Rs.20,000/-.  On 01/07/2014 Machinery I was auctioned for Rs.38,600 and on the same date Machinery III was purchased at the cost of Rs.40,000/-.  Depreciation was provided annually on 31st Dec at the rate of 10%.   Prepare Machinery Account, calculating depreciation as per written down method.
   

 

6.

  

 

The following is the record of receipts and issue of a certain material in a factory:

Purchases: 2015

Jan 4th  500 kg at Rs. 25 per Kg.

Jan 6th 1,200 Kg at Rs. 24 per Kg.

Jan 15th 1,800 kg at Rs. 23 per Kg.

 

Issues: 2015

Jan 5th 500 Kg

Jan 20th 800 Kg

Jan 25th 1,500 Kg.

The stock on Jan 1st was 100 kg. at Rs. 26 per kg.  On 22nd Jan, stock verification revealed a shortage of 60 Kg.  Show the Stores Ledger assuming that the shortage is Normal by adopting the FIFO Method.

 
  7. Selling price per unit of an article = Rs.150

Variable cost per unit = Rs.90

Fixed Cost = Rs.6,00,000

Contribution = Rs.60

(a)   What will be the selling price per unit if the Breakeven point is 8000 units

(b)   Compute the sales required to earn a profit of Rs.2,20,000

 
  8. a) Overheads incurred = Rs.19,200

Actual production = 2,000 units

Std variable overhead rate per unit is Rs.10.

Compute variable overhead variance.

b) Classify the following reasons for causing variance in cost of materials used under Material Cost Variance, Material Price Variance, and Material Usage Variance

(i) Change in Transport charges (ii) Pilferage  (iii) Change in Quality

 
  9. Explain Life Cycle Costing.

 
  10. Prepare a statement of cost and profit from the following information, in the books of M/s. Precision Tools Co; for the half year ended Mar 31, 2013.  Also show the costs at each stage in terms of cost per unit and also the total.

  Rs.
Direct materials consumed 4,20,000
Direct labour charges paid 2,00,000
Direct labour charges outstanding 1,80,000
Prime cost expenses 2,00,000
Factory materials consumed 1,80,000
Factory expense including depreciation 40,000
Factory rent 1,00,000
Office salaries 4,80,000
Salesmen’s salaries 2,40,000

 

Units produced during the period 10,000 – all the units were sold @ Rs.300/- each.
SECTION – B
II. Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)
  11. From the following Balance Sheet, comment on the financial position of the business using comparative balance sheet technique

Name of the Co.:  Raj Ltd. Balance Sheet as at 31st December, 2014 & 2015

Particulars Note No. 31.12.2015 31.12.2014
I.  EQUITY AND LIABILITIES:      
(1)  Shareholders’ Funds:      
        (a) Share Capital  1   21,00,000   11,00,000
        (b) Reserves and Surplus 2     7,25,000     6,00,000
(2)  Share Application Money pending allotment      
       
(3)  Non-current Liabilities:      
        (a) Long-term borrowings (8% Debentures)             10,00,000          2,00,000
(4)  Current Liabilities:      
(a) Short-term borrowings      
(b) Trade Payables (Creditors)       1,00,000        80,000
( c) Other current liabilities (O/S Exps)     25,000    20,000
        ( d) Short-term provisions      
TOTAL     39,50,000  20,00,000
II. ASSETS:      
(1)  Non-current assets:      
        (a) Fixed Assets:      
                    (i) Tangible Assets 3   25,00,000   10,00,000
                   (ii) Intangible Assets      
        (b) Non-current Investments   2,00,000 3,00,000
(2)  Current Assets:      
(a) Current Investments      
(b) Inventories   6,00,000 4,00,000
(c) Trade Receivables (Debtors)   3,50,000 2,00,000
 (d) Cash and Cash Equivalents (Cash)   3,00,000 1,00,000
(e) Short-term Loans and Advances      
 (f)  Other Current Assets      
TOTAL     39,50,000   20,00,000

 

Note: 1:    
Share Capital: 31.12.2015 31.12.2014
Equity Share Capital 12,00,000 6,00,000
Preference Share Capital 9,00,000 5,00,000
  21,00,000 11,00,000
     
 

 

 

Note: 2:

    
Reserves and Surplus:    
Profit and Loss A/c 2,25,000 2,00,000
General Reserve 5,00,000 4,00,000
  7,25,000 6,00,000
     
Note: 3:    
Tangible Assets    
Fixed Assets 40,00,000 18,00,000
Accumulated Depreciation 15,00,000 8,00,000
  25,00,000 10,00,000
  12. From the following Balance Sheet prepare schedule of changes in working capital and fund flow statement.

Name of the Co.:  R Ltd.

Balance Sheet as at 31st December, 2014 and 2015

Particulars Note No. 31.12.2014 31.12.2015
I.  EQUITY AND LIABILITIES:      
(1)  Shareholders’ Funds:      
(a) Share Capital          60,000         65,000
 (b) Reserves and Surplus (P & L A/c)           34,000          26,000
(2)  Share Application Money pending allotment      
(3)  Non-current Liabilities:      
 (a) Long-term borrowings      
(4)  Current Liabilities:      
(a) Short-term borrowings      
(b) Trade Payables (Creditors)      
( c) Other current liabilities          12,000           3,000
( d) Short-term provisions      
TOTAL   1,06,000 94,000
II. ASSETS:      
(1)  Non-current assets:      
 (a) Fixed Assets:      
(i) Tangible Assets (Plant and Machinery)   60,000 50,000
 (ii) Intangible Assets (Goodwill)           30,000         25,000
 (b) Non-current Investments      
(2)  Current Assets:      
(a) Current Investments      
(b) Inventories      
(c) Trade Receivables      
(d) Cash and Cash Equivalents      
(e) Short-term Loans and Advances      
 (f)  Other Current Assets         16,000     19,000
TOTAL        1,06,000        94,000

Additional Information:

a.      Depreciation of Rs. 20,000 on Plant and Machinery was charged to P & L A/c.

b.      Dividend of Rs. 12,000 was paid during the year.

 
  13. “Marginal costing is a valuable technique used by the Management, while taking decisions” explain.

 
  14. Given:

Receivables Turnover =4                   Capital turnover ratio = 2 times

Payable turnover         = 6                   Fixed assets turnover ratio = 8 times

Inventory turnover = 8                        Gross profit ratio= 25%

Gross profit during the year amounted to Rs.80, 000. There are no long term loans or Overdraft. Reserve and surplus amount to Rs. 28,000. Closing inventory of the year is Rs.2,000 above the opening inventory. Bills receivable amount to Rs. 5,000 and Bills payable to Rs.2,000. Prepare a Balance sheet on the basis of the information given above.

 
  15. Hindustan Agro Ltd., was registered with an authorized capital of 8,00,000 shares of Rs.10 each.  6,00,000 shares were issued to the public out of which 5,00,000 share were taken up.  The following balances appeared in the books of the company as on 31st March 2015:

Share Capital 5,00,000 shares of Rs.10 each, Rs.5 called up 25,00,000
Calls in arrears 10,000
Calls in advance 15,000
Profit and Loss balance (on 1.4.2014) 3,50,000
12% Debentures 5,00,000
Unsecured loan 1,50,000
Cash in hand 12,800
Balance with Bank 20,700
Sundry Debtors:  
        More than six months old 25,000
        Other debtors 3,50,000
Sundry creditors 1,82,200
Provision for taxation 75,000
Net profit for the year (after tax) 7,20,000
Freehold premises 16,00,000
Plant and Machinery 18,50,000
Patents 10,000
Goodwill 2,00,000
Preliminary Expenses 44,800
Prepaid Expenses 5,000
Outstanding expenses 66,000
Investment in shares 53,000
Closing stock 3,64,100
Bills receivable 20,000
Bills payable 7,200

 

Prepare the Company’s Balance Sheet for the year ended 31st March 2013 in the prescribed form after taking into account the following matters:

 

a)      Transfer to General Reserve Rs.3,00,000;

b)     Provide for a dividend of 10% on share capital.

 
 

 

SECTION – C
III. Case Study                                                                                                              (1×20=20)

 
  16. (a) “The users of accounting info include both internal and external users”.  Explain.

 

(b) Prepare an accounting equation/Balance Sheet at the end of every transaction:

  1. Kunal started business with cash Rs.2,50,000, Bank loan Rs.1,00,000 and Stock Rs.2,00,000
  2. Paid Rent Rs.10,000, Salaries Rs.20,000
  3. Sold goods costing Rs.50,000 for cash Rs.60,000
  4. Cash Rs.20,000 and goods Rs.10,000 withdrawn for personal use
  5. Loss of goods by fire Rs.10,000

 

 

 

 

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