Alliance Ascent College

Master of Business Administration

Subject Code & Title: Financial Reporting and Cost Control (MGT 521)

Time: 3 HOURS Max. Marks: 100

SECTION – A

Answer any Six of the following Questions. Each Question carries Ten Marks.

(6 x 10 = 60 Marks)

1. Explain the Various Accounting Concepts and Conventions of Generally Accepted

Accounting Principles?

2. What is depreciation? What is the need for charging depreciation? Explain the
different methods of Depreciation Accounting also explain the difference between
Depreciation, Amortization and Depletion

3. Write short notes on the following:

a) Off Balance Sheet items
b) Treatment of Events occurring after Balance Sheet date.
c) Impairment of Assets
d) Deferred Tax Assets and Liabilities
e) Capital/Financial Lease

4. Write Short notes on the following:

a) What are Accounting Standards.

b) Objectives of Accounting Standards.

c) IFRS and Need for IFRS
d) Difference between IFRS and Ind AS
 5. Journalize the following transactions of Mr. Ravi.
2018, June 1: Ravi invested Rs.5,00,000 cash in the business
3: Paid into Bank Rs.80,000
5: Purchased building for Rs.3,00,000
7: Purchased goods for Rs.70,000
10: Sold goods for Rs.80,000
15: Withdrew cash from bank Rs.10,000
16: Goods purchased from Rangasamy Rs.2,00,000
18: Goods returned to Rangasamy Rs.5,000
20: Settled Rangasamy’s account.
22: Bought goods from Natarajan Rs.65,000.
24: Returned damaged goods to Natarajan Rs.2,000.
28: Paid rent Rs. 5,000. Paid salaries Rs. 9,000.

6. A) B raj ltd. sells goods on cash as well as credit (though not on deferred installment
terms). The following particulars are extracted from their books of accounts for the
current year end

Total gross sales (₹) 200000

Cash sales( included in above) 40000
Sales return 17000
Total debtors at the end 39000
Bills receivables at the end 22000
Provision for doubtful debts at the end of the year 10000
Total creditors at the end 40000

Calculate Debtors Turnover Ratio and average collection period.

b) Compute Cash provided from Operations during the year 2017, from the
following data:

Particulars April 1, 2016 March 31, 2017

(₹) (₹)

Sundry Debtors 40000 50000

Sundry Creditors 58000 40000
Outstanding Expenses 13000 16000
Outstanding Income 5000 5000
Stock in Trade 65000 80000
Prepaid Expenses 13000 12000
Accumulated Depreciation 60000 70000
( No retirements during the year)
Provision for Doubtful accounts 3500 2000
Dividends Payable ------ 4000
 Bills receivable 50000 62000
Bills payable 18000 16000
Net Income (as per Profit and Loss account) ------ 200000

7.
A) Determine Yearly Debt Service Coverage ratio (DSCR) and Average DSCR and
Comment.
(₹ in Lakhs)

Year EAT Interest Repayment

(Earnings After Tax) on Loan of Term Loan
1 20 20 16
2 45 18 20
3 50 18 20
4 30 17 20
5 28 15 20
6 28 9 10
7 26 8 10
8 26 5 10

The Net Profit (EAT) has been arrived at after charging depreciation of ₹ 20 Lakh
every year.

B) From the following details, prepare Store Ledger under Weighted Average Method of
pricing the issues.
January 2017

1st: Received 1500 units @ Rs.20 per unit

10th: Received 400 units @ Rs.24 per unit

15th: Issued 800 units

20th: Received 500 units @ Rs.28 per unit

25th: Issue 800 units

27th: Received 900 units @ Rs.22 per unit

31st: Issued 500 units

 SECTION – B

Answer Both the questions (2 x 20=40 Marks)

1. You have been supplied data for the Supreme Plastic Company Ltd., and its industry
averages:
 Determine the indicated ratios for the Supreme Plastic Company.
 Indicate the company’s strengths and weaknesses as shown by your
analysis.

Balance sheet as at March 31

Liabilities Amount Assets Amount
Equity share capital ₹ 12,00,000 Net fixed assets ₹ 6,05,000
10% debentures 2,30,000 Cash 2,20,000
Sundry Creditors 1,65,000 Sundry debtors 2,75,000
Bills payable 2,20,000 Stock 8,25,000
Other Current liabilities 1,10,000
19,25,000 19,25,000

Statement of profit for the year ending March 31, current year
Sales ₹ 27,50,000
Less: Cost of goods sold:
Materials ₹ 10,45,000
Wages 6,60,000
Factory overheads 3,24,500 20,29,500
Gross profit 7,20,500
Less: Selling and Distribution Expenses 2,75,000
Less: administrative and general expenses 3,07,000
Earnings before interest and taxes 1,38,500
Less: interest 23,000
Earnings before taxes 1,15,500
Less: Income Taxes(0.35) 40,425
Net profit 75,075

Ratios Industry
Current assets/ Current liabilities 2.4
Sales/debtors 8.0
Sales/Stock 9.8
Sales/total assets 2.0
Net profit/sales(percent) 3.3
Net profit/total assets(percent) 6.6
Net profit/net worth(percent) 12.7
Total debt/total assets(percent) 63.5
2. The following is an extract of the records of the receipts and issues of a chemical during a
month:

1 Feb: Opening balance 800 tonnes @ Rs 200

3 Feb: Issued 90 tonnes

4 Feb: Issued 100 tonnes

8 Feb: Issued 90 tonnes

13 Feb: Received 400 tonnes @ Rs 190

14 Feb: Return from Department 25 tonnes

16 Feb: Issued 190 tonnes

20 Feb: Received 280 tonnes @ Rs 190

24 Feb: Issued 310 tonnes

25 Feb: Received 390 tonnes @ Rs 190

26Feb: Issued 105 tonnes

27 Feb: Returned from Department 45 tonnes

28 Feb: Received 400 tonnes @ Rs 190

Issues are to priced on the principle of First in First out. The stock verifier has found a
shortage of 15 tonnes on the 22nd and left a note accordingly. Draw up a priced store ledger
card for the materials showing the above transaction.