SPJIMR|PGDM (BM)|2022|Financial And Management Accounting

Introduction to Accounting

Caselet adapted from the book - Accounting by Anthony Hawkins

Gabbar Singh a jamindar in North India lived in a big bungalow high on a hill. He was
responsible for the wellbeing of the farmers who occupied the lands surrounding his
bungalow. Each spring, he would decide how to provide for all his farmers during the
coming year. One spring, Gabbar Singh was thinking about the wheat crop of the coming
season. “I believe that 30 acres of my land, being worth five tons of wheat per acre, will
produce enough wheat for next winter” he said. “But who will do the farming? Ah, I’ll give
the responsibility of growing the wheat to Jay and Viru.” There upon Jay and Viru were
called for a meeting with Gabbar Singh.
“Jay you will farm on 20 acres of land and Viru you will farm on 10 acres of plot. I will give
Jay, 20 tons of wheat for seed and 200 kgs. of fertiliser ( worth 2 tons of wheat). Viru will
get 10 tons of wheat for seed and 100 kgs. of fertiliser ( worth 1 ton of wheat). I will give
each one of you an ox to plough the fields, but I don’t have ploughs to give you. You will
have to buy them for me from Ahmed the plough maker. The oxen are only 3 years old and
have never been used for farming, so they should have a good 10 years of farming ahead of
them. Take good care of them because an ox is worth 40 tons of wheat. Come back next fall
and return the oxen and the ploughs along with your harvest” said Gabbar Singh in the
meeting.
Jay and Viru were very happy and went away taking the things provided by the jamindar.
Summer came and went, and after the harvest Jay and Viru returned to the jamindar to
account for the things given to them in the spring. Jay said “Sarkar, I present you with a
slightly used Ox, a plough, broken beyond repair. You will also remember, Saheb that you
took 20 tons of my harvest for your own personal use and I am now left with 223 tons of
wheat. I unfortunately, owe Ahmed 3 tons of wheat for the plough I got from him last spring.
And as you might expect, I used all the fertilizer and seed you gave me last spring.”
Viru spoke next. “Here, Saheb, is a partially used ox, the plough for which I gave Ahmed 3
tons of wheat and also Sarkar, you took 30 tons of wheat several days ago for your own table
from my harvest. I am now left with 105 tons of wheat. I too used all my seed and fertiliser
last spring. I believe the plough is good for 2 more seasons.”
“You did well” said Gabbar Singh.
After Jay and Viru left, Gabbar Singh thought “They did well, but I wonder which one did
better”

Question:

Jay or Viru who did better?

1|SM