Amity Campus

Uttar Pradesh
India 201303
ASSIGNMENTS
PROGRAM: DBM
Subject Name
Study COUNTRY
Roll Number (Reg.No.)
Student Name

:ACCOUNTING FOR MANAGERS

:BOTSWANA
:
: KEAMOGETSWE DARCIAR LEAKWA

INSTRUCTIONS
a) Students are required to submit all three assignment sets.
ASSIGNMENT
Assignment A
Assignment B
Assignment C

DETAILS
Five Subjective Questions
Three Subjective Questions + Case Study
Objective or one line Questions

MARKS
10
10
10

b)
c)
d)
e)

Total weightage given to these assignments is 30%. OR 30 Marks

All assignments are to be completed as typed in word/pdf.
All questions are required to be attempted.
All the three assignments are to be completed by due dates and need to be submitted for evaluation
by Amity University.
f) The students have to attached a scan signature in the form.

Signature
Date

:
:

______
___________________________
_________30/01/15________________________

( ) Tick mark in front of the assignments submitted

Assignment A
Assignment B

Assignment C

ACCOUNTING FOR MANAGERS

Section A
Q.1
BANK RECONCILIATION STATEMENT AS ON 31 MARCH 1979

Q.2 Name the accounting concept violated, if any, in each of the following situations and explains them in
detail.
a) The Rs 1,00,000 figure for inventory on a Balance Sheet is the amount for which it could be sold on the
balance sheet date.
b) The Balance Sheet of a retail store which has experienced a gross profit of 40% on sales contains an
item of merchandise inventory of Rs. 1,15,00,000 Merchandise inventory (at cost) Rs 69,00,000.
c) Company M does not charge annual depreciation, preferring instead to show the entire difference
between original cost and proceeds of sale as a gain or loss in the period when the assets is sold. It has
followed this practice for many years.
Q.3 From the following Trial Balance extracted from the books off M/s Jayshee Trade, Bombay,

PROFIT AND LOSS ACCOUNT FOR M/s JAY SHEE TRADE BOMBAY AS AT 31/12/92

DR (rs)
sales

CR(rs)
3080000

Returns inwards

-3750
3076250

COST OF GOODS SOLD

Opening inventory

80 000

Purchases

2075200

Carriage inwards

2500

Returns outwards

-5000

Closing inventory

-200

Gross profit

-2150700
925550

INCURRED EXPENSES
Salaries

15 000

Rent + TAXES

2 000

Import duty on puurchases

2 000

General expenses

1400

Printing stationery + postage

900

Interest prepayment

150

Advertisment accrued

2750

DEPRECIATION
Buildings 1800x5/100

900

Furniture 4000x10/100

400

Reserve for doutful debts

2800

Net profit
BALANCE SHEET OF M/S JAYSHEE AS AT 31/12/92

-28300
897250

NON CURRENT
ASSETS

RS

RS

RS

Buildings

18 000

-900

17100

Fixtures

4 000

-400

3600
20700

CURRENT ASSESTS
Closing inventory

5 000

Bills recievable

2 000

Debtors

20 000

Allowancence for debts

-2 800
17 200

Cash in hand

100

Cash at bank

4 700

Prepayment

150

Discount recieved

300

29 350

CURRENT
LIABILITIES
Bills payable

1 400

Payables

8 000

Accruals

2 700

Discount allowed

200

-12 300

17 050

WORKING CAPITAL

37 750

FINANCED BY

61,300

Capital

897,250

Net profit

-12 500

Drawings

946 050

Q.4 What is meant by financial statements? Discuss the utility and significance of financial statements to
various parties interested in the business concern?
Q.5 What is a trial balance? What are the different columns of a trial balance? Explain the different
methods of preparing trial balance.
Section B
Q.1 From the following Balance Sheet as on 31st December 1995 and 1996, you are required to prepare a
Funds Flow Statement for the year ended 31st December 1996.
Additional information:
a) Dividend of Rs. 11,500 was paid
b) Depreciation written of Plant Rs. 7,000
c) Income-tax provision was made during the year 16,500
Q. 2 On 1st July 1994, Raj & Co. purchased machinery worth Rs. 40,000. On 1st July 1996 it buys
additional machinery worth Rs. 10,000. On 30th June, 1997, half of the machinery purchased on 1st July
19:94 is sold for Rs.9.500. The company writes off 10% on the original cost. The accounts are closed
every year on 31st December. Show the machinery account for four yea rs a ccounts are closed on
December 31, ever year.
3 i) Show the effect of following information in the Profit and Loss Account and Balance Sheet
Adjustments 1. There were further Bad debts amounting to Rs.600.
2. Reserve for Bad debts is to be maintained @ 8%
Case Study

BHARAT COMPANY AND VISHAL COMPANY

Comparative financial Information for Bharat Co. and Vishal Co. for the years 1988 and 1989 is given
below
4. Vishal Co. revalued its fixed assets in the beginning of 1989 increasing its fixed assets by

200% and net increase of Rs.400 crores on account of revaluation was credited to
revaluation reserve included in the reserve.
Questions
From the financial information given above, you are required to compute various financial ratios so as to
discuss the following:1. Which company has got a better liquidity position to pay off its short-term commitments?
2. What is the rate of return on the total investment for both the Companies?
3. Which company bas got a better rate of return? Is the difference in the rate of return (above) due to a
better rate of profit on the business conducted or due to a higher volume of business per rupee invested?
4. Which company provides the highest safety margin to its debenture holders?
5. What is the return available to preference sha reholders in Bharat Co.?
6. Which company appears to have a higher return per rupee invested in operating assets?
7. Calculate the operating cycle for both the companies. Which company is in a better position as regards
the operating cycle? (Operating cycle is the time of conversion of current assets into each position)
8. Comment on the depreciation policy as reflected in the financial information of two companies.
9. Assuming the market value of the equity shares of Bharat Co. is twice that of its book value, while that
for Vishal Company is one-and-a-half times of its book value. Which company has a higher priceearnings ratio? What is the dividend yield for both?

Section C
1. What is accounting? What are its objectives and limitations?
Accounting is a practice of recording, classifying, summarizing, analyzing and interpreting the
financial transactions and communicating the results thereof to the persons interested in such
information

OBJECTIVES OF ACCOUNTING
To maintain cash account through cash book.
To record day to day non-cash transaction.
To maintain various ledger accounts to find out the exact amount of income and expenses of gain
and losses or receivable and payable.

 To furnish information regarding purchase, sales, both cash and credit.

LIMITATIONS OF ACCOUNTING
Accountant may select any method of depreciation, valuation of stock amortization or fixed
assets. Therefore accounting statements are influenced by personal judgment of the accountant.
Accounting records only record transactions which can be measured in monetary terms.
Accounting statements are prepared by following basic concepts and conversions therefore the
accounting information may not be realistic.
Accounting transactions are recorded at costs in the books.
2. Distinguish between Book-keeping and Accounting.
Accounting is the art of classifying, recording and summarizing in a significant manner and in
accordance with the theory of accounts and in terms of money, the elements in transaction and
events which are at least partly of a financial nature. While book-keeping is the process of
recording in chronological order the daily transactions of business entity.
3. Explain briefly the meaning of 'financial transactions'.
Is an act of depositing money into a bank account or borrowing money from lender. These are
events that involve money or payment.
4. Distinguish between fixed assets and floating assets.
Tangible long-lived asset. Usually having a life of more than one year. Includes items such as
land, building, plant, machinery, motor vehicles, furniture and fixtures. These are fixed assets
Floating assets
5. Write notes on creditors for goods.
Creditors are sellers of goods; creditors are also lenders of money. In a creditors ledger there
should not be a debit at any point,
6. What do you mean by material facts in accounting?

7. Explain the term 'Dual Aspects' briefly.

dual aspect every transaction has two transactions. If there is any debit there must be credit entry.
8. Differentiate between gross income and net income.

 Gross income include all the income the business earns during the year while net income include
only the profit the business earns after subtracting business expenses and other allowable
deductions from gross income.
9. What is the meaning of double entry accounting?
Double entry means that every business transactions will involve two accounts or more,
10. What do you understand by Money Measurement Concept?
It means only transactions and events that are capable of being measured in monetary terms are
recognised in the financial statement,
11. Explain the convention of consistency.

Convention of consistency means using the same accounting for making financial statements in
different years.
12. Explain the meaning of expenses. Also differentiate between direct and indirect expenses.
Is the money spent or cost incurred in an organisations effort to generate revenue, representing
the cost of doing business.
Direct expenses are those expenses that are paid only for the business part of your home.
Indirect expenses are those expenses that are paid for keeping up and running your entire home
including insurance utilities and general home repairs.
13. What is a Balance Sheet?
A financial statement that summarises companys assets, liabilities and shareholders equity at a
specific point in time.
14. What do you understand by trial balance?
It is the profit and loss statement, balance sheet and other financial reports can then be produced
using ledger accounts.
15. What is an Income Statement?
It is a profit and loss account that show a companys revenue and expenses during a particular
period.
16. Define Financial Analysis.
Refers to an assessment of viability, stability and profitability of a business, project or mini
business.
17. What is the importance of financial statements for creditors?

 Importance of financial statements for creditors are as follows:

Salaries
Income
Existing debt obligations
Expenses

18. What do you mean by accounting ratios?

Is the way of expressing the relationship between one accounting results to another, which is
intended to provide a useful comparison. Accounting ratios assist in measuring the efficiency and
probability of a company based on its functional reports.
19. What is a current asset?
Current assets is any assets reasonably expected to be sold, consumed through normal operations
of a business within a year
20. What is a current liability?
It is a company debt or obligations that are due within one year (current liabilities appear on the
company balance sheet include short term debt, account payable, occurred liabilities and other
debts).
21. How would you determine whether an asset is current asset or a current asset?
22. What is current ratio? What does in indicate?
Current ratio is financial ratio that measures whether or not a firm has enough resources to pay its
debts over next 12 months. It indicates an organizations ability to pay back its short term
liabilities.
23. How do you compute 'Stock-turnover rate'? What does it indicate?
It is used to calculate monthly employee turn-over rates. How much an employee makes on a
given job,
24. Differentiate between gross profit ratio and operating profit ratio.
Gross profit is a company residual profit after selling a product or service and deducting the costs
associated with its production and sale while operating profits is a profit from business
operation(gross profit minus operating expenses) before deduction of interest and taxes.

25. How is working capital turnover ratio calculated?

26. What is an operating ratio? How do you calculate it? What does it indicate?
Is a financial term defined as a company operating expenses as a percentage of revenue. It
indicates efficiency in a business. Calculation Operation cost* 100

Net sale

27. Illustrate the method of determining debtors turnover ratio? What does it indicate?
28. Explain any three accounting ratios based on sales.
29. What is a funds flow statement?
Is a statement prepared to analyze the reasons for changes in financial positions of a company
between 2 balance sheet.
30. Is depreciation a source of funds? Give reasons in support of your answer.
Is not a source of funds, depreciation expense is reported as a positive amount on the statement of
each flow prepared under the popular interest method. Reason being it is listed to adjust the net
income amount that has been reduced by depreciation expense on the income statement.
31. Enumerate four heads of sources and application of funds.
Source of funds
Profit from operations
Bank loan
Issue of shares
Issue of debentures
Application of funds
Payments of loans
Redemption of shares
Redemption of debentures
Expenses of operations
32. Distinguish between funds flow statement and position statement
Elements of fund flow statement

 Shows the inflow and outflows of funds

Analyze the reasons for change in financial position between two balance sheets
Position Statement
Position statement is a succinct description core of the target audience to whom a brand is
directed a compelling picture of how the marketer wants them to view the brand.
33. Which transactions do not affect the flow of funds?
Transactions involving current assets and non-current assets
Transactions involving current liabilities and non- current liabilities
34. What type of transactions result in the flow of funds?
35. What do you understand by overheads?
Overheads are common costs and are shared among various cost counters.
36. Distinguish between overhead apportionment and over-head absorption.
If the cost can be tracked towards a cost object then it is called overhead absobtion. If the cost can
be tracked it respect to a specific cost center or cost object the entire cost is distributed to all cost
centers based on usage ration these is called overhead apportionment
37. Why are the following items added to profit to calculate the fund from operations?
i) Depreciation;
ii) Loss on sale of fixed assets;
iii) Goodwill written off;
iv) Transfer to General Reserve.
38. What is a Cash Flow Statement?
Is a statement that shows how changes in balance sheet accounts and income affect cash and cash
equivalence.
39. Explain the meaning Non-Cash Items.
Non cash item is an entry on an income statement or cash flow statement correlating to expenses
that are essentially just accounting entries rather than actual movements of cash.
40. Enumerate the "Sources of Cash".
Operating activities including receivable, payable and credit cards.

Financing activities-money received from long term loans used to buy an asset.
Investing activities ie include all the purchases of depreciable assets eg vehicles and equipments