FM11
FINANCIAL & MANAGEMENT ACCOUNTING
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Assignment – I
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Assignment Code: 2014FM11A1
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Last Date of Submission: 15th April 2014
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Maximum Marks: 100
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Attempt all the questions. All the questions are compulsory and carry equal marks.
Section‐A
1.“Management accounting is the presentation of accounting information in such a way as to assist the management in the creation of policy, and in the day‐to‐day operation of an undertaking.” Elucidate.
2.(a) What do you understand by Financial Statement Analysis? Discuss their
objectives & requisites.
(b)Differentiate between Comparative Statement & Common Size Statements.
3.What are the basic objectives for compiling a statement of sources & applications of funds? What are the causes for the changes in working capital & how these changes are shown in a statement?
4.“While balance sheet is like a snapshot, profit & loss account is like a moving picture.” Explain.
Section‐B
Case Study
The Chief Executive of a plastic manufacturing company has reviewed the annual financial statements for the current year & is unable to determine from a reading of the balance sheet the reasons for the changes in cash during the year.
He asks you for assistance & presents the following balance sheets of Hypothetical Ltd.:
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Particulars
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Previous year
March 31st
(Rs.)
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Current Year
March 31st
(Rs.)
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Increase/Decrease
(Rs.)
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Assets:
Goodwill
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1,00,000
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NIL
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(1,00,000)
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Buildings
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2,80,000
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4,05,000
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1,25,000
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Land
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75,000
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70,000
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(5,000)
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Machinery
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1,00,000
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1,65,000
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65,000
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Tools
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35,000
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20,000
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(15,000)
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Trade Investments
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7,500
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9,000
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1,500
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Inventories
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1,09,000
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1,05,000
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(4,000)
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Sundry Debtors
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46,000
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90,000
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44,000
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Bills receivables
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13,500
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10,500
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(3,000)
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Cash
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4,500
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1,000
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(3,500)
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Unexpired Insurance
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700
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600
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(100)
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Unamortised discount on
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1,250
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1,050
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(200)
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debentures
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7,72,450
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8,77,150
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1,04,700
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Liabilities:
Equity share capital
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2,00,000
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3,50,000
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1,50,000
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Debentures
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50,000
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75,000
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25,000
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Sundry creditors
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26,000
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29,000
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3,000
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Bank overdraft
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‐
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4,000
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4,000
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Bills payable
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5,000
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4,500
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(500)
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Bank loans(short term)
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3,400
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750
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(2,650)
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Accrued taxes
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1,500
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2,500
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1,000
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Accrued interest
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3,000
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5,000
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2,000
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Allowance for doubtful accounts
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1,150
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2,250
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1,100
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Accumulated depreciation
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90,500
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1,35,600
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45,100
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Retained earnings
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3,91,900
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2,68,550
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(1,23,350)
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7,72,450
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8,77,150
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1,04,700
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Additional Information:
a)There were no purchases or sales of tools.
b)Equity shares were issued at a discount of 10%.
c)Old machinery that costs Rs.2,250 was scraped & written off the books. Accumulated depreciation on such equipment was Rs.1,650.
d) The income statement for the year is:
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Sales(Net)
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Rs. 6,25,000
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(‐) Expenses:
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Operating charges:
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Materials & supplies
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1,25,000
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Direct labour
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1,05,000
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Manufacturing overheads
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90,750
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Depreciation
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61,750
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Selling expenses
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1,22,500
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General expenses
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1,15,000
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Interest expenses
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3,750
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Unusual items:
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Writing off of goodwill
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1,00,000
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Writing off of land
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5,000
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Loss on machinery
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600
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Discount on issue of equity shares 15,000
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7,44,350
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Net Loss
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(1,19,350)
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5.Case Question: You are required to prepare Cash Flow Statement.
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