ADL 03 Accounting for Managers V1

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ADL 03 Accounting for Managers V1
Assignment – A

Question 1.
From the following particulars, prepare a haw, reconciliation statement, showing
the balance as per pass book on 31st March, 1979:
The following cheques were paid into firm’s current account in March, 1979, but
were credited by the bank in April, 1979.
A=Rs. 2,500, B=Rs. 3,500 and C=Rs. 1,900.
The following cheques were issued by the firm in March, 1979 and are cashed in
April, 1979.
P= Rs. 2,500, Q=Rs. 4,500 and R=Rs. 4,000.
A cheque of Rs. 1,000 which was received from a customer was entered in; the
column of cash book in March, 1979. but the sa me was paid into the bank in
Awn), 1979.
The pass book shows a credit of Rs. 2,500 for interest and debit of Rs.1000 for
charges. The balance as per cash book was Rs. 1,80,000 on 31st March, 1979.

Question 2.
Name the accounting concept violated, if any, in each of the following
situations and explain 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

Question 3.
From the following Trial Balance extracted from the books off M/s Jayshee Trade,
Bombay, prepare Trading and Profit and Loss Alc for the year ended 31 Dec. 1992
and a Balance sheet as on that date:
You are given following further information:
1. Interest of Rs.150 was due from bank but it was not received
2. It wa s decided to increase Reserve for bad and doubtful debts to Rs.2,800
after writing off Rs.500 as bad debts during the year.
3. Provide depreciation at 5% p.a. on building and 10% p.a. on Furniture &
4. A Bill of Rs. 250 for printing of advertisement in newspaper remained unpaid
at the end of the year.
Question 4.
What is meant by financial statements? Discuss the utility and significance of
financial statements to various parties interested in the business concern?
Question 5.
What is a trial balance? What are the different columns of a trial balance?
Explain the different methods of preparing trial balance.


Assignment – B
Question 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
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

Question 2.
On 1st July 1994, Raj & Co. purcha sed 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 years a ccounts are closed on
December 31, ever year.

Question 3i)
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
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.
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
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
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 ba s a higher price-earning ratio? What is the
dividend yield for both?


Assignment – C
1. What is Accounting? What are its objectives and limitations?
2. Distinguish between Book-keeping and Accounting.
3. Explain briefly the meaning of ‘financial transactions’.
4. Distinguish between fixed assets and floating assets.
5. Write notes on creditors for goods.
6. What do you mean by material facts in accounting?
7. Explain the term ‘Dual Aspects’ briefly.
8. Differentiate between gross income and net income.
9. What is the meaning of double entry accounting?
10. What do you understand by Money Measurement Concept?
11. Explain the convention of consistency.
12. Explain the meaning of expenses. Also differentiate between direct and
indirect expenses.
13. What is a Balance Sheet?
14. What do you understand by trial balance?
15. What is an Income Statement?
16. Define Financial Analysis.
17. What is the importance of financial statements for creditors?
18. What do you mean by accounting ratios?
19. What is a current asset?
20. What is a current liability?
21. How would you determine whether an asset is current asset or a current
22. What is current ratio? What does in indicate?
23. How do you compute ‘Stock-turnover rate’? What does it indicate?
24. Differentiate between gross profit ratio and operating profit ratio.
25. How is working capital turnover ratio calculated?
26. What is an operating ratio? How do you calculate it? What does it indicate?
27. Illustrate the method of determining debtors turnover ratio? What does it
28. Explain any three accounting ratios based on sales.
29. What is a funds flow statement?
30. Is depreciation a source of funds? Give reasons in support of your answer.
31. Enumerate four heads of sources and application of funds.
32. Distinguish between funds flow statement and position statement
33. Which transactions do not affect the flow of funds?
34. What type of transactions result in the flow of funds?
35. What do you understand by overheads?
36. Distinguish between overhead apportionment and over-head absorption.
37. Why are the following items added to profit to calculate the fund from
(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?
39. Explain the meaning -Non-Cash Items”.
40. Enumerate the “Sources of Cash”.
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