Accounting For Decision Making

Assessment I
Part A (5x2=10)
1. Define Accounting?
2. Give the meaning of financial Statement analysis?
3. Write a Short note on ledger?
4. What do you mean by ‘Working Capital?
5. What is a Job Cost ?

Part B (1x8=8)
6. a) Prepare a Trial Balance from the following balances as on 31.12.2010
Particulars Rs. Particulars Rs.
Capital 19,000 Salary Outstanding 11,000
Furniture 22,000 Stock on 1.1.2010 12,000
Purchases 18,000 Sales Return 14,000
Sales 22,000 Sundry Creditors 18,000
Sundry Debtors 22,000 Bills Payable 8,000
Bank Overdraft 10,000
(Or)
6. b) Following is the Balance Sheet of Kovalam & Co. Ltd.
Balance Sheet
Liabilities Rs. Assets Rs.
Equity Share Capital 1,00,000 Cash 2,000
6% Preference Share 1,00,000 Bank 10,000
7% Debentures 40,000 Bills Receivable 30,000
8% Public Debt 20,000 Investments 20,000
Bank Overdraft 40,000 Debtors 70,000
Creditors 60,000 Stock 40,000
Outstanding Creditors 7,000 Furniture 30,000
Proposed dividend 10,000 Machinery 1,00,000
Reserves 1,50,000 Land & Building 2,20,000
Provision for taxation 20,000 Goodwill 35,000
Profit & Loss Account 20,000 Preliminary Expenses 10,000
Total 5,67,000 Total 5,67,000
 During the year, provision for taxation was Rs.20,000. Dividend was proposed
at Rs.10,000
Profit carried from the last year was Rs. 15,000. You are required to calculate.
(a)Current ratio (b) Liquidity ratio (c) Debt-equity ratio (d) Fixed assets
ratio & Fixed charges cover ratio.
Part C (2x16=32)
7. a) Mr . J furnishes the following particulars relating to his business.
You are required to
(i) Pass Journal Entries
(ii) Prepare Ledger Accounts
(iii) Prepare a Trial Balance as on 31st October 2010
Date Particulars Rs.
01.10.2010 J started the business with cash 4,00,000

03.10.2010 Purchased goods for cash @ 5% 1,00,000

trade discount

04.10.2010 Paid electricity charges 1,000

08.10.2010 Purchased machinery for cash 20,000

10.10.2010 Sold goods to Mohan on credit 15,000

(Or)
7. b) From the following balance sheets, prepare a funds flow statement
Liabilities 1992 1993 Assets 1992 1993
(Rs) (Rs.) (Rs.) (Rs.)
Equity Share Capital 3,00,000 4,00,000 Goodwill 1,00,000 80,000

8% Redeemable Pref. 1,50,000 1,00,000 Land & 2,00,000 1,70,000

share capital Building
Capital Reserve 10,000 20,000 Plant 80,000 2,00,000

General Reserve 30,000 50,000 Investments 20,000 30,000

Profit & Loss A/C 30,000 48,000 Debtors 1,40,000 1,70,000

Proposed dividend 42,000 50,000 Stock 77,000 1,09,000

Sundry Creditors 25,000 47,000 Bills receivable 20,000 30,000

Bills payable 20,000 16,000 Cash in hand 15,000 10,000

Expenses 30,000 36,000 Cash at bank 10,000 8,000

Outstanding
Provision for tax 40,000 50,000 Preliminary 15,000 10,000
expenses
Total 6,77,000 8,17,000 Total 6,77,000 8,17,000

Note:
1. A piece of land has been sold out in 1993 and the profit on sale has been
credited to capital reserve.
2. A machine has been sold for Rs. 10,000. The written down value of the
machine was Rs. 12,000. Depreciation of Rs. 10,000 is charged on Plant
account in1993.
3. Rs. 3,000 by way of dividend on investments is received. It includes Rs.
1,000 from pre-acquisition profit which has been credited to investment
account.
4. An interim dividend of Rs. 20,000 has been paid in1993.

8. a) A product passes through three processes A, B and C. The normal

wastage of each process is as follows: Process A-3%, B-5% and C-8%.
Wastage of process A was sold at 0.25 paise per unit, that of B at .50
paise per unit and that of C at ₹ 1 per unit.
10000 units were issued to process A in the beginning of October
2020 at a cost of ₹ 1 per unit. The other expenses were as follows:
Particulars Process A ₹ Process B ₹ Process C ₹
Sundry Materials 1000 1500 500
Labour 5000 8000 6500
Direct Expenses 1050 1188 2009
Actual Output (Units) 9500 9100 8100
Prepare the Process accounts, assuming that there were no opening
and closing stocks. Also prepare the abnormal loss and abnormal gain
account.
(Or)
8. b)From the following Trial Balance extracted from the books of
Mr. Ramesh, prepare the Trading and Profit & Loss Account and Balance
Sheet as on 31st December 2008.
Particulars Debit(₹) Credit(₹) Particulars Debit(₹) Credit(₹)
Sundry Debtors 43,000 Carriage 350
Outwards
Stock(01.01.2008) 23,000 Rent 950
Cash in Hand 1,850 Bills 18,700
Payable
Bank Overdraft 9,500 Purchases 1,19,670
Plant & Machinery 18,500 Insurance 1,400
Sundry Creditors 11,750 Business 35,000
Premises
Trade Expenses 375 Discount 600
Sales 1,35,000 Capital 72,795
Salaries 2,250 Carriage 2,000
Inwards
Adjustments:
(a) Closing stock as on 31st December 2004: Rs.20,000
(b) Rent Rs.200 per month for the last quarter unpaid
(c) Depreciation 10% on plant & machinery and business premises
(d) Commission earned but not received amount to Rs.500
(e) Rs.400 carry forward for unexpired Insurance
 Accounting For Decision Making
Assessment II
Part A (5x2=10)
1. What do you mean by a budget?
2. Define Marginal costing?
3. Differentiate between Direct and Indirect Costs?
4. List out the uses of Break- Even charts?
5. Write a short note on AS-3?

Part B (1x8=8)
6. a) The Following data have been extracted from the books of coke Ltd.
Joint Products Yield (in lbs) of recovered products per
tonne of coal
Coke 1,420
Coal tar 120
Benzol 22
Sulphate of ammonia 26
Gas 412
2,000
The price of coal is ₹ 80 per tonne. The direct labour and overhead costs to
the point of split-off are ₹ 40 and ₹ 60, respectively, per tonne of coal. Calculate the
material, labour and total cost of each product on the basis of weight.
(Or)
6. b) The sales and profit for the years are given as follows
Year Sales ₹ Profit ₹
2006 1,40,000 15,000
2007 1,60,000 20,000
Calculate
i) P/V ratio
ii) BEP
iii) Sales required to earn a profit of ₹40,000
iv) Fixed expenses
v) Profit when sales are ₹1,20,000
Part C (2x16=32)
7. a) A Company manufactures 3 products and their respective details are
furnished below.
X Y Z
Capacity engaged 20% 40% 40%
Units Produced 2,000 5,000 6,000

Cost Per Unit ₹ ₹ ₹

Materials 20 32 36
Wages 10 12 16
Variable Overheads 7 9 11
Fixed Overheads 20 19 20
57 72 83
Selling Price per unit 55 75 85
The management proposes to discontinue line X. It is intended to utilise the
disengaged capacity in the lines Y and Z equally. Advise the management
suitably.
(Or)
7. b) From the following information of a product calculate.
i) Material cost variance
ii) Material usage variance
iii) Material Price Variance
iv) Material Mix Variance
v) Material Sub-usage variance

Material Standard Quantity(Kgs) Standard price Actual Actual price

(₹) Quantity(Kgs) (₹)
X 20 5 24 4.00
Y 16 4 14 4.50
Z 12 3 10 3.25
48 48

8. a) A company at present operating at 80% capacity produces and sells

40,000 units. Given below are the expenses per unit.
 Particulars Per unit Rs.
Direct Material 15
Direct Labour 10
Factory overhead (30% fixed) 5
Office overhead (60% variable) 3
Selling and distribution overhead (50% fixed ) 2
Selling Price 45
Prepare a budget at 60% capacity and 90% capacity.
(Or)
8. b) Discuss the features of advantages and disadvantages of Marginal
Costing and Assumption underlying CVP Analysis?