Financial Management And Accounting

Name Johnson Kurien.

Subject Management and

: Benoy

: Financial Accounting

Date of Submission 2007.

Assignment no.

: 14th August

: MB0025.

Financial and Management AccountingMB0025 Q1. Explain the differences between Financial Accounting and Management Accounting. Financial accounting is the preparation and communication of financial information to outsiders such as creditors, bankers, government, customers and so on. Another objective of financial accounting is to give complete picture of the enterprise to shareholders. Management accounting on the other hand aims at preparing and reporting the financial data to the management on regular basis. Management is entrusted with the responsibility of taking appropriate decisions, planning, performance evaluation, control, management of costs, cost determination etc., For both financial accounting and management accounting the financial data is the same and the reports prepared in financial accounting are also used in management accounting But the following are major differences between Financial accounting and Management accounting.

Q2. Hiran, a retailer, has prepared the following balance sheets for the years ending 31st March 2004 and 2005:

Other data: The net profit for the year 2004 was Rs.40000. Hiran is paid a salary of Rs.16,000. His drawings amounted to Rs.45,200. You are required to prepare a statement of changes in financial position, on working capital basis. The layout for schedule of changes in Working Capital is as follows

Balances as on Effect on

Schedule of changes in Working Capital is as follows: Year Year Increase Decrease 2004 2005 A. CURRENT ASSETS 4000 2000 2000 Cash in hand & bank 50000 34000 16000 Sundry Debtors

36000

34000

Stock & inventory

_

_

B.CURRENT LIABILITIES

24000

2000

Trade and accrued Expenses Net Working Capital Decrease in Working(A-B)

2000

4000 16000

Statement of Profit and loss adjustment a/c: Particulars

Amount

Particulars

Amount

Salaries

16000

Net profit for the year 2004

40000

Funds from operations 24000 transferred to applications Total: 40000 Funds Flow Statement: Particulars Amount Increase in 5200 capital Decrease in 16000 Working capital

40000

Particulars

Amount

Funds from operations

24000

Total:

Q3. Enter the following transactions in proper subsidiary book. Find out the total of:

a) Purchase book b) sales book c) purchase return book d) sales return book. Purchase book Date Name of Supplier Jan 1 Jan 10 Jan 12 Jan 15 Jan 25

Ledger Folio

Purchase d from Karthik Purchase d from Vikas Purchase d from Naveen Purchase d from Brinda Purchase d from Anand

40000 102000 100000 45000

TOTAL:

321000

Sales book Date Name of Customer Jan 5 Jan 7 Jan 12

Inward Amount Invoice no. Rs Dr 34000

Sold to Vinay Sold to Nagraj Sold to

Ledger Folio

Outward Amount Invoice no. Rs Dr 12000 10000 16000

Gururaj TOTAL: Sales returns Book: Date Name of Customer Jan 14 Jan 22

38000 Ledger Folio

Returned goods to Vinay Nagraj Returned goods

Jan 22

Returned to Karthink Returned to Naveen

TOTAL:

Amount Rs Dr 3000 2000

TOTAL Purchase return book: Date Name of Ledger Supplier Folio Jan 14

Outward Invoice no.

5000 Inward Invoice no.

Amount Rs 4000 2000 6000

4a. On 01-04-2007 Mr. Gundu Rao stated business with Rs. 3, 00,000 cash and opened a bank account with Rs. 1,50,000. He purchased furniture for his business for Rs. 25000. Goods were bought from selvaraj for Rs. 50000 on credit. He sold goods for Rs. 27000 in cash and Rs. 30000 on credit. He paid Rs. 2500 for business expenses during April month. Rs. 10000 was withdrawn for office purpose form the back. Find out the closing balance of cash and bank. Date

Particul

Cash

Bank Date Particular Cash

Bank

1-42007

ars To capital a/c of gundu rao

A/c Dr a/c 30000

1500 0

To Bank a/c 27000 To sales a/c

31-42007

a/c

By cash a/c

1500 0

By Furniture a/c By Business Exp

5000

By Cash Office 31-4- Expenses 2007 By balance c/d 33700 0 16050 0

1500 00 1400 0

a/c

1-42007

2500

10000

To bank Office Expense s

01/05/20 To Bal 07 B/d

s

10000

1605 00 3370 00

4b. Following are the extracts from the Trial Balance of a firm as on 31st December 1998: TRIAL BALANCE As on 31st December 1998 Particulars Dr. Cr. Salaries A/c 10,000 Rent a/c 5,000

14000

15000 0

Additional Information: I. Salary for the month of December Rs.2000 has not yet been paid. II. Rent amounting to Rs.1000 is still outstanding You are required to pass the necessary adjusting entries and show how the above items will appear in the Firm’s Account Entry: Salary a/c Dr 2000 To Salary outstanding A/c 2000 Rent a/c Dr. 1000 To rent outstanding 1000 Trial balance Particulars Dr. Cr. Salaries A/c 12000 Rent a/c 6000 Q5. From the following figures extracted from the book if Shri Govind, you are required to prepare a Trading and Profit & Loss Account for the year ended 31st March, 1999 and a Balance Sheet as on that date after making the necessary adjustment.

Adjustments 1. Stock on 31st March, 1999 was valued at Rs. 72,600 2. A new machine was installed during the year costing Rs. 15,400, but it was not recorded in the books as no payment was made for it. Wages Rs. 1,100 paid for its erection has been debited to wages account. 3. Depreciate: Plant and Machinery by 33 1/3 % Furniture by 10% Freehold property by 5% 4. Loose tools were valued at Rs. 1,760 on 31.3.1999. 5. Of the Sundry Debtors Rs. 600 are bad and should be written off.

6. Maintain a provision of 5% on Sundry Debtors for doubtful debts. 7. The manager is entitled to a commission of 10% of the net profits after charging such commission. Ans: Trading A/c for the year ended 31st March, 1999: Particulars To opening stock Purchases Wages Less inst

Amou nt

Total Amount Dr 38500 110000

35200 1100 34100

Erection Factory Lighting

1100

Gas & Fuel

9900

Freight

106370

To gross profit transferred to P/L a/c Total

302940

Particul ars

Amount

Sales Less returns

231440 - 1100

Closing Stock

Total amount Cr 230340 72600

2970

302940

Profit & Loss A/c for the year ended 31st March, 1999 Particulars To Salaries To Office exp To Discount

Amoun Total Particul Amount Total t Amount ars Amount Dr Cr 13200 By 106370 Balance 2750 b/d from Trading 1320 A/c 1100 1540

To Postage & telegram To Insurance To Office rent To Bad debts (+) FBD (+) NRDD

1760 2860 660 600 1433 880

1813 550

(+)ORDD 38830 To Depreciatio

Interest Receive d

n on Furniture To Depreciatio n on Plant & machinery To Depreciatio n on Free hold property

3300

4381 440

35056

To Manager’s Commission To loose tools

To Net profit transferred to B/S Total:

107760

107760

Balance Sheet for the year ended 31st March, 1999 Liabilities

Amount

Assets

Amount

Capital 228800 (-)Drawings 13200 (+) Net profit 35056

250656 8800 44000

Bills payable Creditors Suspense account

66281

Plant and Mach 99000 (+) add on mach 15400 (+) installation 1100 (-) Dep 33.33% 38800 Free hold prop. 66000 (-) Dep 5% 3300 Furniture 5500 (-) Dep 10% 550

77000 62700 4950 44000 3300 29260 72600

Loan Given

2640

Interest Receivable

2200

Cash Closing stock Cash in Hand Loose tools Revolution

440

Debtors 29260 (-) NBD 600 (-) RDD 5%