Dear Students, The University has decided to have only one assignment per course w.e.f. January 2007 session onwards for students of MBA and MBA (Banking and Finance). Please attempt the assignment questions given in this leaflet/booklet and submit it to the coordinator of the study center, you are attached with, on or before 31st October, 2008.
MS-04: ACCOUNTING AND FINANCE FOR MANAGERS ASSIGNMENT Course Code Course Title Assignment Code Coverage
: : : :
MS-04 Accounting and Finance for Managers MS-04/SEM-II/2008 All Blocks
Note: Please attempt all the questions and send them to the Coordinator of the Study Centre you are attached with. 1.
Meet the Accounts/Finance personnel of any organization and find out about the activities carried out by them? Discuss about the accounting conventions & standards that are being followed by them & the reasons thereof? Also try to find out as to how the accounting information collected by them, helps in making different financial decisions.
2.
You are required to prepare a Profit & Loss Account for the year ending 31st December, 2007 and the Balance Sheet on that date. The Trial Balance of XYZ Ltd. for the year ended 31 st December 2007 is as follows:Trial Balance of XYZ Ltd. as on 31st Dec. 2007 Debit Balances Materials used
Rs. 3,50,00 0 Cost of Labour 1,50,00 0 Stock, finished and work in 50,00 st process on 31 December, 2006 0 Wages : Factory Staff 15,00 0 Directors Remuneration 50,00 0 Salaries : Clerical Staff 75,00 0 Insurances : Workmen’s 1,50 Compensation 0 General, fire etc. 2,00 0 Directors’ Life Insurance 1,50 0 Maintenance : Buildings 1,00 0 Plant and Machinery 12,50
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Credit Balances Sales(including 2% Sales tax)
Rs. 9,18,000
Sale of Scrap
100
Rent received
2,000
Discounts
2,750
Recovered against fire claim re : Stock Capital : Equity
5,000
Preference- 9%
25,000 8,000
Creditors
1,56,000
Provision for Taxation
1,05,000
Profit & Loss Account
13,750
0 Rent and Rates of premises and 20,00 hire of plant 0 Heat, Light and Power 15,00 0 Experimental and Laboratory 10,00 Expenses 0 Canteen Expenses 5,00 0 Staff Welfare expenses 2,50 0 Motor Expenses 12,50 0 Professional Charges 2,80 0 Postage and Telephone 3,50 0 Books, Printing and Stationery 11,000 Sundry expenses 10,00 0 Carriage and Packing on Sales 3,30 0 Discounts 5,00 0 Debtors 1,78,00 0 Freehold Property 50,00 0 Plant and Machinery 12,50 0 Fixtures and Fittings – Offices 3,50 0 Office machinery and Equipment 3,00 0 Motor Car and Van 6,50 0 Stock of materials on 31st Dec. 1,20,00 2007 0 Bank 38,00 0 Sales Tax Paid 15,00 0 12,35,60 0
12,35,600
Depreciation is to be provided at the following rates: Plant and Machinery 10% Fixture and Fittings 05% Office Machinery, etc. 10% Motor Vans and Cars 25% The stock of finished goods and work in progress as on 31 st December, 2007 was Rs. 35,000. Provide for preference dividend and ordinary dividend at 10%. The total taxation liability is estimated at Rs.1,50,000 of which Rs. 75,000 relates to the current year.
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Debtors include Rs. 10,000 deposited as security against government contracts. The Works Manager is paid partly by salary and partly by a commission; he is entitled to a commission of 5% on the amount by which the surplus in the factory cost exceeds 20% of the sales for the period. Charge the commission if any in the Profit and Loss Account. 3.
You are required to show the effect of each of the following changes on profit and Even-Volume from the information given below: Sales 50,000 units Variable cost Fixed cost
Changes: (i) (ii) (iii) (iv)
4.
Rs. 5.00 per unit Rs. 3.00 per unit Rs. 70,000
Price changes by 20%. Volume decreases to 40,000 units. Variable cost increases to Rs 3.50 per unit. Fixed cost decreases by 10%.
From the following information you are to prepare a Cash Budget for the period from July to December 2008. (i) The estimated sales and expenses are as follows: Sales Purchases Wages & Salaries Expenses Interest Received Sale of Fixed Assets (ii) (iii) (iv)
5.
Break-
June 35,000 14,000 12,000 5,000 2,000 -
July 40,000 16,000 14,000 6,000 -
Aug. 40,000 17,000 14,000 6,000 20,000
Sep. 50,000 20,000 18,000 6,000 2,000 -
Oct. 50,000 20,000 18,000 7,000 -
Nov. 60,000 25,000 20,000 7,000 -
Dec. 65,000 28,000 22,000 7,000 2,000 -
Sales are 20% in cash and balance on credit. 50% of the debtors are collected in the month of sales and the remaining in the next month. The time lag in payment of purchases and expenses is 1 month. However, wages and salaries are paid fortnightly with a time lag of 15 days. The company maintains a minimum cash balance of Rs. 5,000. The cash balance in excess of Rs. 7,000 is invested in government securities in multiples of Rs. 1,000. Short falls in cash balance are made good by borrowing from banks. The interest received as well as paid is to be ignored.
As a Finance Manager what is your role in matters of dividend policy. What will be the alternatives and factors that you may consider before finalizing your dividend policy?
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