JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD MBA 2021 FINANCIAL ACCOUNTING AND ANALYSIS Previous Question Paper (July/August - 2021 - R19)
Answer any five questions. All questions carry equal marks.
Main
Explain the Double Entry System of book-keeping. What are its advantages?
Answer
The Double Entry System is a scientific method of recording financial transactions based on the principle of duality. Every transaction involves two aspects: the receiving aspect (debit) and the giving aspect (credit). For every debit entry, there must be a corresponding and equal credit entry, ensuring that the accounting equation Assets = Liabilities + Capital always remains in balance.
The advantages of this system include:
- Accuracy: Since both aspects are recorded, the mathematical accuracy of the books can be verified through a Trial Balance.
- Completeness: It provides a comprehensive record of all financial transactions, facilitating the preparation of final accounts.
- Detection of Fraud: The systematic nature of the records and the requirement for balancing makes it harder to conceal errors or misappropriations.
- Financial Position: It allows for the determination of profit or loss and the true financial position of the business at any given time.
Distinguish between Book-keeping and Accounting.
Answer
| Basis | Book-keeping | Accounting |
|---|---|---|
| Scope | Primary stage involving recording and classifying data. | Secondary stage involving summarizing, interpreting, and communicating data. |
| Objective | To maintain systematic records of financial transactions. | To ascertain the net results and financial health of the business. |
| Nature of Job | Routine and clerical in nature. | Analytical and dynamic in nature. |
| Performance | Usually performed by junior staff. | Performed by senior staff or accountants. |
| Requirement | Does not require specialized analytical skills. | Requires specialized knowledge, judgment, and analytical skills. |
| Relationship | It is the foundation upon which accounting is built. | It begins where book-keeping ends. |
Explain the different categories of accounting transactions. State the rules of ‘debit and credit’ in this connection and brief on accounting concepts.
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Journalize the following transactions and prepare Cash A/C, Purchases A/C, Lal A/C:
- June 1st 2015 Aakash commenced business with cash-80,000 and goods-20,000
- 3 Cash purchases-5,000
- 5 Sales to Swathi (10% trade discount) 16,000
- 7 Discount allowed-150
- 8 Credit purchases from Lal-18,000
- 9 Cash received from swamy-7,000
- 10 Rama Rao purchased goods-2,000
- 12 Returned to lal-5,000
- 13 Paid salaries to Rao-2,000
- 15 Commission received from Raghava-500
- 18 Taxes-750
- 22 Audit fees-200
- 24 Received interest from Narayana-600
- 25 Purchase of tools-1,200
- 30 Cash withdrawn for personal use-2,000
- 30 Paid cash to Krishna on loan account-5,000
- 30 Deposited into bank-10,000
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The following is the trial balance extracted from the book of Nitin as on 31-3-2009. Prepare trading and profit and loss account 31-3-2009 and balance sheet on that date after taking into account the following adjustments: Closing stock-34,220; Provision for doubtful debts is to be kept at Rs.500; Depreciation on plant and machinery @10%; The proprietor has taken goods worth Rs. 5,000 for personal use and additionally distributed goods worth Rs.1,000 as samples; Purchase of furniture Rs.920 has been passed through purchases book.
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Explain the different methods of inventory valuation with suitable examples and brief on the procedure for ascertainment of profit from incomplete records.
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The following are the details of a spare parts of Saketh Mills. Find out the value of stock as on 31-03-15 if the company follows:
First-in-First-out Basis
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Last-in-First-out Basis
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Weighted Average Basis
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What do you understand by Working capital? Mention various sources for mobilising of working capital funds.
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Prepare a statement of sources and applications of funds for the year ended 31st December 2005 based on the provided Balance Sheet and adjustments.
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Discuss about the significance of Financial Statement Analysis.
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From the following information prepare the Balance Sheet of Rajesh as on 31-3-2015: Fixed Assets Rs. 6 lakhs; Working Capital Rs. 4 lakhs; Current Ratio 2; Fixed to assets to turnover 4; G.P 25%; Debtors velocity 1.5 months; Creditors velocity 2 months; Stock 2 months; Net Profit 5% of turnover; Reserve 2/3 of net profits and Capital Gearing 1:1.
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