JNTU
JNTU MBA I FINANCIAL ACCOUNTING AND ANALYSIS Previous Question Paper (May - 2022 - R19)
Answer any five questions. All questions carry equal marks.
Main
What is double entry system? Explain the rules of double entry system with suitable examples.
Answer
The Double Entry System is a fundamental accounting principle where every financial transaction has a dual effect, impacting at least two accounts in opposite directions. For every debit entry, there must be a corresponding credit entry of equal value, ensuring the accounting equation (Assets = Liabilities + Equity) remains in balance.
The rules of double entry are categorized by account type:
- Personal Accounts: Debit the receiver, Credit the giver. Example: Cash paid to a supplier is debited to the supplier's account.
- Real Accounts: Debit what comes in, Credit what goes out. Example: Purchasing machinery for cash involves debiting the Machinery account and crediting the Cash account.
- Nominal Accounts: Debit all expenses and losses, Credit all incomes and gains. Example: Paying rent involves debiting the Rent Expense account and crediting the Cash account.
Discuss the implications of Generally Accepted Accounting Principles on accounting system.
Answer
Generally Accepted Accounting Principles (GAAP) are a standardized set of rules, procedures, and guidelines that companies must follow when reporting financial data. Their implications on the accounting system are significant:
- Consistency and Comparability: By mandating uniform practices, GAAP ensures that financial statements are consistent over time and comparable across different entities, allowing stakeholders to make informed economic decisions.
- Reliability and Transparency: GAAP minimizes subjective interpretation by management. Principles like the Historical Cost Concept and Revenue Recognition Principle provide a verifiable basis for recording transactions, reducing the risk of financial manipulation.
- Full Disclosure: The system requires that all material information be disclosed in financial statements, ensuring that users are not misled by hidden liabilities or off-balance-sheet items.
- Prudence (Conservatism): GAAP encourages the recognition of potential losses but prohibits the anticipation of profits, which forces accountants to present a more cautious and realistic view of the company's financial health.
- Standardization of Financial Reporting: It simplifies the audit process, as auditors can verify financial records against established benchmarks, thereby enhancing the credibility of the financial system in the eyes of investors and regulators.
Explain the objectives of accounting.
Answer
Sign in to view the complete answer paper.
Critically examine the role of accountant in present day economy.
Answer
Sign in to view the complete answer paper.
Distinguish between depreciation, depletion and amortization.
Answer
Sign in to view the complete answer paper.
Discuss various methods of depreciation with their advantages and disadvantages.
Answer
Sign in to view the complete answer paper.
From the following trial balance of Mrs.Hun Shine & Co. Prepare the trading and profit and loss account for the year ended 31.3.2019 and balance sheet as on that date after taking into consideration the adjustments given below.
| Particulars | Debit (Rs.) | Credit (Rs.) |
|---|---|---|
| Capital | 25,000 | |
| Loans | 5,000 | |
| Sales | 35,000 | |
| Accounts payables | 4,000 | |
| Bills payables | 5,000 | |
| Purchase returns | 2,000 | |
| Dividend received | 3,000 | |
| Plant & Machinery | 13,000 | |
| Buildings | 17,000 | |
| Receivables | 9,650 | |
| Purchases | 18,000 | |
| Discount allowed | 1,200 | |
| Wages | 7,000 | |
| Salaries | 3,000 | |
| Travelling expenses | 750 | |
| Freight | 200 | |
| Insurance | 300 | |
| Commission paid | 100 | |
| Bank | 1,700 | |
| Repairs | 500 | |
| Interest on loan | 600 | |
| Opening inventory | 6,000 | |
| Total | 79,000 | 79,000 |
Additional data: i) Closing inventory Rs. 8,000; ii) Depreciation on Plant & Machinery at 15% and 10% on buildings; iii) Provision for doubtful receivables Rs. 500; iv) Insurance prepaid Rs. 50; v) Outstanding rent Rs. 100.
Answer
Sign in to view the complete answer paper.
Explain the purpose of preparing trading and Profit and Loss account and furnish the format.
Answer
Sign in to view the complete answer paper.
What are the advantages of double entry system?
Answer
Sign in to view the complete answer paper.
Discuss the meaning and accounting treatment of various kinds of material losses.
Answer
Sign in to view the complete answer paper.
The balance sheet of Taj Limited company discloses the following financial position as at 31st Dec, 1996.
| Liabilities | Rs. | Assets | Rs. |
|---|---|---|---|
| Share capital (Rs.100 each) | 1,50,000 | Goodwill | 50,000 |
| 6,500 equity shares | 6,50,000 | Free hold property | 3,75,000 |
| Profit and loss account | 4,50,000 | Plant and Machinery | 3,50,000 |
| 5% debentures | 3,00,000 | Stock | 3,70,000 |
| Sundry creditors | 2,39,250 | Debtors net | 3,99,250 |
| Bank balance | 2,45,000 | ||
| Total | 17,89,250 | Total | 17,89,250 |
Profit after tax (1994-1996) were Rs. 2,25,000, Rs. 3,22,500 and Rs. 2,40,000. Ascertain value of goodwill given: Normal return 10%, Goodwill 3 years purchase of super profit, freehold property basis 8% return on rental 50,400, tax 50%, specific profit adjustments for 1995/1996.
Answer
Sign in to view the complete answer paper.
Discuss advantages and disadvantages of single entry system.
Answer
Sign in to view the complete answer paper.
Explain the differences between funds flow and cash flow statements.
Answer
Sign in to view the complete answer paper.
From the provided balance sheets of Mother India Ltd. prepare a statement of changes in the working capital and funds flow statement for the year ended 31st December 2005.
Answer
Sign in to view the complete answer paper.
Explain about vertical analysis of a company.
Answer
Sign in to view the complete answer paper.
The following are the balance sheets of a concern for 2010 and 2011. Prepare a comparative balance sheet and study the financial position of the concern.
Answer
Sign in to view the complete answer paper.