JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD MBA I FINANCIAL ACCOUNTING AND ANALYSIS Previous Question Paper (October/November - 2022 - R19)
Answer any five questions
All questions carry equal marks
Main
What is an accounting cycle? List the sequential steps in accounting process.
Answer
An accounting cycle is the collective process of identifying, analyzing, and recording the accounting events of a company throughout a fiscal period. It is a systematic sequence of steps that ensures all financial transactions are captured, processed, and reported accurately in the financial statements.
The sequential steps in the accounting process are:
- Identification of transactions through source documents.
- Preparation of journal entries to record transactions chronologically.
- Posting journal entries to the respective ledger accounts.
- Preparation of an unadjusted trial balance.
- Recording and posting adjusting entries for accruals and deferrals.
- Preparation of an adjusted trial balance.
- Preparation of financial statements (Income Statement, Balance Sheet, etc.).
- Closing the temporary accounts for the period.
- Preparation of a post-closing trial balance.
Prove that the accounting equation is satisfied in all the following transactions of Suresh:
- Commenced business with a cash Rs.36,00,000
- Paid rent in advance Rs. 30,000
- Purchased goods for cash Rs.18,00,000 and credit Rs.12,00,000.
- Sold goods for cash Rs.18,00,000 costing Rs.12,00,000.
- Paid salary Rs. 30,000 and salary outstanding Rs.6,000
- Bought secondhand car for personal use Rs.3,00,000.
Answer
The accounting equation is Assets = Liabilities + Capital. The following table demonstrates how each transaction affects the equation:
| Transaction | Assets (Rs.) | = | Liabilities (Rs.) | + | Capital (Rs.) |
|---|---|---|---|---|---|
| 1. Start business | +36,00,000 | = | 0 | + | 36,00,000 |
| 2. Rent in advance | 0 (Cash -30k, Prepaid +30k) | = | 0 | + | 0 |
| 3. Purchase goods | +12,00,000 (Stock +30L, Cash -18L) | = | +12,00,000 | + | 0 |
| 4. Sale of goods | +6,00,000 (Cash +18L, Stock -12L) | = | 0 | + | 6,00,000 |
| 5. Salary paid/due | -30,000 (Cash) | = | +6,000 | + | -36,000 |
| 6. Personal car | -3,00,000 (Cash) | = | 0 | + | -3,00,000 |
| Final Balance | 44,40,000 | = | 12,06,000 | + | 32,34,000 |
Since 44,40,000 = 12,06,000 + 32,34,000, the accounting equation is satisfied.
Explain the basic accounting principles.
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What is double entry system of accounting? What are its advantages?
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Below are selected transactions from journal of PFM Co Ltd. during the past month. Post them to respective accounts and then prepare a Trial balance.
| Date | Account title | Debit Rs. | Credit Rs. |
|---|---|---|---|
| Sep 01 | Cash | 18,55,000 | - |
| - | Common stock | - | 18,55,000 |
| 01 | Photo equipment | 17,50,000 | - |
| - | Cash | - | 4,00,000 |
| - | Bills payable | - | 13,50,000 |
| 15 | Cash | 5,25,000 | - |
| - | Service revenue | - | 5,25,000 |
| 26 | Bills receivable | 11,82,500 | - |
| - | Services revenue | - | 11,82,500 |
| 30 | Cash | 1,65,000 | - |
| - | Bills receivable | - | 1,65,000 |
Answer
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A company had bought machinery for Rs.20,00,000 including a boiler worth Rs.2,00,000. The machinery account had been credited for depreciation on the Reducing Instalment System for the past four years at the rate of 10% p.a. In the beginning of the fifth year, the boiler became useless on account of damage to some of its vital parts and the damaged boiler is sold for Rs.40,000. You are required to write up the machinery account for five years.
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Gopal keeps his books by the single-entry method. Prepare the necessary statement showing the profit or loss made by him during the year ending 31st Dec.2021 based on the following:
| Particulars | 31st Dec 2020 Rs. | 31st Dec 2021 Rs. |
|---|---|---|
| Cash in hand | 30,000 | 20,000 |
| Cash at Bank | 2,50,000 | 2,80,000 |
| debtors | 1,80,000 | 2,50,000 |
| stock | 2,90,000 | 3,10,000 |
| furniture | 50,000 | 60,000 |
| machinery | 50,000 | 50,000 |
| Creditors for goods | 1,80,000 | 2,50,000 |
| Expenses outstanding | 15,000 | - |
| Prepaid insurance | - | 4,000 |
Adjustments: Capital introduced Rs.50,000 on 1st Oct 2020; Withdrawal Rs.20,000 on 1st Oct 2020; Depreciate machinery 10% p.a; Provision for doubtful debts 5%; Goods taken for personal use Rs.15,000; Interest on capital 10% p.a.
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A company started on 1st January 2021 purchased raw material during 2021 as follows:
- Jan 02: 800 kg @ Rs. 62
- Feb 26: 1,200 kg @ Rs. 57
- April 13: 2,500 kg @ Rs. 59
- July 10: 3,000 kg @ Rs. 56
- Sep 18: 1,500 kg @ Rs. 60
- Nov 29: 1,000 kg @ Rs. 65
On 31st Dec.2021 company had 1,300 kgs of raw material. Calculate the values of closing stock of raw materials according to FIFO, LIFO and weighted average basis.
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What is cash flow statement? What is fund flow statement? What are their applications?
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A Company sells goods on cash as well as credit. Particulars for 2020: Total gross sales Rs.20,00,000; Sales returns Rs.4,00,000; Total debtors 31-12-2020 Rs.1,40,000; Bills receivable Rs.1,80,000; Provision for doubtful debts Rs.40,000; Total creditors Rs.20,000. Calculate the average collection period.
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What are the main ratios on which ROI depends upon?
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