JNTU
JNTU MCA 1 ACCOUNTING AND FINANCIAL MANAGEMENT Previous Question Paper (August - 2017 - R13)
Note: This question paper contains two parts A and B. Part A is compulsory which carries 20 marks. Answer all questions in Part A. Part B consists of 5 Units. Answer any one full question from each unit. Each question carries 8 marks and may have a, b, c as sub questions.
PART - A
Explain the following accounting concepts: i) the conservatism concept ii) the materiality concept.
Answer
i) The Conservatism Concept (or Prudence) dictates that accountants should anticipate no profits but provide for all possible losses. It ensures that financial statements do not overstate assets or income, favoring a cautious approach where expenses are recognized immediately while revenues are only recorded when realized.
ii) The Materiality Concept states that accounting standards may be ignored for items that are insignificant or immaterial to the financial statements. Information is material if its omission or misstatement could influence the economic decisions of users; thus, only items of significant value or impact require strict adherence to accounting principles.
What are the various sources of working capital finance?
Answer
Working capital finance is sourced through various short-term instruments to meet operational liquidity needs:
- Trade Credit: Credit extended by suppliers for the purchase of raw materials or goods.
- Bank Overdrafts and Cash Credits: Flexible credit lines provided by banks based on current assets like inventory and receivables.
- Commercial Paper: Unsecured, short-term promissory notes issued by large, creditworthy corporations.
- Factoring: Selling accounts receivable to a financial institution to receive immediate cash.
- Accrued Expenses: Delaying payments for wages or taxes, effectively using these funds for short-term operations.
Explain how investors and creditors would make use of Cash Flow Statement.
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What is Sales budget? What is its importance to budgeting process?
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What are the advantages and limitations of Payback period method?
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PART - B
M/s Anurag and Co. manages the publishing business. He has come to you for help in preparing an income statement and a balance sheet for the year ended Dec.31, 2016. Several items determined as of Dec.31, 2016 are presented below. No dividends were paid this year. (All figures in Rs.'000): Equity capital 40,000, Loan payable 72,000, Reserves & surplus (31/12/2015) 12,400, Accounts payable 6,000, Advertising Expenses 2,000, Land 24,000, Cash 17,000, Supplies 2,000, Rent expenses 2,400, Salary expenses 20,000, Building (net block) 1,00,000, Revenues 42,000, Interest expenses 700, Other expenses 1,300, Accounts receivable 3,000.
Prepare an income statement for the year ended 31st Dec.2016.
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Prepare a balance sheet as on Dec.31,2016.
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What is 'Double entry system of accounting'? What are its advantages?
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Prepare a cash book for a trader, enter the following transactions and ascertain the balance as on 7th July 2015. Transactions: July 01: Balance in hand 2,500, Balance at bank 35,000; July 02: Received from “P” cheque 5,000, Discount allowed 250; July 03: Purchased goods by cash 1,500; July 04: Paid Daut Ram by Cheque 1,000, Discount allowed 100; July 05: Salaries paid to staff in cash 2,000; July 06: Bank withdrawal for office 5,000; July 07: Purchase of chair by cheque 5,000.
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What is the importance of Financial Management to an organization?
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Gahlon Gearing Ltd. has a Degree of operating leverage 2 at its current production and sales level of 10,000 units. The resulting operating income figure is $1,000. i) If sales are expected to increase by 20 percent from the current 10,000 unit sales position, what would be the resulting operating profit? ii) At the company's new sales position of 12,000 units, what is the firm's new degree of operating leverage figure?
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The cost of specific sources of capital for Apollo Paper Mills Ltd., are as follows: Cost of debt = 10.00 percent, Cost of preference = 12.00 percent, Cost of equity = 18.00 percent. Capital structure (Book value in millions): Equity 50, Preference 10, Debt 80. (Market value in millions): Equity 120, Preference 9, Debt 70. Calculate the weighted average cost of capital using book value and market value weights.
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What do you understand by time value of money?
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A condensed balance sheet for Sheepwell Company: Assets: Cash 55,000, AR 1,55,000, Inventory 2,70,000, Prepaid 60,000, Plant 5,70,000, Other 90,000 (Total 12,00,000). Liabilities: Loan payable 40,000, AP 1,10,000, Long term debt 3,30,000, Equity 3,00,000, Reserves 4,20,000 (Total 12,00,000). Gross Profit: 11,16,000 on Sales 27,90,000. Compute: a) Current ratio b) Quick ratio c) working capital d) debt ratio e) accounts receivable turnover f) inventory turnover.
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What is Quick ratio? Under what circumstances are short-term creditors most likely to regard a company's quick ratio as more meaningful than its current ratio?
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Explain any four of the profitability ratios for evaluating profitability.
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A company has Sales/Profit: I half 8,00,000/1,00,000; II half 10,00,000/1,50,000. i) find breakeven point and ii) margin of safety.
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What are the applications of Break even analysis?
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A company has fixed expenses of Rs.90,000 with sales at Rs. 3,00,000 and a profit of Rs.60,000. a) Calculate the profit/volume ratio. b) If in the next period, the company suffered a loss of Rs.30,000 calculate the sales volume. c) What is the margin of safety for a profit of Rs. 60,000?
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Two investment proposals (Initial investment 1,20,00,000 each). Returns: Prop1 (Y1-4): 48L, 80L, 50L, 50L. Prop2 (Y1-4): 56L, 70L, 60L, 40L. Evaluate NPV at 12% discount and select best.
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Explain the concept of 'working capital cycle' and show the break up.
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How are shares classified? What are their distinct features?
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