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MS-04 - Accounting and Finance for Managers
Note : Answer all the questions and submit this assignment on or before 31 st October 2011, to the coordinator of your study center.
1. Discuss and explain the relevance of the following accounting concepts
- a Business entity
- b Money measurement
- c Continuity
- d Cost
- e Accrual
- f Conservatism
- g Materiality
- h Consistency
- i Periodicity
- 2. From the Profit and Loss Account of X Limited given below, find out the amount of funds from operations.
Profit and Loss Account of X Ltd.
For the year ending 31 st December, 2010
To Salaries To Printing and Stationery To Advertisement To Depreciation on Assets To Discount on Issue of Shares To Commission To Good will written of To Loss on Sale of Investment To Establishment Expenses To Provision for Taxation To Net Profit
To General Reserve To Proposed Dividend To Balance c/d |
Rs. 15,000 2,000
8,000 15,000 4,000
3,000 12,000 4,500 15,000
80,000 2,41,500 4,00,000
15,000 75,000 1,96,500 2,86,500 |
By Gross Profit b/d By Profit on Sales of Fixed Assets By Dividend received
By Balance b/d By Net Profit for the year By Tax Refunds |
Rs. 3,70.000 20,000
10,000
4,00,000
25,000 2,41,500 20,000 2,86,500 |
- 3. What is CVP analysis? Does it differ from break-even analysis?
- 4. S Limited is considering for purchase of a machine. There are two
possible machines which will produce the additional output. Details of these machines are
as follows:
|
Machine x |
Machine Y |
|
Rs. |
Rs. |
Capital Cost Sales at standard Price Costs: Labour Materials Factory Overheads Administration Cost Selling Costs Expected life in years |
60,000 1,00,000
10,000 8,000 12,000 4,000 2,000 2 |
60,000 80,000
6,000 10,000 10,000 2,000 2,000 3 |
Other Information:
- (a) The costs shown above relate to annual expenditure resulting from each machine. Sales are expected to continue at the rates shown for each year for the full life of each machine;
- (b)Tax to be paid may be assumed at 50% of net earnings;
- (c) Interest on capital is to be ignored;
- (d) The appropriate rate of interest for converting to present value may be taken at 10%.
On the basis of the facts given above, show the most profitable investment by the following methods.
(i) Pay-back Period,
- (ii) Return on Investment; and
- (iii) Net Present Value on Investment.
- 5. What is working capital? Explain the importance of working capital management and discuss about the determinants of working capital requirement.