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Ignou MBA Solved Assignments
IGNOU MBA Solved Assignments

MS-04 Solved Assignment Accounting and Finance for Managers

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  • Version: Jan - June 2015

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Soft Copy: Yes

1. "Accounting is closely connected with control". Elaborate this statement and discuss the role of accounting feedback in the process of control.

Answer. Accounting is closely connected with the control system in an organisation in that it...... Control is the process through which management assures itself, as far as is feasible.....

2. The balance sheets of XYZ Ltd. as on Dec. 31 st, 2013 and 2014 are given below:

Balance Sheets of XYZ Ltd.

(Figure in Rs.)

Liabilities 31.12.2013 31.12.2014 Assets 31.12.2013 31.12.2014
Share Capital 6,00,000 8,00,000 Fixes Assets 16,00,000 19,00,000
Capital Reserve —– 20,000 Less Dep. 4,60,000 5,80,000
General Reserve 3,40,000 4,00,000 11,40,000 5,80,000
Profit & Loss A/c 1,20,000 1,50,000 Investment 2,00,000 1,60,000
Debentures 4,00,000 2,80,000 Current Assets 5,60,000 6,60,000
Current Liabilities 2,40,000 2,60,000 Preliminary Exp. 40,000 20,000
Proposed Dividend 60,000 170,000
Unpaid Dividends 8,000
19,40,000 21,60,000 19,40,000 21,60,000


Additional Information: During the year 2014 , the Company:

1. Sold one machine for Rs. 50,000, the cost of which was Rs. 1,00,000 and the depreciation provided on it was Rs. 40,000.
2.Provided Rs. 1,80,000 as depreciation.
3. Sold investments at a profit of Rs. 20,000, which was credited to Capital Reserve.
4. Redeemed 30% of the Debentures @ 105.
5. Decided to value stock at cost, whereas previously the practice was to value stock at cost less 10%. The stock according to books on 31.12. 2013 was Rs. 1,08,000. The stock on 31.12.2014 was correctly valued at Rs. 1,50,000, and
6. Decided to write of fixed assets costing Rs. 28,000 on which depreciation amounting to Rs. 20,000 has been provided. Prepare the Fund
s flow statement for the year 2014.

3. A company engaged in production of dairy products wants to buy a new spray dryer to replace one which is having frequent breakdown. It received offers for two models of spray dryers S1 and S2. Further details regarding these models are given below:


Particulars S1 S2
Installed Capacity (units) 10,000 10,000
Fixed Overhead p.a. (Rs.) 2,40,000 1,00,000
Estimated profit at the above capacity (Rs.) 1,60,000 1,00,000

The skimmed milk powder manufactured using this type of machine (S1 or S 2) is sold at Rs. 100 per unit.

You are required to determine:
(a) Break even level of sales for each model.
(b) The level of sales at which both the models will earn the same profit.
(c) The model suitable for different levels of demand for the product.

4. a) Describe the characteristics of a flexible budget?
Answer. A flexible budget is a budget that adjusts or flexes for changes in the volume of activity..... A flexible budget provides budgeted data for different levels of activity..... b) “For Private Sector’ budgets are important in profit planning, but budgets are costly for Not- for – Profit organization” Discuss.

5. Rearrange the given statement in a form suitable for analysis and calculate:-

i) Ratio of current assets to current liabilities
ii) Ratio of outside liabilities to net worth
iii) Ratio of net worth to fixed assets
iv) Ratio of sales to fixed assets
v) Ratio of sales to net worth
vi) Liquid ratio
vii) Fixed assets ratio
viii) Proprietary ratio
ix) Capital turnover
x) Debtors Turnover ratio

2013 2014
Assets : Rs. Rs.
Cash at Bank 1,53,800 2,60,200
Trade debtors 1,12,60 1,17,100
Stock 5,61,600 4,94,600
Fixed Assets Less :- Depreciation 21,72,000 21,98,100
30,00,000 30,70,000
Liabilities and Capital
Creditors 2,00,000 1,60,000
Bills payable 1,27,500 65,000
Debentures 6,72,500 8,45,000
Paid up capital 10,00,000 10,00,000
30,00,000 30,70,000
Sales 1,80,000 19,50,000

MS-04 Solved Assignment - IGNOU MBA

This page is dedicated to IGNOU Master of Business Administration (MBA) MS-04 Accounting and Finance for Managers Solved Assignment. You can download IGNOU MBA MS 4 Solved Assignments of Jan - June 2015 here.

Old Sample Answer

Q. What do you understand by Revenue Expenditure?
Answer. Revenue expenditure is the day-to-day expenditure that the organisation incurs as it goes about its business of producing and selling goods and services. Revenue expenses include materials, heating, lighting, admin and management salaries, stationery, photocopying, etc. They are the daily costs of doing business and are charged.......... Revenue expenditure usually has the following characteristics: It is the consequence of earlier capital acquisitions, It is short term, It is usually funded out of day-to-day revenue. As revenue costs do not form part of the fixed asset cost, they are expensed in the income statement in the period in which they are incurred........

Q. What do you understand by Capital Expenditure?
Answer. Capital expenditure is about spending money on long-term assets. Long-term assets could be things like plant, machinery and equipment. Capital expenditure could also be about developing products and brands that deliver a long-term return...... The main form of capital expenditure is on items used in the business over a long period of time – for example, buildings, furniture, and equipment. These are usually referred to as long-term assets. Long-term assets may be tangible assets, such as those named above, or intangible assets such as investments in patents, copyrights...... Plans for capital expenditure must take into account how limited cash is today as well as 'the time value of money'. Constructing a capital expenditure plan requires us to produce a model of the cash flows associated with........

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