Soft Copy: Yes
Downloadable File: Yes
Course: Master of Business Administration
Q&A of MS-04 Solved Assignment 2017 - Accounting and Finance for Managers
Q. "Accountancy is an Information System" do you agree? Substantiate your answer with reasons. How does an Accountant help in planning and controlling a large commercial organisation? Explain.
Q. Prepare Cash Budget for April-Oct. 2017 from the information relating to Shah Agencies, a trading concern:-
Balance Sheet as on 31st March, 2017
Liabilities Rs. Assets Rs.
Proprietor’s Capital 1,00,000 Cash 20,500
Outstanding Liabilities 17,000 Stock 50,500
Sundry debtors 26,000
Dep. 5,000 20,000
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Sales and salaries for different months are expected to be as under:
Months Sales Salaries
April 80,000 3,000
May 52,000 2,500
June 50,000 35,000
July 75,000 4,000
August 90,000 4,000
September 35,000 3,000
October 25,000 3,000
The other expenses per month are: Rent Rs. 1,000, Depreciation Rs. 1,000, Misc. Expenses Rs. 500 and Commission 1% of sales.
Of the sales, 80% is on credit and 20% for cash. 70% of the credit sales are collected in one month and the balance in two months. Debtors on March 31, 2017 represent Rs. 6,000 in respect of sales of February and Rs. 20,000 in respect of sales of March. There are no debt losses. Gross profit on sales on an average is 30%. Purchases equal to the next month’s sales are made every month and they are paid during the month in which they are made. The firm maintains a minimum cash balance of Rs. 10,000. Cash deficiencies are made up bank loans which are repaid at the earliest available
opportunity and cash in excess of Rs. 15,000 is invested in securities (Interest on bank loans and securities is to be ignored). Outstanding liabilities remain unchanged.
Q. Taking a suitable example and explain how the semi-variable costs will be segregated into fixed and variable using the Scattergraph Method.
Q. Aditi Ltd. is considering the selection of one a pair of mutually exclusive investment projects. Both would involve purchase of machinery with a life of 5 years.
Project 1 would generate annual cash flows (receipts less payments) of Rs. 2,00,000; the machinery would cost Rs. 5,56,000 and have a scrap value of Rs. 56,000.
Project 2 would generate annual cash flows of Rs.5,00,000; the machinery would cost Rs. 16,16,000 and have a scrap value of Rs. 4,31,000.
Company use the straight line method for providing depreciation. Its cost of capital is 15% per annum. Assume that annual cash flows arise on the anniversaries of the initial outlay, that there will be no price changes over the project lives and that acceptance of one of the projects will not alter the required amount of working capital.
You are required to:
(a) Calculate for each project:
(i) the accounting rate or return (ratio, over project life, of average accounting profit to average book value of investment) to nearest 1%.
(ii) the net present value
(iii) the internal rate or return (D.C.F. yield) to nearest 1%, and
(iv) the pay back period to one decimal place, and
(b) State which project you would select for acceptance, if either, giving reasons for your choice of criterion to guide the decision. Ignore taxation.
Q. "Dividend can be paid only out of profits". Explain this statement and also discuss your role as a Finance Management in matters of dividend policy?
Product Details: MS-04 Solved Assignment 2017
Course: IGNOU MBA (Master of Business Administration)
Session: Jan - June 2017
Subject: Accounting and Finance for Managers
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........ MS-04 Solved Assignment 2017 Jan - June or July - Dec.
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........