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Total No. of Pages : 4

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Register Number :
Name of the Candidate :
M.B.A. DEGREE EXAMINATION MAY 2014.
(FIRST YEAR)
120 FINANCIAL AND MANAGEMENT ACCOUNTING
Time : Three hours

Maximum : 75 marks

SECTION A
(5 3 = 15)

Answer any FIVE questions.

Write short notes on :
1.

Time value of money.

2.

Replacement and modernisation.

3.

Need for capital budgeting.

4.

Comparative financial statements.

5.

Application of funds.

6.

Funds Vs Cash.

7.

Break-even point.

8.

Cash budget.
SECTION B
Answer any THREE questions.

(3 10 = 30)

9.

How financial accounting is helpful to management?

10.

Explain the various methods of evaluating capital expenditure decisions.

11.

Explain the technique of preparing the common size balance sheet.

12.

Profit volume analysis is a technique of analysing the relationship of cost and

profit at various levels of volume. Explain how such analysis helps the
management in decision making.

13.

Discuss the various approaches to determine an appropriate financial mix of

working capital.
SECTION C
Answer any ONE questions.

14.

(1 15 = 15)

A machine is purchased 6 years back for Rs. 1,50,000 has been depreciated to a
book value of Rs. 90,000. It originally had a projected life of 15 years and zero
salvage value.

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15.

A new machine will cost Rs. 2,50,000 and result in a reduced operating cost of
Rs. 30,000 per year of next 9 years. The old machine could be sold for
Rs. 50,000. The machine will also be depreciated on a straight line method
with a salvage value of Rs. 25,000. The companys tax rate is 50% and the cost
of capital is 10%
Should the company replace the old machine?
Given :
PN of Re. 1 at 10% on 9th year 0.424
PV of annuity of Re. 1 at 10% for 9 years 5.7590.
Using the following data, complete the balance sheet below:
Gross profit (20% of sales)
Rs. 60,000
Shareholders equity
50,000
Credit sales to total sales
80%
Total assets turnover
3 times
Inventory turnover (to cost a sales)
8 times
Average collection period (a 360 day year)
18 days
Current ratios
1.6
Long term debt to equity
40%
Creditors

Cash

Long-term debt

Debtors

Shareholders equity

Inventory

Fixed assets

16.

17.

From the following information, calculate the break-even point and turnover
required to earn a profit of Rs. 30,000:
Fixed overheads Rs. 21,000
Variable costs Rs. 2 per unit
Selling price
Rs. 5 per unit.
If the company is earning a profit of Rs. 30,000, express the margin of safety
available to it.
SECTION D
(15 marks)
Compulsory question :
The balance sheet of National Steel Ltd. as on 31st March 2005 is as under :
Balance Sheet (Rs. in lakhs)
Liabilities

Rs.

Assets

Rs.

Share capital

200

Land and Buildings

60

Reserves and surplus

160

Plant and machinery

200

Term loans

160

Inventories

200

Sundry creditors

120

Debtors

220

Provision for taxation

60

Cash at bank

20

700

700

The companys turnover for 2004-05 was 1200 lakhs. It anticipates a sales
turnover of Rs.1800 lakhs in 2005-06. Estimate the working capital
requirements for 2005-06.
2

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