Seat No.: ________ Enrolment No.

___________

GUJARAT TECHNOLOGICAL UNIVERSITY

MBA – SEMESTER - I – EXAMINATION – WINTER 2021

Subject Code:1519301 Date: 11/03/2022

Subject Name: International Accounting Practices
Time:10:30 AM TO 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.

Q.1 Explain the following 14

(a) IFRS
(b) International Tax Planning
(c) International Finance
(d) Conservation Concept
(e) Expense
(f) Tax Haven
(g) Foreign Exchange Risk
Q.2 (a) What is International Accounting? Discuss scope of International 07
Accounting.
(b) Discuss the objectives of financial statement analysis. 07
OR
(b) Write a note on the role of Financial Accounting Standard Board 07
(FASB).
Q.3 (a) What are the objectives of International Taxation? 07
(b) Prepare flexible budget for overhead expenses on the basis of the 07
following data and determine the overhead rates at 70%, 80% and 90%
plant capacity.
At 80%
Capacity (₹)
Variable Overheads:
Indirect Labour 12,000
Stores including spares 4,000
Semi-Variable Overheads:
Power (30% Fixed, 70% Variable) 20,000
Repairs & Maintenance (60% Fixed, 40% Variable) 2,000
Fixed Overheads:
Depreciation 11,000
Insurance 3,000
Salaries 10,000
Total Overheads 60,000
Estimated Direct Labour Hours 1,24,000 hrs
OR
Q.3 (a) Briefly discuss functions of International Finance Manager. 07
(b) From the following information, interpret the results of operations of a 07
manufacturing concern using Trend Ratios. Use 2007 as the base.

Page 1 of 5
 (Amount in ₹ Lakh for the year ended)
Year 2007 2008 2009 2010
Net Sales 100.00 95.00 120.00 130.00
Cost of Goods Sold 60.00 58.00 69.60 72.80
Gross Profit 40.00 36.10 50.40 57.20
Operating Expenses 10.00 9.70 11.00 12.00
Net Operating Profit 30.00 26.40 39.40 45.20
Q.4 (a) XYZ Ltd manufactures and sells three chemicals by consecutive 07
processes known as X,Y and Z. In each process 2% of total weight put
in is lost and 10% is scrap, which from processes X & Y realized ₹100
a tonne and from Z ₹200 a tonne. The products of the three processes
are dealt with as follows:
X Y Z
Sent to warehouse for sale 25% 50% 100%
Passed on the next process 75% 50% –

The following particulars relate to the month of May:

Materials used (tonnes) 1,000 140 1,348
Cost per tonne of materials (₹) 120 200 80
Manufacturing Expenses (₹) 30,800 25,760 18,100
Prepare an account for each process, showing the cost per tonne of each
product.
(b) From the following information prepare a Comparative Balance Sheet. 07
31st March 31st March
2011 2012
(₹) (₹)
Equity Share Capital 4,00,000 6,00,000
Debentures 2,00,000 3,25,000
Sundry Creditors 2,55,000 1,17,000
Bank Overdraft 7,000 10,000
Total Liabilities and Capital 8,62,000 10,52,000
Plant & Machinery 1,00,000 2,00,000
Land & Building 3,60,000 5,40,000
Investments 2,70,000 1,70,000
Sundry Debtors 1,00,000 88,000
Cash in hand 32,000 54,000
Total Assets 8,62,000 10,52,000
OR
Q.4 (a) The following is data is given: 07
₹
Selling Price 20 per unit
Variable Manufacturing Costs 11 per unit
Variable Selling Costs 3 per unit
Fixed Factory Overheads 5,40,000 per year
Fixed Selling Costs 2,52,000 per year
You are required to compute:
a) Break even point expressed in amount of sales in rupees;
b) Number of units that must be sold to earn profit of ₹60,000 per
year;
Page 2 of 5
 c) How many units must be sold to earn a net income of 10% of
sales?
(b) Journalize the following transactions: 07
2015 January
1st Rajini started business with a capital of ₹ 50,000.
2nd She purchased furniture for ₹ 5,000
3rd She bought goods on credit from Vinod for ₹ 8,000
14th She sold goods to Suresh for ₹ 5,000.
15th She received cash from Suresh ₹ 3,000
18th She purchased goods for cash ₹ 12,000
25th She sold goods for cash ₹ 8,000
28th She paid rent ₹1,200.
31st She paid Vinod ₹3,000 on account.

Page 3 of 5
Q.5 You have the following information on the performance of B C Co. as 14
also the industry averages.
Balance Sheet as on 31 December 2010
Liabilities ₹ Assets ₹
Equity Share 24,00,000 Net Fixed Assets 12,10,000
Capital
10% Debentures 4,60,000 Cash 4,40,000
Sundry Creditors 3,30,000 Sundry Debtors 5,50,000
Bills Payable 4,40,000 Stock 16,50,000
Other Current 2,20,000
Liabilities
38,50,000 38,50,000
Statement of Profit for the year ending 31 December 2010
₹ ₹
Sales 55,00,000
Less: Cost of Goods Sold
Materials 20,90,000
Wages 13,20,000
Factory Overheads 6,49,000 40,59,000
Gross Profit 14,41,000
Less: Selling and Distribution Cost 5,50,000
Administration & General Expenses 6,14,000 11,64,000
Earnings Before Interest & Taxes 2,77,000
Less: Interest Charges 46,000
Earning Before Taxes 2,31,000
Less: Taxes (50%) 1,15,500
Net Profit 1,15,500

Ratios Considered Industry

Current Assets/Current Liabilities 2.4
Sales/Debtors 8.0
Sales/Stocks 9.8
Sales/Total Assets 2.0
Net Profit/Sales 3.3%
Net Profit/Total Assets 6.6%
Net Profit/Net worth 10.7%
Total Debts/Total Assets 60%
a) Determine the indicated ratios for B C Co. and
b) Comment on the company’s strength and weaknesses based on
your answer and industry averages.
OR

Page 4 of 5
Q.5 The controller of Hindustan Housewares Co. instructs you to prepare a 14
monthly cash budget for the next three months. You are presented with
the following budget information:
March (₹) April (₹) May (₹)
Sales 6,50,000 6,50,000 6,50,000
Manufacturing Costs 3,50,000 3,70,000 4,30,000
Selling & Administration 1,75,000 2,25,000 2,45,000
expenses
Capital Expenditures –_ –_ 1,60,000

The company expects to sell about 10% of its merchandise for cash. Of
sales on account, 70% are expected to be collected in full in the month
following the sale and the remainder the following month. Depreciation,
insurance and property tax expense represent ₹ 25,000 of the estimated
monthly manufacturing costs. The annual insurance premium is paid in
July, and the annual property taxes are paid in November. Of the
remainder of the manufacturing costs, 80% are expected to be paid in
the month in which they are incurred and the balance in the following
month.

Current assets as of March 1 include cash of ₹30,000, marketable

securities of ₹1,05,000, and accounts receivable of ₹7,50,000
(₹6,00,000 from February sales and ₹1,50,000 from January sales).
Sales on account for January and February were ₹5,00,000 and
₹6,00,000 respectively. Current liabilities as of March 1 include
₹1,20,000, 15% 90 day note payable due May 20 and ₹60,000 of
accounts payable incurred in February for manufacturing costs. All
selling and administration expenses are paid in cash in the period they
are incurred. It is expected that ₹1,800 in dividend will be received in
March. An estimated income tax payment of ₹46,000 will be made in
April. The regular quarterly dividend of ₹12,000 is expected to be
declared in April and paid in May. Management desires to maintain
cash balance of ₹40,000.

*************

Page 5 of 5