Sample Paper

Accounting for Managers (ACCT 602)

MBA 1st Sem.
[Max Marks: 70]

Note: Attempt Questions from all sections as directed.

Section A - Attempt any Two questions out of Four. Each question carries 7.50 marks. [15
Marks]

Question No: 1
What is financial statements? Explain all four in brief. A) balance sheets; (B) income statements;
(C) cash flow statements; and (D) statements of shareholders' equity

Question No: 2

Explain the concept and usefulness of Marginal Costing and its tools?

Question No: 3

Journalise the following transactions in the books of Mr.

Rajesh.

2011 ` Amount
Jan. 1 Started business with cash 2,00,000
Jan. 3 Purchased goods for cash 60,000
Jan. 5 Sold goods to Shyam 60,000
Jan. 6 Sold goods for cash 20,000
Jan. 9 Received cash from Shyam 40,000
Jan. 13 Goods purchased from Ram 40,000
Jan. 20 Cash paid to Ram 20,000
Jan. 25 Paid office rent 4,000
Jan. 31 Paid salaries to staff 20,000
Jan. 31 Returned goods by Shyam 10,000

Question No: 4

Following is the trial balance of Amar as on 31st March, 2011:

Amount Amount
Capital Account 80,000
Drawing Account 6,000
Stock (1.4.2010) 45,000
Purchases 2,60,000
Sales 3,10,000
Furniture 10,000
Sundry Debtors 40,000
Freight and Octroi 4,600
Trade Expenses 500
Salaries 5,500
Rent 2,400
Advertising Expenses 5,000
Insurance Premium 400
Commission 1,300
Discount 200
Bad Debts 1,600
Provision for Bad Debts 900
Creditors 20,000
Cash in hand 5,200
Bank 5,800
Goodwill (at cost) 20,000

4,12,200 4,12,200

Adjustments:
(a) Stock on 31st March, 2011 was valued at Rs. 53,000.
(b) Salaries have been paid only for 11 months.
(c) Unexpired insurance included in the figure of Rs 400 appearing in trial balance
is Rs 100.
(d) Commission earned but not yet received amounting to Rs 122 is to be
recorded in books of account.
(e) Provision for bad debts is to be brought upto 3% of sundry debtors.
(f) Manager is to be allowed a commission of 10% of net profits after charging
such commission.
(g) Furniture is depreciated @10% per annum.
 (h) Only 1/4th of advertising expenses is to be written off.
Prepare trading and profit and loss account for the year ended
31st March, 2011 and balance sheet as on that date. Transferred

Section B - Compulsory Questions. Each question carries 7.50 marks. [15 Marks]

Paragraph No: 1

A company has annual fixed cost of Rs. 1,68,00,000. In the year 2013-14, sales amounted to Rs. 6,00,00,000 as
compared with Rs. 4,50,00,000 in the preceding year 2012-13. The profit in the year 2013-14 is Rs. 42,00,000
more than that in 2012-13. On the basis of the above information, answer the following:

Question No: 1

(a) What is the break-even level of sales of the company?

(b) Determine profit/loss on the forecast of a sales volume of Rs. 80,00,00,000

Question No: 2

If there is a reduction in selling price by 10% in the financial year 2014-15 and company desires to
earn the same amount of profit as in 2013-14, what would be the required sales volume?

Section C - Compulsory Questions. Each question carries 2.00 marks. [40 Marks]
Question No: 1
Which of these is accounting equation?
a) Liability = Asset + Capital
b) Asset = Liability – Capital
c) Capital = Asset + Liability
d) Asset = Liability +Capital.

Question No: 2
Debit aspect is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐and Credit aspect is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a) Receiving and giving
b) Liability and asset
c) Expense and Gains
d) Income and Expenses

Question No: 3
Principal books of accounting is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
a) Journal
b) Profit and loss
c) Ledger
d) Balance sheet

Question No: 4
Which book is known as total of debit and credit
a. Balance sheet
b. Trial balance
c. Journal
d. Ledger

Question No: 5
Trading and profit and loss account is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ statement.
a) Income
b) Expense
c) Position
d) Revenue

Question No: 6
Balance sheet is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ statement
a) Positional
b) Expense
c) Income
d) Expenditure
Question No: 7
What is the equation of gross profit
a) Opening stock +Purchase +Direct expense – Closing stock
b) Sales –Cost of goods sold
c) Sales returns –Cost of goods sold
d) Sales + Cost of goods sold

Question No: 8
For what use are preparing profit and loss a/c
a) To find out net profit or net loss
b) To find out gross profit or gross loss
c) To know closing stock
d) To determine the sales

Question No: 9
Why use prepare trial balance
a) To check arithmetical accuracy of a/c
b) To know the financial position
c) To know the gross profit
d) To know the capital of the firm

Question No: 10
Which type of account are entered in profit & loss a/c
a) Nominal account
b) Personal account
c) Real account
d) Other

Question No: 11
Which type of account is entered in balance sheet
a) Nominal
b) Real
c) Capital
d) Expense

Question No: 12
Trading account is ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
a) Statement
b) Positional a/c
c) Capital a/c
d) Account

Question No: 13
Trading account show ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ incomes and losses
a) Production
b) Sales
c) Manufacturing
d) Personal

Question No: 14

Balance sheet show ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ and ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ of fund

a) Incomes and losses
b) Sources and applications
c) Debit and Credit
d) Asset and liability

Question No: 15
Outstanding expenses are those expenses which have became‐‐‐‐‐‐‐‐‐during the accounting year.
a) Payable
b) Payed
c) Received
d) Receivable

Question No: 16
Bad debt shown in adjustment is known as
a) Provision for bad debt
b) Bad debt
c) Further bad debt
d) Net bad debt

Question No: 17
Interest on drawings is charged on
a) Asset
b) Capital
c) Inventory
d) Drawing

Question No: 18
Managers commission is calculated on ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
a) Gross profit
b) Notional profit
c) Net profit
d) Sales

Question No: 19
What is the journal entry of interest on capital
a) Interest on capital a/c Dr To capital a/c
b) Drawings a/c Dr To interest on drawings
c) Profit &loss a/c Dr To discount Debtors
d) Capital a/c Dr To Interest on capital.
Question No: 20
Which of the following are not current asset
a) Salary paid in advance
b) Inventory
c) Preliminary expense
d) Temporary investment