Code No: R7-14/MBA

R7
M.B.A. I-Semester Examinations, January - 2008
FINANCIAL ACCOUNTING AND ANALYSIS
Time: 3 hours Max Marks: 60
Answer any FIVE questions
Any question carry equal marks
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1. Who are the users of Accounting information? Why do they need

the information?

2. Explain the importance and limitations of financial statements.

3. Alpha Ltd. Company purchased on 1st January 2001 a small plant

for Rs. 10000. On 1st July in the same year, an additional plant
was purchased costing Rs. 5000. On 1st October, 2003 the plant
purchased on 1st January 2001 having become obsolete, is sold off
for Rs. 6750. On the same date, a fresh plant was purchased for
Rs. 12000. Depreciation is provided at 10% p.a. on the straight
line method. Prepare plant account and depreciation account
assuming that the accounts are closed on 31st December every
year.

4. The Balance Sheet of ‘ABC’ Ltd. As on March 31st, 2006 is as

follows:
Balance Sheet
Liabilities Rs. Assets Rs.
8%, 5000 Preference
shares Goodwill 10000
of Rs. 110 each 55000 Fixed Assets 180000
Investments(5% Govt.
10,000 equity shares of loan) 25000
Rs. 10 each 95000 Current Assets 95000
Reserves(including Preliminary expenses 5000
provision for taxation
Rs. 10000) 105000 Discount on debentures 5000
8% Debentures 45000
Creditors 20000
320000 320000
The average profit of the company (after deducting interest on
debentures and taxes) is Rs. 45000. The present market value of
the machinery included in Fixed assets is Rs. 10000 more.
Expected rate of return is 10%.
Evaluate the goodwill of the company at 5 times of the Super
Profits.
Contd….2
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5. Sony Ltd. Issued 10,000 equity shares of Rs.100 each payable

Rs.20 on application, Rs.40 on allotment and Rs.40 on call. All the
shares are subscribed and amounts duly received. Pass necessary
journal entries and show the balance sheet.

6. Distinguish between ‘Funds Flow Statement’ and ‘Cash Flow

Statement’. What are the uses of funds flow statement ?

7. From the following particulars given in the comparative balance

sheet of Bhaskara Chemicals Ltd., you are required to calculate:
i) Current Ratio ; ii) Quick Ratio ; and iii) Ratio of Inventory to
working capital and give your comments.
BALANCE SHEETS
2006 2007 2006 2007
Rs. Rs. Rs. Rs.
Sundry 5,00,000 6,00,000 Inventory 2,00,000 5,00,000
Creditors Sundry 6,00,000 6,50,000
Debtors
Bills 3,00,000 2,40,000 Advance 50,000 --
Payable Payments
Cash at
Bank -- 1,00,000
overdraft Bank 3,00,000 1,60,000
Cash in
Capital 9,00,000 9,10,000
hand 1,00,000 40,000

Fixed Assets 4,50,000 5,00,000

17,00,000 18,50,000 17,00,000 18,50,000

8. To what extent the Accounting Standards are honoured and

implemented by Indian Corporate Sector ? Examine.

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