Mba 1 Sem ( Smu) Finacial Management Set 1-2

Topics: Balance sheet, Financial statements, Variable cost Pages: 15 (3553 words) Published: December 28, 2012
Master of Business Administration- MBA Semester 1
MB0041 – Financial & Management Accounting
(Book ID: B1624)
Assignment Set - 1

Submitted By: Akhilesh Kumar Kandwal

Q1. Explain the process involved in accounting.
Ans. As implied earlier, today's electronic accounting systems tend to obscure the traditional forms of the accounting cycle. Nevertheless, the same basic process that bookkeepers and accountants used to perform by hand are present in today's accounting software. Here are the steps in the accounting cycle.

• Identifying the transactions and event: This is the first step in accounting process. It recognizes the transactions of financial character that are essential to be recorded in books of account.

• Measuring: this means expressing the value of events and transactions in terms of money.

• Recording: Record the transaction as a journal entry. It deals with recording of transactions and events in a systematic manner in book of original entry in accordance with the principle of accountancy.

• Classifying: In this step , a separate book called Ledger is maintained. It is a book wher the transactions of similar nature are maintained at one place. Post the entry in the individual accounts in ledgers. Traditionally, the accounts have been represented as Ts, or so called T-accounts, with debits on the left and credits on the right.

• Summarizing: At the end of the reporting period (usually the end of the month), create a preliminary trial balance of all the accounts by (a) netting all the debits and credits in each account to calculate their balances and (b) totaling all the left-side (i.e, debit) balances and right-side (i.e., credit) balances. The two columns should be equal. This function involves the preparation of financial statement such as Balance sheet, statement of changes in financial position, and cash flow statement.

• Analyzing: It deals with the establishment of relationship between the various items or group of items taken from income statement or balance sheet or both. Its purpose is to identify the financial strengths and weaknesses of an enterprise. It involves using various tools like ratio analysis, fund flow analysis, cash flow analysis.

• Interpreting: Combine the sums in the various accounts and present them in financial statements created for both internal and external use.

• Communicating: It deals with communicating the analyzed and interpreted data in the form of financial reports or statements to the user of financial information.

Q2. The salaries paid in 2004 is Rs. 5,00,000; Salaries outstanding is Rs. 20,000; Salaries paid in advance for 2004 is Rs. 30,000. What is the actual salary expenditure for 2004? Which accounting principle is involved in this and explain that principle. Ans. Rs 4,90,000 (5,00,000 + 20,000- 30,000) . Accounting principle is : Matching cost and revenue principle.

Q3. Find the value of the following:
a. If the total assets are Rs. 87,000 and the liabilities are Rs. 47,000, find out the amount of capital. Ans. Total Capital = Assets – Liabilities
= 87000- 47000
= 40000

b. If the capital of proprietor is Rs. 4,00,000 and the total assets are Rs. 6,00,000, what is the amount of liabilities to outsiders? Ans. Liabilities = Assets – Total Capital
= 6,00,000- 4,00,000
= 2,00,000

c. If creditors are Rs. 56,000, bank overdraft is Rs.1,00,000, and outstanding expenses are Rs. 8,000, what is the total amount of assets? Ans. Total Amount of assets = Bank overdraft – creditors –outstanding expenses = 100000 – 56000- 8000 = 36000

d. Fixed assets are Rs.70,000 and current assets are Rs.1,00,000 and the creditors are Rs.30,000. What is capital? Ans....
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