MS-04 - Accounting and Finance for Managers


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ASSIGNMENT

Course Code                                   :                            MS-04
Course Title                                    :                            Accounting and Finance for Managers
Assignment Code                          :                            MS-04/TMA/SEM-I/2018
Coverage                                         :                            All Blocks

Note : Attempt all the questions and submit this assignment on or before 30th April, 2018 to the coordinator of your study center.

Question. 1. How is ‘Financial Accounting’ different form ‘Management Accounting’? Discuss the role and activities of an Accountant.

Answer: Financial and management accounting are both important tools for a business, but serve different purposes. A business uses accounting to determine operational plans in the future, to review past performance and to check current business functions. Management and financial accounting have different audiences, as investors are not usually involved in the day-to-day operations of the business but are concerned about their investment, whereas managers need information quickly to make daily business decisions


Question. 2. The Balance Sheets of XYZ Ltd as on 31st December, 2016 and 2017 are as given below:

Liabilities
2016
2017
Assets
2016
2017
Share Capital
2,00,000
2,00,000
Goodwill 
24,000
24,000
General Reserve 
28,000
36,000
Buildings 
80,000
72,000
Profit and Loss Account
32,000
 26,000
Plant
74,000
72,000
Creditors
16,000
10,800
Investments
20,000
22,000
Bills Payable
2,400
1,600
Stock 
60,000
46,800
Provision for Taxation
32,000
36,000
Bills Receivable 
4,000
6,400
Provision for doubtful debts
 800
1,200
Debtors 
36,000
38,000
Cash and bank balance
13,200
30,400
 3,11,200
3,11,600
3,11,200
3,11,600
Additional Information:-
(i) Depreciation provided on plant was 8,000 and on building was Rs. 8,000.
(ii) Provision for taxation made during the year is Rs. 38,000.
(iii) Interim dividend paid during the year is Rs. 16,000.
From the above information, you are required to prepare Schedule of changes in Working Capital and Funds Flow Statement.

Answer: A Balance Sheet is a statement of the financial position of a business which states the assets, liabilities, and owners' equity at a particular point in time. In other words, the balance sheet illustrates your business's net worth.


Question. 3. What do you understand by CVP Analysis. Explain the effect of Price and Volume on the Net Profit, with the help of a suitable illustration.

Answer: Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including:

·       Sales price per unit is constant.
·      Variable costs per unit are constant.
·       

Question. 4. The Management of ABC Ltd. is considering a proposal to purchase an improved model of a machine which gives increased output. Its existing machine which has been in operation for 2 years has current market value of Rs. 1,00,000, its remaining estimated useful life is 10 years, with no salvage value at the end.

The relevant particulars are as follows:
Existing Machine
New Machine
Purchase price
 Rs.2,40,000
Rs.4,00,000 
Estimated life 
 12 years
10 years 
Salvage value 
 -
 -
Annual Operating hours 
 2,000
2,000 
Selling price per unit 
 Rs.10
Rs.10 
Output per hour 
 15 units
20 units 
Material cost per unit 
 Rs.2
Rs.2
Labour cost per unit
 20
 40
Consumable stores per year
 2,000
 5,000
Repairs and Maintenance per year 
 9,000
 6,000
Working Capital
 25,000
 40,000

The company follows the straight-line method of depreciation and is subject to 50% tax. Should the existing machine be replaced? Assume that the company’s required rate of return is 15% and that the loss on sale of Assets is tax deductible.


Answer: There are two possible treatments about the provision for taxation:

1. Provision for taxation can be treated as a current liability and it will decrease the working capital in the schedule of changes in working capital. However, payment of tax does not affect working capital because it involves both current asset and current liability account, i.e., payment decreases cash or bank balance on the one hand and decreases the current liability (tax provision) by the equivalent amount on the other hand.

Question. 5. As a Finance Manager how would you determine the Optimal Cash balance that would be required by your Organisation? What measures you would take to ensure the smooth and efficient Management of Cashflows in the Orgnisation?


Answer: Business analysts report that poor management is the main reason for business failure. Poor cash management is probably the most frequent stumbling block for entrepreneurs. Understanding the basic concepts of cash flow will help you plan for the unforeseen eventualities that nearly every business faces. Below, you will find useful information regarding the importance of cash management for your small business.

Cash vs. Cash Flow


Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call us at : 08263069601


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