Accounting For Managers

Accounting For Managers

MBA Assignment A

Question 1a): What do you understand by the concept of conservatism? Why it is also called the concept of prudence? Why it is not applied as strongly today as it used to be in the Past?

Question 1b): What is a Balance Sheet? How does a Funds Flow Statement differ from a Balance Sheet? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement

Question 2a): Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations .If any

Question 2b): Why do you understand by the term ‘pay-out ratio’? What factors are taken into consideration while determining pay-out ratio? Should a company follow a fixed pay-out ratio policy? Discuss fully.

Question 3: From the ratios and other data given below for Bharat Auto Accessories Ltd. indicate your interpretation of the company’s financial position, operating efficiency and profitability.

Question 4: Bose has supplied the following information about his business to Summary of  Cash  book for the year ended 31st March, 2004 is as follows:

Discount allowed totaled Rs.7,000 and discount received was Rs.4,000. Bad debts written off were Rs.8,000. Depreciation was written off on furniture @5% per annum and machinery @10%per annum under the straight line method of depreciation. The office expenses included Rs.5,000 paid as insurance premium for the year ending 30th June, 2004. Wages amounting to Rs.20,000 were still due on 31st March,2004.Prepare trading and profit and loss account for the year ended 31sl March, 2004 and the balance sheet as on that date.

Question 5a): What procedure would you adopt to study the liquidity of a business firm?

Question 5b): Who are all the parties interested in knowing this accounting information?

Question 5c): What ratio or other financial statement analysis technique will you adopt for this.

Question6. From the following particulars, determine the bank balance as per pass book of Priya &Co. as on 28th February 2008.

a) Credit balance as per cash book on 28th February, 2008 was Rs. 15,000

b) Interest charged by the bank up to 28th February Rs. 500 was recorded in the passbook.

c) Bank charges made by the bank Rs. 125 were also recorded only in the pass book.

d) Out of the cheques of Rs. 25,000 paid into the bank, cheques of Rs. 18,750 were cleared and credited by the bankers.

e) Two cheques of Rs. 7,500 and Rs. 15,000 were issued but out of them only one cheque of Rs. 7,500 was presented for payment upto 28th February.

f) Dividends on shares Rs. 4,500 were collected by the bankers directly, for which Priya & did not have any information.

Question7a): Decide whether the new product be introduced.

Question7b): Make any further observation/recommendations about profitability of the company on the basis of the above data , after making assumption that the present investment is Rs. 8 lakh.

Question8 a):What is Master Budget? How it is different from Cash Budget?

Question8 b):What are the various methods of inventory valuation? Explain the effect of inventory valuation methods on profit during inflation. What are the provisions of Accounting Standard 2 (AS-2) with regards to inventory valuation?


MBA Assignment B

Case Study

Labor standards

Geeta & Company has experienced increased production costs. The primary area of concern identified by management is direct labor. The company is considering adopting a standard cost system to help control labor and other costs. Useful historical data are not available because detailed production records have not been maintained.

To establish labor standards, Geeta & Company has retained an engineering consulting firm. After a complete study of the work process, the consultants recommended a labor standard of one unit of production every 30 minutes, or 16 units per day for each worker. The consultants further advised that Geeta’s wage rates were below the prevailing rate of Rs per hour.

Geeta’s production vice-president thought that this labor standard was too tight, and from experience with the labor force, believed that a labor standard of 40 minutes per unit or 12 units per day for each worker would be more reasonable. he president of Geeta & Company believed the standard should be set at a high level to motivate the workers and to provide adequate information for control and reasonable cost comparison. After much discussion, management decided to use a dual standard. The labor standard of one unit every 30 minutes, recommended by the consulting firm, would be employed in the plant as a motivation device, while a cost standard of 40 minutes per unit would be used in reporting. Management also concluded that the workers would not be in formed of the cost standard used for reporting purposes. The production vice-president conducted several sessions prior to implementation in the plant, informing the workers of the new standard cost system and answering questions. The new standards were not related to incentive pay but were introduced when wages were increased to Rs7 per hour.

The standard cost system was implemented on January 1, 19–. At the end of six months of operation, these statistics on labor performance were presented to executive management:

Materials quality, labor mix, and plant facilities and conditions have not changed to a signify Cant extent during the six month period.


1.Describe the impact of different types of standards on motivations, and specifically, the likely effect on motivation of adopting the labor standard recommended for Geeta & Company by the engineering firm.

2.Please advise the company in reviewing the standards.


MBA Assignment C

  1. Which of the following statements is true concerning assets?

2.When the concept of conservation is applied to the Balance Sheet, it results in

  1. Which of the following is a correct expression of the accounting equation?
  1. How is the balance sheet linked to the other financial statements?
  1. The process of recording the economic effects of business transactions in a book of original entry:
  1. If the sum of the debits and credits in a trial balance is not equal, then
  1. Z Ltd had Rs1800 of supplies on hand at January 1, 2006. During 2006, supplies with acost of Rs7, 000 were purchased. At December 31, 2006, the actual supplies on handamounts to Rs2, 300. After the adjustments are recorded and posted at December 31,2006, the balances in the Supplies and Supplies Expense accounts will be:
  1. In the statement of changes in financial position, uses of resources are defined as:

9.Most firms elected to define funds in the statement of changes in financial position as:

10.The funds flow statement included:

11.Which of the following is not an example of a non-fund adjustment to income required in preparing the statement of changes in financial position when funds were defined as working capital?

12.In the cash flow statement, cash is defined as:

  1. Flexible budgets

14Which of the following statements regarding changing inventory methods is true?

Use the information presented below to answer the questions that follow. Solid Co. received a non-interest-bearing note from Y Ltd. on October 1, 2006. The amount of the note due at the maturitydate is Rs6, 200. The note was accepted by Solid for merchandise sold to Bedrock with a sellingprice of Rs6, 000. The note is due in 3 months.

  1. The difference of Rs200 between the amount of the note (Rs6, 200) and the sales price of the merchandise (Rs6, 000)
  1. Which of the following combination of financial statements would provide the most in-depth information to help understand a company’s liquidity?
  1. Y Ltd sold equipment for Rs4, 000. This resulted in a Rs1, 500 loss. What is the impact of this sale on the working capital?

18.If a company’s asset turnover rate increased from 2005 to 2006, which of the following conclusions can be made?

19.X Ltd’s master budget calls for the production of 6,000 units of product monthly. The master budget includes indirect labor of Rs396,000 annually; X Ltd considers indirect labor to be a variable cost. During the month of September, 5,600 units of product were produced, and indirect labor costs of Rs30,970 were incurred. A performance report utilizing flexible budgeting would report a flexible budget variance for indirect labor of:-a. Rs170 unfavorable.b. Rs170 favorable.c. Rs2, 030 unfavorable.

  1. Rs2, 030 favorable.20.Which of the following is not an advantage for using standard costs for variance analysis?

21.The main purpose of cost accounting is to-

22.Conversion cost is total of:

23.A cost, which does not involve cash outlay, is called:

24.Committed fixed costs are those, which:

  1. Cost of research undertaken at the request of the customer should be:

26.Salaries due for the month of March will appear

27.Liabilities of business are Rs. 11,220 and owner’s equity is Rs. 15,000. The assets of thebusiness will be.

  1. An entry of Rs. 320 has been debited to Eknath’s account at Rs. 230. If is an error of
  1. Unearned revenues are:
  1. The revenue recognition principle requires that sales revenues be recognized:
  1. All of the following are “other receivables” except:
  1. Depreciation is dependent on a number of estimates. When a change in an estimate isrequired, the change is made:
  1. In order to pay a dividend:
  1. Cash flow activities that include the cash effects of transactions that create revenues andexpenses and thus enter into the determination of net income are referred to as:
  1. All of the following are used in preparing a statement of cash flows except:
  1. Depreciation is result of
  1. Outstanding Expenses are the examples of
  1. Liquid Assets are inclusive of all current assets except

39.Management Accounting is mainly related to

40.Variance Analysis is done with regards to actuals with.


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