CS - 54 Accounting & Finance on Computers
Dec. 2002

1(a) Write short notes on any two of the following :
(i) Shareholders’ Funds
(ii) Cost of Capital
(iii) Business Entity Concept

(b) How does Management Accounting differ from Financial Accounting? Explain briefly, how management accounting helps the Management of a company in making its decisions.

(c) State the various factors that affect the capital structure of a company.

Q.2. From the following information relating to Smith sons, calculate the break-even point and the turnover required to earn a profit of Rs. 3,00,000

Fixed Overhead = 2,10,000 (total)
Variable Cost = 20 per unit
Selling price = 50 per unit

If the company is earning a profit of Rs. 3,00,000, what is the margin of safety available to it? Also state the significance of this margin.

3(a) What do you mean by budgetary control? State its objectives.
(b) Discuss the budgetary control ratios and how they are calculated.

Q.4. A manufacturing concern which has adopted standard costing, furnishes the following information: (Dec. 02)

Standard

Materials for 70 units of finished product = 100 kg
Price of meterial per kg = Re. 1

Actual

Output = 2,10,000 units
Materials used = 2,80,000 kg
Cost of materials = Rs. 2,52,000

Calculate material usage variance, material price variance, and material cost variance. Also state the possible causes of Material Usage Variance

Q. 5. The following is the Balance Sheet and Profit & Loss Account of H.S.G. Limited. (Dec. 02)

Balance Sheet
as on 31-3-2001

 

Liabilities

 

Rs.

 

 

Assets

 

Rs.

 

Share Capital
(12,000 Equity Share of Rs. 10 each)

1,20,000

 

Machinery

1,55,000

 

Reserves and Surplus

35,000

 

Inventories

65,000

 

13% Debentures

80,000

 

Debtors

40,000

 

Sundry Creditors

50,000

 

Cash at Bank

35,000

 

Provision for Taxation

15,000

 

Prepaid Expenses

5,000

 

 

3,00,000

 

 

3,00,000

Profit & Loss Account
for the year ended 31-3-2001

 

Particulars

 

Rs.

 

Sales

2,00,000

 

Less: Cost of Sales

1,30,000

 

Profit before Interest and Tax

70,000

 

Less: Interest

10,400

 

Profit before Tax

59,400

 

Less: Tax

30,000

 

Profit after Tax

29,400

Compute:

  1. Return on Investment
  2. Return on Net Worth
  3. Earning per Share
  4. Investment Turnover Ratio
  5. Current Ratio

Q. 6. “While formulating a dividend policy, the Management has to reconcile company’s need for funds with the expectations of the shareholders.” Elaborate this statement and state the policy goals which have to be kept in view by the Management while taking a decision on dividends.

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