1. “Accounting is closely connected with control”. Elaborate this statement and discuss the role of accounting feedback in the process of control.
2. The balance sheets of XYZ Ltd. as on Dec. 31 st, 2013 and 2014 are given below:
Balance Sheets of XYZ Ltd.
(Figure in Rs.)
| Liabilities | 31.12.2013 | 31.12.2014 | Assets | 31.12.2013 | 31.12.2014 |
| Share Capital | 6,00,000 | 8,00,000 | Fixes Assets | 16,00,000 | 19,00,000 |
| Capital Reserve | —– | 20,000 | Less Dep. | 4,60,000 | 5,80,000 |
| General Reserve | 3,40,000 | 4,00,000 | 11,40,000 | 5,80,000 | |
| Profit & Loss A/c | 1,20,000 | 1,50,000 | Investment | 2,00,000 | 1,60,000 |
| Debentures | 4,00,000 | 2,80,000 | Current Assets | 5,60,000 | 6,60,000 |
| Current Liabilities | 2,40,000 | 2,60,000 | Preliminary Exp. | 40,000 | 20,000 |
| Proposed Dividend | 60,000 | 170,000 | |||
| Unpaid Dividends | — | 8,000 | |||
| 19,40,000 | 21,60,000 | 19,40,000 | 21,60,000 |
Additional Information: During the year 2014 , the Company:
1. Sold one machine for Rs. 50,000, the cost of which was Rs. 1,00,000 and the depreciation provided on it was Rs. 40,000.
2.Provided Rs. 1,80,000 as depreciation.
3. Sold investments at a profit of Rs. 20,000, which was credited to Capital Reserve.
4. Redeemed 30% of the Debentures @ 105.
5. Decided to value stock at cost, whereas previously the practice was to value stock at cost less 10%. The stock according to books on 31.12. 2013 was Rs. 1,08,000. The stock on 31.12.2014 was correctly valued at Rs. 1,50,000, and
6. Decided to write of fixed assets costing Rs. 28,000 on which depreciation amounting to Rs. 20,000 has been provided. Prepare the Fund
s flow statement for the year 2014.
3. A company engaged in production of dairy products wants to buy a new spray dryer to replace one which is having frequent breakdown. It received offers for two models of spray dryers S1 and S2. Further details regarding these models are given below:
| Particulars | S1 | S2 | |
| Installed Capacity | (units) | 10,000 | 10,000 |
| Fixed Overhead p.a. | (Rs.) | 2,40,000 | 1,00,000 |
| Estimated profit at the above capacity | (Rs.) | 1,60,000 | 1,00,000 |
The skimmed milk powder manufactured using this type of machine (S1 or S 2) is sold at Rs. 100 per unit.
You are required to determine:
(a) Break even level of sales for each model.
(b) The level of sales at which both the models will earn the same profit.
(c) The model suitable for different levels of demand for the product.
4. a) Describe the characteristics of a flexible budget?
b) “For Private Sector’ budgets are important in profit planning, but budgets are costly for Not- for – Profit organization” Discuss.
5. Rearrange the given statement in a form suitable for analysis and calculate:-
i) Ratio of current assets to current liabilities
ii) Ratio of outside liabilities to net worth
iii) Ratio of net worth to fixed assets
iv) Ratio of sales to fixed assets
v) Ratio of sales to net worth
vi) Liquid ratio
vii) Fixed assets ratio
viii) Proprietary ratio
ix) Capital turnover
x) Debtors Turnover ratio
| 2013 | 2014 | |
| Assets : | Rs. | Rs. |
| Cash at Bank | 1,53,800 | 2,60,200 |
| Trade debtors | 1,12,60 | 1,17,100 |
| Stock | 5,61,600 | 4,94,600 |
| Fixed Assets Less :- Depreciation | 21,72,000 | 21,98,100 |
| 30,00,000 | 30,70,000 | |
| Liabilities and Capital | ||
| Creditors | 2,00,000 | 1,60,000 |
| Bills payable | 1,27,500 | 65,000 |
| Debentures | 6,72,500 | 8,45,000 |
| Paid up capital | 10,00,000 | 10,00,000 |
| 30,00,000 | 30,70,000 | |
| Sales | 1,80,000 | 19,50,000 |
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