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Summer 2013
Master of Business Administration- MBA Semester 1
MB0041 – Financial and Management Accounting – 4 Credits
(Book ID: B 1624)
Assignment- 60 marks
Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.
Q1.Accounting is one of the oldest, structured management information system. Give the meaning of accounting and book keeping? Explain the objectives of accounting?
Answer : Meaning of accounting :
Accountancy, or accounting, is the production of financial records about an organization. Accountancy generally produces financial statements that show in money terms the economic resources under the control of management; selecting information that is relevant and representing it faithfully. The principles of accountancy are applied to accounting, bookkeeping, and auditing. Many tedious accounting practices have been simplified with the help of computer software. Enterprise resource planning (ERP) software provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources.
Meaning of book keeping :
Bookkeeping in the context of a business is simply the recording of financial transactions. Transactions include purchases, sales, receipts and payments by an individual or organization. Many individuals mistakenly consider bookkeeping and accounting to be the same thing.
Q2.Explain GAAP and write down the relationship between accounting principles, accounting concepts, and accounting conventions. Explain all the five accounting concepts with an example.
(Meaning of GAAP 2 marks; Relationship between accounting principles , accounting concepts, and accounting conventions 3 marks ; Explanation of five accounting concepts with examples 5 marks )
Answer : Meaning of GAAP :
Generally Accepted Accounting Principles (GAAP) refers to a widely accepted set of rules, standards, conventions, and procedures for reporting financial info. In USA this set of rules has been established by the Financial Accounting Standards Board (FASB). GAAP is an amalgamation of authoritative standards and the usually accepted methods of recording and reporting info on accounting.
Relationship between accounting principles, concepts and conventions :
Q3.List down the classification of accounts according to accounting equation approach. Give the meaning and examples for all the types of accounts.
Answer : Accounting equation approach is also called the American approach. Under this approach transactions are recorded based on the accounting equation, i.e., Assets = Liabilities + Capital. The accounting equation is a statement of equality between the debits and the credits. The rules of debit and credit depend on the nature of an account..
Accordingly, the following rules of debit and credit in respect to the various categories of accounts can be obtained.
- Assets Accounts: debit increases in assets and credit decreases in assets
- Capital Account: credit increases in capital and debit decreases in capital
- Liabilities Accounts: credit increases in liabilities and debit decreases in liabilities
This type of account keeps a record of all loses or expenses made by company. e.g. expenses on worker’s health issues other facilities etc.It is also called flexible account.
Q4.What is cash book? Differentiate between other subsidiary books and cash book.
Answer : Cash book :
Cash book is a book in which all transactions relating to cash receipts and cash payments are recorded. It starts with the cash or bank balances at the beginning of the period. Generally, it is made on monthly basis. This is a very popular book and is maintained by all organisations, big or small, profit or not-for profit. It serves the purpose of both journal as well as the ledger (cash) account. It is also called the book of original entry. When a cashbook is maintained, transactions of cash are not recorded in the journal, and no separate account for cash or bank is required in the ledger.
Types of cash books :
- Single column
- Double column
- Triple column
Q5.The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000.
Sundry Debtors Rs.160000
Bad Debts written off Rs 9000
Discount allowed to Debtors Rs. 1800
Reserve for Bad and doubtful Debts 31-12-1999 Rs. 16500
Reserve for discount on Debtors 31-12-1999 Rs. 3200
You are required to provide the bad and doubtful debts at 5% and for discount on debtors at 2%. Show the adjustments for bad debts, bad debts reserve, discount account, and provision for discount on debtors.
Hint: RBD to be provided = 500
Reserve for discount to be provided now =1640
(Calculation of amount debited to P/L a/c towards RBD 3 marks ; calculation of amount debited to P/L a/c towards reserve for discount on debtors 5 marks; conclusion with summary 2 marks)
Answer :
Q6.What is management accounting? Explain the roles of management accounting and write down about any 2 functions of management accounting.
Answer : Management accounting :
According to the Institute of Management Accountants (IMA): “Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy”.
The American Institute of Certified Public Accountants(AICPA) states that management accounting as practice extends to the following three areas:
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or
Send your semester & Specialization name to our mail id
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