CODE No

CODE No.:10MC1HS01

SREE VIDYANIKETHAN ENGINEERING COLLEGE (An Autonomous Institution, Affiliated to JNTUA, Anantapur)

M.C.A. I Semester (SVEC10) Supplementary Examinations February - 2015 ACCOUNTING AND FINANCIAL MANAGEMENT [ MASTER OF COMPUTER APPLICATIONS ] Time: 3 hours

Max. Marks: 60 Answer any FIVE questions All questions carry equal marks

1.

What are accounting concepts and conventions? Name them and explain any two accounting concepts in detail.

2.

From the following balances and information, you are required to prepare final accounts of Mohan Bros. for the year ended 31st March, 2012: Particulars Plant and Machinery Depreciation on Plant and Machinery Fixtures and fittings Fuel and power (factory) Office salaries Salary outstanding Lighting (factory) Travelling Expenses Carriage as sales Cash at Bank Trade debtors Purchases (adjusted) Stock (31.03.2012) Wages

Rs. 49,500 5,500 1,720 542 4,095 350 392 925 960 2,313 47,800 66,710 16,580 9,915

Particulars Rent and Taxes Rent outstanding Office Expenses Carriage - Purchases Discount allowed Drawings Stock (1-4-2011) Direct sundry expenses Sale returns Insurance Capital Sales Creditors Returns outwards Bills payable

Rs. 1,951 150 2,778 897 422 6820 21,725 2,680 7,422 570 93230 1,26,177 22,680 3,172 6,422

Additional Information: 1. Depreciate furniture and fittings at 10% 2. Provision for bad debts at 2 ½ % on debtors 3. Insurance unexpired Rs. 70 and 4. Outstanding wages Rs. 800. 3.

Calculate (a) Current Assets: (b) Liquid Assets; and (c) Inventory. Current Ratio 2.6:1 Liquid Ratio 1.5 : 1 Current Liabilities Rs. 40,000

4.

In what respect is the objective of wealth maximization superior to the Profit maximization objective?

5.

Define Financial Management. “Maximization of Profit is regarded as the proper objective of investment decision. But it is not exclusive of maximizing shareholders wealth” - Do you agree? Comment.

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6.

Why the cash flow statement is considered necessary in addition to the profit and loss account and balance sheet? Discuss with suitable examples.

7.

Elucidate any two approaches to calculate cost of equity.

8.

NIIT Ltd. is contemplating to purchase a machine. Two machines A and B are available each costing Rs. 5,00,000. In comparing the profitability of the machines a discounted rate of 10% is to be used. Earnings after taxation are expected as follows: CASH FLOW ----------------------------------------------------------------------------------------------------------------------Rupees Year Machine A Machine B I 1,50,000 50,000 II 2,00,000 1,50,000 III 2,50,000 2,00,000 IV 1,50,000 3,00,000 V 1,00,000 2,00,000 Indicate which of the machines would be profitable using the following methods of ranking investments proposals. i. Pay back method ii. Net present value method iii. Return on investment method. 

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