MGT101 Final Term Subjective

FINAL TERM SOLVED · SUBJECTIVE QUESTIONS · MGT101 · XHD TANOLI

Q1. Assume that a company repays Rs. 300,000 loan taken from its bank and then later, in the same year company borrows Rs. 500,000. How will these items be treated on the current year’s Statement of Cash Flows?

In the section of Financing Activities

 300,000 will appear as (300,000) showing outflow/repayment of loan

•  500,000 will appear as 500,000 showing inflow of cash borrowed.

Q2. Given the following data:

Purchases Rs.26,000, Returns outwards Rs.1,470, Returns inwards Rs.2,100, Carriage outwards Rs.1,230, Carriage inwards Rs.890, Opening stock Rs.4,500, and closing stock Rs.6,130.

What would be the value of the cost of goods sold?

Solution: · Cost of Good Sold · Amount

Opening Stock

4,500

Add: Purchases

26,000

Less: Return Outward

-1,470

Add: Carriage Inward Goods available for Sale

29,920

Less: Closing Stock

-6,130 · Cost of Good Sold · 23,790

Q3.  When closing stock is given in trial balance only, then what will be its effect in Profit & Loss account and Balance Sheet and why?

 When depreciation is given in trial balance only, then what will be its effect in Profit & Loss account and Balance Sheet and why?

AWNSER:

1. Closing stock given in trial balance will be shown as asset in balance sheet only, no effect in P & L a/c
2. Depreciation when given in trial balance will be shown as an expense in P & L a/c, only no effect in balance sheet.

Q4. Pass the journal entries if:

•  Shares are issued against cash of Rs. 20,000.
•  Shares are issued against transfer of asset amounting to Rs. 30,000.

Solution: · 1. Cash dr. 20000 and share capital Cr. 20000 · 2. Asset a/c dr. 30000 and share capital cr 30000

Q5. Differentiate between debtor’s turnover ratio and creditor’s turnover ratio.

AWNSER

Debtor’s turnover ratio is regarding payment received from debtors. Basically this ratio is a helping tool for the management to make out and identify the debtors who do not pay in time. Creditors’ turnover ratio is the calculation done to identify that that in how many days the company is required to pay its creditors and the number of installments.

Q6. 10 % Debentures of Rs. 80,000 are shown in trial balance. How it will be shown in financial statements? Also mention why a company issues debentures.

Answer: Answer: 10% Debentures of Rs. 80000 is shown the Owners Equity pr liability Side of Balance sheet. Debentures are issued under the common seal of the company and debentures are an instrument for obtaining the loan from the general public. Company also paid mark up on debentures which generally equal to the market rate.

Q7. Income Statement of XYZ Ltd for the year ended on 30th June, 2007: Particulars

Rs. Rs.

Sales · 500,000 · Less: Cost of Goods Sold · 250,000 · Gross Profit · 250,000 · Less: Operating expenses · Administrative expenses · 110,000 · Interest expenses · 20,000 130,000 · Net profit before Tax · 120,000 · Less: Taxes · 36,000 · Net profit after tax · 84,000

Opening Stock for the year was Rs. 60,000.

Balance Sheet of XYZ Ltd on 30th June, 2007:

Assets

Rs.

Fixed Assets · 400,000 · Stock · 60,000 · Debtors · 230,000 · Bills Receivable · 40,000 · Cash at bank · 150,000 · Prepaid expenses · 20,000 · Total · 900,000 · Liabilities · Share capital · 200,000