MGT101 Final Term Subjective Set 2

Rana Abubakar Khan

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MGT101 Solved Subjective Question

Q49. Mr. A, B & C entered into a partnership. At the beginning of the year their capital balances were Rs. 180,000, Rs. 140,000 and Rs. 80,000 respectively. Profit or loss is to be divided as: (3 marks)

Ø Mr. A: one-half Ø Mr. B: one-third Ø Mr. C: one-sixth

Required:

If profit is Rs. 390,000, calculate the share of profit for all the partners.

Total profit 390,000 Share of A = 390,000 * 1/2 = 195,000 Share of b = 390,000 * 1/3 = 130,000 Share of C = 390,000 * 1/6 = 65000

Q50. Write (3 marks)

down

the components of Cash Flow Statement.

Answer: Cash Flow statement has three components.

1. Cash related to operating activities of the business
2. Cash related to Investment made by the business
3. Cash related to the financial activities of the business

Q51. What is bank overdraft? Mention an example for this. Why companies have to pay mark up on it. Under which head mark up paid on overdraft is shown in financial statement. (5 marks)

Bank overdraft is the amount drawn over the balance exists in the account of business in the bank. This amount is the liability of the business and a kind of short term loan. As the bank has provided loan, so the bank charge interest (markup) on this amount as they have provided the short term loan to the business for markup incentive. As we know that the markup on overdraft relates to the finance of the business. So, it is placed under the head of financial charges in the financial statements.

Q52. Write note on following terms. (5 marks)

Ø Net capital employed Ø Share holder's equity Ø Gain on sale of Fixed Assets Ø Return on Investment

Q53. Indicate in which section of the Balance Sheet each of the following accounts is classified. Use the symbols CA for current assets, NCA for non current assets, CL for current liabilities, LTL for long term liabilities, and SHE for stockholders’ equity. (5 marks)

Accounts

Section

Prepaid rent CA

Dividends payable CL

Salaries payable CL

Prepaid insurance CA

Retained earnings CA

Mortgage payable (due in 15 years) LTL

Unearned service revenue CA

Accounts receivable CA

Land NCA

Office supplies NCA