Q.1 Selected financial information about Vijay merchant company is given below:
Q.1 Selected financial information about Vijay merchant company is given below:
2010 | 2009 |
Sales | 69,000 | 43,000 |
Cost of Goods Sold | 57,000 | 32,500 |
Debtors | 7,200 | 3,000 |
Inventories | 11,400 | 5,500 |
Cash | 1,500 | 800 |
Other current assets | 4,000 | 2,700 |
Current liabilities | 16,000 | 11,000 |
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Compute the current ratio, quick ratio, average debt collection period and inventory
turnover for 2009 and 2010. State whether there is a favorable or unfavorable change in liquidity from 2009 to 2010. At the beginning of 2009, the company had debtors of Rs..2500 and inventory of Rs.3000. [10 Marks]
Q.2 Explain different methods of costing. Your answer should be studded with examples (preferably firm name and product) for each method of costing.
[10 Marks]
Q.3 State the importance of differentiating between the fixed costs and variable costs in managerial decision. [10 Marks]
Q.4 Following are the extracts from the trial balance of a firm as at 31st March 2009
Name of the account | Dr | Cr | |
Sundry debtors | 2,05,000 | ||
Bad debts | 3,000 | ||
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Additional Information
1) After preparing the trial balance, it is learnt that Mr.X a debtor has become insolvent and nothing could be recoverd from him and, therefore the entire amount of Rs.5,000 due from him was irrecoverable.
2) Create 10% provision for doubtful debt.
Required: Pass the necessary journal entries and show the sundry debtors Spring 2011(Feb-July)
account, bad debts account, provision for doubtful debts account, P&L a/c and Balance sheet as at 31st March 2009. [10 Marks]
Q.5 A change in credit policy has caused an increase in sales, an increase in discounts taken, a decrease in the amount of bad debts, and a decrease in investment in accounts receivable. Based upon this information, the company’s (select the best one and give reason)
1) Average collection period has decreased
2) Percentage discount offered has decreased
3) Accounts receivable turnover has decreased
4) Working Capital has increased.
[10 Marks]
Q.6 Identify the users of accounting information. [10 Marks]
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