ACCOUNTING FOR MANAGERS

IMPORTANT QUESTIONS

UNIT – 1

SHORT QUESTIONS:
1. Define Double Entry System
2. Convention of Conservatism
3. Accounting Cycle
4. GAAP (Generally Accepted Accounting Principles)

LONG QUESTIONS:
1. Define the meaning and growth of Accounting. List out the various users of accounting
information?
2. Explain the types of accounts with examples & explain their rules of debit & credit.
3. What is meant by Financial Accounting? Discuss the advantages and limitations of Financial
Accounting?
4. Explain the Concepts & Conventions of Accounting?

UNIT – 2

SHORT QUESTIONS:
1. What is Accounting Equation?
2. Define Ledger
3. State two objectives of Trial Balance.
4. List out any three types of Journal entries.

LONG QUESTIONS:
1. What is Journal? Explain the types of Journal Entries.
2. ** Illustration on Journal Entries **
3. What is Ledger? Explain the difference between Journal and Ledger.
4. Define Trial Balance? Explain the preparation of Trial Balance?

UNIT – 3

SHORT QUESTIONS:
1. Gross Profit v/s Net Profit
2. Joint Stock Company
3. What is Trading Account.?
4. What are Adjustment Entries?

LONG QUESTIONS:
1. ** Final Accounts with Adjustments **
 2. Define Joint Stock Company and prepare the format of Profit & loss A/C and Balance Sheet of
Joint Stock Company.
3. What is Joint Stock Company? Describe the steps in formation of Joint Stock Companies.
4. Explain the provisions of the companies Act in the preparation of company final accounts?

UNIT – 4

SHORT QUESTIONS:
1. Comparative Financial Statements.
2. Define Solvency Ratios
3. Tools of Financial Statement Analysis
4. Liquidity Ratio

LONG QUESTIONS:
1. What do you mean by analysis of financial statements? Enumerate the purpose & Limitations of
Financial Statements?
2. Briefly explain the meaning & significance of the following ratios:
i. Operating Ratio
ii. Liquidity Ratio
iii. Stock Turnover Ratio
3. Discuss the nature of Financial statements. Explain the principal tools of analysis of financial
statements.
4. Illustrations on Ratio Analysis

UNIT – 5

SHORT QUESTIONS:
1. Write about Indian Accounting standards
2. Define IFRS
3. Salient features of Ind-AS issued by ICAI
4. Write short notes on IFRS

LONG QUESTIONS:
1. What are Indian Accounting Standards (IND AS)? Discuss the List of Indian Accounting
standards (Currently Applicable) of ICAI in detail?
2. Explain the concept & procedure for issuing Ind-AS in india.
3. What is IFRS? Explain the main features & uses of IFRS as global standards issued by IASB.
4. Explain the Features and objectives of IFRS issued by IASB.

Practice Problems
 1. Mr.Arav has the following transactions in the month of June, journalise the following
transactions.
2020
05th June Commenced business with a capital of Rs. 2,00,000
12th June Bought goods from kavya for cash Rs.3000
15th June Rent paid Rs.10,000
19th June Received cash from Mahesh Rs.6000
23rd June Sold Furniture for cash Rs.15000 to Ravi
24th June Deposited in to Bank Rs.30,000
26th June Withdrew for personal use Rs. 5000
30th June Purchases goods from Mayur Rs.12,000

2. Journalise the following transactions:

2022
03rd Feb Started business with Rs.5,00,000
5th Feb Paid for postage Rs.350
7th Feb Sold goods on credit to Mr.Abhiram Rs. 14,000
10th Feb Paid for: Electricity Charges Rs.1200
15th Feb Received From Mr.Abhiram in full settlement of his account Rs.13500 & Discount Allowed
Rs.500
26th Feb Goods purchased for cash Rs.8000
29th Feb Received Commission Rs.3500

3. Journalise the following transaction:

2020
Jan 1st Commenced business with cash Rs.1,00,000
Jan 5th Deposited cash with bank Rs. 40,000
th
Jan 8 Paid salaries by cash Rs.5,000
th
Jan 11 Bought furniture by cash Rs.4,000
Jan 16th Paid electricity charges by cash Rs.1,000
th
Jan 20 Sold goods to D and Co. on credit Rs.10,000
Jan 28th Commission received in cash Rs.5,000

4. Journalise the following transaction:

2022
June 2nd Commenced business with cash Rs.70,000
th
June 4 Purchased goods from X and Co. on credit Rs. 30,000
th
June 8 Cash deposited into bank Rs.40,000
June 10th Bought a building from L and Co. on credit Rs.95,000
th
June 13 Cash withdrawn from bank for office use Rs.5,000
th
June 18 Cash withdrawn from bank for personal use Rs.4,000
June 24th Salaries paid in cash Rs.8,000
FINAL ACCOUNTS WITH ADJUSTMENTS:

1. From the following Trial Balance of M & S co., you are required to prepare Trading, Profit &
Loss Account and Balance sheet for the year ended 31st March, 2020.
PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)
Opening Stock 20,000 Sales 1,09,000
Purchases 25,500 Purchase Returns 1,325
Factory Wages 13,000 Creditors 2,000
Carriage Inwards 500 Bills Payable 10,000
Salaries 17,500 Short term loan 7,500
Carriage Outwards 250 Bank Overdraft 1,500
General Expenses 225 Capital 80,000
Rent 1,750 General Reserve 13,500
Sales Returns 1,000
Interest 1,500
Commission 550
Printing & Stationery 1,150
Bad Debts 600
Drawings 22,500
Good Will 20,000
Loose Tools 5,000
Motor Car 20,000
Land & Building 30,000
Machinery 20,000
Bills Receivable 3,000
Furniture 3,000
Debtors 22,500
Cash at Bank 13,300

2,42,825 2,42,825

Adjustments:
1. Make Provision 5% on Debtors For Bad Debts.
2. Depreciation on Machinery & Furniture by 10 %.
3. Stock at the end Rs.17, 500.
4. Prepaid Rent Rs.250.
5. Outstanding Wages Rs.750.
2. Prepare the Final Accounts from the following Trial Balance for the year ended 31.12.2021 of
M/S Ravinder & Bros.
PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)
Purchases 2,00,000 Sales 4,71,004
Machinery 90,000 Capital 45,000
Returns 5,000 Returns 2,503
Debtors 92,000 Creditors 51,000
Cash at Bank 28,000 Provision for Bad Debts 1,000
Stock(01.01.2021) 50,205
Rates & Taxes 4,800
Wages 40,000
Furniture 8,000
Salaries 47,000
Freight 5,502

5,70,507 5,70,507
Adjustments:
1. Closing Stock Rs.56,000.
2. Outstanding Salaries Rs.6,000.
3. Write off Rs.2,000 as Bad Debts. Create a Provision for Doubtful Debts @ 3%.
4. Provide 5% depreciation on Machinery.
5. Interest on Capital @ 5% is allowed.

3. Given below are the balances extracted from the books of Nagarajan as on 31st March, 2023.
Particulars Amount(Rs) Particulars Amount(Rs
)
Purchases 1,00,000 Sales 1,51,000
Wages 6000 Commission 19,000
Freight 7500 Rent 6,000
Advertisement 5000 Creditors 24,000
Carriage Outwards 4000 Capital 50,000
Cash 12,000
Machinery 80,000
Debtors 22,500
Bills Receivable 3,000
st
Stock on 1 Jan,2023 10,000

2,50,000 2,50,000
Prepare the trading and profit and loss account for the year ended 31st March, 2023 and the
balance sheet as on that date after adjusting the following:
i. Commission received in advance Rs. 4,000.
ii. Advertisement paid in advance Rs. 1,500.
iii. Wages outstanding Rs. 2,000.
iv. Closing stock on 31st March 2023, Rs. 21,000.

4. Given below are the balances of Priya as on 31st March, 2021. Prepare final accounts for the year
ended 31st March, 2021.
Particulars Debit (Rs) Credit (Rs)
Capital 1,20,000
Sundry Debtors and Creditors 22,000 22,500
Sales 59,700
Drawings 2,000
Cash in hand 8,200
Cash at bank 30,000
Wages 2,500
Purchases 10,000
Opening Stock 30,000
Building 60,000
Bills Receivable 14,500
Office telephone expenses 3,500
General Expenses 9,000
Goodwill 10,500
2,02,200 2,02,200
Adjustments:
i. The stock value at the end of the accounting period was Rs. 5,000
ii. Interest on capital at 6% is to be provided
iii. Interest on drawing at 5% is to be provided
iv. Write off bad debts amounting to Rs. 2,000
v. Create provision for bad and doubtful debts on sundry debtors @ 10%

b) From the following information calculate: a) Gross Profit Ratio, b) Net Operating Profit Ratio, c)
Net Profit Ratio.
Net Sales Rs.5,00,000
Cost of Goods Sold Rs.3,50,000
Selling Expenses Rs.12,000
Administrative Expenses Rs.8,000
Interest Income Rs.5,000
Loss on the sale of old machine Rs.12,000