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(Last date of submission for January 2023 session is 30th April, 2023 and for July 2023 sessions is 31st October, 2023)
MS04 ignou assignment solution 2023
Q1. Explain the following Accounting concepts
a) Business entity concept
b) Accrual concept
c) Money measurement concept
d) Periodicity concept
Q2. Compute cash generated from Operations during the year 2021-22, from the following data:
Particulars April 1, 2021 March 31, 2022
Sundry debtors R. 30,000 R. 40,000
Sundry creditors 48,000 30,000
Outstanding expenses 3,000 6,000
Outstanding income 1,000 1,000
Stock in trade 55,000 60,000
Prepaid expenses 3,000 2,000
Accumulated depreciation
(no retirements during the year) 50,000 60,000
Provision for doubtful accounts 1,500 2,000
Dividends payable — 3,000
Bills receivable 10,000 12,000
Bills payable 8,000 6,000
Net income before taxes (as per profit and loss account)
Q3. The Colour Flow Ltd’s income statement for the preceding year is presented below. Except as noted, the cost/revenue relationship for the coming year is expected to follow the same pattern as in the preceding year. Income statement for the year ending March 31 is as follows:
Sales (20,000 bottles @ R. 25 each) R5,00,000
Variable costs R3,00,000
Fixed costs 1,00,000 4,00,000
Pre-tax profit 1,00,000
Less: Taxes (0.35) 35,000
Profit after tax 65,000
1. What is the break-even point in amount and units?
2. Suppose that a plant expansion will add R 50,000 to fixed costs and increase capacity by 60 per cent. How many bottles would have to be sold after the addition to break-even?
3. At what level of sales will be company be able to maintain its present pre-tax profit position even after expansion?
4. The company’s management feels that is should earn at least R 10,000 (pre-tax per annum) on the new investment. What sales volume is required to enable the company to maintain existing profits and earn the minimum required return on new investments?
5. Suppose the plant operates at full capacity after the expansion, what profit after tax will be earned?
Q4. What are the various types of investment proposals? Explain the various discounted cash flow techniques used to evaluate investment proposals.
Q5. What is ‘Capital Structure’? Explain the features of an appropriate capital structure and discuss factors determining capital structure of a firm.
Old
Q1. Accounting is closely associated with control”. Explain the statement and discuss the role of accounting feedback in the process of control. What do you understand by Internal Audit? How do the functions of an internal auditor differ from that of External Auditor?
Q2. You are required to prepare a Schedule of Changes in Working Capital and a Statement showing Sources and Application of Funds for XYZ Ltd. The following is the condensed Balance sheet of XYZ Ltd. at the beginning and at the end of the year 2021
Additional information available is:
(a) Dividend was paid @ 10% .
(b) During the year and old machinery costing Rs. 12,000 was sold for Rs. 4,000, on which accumulated depreciation was Rs. 6,000 and a new machinery of Rs. 20,000 was purchased. The factory sheds are fully depreciated.
(c) 5% Debentures of face value of Rs. 100 each worth Rs. 20,000 were redeemed by purchase from the open market at Rs. 96 each.
(d) Rs. 10,000 was debited to the contingency reserve for settlement of previous tax liability.
(e) Investment worth Rs. 26,000 were sold at book value.
Q3. Explain the technique of Marginal Costing and Absorption Costing. Taking a suitable example prepare a Profit and Loss Account according to Marginal Costing and Absorption Costing.
Q4. A firm has sales of Rs. 75, 00,000 variable cost of Rs. 42, 00,000 and fixed cost of Rs. 6,00,000. It has a debt of Rs. 45, 00,000 at 9% and equity of Rs. 55, 00,000.
(i) What is the firm’s ROI?
(ii) Does it have favorable financial leverage?
(iii) If the firm belongs to an industry whose asset turnover is 3, does it have high or low asset leverage?
(iv) What are the operating, financial and combined leverages of the firm?
(v) If the sales drop to Rs. 50.00.000, what will be the new EBIT?
(vi) At what level the EBT of the firm will be equal to zero?
Q5. Discuss the concept of Working Capital. As a financial manager which factors would you take into consideration while estimating working capital needs of your firm.
Another Set of IGNOU solution
1. Explain the purposes of Accounting Information? Which purpose, in your opinion, is most important and why?
2. The following are the summarized Balance Sheets of ABC Ltd as on 31st December, 2019 and 31st December 2020, respectively: 
No plant and machinery was sold during the year 2020. Depreciation written off during 2020 was Rs 7,500. Net Profit for the year was Rs. 8,200. dividend paid during 2020 in respect of previous year was Rs. 6,000 . Capital reserve represented a profit on sale of freehold premises. You are Required to prepare:
(i) a Statement showing Changes of Working Capital during 2020; and
(ii) A Funds Flow Statement for the same period.
3. Discuss the techniques of Absorption Costing and Marginal Costing using a suitable example.
4. Explain the different types of Budgets prepared in an Organization of your choice and discuss the relevance of these budgets to that organisation.
5. Alpha Ltd is considering a capital investment proposal where two alternatives, involving differing degrees of mechanization, are being considered.
New machinery would cost Rs. 2,78,000 in option 1 and Rs. 8,05,000 in option 2. Both these investments would have a five year life, however it is anticipated that the scrap values after 5 years would be Rs. 28,000 and Rs. 1,50,000 respectively. Depreciation is provided on a straight line basis. Annual Cash Inflows, expected to be generated for option 1 is Rs. 1,00,000 and Rs. 2,50,000 for option 2. The cost of capital is 15%.
You are required to calculate the following for each option:
(i) The payback period
(ii) The Accounting rate of return, based on average book value
(iii) The Net Present Value
(iv) The Internal Rate of Return.
As a Manager which option you would prefer, give reasons for your preference.
