MS04 ignou assignment solution 20



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MS04 ignou assignment solution 2020 July

Q1. Explain the meaning of Generally Accepted Accounting Principles? Discuss in brief about the Accounting Concepts that are being followed in your Organisation. Give your suggestions if any.

Q2. Discuss the methods of depreciation and how these methods differ from each other.

Q3. You are required to Compute all variances for a product X, the standard cost data per unit of output for which are as follows:

Direct material:

20kg @ Rs.10per kg

Direct labour:

12 hours at Rs. 5.50 per hour

Variable overheads:

12 hours at Rs. 10 per hour

Fixed overheads:

Rs.9,00,000 per month based on a normal volume of 60,000 direct labour hours

Selling price:

Rs. 600 per unit


The costs incurred and other relevant information for the month of June2020 are as under

Direct material used:

1,00,000 kg at a cost of Rs. 10,50,000

Direct wages paid:

Rs. 3,10,000 for 62,000 hours worked


Rs.15,26,000 out of which a sum of Rs.9,40,000 is Fixed

Actual output:

4,800 units sold for Rs. 28,32,000


Assume no stocks of work-in-progress or finished goods at the beginning or at the end of the month.


Q4. Alpha Ltd is considering the purchase a new machine, the details of the machines from which it is to select one are as follows:

The company follows the straightline method of depreciation, the estimated salvage value of both the types of machines is zero. You are to advise which is the most profitable investment based on (i) Payback period (ii) Accounting Rate of Return and (iii) Net Present Value assuming a 10% cost of capital.


Q5. Explain the Concepts of Working Capital. Why is management of working capital important for any business? Discuss the various factors that are taken into consideration while deciding the working capital requirements of the business.

Previous Jan 2020

  1. “Accounting is closely connected with Control”. Elaborate the statement and discuss the role of accounting feedback in the process of control.
  2. Prepare Funds Flow Statement and Cash Flow Statement for the year ending March 31, 2019 from the information given below.
    • images
    • Profit from operations after providing Rs. 10,000 as depreciation on Building and Rs. 10,000 on Machinery and Rs. 5,000 as amortization on Patents for the year April ’18-March ’19 was Rs. 35,000. Other revenues for the year were Rs. 40,000. An old machine with original cost of Rs. 15,000 was sold at a loss of Rs. 5,000.
  3. A company requires capital funds of Rs. 5 crores and has two options: (i) To raise the amount by the issue of 15% debentures, and (ii) To issue equity shares at a rate of Rs. 20 per share. It already has 40 lacs equity shares issued and debt financing of Rs. 6 crores at the rate of 12%. Find out the expected EPS under both financing options at the given EBIT levels of Rs. 2 crores and Rs. 7.5 crores. What should be choice of the company given that the applicable tax rate is 50%?
  4. Explain the meaning of Variance. Taking a suitable example explain how material variances can be computed.
  5. In organisation of your choice try to find out the factors that are taken into consideration while making the dividend decision.

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Q1. What is the importance of Accounting Concepts in the preparation of Financial Statements? After going through the concepts discussed in the course material, do you find any of these concepts conflicting with each other. If yes explain it with the help of an example.

Fundamental accounting concepts are broad general assumptions which underline the periodic financial statements of business enterprises. The reason why some of these terms should be called concepts is that they are basic assumptions and have a direct bearing on the quality of financial accounting information. The term ‘convention’ is used to signify customs or tradition as a guide to the preparation of accounting statements.