PES UNIVERSITY, BANGALORE-85

Bachelor of Business Administration

Course Plan

Course Code : UM14BB257 No. of Hours/Week: 4 Course Title : Management Accounting IA Marks : 50 Exam Hours: 3 hrs Exam Marks : 100 Total No. of Lecture Hrs: 52

Course coordinator: Mrs.Deepika Rathi

Course Description: This course aims to provide students with the basic concepts of management

accounting and introduces business management approach to the use of accounting information. The

course is intended as an introduction for individuals who make business decisions and evaluate the

performance of business units using data obtained from the accounting system.

Course Outcome: At the end of the course the students will be able to The student will be able to

1. Apply accounting knowledge in decision-making scenarios.

2. Analyzes, synthesizes, and evaluates from a wide variety of accounting information sources and

its implementation

COURSE PLAN (52 Hours)

No. SESSIONS TOPIC COVERAGE

Pedagogy % Cum.

MODULE I

1. Unit 1 Introduction of management accounting.

1 1 Lecture method

2. Definition of management accounting and its objectives

2 3 Lecture method & PPT both

3. Scope of management accounting and it different branches of accounting

2 5 PPT

4. Relationship of cost accounting financial accounting and management accounting

2 7 PPT & lecture both

5. Meaning of financial statement 3 10 Quiz method

6. Meaning & nature of financial statements

2 12 Lecture & PPT

7. Objectives of financial statements 2 14 PPT

8. Steps to analyze financial statements 2 16 Lecture method

9.

UNIT 2 Introduction of tools used for financial statement analysis

2 18 PPT method

10 Meaning of comparative analysis 2 20 Hand out solution

11 Problem of comparative analysis with its interpretation

2 22 Lecture method

12 Use of common size statement 1 23 Handout discussion

13 Analysis of Common size statement 1 24 Handout discussion

14 Trend analysis with practical application

3 27 Lecture method & ASSINGMNET 2

15 Meaning of ratios and its classification 2 29 Lecture method

16 Uses and limitations of ratio 2 31 Lecture method

17 Problems on ratios 2 33 White board

18 Ratios calculation on the basis of financial statements

2 35 Lecture method

19 Preparation of trading & loss account and balance sheet

2 37 Lecture method

20 Analysis of ratios 1 38 PPT method

ASSINGMENT-I & II TEST -1

MODULE-II

21 UNIT 3 Meaning& definition of Fund flow statement

2 40 PPT method

22 Procedure to prepare fund flow statement

2 42 Lecture method

23 Statement of change in working capital with practical

2 44 PPT method

24 Fund flow statement and its adjustments

2 46 PPT method

25 Numerical 3 49 Handout discussion

26 Meaning and significance of cash flow statement

2 51 Lecture method

27 Concepts of cash and cash equivalents 2 53 PPT method

28 Cash flow from operating and investing activities

3 56 Lecture method & Assignment 3

29 Preparation of cash flow statement 1

57

PPT

30 Practical problems 3 60 Discussion

31

Unit 4 Meaning of Marginal costing

2 62 Lecture method

32 Methods of computing break even analysis

2 64 Lecture method

33 Contribution and P/V ratio 3 67 Hand out discussion

34 Practical application of break even analysis

2 69 Lecture method

35 Analysis of break even point 2 71 Assignment 4

36 Absorption costing method 1 72 PPT

37 Pricing decisions 2 74 PPT and lecture

39 Make or buy decisions 2 76 Lecture method

40 Evaluation of shut down point 2 78 Hand out discussion

41 Some practical problems 2 80 PPT

42 Meaning and exploring foreign markets 2 82 PPT

ASSINGMENT 3&4

TEST II

MODULE

43

UNIT 5 Introduction of budgeting

1 83 PPT

44 Meaning and objectives of budgeting control

2 85 PPT

45 Advantages of budgetary control 1 86 Lecture method

46 Different types of budget 2 88 Numerical in lecture

47 Preparation of purchase budget 2 90 Lecture method

48 Preparation of production budget 2 92 Lecture method

49 Preparation of cash budget 2 94 Lecture method

50 Flexible budget 2 96 Assignment 5

51 Concept of zero based budgeting 2 98 Handout discussion

52 Practical problem of budget 2 100 Lecture method

Note: Handouts & case lets will be emailed before commencement of Modules

Internal Assessment:

TEST(BEST OF

TWO)

ASSINGMENT TERM PAPER ATTENDANCE

>85%

TOTAL

I II III

30 8 8 4 50

Each assignment consists of the questions prescribed from the question bank by the

coordinator related to that module.

Dead line for submission: after completion of each module.

RECOMMENDED SOURCES

Text Book:

1. Sharma and S.K.Gupta “Management Accounting”, Kalyani Publishers, New Delhi, 2006. Reference Books:

1. Dr. S.N. Maheswari. “Management Accounting”, Sultan Chand & Sons,

New Delhi, 2004.

2. M.Y Khan & P K Jain, “Management Accounting, Text, problems and cases”

McGraw,Hill Publication Fifth Edition Third reprint 2011.

3. S.P. Jain and K.L. Naran, “Cost and Management Accounting,”, Kalyani

Publishers; Thirteenth edition (2012)

4. S.K. Gupta, “Management Accounting”, Kalyani Publishers, New Delhi, 2011.

5. Pandey I.M. “Management Accounting”, Vikas publishing House, New Delhi,

Attendance (5Marks)

Marks for Attendance would be considered as mentioned below.

95 to100%- 4 Marks

90 to 94%- 3 Marks

86 to 89%- 2 Marks

85% - 1 Marks

(Permissions for sports/Fest/ other college related activities are treated as regular

attendance if it is prior approved.)

QUESTION BANK

SECTION A (2 MARKS)

Attempt all Questions briefly:

1. Define financial accounting

2. Define management accounting

3. Define objectives of management accounting

4. Define break even analysis?

5. CVP analysis

6. Marginal costing

7. Trend analysis

8. Common-size analysis

9. Current ratio

10. Acid –test ratio

11. Inventory turnover ratio

12. Debtors turnover ratio

13. Debt equity ratio

14. Meaning of “FUND”.

15. Profitability ratios.

16. Fund flow statement.

17. Cash flow statement

18. Concept of “CASH”

19. Meaning of Schedule change in working capital.

20. P/V ratio

21. Margin of safety

22. Break even chart

23. Flexible budget

24. Production budget

25. Sales budget

26. Master budget

27. Cash budget

28. Angle of incidence.

29. Investing activities

30. Operating activities

31. Financing activities

32. Funds from operations

33. Budgetary control

34. Contribution

35. Variable cost

36. Fixed cost

37. Meaning of budget

38. Profit centre

39. Cost accounting

40. Scope of management accounting.

SECTION B (5 MARKS)

1. Discuss the nature and scope of management Accounting. Also describe the steps required for

installing Management Accounting System.

2. Define Management Accounting. How does it differ from Financial and Cost Accounting? Explain

the utility of Management Accounting in Business Management.

3. Define Management Accounting. Explain the principles and conventions of management

accounting. What are the limitations of Management Accounting?

4. What is Marginal Costing? How is control exercised on costs through Marginal Costing Techniques?

5. What do you mean by Break-even Analysis? Discuss its advantages, assumptions and limitations.

6. Discuss the role of ‘contribution’ in marginal costing. Discuss the important areas of management

decisions helped by the application of variable costing technique. Also explain its limitations.

7. What do you understand by Responsibility Accounting? Explain the significance of responsibility

accounting. And discuss its problem in implementing in business.

8. What is a responsibility centre? Explain different types of responsibility centres. What are the

prerequisites in it’s in its implementation in an industrial organisation?

9. Define responsibility accounting. Explain how the management decides about the performance of

organization units.

10. What is budgeting and how is it exercised? Discuss the various advantages and essentials for the

success of budgeting.

11. What do you understand by Budgetary Control? Discuss the types and process for preparation of

budgets prepared.

12. What do you mean by flexible budget and explain its utility. How is differ from fixed budget.

Prepare a Performa of flexible budget of a manufacturing concern for imaginary activity levels in a

suitable form.

13. What do you mean by ‘financial statements’? How are these analysed? Explain various techniques

of it.

14. Explain the following and indicate their uses as techniques for financial statement analysis: a)

Comparative Balance Sheet b) Common Size Statement

15. “Ratios are indicators –sometimes pointer but not in themselves powerful tools of management.

In the wrong hands, ratios can be very dangerous as it is possible to draw incorrect conclusions from

them particularly when based on insufficient detailed data.” Discuss. (Hint: Meaning and importance

of Ratio Analysis, Limitations and how to overcome from these limitations)

16. What is a ‘Fund Flow Statement’? Explain the importance and limitations of fund flow statement.

17. What do you mean by ‘funds’ and ‘flow’? Explain different sources and applications of fund, with

suitable illustrations.

18. Distinguish between ‘Fund Flow’ and ‘Cash Flow’ Statement. What are the advantages of

preparing Cash Flow Statement?

19. How is Cash Flow Statement prepared? Explain with the help of suitable illustration.

20. What do you mean capital budgeting? Explain the different methods of capital budgeting.

SECTION C (10 Marks)

1. From the following data of AB Ltd., calculate

(a) PI V Ratio

(b) Break -even sales

(c) Sales required to earn profit of Rs. 8,00,000

Fixed expenses rs1,00,000

Variable Cost per unit:

Direct Material = Rs. 7

Direct Labour = Rs. 2

Direct Overheads = 100% of Direct Labour

Selling price per unit = Rs. 15

2. Comment upon:

(a) Dupont Analysis

(b) Utility of Cash Flow Statement

(c) Budgetary control

3. "Management Accounting is the presentation of accounting information in such a way as to assist

the management in the creation of policy and in the day to day operations of an organization."

Elucidate.

4. "Budgetary Control brings planning, coordination and control." Elucidate the statement.

5. Explain the concept of responsibility accounting. What are the prerequisites of responsibility

accounting? Also, explain the various cost centers in this regard.

6. Calculate currents assets of a company for the following information:-

(a) Stock Turnover Ratio : 4 Times

(b) Stock of the end of year is Rs.20,000 more than stock in the beginning.

(c) Sales Rs. 3,00,000.

(d) Gross Profit Ratio 25%.

(e) Current Liabilities Rs.40,000.

(f) Quick Ratio 0.75.

7. Convert the following balance sheets into common size balance sheets and make a brief comments..

liablities 1983(rs) 1984(rs) assets 1983(rs) 1984(rs)

Share capital 5,00,000 6,50,000 Machinery 2,80,000 3,20,000

6% debentures 3,40,000 2,00,000 building 3,50,000 3,50,000

Sundry creditors 1,60,000 67,000 investment 2,40,000 2,65,000

Provision for

doubtful debts 4,500 3,000 goodwill 70,000 55,000

Profit & loss a/c 75,500 1,65,000 Bank balance 40,000 30,000

inventory 60,000 40,000

Bills receivable 40,000 25,000

total 10,80,000 10,85,000

10,80,000 10,85,000

8. The income statement of sanyasi Ltd. Are given below for the yrs 2013 and 2014. Convert them into

Common-size income statement and interpret the changes.

Income statement for the year ending 2013 and 2014

Particulars 2013(rs) 2014(rs)

Operating expenses

Selling & distribution

expenses 23,000 24000

Administrative expenses 12,700 12,500

Total expenses 35,700 36,500

Operating income 69,300 1,48,500

Other incomes 1,200 8,050

70,500 1,56,550

Non-operating expenses 1,750 1,940

Net profit during the

year 68,750 1,54,610

10. From the following particulars, pertaining to Mohan Ltd., you are required to prepare a

comparative Income Statement and interpret the changes

Particulars 2013(rs) 2014(rs)

Gross sales 7,25,000 8,15,000

Less: sales returns 25,000 15,000

Net sales 7,00,000 8,00,000

Less: Cost of sales 5,95,000 6,15,000

Gross profit 1,05,000 1,85,000

Particulars RS Rs.

Sales 58,000 65,200

Cost of goods sold 47,600 49,200

Administrative expenses 1,016 1,000

Selling expenses 1,840 1,920

Non-operating expenses 140 155

Non-operating income 96 54

Sales returns 2,000 1,200

taxes 43.75% 43.75%

11. The following are the Balance Sheets of Gokul Ltd., for the years ending 31st December, 2000,2001

Particulars 2000 2001

Liabilities

Equity share capital 2,00,000 3,30,000

Preferences 1,00,000 1,50,000

Reserves 20,000 30,000

P& L 15,000 20,000

Bank overdraft 50,000 50,000

Creditors 40,000 50,000

Provision for taxation 20,000 25,000

Proposed dividend 15,000 25,000

Total 4,60,000 6,80,000

Fixed assets 2,40,000 3,50,000

Less: depreciation 40,000 50,000

Stock 1,00,000 1,25,000

Bills receivable 20,000 60,000

Prepaid 10,000 12,000

Cash in hand 40,000 53,000

Cash at bank 10,000 30,000

Total 4,60,000 6,80,000

12. From the given Balance Sheets calculate:

(a) Debt-equity ratio

(b) Liquid ratio

(c) Fixed assets to current assets ratio

(d) Fixed assets to Net worth ratio

Balance Sheet

Liability Rs.

Share Capital 1,00,000

Goodwill 60,000

Reserve 20,000

Fixed assets (Cost) 1,40,000

Profit and Loss a/c 30,000

Stock 30,000

Secured Loans 80,000

Debtors 30,000

Creditors 50,000

Advances 10,000

Provisions for taxation 20,000

Cash 30,000

Total 3,00,000

13. A company has a profit margin of 20% and asset turnover of 3 times.

What is the company's return on investment? How will this return on investment vary if (i) Profit

margin is increased by 5%?

(ii)Asset turnover is decreased to 2 times?

(iii)Profit margin is decreased by 5% and asset turnover is increased to 4 times.

Calculation of impact of change in profit margin and change in asset turnover on return on

investment.