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Q. Babu Rao is an officer on special duty in the project analysis wing of the Finance department. His job is to look at the financial and economic viability of projects. Given the available budget, the projects with higher returns are picked up for funding or seeking aid from external donors. Although the procedure is involved, its principles are simple. The analysts calculate for each year of the project’s useful life, the expected expenditures and revenues. As these flows occur in different years, they have to be made comparable. For this purpose, the revenue and expenditure flows are discounted using a particular interest rate. Discounting means that their magnitudes are reduced by using a factor based on the interest rate. Due to discounting, the actual numbers of future streams of expenditure and income become smaller. The same numbers of expenditure and income of say year 5 will become smaller than those of year 3. The present values of future income and expenditure depend on two factors: interest rate and the future year in which they occur. In this process, the present value of the numbers of later years in future becomes less than that of earlier years in future. These income (benefit) and expenditure (cost) streams, which are reduced to their present values, are added and compared. In short, the projects which have higher benefit-cost ratios in terms of present values are selected for funding.

In this process, a pet project of a powerful minister is dropped. The incensed minister calls Babu Rao for discussion. Babu Rao tries to explain things. But the minister berates him for slashing the solid Rs 100 crore revenue of seventh year to almost Rs 15 crore. After some discussion, the minister realises that if the interest rate used for discounting expenditure and revenue flows is reduced, the project will become viable. He asks Babu Rao to cut that rate. Babu Rao refuses saying that the rate is prescribed by the Department of Economic Affairs.

Question

What should Babu Rao do in the above circumstances?

1. Follow minister’s orders.
2. Babu Rao should give up his narrow accounting perspective and adopt a wider social point of view.
3. He should politely express his inability to follow the minister’s instructions.
4. He should tell the minister that he would write to the Department of Economic Affairs seeking a lowering of the rate of interest.

The cheque which is issued by us, but payment has not been deducted from our bank account at the end of a particular year is called?

Prepare a trading and profit and loss account of M/s Green Club Ltd. for the year ending December 31, 2010 from the following figures taken from his trial balance

$\begin{array}{cccc}\text{Account Title}& \text{Amt. (Rs.)}& \text{Account Title}& \text{Amt. (Rs.)}\\ \text{Opening Stock}& 35,000& \text{Sales}& 2,50,000\\ \text{Purchase}& 1,25,000& \text{Purchase Return}& 6,000\\ \text{Return Inwards}& 25,000& \text{Creditors}& 10,000\\ \text{Postage and Telegram}& 600& \text{Bills Payable}& 20,000\\ \text{Salary}& 12,300& \text{Discount}& 1,000\\ \text{Wages}& 3,000& \text{Provision for Bad Debts}& 4,500\\ \text{Rent and Rates}& 1,000& \text{Interest Received}& 5,400\\ \text{Packing and Transport}& 500& \text{Capital}& 75,000\\ \text{General Expenses}& 400& & \\ \text{Insurance}& 4,000& & \\ \text{Debtors}& 50,000& & \\ \text{Cash in Hand}& 20,000& & \\ \text{Cash at Bank}& 40,000& & \\ \text{Machinery}& 20,000& & \\ \text{Lighting and Heating}& 5,000& & \\ \text{Discount}& 3,500& & \\ \text{Bad Debts}& 3,500& & \\ \text{Investment}& 23,100& & \\ & \overline{\underset{–}{\underset{–}{3,71,900}}}& & \overline{\underset{–}{\underset{–}{3,71,900}}}\end{array}$

Adjustments

1. Depreciation charged on machinery 5% p.a.

2. Further bad debts Rs. 1,500, discount on debtors 5% and make a provision on debtors 6%.

3. Wages prepaid Rs. 1,000.

4. Interest on investment 5% pa.

5. Closing stock Rs. 10,000.

From the details given below, find out the credit sales and total sales.

$\begin{array}{cc}& (Rs.)\\ \text{Opening Debtors}& 45,000\\ \text{Closing Debtors}& 56,000\\ \text{Discount allowed}& 2,500\\ \text{Sales returns}& 8,500\\ \text{Irrecoverable Amount}& 4,000\\ \text{Bills receivables received}& 12,000\\ \text{Bills receivables dishonoured}& 3,000\\ \text{Cheque dishonoured}& 7,700\\ \text{Cash Sales}& 80,000\\ \text{Cash received from Debtors}& 2,30,000\\ \text{Cheque received from Debtors}& 25,000\end{array}$

जॉर्ज
पंचम की लाट पर
किसी भी भारतीय
नेता,
यहाँ
तक कि भारतीय
बच्चे की नाक
फिट न होने की
बात से लेखक किस
ओर संकेत करना
चाहता है।

The following balances of ledger of M/s Marble Traders on April 1, 2011

$\begin{array}{cc}& \text{Rs}\\ \text{Cash in hand}& 6,000\\ \text{Cash at bank}& 12,000\\ \text{Bills receivable}& 7,000\\ \text{Ramesh (Cr)}& 3,000\\ \text{Stock (Goods)}& 5,400\\ \text{Bills payable}& 2,000\\ \text{Rahul (Dr)}& 9,700\\ \text{Himanshu (Dr)}& 10,000\end{array}$

Transactions during the month were

$\begin{array}{ccc}\text{April}& & \text{Rs}\\ 01& \text{Goods sold to Manish}& 3,000\\ 02& \text{Purchased goods from Ramesh}& 8,000\\ 03& \text{Received cash from Rahul in full settlement}& 9,200\\ 05& \text{Cash received from Himanshu on account}& 4,000\\ 06& \text{Paid to Ramesh by cheque}& 6,000\\ 08& \text{Rent paid by cheque}& 1,200\\ 10& \text{Cash received from Manish}& 3,000\\ 12& \text{Cash sales}& 6,000\\ 14& \text{Goods returned to Ramesh}& 1,000\\ 15& \text{Cash paid to Ramesh in full settlement}& 3,700\\ & \text{Discount received}& 300\\ 18& \text{Goods sold to Kushal}& 10,000\\ 20& \text{Paid trade expenses}& 200\\ 21& \text{Drew for personal use}& 1,000\\ 22& \text{Goods return from Kushal}& 1,200\\ 24& \text{Cash received from Kushal}& 6,000\\ 26& \text{Paid for stationery}& 100\\ 27& \text{Postage charges}& 60\\ 28& \text{Salary Paid}& 2,500\\ 29& \text{Goods purchased from Sheetal Traders}& 7,000\\ 30& \text{Sold goods to Kirit}& 6,000\\ & \text{Goods purchased from Handa Traders}& 5,000\end{array}$

Journalise the above transactions and post them to the ledger.

Matching concept means:

Which account is credited while passing the adjustment entry for outstanding expenses?

How does Forster use the analogy of Scheherazade to establish his point ?

State the types of life insurance policies.

Fill in the blanks.

The payment to a creditor will be shown on ___?

Distinguish between the straight-line method and written down value method of calculating depreciation.

Which of the following is correct with regards to repair expenditure done on machinery?

Give the meaning of rebate.

The characteristics of a current asset would not include:

'Capital is a liability for the business'.Explain this statement with the principle applied.

Or

Explain the business entity principle with the help of an example.

Nancy is an accountant incharge of preparing financial statements for ABC Ltd. Nancy asks for ABC’s records to support its payables and receivables, but officials of ABC say it will be too much work to get. They say to go with the numbers in the accounting system. Which of the following principles of accounting shall be violated if Nancy accepts the suggestion as given by the officials?

_____ cheques are issued by the business but not yet presented to bank.

What is petty cash book? How is it prepared?

“Vinod” Engineering Works purchased a machine on 1st April 2001 for Rs.1,80,000 and spent Rs.20,000 on its installation.

On 1st January 2002, it purchased another machine for Rs.2,40,000. On 1st July 2003, the machine purchased on 1st April, 2001 was sold for Rs.1,45,000. On 1st October, 2003 another machine was purchased for Rs.4,00,000.

Prepare Machinery Account from 2001 to 2003 after charging depreciation 10% p.a. by diminishing balance method. Accounts are closed on 31st December every year.

The downturn in the economy last year has prompted many companies to make widely publicized layoffs, resulting in thousands of lost jobs. Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending, even if their jobs were secure, in anticipation of coming hard times. However, this prediction has not come to pass, since there has been no increase in the amount of money set aside by the general public in savings accounts.
Which one of the following is an assumption on which the argument depends?

When sales book is undercast, which of the following accounts will have error?

बदलू के मन में ऐसी कौन-सी व्यथा थी जो लेखक से छिपी न रह सकी।

When cash is brought into the business as capital, which account is debited?

Raju
purchases 10 pens for Rs 150 and Manish buys 7 pens for Rs 84. Can
you say who got the pens cheaper?

Permanent accounts are ________ variable, while temporary accounts are _______ variable.

Mr. Ajay has taken an insurance policy from Bajaj Life Insurance Corporation & has given instruction to bank to pay the insurance premium monthly i.e. Rs 10,000 by deducting the amount automatically from the account. The bank reconciliation statement was not prepared for 4 months by him & after 4 months the cash book & bank pass book showed a difference. What according to you could be the probability?

If a transaction is completely omitted from the books of accounts, will it affect the agreement of a trial balance?

How
does Rawls use the idea of a veil of ignorance to argue that fair and
just distribution can be defended on rational grounds?

What is retirement of a bill of exchange?

How did the narrator adjust to the ways of life first in London and then in Cambridge, U.S.A.?