Q1.Assure you have just started a Mobile store.

You sell mobile sets andcurrencies of Airtel, Vodaphone, Reliance and BSNL. Take five transactionsand prepare a position statement after every transaction. Did you firm earnprofit or incurred loss at the end? Make a small comment on your financialposition at the end.
Ans :- We shall consider five transactions and show how they are accounted for in thebooks of the business. 1. Mr. Rajesh brings Rs.100000 cash as capital into his business. 2. He purchases Mobile Set to his shop Rs.10000 3. He buys currencies for cash Rs.50000 4. He sells currencies worth Rs.30000 for Rs.40000 on credit to Arjun 5. He pays wages to servants Rs.1000 Transaction 1: The business receives capital in cash. Capital is a liability and cash isan asset to the business.Liability AssetCapital 100000 Cash 100000 Transaction 2: Mobile Set is purchased for cash. This transaction can be reflected as under.

Q2. (a) List the accounting standards issued by ICAI. (b) Write short notes of IFRS.
Ans :- (a) List the accounting standards issued by ICAI. :- To bring uniformity in terminology, accounting concepts, conventions, andassumptions, the Institute of Chartered Accountants of India (ICAI) establishedAccounting Standards Board (ASB) in 1977. An Accounting Standard is a selected setof accounting policies or broad guidelines. Example: While depreciating an asset the practice of adopting straight line method ordiminishing balance method or any other method is a convention regarding theprinciples and methods to be chosen out of several alternatives. There are altogether 32accounting standards issued by ASB out of which, one standard (AS8) has beenwithdrawn pursuant to AS26 becoming mandatory.

(b) Write short notes of IFRS. :- IFRS are standards, interpretations and framework for
the preparation andpresentation of financial statements. IFRS was framed by International AccountingStandards Board (IASB).

The objective of financial statement is to provide information about the financial position,performance and changes in the financial position of an entity. It should also provide thecurrent financial status of the entity to all the users of financial information. IFRS followsaccrual basis of accounting and the financial statements are prepared on the basis thatan entity will continue for the foreseeable future. IFRS helps entities access globalcapital market with ease

Q3 . Ans :Q4. Choose an Indian Company of your choice that has adopted Balance Score Card and detail on it.
Ans :- The Balanced Score Card is a framework for integrating measures derived fromstrategy. While retaining financial measures of past performance, the Balanced ScoreCard introduces the drivers of future financial performance. (Figure 1) The drivers(customer, internal business process, learning & growth perspectives) are derived fromthe organization's strategy translated into objectives and measures. The Balanced Score Card is more than a measurement system it can be used as anorganizing framework for their management processes. The real power of the BalancedScore Card is when it is transformed from a measurement system to a managementsystem. It fills the void that exists in most management systems - the lack of asystematic process to implement and obtain feedback about strategy

Q5. Ans.

Q6. What is a cash budget? How it is useful in managerial decision making?

Ans :- A proper control over cash is very essential. Cash is an important component inany activity. The control becomes inescapable. If cash is not properly managed or if it ismismanaged, the ultimate result would be disastrous. In many times and in manybusiness situations, business failures are noticed due to the lacunae found in the cashmanagement. Hence cash budgeting occupies a pivotal place in the study of FinancialManagement. Cash budgeting is the process of forecasting the expected receipts known as cashinflows, and expected payments known as cash outflows to meet the future obligations.The written statement of receipts and payments is known as the cash budget. It is acrystal ball which enables one to observe the future movements in cash position. It is amere forecast of cash position of an undertaking for a definite period of time. The periodmay be daily, weekly, monthly, quarterly, semi-annually, or annually. The major twocomponents of cash budget would be forecast first the cash receipts and then secondforecasting the cash disbursements. The receipts of cash are formatted as follows:

1. Opening balance of cash in hand and cash at bankThe Management Accounting Perspective of the Business EnterpriseThe management accounting view of business may be divided into two broadcategories: (1) basic features and (2) basic assumptions. Basic Features The business firm or enterprise is an organizational structure in which the basicactivities are departmentalized as line and staff. There are three primary line functions:marketing, production, and finance. The organization is run or controlled by individualscollectively called management. The staff or advisory functions include accounting,personnel, and purchasing and receiving. The organization has a communication orreporting system (e.g. budgeting) to coordinate the interaction of the various staffand line departmental functions. The environment in which the organization operatesincludes investors, suppliers, governments (state and federal), bankers, accountants,lawyers, competitors, etc.) The organizational aspect of the business firm is illustrated in Figure 2.1. Thisdescriptive model shows that there are different levels of management. A commonlyused approach is to classify management into three levels: Top management, middlemanagement, and lower level management. The significance of a hierarchy ofmanagement is that decision-making occurs at three levels.Basic Assumptions in Management Accounting The framework of management accounting is based on a number of impliedassumptions. Although no single work has attempted to identify all of the assumptions,. Five categories of assumptions will bepresented: 1. Basic goals 2. Role of management 3. Nature of Decision-making 4. Role of the accounting department 5. Nature of accounting information Basic Goal Assumptions - The basic goals or objectives the business enterprisemay be multiple. For example, the goal may be to maximize net income. Other goalscould be to maximize sales, ROI, or earnings per share. Management accountingdoes not require a specific of type of goal. However, whatever form the goal takes,management will at all times try to achieve a satisfactory level of profit. A less thansatisfactory level of profit may portend a change in management.Role of Management Assumptions - The success of the business dependsprimarily upon the skill and abilities of management which skills can vary widelyamong different managers. The business is not completely at the mercy of marketforces. Management can through its actions (decisions) influence and control eventswithin limits. In order to achieve desired results, management makes use of specificplanning and control concepts and techniques. Planning and control techniqueswhich management may use include business budgeting, cost-volume-profitanalysis, incremental analysis, flexible budgeting, segmental contribution reporting,inventory models, and capital budgeting models. Management, in order to improvedecision-making and operating results, will evaluate performance through the use offlexible budgets and variance analysis. Decision-making Assumptions-A critical managerial function is decisionmaking.Decisions which management must make may be classified as marketing,production, and financial. Decisions may also be classified as strategic and tacticaland long-run and short-run. A primary objective of decision-making is to achieveoptimum utilization of the businesss capital or resources. Effective decision-makingrequires relevant information and special analysis of data. Accounting Department Assumptions-The accounting department is a primary source of information necessary in making-decisions. The accounting departmentis expected to provide information to all levels of management. Management will consider the accounting department capable of providing data useful in makingmarketing, production, and financial decisions. Nature of Accounting Information - In order for the accounting department tomake meaningful analysis of data, it is necessary to distinguish between fixed andvariable costs and other types of costs that are not

important in the recording ofbusiness transactions. Some but not all of the information needed by management canbe provided from financial statements and historical accounting records. In addition tohistorical data, management will expect the management accountant to provide othertypes of data, such as estimates, forecasts, future data, and standards. Each specific 18 | CHAPTER TWO Management Accounting and Decision-Makingmanagerial technique requires an identifiable type of information. The accountingdepartment will be expected to provide the information required by a specific tool. Inorder for the accounting department to make many types of analysis, a separation ofcosts into fixed and variable will be required. The management accountant need notprovide information beyond the relevant range of activity