MCS Degree Alagappa University Model Question Paper Distance Education : www.alagappauniversity.ac.in

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Document Described : Alagappa University
DISTANCE EDUCATION
M.C.S. DEGREE EXAMINATION, MAY 2011.
CORPORATE ACCOUNTING
(Old and 2002 onwards)
Time : Three hours Maximum : 100 marks

http://www.alagappauniversity.ac.in/...9&college_id=2
http://www.alagappauniversity.ac.in/...aper/1-MCS.doc

SECTION A — (5 ? 8 = 40 marks)

Answer any FIVE questions.
All questions carry equal marks.

1. Define the term ‘cash flow’. Explain the objectives of cash flow analysis and also state the procedure of preparing cash flow statement.

2. What are liquidity ratios? Discuss their significance.

3. Explain various methods of valuation of shares.

4. Give the steps for redemption of redeemable preference shares.

5. Mithilesh Kumar Ltd. went into voluntary liquidation on 01.01.2008. The liquidator's remuneration is 2 % on assets realised and 1 % on distribution among shareholders from the following information prepare liquidators final statement :
Assets realised Rs. 5,00,000
Expenses on liquidation Rs. 9,000
Unsecured creditors Rs. 62,000
Salaries and wages outstanding Rs. 6,000
5,000 6% preference share capital (dividend paid upto 01.01.2006) Rs. 1,50,000
10000 equity share capital Rs. 90,000
General Reserve Rs. 1,20,000
As per the Articles of Association of the company the preference shareholders have the right to receive 1/3 of surplus remaining after paying equity share capital.

6. Aarthy Company Ltd. is considering the purchase of a new machine. Two alternative machines A and B have been suggested each costing Rs. 4,00,000. Earnings after taxation are expected to be as follows :
Cash flow
Machine A Machine B
Rs. Rs.
Year
1 40,000 1,20,000
2 1,20,000 1,60,000
3 1,60,000 2,00,000
4 2,40,000 1,20,000
5 1,60,000 80,000
The company has a target of return on capital of 10% and on this basis you are required to compare profitability of the machines and state which alternative you consider financially preferable :
Note : The present value of Re. 1.
Year P.V. Factor
1 0.91
2 0.83
3 0.75
4 0.68
5 0.62

7. H Ltd. acquired all the shares in S Ltd on 1st January 2008 and the Balance sheet of two companies on
31st March 2008 were as follows :
Liabilities H ltd. S Ltd. Assets H Ltd. S Ltd.
Rs. Rs. Rs. Rs.
Share capital 50,000 30,000 Sundry assets 65,000 70,000
Reserve on 1.4.2007 20,000 15,000 Shares in
Profit and Loss A/c 25,000 10,000 ‘S' Ltd. at cost 50,000 -
Sundry creditors 20,000 15,000
1,15,000 70,000 1,15,000 70,000
The Profit and Loss Account of S Ltd. had a credit balance of Rs. 3,000 on 1st April 2007. Prepare a consolidated Balance Sheet as on 31st march 2008.

8. The following information is given :
Current ration : 2.5
Fixed assets turnover ratio : 2 times
Liquidity ratio 1.5
Average debt collection period : 2 months
Net working capital Rs. 3,00,000
Stock turnover ratio : 6 times
Fixed assets : Share holders networth 1 : 1
Gross profit ratio : 20%
Reserves : Share capital 0.5 : 1
Draw up a Balance Sheet from the above information.