END TERM EXAMINATION
MANAGEMENT ACCOUNTING (I)
MODULE I, OPGDM, 2025
(Open Book Exam. Please fill up the numbers and complete the answer
sheet template)
Time – 3 hours Marks - 30
Parvez, the promoter of Radiance Architect, had sought your help for the preparation of
the financial statements on the basis of the information set out below. He had to also pay a
tax of 25% on the profit calculated.
RADIANCE ARCHITECT
In April 2019, Mr Parvez Alam did set himself up as a consulting architect after retiring from a
real estate company. While his primary interest was in building institutional complexes, he
had advised some wealthy clients on designing their residential homes. Radiance was doing
pretty well under the leadership of Parvez but how well was difficult to define in absence of
financial statements. Parvez was somewhat allergic to accounting as he felt that it stifled creative
and innovative abilities.
In early April 2024 Parvez approached his banker to extend a line of credit to sustain the business
growth. The banker asked him to submit his tax return along with the required financial
statements, i.e. a profit and loss statement in respect of his operations as well as a balance
sheet as at March 31, 2024. Parvez felt that some attempt had to be made to put together a set
of accounts to satisfy the banker and tax authorities. He instructed Miss Joshi, the young lady
who acted as his secretary, to collect all the necessary details relating to billing made, cash
received, expenses incurred, assets held and outstanding amounts due to suppliers and others
relevant to the period.
Miss Joshi assembled the following data:
1. Business assets consisted primarily of office furniture and equipment which were
acquired on April 1, 2019. It was decided that these assets should be depreciated at the
rate of 10% per year on written down value. The acquisition cost of these assets was
Rs 3,50,000.
2. There were shares and debentures worth Rs 15, 00,000 at the beginning of the
accounting period 2023-24.
3. Cash balance and inventory on March 31, 2023 were Rs 7,12,000 and Rs 70,000
respectively
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4. The office records showed that the following cash had been received during the year
ended March 31, 2024.
(a) Collections relating to bills raised on clients 23,45,000
Dividends and interest received from stocks and
(b) 1,19,000
debentures
Parvez was rather happy about the fact that while actual billings during the period
2023-24 were Rs 20,79,000 while the cash received from clients was Rs 23, 45,000.
Miss Joshi also informed that some of the clients, who were personal friends of Parvez,
did not pay their fees in 2022-23. The estimate of such amounts was Rs 5, 50,000.
A thorough analysis of the stubs of used cheque books disclosed that the following payments
were made during that period:
Items Amount in RS
Salaries of architects 10,51,820
Supplies used for prototypes 4,02,850
Rent for Office Premises 1,84,800
Professional association Fees 35,000
Shares purchased 1,68,000
Amount withdrawn by Parvez for personal expenses 5,60,000
Selling, & Administrative Expenses 1,26,000
Total 25,28,470
Ms Joshi found that the following bills were outstanding at the end of 2023 and 2024
respectively:
Outstanding on March Outstanding on March
2023 2024
Salaries of architects 11,900 17,500
Supplies used for prototypes 57,400 45,150
Rent for Office Premises 14,000 16,800
Selling, & Administrative Expenses 5,600 1750
Total 88,900 81,200
Ms Joshi also informed that the inventory of supplies material as at the end of March 31,
2024 was Rs 1, 10,000.
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