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Finance
Management
1.(a) How
does an accountant follow the principle "anticipate no profit, provide for
all losses" ? On which accounting concept is this based ? Explain it and
discuss its significance.
(b)
Distinguish between Financial Accounting and Management Accounting. What is the
most important role of a Management Accountant in a business organisation ?
Discuss.
2.(a)
Distinguish between revenue expenditure and Capital expenditure. How are they
treated while preparing the final accounts ? If by mistake the accountant of a
firm treats a capital expenditure as revenue expenditure, how will it affect
the final accounts of the' firm ? Give an example.
(b) Why is
depreciation charged ? Explain the two methods of charging depreciation. In
which method the value of the asset is reduced to zero earlier ? Which one is
more rational ? Explain why ?
3.
"Financial Leverage is one of the important considerations in planning the
capital structure of a company." Explain this statement giving an example.
Briefly describe the other factors which are also considered while planning the
Capital structure.
4.
Distinguish between :
(a)Profit
maximisation and Wealth maximisation goals.
(b)Accounting
Rate of Return and Internal Rate of Return.
(c)Operating
Cash flows and Financial cash flows.
(d)Direct
Labour Rate Variance and Direct Labour Efficiency Variance.
5. Explain
fully the following statements :
(a)"Break
- even Analysis is not without limitations".
(b)"Lenders
prefer high interest coverage ratio but a low debt-equity ratio".
(c)"Weighted average cost
of capital would always be higher, if market value weights are used."
(d)Zero -
based budgeting is a better alternative to traditional method of budgeting.
6.(a)
"Sales Budget forms the basis on which all other budgets are built ."
Explain.
What factors
are taken into consideration while preparing the sales budget ? Discuss.
(b) What is
Rolling Budget ? How does it differ from flexible Budget ? What purposes do
these budgets serve ? Explain.
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