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MANAGEMENT PROGRAMME Term-End Examination December, 2015 MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS Time : 3 hours Maximum Marks : 100 Note : (i) Attempt any five questions. (ii) All questions carry equal marks. (iii) Use of calculators is allowed.

1. (a) Explain the 'Accrual Concept' and the 'Consistency Concept' in accounting and signify their importance to an accountant.

(b) Distinguish between 'Operating Profit' and 'Net Profit'. Which is a measure of operational efficiency of a company ? Distinguish between Capital expenditure and Revenue expenditure. Which is taken into account for determining the Operating Profit ?

2. What do you understand by Fund Flow Statement ? How does it differ from a Cash Flow Statement ? Explain the main items which are shown in the fund flow statement and the purpose of preparing this statement. 3. What do you understand by Discounted Cash Flow Techniques of Capital Budgeting ? Briefly explain the Net Present Value Method and Internal Rate of Return Method of appraisal of projects. Which of the two would you rank better and why ?

4. Distinguish between : (a) Profitability Index and Profitability Ratios. (b) Earnings Yield and Dividend Yield. (c) Fixed Budget and Flexible Budget. (d) Direct Labour Rate Variance and Direct Labour Efficiency Variance.

MANAGEMENT PROGRAMME Term-End Examination June, 2015 MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS . 1. (a) What do you understand by Accounting Standards ? How do they differ from Accounting Concepts ? Why should the accounting practices be standardised ? Explain. (b) Explain the 'Money Measurement Concept' and the 'Accrual Concept'. What are the limitations of the former concept ? Explain.

 2. (a) What are intangible assets of a firm ? Why are they shown in the Balance Sheet ? What is meant by amortisation of such assets ? Give reasons for the same.

 (b) What do you understand by Appropriation of profits of a company ? How are the profits appropriated ? What will be the effect on appropriation of profit of a company if : MS-4 1 P.T.O. the company has issued debt instead of equity shares to finance its activities, and the accountant has treated a revenue expenditure as capital expenditure. 3. What do you understand by cost of capital ? What is its significance in financial decision making ? Explain how is the weighted average cost of capital computed ? 4. Distinguish between : (a) Contingent liabilities and accrued liabilities. (b) Funds from Operations and Net Profit (c) Straight line Method and Written down Value Method of charging depreciation (d) Direct Material Price Variance and Direct Material usage Variance 5. (a) "Other things remaining the same, firm with relatively stable sales are able to incur relatively high debt ratio". Do you agree with this statement ? Give reasons for your answer. (b) Explain fixed budget, flexible budget and rolling budget. Point out the differences between them and explain their utility for a firm.

MS-4 -   june-2007

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

1. (a) Explain the Continuity concept and the Periodicity concept and discuss their significance.

(b) Explain the nature of accounting function and describe the role played by the Accountant in a business organisation.

2. The following items appear on the Trial Balance prepared from the books of Mr. Kamal Saxena as on 31st March 2006 after making necessary adjustments for depreciation on fixed assets, outstanding and accrued items and placing the difference under Suspense Account.

MS-4 -   june-2008

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

l. (a) What do you understand by the concept of conservatism ? Why is it also called the concept of prudence ? Why is it not applied as strongly today as it used to be in the Past ?

(b) What is a Balance Sheet ? How does a Funds Flow Statement differ from a Balance Sheet ? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement'

2. (a) Why does depreciation need to be provided on fixed assets and what are the usual methods of providing depreciation

MS-4 -   june-2009

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

1. 'Management Accounting is an extension of financial Accounting'. Explain how is Management Accounting..an effective tool of financial control ? Discuss.

2. Explain the cost concept and the concept of conservation. Why are assets shown at cost even when this market prices far exceeds the cost ? Give reason.

3.Why are Reserves created at the time of preparing the final accounts ? Distinguish

MS-4   june-2010

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

1."In managing cash, the finance manager faces the problem of compromising the conflicting goals of liquidity and profitability". Comment on this statement. How would you determine the optimum cash balance in a business organisation ?

2. What is meant by appropriate capital structure ? Discuss the determinants and features

of an appropriate capital structure for a corporate body.

MS-4   june-2011

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

1. (a) What do you understand by capitalisation of earnings ? How is the value of a firm

ascertained with the help of its earnings ? Explain with an example.

(b) How can accounting reports, prepared on a historical basis after the closure of an accounting period, be useful to mangers in directing the activities of a business ? Discuss.

MS-4   Dec, 2007

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

l. (a) What dq you understand by Accounting Standards ? How do they differ from Accounting Concepts ? Why should the accounting practices be standardised ?

(b) Why are the fixed assets shown at their book value rather than their market value, even if the latter has appreciated significantly ? Give reasons.

2. (a) How would Explain the you compute the cost of goods sold ? Explain two methods of inventory valuation

MS-4   Dec, 2008

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

l. (a) Explain the Money Measurement Concept and the Accrual Concept. What are the limitations of the former concept. Explain.

(b) What do you understand by Accounting Standards ? Why are they necessary ? Explain with examples.

MS-4   Dec, 2009

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

1. (a) What do you understand by Internal Audit ? How do the functions of an internal auditor differ from that of External Auditor ?

(b) Explain the consistency concept and Accrual Concept of Accounting. How is the Accrual Concept adhered to while preparing the final accounts of a company ?

2. (a) What are intangible assets of a firm ? Why are they shown in the Balance Sheet ? What is meant by amortisation of such assets ? Give reason for the same.

MS-4   Dec, 2010

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

MS-4   Dec, 2011

MS-4 : ACCOUNTING AND FINANCE FOR MANAGERS

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.