JUN 2001

Question Paper of CS-54 – Finance & Accounting On Computers of June 2001 from IGNOU

Time : 3 Hours
Max. Marks : 75

Note : There are 6 questions in the paper. Question no. 1 is compulsory and carries 35 marks. From the remaining attempt any two questions. Each of these carries 20 marks.

(a) Explain the following terms in about 10 lines each :
i) Social Responsibility Accounting
ii) Accrual Concept
iii) Operating Profit
iv) Opportunity Cost
v) Margin of Safety

(b) Discuss the scope of modern accounting.

(c) What factors affect the working capital requirements? Explain briefly.

(a) Anil invested Rs. 40,000 of his own in a florist shop and borrowed another Rs. 20,000 from a bank for business use. At the end of first year of operations, he found Rs. 72,000 in his shop’s bank account. He owed his suppliers Rs. 12,000 and had not repaid the bank loan. He had no other business assets other than cash. During the year he paid himself a salary of Rs. 24,000
i) What conclusions would you draw from his first year’s operations?
ii) For what decisions could this information be used?

(b) From the following data :

Selling Price 40 per unit
Variable manufacturing cost 20 per unit
Variable selling cost 10 per unit
Fixed factory overheads 10,00,000 per year
Fixed selling costs 4,00,000 per year

Calculate :
i) Break-even point expressed in rupee sales.
ii) Number of units that must be sold to earn a profit of Rs. 2,00,000 per year.

3. Distinguish between Direct Material Price Variance and Direct Material Usage Variance. What causes could lead to material usage variances?

4. What do you mean by fixed Assets? Are all fixed assets depreciable?

5. What factors could a company in general consider before it takes a decision on dividends? 6.
(a) The margin of profit of Apex Industries is 10 percent, its total assets turnover ration is 2 times, and its equity/total assets ration is 40 percent. What would be the company’s rate of return on equity ?

(b) If the net profit margin of the above firm is 25 percent, and the ROI percent, what would be the total assets turnover ratio ?

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