DEC 1999

Question Paper of CS-54 – Finance & Accounting On Computers of Dec 1999 from IGNOU

Note : Question 1 is compulsory. Attempt any three from the rest.

(a). In about one short paragraph, explain the meaning of the following words or phrases :

(i). Financial Accounting
(ii). Contingent liability
(iii). Opportunity Costs
(iv). break-even Analysis
(v). Return on Equity

(b). State the group of persons having an interest in an business organisation and examine the nature of their information heads.

(c). Accounting is closely and connected with control. Elaborate the statement and discuss the role of accounting feedback in the process of control.

2. A travel constancy firm offers to prospective vacationers a range of information on a range of information on destinations, alternative tour packages and special offers. In view of its success and now large patronage, it decides to computerize its operations and has a choice of two systems on which to offer these services :

Under option A, a computer system would be leased for Rs. 50 lakhs per year and the customer request. Under option B, another system could be leased for Rs.100 per request.

The customer’s requirements are fully met by either of the above options and he is happy to pay Rs. 180 per query. On the basis of the above data :
(i) Which option is more risky ?
(ii) Which plan has more operating leverage ?
(iii) Construct break-even charts for the two options
(iv) At what volume of business would the operating profit under either option be the same.

3. What is a variance ? Why are the variances computed ? How can the variances controlled?

4. Distinguish between Master budget and Financial budget. How does management make use of Master budget ? Explain the utility of computers in this respect.

5. Do you think that different factors affecting capital structure decision will be viewed differently by different companies ? Support your answer with suitable examples.

(a) “Dividend can be paid only out of profits.” Explain this statement. Will a company be justified in paying dividends when it has unwritten-off accumulated losses of the past ?

(b) what are the limitations of current computer based accounting systems which inhibit their greater spread and usage ?

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