JUNE 2000

Question Paper of CS-54 – Finance & Accounting On Computers of June 2000 from IGNOU

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) In about one short paragraph, explain the meaning of the following words or phrases:
(i) Management Accounting
(ii) Owner’s Equity
(iii) Imputed or Hypothetical Costs
(iv) Marginal Costing
(v) CVP Analysis

(b) Discuss the role of accountants in modern business organisations

(c) What is a Balance Sheet and what information does it convey to outsider ?

2. A health advisory offers to its subscribers complete information on doctors, parameters, health insurance, super specialty hospitals and general health awareness. It now plans to computerise these services and has choice of two system. Under option A. A computer system would be leased for Rs. 60 lakhs per year and the customer requests would be processed with a variable cost of Rs. 25 per . Under option, B another system could be leased for Rs. 10 lakhs per year but processing costs are Rs. 125 per request.

Under either options, the subscriber is happy to pay Rs. 200 per request. On the basis of the above data.

(i) Which option is more risky ?
(ii) Draw a break-even charts for the both options
(iii) At what volume of business would the operating profit under either option be the same ?
(iv) Which option has more operating leverage ?

3. Distinguish between Variable Overhead Cost Variance and Find Overhead Cost Variance. Why are such variances caused?

4. What do you understand by ‘Budgeting’? Mention the type of budgets that the management of a big industrial concern would normally prepare. How can computers help the management in this matter?

5. What is capital structure and its determinants? Explain the importance of capital structure and planning

(a) What is rate of return on equity for a company whose profit margin is 12% total assets/turnover ratio is 2 and its equity/total assets ratio is 40% ?

(b) Discuss the role of a financial manager in the matter of dividend policy. What alternatives might he consider and what fact ors should he take into consideration before finalising his views on dividend policy.

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