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No. of Printed Pages : 5

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MANAGEMENT PROGRAMME

Term-End Examination June, 2011 MS-4 ACCOUNTING AND FINANCE FOR MANAGERS

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Time : 3 hours

Maximum Marks : 100

Note : Attempt any five questions. All questions carry equal marks. 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. 2. (a) Explain the terms 'Intangible Assets' and 'Contingent Liabilities' giving suitable examples. How are they treated While preparing the Balance Sheet ? Explain with reasons. MS-4 1 P.T.O.

(b) VVhat do you understand by the 'net worth' of a company ? I -low is it different from the owners' equity ? What items comprise the net worth ? Is dividend policy connected with the net worth in any way ? Explain. 3. Explain the important determinants of the Working Capital needs of a firm. Can two firms with different Working Capital achieve the same amount of sales ? If so, explain how ? 4. Distinguish between : (a) Profitability index and Profitability Ratios. (b) (c) (d) 5. Cash Budget and Cash Flow Statement. Capitalisation of reserves and Capital Reserve. Depreciation and Amortisation.

Explain fully the following statements : (a) "Where cash flows are uncertain, the principle will be, greater the variability of cash flows, higher should be the minimum cash balance". (b) (c) (d) 'Companies with very high profits, generally have a low pay out ratio.' "Debt is double edged knife". "Lower the Break-even point, better it is."

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What do you understand by Budgetary Control ? How is it exercised ? What steps should be taken for installing a Budgetary Control system in an organisation ? Discuss. 2

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7.

A company produces a single product which is sold by it...