Test Papers / Previous Question Papers of IGNOU CS54 Finance & Accounting on Computers December 2006

1. (a) What is meant by 'Accounting concepts' ? Examine the role of accounting concepts in the preparation of financial statements. 9

(b) What is a Balance Sheet and what information does it convey to an outsider ? 6

2. (a) A firm purchases a plant for a sum of Rs. 10,000 on 1^st January 2000. Installation charges are Rs. 2,000. Plant is estimated to have a scrap value of Rs. 1000 at the end of its useful life of five years.

You are required to prepare the 'Plant Account' for three years charging depreciation according to.

(i) Straight Line Method, and

(ii) Written Down Value Method. 8

(b) Discuss the concept of working capital. Are the gross and net concepts of working capital exclusive ? Explain. 7

3. (a) What is meant by Cost Accounting ? State its objectives. 5

(b) From the following particulars calculate

(i) Contribution per unit

(ii) P / V Ratio

(iii) Break Even Point in units

(iv) Break Even Point in rupees

(v) What will be the Selling Price per unit if the Break Even Point is brought down to 25,000 units ? 10

4. What is leverage ? Explain the types of leverage with the help of a suitable example. 15

5. (a) A company has just purchased a new plant for Rs. 75:000. The effective life of the plant is three years and it has no salvage value. The estimated cash flows after tax are as follows :

Compute Net Present Value at 10% rate of discount. The present value of Re. 1 at 10% discount rate is 10

(b) Write short notes on the following : 20

(i) Trading on Equity

(ii) Zero Based Budgeting

(iii) Flexbility in capital structure

(iv) Difference between Schedule of Changes in Working Capital and Funds Flow Statement