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Wednesday, 09 December 2015 08:48

MS 4 JUNE 2015

. 1. (a) What do you understand by Accounting Standards ? How do they differ from Accounting Concepts ? Why should the accounting practices be standardised ? Explain. (b) Explain the 'Money Measurement Concept' and the 'Accrual Concept'. What are the limitations of the former concept ? Explain.

 2. (a) What are intangible assets of a firm ? Why are they shown in the Balance Sheet ? What is meant by amortisation of such assets ? Give reasons for the same.

 (b) What do you understand by Appropriation of profits of a company ? How are the profits appropriated ? What will be the effect on appropriation of profit of a company if :
MS-4 1 P.T.O.
the company has issued debt instead of equity shares to finance its activities, and the accountant has treated a revenue expenditure as capital expenditure.
3. What do you understand by cost of capital ? What is its significance in financial decision making ?
Explain how is the weighted average cost of capital computed ?
4. Distinguish between :
(a) Contingent liabilities and accrued liabilities.
(b) Funds from Operations and Net Profit
(c) Straight line Method and Written down Value Method of charging depreciation
(d) Direct Material Price Variance and Direct Material usage Variance
5. (a) "Other things remaining the same, firm with relatively stable sales are able to incur relatively high debt ratio". Do you agree with this statement ? Give reasons for your
(b) Explain fixed budget, flexible budget and rolling budget. Point out the differences
between them and explain their utility for a firm.

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