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PROGRAM:
BCA (REVISED 2007)
SEMESTER:
3RD SEM
SUBJECT
CODE & NAME: BC0044– ACCOUNTING AND FINANCIAL MANAGEMENT
CREDIT:
4
BK
ID: B0805
MAX.
MARKS: 60
Q.1:
What is over capitalization? How do we know over capitalization has occurred?
ANS:
Over-capitalization
arises when the present capital of the company is noteffectively or properly
used. There is excess capital available in thecompany than the actual
requirement. A firm is said to be over-
Q.2:
Explain the steps involved in Funds Flow statement.
ANS:
1. Preparation of
schedule changes in working capital (taking current itemsonly).
2. Preparation of
adjusted profit and loss account (to know fund from [or]fund lost in
operations).
3. Preparation of
accounts for non-current items (Ascertain the hiddeninformation).
Q.3: Explain permanent
and temporary working capital.
ANS:
Permanent working
capital is the minimum investment in the form ofinventory of raw materials,
work-in-progress, finished goods, stores andbook debts to facilitate
uninterrupted operations in a firm. This minimumlevel is called the permanent or fixed working capital. It
is permanent likethe firm’s fixed assets
Q.4: Following are the
extracts from the Trial Balance of a firm as on 31st March 20X7
Additional Information:
1) Additional Bad Debts required Rs.4,000
2) Additional Discount allowed to Debtors Rs.1,000
3) Maintain a provision for bad debts @ 10% on
debtors
4) Maintain a provision for discount @ 2% on
debtors
Required: Pass the necessary journal entries and
show the relevant accounts including final accounts.
ANS:
Q.5: Explain the
objectives of cash management
ANS:
This can be studied
under two heads: (a) meeting payments schedule and(b) minimize funds committed
to cash balances.
Q.6: Why wealth
maximization is superior to profit maximization
ANS:
Wealth maximization is also known as value maximization and net present worth maximization.
Shareholders’ Wealth Maximization (SWM) is an appropriate an operationally
feasible criterion to choose among the alternative financial actions. SWM is
the maximization of the net present value or wealth of a
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