Note : There are 6 questions in this paper. Question no. 1 is compulsory and carries 30 marks. From the remaining , attempt any three questions. Each of these carries 15 marks.

1. (a) In about one short paragraph, explain the meaning of the following words or

phrases : 10

(i) Combined Leverage

(ii) Fictitious Asset vs. Intangible Asset

(iii) Fixed Costs

(iv) Depreciation

(b) Write a brief note on accounting as an information system. 10

(c) Discuss any three important accounting concepts. 10

2. ABC Company’s financial statements contain the following information

From the above, appraise the financial position of the company by calculating the

following :

(i) Current Ratio

(ii) Acid Test Ratio

(iii) Debt Equity Ratio

(iv) Net Profit Ratio

(v) Return on Capital Employed

(vi) Return on Total Assets

(vii) Return on Equity Funds

3. The balance Sheets of a Petro company for the year 1999 and 2000 are as follow : 15

Additional Information :

(i) Dividend has been proposed @ 25% of the share capital. Additional capital of Rs. 160 lakhs was brought in during the year 2000 and eligible for dividend is the full year. For 2000 the proposed dividend is included in other liabilities.

(ii) Depreciation on fixed assets has been provided to the extent of Rs. 90 lakhs.

From the above information you are required to prepare a funds flow statement for the year 2000.

4. How are cash budgets prepared ? Give their importance. Can computers be useful in preparation of cash budgets ? 15

5. Discuss the factors affecting dividend decision of a large company, with

examples. 15

6. Explain the technique of marginal costing. Examine critically the utility of

marginal costing in management accounting. 15