All India Management Association (AIMA) 2007 M.B.A Marketing Management Accounting for ision Making – I - Question Paper

35. C The subsequent heads are shown under the ‘sources of funds’ in the balance sheet of the company:
1. Share capital.
2. Reserves and surplus.
3. Secured loans.
4. Unsecured loans
The head ‘Miscellaneous expenditure’ is shown under the ‘application of funds’ in the balance sheet. < TOP >
36. E Current assets = Current liabilities x current ratio = Rs.150 x 1.5 = Rs.225 lakh
So, the amount of cash and bank balance is Rs.225 lakh – Rs.100 lakh – Rs.100 lakh = Rs.25 lakh. < TOP >
37. E The choice (e) assets and liabilities are shown in the liquidity or permanency order in the balance sheet of a company is a not a limitation of balance sheet. Remaining all other choices are limitations of balance sheet. < TOP >
38. A In short run, the amount of liquid assets of a company determines the ability to clear its current obligations. Therefore, creditors are interested in liquidity ratio. < TOP >
39. E The ratio that can be directly inferred from the income statement is net profit margin ratio. < TOP >
40. D The analysis which involves comparison with various entities belonging to the identical industry or comparing with the industry avg. is known as cross sectional analysis. < TOP >
41. A Operating Profits only include operating income and expenses. Income on investments is not an operating income.
Therefore, operating profit =
Income from Hardware services –
(Hardware development expenses + Selling and marketing expenses + General and administrative expenses)
= Rs.4,00,00,000 – (Rs.1,75,00,000 + 66,00,000 + 45,00,000)
= Rs.1,14,00,000. < TOP >
42. E Return on equity = (Profit after tax – Preference dividends)/Average shareholders’ equity
Let x be treated as preference dividends
10% = (Rs.5,00,000 – x)/Rs.22,50,000
Rs.5,00,000 – x = 10% of Rs.22,50,000
x = Rs.5,00,000 - Rs.2,25,000
Therefore, preference dividends = Rs.2,75,000. < TOP >
43. A The comparison of the business performance over a period of time is called as pattern analysis. < TOP >
44. D Net Profit margin = 25%
Net Profit margin = (Net Profit/ Net Sales) x 100
Net Profit = Rs.3,00,000
or 0.25 = Rs.3,00,000/ Net Sales
Therefore net sales = Rs.3,00,000/0.25 = Rs.12,00,000
Gross Profit = Net sales – Cost of goods sold
Gross Profit = Rs.12,00,000 – Rs.6,00,000
Gross Profit = Rs.6,00,000
Therefore, Gross Profit margin = (Gross Profit / Net sales ) x 100
or (Rs.6,00,000 / Rs.12,00,000) x 100 = 50%. < TOP >
45. C Operating expenses = Gross Profit – Net Profit

Earning:   Approval pending.