All India Management Association (AIMA) 2008 M.B.A Marketing Management Accounting_for_ision_Makingober - Question Paper

Total Marks : 100

1.

Which of the following transactions results in an increase in the owners equity?

(

1

mark)

<Answer>

2.

Which of the following accounting concepts is applicable to determine the profits or losses accrued?

(

1

mark)

<Answer>

3.

Duality concept states that

(

1

mark)

<Answer>

4.

Assets are to be recorded in the books of accounts at the price paid to acquire them. This statement is in recognition of

(

1

mark)

<Answer>

5.

Depreciation is allocated over the effective life of an asset according to

(

1

mark)

<Answer>

6.

Contingent liabilities appearing as notes to balance sheet reiterate

(

1

mark)

<Answer>

7.

The capital of Ram Ltd., is Rs.7,00,000. The outside liabilities of the company are Rs.50,000. If the total of assets are Rs.8,25,000, then the reserves & surplus of Ram Ltd., are

(

2

marks)

<Answer>

8.

Which of the following accounting concepts assume that a business will carry on its operations for an indefinite period?

(

1

mark)

<Answer>

9.

According to the requirement of US GAAP compliance for Indian Corporate, an Indian company, if it is incorporated under the laws of a jurisdiction outside of the United States, is called as

(

1

mark)

<Answer>

10.

According to which of the following accounting concepts, are the shareholders treated as creditors for the amount they pay on shares?

(

1

mark)

<Answer>

11.

Every year inventory should be valued on the same basis. This is based on

(

1

mark)

<Answer>

12.

The following are the external users of financial statements, except

(

1

mark)

<Answer>

13.

Which of the following is not an objective of accounting?

(

1

mark)

<Answer>

14.

Which of the following is not a qualitative characteristic of financial statements?

(

1

mark)

<Answer>

15.

Death of the Chairman of a company is not recorded in the books of accounts in recognition of

(

1

mark)

<Answer>

16.

Which of the following is the correct order for arranging the liabilities in a balance sheet prepared according to permanency order?

(

1

mark)

<Answer>

17.

The following is the data pertaining to Axon Ltd., as on March 31, 2008:

The total of the Sources of Funds in the balance sheet of Axon Ltd., as on March 31, 2008 was

(

2

marks)

<Answer>

18.

Normally, a complete set of financial statements does not include

(

1

mark)

<Answer>

19.

Which of the following items does not appear under the head Reserves and Surplus in the balance sheet?

(

1

mark)

<Answer>

20.

The activities that are basically related to the changes in share capital and long term borrowings of the company are known as

(

1

mark)

<Answer>

21.

The following data are available from the books of Alfa Ltd., for the year 2007-08:

           Cash inflow from operating activities : Rs.1,29,000

           Net Cash outflow from investing activities : Rs.1,00,000

           Net Cash outflow from financing activities : Rs. 35,000

           Cash at the beginning of the period : Rs. 95,000

Cash at the end of the year 2007-08 amounted to

(

2

marks)

<Answer>

22.

The total of application of funds of Daniel Ltd., amounted to Rs.90 lakh. The shareholders funds amounted to Rs.60 lakh. The loan funds of Daniel Ltd., amounted to

(

2

marks)

<Answer>

23.

Which of the following items should not appear under the head unsecured loans in the Balance Sheet of a company?

(

1

mark)

<Answer>

24.

Which of the following is not classified as inventory in the financial statements?

(

1

mark)

<Answer>

25.

Following information pertaining to Alex Publishing Ltd., was extracted from the accounting records for the year ended March 31, 2008:

The net cash flow from operating activities for 2007-08 was

(

2

marks)

<Answer>

26.

Which of the following is treated as an extraordinary item in the income statement of a company?

(

1

mark)

<Answer>

27.

Inventories should be valued at

(

1

mark)

<Answer>

28.

Balances with Customs and Port Trust, comes under the head

(

1

mark)

<Answer>

29.

Operating expenses does not include

(

1

mark)

<Answer>

30.

Which of the following items is a financing activity in a cash flow statement?

(

1

mark)

<Answer>

31.

Brij Manufacturing Ltd., had the following activities relating to its stock investments during 2007-08:

           Acquired 2,000 shares in Bhuvan Ltd., for Rs.26,000.

           Sold an investment for Rs.35,000 when the carrying value was Rs.33,000.

           Acquired 5-year Fixed deposit for Rs.50,000. (During the year, interest of Rs.3,750 was received.)

           Collected dividends of Rs.1,200 on investments.

As per the statement of cash flows, the net cash outflow from investing activities of Brij Manufacturing Ltd., for the year 2007-08 was

(

2

marks)

<Answer>

32.

Which of the following practices does not amount to revenue manipulation to inflate the earnings?

(

1

mark)

<Answer>

33.

Sai Ltd., invested Rs.6,00,000 in fixed interest bearing securities. If the capital gearing ratio of the company is 0.60, the equity shareholders fund is

(

2

marks)

<Answer>

34.

Which of the following will not appear in Profit and Loss Account of a business?

(

1

mark)

<Answer>

35.

Which of the following heads is not shown under Sources of Funds in the balance sheet of a company?

(

1

mark)

<Answer>

36.

The following information is related to Arnika Industries Ltd.:

What is the amount of cash and bank balance (assuming there are no other current assets)?

(

2

marks)

<Answer>

37.

Which of the following is not a limitation of a Balance Sheet?

(

1

mark)

<Answer>

38.

The short-term creditors are interested in

(

1

mark)

<Answer>

39.

The ratio that can be directly inferred from the income statement is

(

1

mark)

<Answer>

40.

The analysis which involves comparison of different entities belonging to the same industry is known as

(

1

mark)

<Answer>

41.

Ramosys Hardware Ltd., furnished the following information for the year ended March 31, 2008:

The operating profit of Ramosys Hardware Ltd., was

(

2

marks)

<Answer>

42.

Shyam Ltd., furnished the following information:

If return on equity is 10%, then the preference dividends of Shyam Ltd., is

(

2

marks)

<Answer>

43.

The comparison of the business performance of a company over a period of time is known as

(

1

mark)

<Answer>

44.

Harika Ltd., furnished the following information:

If the net profit margin of Harika Ltd., was 25% then the gross profit margin was

(

2

marks)

<Answer>

45.

Seema Ltd., furnished the following information:

If there were no non-operating expenses, the percentage of operating expenses to sales was

(

2

marks)

<Answer>

46.

RK Ltd., furnished the following information:

Compared to 2006-07, the percentage of net current assets to total assets in 2007-08 was increased by

(

2

marks)

<Answer>

47.

The paid-up capital of a company is arrived at

(

1

mark)

<Answer>

48.

Pavithra Ltd., has furnished the following data for the year 2007-08:

Closing stock of goods as on March 31, 2008 was

(

2

marks)

<Answer>

49.

The accent of the Indian accounting standard is on

(

1

mark)

<Answer>

50.

Which of the following is a not a difference between US GAAP and Indian Accounting Standard (Indian AS)?

(

1

mark)

<Answer>

51.

According to US GAAP, the emphasis is on protection of

(

1

mark)

<Answer>

52.

Consider the following data of a company:

The average collection period (assuming 365 days a year) was

(

2

marks)

<Answer>

53.

Sarika Ltd., presented the following information:

The total of Miscellaneous expenditure of Sarika Ltd., was

(

2

marks)

<Answer>

54.

According to US GAAP, the foreign exchange differences on monetary transactions are

(

1

mark)

<Answer>

55.

The following balances were extracted from the books of Run Ltd., as on March 31, 2008:

The total of Application of Funds in the balance sheet of Run Ltd., as on March 31, 2008 was

(

2

marks)

<Answer>

56.

The following data is extracted from the books of Dravida Ltd., for the year ended March 31, 2008:

The absolute liquid ratio was

(

2

marks)

<Answer>

57.

The following data is extracted from the books of Sindh Motors Ltd., for the year ended March 31, 2008:

The average daily credit purchases of Sindh Motors Ltd., (assuming 365 days in a year) were

(

2

marks)

<Answer>

58.

The following information is related to Ashwini Industries Ltd.:

The total of current assets of the Ashwini Industries Ltd., were

(

2

marks)

<Answer>

59.

The following data is extracted from the books of Punjab Steels Ltd., for the year ended March 31, 2008:

If the return on net worth is 0.25, then the net profit margin of Punjab Steels Ltd., was

(

2

marks)

<Answer>

60.

In which of the following methods of financial statement analysis, the items in the income statement are expressed as percentages of total sales?

(

1

mark)

<Answer>

61.

Hari Ltd., furnished the following information:

The free cash flow is

(

2

marks)

<Answer>

62.

Raj Ltd., furnished the following information for the year 2007-08:

The average payment period (assuming 365 days a year) for the year 2007-08 was

(

2

marks)

<Answer>

63.

Savera-Kamath Hotels Ltd., furnished the following information as on March 31, 2008:

The operating cash flow to current debt ratio of Savera-Kamath Hotels Ltd., was

(

2

marks)

<Answer>

64.

Satguru Ltd., furnished the following information:

The capital employed of Satguru Ltd., was

(

2

marks)

<Answer>

65.

RXD Ltd., furnished the following information:

The market price of each share was

(

2

marks)

<Answer>

66.

The following information was furnished by Bajaz Ltd.:

The Price to book value was

(

2

marks)

<Answer>

67.

PVR Cinemas Ltd., provided the following information:

The equity dividend coverage ratio of PVR Cinemas Ltd., was

(

2

marks)

<Answer>

68.

Govind Ltd., furnished the following information:

The total assets of Govind Ltd., was

(

2

marks)

<Answer>

69.

The dividend pay-out ratio of CAMEL Ltd., was 30%. If the net profit available for distribution was Rs.1,20,000, then the dividends paid by the company were

(

2

marks)

<Answer>

70.

Which of the following does not help in expense manipulation?

(

1

mark)

<Answer>

Answer

Reason

1.

B

Earning revenue income will increase the owners equity.

The following transactions will not result in an increase in the owners equity:

Borrowing additional loans.

Sale of fixed assets at book value.

Sale of investments at book value.

Purchase of fixed assets.

< TOP >

2.

E

In order to determine the profits or losses accrued in an accounting period, the expenses are related to the goods or services sold during the period. This is in recognition of matching concept.

< TOP >

3.

A

The duality concept states that:

Owners equity + Outside liabilities = Assets

The sum of the Sources of Funds, must be equal to the sum of Uses of funds.

< TOP >

4.

A

Assets are to be recorded in the books of accounts at the price paid to acquire them. This statement is in recognition of cost concept.

< TOP >

5.

C

According to matching concept, if fixed assets are used to generate income, the cost of these assets (in the form of depreciation) is allocated over the effective life of the asset.

< TOP >

6.

C

Contingent liabilities appearing as notes reiterate the principle of disclosure. The full disclosure concept implies that all material information that could affect the decision of the user must be disclosed.

< TOP >

7.

C

According to Dual aspect concept :

Total assets = Owners equity + Outside liabilities

Owners equity = Capital + Reserves & Surplus

Therefore, Rs.8,25,000 = Rs.7,00,000 + Reserves & surplus + Rs.50,000

Therefore, Reserves & Surplus = Rs.8,25,000 Rs.7,50,000 = Rs.75,000.

< TOP >

8.

B

According to going concern concept (b), a business entity is assumed to carry on its operations for an indefinite period.

< TOP >

9.

A

According to the requirement of US GAAP compliance for Indian corporate, an Indian company, if it is incorporated under the laws of a jurisdiction outside of the United States, is called as foreign private issuer.

< TOP >

10.

E

Shareholders are treated as creditors for the amount they have paid on shares subscribed by them according to the business entity concept. According to cost concept, all transactions are recorded at cost. The duality concept emphasizes that assets = owners equity + outside liability. A business entity is assumed to carry on its operations forever under going concern concept. According to money measurement concept, only those transactions that can be expressed in monetary terms are recorded.

< TOP >

11.

B

The consistency concept requires that once an entity has decided to follow a particular method of valuation of inventory, it will follow the same unless there is strong reason to change the method of valuation.

< TOP >

12.

E

The following are the external users of financial statements.

Government agencies.

Lenders.

Customers.

Investors.

Board of directors are not the external users of financial statements.

< TOP >

13.

E

Maintenance of records of human resources of the company is not an objective of accounting.

< TOP >

14.

E

Periodicity is not a qualitative characteristic of financial statements.

< TOP >

15.

A

Money measurement concept states that if events cannot be quantified in monetary terms then they do not facilitate accounting. Therefore, death of a Chairman of a company, even though it has far reaching consequences for the health of the business is not accounted for, since no monetary measurement of the event is feasible.

< TOP >

16.

A

According to permanency order of balance sheet the order of the liabilities are shown as capital, long-term liabilities, short-term liabilities and current liabilities. In the order of permanency, permanent assets are shown first and those of less permanent are shown next.

< TOP >

17.

c

Balance sheet of Axon Ltd., as on March 31, 2008

< TOP >

18.

E

A complete set of financial statements normally does not consist of prospectus. A complete set of financial statement includes

Income statement

Balance sheet

Cash flow statement

Notes to balance sheet.

< TOP >

19.

C

Proposed dividend does not come under the head reserves and surplus. It comes under current liabilities. Remaining all other options come under reserves and surplus.

< TOP >

20.

a

The activities that are basically related to the changes in share capital and long-term borrowings of the company is known as Cash from financing activities. They account for cash flows generated from issue of shares, issue of debentures, loans raised, redemption of debentures, repayment of loans, etc.

< TOP >

21.

a

< TOP >

22.

C

The balance sheet is based on the concept that

Sources of funds = Applications of funds

Sources of funds is divided into Shareholders funds and loan funds

Therefore, Shareholders funds + Loans funds = Applications of funds

Therefore, Loan funds = Applications of funds shareholders funds

Loan funds = Rs.90 lakh Rs.60 lakh = Rs.30 lakh.

< TOP >

23.

A

Sinking fund is created out of profits. It is the part of profit and should be listed under the heading Reserves and Surplus and not under unsecured loans. Short-term loans from others, short term loans from banks, short-term advances from banks and fixed deposits are unsecured loans.

< TOP >

24.

E

Advance payment made to suppliers for raw materials is not treated as inventory in the financial statements.

< TOP >

25.

C

Payment of dividend is a financing activity. Therefore, it does not come under operating activity.

< TOP >

26.

E

Occurrence of fire is an extraordinary item. Therefore option (e) is the correct answer.

< TOP >

27.

E

Inventories should be valued at lower of cost or net realizable value.

< TOP >

28.

A

Balances with Customs and Port Trust, comes under the head Loans and advances in the balance sheet of a company.

< TOP >

29.

e

Operating expenses does not include loss on sale of investment. It is a non operating expense. Remaining all other options are operating expenses.

< TOP >

30.

b

Payment of dividends tax is a financing activity in a cash flow statement.

i. Payment made to acquire shares is an investing activity

ii. Payment of dividend tax is a financing activity

iii. Dividends received is an investing activity.

iv. Payments to employees is an operating activity

v. Acquisition of long lived assets is an investing activity.

Hence, (b) is correct answer.

< TOP >

31.

D

Investing activities include all cash flows involving assets, other than operating assets. The investing activities are:

Note that the sale of investments is reported in the investing section at the cash inflow amount (Rs.35,000), not at the carrying value of the investment (Rs.33,000).

< TOP >

32.

d

Revenue manipulation is the most common type of earnings management. The sales transaction is the pillar for recognition of revenue in the business and it is this figure that is manipulated to inflate earnings. This is resorted to by any of the following practices:

Vendor financing.

Trade loading.

Channel stuffing.

Understating the value of accounts receivables.

Not recognizing rebates.

Overstating the allowance for uncollectible accounts is not revenue manipulation to inflate the earnings. Hence, (d) is correct answer.

< TOP >

33.

a

Capital gearing ratio = Fixed interest bearing securities/ Equity Shareholders fund

Capital gearing ratio = 0.6

Fixed interest bearing securities = Rs.6,00,000

0.6 = Rs.6,00,000 Equity shareholders fund

Therefore, Equity Share holders fund = Rs.6,00,000 0.6 = Rs.10,00,000.

< TOP >

34.

D

Interest paid out of capital to the extent not written off is a miscellaneous expenditure. Hence it does not appear in Profit and Loss account of a company.

< TOP >

35.

C

The following 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 option (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 options 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 different entities belonging to the same industry or comparing with the industry average 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 trend 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

= Rs.25,00,000 Rs.10,00,000

= Rs.15,00,000

Therefore percentage of operating expenses on sales = (Operating expenses/sales) x 100

= (Rs.15,00,000/Rs.40,00,000) x 100

= 37.5%.

< TOP >

46.

C

% of net current assets to total assets in 2006-07 = Rs.3,00,000/Rs.9,37,500 = 32%

% of net current assets to total assets in 2007-08 = Rs.4,00,000/Rs.10,00,000 = 40%

Therefore percentage of net current assets to total assets from 2006-07 to 2007-08 has increased by 40% 32% = 8%.

< TOP >

47.

B

The paid-up capital of a company is arrived at after deduction of calls-in-arrear from the called up capital.

< TOP >

48.

d

< TOP >

49.

A

The accent of Indian accounting standard is on reporting.

< TOP >

50.

D

According to US GAAP, capitalization of interest on constructed assets is required whereas according to Indian AS capitalization is not required is the false statement, because even as per Indian Accounting Standard capitalization of interest on constructed assets is required.

< TOP >

51.

c

According to US GAAP, the emphasis is on protection of investor.

< TOP >

52.

B

Sales per day = Annual net sales/ 365 days

Sales per day = Rs.18,25,000/ 365 = Rs.5,000

Average collection period = Average trade debtors Sales per day

= Rs.4,50,000/Rs.5,000 = 90 days.

< TOP >

53.

B

Provision for proposed dividends does not come under Miscellaneous expenditure. Therefore, the total of preliminary expenses, discount allowed on the issue of shares, development expenditure is Rs.45,000 + Rs.66,000 + Rs.58,000 = Rs.1,69,000.

< TOP >

54.

A

According to US GAAP, the foreign exchange differences on monetary transactions are recorded in net income.

< TOP >

55.

C

Balance Sheet of Run Ltd., as on March 31, 2008

< TOP >

56.

A

Absolute liquid ratio =

(Cash in hand + Cash at bank + Short-term Marketable securities)/Current liabilities

Absolute liquid ratio = (Rs.75,000 + Rs.1,00,000 + Rs.2,00,000)/Rs.3,00,000

= 1.25:1.

< TOP >

57.

A

Let annual credit purchases = x

Creditors turnover ratio = Annual credit purchases/Average trade creditors

30 = x/Rs.76,650

x = = Rs.76,650 30 = Rs.22,99,500

Average daily credit purchases = Rs.22,99,500 /365 = Rs.6,300.

< TOP >

58.

B

Quick ratio = (Current assets-Inventory) / current liabilities

To find out Inventory

Inventory turnover ratio = Cost of goods sold / Average inventory

Cost of goods sold = Rs.180 lakh

Inventory turnover ratio = 2

Therefore, 2 = Rs.180 lakh/ Average inventory

Therefore, Average inventory = Rs.180 lakh 2 = Rs.90 lakh

Opening stock = Rs.40 lakh

Average inventory = Rs.90 lakh

Average inventory = (Opening stock + Closing stock ) /2

Opening stock = Rs.40 lakh

Rs.90 lakh = ( Rs.40 lakh + Closing stock) /2

Therefore, Closing stock = (Rs.90 lakh x 2 ) Rs.40 lakh

Closing stock = Rs.140 lakh

Quick ratio = 1.5

Therefore 1.5 = (Current assets Rs.140 lakh) / 400 lakh

Current assets Rs.140 lakh = Rs.400 lakh x 1.5 = Rs.600 lakh

Current assets = Rs.600 lakh + 140 lakh = Rs.740 lakh.

< TOP >

59.

B

Return on net worth = Profit after tax / Net worth

Net worth = Rs.30,00,000

0.25 = Profit after tax / Rs.30,00,000

Profit after tax = Rs.30,00,000 x 0.25 = Rs.7,50,000

Net Profit margin = Net profit/ net sales

Net sales = Sales Sales returns = Rs.15,60,000 Rs.60,000 = Rs.15,00,000

Net Profit Margin = Rs.7,50,000/Rs.15,00,000 x 100 = 50%.

< TOP >

60.

A

In common size analysis, the income statement is expressed as a percentage of total sales. Time series analysis, involves the study of financial statements over a period of time. Revenue analysis involves change in sales revenue, change in sales volume and change in other income. Expense analysis involves change in operating expenses, employee expenses, selling and marketing expenses, and depreciation expenses. Profitability analysis involves change in profit after tax, and change in PBDIT as a percentage of sales.

< TOP >

61.

C

< TOP >

62.

B

Average Payment Period = Average trade creditors / Average daily purchases

Average Trade creditors = (opening trade creditors+ closing trade creditors) 2

= (Rs.1,80,000 + Rs.2,00,000) 2 = Rs.1,90,000

Net annual purchases = Rs.7,30,000

Average daily purchases = Rs.7,30,000/ 365 = Rs.2,000

Therefore, average payment period = Rs.1,90,000 /Rs.2,000 = 95 days.

< TOP >

63.

B

Operating cash flow to current debt= Net Cash flow from operating activities/ current debt

Current debt = Current maturities of long-term debts and current notes payable

Net cash flow from operating activities = Rs.18,00,000 Rs.6,00,000 Rs.1,00,000

Net cash flow from operating activities = Rs.11,00,000

Operating cash flow to current debt ratio = Rs.11,00,000/ Rs.5,00,000 = 2.2 times.

Interest from investments is not considered because it is an investing activity.

< TOP >

64.

D

Capital employed = Fixed assets + Current assets Current liabilities

= Rs.6,00,000 + Rs.4,00,000 Rs.3,00,000 = Rs.7,00,000.

< TOP >

65.

C

Option (c) is the correct answer because

Earnings per share = Net income available for shareholders Number of outstanding equity shares

= Rs.3,00,000 2,000 = Rs.150

Price earnings ratio = Market price of the share Earnings per share

Market price of the share = Rs.150 x 5 = Rs.750.

< TOP >

66.

C

Option (c) is the correct answer because:-

Price to book value = Market price of the share Book value per share

Book value per share = Equity shareholders fund Number of outstanding equity shares

Book value per share = Rs.18,00,000 90,000

Book value per share = Rs.20.

Market price of the share = Rs.200

Therefore, Price to book value = Rs.200 Rs.20 = 10.

< TOP >

67.

A

Preference dividend coverage ratio = Profit after tax/Preference dividends

Therefore, 12.9 = Rs.5,41,800 / Preference dividends

Therefore, Preference dividends = Rs.5,41,800 /12.9 = Rs.42,000

Equity dividend coverage ratio = (Profit after tax − Preference dividends) /Equity dividends

Therefore, Equity dividend coverage ratio = (Rs.5,41,800 Rs.42,000) / Rs.3,20,000

Equity dividend coverage ratio = 1.56 times.

< TOP >

68.

B

Return on net worth = Profit after tax/Net worth

30% = Profit after tax /Rs.15,00,000

Therefore Profit after tax = Rs.4,50,000

Return on total assets = Profit after tax/ total assets

25% = Rs.4,50,000 / total assets

Total assets = Rs.18,00,000.

< TOP >

69.

B

Dividend pay-out ratio = Dividends/Net income available to shareholders

30% = Dividends /Rs.1,20,000 = Rs.36,000.

Dividends = Rs. 36,000.

Therefore, dividends paid by the company are Rs.36,000.

< TOP >

70.

e

(a) Employee Pension and Other Retirement Benefit Schemes, (b) Big-Bath accounting, (c) Accounting for inventories and (d) Understating liabilities help in expense manipulation. Overstatement of value of accounts receivables helps in revenue manipulation.
Hence, the answer is (e).

< TOP >