Institute of Actuaries of India 2008 CT-2 Finance and Financial Reporting - Question Paper

i. Rs. 2,75,000
ii. Rs. 50,000
iii. Rs. 2,25,000
iv. Rs. 5,00,000 [2]

Q. 4) The subsequent info is based from the accounts of JMW Ltd for 2007 and 2008
2007 2008
Sales 6,00,000 7,50,000
Net profit before tax and interest 60,000 90,000
Long-term loans 75,000 2,25,000
Share capital 75,000 90,000
Reserves 37,500 60,000
Which of the subsequent is actual about the performance of JMW Ltd: -

A. The return on capital employed has fallen because the fall in the asset
utilization ratio has outweighed the rise in the profit margin
B. The return on capital employed has risen because the asset utilization ratio
has risen
C. The return on capital employed has risen because the profit margin has
risen
D. The return on capital employed has fallen because the fall in the profit
margin has outweighed the rise in the asset utilization ratio
[2]

Q. 5) Which of the subsequent is NOT a requirement for a published report and accounts?
A. The accounting policies opted must be judged to be the most
improper for giving a actual and fair view of the financial position of
the company.

B. The accounts should be compiled assuming that the company is a going
concern.
C. Income and expenditure should be taken into account in the year in which
it is earned or incurred respectively.
D. The accounts should be computed on a prudent basis. [2]

Q. 6) Which of the subsequent is lowest likely to provide rise to agency costs?
A. A software company which employs managers to carry out day-to-day
operations.
B. A heavy vehicle manufacturing company where there are managers and

Earning:   Approval pending.