CS - 54 Accounting & Finance on Computers
June 2000
Q. 1. (a) In about one short paragraph, explain the meaning of the following
words or phrases:
(i) Management Accounting
(ii) Owner's Equity
(iii) Imputed or Hypothetical Costs
(iv) Marginal Costing
(v) CVP Analysis
(b) Discuss the role of accountants in modern business organizations.
(c) What is a Balance Sheet and what information does it convey to outsider
?
Q. 2. A health advisory offers to its subscribers complete information
on doctors, paramedical, health insurance, super specialty hospitals and
general health awareness. It now plans to computerize these services and
has a choice of two system. Under option A, a computer system would be
leased for Rs. 60 lakhs per year and the customer requests would be processed
with a variable cost of Rs. 25 per . Under option B, another system could
be leased for Rs. 10 lakhs per year but processing costs are Rs. 125 per
request.
Under either options, the subscriber is happy to pay RS 200 per request.
On the basis of the above data:
(i) Which option is more risky ?
(ii) Draw a break-even charts for the both options
(iii) At what volume of business would the operating profit under either
option be the same ?
(iv) Which option has more operating leverage ?
Q. 3. Distinguish between Variable Overhead Cost Variance and Fixed Overhead
Cost Variance. Why are such variances caused?
Q. 4. What do you understand by 'Budgeting'? Mention the type of budgets
that the management of a big industrial concern would normally prepare.
How can computers help the management in this matter?
Q. 5. What is capital structure and its determinants? Explain the importance
of capital structure and planning
Q. 6. (a) What is rate of return on equity for a company whose profit
margin is 12% total assets/turnover ratio is 2 times and its equity/total
assets ratio is 40% ?
(b) Discuss the role of a financial manager in the matter of dividend
policy. What alternatives might he consider and what factors should he
take into consideration before finalizing his views on dividend policy.
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