1. Explain the various methods of providing for depreciation of fixed assets.

2. From the following Balance sheet , calculate

(a) Current ratio
(b) Liquid ratio
(c) Debt equity ratio
(d) Proprietary ratio
Balance sheet

Liabilities Rs. Assets Rs.

14,00,00
Share capital 5,00,000 Fixed asset 0
Reserves 3,00,000 Stock 5,00,000
11,00,00
6% Debentures 0 Debtors 2,00,000
Bank overdraft 1,00,000 Cash 1,00,000
Creditors 2,00,000  

22,00,00 22,00,00
  0   0

3. Explain the procedure for the preparation of cash flow statement.

4. What is budgetary control? Explain the merits and demerits?
5. What is cost of capital? Explain the significance of cost of capital.
6. Explain the essentials of Sound working capital management.
7. Prepare a flexible budget on the basis of the data given below and ascertain the total cost
at 40% capacity and 80% capacity levels
 At 60%
Particulars Capacity

Fixed asset  
Salaries 30,000
Insurance 20,000
Variable costs  
Materials 90,000
Wages 75,000
Semi variable costs  
Maintenance (60%
variable) 24,000
Lighting (50% fixed) 16,000
Supervision(80% fixed) 30,000

Total Cost 285000

8. Two projects M and N which are mutually exclusive are being under consideration. both
of them require an investment of Rs.1,00,000 each. The net cash inflows are estimated as
under

M N
Year (Rs.) (Rs)

1 10,000 30,000
2 40,000 50,000
3 30,000 80,000
4 60,000 40,000
5 90,000 60,000

The company targeted rate of return on investment is 12%. You are required to assess the
projects on the basis of their presents values, using i.NPV method ii. Profitability index method
Present value of Rs.1 at 12 % interest for five years are given below

0.893, 0.797, 0.712,0.636,0.567