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MS 04 TEE Suggestions - DEC 2010

Given below questions are important from exam point of view. Generally these questions have been asked in previous years papers. 

1. What is Accounting Standards? How do they differ from Accounting Concepts? Why should the accounting practices be standardized?

2. What do you understand by Zero Base Budgeting? Discuss the steps that
are involved in the preparation of Zero Base Budgeting and describe its advantages over a traditional budget.

3. What do you mean by DCF techniques of Capital Budgeting? Briefly
     explain the NPV method and IRR method. Which of the two would you
     rank better and why?

4. Distinguish between / Short notes:

a. Cash Budget and Cash Flow Statement
b. Right shares, Bonus shares and Preference shares.
c. Capitalization of Reserve and capital Reserve
d. Imputed costs, Opportunity costs, Sunk costs, and Shut Down costs
e. Gross Working Capital and Net Working Capital
f. Committed Fixed Cost and Discretionary Fixed Cost
g. Sales Price variance and Sales Volume variance
h. Internal Audit and External Audit
i. Absorption costing and marginal costing
j. Amortization and Appropriation
k. Business Entity, Accrual, Consistency and Materiality concept
l. Rolling Budget and Flexible Budget

5. Explain the following statements:

a. “An investor in shares considers not only its EPS but also PE ratio.”
b. “Higher profit margins need not necessarily lead to higher rate of return on investment.”
c. “A high operating leverage is not always desirable.”
d. “Dividend, Investment and Financing decisions are inter-dependent.”
e. “Weighted average cost of capital would always be higher, if the market value weights are used.”
f. “Accounting is closely connected with control.”
g. “The cost concept of accounting meets all the three basic criteria of relevance, objectivity and feasibility.”

6. How would you compare the actual performance of a business with the
     budgeted performance? Discuss the important ratios used for this

7. Discuss the relationship of financial leverage and operating leverage with 
     an example.  How would you appraise the technical feasibility and   
     financial viability of a project?

8. What do you understand by the term Pay-out ratio? What factors are 
     considered while determining pay-out ratio? Should a company follow a  
     fixed pay-out ratio policy?

9. What is composite cost of capital? How is it calculated? What is its role in 
     determining the optimal debt equity mix? Explain fully.

Contributed & Shared by : Ahmed Al Alawi