the coordinator of your study center.
1. a) Distinguish between Revenue expenditure and Capital expenditure. How are they
treated while preparing the final accounts? If by mistake the accountant of a firm treats a capital expenditure as revenue expenditure, how will it affect the final accounts of the firm? Give an example.
b) Why is depreciation charged? Explain the two methods of charging depreciation. In which method the value of the asset is reduced to zero earlier. Which one is more rational? Explain why?
2. What is meant by appropriate capital structure? Discuss the determinants and features of an appropriate capital structure for a corporate body.
3. Explain the important determinants of the Working Capital needs of a firm. Can two firms with different Working Capital achieve the same amount of sales? If so, explain how.
4. a) What do you understand by Budgetary Control? How is it exercised? What steps should be taken for installing a Budgetary Control System in an organization? Discuss.
b) What is Rolling Budget? How does it differ from flexible Budget? What purpose do these budgets serve?
5. Following are the balance sheets of a limited company as on 31st December, 2000 and 2001.
Rs. Assets 2000
Share Capital 54,000 74,000 Goodwill 3,000 2,520
Reserves 13,000 15,500 Buildings 50,950 48,000
P. & L. A/c 8,600 8,800 Plant 35,000 43,000
Bank Loan (Long-term) 25,000 - Stock 25,500 18,800
Creditors 28,000 24,000 Debtors 22,000 16,200
Bills Payable 8,000 8,500 Cash 150 180
Bank - 2,100
1,36,600 1,30,800 1,36,600 1,30,800
Taking into account the following additional information, you are required to prepare funds flow statement and statement of change in working capital.
(a) Dividend paid was Rs. 6,000.
(b) Rs. 3,600 was written off as depreciation on plant and Rs. 2,950 on buildings.
(c) Profit on sale of plant was Rs. 3,000.