ACC501 Final Term Past Paper Fall 2008 Paper 2

FINALTERM EXAMINATION

Fall 2008 ACC501Business Finance (Session - 1) Marks: 81

Q1. The accounting definition of income is: (1 marks)

Income = Current Assets

Income = Fixed Assets

Income = Revenues

Income = Revenues Current Liabilities

Current Assets

Current Liabilities

Expenses

Q2. What would be the capital spending for an organization who has purchased fixed assets of Rs. 200,000 and sold fixed assets of Rs. 45,000? (1 marks)

Rs. 245,000

Rs. 200,000

Rs. 155,000

Rs. 45,000

Q3. Selected information from SNT Company's accounting records is as follows: (1 marks)

o Cash paid to retired common shares Rs. 15,000 o Proceeds from issuance of preferred shares Rs. 20,000 o Cash dividends paid Rs. 8,000 o Proceeds from sale of equipment Rs. 25,000 On its cash flow statement for the year, SNT Company should report net cash flow from financing activities as:

Rs. 3,000 net cash outflow

Q4. SNT Com pany has a current ratio of 3:2. Current Liabilities reported by the com pany are Rs. 30 ,0 0 0 . What would be the Net Working Capital for the company? (1 marks)

Rs. 45,000

Rs. 15,000

( Rs. 45,000)

( Rs. 15,000)

Q5. Which of the following would not improve the current ratio? (1 marks)

Borrow short-term to finance additional fixed assets

Issue long-term debt to buy inventory

Sell common stock to reduce current liabilities

Sell fixed assets to reduce accounts payable

Q6. Which of the following are incorporated into the calculation of the Du- Pont Identity? (1 marks)

I. Return on assets II. Equity Multiplier III. Total Assets Turnover IV. Profit Margin

I, II, and III only

I, III, and IV only II, III and IV only

I, II, III, and IV

Q7. The concepts of present value and future value are: (1 marks)

Directly related to each other

Not related to each other

Proportionately related to each other

Inversely related to each other

Q8. Which of the following is a special case of annuity, where the stream of cash flows continues forever? (1 marks)

Special Annuity

Ordinary Annuity

Annuity Due

Perpetuity

Q9. Which of the following is an unsecured bond for which no specific pledge of property is made? (1 marks)

Mortgage

Debenture

Collateral

Note Payable