1. Which is not the function of financial accounting?

a) Recording
b) Classifying
c) Summarizing
d) None of the above

2. If contribution exceed fixed cost company assume
a) Profit
b) Breakeven
c) Loss
d) None of the above.
3. Term loan is a source of --------------financing.
a) Long term financing
b) Short term financing
c) Medium term financing
d) All of the above.
4. Which among these is not the option of financing a firm for a long term?
a) Discounting bill of exchange
b) Trade credit
c) Factoring
d) Retention of profit.
5.Financial institution grant loan upto the period of ------yrs.
a)20
b)25
c) 15
d) 10.
6)An arrangement on a continuing basis whereby the commercial bank allows money to be frawn in
advance from time to time within a specified limit known as
Bank overdraft
Cash credit
Public deposits
All of the above.
7. When borrowing is less than equity, the company is said to be
a) Trading on equity
b) Trading on thick equity
c) Trading on thin equity
d) None of these
8 .Short-term loans can also be obtained from banks on the personal security of directors of the
company.These are known as
a)Clean advances
b)Direct advances.
c)Indirect advances
d) None of these
9.Overheads are also known as
Offcost
Oncost
Both are right
Both are wrong
10. Prime cost involves
Direct material+Direct Labour + direct expenses
In direct material+indirect Labour+indirect expenses
Workcost +Work overheads
None of these
11) equity shares are issued for -----------
a)Investment in fixed assets
b) Financing operating expenses
c) modernization of plants
d) all of the above
12) The minimum number of persons required to form partnership organization for banking business
are-------------.
a) 10
b) 2
c)50
d)20.
. 13 .---------------is temporary arrangement with the bank which permit the company to overdraw from
its current deposit account with the bank upto a certain limit.
a)Cash credit
b)Trade credit.
c)Bank overdraft.
d)Factoring.

14. The proportion of fixed interest bearing capital in the total capital is known as ----------------.
Capital gearing
capital structure
fixed capital
venture capital.
15. Reinvestment of profit is a part of -------------
Long term capital
Medium term capital
Option a and b are correct
Short term capital.






1 )The permanent part of working capital may be regarded as long term finance .
2) Equity share capital can be used for investment in fixed assets as well in current assets.
3) Working capital is not required by traders who buy and sell goods on credit.
4) Equity share capital can be used for investment in fixed assets as well as current assets.
4) Trade credit helps in financing short term investments.




Match the column
1.Medium term finance Short term finance.
2.Capital structure Current assets
3.Working capital Risk capital
4.Ownership capital Modernization of machinery.
5.Bills receivable Borrowed capital and ownership capital.







3X10=40

Short answer type questions
Attempt any ten out of the following
1) Write a short note on partnership form of organization.
2) Discuss in brief regarding the importance of working capital for a business.
3) There are certain advantages of financing business activities with loans. In the light of aforesaid
statement illustrate the advantage.
4) Discuss in brief capital structure.
5) Discuss the various methods of raising long term capital
6) Define costing .What are objectives of costing?
7) Discuss concept of overheads
8) Write a short note on contribution
9) Differentiate between equity share and preference shares
10) What is factoring?
11) Briefly describe the concept of cost sheet.
12) Discuss prime cost .


Long answer type questions
Attempt any three out of the following
1. From the following particulars of a manufacturing firm, prepare a cost sheet showing
1) prime cost 2)work cost 3) cost of production 4) cost of sales
Rs
Stock of material on 1.1.2007 40000
Purchase of material 11000
Stock of finished shoes on 1.1.2007(500pairs) 50000
Productive wages 500000
Finished goods sold(17400 pairs) 2296800
Work overheads 150000
Office expenses 100000
Selling and distribution expenses 174000
Stock of material on 31.1.2007 140000
Stock of finished shoes on 31.12.2007(600pairs) 60000

2) A) Write a short note on breakeven analysis

b) A shoe manufacturer plan a new variety of shoe through a new factory . His fixed cost is rupees
200000. If he sells a pair of shoe for Rs. 250 and incurs a variable cost of 50per unit, calculate the
breakeven revenue for the firm.


1. Define the term accounting? State function and objectives of accounting.
3. Discuss the factors deter mining capital structure.