Wednesday, April 01, 2015

Dibrugarh University Question Paper - Financial Statement Analysis (May' 2014)

2014 (May)
COMMERCE
(Speciality)
Course: 602
(Financial Statement Analysis)
Full Marks: 80
Pass Marks: 32
Time: 3 hours

1.(a) Fill in the blanks with appropriate word or words :                  1x5=5
(i) Financial system are______.(estimates of fact/ recorded facts/anticipated facts.)
(ii) long term solvency ratio is the same as_____(current ratio/acid-test ratio/ debt-equity ratio)
(iii) The objective of financial reporting for business enterprises are based on_____(GAAP/the need of conservatism/need of the users of the information).
(iv) The institute of chartered Accountant Of India has decided to converge the Indian reporting of corporate India with effect from 1st April______(2011/2012/2013).
(v) Disclosures in financial statement of banks and similar financial institutions are associated with_____(IAS 30/IAS 31/IAS 32)

(b)State whether the following statements are true or false :                     1x3=3

(i) Financial statements accomplish only external reporting.
(ii) Current ratio is also known as liquid ratio.
(iii) IFRS-4 is associated with insurance contracts.

2. Write short answer to the following questions :                            4x4=16
(a) Discuss the significance of financial statement Analysis.
(b) What are the limitations of ratio analysis.
(c) Distinguish between ‘Financial reporting’ and ‘financial statements’.
(d) What are the benefits of Global Accounting Standard?

3. (a) What do you understand by Analysis of Financial Statements? “Financial Statements suffers from a number of limitations.” Discuss.                                       4+7=11

Or

    (b) What are the tools normally adopted by a financial analyst while analyzing the financial statements? Explain how economic value added to the statements are useful for a potential investor    6+5

4.(a) From the following information, prepare the balance sheet of X company showing the details of working:      12
Paid up capital
50000
Plant and Machinery
125000
Total sales p.a
500000
Gross profit margin
25%
Annual credit sales
80% of net sales
Current Ratio
2
Inventory Turnover
4
Fixed assets turnover
2
Sales Return
20% of sales
Average collection period
73 days
 Bank credit to trade credit         
3:2
Cash to inventory           
1:15
Total debt to current Liability
3

OR

(b) What do you mean by Ratio Analysis? Discuss its objective. State the significance of solvency ratio.     4+4+4=12

5.(a) what should be the objective of Financial reporting by business enterprises? Explain qualitative characteristics of a good financial reporting.      4+7=11

OR

(b) How does a good corporate governance benefit the stakeholder of a company? Corporate social responsibility is mendatory for corporates from April 1, 2014, what social cost and social benefits to be included in a CSR report?         5+6=11

6.(a) what do you mean by Global convergence of Accounting Standards? Why is it necessary to coverge the indian GAAP with IFRS inaccounting practices?                             5+6=11

Or

(b) what are the benefits may enjoyed by a Nation’s economy if there is a single set of Global Accounting Standard? State the steps to be adopted by an entity for the first time adoption of IFRS.         5+6=11

7.(a) Discuss the recommendation of RBI Group on accounting and auditing on harmonization of Accounting standards.     11

OR

(b) Discuss the IRDA guidelines regarding the financial reporting of Insurance companies (as per IFRS-4, optional) on insurance contract.