Finanace_20connepts_1_

Document Sample
Finanace_20connepts_1_ Powered By Docstoc
					1. Definition of accounting: “the art of recording, classifying and summarizing
in a significant manner and in terms of money, transactions and events which
are, in part at least of a financial character and interpreting the results there of”.

2. Book keeping: It is mainly concerned with recording of financial data relating
to the business operations in a significant and orderly manner.

                        PRINCEPLES OF ACCOUNTING (3, 4)

3. Concepts of accounting:

   A. separate entity concept

   B. going concernconcept

   C. money measurement concept

   D. cost concept

   E. dual aspect concept

   F. accounting period concept

   G. periodic matching of costs and revenue concept

   H. realization concept.

4 Conventions of accounting

   A. conservatism

   B. full disclosure

   C. consistency

   D materiality.

5. Systems of book keeping:

   A. single entry system

   B. double entry system


                                           1
6. Systems of accounting

   A. cash system accounting

   B. mercantile system of accounting.

7. Roles of accounting

     a. personal a/c : debit the receiver

                      Credit the giver

     b. real a/c      : debit what comes in

                      credit what goes out

     c. nominal a/c   : debit all expenses and losses

                      credit all gains and incomes

8. Meaning of journal: journal means chronological record of transactions.

9. Meaning of ledger: ledger is a set of accounts. It contains all accounts of the
business      enterprise whether real, nominal, personal.

10. Posting: it means transferring the debit and credit items from the journal to
their respective accounts in the ledger.

11. Trial balance: trial balance is a statement containing the various ledger
balances on a particular date.

12. Credit note: the customer when returns the goods get credit for the value of
the goods returned. A credit note is sent to him intimating that his a/c has been
credited with the value of the goods returned.

13. Debit note: when the goods are returned to the supplier, a debit note is sent
to him indicating that his a/c has been debited with the amount mentioned in
the debit note.

14. Contra entry: which accounting entry is recorded on both the debit and
credit side of the cashbook is known as the contra entry.

15. Petty cash book: petty cash is maintained by business to record petty cash
expenses of the business, such as postage, cartage, stationery, etc.

                                         2
16.promisory note: an instrument in writing containing an unconditional
undertaking igned by the maker, to pay certain sum of money only to or to the
order of a certain person or to the barer of the instrument.

17. Cheque: a bill of exchange drawn on a specified banker and payable on
demand.

18. Stale cheque: a stale cheque means not valid of cheque that means more
than six months the cheque is not valid.

20. Bank reconciliation statement: it is a statement reconciling the balance as
shown by the bank passbook and the balance as shown by the Cash Book. Obj:
to know the difference & pass necessary correcting, adjusting entries in the
books.

21. Matching concept: matching means requires proper matching of expense
with the revenue.

22. Capital income: the term capital income means an income which does not
grow out of or pertain to the running of the business proper.

23. Revenue income: the income, which arises out of and in the course of the
regular business transactions of a concern.

24. Capital expenditure: it means an expenditure which has been incurred for the
purpose of obtaining a long term advantage for the business.

25. Revenue expenditure: an expenditure that incurred in the course of regular
business transactions of a concern.

26. Differed revenue expenditure: an expenditure, which is incurred during an
accounting period but is applicable further periods also. Eg: heavy
advertisement.

27. Bad debts: bad debts denote the amount lost from debtors to whom the
goods were sold on credit.

28. Depreciation: depreciation denotes gradually and permanent decrease in the
value of asset due to wear and tear, technology changes, laps of time and
accident.

29. Fictitious assets: These are assets not represented by tangible possession
or property. Examples of preliminary expenses, discount on issue of shares,


                                       3
debit balance in the profit and loss account when shown on the assets side in
the balance sheet.

30.Intanglbe Assets: Intangible assets mean the assets which is not having the
physical appearance. And its have the real value, it shown on the assets side of
the balance sheet.

31. Accrued Income : Accrued income means income which has been earned by
the business during the accounting year but which has not yet been due and,
therefore, has not been received.

32. Out standing Income : Outstanding Income means income which has
become due during the accounting year but which has not so far been
received by the firm.

33. Suspense account: the suspense account is an account to which the
difference in the trial balance has been put temporarily.

34. Depletion: it implies removal of an available but not replaceable source,
Such as extracting coal from a coal mine.

35. Amortization: the process of writing of intangible assets is term as
amortization.

36. Dilapidations: the term dilapidations to damage done to a building or other
property during tenancy.

37. Capital employed: the term capital employed means sum of total long term
funds employed in the business. i.e.

  (Share capital+ reserves & surplus +long term loans –

  (Non business assets + fictitious assets)

38. Equity shares: those shares which are not having pref. rights are called
equity shares.

39. Pref.shares: Those shares which are carrying the pref.rights is called pref.
shares. Pref.rights in respect of fixed dividend. Pref.right to repayment of
capital in the even of Company winding up.

40. Leverage: It is a force applied at a particular work to get the desired result.



                                         4
41. Operating leverage: the operating leverage takes place when a changes       in
revenue greater changes in EBIT.

42. Financial leverage : it is nothing but a process of using debt capital to
increase the rate of return on equity

43. Combine leverage: it is used to measure of the total risk of the firm =
operating risk + financial risk.

 44. Joint venture: A joint venture is an association of two or more the persons
who combined for the execution of a specific transaction and divide the profit or
loss their of an agreed ratio.

45. Partnership: partnership is the relation b/w the persons who have agreed to
share the profits of business carried on by all or any of them acting for all.

 46. Factoring: It is an arrangement under which a firm (called borrower)
receives advances against its receivables, from a financial institutions (called
factor)

47. Capital reserve: The reserve which transferred from the capital gains is
called capital reserve.

 48.General reserve: the reserve which is transferred from normal profits of the
firm is called general reserve

49. Free Cash: The cash not for any specific purpose free from any
encumbrance like surplus cash.

50. Minority Interest: minority interest refers to the equity of the minority
shareholders in a subsidiary company.

51. Capital receipts: capital receipts may be defined as “non-recurring receipts
from the owner of the business or lender of the money crating a liability to either
of them.

52. Revenue receipts: Revenue receipts may defined as “A recurring receipts
against sale of goods in the normal course of business and which generally the
result of the trading activities”.

53. Meaning of Company: A company is an association of many persons who
contribute money or money’s worth to common stock and employs it for a
common purpose. The common stock so contributed is denoted in money and is
the capital of the company.

                                          5
54. Types of a company:

   1.Statutory companies

   2.government company

  3.foreign company

  4.Registered companies:

     a. Companies limited by shares

     b. Companies limited by guarantee

      c. Unlimited companies

      D. private company

      E. public company

55. Private company: A private co. is which by its

   AOA: Restricts the right of the members to transfer of shares Limits the no.
Of members 50. Prohibits any Invitation to the public to subscribe for its shares
or debentures.

56. Public company: A company, the articles of association of which does not
contain the requisite restrictions to make it a private limited company, is called a
public company.

57. Characteristics of a company:

   Voluntary association

   Separate legal entity

   Free transfer of shares

   Limited liability

   Common seal

Perpetual existence.


                                         6
58. Formation of company:

   Promotion

   Incorporation

   Commencement of business

59. Equity share capital: The total sum of equity shares is called equity share
capital.

60. Authorized share capital: it is the maximum amount of the share capital,
which a company can raise for the time being.

61. Issued capital: It is that part of the authorized capital, which has been
allotted to the public for subscriptions.

62. Subscribed capital: it is the part of the issued capital, which has been
allotted to the public

63. Called up capital: It has been portion of the subscribed capital which has
been called up by the company.

64. Paid up capital: It is the portion of the called up capital against which
payment has been received.

65. Debentures: Debenture is a certificate issued by a company under its seal
acknowledging a debt due by it to its holder.

66. Cash profit: cash profit is the profit it is occurred from the cash sales.

67. Deemed public Ltd. Company: A private company is a subsidiary company to
public company it satisfies the following terms/conditions Sec 3(1)3:

  1.having minimum share capital 5 lakhs

  2.accepting investments from the public

  3.no restriction of the transferable of shares

  4.No restriction of no. of members.

  5.accepting deposits from the investors


                                          7
68. Secret reserves: secret reserves are reserves the existence of which does
not appear on the face of balance sheet. In such a situation, net assets position
of the business is stronger than that disclosed by the balance sheet.

  These reserves are crated by:

  1.Excessive dep.of an asset, excessive over-valuation of a liability.

  2.Complete elimination of an asset, or under valuation of an asset.

69. Provision: provision usually means any amount written off or retained by
way of providing depreciation, renewals or diminutions in the value of assets or
retained by way of providing for any known liability of which the amount can not
be determined with substantial accuracy.

70. Reserve: The provision in excess of the amount considered necessary for
the purpose it was originally made is also considered as reserve Provision is
charge against profits while reserves is an appropriation of profits Creation of
reserve increase proprietor’s fund while creation of provisions decreases his
funds in the business.

71. Reserve fund: the term reserve fund means such reserve against which
clearly investment etc.,

72. Undisclosed reserves: Sometimes a reserve is created but its identity is
merged with some other a/c or group of accounts so that the existence of the
reserve is not known such reserve is called an undisclosed reserve.

73. Finance management: financial management deals with procurement of
funds and their effective utilization in business.

74. Objectives of financial management: financial management having two
objectives that Is:

 1. Profit maximization: the finance manager has to make his decisions in a
manner so that the profits of the concern are maximized.

  2. Wealth maximization: wealth maximization means the objective of a firm
should be to maximize its value or wealth, or value of a firm is represented by
the market price of its common stock.




                                         8
75. Functions of financial manager:

      Investment decision

      Dividend decision

      Finance decision

      Cash management decisions

      Performance evaluation

      Market impact analysis

76. Time value of money: the time value of money means that worth of a rupee
received today is different from the worth of a rupee to be received in future.

77. Capital structure: it refers to the mix of sources from where the long-term
funds required in a business may be raised; in other words, it refers to the
proportion of debt, preference capital and equity capital.

78. Optimum capital structure: capital structure is optimum when the firm has a
combination of equity and debt so that the wealth of the firm is maximum.

79. Wacc: it denotes weighted average cost of capital. It is defined as the overall
cost of capital computed by reference to the proportion of each component of
capital as weights.

80. Financial break-even point: it denotes the level at which a firm’s EBIT is just
sufficient to cover interest and preference dividend.

81. Capital budgeting: capital budgeting involves the process of decision
making with regard to investment in fixed assets. Or decision making with
regard to investment of money in long-term projects.

82. Pay back period: payback period represents the time period required for
complete recovery of the initial investment in the project.

83. ARR: accounting or average rate of return means the average annual yield
on the project.

84. NPV: the net present value of an investment proposal is defined as the sum
of the present values of all future cash in flows less the sum of the present
values of all cash out flows associated with the proposal.

                                         9
85. Profitability index: where different investment proposal each involving
different initial investments and cash inflows are to be compared.

86. IRR: internal rate of return is the rate at which the sum total of discounted
cash inflows equals the discounted cash out flow.

87. Treasury management: it means it is defined as the efficient management of
liquidity and financial risk in business.

88. Concentration banking: it means identify locations or places where
customers are placed and open a local bank a/c in each of these locations and
open local collection canter.

89. Marketable securities: surplus cash can be invested in short term
instruments in order to earn interest.

90. Ageing schedule: in a ageing schedule the receivables are classified
according to their age.

91. Maximum permissible bank finance (MPBF): it is the maximum amount that
banks can lend a borrower towards his working capital requirements.

92. Commercial paper: a cp is a short term promissory note issued by a
company, negotiable by endorsement and delivery, issued at a discount on face
value as may be determined by the issuing company.

93. Bridge finance: It refers to the loans taken by the company normally from a
commercial banks for a short period pending disbursement of loans sanctioned
by the financial institutions.

94. Venture capital: It refers to the financing of high-risk ventures promoted by
new qualified entrepreneurs who require funds to give shape to their ideas.

95. Debt securitization: It is a mode of financing, where in securities are issued
on the basis of a package of assets (called asset pool).

96. Lease financing: Leasing is a contract where one party (owner) purchases
assets and permits its views by another party (lessee) over a specified period

97. Trade Credit: It represents credit granted by suppliers of goods, in the
normal course of business.

98. Over draft: Under this facility a fixed limit is granted within which the
borrower allowed to overdraw from his account.

                                         10
99. Cash credit: It is an arrangement under which a customer is allowed an
advance up to certain limit against credit granted by bank.

100. Clean overdraft: It refers to an advance by way of overdraft facility, but not
back by any tangible security.

101. Share capital: The sum total of the nominal value of the shares of a
company is called share capital.

102. Funds flow statement: It is the statement deals with the financial resources
for running business activities. It explains how the funds obtained and how they
used.

103.Sources of funds: There are two sources of funds Internal sources and
external sources. Internal source: Funds from operations is the only internal
sources of funds and some important points add to it they do not result in the
outflow of funds

      Depreciation on fixed assets

(b) Preliminary expenses or goodwill written off, Loss on sale of fixed assets

Deduct the following items, as they do not increase the funds:

Profit on sale of fixed assets, profit on revaluation

Of fixed assets

External sources: (a) Funds from long-term loans

(b)Sale of fixed assets

(c) Funds from increase in share capital

104. Application of funds: (a) Purchase of fixed assets (b) Payment of dividend
(c)Payment of tax liability (d) Payment of fixed liability

105. ICD (Inter corporate deposits): Companies can borrow funds for a short
period. For example 6 months or less from another company which have surplus
liquidity. Such eposits made by one company in another company are called
ICD.




                                         11
1 06. Certificate of deposits: The CD is a document of title similar to a fixed
deposit receipt issued by banks there is no prescribed interest rate on such CDs
it is based on the prevailing market conditions.

107. Public deposits: It is very important source of short term and medium term
finance. The company can accept PD from members of the public and
shareholders. It has the maturity period of 6 months to 3 years.

108.Euro issues: The euro issues means that the issue is listed on a European
stock Exchange. The subscription can come from any part of the world except
India.

109.GDR (Global depository receipts): A depository receipt is basically a
negotiable certificate , dominated in us dollars that represents a non-US
company publicly traded in local currency equity shares.

110. ADR (American depository receipts): Depository receipt issued by a
company in the USA are known as ADRs. Such receipts are to be issued in
accordance with the provisions stipulated by the securities Exchange
commission (SEC) of USA like SEBI in India.

111.Commercial banks: Commercial banks extend foreign currency loans for
international operations, just like rupee loans. The banks also provided
overdraft.

112.Development banks: It offers long-term and medium term loans including
foreign currency loans

113.International agencies: International agencies like the IFC,IBRD,ADB,IMF
etc. provide indirect assistance for obtaining foreign currency.

 114. Seed capital assistance: The seed capital assistance scheme is desired by
the IDBI for professionally or technically qualified entrepreneurs and persons
possessing relevant experience and skills and entrepreneur traits.

115. Unsecured l0ans: It constitutes a significant part of long-term finance
available to an enterprise.

116. Cash flow statement: It is a statement depicting change in cash position
from one period to another.




                                        12
117.Sources of cash: Internal sources-

      (a)Depreciation

      (b)Amortization

      (c)Loss on sale of fixed assets

      (d)Gains from sale of fixed assets

      (e) Creation of reserves External sources-

      (a)Issue of new shares

      (b)Raising long term loans

      (c)Short-term borrowings

      (d)Sale of fixed assets, investments

118. Application of cash:

      (a) Purchase of fixed assets

      (b) Payment of long-term loans

      (c) Decrease in deferred payment liabilities

      (d) Payment of tax, dividend

      (e) Decrease in unsecured loans and deposits

119. Budget: It is a detailed plan of operations for some specific future period.
It is an estimate prepared in advance of the period to which it applies.

 120. Budgetary control: It is the system of management control and accounting
in which all operations are forecasted and so for as possible planned ahead, and
the actual results compared with the forecasted and planned ones.

121. Cash budget: It is a summary statement of firm’s expected cash inflow and
outflow over a specified time period.

122. Master budget: A summary of budget schedules in capsule form made for
the purpose of presenting in one report the highlights of the budget forecast.
                                           13
123. Fixed budget: It is a budget, which is designed to remain unchanged
irrespective of the level of activity actually attained.

124.Zero- base- budgeting: It is a management tool which provides a systematic
method for evaluating all operations and programmes, current of new allows for
budget reductions and expansions in a rational manner and allows reallocation
of source from low to high priority programs.

125. Goodwill: The present value of firm’s anticipated excess earnings.

126. BRS: It is a statement reconciling the balance as shown by the bank pass
book and balance shown by the cash book.

127. Objective of BRS: The objective of preparing such a statement is to know
the causes of difference between the two balances and pass necessary
correcting or adjusting entries in the books of the firm.

128.Responsibilities of accounting: It is a system of control by delegating and
locating the Responsibilities for costs.

129. Profit centre: A centre whose performance is measured in terms of both
the expense incurs and revenue it earns.

130.Cost centre: A location, person or item of equipment for which cost may be
ascertained and used for the purpose of cost control.

131. Cost: The amount of expenditure incurred on to a given thing.

132. Cost accounting: It is thus concerned with recording, classifying, and
summarizing costs for determination of costs of products or services planning,
controlling and reducing such costs and furnishing of information management
for decision making.

133. Elements of cost:

   (A) Material

   (B) Labour

   (C) Expenses

   (D) Overheads



                                       14
134. Components of total costs: (A) Prime cost (B) Factory cost

   (C)Total cost of production (D) Total c0st

135. Prime cost: It consists of direct material direct labour and direct expenses.
It is also known as basic or first or flat cost.

136. Factory cost: It comprises prime cost, in addition factory overheads which
include cost of indirect material indirect labour and indirect expenses incurred
in factory. This cost is also known as works cost or production cost or
manufacturing cost.

137. Cost of production: In office and administration overheads are added to
factory cost, office cost is arrived at.

138. Total cost: Selling and distribution overheads are added to total cost of
production to get the total cost or cost of sales.

139. Cost unit: A unit of quantity of a product, service or time in relation to
which costs may be ascertained or expressed.

140.Methods of costing: (A)Job costing (B)Contract costing (C)Process costing
(D)Operation costing (E)Operating costing (F)Unit costing (G)Batch costing.

141. Techniques of costing: (a) marginal costing (b) direct costing (c)absorption
costing (d) uniform costing.

142. Standard costing: standard costing is a system under which the cost of the
product is determined in advance on certain predetermined standards.

143. Marginal costing: it is a technique of costing in which allocation of
expenditure to production is restricted to those expenses which arise as a result
of production, i.e., materials, labour, direct expenses and variable overheads.

144. Derivative: derivative is product whose value is derived from the value of
one or more basic variables of underlying asset.

145. Forwards: a forward contract is customized contracts between two entities
were settlement takes place on a specific date in the future at today’s pre agreed
price.

146. Futures: a future contract is an agreement between two parties to buy or
sell an asset at a certain time in the future at a certain price. Future contracts
are standardized exchange traded contracts.

                                         15
147. Options: an option gives the holder of the option the right to do some thing.
The option holder option may exercise or not.

148. Call option: a call option gives the holder the right but not the obligation to
buy an asset by a certain date for a certain price.

149. Put option: a put option gives the holder the right but not obligation to sell
an asset by a certain date for a certain price.

150. Option price: option price is the price which the option buyer pays to the
option seller. It is also referred to as the option premium.

151. Expiration date: the date which is specified in the option contract is called
expiration date.

152. European option: it is the option at exercised only on expiration date it self.

153. Basis: basis means future price minus spot price.

154. Cost of carry: the relation between future prices and spot prices can be
summarized in terms of what is known as cost of carry.

155. Initial margin: the amount that must be deposited in the margin a/c at the
time of first entered into future contract is known as initial margin.

156 Maintenance margin: this is some what lower than initial margin.

157. Mark to market: in future market, at the end of the each trading day, the
margin a/c is adjusted to reflect the investors’ gains or loss depending upon the
futures selling price. This is called mark to market.

158. Baskets : basket options are options on portfolio of underlying asset.

159. Swaps: swaps are private agreements between two parties to exchange
cash flows in the future according to a pre agreed formula.

160. Impact cost: impact cost is cost it is measure of liquidity of the market. It
reflects the costs faced when actually trading in index.

161. Hedging: hedging means minimize the risk.

162. Capital market: capital market is the market it deals with the long term
investment funds. It consists of two markets 1.primary market 2.secondary
market.

                                         16
163. Primary market: those companies which are issuing new shares in this
market. It is also called new issue market.

164. Secondary market: secondary market is the market where shares buying
and selling. In India secondary market is called stock exchange.

165. Arbitrage: it means purchase and sale of securities in different markets in
order to profit from price discrepancies. In other words arbitrage is a way of
reducing risk of loss caused by price fluctuations of securities held in a
portfolio.

166. Meaning of ratio: Ratios are relationships expressed in mathematical terms
between figures which are connected with each other in same manner.

167. Activity ratio: it is a measure of the level of activity attained over a period.

168. mutual fund : a mutual fund is a pool of money, collected from investors,
and is invested according to certain investment objectives.

169. characteristics of mutual fund : Ownership of the MF is in the hands of
the of the investors MF managed by investment professionals The value of
portfolio is updated every day

170.advantage of MF to investors : Portfolio diversification Professional
management Reduction in risk Reduction of transaction casts Liquidity
Convenience and flexibility

171.net asset value : the value of one unit of investment is called as the Net
Asset Value

172.open-ended fund : open ended funds means investors can buy and sell
units of fund, at NAV related prices at any time, directly from the fund this is
called open ended fund. For ex; unit 64

173.close ended funds : close ended funds means it is open for sale to investors
for a specific period, after which further sales are closed. Any further
transaction for buying the units or repurchasing them, happen, in the secondary
markets.

174. dividend option : investors who choose a dividend on their investments,
will receive dividends from the MF, as when such dividends are declared.

175.growth option : investors who do not require periodic income distributions
can be choose the growth option.

                                          17
176.equity funds : equity funds are those that invest pre-dominantly in equity
shares of company.

177.types of equity funds : Simple equity funds Primary market funds Sectoral
funds Index funds

178. sectoral funds : sectoral funds choose to invest in one or more chosen
sectors of the equity markets.

179.index funds :the fund manager takes a view on companies that are expected
to perform well, and invests in these companies

180.debt funds : the debt funds are those that are pre-dominantly invest in debt
securities.

181. liquid funds : the debt funds invest only in instruments with maturities less
than one year.

182. gilt funds : gilt funds invests only in securities that are issued by the GOVT.
and therefore does not carry any credit risk.

183.balanced funds :funds that invest both in debt and equity markets are called
balanced funds.

184. sponsor : sponsor is the promoter of the MF and appoints trustees,
custodians and the AMC      with prior approval of SEBI .

185. trustee : trustee is responsible to the investors in the MF and appoint the
AMC for managing the investment portfolio.

186. AMC : the AMC describes Asset Management Company, it is the business
face of the MF, as it manages all the affairs of the MF.

187. R & T Agents : the R&T agents are responsible for the investor servicing
functions, as they maintain the records of investors in MF.

188. custodians : custodians are responsible for the securities held in the
mutual fund’s portfolio.

189. scheme take over : if an existing MF scheme is taken over by the another
AMC, it is called as scheme take over.

190.meaning of load: load is the factor that is applied to the NAV of a scheme to
arrive at the price.

                                         18
192. market capitalization : market capitalization means number of shares
issued multiplied with market price per share.

193.price earning ratio : the ratio between the share price and the post tax
earnings of company is called as price earning ratio.

194. dividend yield : the dividend paid out by the company, is usually a
percentage of the face value of a share.

195. market risk : it refers to the risk which the investor is exposed to as a result
of adverse movements in the interest rates. It also referred to as the interest rate
risk.

196. Re-investment risk : it the risk which an investor has to face as a result of a
fall in the interest rates at the time of reinvesting the interest income flows from
the fixed income security.

197. call risk : call risk is associated with bonds have an embedded call option in
them. This option hives the issuer the right to call back the bonds prior to
maturity.

198. credit risk : credit risk refers to the probability that a borrower could default
on a commitment to repay debt or band loans

199.inflation risk : inflation risk reflects the changes in the purchasing power of
the cash flows resulting from the fixed income security.

200.liquid risk : it is also called market risk, it refers to the ease with which
bonds could be traded in the market.

201.drawings : drawings denotes the money withdrawn by the proprietor from
the business for his personal use.

202.outstanding Income : Outstanding Income means income which has become
due during the accounting year but which has not so far been received by the
firm.

203.Outstanding Expenses : Outstanding Expenses refer to those expenses
which have become due during the accounting period for which the Final
Accounts have been prepared but have not yet been paid.




                                           19
204.closing stock : The term closing stock means goods lying unsold with the
businessman at the end of the accounting year.

205. Methods of depreciation :

      1.Unirorm charge methods :

         a. Fixed installment method

         b .Depletion method

         c. Machine hour rate method.

    2. Declining charge methods :

         a. Diminishing balance method

         b.Sum of years digits method

         c. Double declining method

    3. Other methods :

        a. Group depreciation method

        b. Inventory system of depreciation

        c. Annuity method

        d. Depreciation fund method

        e. Insurance policy method.

206.Accrued Income : Accrued Income means income which has been earned by
the business during the accounting year but which has not yet become due
and, therefore, has not been received.

207.Gross profit ratio : it indicates the efficiency of the production/trading
operations.




                                         20
      Formula : Gross profit

              -------------------X100

                 Net sales

208.Net profit ratio : it indicates net margin on sales

      Formula: Net profit

               --------------- X 100

                  Net sales

209. return on share holders funds : it indicates measures earning power of
equity capital.

      Formula : profits available for Equity shareholders

                  -----------------------------------------------X 100

                   Average Equity Shareholders Funds

210. Earning per Equity share (EPS) : it shows the amount of earnings
attributable to each equity share.

      Formula : profits available for Equity shareholders

                      ----------------------------------------------

                          Number of Equity shares

211.dividend yield ratio : it shows the rate of return to shareholders in the form
of dividends based in the market price of the share

          Formula :     Dividend per share

                      ---------------------------- X100

                      Market price per share




                                                 21
212. price earning ratio : it a measure for determining the value of a share. May
also be used to measure the rate of return expected by investors.

             Formula : Market price of share(MPS)

                      -      ------------------------------X 100

                              Earning per share (EPS)

213.Current ratio : it measures short-term debt paying ability.

             Formula : Current Assets

                     ------------------------

                          Current Liabilities

214. Debt-Equity Ratio : it indicates the percentage of funds being financed
through borrowings; a measure of the extent of trading on equity.

             Formula : Total Long-term Debt

                            ---------------------------

                           Shareholders funds

215.Fixed Assets ratio : This ratio explains whether the firm has raised adepuate
long-term funds to meet its fixed assets requirements.

           Formula             Fixed Assets

                           -------------------

                             Long-term Funds

216 . Quick Ratio : The ratio termed as ‘ liquidity ratio’. The ratio is ascertained y
comparing the liquid assets to current liabilities.

            Formula :       Liquid Assets

                          ------------------------

                          Current Liabilities


                                                     22
217. Stock turnover Ratio : the ratio indicates whether investment in inventory in
efficiently used or not. It, therefore explains whether investment in inventory
within proper limits or not.

        Formula: cost of goods sold

                     ------------------------

                      Average stock

218. Debtors Turnover Ratio : the ratio the better it is, since it would indicate that
debts are being collected more promptly. The ration helps in cash budgeting
since the flow of cash from    customers can be worked out on the basis of
sales.

        Formula:        Credit sales

                      ----------------------------

                    Average Accounts Receivable

219.Creditors Turnover Ratio : it indicates the speed with which the payments
for credit purchases are made to the creditors.

        Formula:            Credit Purchases

                              -----------------------

                            Average Accounts Payable

220. Working capital turnover ratio : it is also known as Working Capital
Leverage Ratio. This ratio Indicates whether or not working capital has been
effectively utilized in making sales.

         Formula:            Net Sales

                   ----------------------------

                          Working Capital

221.Fixed Assets Turnover ratio : This ratio indicates the extent to which the
investments in fixed assets contributes towards sales.



                                                     23
    Formula:             Net Sales

                    --------------------------

                         Fixed Assets

222 .Pay-out Ratio : This ratio indicates what proportion of earning per share
has been used for paying dividend.

     Formula:       Dividend per Equity Share

                  --------------------------------------------X100

                      Earning per Equity share

223.Overall Profitability Ratio : It is also called as “ Return on Investment” (ROI)
or Return on Capital Employed (ROCE) . It indicates the percentage of return on
the total capital employed in the business.

      Formula : Operating profit

                  ------------------------X 100

                    Capital employed

    The term capital employed has been given different meanings a.sum total of
all assets whether fixed or current b.sum total of fixed assets, c.sum total of
long-term funds employed in the business, i.e., share capital +reserves &surplus
+long term loans –(non business assets + fictitious assets). Operating profit
means ‘profit before interest and tax’

224 . Fixed Interest Cover ratio : the ratio is very important from the lender’s
point of view. It indicates whether the business would earn sufficient profits to
pay periodically the interest charges.

      Formula :     Income before interest and Tax

                    ---------------------------------------

                             Interest Charges




                                                  24
225. Fixed Dividend Cover ratio : This ratio is important for preference
shareholders entitled to get dividend at a fixed rate in priority to other
shareholders.

      Formula :    Net Profit after Interest and Tax

                      ------------------------------------------

                      Preference Dividend

226. Debt Service Coverage ratio : This ratio is explained ability of a company to
make payment of principal amounts also on time.

      Formula :     Net profit before interest and tax

                       ----------------------------------------    1-Tax rate

                  Interest + Principal payment installment

227. Proprietary ratio : It is a variant of debt-equity ratio . It establishes
relationship between the proprietor’s funds and the total tangible assets.

     Formula :     Shareholders funds

                  ----------------------------

                   Total tangible assets

228.Difference between joint venture and partner ship : In joint venture the
business is carried on without using a firm name, In the partnership, the
business is carried on under a firm name. In the joint venture, the business
transactions are recorded under cash system In the partnership, the business
transactions are recorded under mercantile system. In the joint venture, profit
and loss is ascertained on completion of the venture In the partner ship , profit
and loss is ascertained at the end of each year. In the joint venture, it is confined
to a particular operation and it is temporary. In the partnership, it is confined to
a particular operation and it is permanent.

229.Meaning of Working capital : The funds available for conducting day to day
operations of an enterprise. Also represented by the excess of current assets
over current liabilities.




                                                 25
230.concepts of accounting :

     1.Business entity concepts :- According to this concept, the business is
     treated as a separate entity distinct from its owners and others.

     2.Going concern concept :- According to this concept, it is assumed that a
     business has a reasonable expectation of continuing business at a profit
     for an indefinite period of time.

     3.Money measurement concept :- This concept says that the accounting
     records only those transactions which can be expressed in terms of
     money only.

     4.Cost concept :- According to this concept, an asset is recorded in the
     books at the price paid to acquire it and that this cost is the basis for all
     subsequent accounting for the asset.

     5.Dual aspect concept :- In every transaction, there will be two aspects –
     the receiving aspect and the giving aspect; both are recorded by debiting
     one accounts and crediting another account. This is called double entry.

     6.Accounting period concept :- It means the final accounts must be
     prepared on a periodic basis. Normally accounting period adopted is one
     year, more than this period reduces the utility of accounting data.

     7.Realization concept :- According to this concepts, revenue is considered
     as being earned on the data which it is realized, i.e., the date when the
     property in goods passes the buyer and he become legally liable to pay.

     8.Materiality concepts :- It is a one of the accounting principle, as per only
     important information will be taken, and un important information will be
     ignored in the preparation of the financial statement.

     9.Matching concepts :- The cost or expenses of a business of a particular
     period are compared with the revenue of the period in order to ascertain
     the net profit and loss.

     10.Accrual concept :- The profit arises only when there is an increase in
     owners capital, which is a result of excess of revenue over expenses and
     loss.

231. Financial analysis :The process of interpreting the past, present, and future
financial condition of a company.


                                         26
232. Income statement : An accounting statement which shows the level of
revenues, expenses and profit occurring for a given accounting period.

233.Annual report : The report issued annually by a company, to its share
holders. it containing financial statement like, trading and profit & lose account
and balance sheet.

234. Bankrupt : A statement in which a firm is unable to meets its obligations
and hence, it is assets are surrendered to court for administration

235 . Lease : Lease is a contract between to parties under the contract, the
owner of the asset gives the right to use the asset to the user over an agreed
period of the time for a consideration

236.Opportunity cost : The cost associated with not doing something.

237. Budgeting : The term budgeting is used for preparing budgets and other
producer for planning,co-ordination,and control of business enterprise.

238.Capital : The term capital refers to the total investment of company in
money, tangible and intangible assets. It is the total wealth of a company.

239.Capitalization : It is the sum of the par value of stocks and bonds out
standings.

240. Over capitalization : When a business is unable to earn fair rate on its
outstanding securities.

241. Under capitalization : When a business is able to earn fair rate or over rate
on it is outstanding securities.

242. Capital gearing : The term capital gearing refers to the relationship between
equity and long term debt.

243.Cost of capital : It means the minimum rate of return expected by its
investment.

244.Cash dividend : The payment of dividend in cash

245.Define the term accrual : Recognition of revenues and costs as they are
earned or incurred . it includes recognition of transaction relating to assets and
liabilities as they occur irrespective of the actual receipts or payments.



                                         27
245. accrued expenses : An expense which has been incurred in an accounting
period but for which no enforceable claim has become due in what period
against the enterprises.

246.Accrued revenue : Revenue which has been earned is an earned is an
accounting period but in respect of which no enforceable claim has become due
to in that period by the enterprise.

247.Accrued liability : A developing but not yet enforceable claim by an another
person which accumulates with the passage of time or the receipt of service or
otherwise. it may rise from the purchase of services which at the date of
accounting have been only partly performed and are not yet billable.

248.Convention of Full disclosure : According to this convention, all accounting
statements should be honestly prepared and to that end full disclosure of all
significant information will be made.

249.Convention of consistency : According to this convention it is essential that
accounting practices and methods remain unchanged from one year to another.

250.Define the term preliminary expenses : Expenditure relating to the formation
of an enterprise. There include legal accounting and share issue expenses
incurred for formation of the enterprise.

251.Meaning of Charge : charge means it is a obligation to secure an indebt
ness. It may be fixed charge and floating charge.

252.Appropriation : It is application of profit towards Reserves and Dividends.

253.Absorption costing : A method where by the cost is determine so as to
include the appropriate share of both variable and fixed costs.

254.Marginal Cost : Marginal cost is the additional cost to produce an additional
unit of a product. It is also called variable cost.

255. What are the ex-ordinary items in the P&L a/c : The transaction which are
not related to the business is termed as ex-ordinary transactions or ex-ordinary
items. Egg:- profit or losses on the sale of fixed assets, interest received from
other company investments, profit or loss on foreign exchange, unexpected
dividend received.




                                        28
256 . Share premium : The excess of issue of price of shares over their face
value. It will be showed with the allotment entry in the journal, it will be adjusted
in the balance sheet on the liabilities side under the head of “reserves &
surplus”.

257.Accumulated Depreciation : The total to date of the periodic depreciation
charges on depreciable assets.

258.Investment : Expenditure on assets held to earn interest, income, profit or
other benefits.

259.Capital : Generally refers to the amount invested in an enterprise by its
owner. Ex; paid up share capital in corporate enterprise.

260. Capital Work In Progress : Expenditure on capital assets which are in the
process of construction as completion.

261. Convertible Debenture : A debenture which gives the holder a right to
conversion wholly or partly in shares in accordance with term of issues.

262.Redeemable Preference Share : The preference share that is repayable
either after a fixed (or) determinable period (or) at any time dividend by the
management.

263. Cumulative preference shares : A class of preference shares entitled to
payment of umulates dividends. Preference shares are always deemed to be
cumulative unless they are expressly made non-cumulative preference shares.

264.Debenture redemption reserve : A reserve created for the redemption of
debentures at a future date.

265. Cumulative dividend : A dividend payable as cumulative preference shares
which it unpaid cumulates as a claim against the earnings of a corporate before
any distribution is made to the other shareholders.

266. Dividend Equalization reserve : A reserve created to maintain the rate of
dividend in future years.

267. Opening Stock : The term ‘opening stock’ means goods lying unsold with
the businessman in the beginning of the accounting year. This is shown on the
debit side of the trading account.




                                         29
268.Closing Stock : The term ‘Closing Stock’ includes goods lying unsold with
the businessman at the end of the accounting year. The amount of closing stock
is shown on the credit side of the trading account and as an asset in the balance
sheet.

269.Valuation of closing stock : The closing stock is valued on the basis of
“Cost or Market price whichever is less” principle.

272. Contingency : A condition (or) situation the ultimate out come of which gain
or loss will be known as determined only as the occurrence or non occurrence
of one or more uncertain future events.

273.Contingent Asset : An asset the existence ownership or value of which may
be known or determined only on the occurrence or non occurrence of one more
uncertain future events.

274. Contingent liability : An obligation to an existing condition or situation
which may arise in future depending on the occurrence of one or more uncertain
future events.

275. Deficiency : the excess of liabilities over assets of an enterprise at a given
date is called deficiency.

276.Deficit : The debit balance in the profit and loss a/c is called deficit.

277.Surplus : Credit balance in the profit & loss statement after providing for
proposed appropriation & dividend , reserves.

278.Appropriation Assets : An account sometimes included as a separate
section of the profit and loss statement showing application of profits towards
dividends, reserves.

279. Capital redemption reserve : A reserve created on redemption of the
average cost:- the cost of an item at a point of time as determined by applying
an average of the cost of all items of the same nature over a period. When
weights are also applied in the computation it is termed as weight average cost.

280.Floating Change : Assume change on some or all assets of an enterprise
which are not attached to specific assets and are given as security against debt.

281.Difference between Funds flow and Cash flow statement : A Cash flow
statement is concerned only with the change in cash position while a funds flow
analysis is concerned with change in working capital position between two
balance sheet dates.

                                          30
A cash flow statement is merely a record of cash receipts and disbursements.
While studying the short-term solvency of a business one is interested not only
in cash balance but also in the assets which are easily convertible into cash.

282. Difference Between the Funds flow and Income statement :

A funds flow statement deals with the financial resource required for running the
business activities. It explains how were the funds obtained and how were they
used, Whereas an income statement discloses the results of the business
activities, i.e., how much has been earned and how it has been spent. A funds
flow statement matches the “funds raised” and “funds applied” during a
particular period. The source and application of funds may be of capital as well
as of revenue nature. An income statement matches the incomes of a period
with the expenditure of that period, which are both of a revenue nature.




                                       31
1. What is the purpose of the Profit & Loss account?
   a) To show the financial position for a particular period.
   b) To show the profitability position for a particular period
   c) To show the financial position as on particular date.
   d) To show the profitability position as on particular date.

2. What do you understand by “Time value of the Money”?
   a) Different values for a unit of money in different time periods.
   b) Same value for a unit of money in same time periods.
   c) Different values for a unit of money in same time periods.
   d) Same value for a unit of money in different time periods.

3. The ratio of expected return to the standard deviation is called as _______________.
   a) Standard deviation ratio
   b) Sharpe’s ratio
   c) Best Ratio
   d) Standard ratio

4. Calculate the value 5 years hence of deposit of Rs.5, 000 made today if the interest rate is
   10%.
   a) 5082.00
   b) 7500.00
   c) 8052.55
   d) 8082.75

5. What is the present value of Rs. 1,00,000 receivable after 5 years at discount rate of
   10%?
   a) 60,000
   b) 62,902
   c) 69092
   d) 62092

6. The profits available to the ordinary share holders on a per share basis, after
   deduction of taxes are called as _____________________.
   a) Earnings per share
   b) Dividends
   c) Net profits
   d) Preference Dividends.

7. What is Price to Earnings Ratio (P/E ratio)?
                                             32
   a)   Market price of share / Earnings per share.
   b)   Earnings per share / Marker price of share.
   c)   Profits / Earnings ratio.
   d)   None of the above.

8. Financial Leverage ratio is also known as ______________________.
   a) Debt x Equity ratio
   b) Debt / Equity ratio
   c) Equity ratio
   d) Debt ratio

9. Which of the following ratio is used to judge the liquidity of a firm?
   a) Current assets ratio
   b) Profitability ratio
   c) Current ratio
   d) Debt / Equity ratio

10.The measure of risk (standard deviation) is calculated by ______________.
   a) Variance
   b) Square Root of variance
   c) Square of variance
   d) None of the above.

11.The ratio of Gross Profit margin to net sales is called as ___________________.
   a) Net sales ratio
   b) Liquidity ratio
   c) Profit margin ratio
   d) Gross profit ratio.

12.What is the formula for calculating the future value of money?
   a) FV=PV x (1+r)t
   b) FV=PV x (1+r)
   c) FV=PV x (1+t)r
   d) FV=PV x (1+t)

13.Which of the following is true about private placements?
   a) It is cost & time effective method of raising funds.
   b) Not required detailed compliance with formalities
   c) Both a & b
   d) Only a

                                             33
14.The market where securities are brought and sold is called as ___________________.
   a) primary market
   b) secondary market
   c) stock exchange
   d) none of the above

15.Government Securities are issued and auctioned by ________________.
   a) Central Government
   b) RBI
   c) SEBI
   d) Both RBI & SEBI

16.Which of the following is not a market participant?
   a) RBI
   b) Money lender
   c) Merchant Bankers
   d) Under writers

17.What do you mean by GDRs?
   a) Global Depository Receipts
   b) Gold Deposit Receipts
   c) Gold Deposit Rates
   d) Gross Deposit Receipts

18.What is NCFM?
   a) National Certification for Financial Markets
   b) NSE’s Certification in Financial Markets
   c) National Certification of Financial Markets
   d) National Certification in Financial Markets

19.Which of the following is FALSE about Reforms of Securities Market?
   a) FIIs have been permitted to invest in all types of securities.
   b) Indian Companies have been permitted to raise resources form abroad through
      issue of ADRs & GDRs.
   c) Indian companies have not been permitted to setup trading terminals abroad
   d) Trading platform of Indian exchanges accessible throughout world.

20.Which of the following is TRUE about NEAT?
   a) Trading system is called as NATIONAL EXCHANGE FOR AUTOMATED
      TRADING.

                                           34
   b) It is an order driven system which matches buy & sell orders on price time
      priority.
   c) The system discloses the identity of buyer and seller.
   d) All of the above statements
   e) Only a & b
21.Derivative trading in India was introduced in _______________________.
   a) August 2000
   b) June 2000
   c) July 2000
   d) Sept 2000

22.Which of the following are considered very safe by the Indian Investors?
   a) Mutual Funds
   b) Units of UTI
   c) Bank Deposits
   d) Equity Shares

23.What is the main reason for Corporates to enter in primary market for Issues?
   a) To meet long term capital needs
   b) To meet working capital requirement.
   c) For expansion of operations.
   d) All of the above
   e) Only a & b

24.Which of the following are the statutory powers of SEBI, which are empowered by SEBI Act
   1992?
   a) protecting the interests of investors in securities
   b) promoting the development of securities market
   c) regulating the securities market
   d) All of the above

25.________________ deals with issue, allotment and transfer of securities and various
   aspects relating to company management.
   a) SEBI Act 1992.
   b) Companies Act 1956
   c) Depositories Act 1996
   d) SCRA Act 1956

26._____________ was passed to provide for the establishment of depositories in
   securities with the objective of ensuring free transferability of securities with speed &
   accuracy.
                                             35
   a)   SEBI Act 1992.
   b)   Companies Act 1956
   c)   Depositories Act 1996
   d)   SCRA Act 1956

27.The governing regulators of securities market are __________________.
   a) Department of Economic Affairs, Securities Appellate Tribunal
   b) RBI, SEBI
   c) Only a
   d) Only b
   e) Both a & b

28.________________ provides for direct and indirect control of virtually all aspects of
   securities trading and the running of stock exchanges.
   a) SEBI Act 1992.
   b) Companies Act 1956
   c) Depositories Act 1996
   d) SCRA Act 1956

29.A contract which derive its value from the prices, or index of prices of underlying
   securities is known as ___________________.
   a) Derivative
   b) Options
   c) Futures
   d) Stock Futures

30.Which of the following are bye-laws of the Stock-Exchange?
   a) Opening & Closing of markets
   b) Regulation of hours of trade
   c) Fixing, altering or postponing the days of settlements
   d) Regulation of taravani business
   e) All of the above.

31.Which of the following should be comply with, in order to list the securities in an
   exchange?
   a) Listing agreement
   b) Listing Period
   c) Listing proposal
   d) All of the above

32.SCRA Act 1956 is not applicable to ________________.
                                            36
   a)   RBI
   b)   SEBI
   c)   DCA
   d)   DEA

33.Companies aggrieved with refusal of listing by a recognised stock exchange can
   make appeal to _____________.
   a) RBI
   b) SEBI
   c) DCA
   d) SAT

34.Which of the following is not required for the qualification for membership of
   recognised stock exchange?
   a) He is of twenty one years of age.
   b) He is citizen of India
   c) He has compounded with his creditors
   d) He has not been convicted of an offence
   e) He has not been expelled or declared defaulter.

35.All the intermediaries in the market such as Brokers, Sub-brokers, Underwriters,
   Merchant Bankers are required to register with ________________.
   a) RBI
   b) SEBI
   c) NSE
   d) DCA

36.Which of the following is/are the functions of SEBI?
   a) Regulating the business in stock exchanges and other securities market.
   b) Promoting investors education and training of Intermediaries.
   c) Promoting Insider Trading regulations
   d) Only a & b
   e) a, b & c

37.Number of Members in the Board of SEBI are _________
   a) 3
   b) 4
   c) 5
   d) 6



                                           37
38.Which of the following punishment(s) is/are imposed by SEBI, for violation of
   provisions of SEBI Act 1992?
   a) Suspension or Cancellation of registration.
   b) Monetary Penalties
   c) Either a or b
   d) Both a & b
39._______________ is a person whose name is recorded as such with a depository.
   a) Beneficial Owner
   b) Registered Owner
   c) Depository Participant
   d) Actual Owner

40.Any information which relates to the financial results of a company and is not
   generally known or published by that company is called as ________________.
   a) Financial Information
   b) Unpublished price sensitive Information
   c) Unpublished information
   d) Sensitive information

41.As per _________________, a contract is an agreement enforceable by the law.
   a) Indian Contract Act 1872
   b) SEBI Act 1992
   c) SCRA Act 1956
   d) Companies Act 1956

42.A certificate under the common seal of a company, specifying the number of shares
   held and is prima facie evidence of the title to such shares is called as ____________.
   a) Share Certificate
   b) Certificate of Shares
   c) Shares
   d) All of the above

43.A general meeting of a company may be called by giving at least __________ days
   of notice in writing.
   a) 7
   b) 15
   c) 21
   d) 30
44.A Stock-broker or sub-broker shall not buy, sell and deal in securities, unless he
   holds the certificate granted by _____________
   a) RBI
                                            38
   b) SEBI
   c) NSE
   d) All of the above

45.A Broker is a person who arranges to buy and sell securities on behalf of
   _____________.
   a) Different exchanges
   b) Buyer & Seller
   c) Purchaser & Exchange
   d) Seller & Exchange
46.The Contract Note should contain name, ___________________ and SEBI
   registration number of Trading Member.
   a) Registered Office Address
   b) Dealing Office Address
   c) Registered Office Address as well as Dealing Office Address
   d) Registered Office Address and / or Dealing Office Address

47.Every Trading Member shall make payments to his clients or deliver securities
   purchased within ______________ of pay-out.
   a) T+2 days
   b) 2 working days
   c) 24 hours
   d) 48 hours
48.Purchase / Sale note is issued by _____________.
   a) Stock-Broker
   b) Sub-Broker
   c) Either a & b
   d) Both a & b
49.Which of the following not falls under code of conduct of SEBI regulation 1992?
   a) Execution of orders
   b) Breach of Trust
   c) Issuance of Contract Notes
   d) Fairness to Clients

50. The following is the Balance Sheet of ABC Co. Ltd.               (Rs.in Crores)
     Liabilities                  Amoun Assets                    Amou
                                  t                               nt
     Share Capital                  15.00 Fixed Assets             39.00
     Reserves & Surplus              8.50 Cash & Bank              00.60
     Secured Loans                  12.80 Debtors                  15.60

                                          39
     Unsecured Loans                 22.30 Prepaid Expenses           0.75
     Current Liabilities             12.60 Stock                     13.20
                                           Long Term                  2.05
                                           Investments
     Total                           71.20                           71.20

   Calculate Debt to Equity ratio from the above the table?
   a) 1.49
   b) 1.91
   c) 0.86
   d) 3.06

51.Calculate current ratio from the above the table?
   a) 1.24
   b) 2.33
   c) 1.44
   d) 2.39

52.Which of the following is not currently available in Normal market?
   a) Pre-Open phase
   b) Opening phase
   c) Open phase
   d) Market Close
53. Which of the following is CORRECT about SURCON period?
   a) It is a Surveillance & Control period after market close.
   b) It is the period during which users have inquiry access only.
   c) It is the period during which system processes the data for making system
      available for the next Trading day.
   d) All of the above
   e) None of the above

54. Which of the following is the top most level in hierarchy?
   a) Corporate Manager
   b) Branch Manager
   c) Dealer
   d) User

55. Which of the following is lowest level in hierarchy?
   a) Corporate Manager
   b) Branch Manager

                                            40
   c) Dealer
   d) User

56. The NEAT system supports an order driven market, wherein order match on the basis of
___.
   a) time priority
   b) price priority
   c) time – price priority
   d) price – time priority

57. What do you mean by abbreviation of word NEAT?
   a) National Exchange for Automated Trading
   b) National stock Exchange’s Automated Trading.
   c) Both a& b
   d) None of the above

58. Which of the following symbol is used to indicate that a security is Ex-Bonus?
101. Bonus
102. Ex-B
103. XB
104. EB

59._____________ is a facility for setting up the securities in the market watch screen
and also to setup the user’s own portfolio.
100. Market Watch
101. Security / Portfolio list
102. Market By Price
103. Basket Trading
60. Which of the following indicator is displayed for a security, when the company for
the security announces Extraordinary General Meeting (EGM)?
   a) XO
   b) XE
   c) XD
   d) XB

61. Internet trading on NSE started from ___________
   a) January 2000
   b) February 2000
   c) March 2000
   d) April 2000
62._________ is a party who enters on the opposite side as of the initiator.
                                            41
   a)   Competitor
   b)   Exchange
   c)   Initiator
   d)   Solicitor

63. Which of the following indicator is displayed when a scrip goes ex-dividend on a trading
day?
   a) XB
   b) XD
   c) X*
   d) ED

64. Which of the following indicator is displayed against a security, if that security
comes along with rights?
   a) XR
   b) CR
   c) ER
   d) X*

65. No delivery period for a security is displayed in ____________ option.
   a) security information
   b) security descriptor
   c) security analysis
   d) security window

66. S&P CNX Defty consists of _____________.
   a) 50 securities expressed in Rupees
   b) 50 securities expressed in Dollars
   c) 50 securities expressed in Pounds
   d) 50 securities

67. Closing prices of securities traded on a day can be had from ___________
   a) Online Back-up
   b) Security Information
   c) Reports
   d) Bhav Copy

68. How many depositories are there in India?
   a) 2
   b) 3
   c) 85
                                             42
   d) None of the above

69. What do you mean by NSDL?
   a) National Securities Depository Limited
   b) NSE’s Security Depository Limited
   c) National Stock Depository Limited
   d) National Securities Depositories Limited
70. Which of the following account is used by Clearing Members to deliver securities to
NSCCL?
   a) Pool
   b) Delivery
   c) Receipts
   d) Beneficiary

71. What do you mean by ISIN?
   a) International Share Identification Number
   b) Indian Securities Identification Number
   c) International Shares Identification Number
   d) International Securities Identification Number

72. The conversion of electronic form of security into physical form is called as
________.
   a) Dematerialisation
   b) Rematerialisation
   c) Materialisation
   d) Hypothecation

73. How many banks have been empanelled by NSCCL, in the list of clearing banks/
   a) 8
   b) 9
   c) 10
   d) 12
74. Which of the following is not treated as a Public Company?
   a) Company which is not a private company
   b) Company which has a minimum paid-up capital of 5 Lakhs rupees.
   c) Private company which is a subsidiary of a company which is not a private
      company
   d) Company which is formed by 2 number of persons

75. Which of the following conditions must be satisfied by the company before buying
back its own shares?
                                            43
   a) The buy-back must be authorised by its articles
   b) Special resolution to be passed in general meeting of the company authorising buy-
      back
   c) The buy-back shall be or equal to or less than 25% of the total paid up capital.
   d) All the shares for the buy-back may or may not be fully paid up.
   a) only A & B
   b) only B, C & D
   c) only A, B & C
   d) only A, B & D

76. An Indian company or any other company which, in respect of its income liable to
tax, has made prescribed arrangements for declaration & payment of dividends within
India is called as ______________.
    A. Domestic Company
    B. Public Company
    C. Private Company
    D. Widely Held company

   126. Which is the leading stock exchange in India?
   (a) Delhi Stock Exchange
   (b) National Stock Exchange of India
   (c) OTCEI
   (d) Calcutta Stock Exchange

77. A Company does NOT announce a record date for ______.
    (a) holding general meeting
    (b) declaring dividends
    (c) rights issue
    (d) bonus issue

78. Which is the underlying asset for index futures traded on NSE?
    (a) S&P CNX Defty
    (b) CNX Midcap 200
    (c) CNX Nifty Junior
    (d) S&P CNX Nifty

79. SEBI made it mandatory for all brokers to use _____________ for all clients.
    a) Permanent Account number
    b) Driving License number
    c) Bank Account number
    d) Unique client code
                                           44
80. The minimum paid-capital of private company is Rs._____________.
    a) 10 lakhs
    b) 5 lakhs
    c) 1 lakh
    d) 2 lakhs

81. The minimum paid-capital of public company is Rs._____________.
282. 10 lakhs
283. 5 lakhs
284. 1 lakh
285. 2 lakhs

82. The private company limits the number of its member to ____________.
   a) seven
   b) two
   c) fifty
   d) No limit

83. The public company limits the number of its member to ____________.
   a) seven
   b) two
   c) fifty
   d) No limit

84. The minimum number of persons required to form a private company is ________.
   a) two
   b) ten
   c) five
   d) seven

85. The minimum number of persons required to form a public company is ________.
   a) two
   b) ten
   c) five
   d) seven

86. Every public company, making initial public offer of any security for a sum of
rupees of ________ or more, shall issue the same only in dematerlised form.
   a) two crores
   b) fifty crores
                                           45
   c) ten crores
   d) five crores

87. What is the difference between listed and permitted shares?
   a) Listed shares belong to public companies while permitted shares belong to private Cos.
   b) Shares of companies which have entered into a listing agreement with an
      exchange are called listed, while shares permitted for trading without entering into
      a listing agreement are called permitted shares.
   c) Listed shares are regulated by SEBI while permitted shares by Exchange.
   d) There is no difference.

88. Dividend yield is given by:
   a) Dividend per share / Market Value per share * 100
   b) Net profit available to equity shareholders / Market Value per share * 100
   c) Dividend per share / Face Value per share * 100
   d) Net profit available to equity shareholders / Face Value per share * 100

89. Acid Test Ratio of a firm is given by:
   a) Current Assets / Total Liabilities
   b) Current Assets – (Inventory + Prepaid expenses) / Current Liabilities
   c) Total Assets / Current Liabilities
   d) Current Assets / Current Liabilities

90. Inventory Turnover ratio is given by:
   a) Cost of goods sold / Inventory
   b) Cost of goods sold / Sales
   c) Purchases / Inventory
   d) Sales / Inventory

91. Calculate Price to Earnings from the following details?
    Market Price of share – Rs. 35.00, Share Capital – 30 crores (1,00,00, 000 equity
    shares of Rs.10 each), Gross Profit - 15 crores, Income Tax – 7.5 crores, Equity
    Dividend – 2 crores, Current liabilities – 12 crores, Fixed Assets – 40 crores &
    Reserves – 22 crores
   a) 5.66
   b) 4.66
   c) 4.83
   d) 5.98
92. Which of the following is the purpose of Balance Sheet?
   a) To show the operational position of a business.
   b) To show the financial position of a business.
                                            46
c) Both a & b.
d) None of the above.


 1   b           31   a   61   d   91 b
 2   a           32   d   62   b   92 b
 3   b           33   c   63   b
 4   c           34   b   64   b
 5   d           35   d   65   b
 6   a           36   d   66   d
 7   a           37   c   67   a
 8   b           38   a   68   a
 9   c           39   b   69   b
10   b           40   a   70   d
11   d           41   b   71   b
12   a           42   c   72   c
13   c           43   b   73   d
14   b           44   b   74   c
15   b           45   c   75   a
16   a           46   b   76   b
17   a           47   b   77   a
18   b           48   b   78   d
19   c           49   b   79   d
20   b           50   d   80   c
21   b           51   a   81   b
22   c           52   d   82   c
23   d           53   a   83   d
24   b           54   c   84   a
25   c           55   c   85   d
26   e           56   a   86   c
27   d           57   c   87   b
28   a           58   b   88   a
29   e           59   a   89   b
30   a           60   b   90   a



                           47

				
DOCUMENT INFO
Shared By:
Tags:
Stats:
views:8
posted:10/29/2012
language:
pages:47