1999
AND ACCOUNTANCY
I

I Maxi,mum Marhs 300
•
INSTllUC'l"/ONS
l'.:nch question printed both ill in [(annada.
Answers must be written m the medium ti/wcl/ied (English or Kannada) in the Admission Tichet issued to you, which must be stated clearly on the cover of the answer book in the space provided {or this purpose. No credit will be given {or the answers written in a medillm other than that specified in the Admission Ticket.
Candidates should attempt questwns 1 and 5 which are compulsory, ,qnd any three of the remaining questions, selecting at least one question (roln each Section.
All questions carry equal marks.
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[Tum over

121
SECTION A
1. Answer any three of the following, each in about 200 words

'Accounting is the language of business.' -Explain.


Rules relating to determination of residential status of an individual under the LT. Act 1961.


Investment Centre.


•
(dl Special points in the audit of a banking company.
2. 'One of the central issues of modern accounting thought is the question of making price level adjustment in accounting data.' -Give your opinion on this issue and briefly explain the Current Purchasing Power technique of price level adjustment,
The paid-up share capital' of a company consists of 1,000, preference shares of Rs. 100 each and 20,000 equity shares of Rs, 10 each. In addition to a fixed dividend of the preference shareholders are entitled to participate in the profit upto after payment of dividend of 10% on the equity shares. Any

surplus profits are to be distributed among equity shareholders.
The annual average profits of the company arc 1s. 50,000 after providing for depreciation and taxation, and it is considered necessary to transfer Rs. 3,000 per annum to the reserve fund. The normal rate of return expected on prefercnce shares is and that on equity shares is
You arc required to work out the value of each preference share and equity share in the company.

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Ol!,JOn A

tIl3d 200
1.




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;loOoiOoMo,

2. z:ld""tt,cJ omctJo;iJrn eQo;lo z..,odJ c:::illron -radd iOo":l z:ldiOott,cJ oOf.lomEB5oil roDW Alo1?l
,"om ooo:i;loil .o'dJ 100 dk M 1,000, i003t o;j,Jlo3J>o<:ir.l 10 M 20.000 .o'dJrN% .o'dJmddJ, oil,,j 10% 49'0 'T.lQ'jo" cJi) mtJJM'" e05 E" """dJ'"O. cili"o:jj 05130 oJD M v 0 .ffic,j13
:rJITJAjo 5NM 50,000 M. rN",rn 3,000 ;lQnw Q 0 W oj rwE" cJf.) 05 e e cJv "" .0, dJ "" d dJO Doilo'" """""". 'T.lo;jcJ 10% worn 'T.l"cl
ooo:i;loil ecJ,"" .o'M
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JOlla Manufacturing Company Ltd, manufactures and market.s a single product. The folJowing data are available
Per unit
Materials

Rs. 16
COJlversion cost (variable) Tis. 12

Dealers' margin of sales) Tis. 4
Selling price Tis. 40
Fixed cost Hs, lac
Present sales 90,000 units
Capacity utilisation 60%

There is stiff competition. Ext.ra efforts are necessary to the competition in the market. The following suggestions have been made for increasing sales:
HcductJOll in scdli ng price hy ulli t.
OR
Increase in dealers' margin by of the existing rate.
Answer the /ollowI!I{f questions
What is the present break-even sales (in units)
(iiJ Wlllch of t.hl' aforesaid two suggestions would you recommend if the compan.y desires to Illfllllt<lln t.he present profit?
5 0611


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16 M.

12 M.

4 M.

40 M.
5
90,000
w<lil 60%

10'S "lJ*"nl 'O.d. 00"ti,oili,2 oro" do ilJO eo.> d0 oS oj0 il<l"oal

[Turn over

III lUllllJilllY ilUUII,Of' Oil l./le ground

01111d:ll'lIltl receives the f{lllmvitlg illCOIlH.'S during ending
March
Salary Hs. 5,500 for 12 months 66,000
Leave travel concession for proceeding
OIl leave to home district
(aciu<.lJ expenditure Its. 4,100) ,3,800

Lunch allowance 4,000
Hcimbul'semenL of ordinar.y medical expenses for treatment of R. Sundaram and his family members from a doctor 26,300
Besides, R Sundaram enjoys the following perks:
Free unfurnished nat at Delhi (fair rent Hs. 40,000)
Besides, the employer provides two watchmen
(Salary: Rs. 600 p'.111. per person)

Free use of Maruti SOO for official purposes. Car can also be used for journey between office and residence and for other domest.ic purposes (jog-book is not maintained by the employer).
Free refreshment (outside the place of work) Hs. 7,350 e., Rs. 35 per day for 210 days. The amount is directly paid to the canteen by the employer).
Though the salary falls due UIl the last day of each mont.h, the salary of l'1arch, 1995 is received on April 15, 1995.
Iklcl'llline the taxa hIe income H. SUlldar'111l.
06/1
17)

4. """',omoJd,;cill iioo:l;O dii,o:IDM'Qiid dii,o:IOM'Qii
o:lr.>';""00oil oJ8,.",
n
1998 3l0, oJ,lo1ommiO
o,<iioDJ ",moilnlio woDdo"ioS
5,500 d03 12 iloM" 03 WOD" doloil oil,d 3d'idiR) dr.l03 dol
" Q0
DomeDoil 4,100 M.)

WOWO 1,J3b
ii,Woowdo:Jdo oS","bOod o:Idd ,"owoQ"d oS'1,nli o:0domo:J,B 'adud "iOM oliiio13 Mo,BoS
M
ero83W<ld, ero n m 3 do " o:J D" '"00M "Ii0 iOJ" GOO
GG,OOO 3,800 4,000 2G,300
40,000)
oeJ,"n'i"odo 800 0:001" o:001eDood 'a3d 'lJ05'lJ3MM
v
(tNoJ.l<{:r1m3d2' -c0ji5cj(j2.. ero83 7,350 ("0000 210 35 d03. o1,dW<lh

'Sil ,BoM ",om ilonli OJ,lo1cill Di:Jdodo ",do 1998 d 1998 d 15 dSl "o:Jd 3MMlio:iCiloo:J
ITurn over

SECTION B
5.
Answer any three of the following, each in about 200 ,.....orcls

6.
Discuss the alt.ernative policies that a firm IlIay adopt in relation to the financing of working capital.


Wealth maximisatIOn olljedive of financial management.
(bi 'Management management.' of receivahles is Elucidate this an important statement. aspect of financial
Functions of l.D,B.I.
(dJ Holder in due course.

(bJ X Company Ltd. is examining tvo mutually exclusive proposals for new capital investment. Out of these two proposals, anyone has to be approved. The data relating to the proposals are as under:

Usc straight-line method of depreciation. The minimum required rate of return is 100}h and the cnmpnny is in Hw tax bracket. The pre.scllt value factor.s at for 4 yenni arc:
Year 1 234
P.F. Factor 0909 0826 0751 0683
Using Net Prescnt Vnlue method, you nrc required to Lldvi.o;c as to which proposal would be financially favourable.
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ill';cillo wili:J w1!lelojtM


"""t:JoDelelM Q'l0t (Holder in due course).
li, ""cill, W013""II,;, ,"elK"r1 ,"odo
",1I"'I:lMJ.)"wojomei oJoill,-cill woW wr1


X to iliJ.> wo clOT.) II iliJ.> I:l wociJ wo:JoM,
A
iJKeI' woclOT.)II OJ.). 40,00,000 OJ.). 50,00,000


"
t5 0 m e3 4 4
oD3' $Dr1r1 o:ir.ld'"

d.r.J . d.r.J . 12.00,000 18,00.000 14,00,000 20,00,000

16,00,000 22,00,000 4 22,00,000 22,00,000 u.J1,J "'K363cill do 10%. 50% 3Dn E3c:Sd['@dCJo. 10% d03 4
t)

12 34
0·909 0·826 0·751 0·683 oilloJ wowodo wr1 ;:"1313'to.

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[Turn ovur

10I

7. Explain fully the 111'1 rlVlodigliani and I'diller) approach to capital
structure. How does it from the traditional approach
The following IS the capital strudure of X Cu. Ltd:
lis.
Equity shares (5,000 shares of Hs. 100 each) 5,00,000
Preft'l'cncc shares 2,00,000
I uri· Debenturl's 3,00,000
Tutal 10,00,000
EqUlty shareholders expect dividend Rs. 10 per share. Market price
of each equity share is Hs. 100. Shareholders expect growth rate of
4·59% fof' evcr.

Compute the vcightcd average cost cnplLal.
H. (aJ WhilL is the statutory protccLion to the pnying banker?
(I» A firlll is contemplating nil in the credit period f'1'IlIl1 :30 to days. The nvcl'fIgc collecLirlil period which if; [It present 45 is expected to incrcnsc to 7G daYfi. IL also likely the debt expenses 'will increase from the current level of to of sales. Toted credit snles are expected t.o increase from the current level of 30,000 units to 34,500 units. The present average cost per unit is Rs. and' ,the variable costs Clnd sales per unit are Rs, 6 and Rs. 10 respectively. Assume that the firm expects a rate of return of 15)".
Should the firm extend the credit period?

..


I11 I




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5,00,000
100 M.nli 5,000
2,00,000

6
10% z:j 3,00,000 10,00,000
.iieon 10 M. 0503 100 M .Mo. ol'OJmoOJ 4·59%
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1999
COMMERCE AND ACCOUNTANCY
Paper 2

. Uours I Maximum Marhs 300
INSTRUCTIONS
Each quet;tion is printed both in EngUsh and in Kannada.
Answer<i be written Ul the medium specified or K(wlwc!u) in the Admission 'l'iclwf which must be stated clearl,y on the cover the answer book in the space provided for this purpose. No credit will be given for the answers written in a medium other than that specified in the Admission Ticket.
Candidates f:ihould attempt questions 1 and 5 which arc compulsory, any three of the remaining questions, selecting at least one question from. each Section.
All questions carry equal
f1f dowd0c5 MIJiJrI<! f1f
ifJJiJoiJ Q1Wd1;J oJJJty:luoMS.
{Turn OVf!f


12)
SECTION A
I. 'Write short on any three the fiJl10willg in not lllore than
200 words each


lJcans-end Chain


Porter and Lawler model of motivation


Participative leadership


"
Bases of pmver
2. -Vbat IS conLingenl.:,Y approach of Organisation Theo!'y How is it related with System.s Approach? Does this explain the pnttcrn of ol'WlllisationaJ design adequately?
a. Distinguish between formal and informal organisation and discuss the merits and demerits of informal organisation.
4. Vhat is the concept of organisational conflict Arc organisational connicts alway's dysfunctional? Explain fully.
131


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(Means-end chain)
omDQ


eQo.JdD
2. JJffi'03d e;:iJc::.;loFus c::Jodoer:tJ 7 l5D:J

=03 " "am ;QOFVO:
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;;)030Ti>"cJo5o

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4. 7
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06/2 (4 I
SECTION B
5. Vritc short. notes 011 three of the following in not more than 200 words each

Nage Board


Role of olltsiden; JIl Indian labour unions


Vorks Committee
Persollnel research



fi. ,"VhaL do you understand by the term 'Industrial Relations' Discuss its objectives and scope.
7. In what vays has the labour policy of the government f(lsterecl and impeded collective bargaining in India? Has it made trade unions weaker stronger?
8. 'Prevention of disputes is good for industrial peace.' -Elucidate this stntcment <llld the machinery for of indllstri:ll dispute," in India.


51 06/2


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7.
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