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Short answers (2010)

What is a right share?
Right share is offered to the exacting share holding. It is given to the share holder as they on to
retain there % of owner ship in the company.
What is amalgamation?
When two companies join to gather to firm of new company is called amalgamation.
Reason of amalgamation
To avoid the computation
Economy of scale.
To take the advantages of second company interims of capital machinery experience.
Different between equity and debt financing
When the money is obtain through the share capital by issuing capital share is called equity
finance while when company is financial institution or by issuing bonds.
Kinds of bond
Registration bond, barer bond, merged bond, junk bond, income bond and debenture bond
What is interim dividend?
Dividend which is pay to the share holder before the logier dividend is called interim
dividend.
Minority interest
It relates to the holding and subsidiary company. The interest of the subsidiary company share
holder is called minority interest.
Lower of cost in market
It the time evaluating inventories a company taken a price of inventories which one lower;
book value in order the cost of inventories or to show the profit to the compotators.
Cash equivalents
Marketable security it has three month or less is called cash equivalents.
Stock split
A share which is driven from another stock or which is dividend in to two it is mostly done to
incries the value of a form share.
What are reasons for stock split?
(Stock split and reason of stock split are same)
Define reconstruction of company
When a business of company is unsuccessful usual is required to reconstruction the company
process of doing is called reconstruction company.
Methods of valuation share
Assets based methods goods based methods market based methods.
Holding company
To hold the subsidiary company but dos not purchases it complete (more then 50% purchases
of share)
What is inter company transition
A transition which is taken place between two companies is hold or subsidiary company.
(Account receivable of and other company is taken by second company.
What is gross profit?
A profit which needs to be father deducted to regional net profit (revenue-cost of good sold)
What is cost of control?
It is the cost which a holding pay to get the control over the subsidiary company it called cost
of control.
What is working capital?
Current assets current liability

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What is cash flow statement?
It is the state which shows the net flow of cash between the two periods of time.
What is depletion?
The where interest of natural assets is called deletion.
What is common size income statement?
A statement in which sales is compared with other items of income is % sales is consider
100% and rest of the time a compared with it.
What is common size of balance sheet?
A it is a % statement is which total assets are consider 100% in assets side while on liability
and owner equity side liability +owner equity is consider 100% and the rest of assets and
owner equity and liability.
Exp= particular assets /total assets
Particular liability or owner equity/ total liab or owner
Define trend ratios
A ratio which shows the trend of a company business is a particular direction is called trend
ratios.
Exp= 2001 is based year and we want to see the trend of current rate of firm 2001to 2007 will
apply trend ratios.
Redemption of bond
It is repayment of bond is accrued liability
Accrued liability
This is not pay yet and has to be.
Define bond yield?
Written on bond is called bond yield. It is in term of coupon rate. Interest rate.
Define recurring profit?
A profit which a company is getting on regular basis.
Define sinking fund?
A fund which is establish for repayment of death which can be bond or any term lone or long
term lone.
What is the matching principal?
When cost is matched with revenue resent period.
Short answers (2004)
What is line credit?
Its continues line of credit or it is series of reoccur credit. Which a firm takes supplies of raw
material or goods.
What is share market?
A market where share are traded is called share market.
What is capitalization of profit?
A profit which is obtained from sale of capital assets.
What is solvency?
It is the strong financing position of a firm where it has the ability to pay its debt.
Write down the different kind of shares?
Preference share
Ordinary share
What is indenture?
It is the term and condition which is provided in the agreement of term loan and bond
What is interim dividend is paid?
Dividend which is pay to the share holder before the logier dividend is called interim
dividend.
Define intrinsic value of a share?
It is the core value or original value of share. In the other word it is the real worth of share.
What is the purpose of financial reporting?
To provide the information of the stake holder.
Define coupon bond?
A bond in which attached is called coupon bond. The coupons which are attached to the
bond are for the payment of interest to the bond holders.

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What is meant by inventory shrinkage?
It is reduction in the size of inventory due to theft contamination and miss user.
What is cash flow account?
It is the state which shows the net flow of cash between the two periods of time.
What is the purpose of calculating the accounts receivable turnover?
The purpose of calculating the accounts receivable to see how many times accounts
receivable a turned is to cash.
What is under circumstances the stock dividend is paid?
When a company dos not disturb the owner ship percentage of exchange share holder. It
pays stock dividend or it the company wants to waived the under written charges of share
of bond it may pay stock dividend.
What is fund flow statement is prepared?
To measure net flow of fund between two period of time.
What is the purpose of maintaining reserves and allowance?
To meet the contingencies or adverse financial selection.
What is the concept of future value?
The value of money having present in hand in the future.
What stand for EBIT?
Earnings before interest taxes.
What is normal profit?
It is the profit the company earned in the usual way of business.
What is actual profit?
Profit which is the company gets in a particular year.
Why depletion and amortization be calculated.
Depletion = for reclamation for repayment of lone
Amortization = the repayment of lone.
What is the cost of control?
Assets liability
What is meant by half-year convention?
It is American law which is applied on the new purchases of fixed assets. In the year of
purchases of fixed assets is called half-year convention.