The financial framework of a merger decision covers 3 interrelated aspects i.e.

:Correct Answer :Financing techniques in mergers , Analysis of merger as a capital budgeting decision , Determining the firm's value A company shall buyback its shares through the stock exchange by making a public announcement at least ________ days prior to the commencement of buyback. Correct Answer :Seven Management of working capital refers to the management of total assets and liabilities of a company. Correct Answer :False Optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate. Correct Answer : False Appraisal value of a firm can be acquired from an independent appraisal agency. Correct Answer :True Accounting standards (AS - 13) is now mandatory. Correct Answer :True The accounting records serve as the major source of cost data. Correct Answer :True To gather costs means to do the following actions to support the costing of the activities :Correct Answer :To capture , To construct , To synthesize the correct cost figures If firms have same technology ________ makes the difference i.e. firms become more productive . Correct Answer : Solid human resource team. In many companies, there is no formal record of________. Correct Answer : Investment in employees The activity model is normally created by an activity Accountant. Correct Answer :False The chance of bankruptcy is small when the leverage of a firm is small. Correct Answer :True The total cost of the activity model allocated by the applied activity drivers to the output of the activity model is called________. Correct Answer : The cost of the output A firm using a conservative policy for determining the requirements of current assets :- Correct Answer : Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales. The budgetary records are useful for:Correct Answer :Validating accounting costs , Providing a rationale for division of costs , Replacing missing data When a company has resorted to buyback of its shares it cannot make a further issue of the same kind of securities within a period of how many months? Correct Answer :6 months

The bottom line of ABC Process is :Correct Answer :To achieve a better method of doing the right business pf the organisation The most popular kind of dividend policy is one that pays a ________. Correct Answer : Regular, steady dividend Due to diversification employees seek:Correct Answer :Job security , Better opportunities within the firm , Higher compensation Match The Following Amount involved in buy back : Not to exceed 25 % of the total paid up capital Articles of Association :Authorize buy back of securities Board of Directors :Resolution permitting the buy back of shares Shares to be bought back :Fully paid up A high payout policy means :- Correct Answer :More current dividends Match The Following Earning per share : Acquisition is considered to be a function of the impact of the merger on the EPS Book value :Divide net worth by the number of equity shares outstanding Appraisal value :Provides a list of the reasonableness of results obtained through methods base upon the going concern concept Market value :Indicate the consensus of the investors In the reproduction value method of valuation, the value of assets is taken to be on the basis of ________ Correct Answer :Replacement cost The advantage of ________ is that the company is not required to wait for the payment by the bill issuer. Correct Answer :Bill discounting In a growth firm, internal rate is :- Correct Answer :More than opportunity Shortage costs are mainly in the form of :Correct Answer :Disruption in production schedule , Loss of sales , Loss of customer goodwill Shortcomings of accounting numbers consist of the following :-

Correct Answer :Firms use different kind of accounting methods , Business risk and financial risk do not have any influence on accounting numbers Internal financing means the firm finances all investments through :- Correct Answer :Retained earnings The earning power of the company approach includes :- Correct Answer :Mainly discounting of all future earnings A firm should consider acquisition as a :- Correct Answer Capital budget decision Firms which have marked seasonality in their operations usually have :Correct Answer :Highly fluctuating working capital requirement Decrease in leverage results in increasing the :- Correct Answer :Overall cost of capital Segment expense includes ________. Correct Answer :The relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment The amount of working capital required to meet long term, minimum needs is called :Correct Answer :Permanent working capital The costs should be gathered & allocated within the organisation at the ________ structural layer. Correct Answer :Lowest possible The acquiring firm for any M & A will require data about the target firm which will include :Correct Answer :Quality of management , Production capabilities , Profitability Segment assets are determined after :Correct Answer :Deducting related allowances / provisions reported as direct offsets For M & As, the acquiring firm needs industry data on :Correct Answer :Market growth , Nature of competition , Degree of regulation Implicit & Explicit costs are included in the ________. Correct Answer :Price of a product In a merger decision, the value of a firm depends upon:Correct Answer :Earnings , Operating characteristics of acquiring firm , Financial characteristics of acquiring firm. To `gather costs', means capturing all relevant expenses that pertain to the selected model and processes. Correct Answer :True Segment result is segment revenue less segment expenses.

Correct Answer :True The main factor affecting the profits is :Correct Answer : The magnitude of sales of the business Retained earnings are the most important internal sources of financing the growth of the firm. Correct Answer :True ________ are those operating assets that are employed by a segment in its operating activities. Correct Answer :Segment assets The direct costs tier normally only includes the following :Correct Answer :The personnel payroll , Supplies , Individual rental equipment Accounting numbers are not influenced by :Correct Answer :Dividend policy , Time span of money , Financial and business risk Total risk reduces if operations of combining firms are ________. Correct Answer :Negatively correlated The Public announcement of share buy back has to be made at least :Correct Answer :7 Days prior to the commencement of buy back It is the activity accountant's job to do the following for the existing organisational structure :- Correct Answer :To define the costs , To refine the costs , To document the costs Operating economies occur due to indivisibilities of resources like :Correct Answer :People , Equipment , Overheads The amount to be invested by any single investor in a commercial paper shall not be less than Rs. ________. Correct Answer :25 lacs A change in the method of depreciation is treated as a change in an accounting policy and is disclosed accordingly. Correct Answer :True The development aspect of training in firms focus on :Correct Answer :Promotion to higher job levels

The main assumptions for stock repurchase models are as follows :Correct Answer :The market is efficient , There is perfect competition in the securities market AS 17 is mandatory for all commercial, industrial & business reporting enterprises whose turnover for the accounting period :- Correct Answer - Exceeds 50 crores If the segment result of a segment includes interest or dividend income its segment assets will not include ________. Correct Answer :Payables Economies of scale arises with increase in volume of production leading to________. Correct Answer :Reduction in the cost of production When a change in the method of depreciation is made :Correct Answer :Depreciation is recalculated in accordance with the new method One of the advantages of trade credit is its flexibility i.e. the firm does not :Correct Answer :Have to sign a note , Pledge collateral , Adhere to strict payment schedule Depreciation is ________ of an asset. Correct Answer : Loss of value There is a ________ relationship between the number of employees & the use of operating supplies. :Correct Answer :Natural If a firm opts for restrictive policy then the investments in current assets is :Correct Answer :Low When the seller asks for the payment before making the delivery in order to avoid all risks it is known as Correct Answer :Cash before delivery An activity model is a tool to assist in understanding & defining the organisation. Correct Answer :True It is possible to place a single value for the acquired firm. Correct Answer :False In the disclosures in financial statements, there are significant restrictions on :Correct Answer :The right of ownership , Realisability of investments , The remittance of income & proceeds of disposal The depreciable assets are assets which are expected to be used :Correct Answer :During more than 1 accounting period Short term financing is meant for funding working capital of a company.

Correct Answer :True The existence of significant influence by an investor is usually evidenced in the following ways :Correct Answer :Participation in policy making processes , Material transactions between the investor & the investee , Interchange of managerial personnel. The important steps involved in the analysis of mergers & acquisitions are:Correct Answer :Planning , Searching & screening , Financial evaluation Match The Following Unsecured loans :Form of debt not backed by the pledge of specific assets Line of credit :Does not constitute any legal commitments on the part of the bank Revolving credit agreements :While the commitment is in force the bank must extend credit whenever the borrower wishes to borrow Transaction loan :The cash flow ability of the borrower to pay the loan is usually of paramount importance The financial managers of a company consume a great deal of their time in activities like :Correct Answer :Monitoring the investment in inventories , Negotiating favourable credit terms , administrating Accounts receivables Dividends increase the current returns for shareholders. Correct Answer :True Book value is based on the balance sheet value of owner's equity. Correct Answer :True The commercial paper may be issued in the multiples of ________. Correct Answer :5 lakhs In presenting the reconciliation segment result should be reconciled to ________. Correct Answer :Enterprise net profit or loss Another meaning of bear hug is ________. Correct Answer :Hostile takeover Funds borrowed for a period of 1 year or less is called :- Correct Answer Short term finance Financial statements classify the following into separate categories :Correct Answer Fixed assets , Investments , Current assets Any addition or extension to an existing asset which retains a separate identify & is capable of being used after the existing asset is disposed of :Correct Answer : Is depreciated independently

In value of assets approach the value of which of the following should be deducted to calculate the net assets available to the equity shareholders :Correct Answer :jy preference shares Correct Answer :Exchange ratio When the working capital is less than its peak level :Correct Answer :The surplus is invested in liquid assets Baumul`s Model is similar to EOQ model in inventory management. Correct Answer :True Sometimes the mechanisms may appear to be inputs for an activity. Correct Answer :True Accrued expenses represent :Correct Answer :Costless financing , An interest free source of financing The intellectual assets of a company are often worth 3 or 4 times the tangible bookvalue. Correct Answer :True Match The Following Terminal warehouse receipt : Inventory is stored with a public or terminal warehousing company Floating lien :Loose arrangement as the lender may find it difficult to police Chattel mortgage :Well suited for financial good inventories of capital goods Trust receipt :Specifically identified by serial number or other means The different types of floats are :- Correct Answer :Postal float , Deposit float , Bank float If a company is following multiple accounting system, the activity accountant will have to match data across :Correct Answer :Codes , Time periods , Systems AS 13 statement does not deal with operating or finance leases. Correct Answer :True The number of bidding centers shall not be less than ________ for buy back through book building. Correct Answer :30 Market approach is used for companies whose shares are ________ on the Stock market. Correct Answer :Listed