+7)/3=y m=1/3 m=y2-y1/x2-x1 1/3=k/3 1=k 1.

Peter and Paul start simultaneously on 2 different cars from Point A and travel towards Point B at speeds of 52 kmph and 39 kmph respectively on the same road. As soon as Peter reaches Point B, he returns back to Point A on the same road and meets Paul on the way. How far from Point B do the two friends meet, if the distance between the 2 points is 70 kms? Solution: Since they are meeting after sometime say T. Therefore, compare the time taken by both peter and paul. 70+x is covered by peter and 70-x is covered by paul. (70+x)/52 = (70-x)/39 this gives x=10. 2. In triangle ABC, AD is the bisector of |A, AB=10 cm, AC=14 cm and area of triangle ABD = 140 sq cm. Find area of triangle ACD Solution: Any angle bisector of any angle between 2 sides of a triangle divides the Area of the triangle into the ratio of sides . Area of any triangle is 1/2 *(Product of any 2 sides of the triangle) * (Sin of Angle between those 2 sides) Now coming to the question at concern. Here area of ABD => 140 = 1/2*(AB * AD) *(Sin of angle BAD) ---eqn (1) Area of ACD = 1/2*(AC*AD) * (Sin of angle DAC) ---eqn(2) angle DAC = angle BAD ---eqn(3) as angle A is bisected Using eqn 1 and 2 and 3, gives 196 as area of ACD. 3. The rate of a certain chemical reaction is directly proportional to the square of the concentration of

INTANGIBALE ASSSETS CAN BE TREATED IN THE SAME WAY AS FIXED ASSETS. THEY ARE NEEDED FOR OPERATION AND ARE ACQUIRED WITH ENTERPRISE FUNDS.

EXAMPLE:

PATENTS

CAPITALIZED & MAY BE EXPENSED OVER A PERIOD OF TIME

chemical A and inversely proportional to the concentration of chemical B present. If the concentration of chemical B is increased by 100%, which one of the following is the closest to the percentage change in the concentration of chemical A required to keep the reaction rate unchanged? a)100% decrease b)50% decrease c)40% decrease d)40% increase e)50% increase Solution: Let the rate of the reaction be R Let concentration of chemical A be A Let concentration of chemical B be B Then R is proportional to A R is also proportional to 1/B Hence, R is proportional to A/B If C is a constant, R=C*(A/B) If the concentration of B is increased 100% B becomes 2B ( B+(100/100)*B = 2B) Let A2 be the new concentration of chemical A for the rate to be constant Then R II. k+2kt+t III. k+t a) None b) I only c) II only d) III only e) I,II and III Solution: First, you must find out whether k and t are odd or even. This problem is all about the results of performing operations on even and odd numbers. Given that k^2 - t^2 is an odd number, then you know that k^2 is even, and t^2 is odd. Of course, it could be reverse, but it shouldn't matter because of commutative and associative laws. So, you then know that k must be even, and t must be odd. Even *

4.

Even = Even, and Odd * Odd = Odd. Now, just go through the statements: 1: Even + Odd + Even = Odd 2: Even*Even + Even*Even*Odd + Odd*Odd = Even + Even + Odd = Odd 3: Even + Odd = Odd Answer then is None (A). 5. A contractor combined x tons of a gravel mixture than contained 10% gravel G, by weight, with y tons of a mixture that contained 2% gravel G, by weight, to produce z tons of a mixture that was 5% gravel G, by weight. What is the value of x? (1) Y=10 (2) Z=16 Solution: Mixture 1 : 10% gravel and quantity : x tonnes Therefore amount of gravel : 0.1x Mixture 2 : 2% gravel and y tonnes Amount of gravel : 0.02y They are mixed to produce a mixture of z tonnes that is 5% gravel Hence, 0.1x+0.02y=0.05z We need x. Statement 1 y=10 Now x+y=z x+10=z Putting it in the equation 0.1x+10*0.02=(x+10)0.05 We can get x, hence sufficient. Statement 2 z=16 ==>x+y=16 And we have 0.1x+0.02y=0.05z i.e 0.1x+0.02y=0.05*16 We can solve for x and y, hence sufficient, Hence D 6. True # of items = (total # in group 1) + (total # in group 2) + (total # in group 3) - (# in at least 1/2) - (# in at least 1/3) - (# in at least 2/3) + (# in 1/2/3) True # of items = (total # in group 1) + (total # in group 2) + (total # in

group 3) - (# in only 1/2) - (# in only 1/3) - (# in only 2/3) - 2(# in 1/2/3) Examples: At a certain school, each of the 150 students takes between 1 and 3 classes. The 3 classes available are Math, Chemistry and English. 53 students study math, 88 study chemistry and 58 study english. If 6 students take all 3 classes, how many take exactly 2 classes?

In this case, we'd use the first formula, since we want the number who take exactly 2 classes: 150 = 53 + 88 + 58 - (doubles) 2(triples) 150 = 199 - (doubles) - 2(6) 150 = 187 - doubles doubles = 37 Let's just change the question a tiny bit:

At a certain school, each of the 150 students takes between 1 and 3 classes. The 3 classes available are Math, Chemistry and English. 53 students study math, 88 study chemistry and 58 study english. If 6 students take all 3 classes, how many take at least 2 classes?

In this case, we'd use the second formula, since we want the number who take at least 2 classes: 150 = 53 + 88 + 58 - (at least 2 of the 3) + (all 3) 150 = 199 - (at least 2 of 3) + 6 150 = 193 - (at least 2 of 3) At least 2 of 3 = 43 7. In the xy-coordinate system, if (a,b) and (a+3, b+k) are two points on the line defined by the equation x = 3y7, then k= (A) 9 (B) 3 (C) 7/3 (D) 1 (E) 1/3

8.

Solution: like both strawberry and apple jam, what is the largest possible number of people who like raspberry jam but do not like either strawberry or apple jam? Solution: 40% of the 200 like Raspberry (I'm assuming you got 80 by simply taking 40% of 200). However, there are people who like other jams as well. In general, when we're asked to maximize one thing in a GMAT question, we want to minimize everything else. In this question, to maximize the number of people who like just raspberry, we need to minimize the number of people who like strawberry and/or apple PLUS raspberry. Here's what we know about Strawberry/Apple: 112 people like Strawberry 88 people like Apple. 60 people like both of them. Since only 60 people like both of them, this means that: 52 people like only strawberry; 28 people like only apple; and 60 people like both. That's already 140 people. We only started with 200, so the maximum possible number of people who could dislike both apple and strawberry is 60.

9.

Right triangle PQR is to be constructed in the xy-plane so that the right angle is at P and PR is parallel to the x-axis. The x and y coordinates of P, Q and R are to be integers that satisfy the inequalities 4 <= x <= 5 and 6 <= y <= 16. How many different triangles with these properties could be constructed? (A) 110 (B) 1,100 (C) 9,900 (D) 10,000 (E) 12,100 Solution:

No. of possible value for x=10 and y=11 1) information given is right angle at P, PR(ll) to x axis information inferred y coordinates of p and r is same. 2) PQ (llel) y therefore x coordinates of P and Q is same. For P x can be selected in 10 ways and y in 11 ways = 10*11 For R x in 9 ways and y in 1 way (as same of P) =9*1 For q x in 1 way and y in 10 ways (one already selected for P) =10*1 Total ways=10*11*9*10=9900 10. A password of a computer used five digits where they are from 0 and 9. What is the probability that the password solely consists of prime numbers and zero? A 1/32 B 1/16 C 1/8 D 2/5 E Solution: There are 10 possible options (0,1,2,3,4,5,6,7,8,9) for each digit. 5 of the options (0,2,3,5,7) are zero or prime. So, P(a given digit is zero or prime) = 5/10 = 1/2 A quick way is to look at this as an AND probability. P(all five digits are zero or prime) = P(1st digit is zero or prime AND 2nd digit is zero or prime AND 3rd digit is zero or prime AND 4th digit is zero or prime AND 5th digit is zero or prime) This is equal to P(1st digit is zero or prime) x P(2nd digit is zero or prime) x P(3rd digit is zero or prime) x P(4th digit is zero or prime) x P(5th digit is zero or prime) So, we get 1/2 x 1/2 x 1/2 x 1/2 x 1/2 = 1/32 11. There are two set each with the number 1, 2, 3, 4, 5, 6. If randomly choose one number from each set, what is the probability that the product of the 2 numbers is divisible

by 4? Solution: Picking 2 numbers from each set : 6c1*6c1=36 Favorable outcomes = 15 (1,4) (2,2),(2,4),(2,6) III. k+t a) None b) I only c) II only d) III only e) I,II and III Solution: First, you must find out whether k and t are odd or even. This problem is all about the results of performing operations on even and odd numbers. Given that k^2 - t^2 is an odd number, then you know that k^2 is even, and t^2 is odd. Of course, it could be reverse, but it shouldn't matter because of commutative and associative laws. So, you then know that k must be even, and t must be odd. Even * Even = Even, and Odd * Odd = Odd. Now, just go through the statements: 1: Even + Odd + Even = Odd 2: Even*Even + Even*Even*Odd + Odd*Odd = Even + Even + Odd = Odd 3: Even + Odd = Odd Answer then is None (A). 13. A contractor combined x tons of a gravel mixture than contained 10% gravel G, by weight, with y tons of a mixture that contained 2% gravel G, by weight, to produce z tons of a mixture that was 5% gravel G, by weight. What is the value of x? (3) Y=10 (4) Z=16 Solution: Mixture 1 : 10% gravel and quantity : x tonnes Therefore amount of gravel : 0.1x Mixture 2 : 2% gravel and y tonnes Amount of gravel : 0.02y They are mixed to produce a mixture

12.

14.

of z tonnes that is 5% gravel Hence, 0.1x+0.02y=0.05z We need x. Statement 1 y=10 Now x+y=z x+10=z Putting it in the equation 15. Right triangle PQR is to be constructed in the xy-plane so that the right angle is at P and PR is parallel to the x-axis. The x and y coordinates of P, Q and R are to be integers that satisfy the inequalities 4 <= x <= 5 and 6 <= y <= 16. How many different triangles with these properties could be constructed? (A) 110 (B) 1,100 (C) 9,900 (D) 10,000 (E) 12,100 Solution: No. of possible value for x=10 and y=11 1) information given is right angle at P, PR(ll) to x axis information inferred y coordinates of p and r is same. 2) PQ (llel) y therefore x coordinates of P and Q is same. For P x can be selected in 10 ways and y in 11 ways = 10*11 For R x in 9 ways and y in 1 way (as same of P) =9*1 For q x in 1 way and y in 10 ways (one already selected for P) =10*1 Total ways=10*11*9*10=9900 16. A password of a computer used five digits where they are from 0 and 9. What is the probability that the password solely consists of prime numbers and zero? A 1/32 B 1/16 C 1/8 D 2/5 E Solution: There are 10 possible options (0,1,2,3,4,5,6,7,8,9) for each digit. 5 of the options (0,2,3,5,7) are zero

or prime. So, P(a given digit is zero or prime) = 5/10 = 1/2 A quick way is to look at this as an AND probability. P(all five digits are zero or prime) = P(1st digit is zero or prime AND 2nd digit is zero or prime AND 3rd digit is zero or prime AND 4th digit is zero or prime AND 5th digit is zero or prime) This is equal to P(1st digit is zero or prime) x P(2nd digit is zero or prime) x P(3rd digit is zero or prime) x P(4th digit is zero or prime) x P(5th digit is zero or prime) So, we get 1/2 x 1/2 x 1/2 x 1/2 x 1/2 = 1/32

Contrary to popular belief, credit cards are a form of money even though people often refer to them as "plastic money. " Credit card users are actually taking out a loan and sooner or later, they will have to pay the bill for all those things they have charged. They are buying something now and agreeing to pay for it at a later date with money, usually a check.

Many banks issue credit cards, even to people who aren't regular customers. Before issuing you a credit card, a bank will require you to complete an application form and will examine your credit record to see if you have a history of paying back your debts on time. Many people run up credit card bills that are too big to pay off every month. When that happens customers must pay a monthly finance charge that can run anywhere from 10 percent to 24 percent a year. In addition, many banks and other companies that

issue credit cards charge their cardholders an annual fee usually $20 to $50 a year. Even customers who pay off their entire credit card bill every month still have to pay the annual fee. Banks and credit card companies also charge merchants a fee for making the credit card service available. Finance charges, annual fees, and merchant fees have become an important source of profit for banks.

Finally there's another plastic card that resembles a credit card in appearance but is actually very different in functionthe debit card. A debit card is much more like an ATM card than a credit card. When someone uses a debit card at the gas pump or at a store, the amount of the purchase is electronically deducted from the user's bank balance. There's no monthly bill because the amount of cash purchase is deducted almost immediately from the users account.

What Happens to Your Money After You Deposit it in Your Bank Account?
The bank begins by adding the amount you're depositing to the amount that's already in your account (your existing balance). Your deposit and new balance are

entered into your "passbook" and into the bank's computer system. The money you deposited is mixed in with all the other cash the bank received that day.

When you and other customers deposit money in a bank, the bank puts most of it to work. Part of the money is set aside and held in reserve, but much of the rest is loaned to people who need to borrow money in order to buy houses and cars, start or expand businesses, buy farm equipment or to plant crops, or do any of the other things that require people to borrow money.

Interest - Compounding
When you keep your savings in a bank, the bank pays you extra money, which is called interest. The interest is added to your account on a regular basisusually once a month or once every three months (quarterly). Compounded interest means that interest is added to your balance (usually quarterly), then the next quarter the interest is computed on your money deposited plus the last quarter interest.

Example: New Balance = $500. 00 Interest rate = 5% Annual = $25. 00 New Balance = $500. 00 Interest rate = 5% Compounded quarterly = $25. 72

You would earn $. 72 more with the

interest compounded quarterly and the annual yield rate would be 5. 14%. Banks must disclose to you if the savings account is compounded and how often it is compounded and give you the annual yield rate as a result of the compounding. Some banks may compound interest as often as daily. The shorter the compound period, the higher the yield rate would be.

There is another side to interest. When someone borrows money from a bank, the bank charges them interest and it charges borrowers a higher rate than it pays savers. For example, it might pay savers 5% and charge borrowers 8% on up to as high as 25% imposed on some bank credit cards. A bank is a business and like other businesses, banks sometimes fail. But why should banks go out of business? Sometimes banks fail because the people who run them make poor business decisions such as expanding too quickly, pushing too much money into one type of loan, or using bad judgment making loans. Sometimes banks fail because of fraud. Maybe the president makes questionable loans to friends or hires unqualified people and pay them huge salaries.

Things like that happen The bank begins by adding the amount you're depositing to the amount that's already in your account (your existing balance). Your deposit and new balance are entered into your "passbook" and into

the bank's computer system. The money you deposited is mixed in with all the other cash the bank received that day.

When you and other customers deposit money in a bank, the bank puts most of it to work. Part of the money is set aside and held in reserve, but much of the rest is loaned to people who need to borrow money in order to buy houses and cars, start or expand businesses, buy farm equipment or to plant crops, or do any of the other things that require people to borrow money.

Interest - Compounding
When you keep your savings in a bank, the bank pays you extra money, which is called interest. The interest is added to your account on a regular basisusually once a month or once every three months (quarterly). Compounded interest means that interest is added to your balance (usually quarterly), then the next quarter the interest is computed on your money deposited plus the last quarter interest.

Example: New When you fill in the blank spaces on one of your checks, you are telling your bank how much of your money you want to transfer and to whom you want it transferred. You authorize the transfer by signing y our check. One reason why checks are so popular is that people can use a cancelled check to prove they paid

a bill. In most cases a cancelled check is as good as a receipt because it bears the endorsements of all the persons, banks, companies, or other organizations that have handled it. For example if the landlord claims you didn't pay your rent, all you need to do is find your cancelled check and point out that it was endorsed by your landlord and your landlord's bank.

Tracing a Check Through the Federal Reserve's Check Collection Network

1. Your Aunt sent you a $20 Check for your birthday. 2. You deposit the check in your savings account at your bank.

3. Your bank endorses the check and sends it to its Federal Reserve Bank.

4. The Federal Reserve Bank gives your bank credit for the check by adding the amount of the check to your banks reserve account or clearing balance.

5. The Federal Reserve Transportation system flies the check to your Aunt's Bank Federal Reserve Bank.

6. That Federal Reserve Bank forwards the check to your Aunt's bank and deducts the appropriate amount from that bank's reserve account.

7. Your Aunt's bank deducts the $20 from your Aunt's checking account.

Check 21 is a sweeping new federal law effective October 28, 2004 that takes away your ability to get back your original paper checks. Under this law, consumers could be more likely to bounce checks and may find themselves paying higher bank fees. The complicated new law gives you some rights, but those rights depend on a variety of factors, including how the merchant and the bank decide to process your check. Visit the FRB's web site on the new law: http://www. federalreserve. gov/paymentsystems/truncation/.

What is Electronic Banking?

Electronics and computers have made banking an around-the-clock business. You can now do much of your banking even when your bank is closed. You no longer need to plan your schedule around your banks business hours.

Automated Teller Machines (ATMs)

are computers that are much like limited-service bank branches. You can use them to make a withdrawal, make a deposit, make a payment, transfer money from one account to another, or check your account balance. In some cases, ATMs of different banks are linked together so you can use them when you travel to a different part of town or even to another state. All you need to use an ATM is a plastic card from your bank and your own personal password called a PIN number.

You can also have your employer electronically deposit your pay directly to your bank account each payday. Direct deposit is also popular among people who receive Social Security checks or pension checks because it saves them the bother of standing in line at the bank, battling bad weather, or worrying about being robbed on the way home from the bank

Another electronic banking service is called electronic funds transfer or EFT. By using EFT, a bank can transfer large amounts of money to another bank by wiring an electronic message. There is no need to write a check or load up an armored car with cash and there's no long wait for the money to be moved. Electronic transfers take only an instant. An electronic message instructs a computer to deduct a certain amount 2. You deposit the check in your savings account at your bank.

3. Your bank endorses the check and sends it to its Federal Reserve Bank.

4. The Federal Reserve Bank gives your bank credit for the check by adding the amount of the check to your banks reserve account or clearing balance.

5. The Federal Reserve Transportation system flies the check to your Aunt's Bank Federal Reserve Bank.

6. That Federal Reserve Bank forwards the check to your Aunt's bank and deducts the appropriate amount from that bank's reserve account.

7. Your Aunt's bank deducts the $20 from your Aunt's checking account.

Check 21 is a sweeping new federal law effective October 28, 2004 that takes away your ability to get back your original paper minimum balance) in your NOW account in order to keep earning interest. Only non-business customers may open NOW accounts, businesses must use regular checking accounts.

Money market deposit accounts usually pay a higher rate of interest and require a higher minimum balance (usually $2,500).

Certificates of deposit (CDs) are savings deposits that require a customer to keep a certain amount of money in the bank for a fixed period of time (example: $1,000 for two years). As a rule the rate if interest your money earns is higher if you agree to keep your money on deposit for a longer period of time. (That's because banks can plan on using your money for a longer period of time.) Banks do not offer checkwriting privileges on certificates of deposit.

Finally, banks don't always call their accounts by the same names. Often they choose distinctive names in hopes of attracting customer. But sometimes there can be a real difference between one bank's accounts and another's, so shop around.

homebuyers. Most of the loans went to people who didn't make enough money to be welcome at traditional banks.

Credit unions began as a 19thcentury solution to the emergency needs of people who were unable to borrow money from traditional lenders. Before the opening of credit unions, ordinary citizens had no place to turn when they faced unexpected home repairs, medical expenses, or other emergencies. Credit unions were started by people who shared a common bond such as working at the same factory, belonging to the same house of

worship, or farming in the same community. Members pooled their savings and used the money to make small loans to one another.

Although there are still differences between banks and thrifts, they now offer many of the same banking services to their customers. Most commercial banks now compete to make car loans, many thrifts have begun to make commercial loans, and some credit unions make loans to homebuyers.

used to be. For starters you should shop around to find out which banks offer the most competitive services. Some banks charge a monthly fee if your account falls below a certain level and sometimes that fee can be higher than the interest your account may earn.

Some states prohibit banks from charging fees on savings accounts held by people under 18 or 65 and over. Find out if your state has such a law.

Other things you might want to consider:

Does your bank pay its depositors a competitive interest rate? Is the bank in a convenient location and are its business hours convenient to you?

Is your deposit fully insured by the federal government? Is the bank a good corporate citizen? Does it invest in your neighborhood?

Last, but certainly not least, does your bank provide courteous and efficient service? Before you open an account, ask a few people if they are happy with their bank. All banks are not the same. It's up to you to do some comparison shopping before you open an account. loans, business loans, checking accounts, savings accounts, certificates of deposit, and credit card services. Some people go to the bank in search of a safe place to keep their money. Others go to the bank seeking money for loans to buy houses or cars, start businesses, expand farms, or do any of the other things that require borrowing money.

Where do banks get the money to lend? They get it from all the people who open savings and other types of accounts. Banks act as a go between the people who save and people who need to borrow. If savers didn't put their money in banks, the banks would have little or no money to lend.

Your savings are combined with everyone else's savings to form a big pool of money. The bank uses that pool of money to make loans. The money doesn't belong to the bank's president, board of directors, or stockholders. It belongs to the depositors. That's why banks have a

special obligation not to take big risks when they make loans.

How did Banking Begin?

No one knows who started the world's first bank, but it's safe to say that banking has it roots in the early trading civilizations of the Mediterranean ocean. Without trade there would have been little need to establish banks. Without banks there would have been less money to finance trading ventures.

Imagine for a moment that you are a merchant in ancient Greece or Phoenicia. You make your living by selling to distant ports with boatloads of olive oil and spices. You don't grow the olive oil and spices yourself; you buy them from growers or other merchants. If all goes well, you will be paid for your cargo when you reach your destination, but before you can sail, you must have money to outfit your ship.

You find it by seeking out people who have money sitting idle. They agree to put up the money for your cargo and supplies in exchange for a share of your profits when you return from your voyage. . if you return. The people with the idle money are among the world's first lenders and you are among the world's first borrowers. You complain that they're demanding too large a share of your profits. They reply that your voyage

is perilous and they run a risk of losing their entire investment. Lenders and borrowers have carried on this debate ever since.

Today, most people who want to borrow money go to banks rather than to wealthy individuals. But the basic concepts of borrowing and lending haven't really changed. People don't let you have their money for nothing. It's risky to lend money. There's no guarantee that a lender will get the money back, even if the borrower is an old friend. So why lend money? Why take the risk? Because lending presents an opportunity to make even more money. People will often take a financial risk if they believe there is a good chance of making more money.

If a bank lends $50,000 to a borrower, the bank isn't satisfied to just get its $50,000 back. In order to make a profit, the bank charges interest on the loan. Interest is the price borrowers pay for using someone else's money. If a loan seems risky, the lender will charge more interest to offset the risk. (If you take a bigger risk, you want a bigger return). Of course, the opportunity to earn lots of interest won't mean much if a borrower fails to repay a loan. That's why banks often refuse to make loans that seem too risky.

Banks also use interest to attract savers. After all, people who have extra money don't have to put it in the bank. They have lots of choices. But

in addition to all of the different types of accounts banks offer depositors, the added advantage is being able to get to their money quickly.

How is a Bank Started?

The process varies from state to state, but here's a simple version of what it takes to start a bank.

1. Individuals get together and decide to start a bank. 2. They file an application with the federal and state banking authorities. In Indiana, it's the Indiana Department of Financial Institutions. 3. People at the state banking authority review the application. They look closely at the financial condition and the character of the applicants. 4. After reviewing the application, the federal and state banking authorities will either approve or deny it.

\living by selling to distant ports with boatloads of olive oil and spices. You don't grow the olive oil and spices yourself; you buy them from growers or other merchants. If all goes well, you will be paid for your cargo when you reach your destination, but before you can sail,

you must have money to outfit your ship.

You find it by seeking out people who have money sitting idle. They agree to put up the money for your cargo and supplies in exchange for a share of your profits when you return from your voyage. . if you return. The people with the idle money are among the world's first lenders and you are among the world's first borrowers. You complain that they're demanding too large a share of your profits. They reply that your voyage is perilous and they run a risk of losing their entire investment. Lenders and borrowers have carried on this debate ever since.

Today, most people who want to borrow money go to banks rather than to wealthy individuals. But the basic concepts of borrowing and lending haven't really changed. People don't let you have their money for nothing. It's risky to lend money. There's no guarantee that a lender will get the money back, even if the borrower is an old friend. So why lend money? Why take the risk? Because lending presents an opportunity to make even more money. People will often take a financial risk if they believe there is a good chance of making more money.

If a bank lends $50,000 to a borrower, the bank isn't satisfied to just get its $50,000 back. In order to make a profit, the bank charges interest on the loan. Interest is the price borrowers pay for using

someone else's money. If a loan seems risky, the lender will charge more interest to offset the risk. (If you take a bigger risk, you want a bigger return). Of course, the opportunity to earn lots of interest won't mean much if a borrower fails to repay a loan. That's why banks often refuse to make loans that seem too risky.

SOURCES
PROPRIETORS CAPITAL ORIGINAL AMOUNT INVESTED IN ENTERPRISE

Profit before Taxes Depreciation

STOCK-COMMON/ PREFERRED AMOUNT INVESTED BY

SHAREHOLDER

Increase in A/C Payable

COST OF PROTOTYPE DEVELOPMENT & STUDIES FOR IMPROVED PRODUCTIO, EFFICIENCY & PROCESS DEVELOPMENT (COULD ALSO BE EXPENSED)

Increase in Bank Loan

RETAINED EARNINGS

EARNINGS

RETAINED AFTER DISTRIBUTION OF DIVIDENDS

ACCURED EXPENSES

PORTION OF SALARIES DUE BUT NOT YET PAID

Total Sources ACCRUED TAXES PORTION OF TAXES DUE BUT NOT YET PAID

APPLICATIONS

SHORT-TERM LOANS

LOANS TO BE REPAID IN LESS THAN ONE YEAR

Expenditures for plant/ equipment Repayment of Long-term Debt LONG-TERM LOAN (current portion)

PORTION OF LOAN TERM DEBT DUE FOR PAYMENT WITHIN ONE YEAR

Increase in A/C Receivable Increase in Inventories Taxes Dividends

Total Applications

Increase (decrease) in Cash

RESEARCH AND DEVELOPMENT (DEFERRED REVENUE EXPENDITURE)

GOODWILL

PATENTS, CPOYRIGHTS

PRE-OPERATING EXPENSES

BUSINESS LOSS

NONPHYSICAL POOSESSIONS OF AN ENTERPRISE EXPECTED TO YIELD A PERIOD OF YEARS

PETTY CASH MONEY IN BANK

RAW MATERAIL SPARE PARTS & CONSUMABLES WORK-IN-PROCESS FINISHED PRODUCT (UNSOLD)

GOODS & SERVICES SOLD BUT NOT YET PAID FOR

NOTES & DEPOSITS DRAWING INTEREST, ETC

INSURANCE PREMIUMS LICENSE FEES RENT

INTEREST ACCRUED BUT NOT DUE

Current Assets Cash/ Bank Balance Accounts Receivable Inventories Total Current Assets

Current Liabilities Short-term Loans Accounts Payable Total Current Liabilities

Net Current Assets

Total Assets

Long-term Liabilities

Long-term Loan Debenture Deposits

EQUITY & LIABILITIES Equity Equity Share Capital Preference Share Capital Retained Earning Total Equity

LIABILITIES Equity Capital Stock Retained Earnings Total Equity

Long-term Liabilities Long-term Debt

Current Liabilities Short-term Loans Accounts Payable Total Current Liabilities

TOTAL LIABILITIES & EQUIY

CONSISTENCY ONCE A METHOD OR POLICY IS ADOPTED, SUBSEQUENT TRANSACTIONS WILL BE TREATED IN THE SAME WAY; OTHERWISE, CHANGES SHOULD BE EXPLAINED

8)

COSERVATISM TO AVOID OVERSTATEMENT, WHENEVER THERE IS CHOICE IN VALUING ASSETS OR LIABILITIES THE MORE CONSERVATIVE VALUE WILL BE USED

9)

MATERIALITY TRIVIALITIES ARE IGNORED. PERSONAL JUDGEMENT AND COMMON SENSE DETERMINE WHETHER AN ITEM IS TRVIAL OR NOT

The Going Concern Concept ACCOUNTING IS BASED ON ASSUMPTION THAT THE ENTERPRISE WILL OPERATE INDEFINITELY

4)

The Cost Concept FIXED ASSETS ARE ACCOUNTED FOR AT ACQUISITION COST RATHER THAN VALUE THEY COULD BE SOLD FOR

5)

The Dual Aspect Concept EVERY (EVENT) TRANSACTION RECORDED AFFECTS AT LEAST TWO ITEMS IN A FINANCIAL STATEMENT

6)

The Accrual Concept INCOME AND EXPENSES ARISING FROM TRANSACTIONS ARE RECORDED IN THE PERIOD IN WHICH THEY OCCUR RATHER THAN THE PERIOD IN WHICH PAYMENT IS MADE. SEEKS TO MATCH COSTS WITH REVENUES

The raw material has to be cut to size. This is done with a variety of tools. The most common way to cut material is by Shearing (metalworking);

Special band saws designed for cutting metal have hardened blades and a feed mechanism for even cutting. Abrasive cut-off saws, also known as chop saws, are similar to miter saws but with a steel cutting abrasive disk. Cutting torches can cut very large sections of steel with little effort. Burn tables are CNC cutting torches, usually natural gas powered. Plasma and laser cutting tables, and Water jet cutters, are also common. Plate steel is loaded on a table and the parts are cut out as programmed. The support table is made of a grid of bars that can be replaced. Some very expensive burn tables also include CNC punch capability, with a carousel of different punches and taps. Fabrication of structural steel by plasma and laser cutting introduces robots to move the cutting head in three dimensions around the material to be cut.
the maximum output rate a process can achieve under ideal conditions (Krajewski and Ritzman, 2003). The company believes that the CSI effectively communicates how well a process meets customer specifications, and it provides more useful feedback to the production system. For instance, a 65% of CSI in cutter operation was measured over a two-month period, which indicates that only 65% of peak capacity was utilized to meet customer needs. In other words, 35% of machine capacity was either wasted (due to setup, wait for material, maintenance, or breakdown) or produced items that failed to meet customer specifications. The 65% of CSI was then used as a baseline to measure the level of improvement made by this project. The goal (performance outcome) established for this process was 80 percent of CSI, which was considered to be the standard for world-class practice.

Once the measure and process capability for cutting operations was defined, the project team proceeded to analyze the root cause of poor CSI performance. A Pareto analysis was next performed, and the team discovered that the cutter grinder accounted for 40% of machine downtime on the cutting machines (Figure 3). The project team interviewed the operators and found that, due to lack of proper lubrication of the blades, many cutting heads did not attain their maximum life. Moreover, as the dull blades were removed for re-sharpening, cutter grinders became idle and thus failed to keep up with the production schedule. Apparently, the dullness of the blades caused substantial downtime at the cutters. Furthermore, a dull blade also resulted in many defect-prone items including rough finish along the cutter lines and machine crash. In summary, the root cause of poor CSI was found to be blade inefficiency, since it caused machine downtime and defective cutter bodies. Specifically, neither traditional unit cost reduction nor local operations productivity increase was used to determine the improvement effort. Instead, the impact of the improvement on overall quality of axle and system throughput was used to select the improvement project.

Figure 2 displays a simplified process flow of the Axle manufacturing. Following the TOC approach, the project team first searched for the bottleneck by identifying operations associated with large piles of inventory. Gear cutting operation was suspected to be the bottleneck. The project team further interviewed the operators of the downstream operation, lapping, and confirmed that lapping was constantly starving for competed ring set from the cutting operation. Accordingly, cutting operation was determined to be the bottleneck and was chosen as the target for improvement. Incorporating TOC concept into improvement process enabled the project team to select a project that could increase the plant throughput and bottom-line performance.

(take in Figure 2) Value analysis was first performed to determine the various activities in the cutter operation that add both customer and operational value to the process (Table 1). The purpose of value analysis is to streamline the value chain to reduce all non-value added waste in the system and to look for ways to enhance high value-added activities. The machine cycle that includes the cutting operation is both a customer and operational value-added activity. Improving the yield of a highvalue added activity such as blade cutting would increase the overall capacity of the plant. Increasing the gear cutting capacity would have a positive impact on manufacturing system throughput. This could be achieved through a reduction of hours required per gear set, which would in turn increase the capacity and remove the need for new capacity investments. (take in Table 1)

After confirming gear cutters as the bottleneck, the project team initially discussed purchasing additional cutting capacity. The company was using a solvent-cutting device, where the cutting head was lubricated to increase the shelf life of the cutting blades. Newer technology in this process had advanced to dry cutting, a significant increase in the life of the blade, thereby increasing the capacity. However, with the capital constraints facing the plant, it was not feasible to upgrade to the dry cutting process. As suggested by the TOC concept, the team decided to exploit or maximize the utilization of the current technology rather than make new capital investment in additional cutting capacity. In other words, the team would proceed to investigate the current performance of the solvent-based cutting machines and identifying ways to increase quality and throughput without additional capital expenditures.

The business case for this project was initiated because of the eroding sales revenue, which went down by 23% in 2000, while fixed expenses went up by as much as 22% within the same year. Management was faced with either shutting down the plant or eliminating the non-value added processes to increase capacity without incurring new capital expenditures. The Axle facility had some experience in successfully applying Six Sigma to its process improvement. After receiving training on TOC, managers decided to combine TOC and Six Sigma to guide their improvement effort. They felt that the concept of TOC could provide them with a focus on global system improvement. With careful study and planning, an eight-member project team was formed. The

project team was composed of the plant manager, the controller, two six-sigma certified employees, and four operators from the plant. One of the authors of this paper and a student team served as external resources for the project. The team was charged with the responsibility of seeking process improvement that would result in a minimum of $175,000 savings per year. This was the minimum standard established by the plant for any major process improvement project. The team started by reviewing the process map to determine possible bottlenecks in the process. Extensive interviews were conducted, and an in-depth observation of the processes was undertaken to identify probable causes of inefficiencies in the system. After the extensive investigation, the cutting process was singled out as the likely bottleneck operation. The proposed integrated framework was adopted to make the improvement. The various stages of the process implementation are discussed below. Phase 1 of this integrated framework is identical to both strategies, and its purpose is to identify current constraint(s) that block the improvement of global performance, such as meeting customer needs or improving system throughput. Accordingly, a specific process is selected for improvement. Phases 2 and 3 follow the spirit of TOC by exploring the capacity of the selected process. Phase 2 measures the current performance of the process and identifies the root causes needed to be corrected for improvement. The two phases of Six Sigma, measure and analyze, are involved in this step. Once the root causes are confirmed, Phase 3 of the integrated approach applies conventional Six Sigma strategy by using the key manufacturing, engineering, and statistical techniques to remove root causes of the problem for making necessary process improvement. The purpose is to best utilize the current capacity of the process without incurring additional capital expenditures.

Phase 4 ensures the changes made in previous steps are properly supported by the rest of the system. For example, managers may need to change policies and obtain buy-in from employees to implement the changes. Training is often required for a revised process. Phases 5 and 6 are taken from the TOC process. If the improvement of the selected process is insufficient to satisfy customer needs or goals, managers have to consider various options (e.g., outsourcing and additional investment) to raise the capacity of the process. Finally, managers must stay alert to the dynamic nature of the manufacturing system and constantly monitor occurrence of new constraints.

Overall, when the integrated framework is applied to improve a specific process, these two techniques seem to complement each other. The integration is made by combining the management aspect of TOC and the engineering aspect of Six Sigma. Specifically, for firms that apply Six Sigma, TOC provides a global perspective in identifying the constraints and examining necessary changes to the rest of the systems. On the other hand, Six Sigma brings in the perspectives of customer needs, performance measures, and engineering and statistical tools during the stages Theory of Constraints (TOC) was developed by Eliyahu M. Goldratt during the 1980s (McMullen, 1998). The core idea of TOC is that every organization has at least one constraint that prevents management from achieving the goal of the organization to a larger degree. Constraints can be physical resources or policies. TOC develops a set of procedures and methodologies to identify and optimize such constraints. For the purpose of continuous improvement, TOC uses a systematic approach which consists of five focusing steps (Goldratt and Cox, 1992).

1. Identify the systems constraint(s). 2. Decide how to exploit the systems constraint(s). 3. Subordinate everything else to the above decision. 4. Elevate the systems constraint(s). 5. If a constraint has been broken, go back to Step 1. Do not allow inertia to cause a systems constraint.

The implementation of Six Sigma strategy involves a series of steps specifically designed to facilitate a process of continuous improvement. The strategy takes the key manufacturing, engineering, and transactional processes of entire process through the five transformational phases (Plotkin, 1999).

1. Define: Identify customer needs and a project suitable for Six-Sigma effort. 2. Measure: Determine what and how to measure the performance of the selected process. 3. Analyze: Understand and determine the variables that create quality variations. 4. Improve: Identify means to remove causes of defects and modify the process. 5. Control: Maintain the improvement.

The primary objective of the five-step process is to recognize critical customer requirements, identify and validate the improvement opportunity, and upgrade the business processes. A large number of companies have boosted their profitability, increased market share, and improved customer satisfaction through the implementation of Six-Sigma. Companies such as Allied Signal, General Electric, Sony, Texas Instruments, Bombadier, Crane Co., Lockheed Martin, and Caterpillar are beginning to dir The swot anlysis of the Perpetual Inventory System is as under: STREGTHS:

Accurate Reporting

Companies often experience more accurate financial reporting with a perpetual inventory system. Accountants update the general ledger after each inventory transaction. This results in a general ledger account that closely mirrors the actual physical inventory on hand. Owners and managers can then make quality decisions based on the accuracy of reporting inventory values. Multiple inventory types also benefit from this method, as accountants accurately track each one through the general ledger.

Electronic Management

Perpetual inventory systems often use electronic methods to record transactions. An example is the barcode system a clothing retailer uses when selling goods. Each scan records data that updates the company's inventory value. Accountants use this information to balance the general ledger. Companies also use the data to order goods using a just-in-time system. Electronic ordering helps to prevent stock outs and lost sales.

WEAKNESSES:

Cost

Many perpetual inventory systems are expensive. The cost for these systems is twofold. The technology necessary to make the system work can be a major capital expense. Updating the system for new changes to the technology is also costly. Training employees to properly use the system is yet another expense. On the administrative side, companies must find accountants who can work the system and manage frequent changes to the general ledger.

Process

Perpetual inventory systems are often time-consuming. Electronic updates to a company's general ledger may result in a need for account reconciliations. Accountants will often spend copious hours each week or month to reconcile inventory. Persistent errors can also cause further complications. Accountants need to correct errors and balance the inventory account prior to closing the company's books. Reporting inaccurate inventory figures can trigger an audit, resulting in potential problems for the company. Additional record-keeping Increase workload, increase in staff. Additional costs Staff costs, costs of computer package to maintain inventory records.

First-In, First-Out (FIFO) is one of the methods commonly used to calculate the value of inventory on hand at the end of a period and the cost of goods sold during the period. This method assumes that inventory purchased or manufactured first is sold first and newer

inventory remains unsold. Thus cost of older inventory is assigned to cost of goods sold and that of newer inventory is assigned to ending inventory. The actual flow of inventory may not exactly match the first-in, first-out pattern. First-In, First-Out method can be applied in both the periodic inventory system and the perpetual inventory system. Example Use the following information to calculate the value of inventory on hand on Mar 31 and cost of goods sold during March in FIFO periodic inventory system and under FIFO perpetual inventory system.
Mar 1 Beginning Inventory 60 units @ $15.00 per unit

Purchase

140 units @ $15.50 per unit

14

Sale

190 units @ $19.00 per unit

27

Purchase

70 units @ $16.00 per unit

29

Sale

30 units @ $19.50 per unit

Solution

FIFO Periodic

Units Available for Sale

= 60 + 140 + 70

= 270

Units Sold

= 190 + 30

= 220

Units in Ending Inventory

= 270 220

= 50

Cost of Goods Sold

Units

Unit Cost

Total

Sales From Mar 1 Inventory

60

$15.00

$900

Sales From Mar 5 Purchase

140

$15.50

$2,170

Sales From Mar 27 Purchase

20

$16.00

$320

220

$3390

Ending Inventory

Units

Unit Cost

Total

Inventory From Mar 27 Purchase

50

$16.00

$800

FIFO Perpetual

Purchases Date Units Unit Cost Total Units

Sales

Balance

Unit Cost

Total

Units

Unit Cost

Total

Mar 1

60

$15.00

$900

140

$15.50

$2,170

60

$15.00

$900

140

$15.50

$2,170

14

60

$15.00

$900

10

$15.50

$155

130

$15.50

$2,015

Under the perpetual inventory system, an entity continually updates its inventory records to account for additions to and subtractions from inventory for such activities as received inventory items, goods sold from stock, and items picked from inventory for use in the production process. Thus, a perpetual inventory system has the advantages of both providing up-to-date inventory balance information and requiring a reduced level of physical inventory counts. However, the calculated inventory levels derived by a perpetual inventory system may gradually diverge from actual inventory levels, due to unrecorded transactions or theft, so you should periodically compare book balances to actual on-hand quantities. Perpetual inventory is by far the preferred method for tracking inventory, since it can yield reasonably accurate results on an ongoing basis, if properly managed. The system works best when coupled with a computer database of inventory quantities and bin locations, which is updated in real time by the warehouse staff using wireless bar code scanners, or by sales clerks using point of sale terminals. It is least effective when changes are recorded on inventory cards, since there is a significant chance that entries will not be made, or will be made incorrectly. Balance sheets complete the sequence of accounts, showing the ultimate result of the entries in the production, distribution and use of income, and accumulation accounts. Balance sheets and accumulation accounts form a group of accounts that are concerned with the value of assets owned by institutional units or sectors, and their liabilities at particular points in time and with the evolution of those values over time. Balance sheets measure the values of stocks and are compiled at the beginning and end of the accounting period. On the other hand, the accumulation accounts record the changes in the values of assets and liabilities during the accounting period. They are flow accounts, whose entries depend on the amounts of economic or other activities that take place within a given period of time. In the balance sheets three categories of assets are distinguished: a) non-financial produced assets b) non-financial non-produced assets c) financial assets (i) Periodic stock verification (ii) Continuous stock verification (i) Periodic stock verification: It refers to a system where physical stock verification is normally done periodically, i.e., once or twice in a year. Under this method, value of stock is determined by physical counting of the stock on a particular date, usually at the end of the year. It is a simple and economical method of stock-taking and is adopted in small concerns. This type of verification is good only for the items which do not find place in the perpetual

inventory records, e.g., works-in-progress, components and consumable stores at site etc. But there are many limitations of this method. Stores may' be closed down for a few days to facilitate stock-taking. There is possibility of fraud] discrepancy, etc. (ii) Continuous stock verification: This system comprises of counting and verifying i number of items at random daily throughout the year so that all items of stores are verified several times during the year. Notice of the particular stock to be verified each clay is given to the store-keeper only on the date of actual verification. As there is an element of surprise check in this system of stock-taking, effective control over the items of stores can be exercised. The system does not necessitate the closing down of the stores to facilitate stock-taking. There is also less possibility of fraud and discrepancy, but the method is expensive and is adopted by big concerns only. The actual stock of material should not differ from the recorded stock under normal circumstances. But-sometimes differences arise due to the following reasons: (i) Breakage and wastage of materials due to improper handling. (ii) Shrinkage and evaporation.

In earlier periods, non-continuous, or periodic inventory systems were more prevalent. Starting in the 1970s digital computers made possible the ability to implement a perpetual inventory system. This has been facilitated by bar coding and lately radio frequency identification (RFID) labeling which allows computer systems to quickly read and process inventory information as part of transaction processing. Perpetual inventory systems can still be vulnerable to errors due to overstatements (phantom inventory) or understatements (missing inventory) that can occur as a result of theft, breakage, scanning errors or untracked inventory movements, leading to systematic errors in replenishment. The ESA95 recommends the Perpetual Inventory Method (PIM) for the calculation of the stock of Fixed assets whenever direct information is missing (par. 6.04). The calculation of consumption of Fixed capital can be based on these stocks of assets. Besides net capital stock which appears in the Balance sheets can be derived within a PIM approach. In this paragraph the basic principles of the PIM will be discussed. Using the PIM, gross capital stock is calculated as the sum of gross fixed capital formation in Previous years, of which the service live is not yet expired. In the simplest case it is assumed that the total investment of a particular asset does not deteriorate during the expected service life of that asset and is discarded as a whole after that period of time.
Becoming a preferred employer involves more than learning the characteristics of such an organization, howeverit also requires that you understand what top performers want and value in a relationship with an employer. Interestingly, the answers to both questions are the same.

To begin with, top-tier employers offer more than competitive pay and benefits. In fact, the word "competitive" implies that you're simply matching what many other businesses are providing. Even important additional elements, such as a good environment and open communication, won't necessarily make the difference. Studies show that the most important factor is how people feel about their role in the business. Employees perform at different levels based on how they're engaged in the lifeblood activities of the company. When an employer brings in people who are talented, aligned with the company's values and focused on its goals, the results can be tremendous. Want to set your company apart from your competitors? Here are some steps that can help you draw the best people to your business: