FINANCE FUNDAMENTALS 1. What Are Accounting Principles? These are rules and guidelines that govern current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions. Some of the commonly used principles are: Separate Legal Entity Going Concern Concept Cost Concept Accrual Principle Conservatism 2. What Are Three Golden Rules Of Accounting? Real Ac – Debit what comes in and Credit what goes out Personal Ac – Debit the Receiver and Credit the Giver Nominal AC – Debit all expenses and losses, Credit all incomes and gains 3. What Is Finance? "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds 4. What Is The Difference Between P & L A\C And Income & Expenditure Statement? Income and expenditure account is created by non profit making organizations (NPO) and P&L account is created by business like trading and manufacturing etc. 5. What Are Various Types Of Leases? Lease is a contract by which one party conveys land, property, services, etc., to another for a specified time, usually in return for a periodic payment. Popular types of lease are: Financial lease Operating Lease Leverage lease
Transcript
FINANCE FUNDAMENTALS
1. What Are Accounting Principles?These are rules and guidelines that govern current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions.Some of the commonly used principles are:Separate Legal EntityGoing Concern ConceptCost ConceptAccrual PrincipleConservatism
2. What Are Three Golden Rules Of Accounting?Real Ac – Debit what comes in and Credit what goes outPersonal Ac – Debit the Receiver and Credit the GiverNominal AC – Debit all expenses and losses, Credit all incomes and gains
3. What Is Finance?"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds
4. What Is The Difference Between P & L A\C And Income & Expenditure Statement?Income and expenditure account is created by non profit making organizations (NPO) and P&L account is created by business like trading and manufacturing etc.
5. What Are Various Types Of Leases?Lease is a contract by which one party conveys land, property, services, etc., to another for a specified time, usually in return for a periodic payment.Popular types of lease are:Financial leaseOperating LeaseLeverage leaseCross border lease
6. What Is Difference Between Bonds And Debentures?In simple terms bondholders are secured by access to the underlying asset in case of default by the issuer. Debentures, on the other hand, are unsecured (secured by corporate general credit), and debenture holders do not have recourse to assets in the case of default by the debenture issuer.
7. What Is Minority Interest?It is a significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company.
8. Giving A Loan And Credit Provision. What Are The Differences And The Similarities Of
The Two?
Credit is depend on the mind of debtor to give or not and the interest is not to be paid, but loan is applied by creditor and the interest has to be paid on loan taken and similarities is both have a same objective and both is same in nature Giving a loan and credit provision both has same purpose of giving money. However, while giving loan there is implied contract (legal) for recovery and interest. But, in credit provision, there is rarely a written contract and it is extended based on credit rating or reputation and does not attract interest (for a limited period).
9. How is the income statement linked to the balance sheet?
Net income flows into retained earnings.
10. What Are Fixed Assets And Current Assets?
Ans: Fixed Asset: Fixed assets, also known as a non-current asset , is a term used in accounting for assets and property which cannot easily be converted into cash. These are items of value which the organization has bought and will use for an extended period of time; fixed assets normally include items such as land and buildings, motor vehicles, furniture, office equipment, computers, fixtures and fittings, and plant and machinery.Current Asset: In accounting, a current asset is an asset which can either be converted to cash or used to pay current liabilities within 12 months. Typical current assets include cash, cash equivalents, short-term investments, accounts receivable, inventory and the portion of prepaid liabilities which will be paid within a year.
11. What Are The Benefits Of Trade Liberalization?Ans:Trade liberalisationTwo opposing forces have shaped the changing pattern of world trade over the last 200 years; the promotion of free trade and the protection against free trade. Trade protection is the process of erecting barriers to trade, such as taxes on imports, called tariffs, and trade liberalisation is the process of making trade free from such barriers.
The advantages of free trade
It can be argued that free trade creates the following advantages:1. Specialization and comparative advantage:
Free trade encourages countries to specialise and benefit from the application of the principle of comparative advantage.
2. Increased world output:If countries specialize and trade, world output is likely to increase as scarce resources will be used more efficiently. Mass production will generate considerable economy of scale, which reduce average costs.
Free trade increases competition, which generates further benefits, including lower prices, greater use of new technology and technology transfer between countries. Free trade will also encourage the breakdown of domestic monopolies, and provide greater choice for consumers and firms.
4. Higher quality:Open economies are likely to see an increase in the quality of products available as overseas firms compete on non-price factors, such as design and reliability.
12. What Is Bottomline And What Is Topline?Ans:Bottom line refers to profit or net income shown on the bottom of the income statement. The bottom-line or the bottom figure in an income statement is the ‘net profit’ of the company. This is what the company is left with after paying all its expenses (both operating and administrative) for the period reported. A company’s bottom-line generally denotes the efficiency of the management in controlling costs even as it delivers higher sales.Top Line: When reporting performance, corporate entities post the period’s sales number as the first entry in the top-line of the income statement. So, generally, when people make remarks on revenue growth of a company they refer to it as ‘top-line growth’.
13) What Is BEP? How Is It Calculated?Ans: Break-even is the point of zero loss or profit. At break-even point, the revenues of the business are equal its total costs and its contribution margin equals its total fixed costs. Break-even point can be calculated by equation method, contribution method or graphical method. The equation method is based on the CVP analysis formula:px = vx + FC + ProfitWhere,p is the price per unit,x is the number of units,v is variable cost per unit andFC is total fixed cost.
14. What Is Accounting?Ans:The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit.15. What Is GP?Ans:A company's revenue minus its cost of goods sold. Gross profit is a company's residual profit after selling a product or service and deducting the cost associated with its production and sale.
To calculate gross profit: examine the income statement, take the revenue and subtract the cost of goods sold. Also called "gross margin" and "gross income".
16. What Is Free Float Market Capitalisation?Ans:As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization. SENSEX is calculated using the "Free-float Market Capitalization" methodology.
17. Now Days Which Type Of Fund Is Best In Share Market? Why?Ans:It depends upon investor's risk taking ability, tenure for which he wants to invest.According to me, balanced fund, gold fund and investment through SIP is a better way for investment.
Q18. What Do You Mean By Forex Reserve?
Total of a country's gold holdings and convertible foreign currencies held in its banks, plus special drawing rights (SDR) and exchange reserve balances with the International Monetary Fund (IMF).
Q19. Why Do You Want Do Your Specialization In Finance?
An MBA degree with specialization in finance trains on variety of subjects like Corporate Finance, Costing, Budgeting, International Finance, Working Capital Management, investments and securities etc. that prepares an individual to gain an important position or take charge of the finance department of any organization efficiently.
Q20. Who is the First President of RBI & who is current?
A call option is an option contract in which the holder (buyer) has the right (but not the obligation) to buy a specified quantity of a security at a specified price (strike price) within a fixed period of time (until its expiration).
Q23. Which Debt Instrument Is Preferred By The Company For Financing?
Company preferably uses Debentures for financing because it has to pay a fixed amount of interest for the period for which it has taken the debentures.
Q24. Which Government Body Calculates GDP And Inflation Of India?
GDP is calculated by the Central Statistics Office and the first set of numbers that come out are the quarterly estimates, which are later revised to show the final numbers.
Q25. What Is GDP Means?
The monetary value of all the finished goods and services produced within a country's borders in a specific time period. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
Q26.How Is Inflation Calculated?
Calculation of WPI value – WPI is calculated on a base year and WPI for the base year is assumed to be 100. To show the calculation, let us assume the base year to be 2000. The data of wholesale prices of all the 676 commodities in the base year and the time for which WPI is to be calculated is gathered.
Let us calculate WPI for the year 2010 for a particular commodity, say rice. Assume that the price for a kilogram of rice in 2000 = Rs. 20 and in 2010 = Rs. 25. Therefore, the WPI for the year 2010 is :-
(Price of rice in 2010 – Price of rice in 2000) / (Price of rice in 2000) * 100 i.e. (25 – 20) / (20) * 100 = 25
Since WPI for the base year is assumed as 100, WPI for 2010 will become 100 + 25 = 125. In this way individual WPI values for the remaining 675 commodities are calculated and then the weighted average of individual WPI figures are found out to arrive at the overall Wholesale Price Index. Commodities are given weightage in accordance with their influence in the economy.
Calculation of Inflation – If we have WPI values for two time zones, say beginning and end of the year, the inflation rate for the year will be :-
(WPI at end of year – WPI at beginning of year) / (WPI at beginning of year) * 100
For example, WPI on Jan 1 2010 is 125 and that on Jan 1 2011 is 133.75 then inflation for the year 2011 would be :-
(133.75 – 125) / (125) * 100 = 7%. Thus we say that inflation for the year 2011 is 7%.
Q27. What Are The Key Steps Involved In Formulating Treasury Policy Of A Firm?
Treasury policy depends upon financial objectives of a firm as to what they would like to do with short term/ long term funds and how they would like to procure short term/long term funds.
The second step is to ascertain risk and company’s risk appetite and invest accordingly.
Q28.What Is The Difference Between ADR & GDR?
ADR refers to American Depositary Receipt, which is a negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange
GDR stand for:- Global Depositary Receipt, which is a negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country.
Q29.What Is SLR And How Much Is It At Present?
Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of cash, or gold or govt. approved securities before providing credit to the customers. Here by approved securities we mean, bond and shares of different companies. Currently SLR is 23%
Q30.What Is CRR And How Much Is It At Present?
Scheduled banks are required to maintain with the RBI an average cash balance, the amount of which shall not be less than 4% of the total of the Net Demand and Time Liabilities (NDTL), on a fortnightly basis. Currently is 4%
Q31.Why CRR And SLR Are Imposed?
SLR/CRR is imposed for the purpose of prudence and hence the operative principle is that banks should hold all the regulatory required risk capital in SLR/CRR
Q32.What Is The Meaning Of Portfolio Management?
portfolio is nothing but managing different type of securities of a company, and trying to get maximum returns
and minimum risk.
Q33.What Comes Under Portfolio Management?Shares,Bonds,gold,Real assets etc.
34. What Is Amortisation?Amortisation is a routine decrease in value of an intangible asset, or the process of paying off a debt over time through regular payments. OR depreciation of intangible asset is called amortization, for example good will written off, preliminary expenses amortized over period
35. What Is Authorized Capital?Authorized capital is the capital to which an organization is authorised to use in the business and maximum amount that can be used for the working of organization. Authorized capital is also called Registered capital or Nominal capital.
36. Explain,What Are Basel-I And Basel-Ii?Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations.
37. What You Will Find In Balance Sheet?The Balance Sheet of the firm consists of two sides. One is the right-hand side and the other is the left-hand side. Left-hand side contains all liabilities & capital and another side is of the firm and right-hand side contains alland assets. Balance sheet equation is Liabilities + Capital = Assets
38. What Is The Difference Between Stock & Shares?A share is one of a number of individual units into which the capital of a company is divided. Stock is the capital in the form of a fund which may be divided into any desired amount.
Shares may be partly or fully paid-up, but stock must be fully paid.
Shares can be issued directly but stock cannot
A share has a nominal value, whereas stock has none.
Shares must bear distinct numbers, while stock is never numbered.
Shares are of equal denomination while stock may be split into unequal amounts.
39. What Is Another Name Of NYSEThe New York Stock Exchange (NYSE), sometimes known as the Wall Street "Big Board"
40. Explain How Ratios May Be Used To Assess The Profitability And Liquidity Of A Business?For liquidity ratio there are two-1)current ratio 2)quick ratio. for profitability they are divided into 2 categories-
1) on sales basis-a)gross profit ratio b)net profit ratio c)operating ratio2) on investment basis-a)return on capital employed b)return on shareholders’ fund c)earning per
share ROE/ROCE liquid assets to total assets
41. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
Prepaid expenses are the Expenses which are made before getting the benefit which we can show it as current where as preliminary expenses are those expenditure which are made before registration of company
42. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
Ans: Prepaid expenses are the paid by the company in advance but the preliminary expenses are
paid when the company is established. Eg. registration charges.
43. Explain The Qualities Of A Smart Investor?
Ans: Smart investors are not emotionally tied to their investment positions: They know that to be
successful, they must not be emotional towards their investment. No matter how attractive an
investment looks or how badly an investment has performed recently, selling at the right time is
just as important as buying. They are aware that no investment will move up forever, and they are
able to sell it when right.
44. What Is Finance?
Ans: "Finance" is a broad term that describes two related activities Eg. the study of how money is
managed and the actual process of acquiring needed funds. Because individuals, businesses and
government entities all need funding to operate, the field is often separated into three sub-
categories: personal finance, corporate finance and public finance.
45. What Is An Auction? Why Does It Occur?
Ans: An auction is a process of buying and selling goods or services by offering them up for bid,
taking bids, and then selling the item to the winning bidder. In economic theory, an auction may
refer to any mechanism or set of trading rules for exchange.
46. What Is Derivatives?
Ans: A company with a market capitalization between $2 and $10 billion, which is calculated by
multiplying the number of a company's shares outstanding by its stock price. Mid cap is an
abbreviation for the term "middle capitalization".
47. What Are The Criticisms Against His Profit Maximization Objective Of A Business?
Ans: the business having sole objective of profit maximization does not think about customer
satisfaction and its social responsibilities. It blindly goes for making big profit and does not
consider its responsibilities. Profit maximization as an objective can be good for short run but in
long run the business having good name in society in terms of work done for social welfare ,
quality of its products, will matter more.
48. What Is Sensex And What Is Nifty?
Ans: The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator
of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the
stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this
tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the
Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE.
49. What Is The Higher IRR In Case Of Fixed Or Reducing Interest Rate?
Ans: Assuming the total inflow of fund ( without discounting) is same then reducing interest rate
will give higher IRR.
50) What is Beta?
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
51) Explain How Ratios May Be Used To Assess The Profitability And Liquidity Of A Business?
For liquidity ratio there is two-1) current ratio 2) quick Ratio. For profitability they are divided into 2 categories-1) On sales basis-a) gross profit ratio b) net profit ratio c)Operating ratio2) On investment basis-a) return on capital employed b) return On shareholders fund c) earnings per share
52) What Is Diluted EPS? In Finance What Is The Use Of Diluted EPS?
A performance metric used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised. If things go well, there is a good chance that all options and convertibles will be converted into common stock.
53) How to Predict Capital Adequacy Ratio of ICICI 13.4% and SBI 11%...Which One Is Better and How?
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc.More adequate capital to risk weighted assets is better Hence ICICI 13.4% is better.
54) NPA Of ICICI Bank Is 3.2% And State Bank Is 2.3%. Which One Is Better?
Lower the NPA higher the protection to depositor’s fund. Hence, State Bank 2.3% is better.
55) What Is The Functionality Of Stock Exchange?
The market in which shares are issued and traded either through exchanges or over-the-counter markets.
56) Briefly Explain About Ledger Postings?
Ledger posting done to find out the balance of a particular Account easily.....while finding the balance from journal Entries will prove time consuming........with the help of Ledger a/c trial balance prepared and with the help of Trial balance P.L a/c prepared.
57) What Is Convertible Debenture?
A long-term unsecured, interest-bearing corporate bond that can be exchanged for common shares.
58. What Is Its Effect On EPS?
Ans: Convertible debenture is one which can be converted into an equity share after a chosen time period.
EPS is ratio of Profit After Taxes to No of Shares Outstanding.If a convertible debenture is converted into 2 equity shares, then no of outstanding shares will increase which leads to decrease in EPS.
59. Is It True That Indian Currency Has To Be Converted In Foreign Exchange Before Going To Other Countries?
Ans: Of course. There is no ambiguity, conversion is must. e.g. if you go to England u cannot do any transaction through INR. You have to convert it to GBP (Currency of England).Thus wherever u go to foreign country u need to convert to that respective currency. There are some theories upon which conversion rate is determined.
The basic reason behind this requirement is that, if govt. or ministry of external affairs will allow the outflow of Indian currency to any other country without converting it to respective country's currency then the Indian currency might be used for illegal activity. Also the strength of the economy is somewhere evaluated by having foreign currency. If a country holding larger foreign currency, they could make payment for import transactions. So if the Indian govt. allows the INR to be outflow then they are indirectly allowing other countries to be stronger when they will intend to make transactions with Indian merchandise.
60. What Is A Swap?Ans: A swap is a derivative in which counterparties exchange cash flows of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved.Swaps can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices.
61. What is Dividend?Ans: A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.
62. On Which Basis Sensex And Nifty Will Be Measured And Also How The Inflation Rate Measured?Ans: Sensex and Nifty are calculated based on Free float Market Capitalization. The Difference is that Sensex is an average of 30 companies and Nifty is an average of 50 companies. Inflation rate is measured based on Whole Sale Price Index
63. What Is The Problem That Is Being Faced By Fixed Maturity Plans Today?Ans: Fixed Maturity Plans: Fixed maturity plans are investment schemes floated by mutual funds and are close-ended with a maturity period ranging from three months to five years. These plans are predominantly debt-oriented, while some of them may have a small equity component.
The objective of such a scheme is to generate steady returns over a fixed-maturity period and immunizing the investor against market fluctuations.
During the meltdown, the fixed mutual funds had to bear very heavy withdrawals due to panic among investors. 90 per cent of the assets the mutual funds has bought were rated AAA or P1
plus, depending on whether they were long term or short term assets. But in the coming months these MFs will face huge redemptions, leading to a problem again.
64. What Is The Concept Of Finance Accounting?Ans: A field of accounting that treats money as a means of measuring economic performance instead of as a factor of production. It encompasses the entire system of monitoring and control of money as it flows in and out of an organization as assets and liabilities, and revenues and expenses.Financial accounting gathers and summarizes financial data to prepare financial reports such as balance sheet and income statement for the organization's management, investors, lenders, suppliers, tax authorities, and other stakeholders.
65. What is the Meaning of Liquidity?
Ans: The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.Assets that can be easily bought or sold are known as liquid assets.The ability to convert an asset to cash quickly. Also known as "marketability." There is no specific liquidity formula; however, liquidity is often calculated by using liquidity ratios.
66. WHAT IS THE CONCEPT OF FINANCE ACCOUNTING?
Finance Accounting gathers and summarizes financial data to prepare financial reports such as
balance sheet and income statement for the organization's management, investors, lenders,
suppliers, tax authorities, and other stakeholders.
67. HOW TRADING GOES IN STOCK MARKETS. I.E. IN BSE HOW WE ARE
KNOWING THAT A COMPANY’S SHARE IS INCREASING OR DECREASING?
A circuit is like a limit set during stock market trading hours. There is an upper circuit and a
lower circuit, It means that if a stock price of a particular company rises or falls, trading will stop
for that stock if it rises or falls ahead of the circuit.
Q.78 What Is Financial Management?
Financial Management means planning, organizing, directing and controlling the financial
activities such as procurement and utilization of funds of the enterprise.
Q.79 What Are Nationalised Banks?
Nationalised banks are those banks which were taken over by the Government of India.
Q. 80 What Is Bear Market?
A market condition in which the prices of securities are falling, and widespread pessimism causes
the negative sentiment to be self-sustaining.
Q.81 What Is Inventory?
The word inventory simply means the goods and services that businesses hold in stock.
82. Defination of Good will?
Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.
How to calculate it?
Method 1. Average Profit Method:Goodwill = Average Profit x Number of Years Purchase
83. What is Cost of Capital ?
The cost of capital is a term used in the field of financial investment to refer to the cost of a company's funds (both debt and equity), or, from an investor's point of view "the shareholder's required return on a portfolio company's existing securities".
Explain the measure of cost of capital ?
Measures of cost of capital is calculating cost of capital on the basis of equity and debt (rate of interest) so as to make less cost of capital for the firm.
84. What are the componants and companies of BSE – Bombay stock exchange sensex? this is the current list of companies in the BSE-30 benhmark index. but it keeps changing DO NOT REMEMBER ALL 30 JUST REMEMBER TOP 5RELIANCE ENRACC LTDGRASIM INDDLF LTDRELIANCE CAPTCSINFOSYS TECHTATA MOTORSTATA POWERWIPROMAH & MAHS B IICICI BANKHIND UNI LTBHARTI TELERELIANCESTERLITE (I)MARUTI UDYOGREL COM LTDHINDALCOHOUS DEV FINO N G CJAIPRAK ASSOLARSEN & TOUNTPC LTDB H E LH D F C BANKTATA STEELSUN PHARMAI T CM& MTCSL & T
85. What is difference between Debt and Equity ?
86. Corporate Social Responsibility Is Outside The Scope Of Business Houses´. Explain Why You Agree Or Disagree?I Wouldn’t Take ITC for instance. Their e-chopal initiative was a remarkable effort in freeing the farmers from the clutches of traders. They now have better understanding of the prices prevailing in the market, and hence can generate more money.
The Tatas have been known for their philanthropic activities. So it would be incorrect to state the above statement.
87. What Is The Difference Between Prepaid Expenses And Preliminary Expenses?
prepaid expenses refers to payment of money in advance before getting the benefit of it but preliminary expenses refers to the expense which incurred by the company at the time of incorporation and the utility of this expense carries over a period of time and thats why it is not completely written off in the bigging itself.
88. What Is The Difference Between Long Term Loan And Debt?
long term loans are taken for the purpose of long term investments or capital investments but debt are taken for the purpose of maintain the shot term financial needs of the company.
89. What Is The Difference Between Sensex And Nifty?
Nifty is an indicator of the performance of the companies listed in national stock exchange situated in delhi. its an index or a benchmark of the financial performance of the companies.
Sensex is an indicator of the financial performance of those companies which r listed in Bombay stock exchane situated in Bombay.
Q.90) what is a portfolio?
Ans: A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts. Portfolios are held directly by investors and/or managed by financial professionals.
Q.91) In Stock Market I Find the Term Futures and Options? What Was the Meaning of That sensex Futures And Options?
Ans: Futures Contract: A futures contract is an agreement to buy or sell an asset at a certain time in the future at a specific price.
Option: An options contract is nothing but the right to buy or sell something at a specified price within a period of time.
Q.92) What Is Trial Balance?
Ans: The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct. OR Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system.
Q.93) What Are Hedge Funds?
Ans: Hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.
Q.94) What Are Valuation Accounts?
Ans: Reserve account created to offset changes in the value of a firm's assets. Examples are accumulated depreciation and allowance for bad debts. Also called valuation reserve.
Q.95) EBIT Stands For?
Ans: Earnings Before Interest and Tax.
Q.96) What Is Fixed Cost?
Ans: A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity.
Q.97) In Banking Industry Difference Between Interest Income And Interest Expenses Is called As ............
Ans: Net Interest Income
Q-98: What is the Effect of CRR Hike on Market?
Ans: Following are the Effects of CRR Hike on Market:
1) It will Affect the Lending Rates
2) IncreaseInterest on Loans will be Increased
3) Interest on Deposits will be Reduced.
4) Since banks will have to keep more money in CRR it will reduce flow of funds to the market
Q-99: How Cash Enters In Market?
Ans: Cash Enters the Market in the Following Way:
1) Purchase and Sale of Securities
2) Through Money Lenders, though they need more Interest
Q-100: What Is Reverse Repo Rate?
Ans: Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. Banks are always happy to lend money to the RBI since their money is in safe hands with a good interest.
An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money out of the banking system.
Q-101: Difference Between Cash Flow vs Funds Flow.
Ans: Following are some of the Differences Between Cash Flow Vs Funds Flow:
1) While funds flow statement reveals the change in the working capital of a company between two balance sheet dates, while cash flow statement reveals the change in the cash position of the company between two balance sheet dates.
2) As cash flow statement is only concerned with cash related transactions it is can be easily understood by a person who does not have accounting knowledge which is not the case with funds flow statement.
Q-102: Do You Have Any Idea About Basic Banking?
Ans: Following is some of the information of Basic Banking:
1) Savings accounts means number of withdrawals per quarter and amount of withdrawals per transaction in ATM.
2) Overdraft is allowed generally by banks in Current accounts.
3) A bank’s Fixed Deposits is characterized by Interest rate as agreed with the customer at the time of the deposit, Fixed period of the deposit and Periodical payment of interest.
Q-103: What Are The Key Steps Involved In Formulating Treasury Policy Of A Firm?
Ans: Following are the Key Steps Involved in Formulating Treasury Policy of a Firm:
1) Investment
2) Cash Management
Q-104: What Is Value At Risk Approach?
Ans: Value at Risk Approach is a Technique which uses the statistical analysis of historical market trends and volatilities to estimate the likelihood that a given portfolio's losses will exceed
a certain amount. Value at risk is frequently calculated for either one day or two week periods, and is generally given as an X percentage chance that the portfolio will lose Y dollars.
Q-105: What Is The Meaning Of Finance?
Ans: Finance is nothing but an exchange of available resources. Finance is not restricted only to the exchange and/or management of money. A barter trading system is also a type of finance. Thus, we can say, Finance is an art of managing various available resources like money, assets, investments, securities, etc.
106.)Why Do You Want To Work With Our Company Not Others?Ans: As I'm a fresher I want to prove my skills in your organisation and your organisation is the best one which is upcoming and my skills and innovative ideas may help your organisation in a successful manner. Your company is one of the best in this sector and I feel I will learn a lot during my tenure with the organization alongwith career growth (don’t try to become hero/heroin by saying my skill will help your organization)
107.) What Will Your Outlook To Wards Maintenance Of Liquid Assets?
Ans: A firm should go ahead and convert some of their investments that are slightly less liquid than cash (items like storm-term stock investments) into cash in order to make sure that the firm has sufficient actual cash on hand when current obligations come due.
108.) What Is The Product Of Money Market?
Ans: Money market products (T-bills, Commercial Paper and Banker’s Acceptances) are short-term fixed-income products that are sold at a discount and then mature at face value. The difference between your purchase price and par value is your return.
109.) What Is The Functionality Of Stock Exchange?
Ans:Stock exchange provides a ready and continuous market for purchase and sale of securities.Its provides ready outlet for buying and selling of securities. Stock exchange also acts as an outlet/counter for sales of listed securities.
110.)What Is Reconciliation Of Assets?Ans: Reconciliation means verifying the assets or the assets value which appears on the balance sheet of a particular company.
111.) What Is Real Account?
Ans: Real account is the elements of accounts which represents assets, that may be tangible/intangible. For accounting treatment debit what comes in & credit what goes out from Business.
112.) What Is Sub-Prime Crisis?
Ans:A situation starting in 2008 affecting the mortgage industry due to borrowers being approved for loans they could not afford. As a result, a significant rise in foreclosures led to the collapse of many lending institutions and hedge funds. The financial crisis in the mortgage industry also affected the global credit market resulting in higher interest rates and reduced availability of credit.
136) What Is The Difference Between Stock & Shares?
Ans:
Stocks are fully paid up whereas shares may be fully paid up or partly paid up. Shares may be issued when a company is incorporated but stock cannot be issued under such
circumstances. Only fully paid shares can be converted into stock. Shares are always registered and not transferable by mere delivery but stock man may be
registered or unregistered or unregistered stock can be transferred by mere delivery.
137) How To Measure Cost Of Capital? Explain The Measures Of Cost Of CapitalAns:The cost of Capital to a company is the minimum rate of return that it must earn on its investments in order to satisfy the various categories of investors who have made investments in the form of shares, debentures or term loans.
138) What Is Futures Contract?Ans: A futures contract is a type of derivative instrument, or financial contract where two parties agree to transact a set of financial instruments or physical commodities for future delivery at a particular price.
139) What Is Risk?Ans:The Oxford English Dictionary (Oxford University Press, 1971) defines risk as a "hazard, danger; exposure to mischance or peril". Therefore, to put oneself "at risk" means to participate voluntarily or involuntarily in an activity or event that could lead to injury, damage, or loss. In business sense, putting capital at stake.
140) What Is Accounting?Ans:
Accounting is the recording of financial transactions plus storing, sorting, retrieving, summarizing, and presenting the information in various reports and analyses. Accounting is also a profession consisting of individuals having the formal education to carry out these tasks.
141) What Is ROE?Ans:The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as:Return on Equity = Net Income/Shareholder's Equity
142) Equity Share Is Most Safe Capital In The Organization´ CommentAns:This is the safest capital because you are investing Your capital in the business and you have the right as to take decisions regarding that. Neither the preference shareholders nor the debentureholders who are investing their capital have such type of rights.
143. What Is The Difference Between Single Point Tax And Value Added Tax?ANS. Tax (Income tax) is payable on your net profits that you make with your business. VAT (Value-added tax) is payable on your net taxable supplies
144. WHAT IS BRS?
ANS. A form that allows individuals to compare their personal bank account records to the bank's records of the individual's account balance in order to uncover any possible discrepancies.
145. WHAT IS EQUITY?
ANS. A stock or any other security representing an ownership interest.
146. What Is Dividend Pay Out Ratio?
ANS. The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio.
147. What Are Accounting Principles?
ANS. The rules and guidelines that companies must follow when reporting financial data. The common set of accounting principles is the generally accepted accounting principles (GAAP).
148. What Is Euro Bond?
ANS. A bond issued in a currency other than the currency of the country or market in which it is issued.
149.
150. What Is Mean By OTC?
In general, the reason for which a stock is traded over-the-counter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as "unlisted stock", these securities are traded by broker-dealers who negotiate directly with one another over computer networks and by phone.
151. What Is Spread?
The difference between the bid and the ask price of a security or asset.
152. What Is Arbitrage?
Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. This is considered riskless profit for the investor/trader.
153. What Is The Difference Between ROCE And ROSF And ROI
The Return On Shareholders Funds (ROSF) ratio has historically been used by industry investors as a measure of the profit for the period which is available to the owner’s stake in a business. The Return On Shareholders Funds ratio is therefore a measure of profitability.
A ratio that indicates the efficiency and profitability of a company's capital investments is return on capital employed.
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments is return on investement.
154. What Is The Difference Between Debenture And Preference Share
A debenture is a kind of debt. If any organization issues a Debenture to raise funds, the investor becomes a creditor to the business.On the other hand, by purchasing preference shares the investor becomes an owner of the company but he doesn't enjoy any voting rights.
155. How Crude Oil Prices And Inflation Is Inter-Related Especially For India And U.S.
Crude oil is the fuel for running the transporting the essential items. The phenomenon increase in the fuel cost pushes up the cost of the commodities equally. Further, it appears that there is a lot
of speculative trading going on in fixing the oil price and that results in the dollar's and other currency's value. All have a cascading effect on the price of the commodities.
Q.156.What Is Nominal Account?
Ans: Debit All Losses and Expenses and Credit all Incomes and Profits
Nominal accounts are just headings, under which you analyse your income and expenditure, for example “Fees”, “Commissions”, “Electricity”, etc. Income nominals are typically referred to as “Sales” nominals, while expenditure ones are called “Purchase” nominals.
Q.157.Who Is A Lame-Duck?
Ans: A lame duck is an elected official who is approaching to the end of his tenure and especially an official whose succesor is already elected.
Q.158. Difference between Cash Flow Vs Funds Flow?
Ans: cash flow is a statement showing changes in inflow and outflow during a period. CFS allows investors to understand how a company’s operations are running the income and spendings of a company.
Fund flow statement shows the source and acpplication of funds during the period. FFS is showing the funds for the future activities of the company.
Q.159.Profit Maximization Is Not Wealth Maximization ± Discuss Briefly By Giving Appropriate Examples.
Ans: Profit maximization is a short run project while wealth maximization is a long projectThe share holders of organisation prefer wealth maximization over profit maximization.The share price of any organisation.
Eg. Wealth maximization consider EPS dividend payment in advance,while profit maximization does not consider it.
Q.160. If Private Company Will Takeover The Public Company It Will Come Under Which Type Of Takeover?
Ans: If Private Company Will Takeover The Public Company It Will Come Under Reverse takeover type of Takeovers
Q.161. What Is Bonus Dividends?
Ans:Bonus dividend are used with stock a one time extra dividend that is in addition to the usual dividend payment received from owing the stock.
Q.162. What Is Fixed Cost?
Ans: A cost that does not change with an increase or decrease in the amount of goods or services produced.
170. Difference Between Cost Accounting And Financial Accounting?The main purpose of cost accounting is to analyse, ascertainment and control of cost. The main purpose of financial accounting is to record financial transactions, finding out profit or loss and financial position.
171. What Is Net Present Value?Net Present Value (NPV) analysis is the process of taking a current investment (in this case the replacement gilt), and projecting the future net income from this investment.
172. What Is The Functionality Of Stock Exchange Continuous and ready market for securities 2. Facilitates evaluation of securities 3. Encourages capital formation 4. Provides safety and security in dealings
173. What Is Amalgamation?Amlgamation is nothing but joining of two companies.one company join to another company after they are making a new company is called AMALGAMATION.Amalgamation is a union of two or more companies, made with an intention to form a new company.
174. Differentiate Between Horizontal And Vertical MergerHorizontal Merger (Integration) = When a company expands its business into different products that are similar to current lines. Vertical Merger (Integration) = When a company expands its business into areas that are at different points of the same production path.
175. What Is Hedging?Hedging means reducing or controlling risk .A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment.
176. Describe The Dynamics Of Culture As A Multi-Level, Multi- Layer Construct.Multi-Level- macro-level, Multi- Layer Construct- micro level
177. What Are Debentures?A debenture is a document that either creates a debt or acknowledges it, and it is a debt without collateral. What is GL accounting?
178. What Is Meant By G L Accounting?
A general ledger is a book containing all the accounts for recording transactions relating to a company's assets, liabilities, owners' equity, revenue, and expenses.
179. Difference Between P&L A/C And Balance Sheet?The difference between Profit and loss account and Balance sheet are;
Balance sheet is a statement of assets and liabilities, whereas profit and loss is an account.
Balance sheet discloses the financial position of the business on a particular date, whereas, profit and loss account discloses profits earned or losses suffered during an accounting period.
180. Is There Any Obligation To Issue Preference Shares At Fixed Rate Of Dividend?Preference shares. Sec. 85(1) of the Companies Act defines preference shares as those shares which carry preferential rights as the payment of dividend at a fixed rate and as to repayment of capital in case of winding up of the company.
181. What Is The Difference Between Indian Gaap And Accounting Standards?GAAP Stands for Generally Accepted Accounting Principles.Accounting Standardards are issued by the Institute of Chartered Accountants of India (ICAI). This is the largest accounting body in the country.
182. If Both The Tax Rate & Interest Rate Is 10%. Then From Where The Company Raise Fund From Debt Or Equity. And Which One Is More Suitable.
Debt ang equity to raised is Rs 500let income is Rs 100 ( When debt is raised ) intrest(-) 50 so, Tax (-) 5 PAT = 45 When equity is raised intrest(-)0 Tax 50 PAT = 50 so,answer is equity option is better
Sorry, go further, In first case equity is 400 hence net profit on equity is 45/400 = 11.25% and in the second case it is 50/500 = 10% hence first case is better
183. What Do You Understand By The Term´Capital Gains´ Used Inthe Income Tax Act? What Are The Rules Regardingexemption Of Capital Gains.
Capital gains are profits from the sale of a capital asset, such as shares of corporate stock, a business, a parcel of land, or a piece of art. Capital gains are generally included in taxable income but are often taxed at a lower rate; under current law, for example, most long-term capital gains face a top rate of 15 percent.
190) Types of ratios. What are they?
Some of the different types of ratios that can be calculated from data in the financial statements and used to evaluate a business include: Liquidity ratios, Solvency ratios, Activity ratios, Profitability ratios.
191) what is meant by fidelity funds, Inception date, right issue and stock split?
Fidelity fund: Fund available in limited circumstances for clients who have suffered a loss because of a defalcation
Inception Date: The date the insurance policy begins.
Right issue: An issue of rights to a company's existing shareholders that entitles them to buy additional shares directly from the company in proportion to their existing holdings, within a fixed time period. In a rights offering, the subscription price at which each share may be purchased in generally at a discount to the current market price.
Stock Split: An issue of new shares in a company to existing shareholders in proportion to their current holdings.
192) Difference btw bank rate and repo rate
The Bank rate is the rate at which commercial banks, which are temporarily short of cash, can borrow from RBI.
The repo rate enables banks, to acquire funds from RBI by selling the securities and at the same time agreeing to repurchase them at a later date at a predetermined price.
193) Difference btw debentures and preference shares
A debenture is a kind of debt. If any organization issues a Debenture to raise funds, the investor becomes a creditor to the business. On the other hand, by purchasing preference shares the investor becomes an owner of the company but he doesn't enjoy any voting rights. Debentures are generally costlier as compared to the preference shares.
194) what are market risks?
Market risk is the risk of losses in positions arising from movements in market prices. The possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets. Market risk, also called "systematic risk," cannot be eliminated through diversification, though it can be hedged against. The risk that a major natural disaster will cause a decline in the market as a whole is an example of market risk. Other sources of market risk include recessions, political turmoil, changes in interest rates and terrorist attacks.
195) who are called under writers?
1. An investment bank that acts as an intermediary between the issuing company and the investors who purchase the company's debt instruments and/or stock at the Initial Public Offering (IPO). The underwriter buys the newly issued securities from the company and sells them to investors on the secondary market through a stock exchange.2. An issuer of insurance policies.
196. In Stock Market I Find The Term Futures And Options ? What Was The Meaning Of That sensex Futures And Options ?
ANS :- future
A financial derivative which represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (excercise date).
1. call option : a Call Option gives its buyer the right to buy shares of the underlying security at a fixed price before a specified date in the future-usually three, six, or nine months. For this right, the call option buyer pays the call option seller, called the writer, a fee called a Premium, which is forfeited if the buyer does not exercise the option before the agreed-upon date. A call buyer therefore speculates that the price of the underlying shares will rise within the specified time period
2. put option : The opposite of a call option is a Put Option which gives its buyer the right to sell a specified number of shares of a stock at a particular price within a specified time period. Put buyers expect the price of the underlying stock to fall.
197. On Which Basis Sensex And Nifty Will Be Measured And Also Howthe Inflation Rate Measured ?
ANS : Sen sex and Nifty are calculated based on Free float Market Capitalization. The Difference is that Sen sex is an average of 30 companies and Nifty is an average of 50 companies. Inflation rate is measured based on Whole Sale Price Index
198. What Is Merger? What Is Acquisition? What Are Motive Behind Mergers And Acquisitions?
ANS :
Merger : The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.Acquisition : A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.
Motive Behind Mergers And Acquisitions?
Tax advantages Increases liquidity for owners Gaining access to funds –
Growth Diversification Synergistic benefits Protection against a hostile takeover Acquisition of required managerial skills, assets or technology
199. Raising Funds Through Debt-Equity In Indian Economy. If A Firm Is Going To Use It &After Year If Depression Will Continue In Economy & It Faces Inflation?
ANS :
equity will be the best choice because the risk of the company till the payment of interest on bonds is reduced so that the company will not be in a serious position to pay the debts off and risk in equity side will be till the extent of investors expectations, which may lead the share prices bit low in their market price as it is common in a depression economy.
Its better to have more of equity because if inflation increase the interest rate also increase.
200. What Is Convertible Debenture? What Is Its Effect On EPS?
ANS :convertible debenture is the type of debenture which the company give the right or option to
the holder to change from debenture form to ordinary shareholder in an agreed number of shares to be exchanged per debenture.
The effect of convertible debenture to the EPS is that it diluted the EPS (the EPS will decrease because of the increase of the number of shares which were not contributed any thing to the profit for the year).
201. What Is Apex Banking?
ANS : Apex banking is an easy banking in the mode of E-banking.It is multi location, multi language, multi branches and multi currency compatible to ensure global coverage.202. What Is E.T.F. Give The Name Of Any Company?
ETF is exchange traded fund. As the name suggest it is traded on the stock exchange like a stock. It is made up of basket of assets like a mutual fund.Its price changes every second like any other stock. It does not have a NAV like mutual fund which is calculated at the end of the day.
203. What Is Mean By Due Diligence
Due Diligence refers to background verification of a person or business before dealing any transaction with them. Most commonly it used in real estate industries where people verify that the assets have clear records
204. What Is Finance?
"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds.
205. What Is Minority Interest?
A significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company. Minority interest in business is an accounting concept that refers to the portion of a subsidiary corporation's stock that is not owned by the parent corporation.
206. What Is The Difference Between Single Point Tax And Value Added Tax?
A tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state vat is tax which applicable to the goods only
207. How Can You Create A Secret Reserve?
1. High Value Of Goodwill , 2. Shown More Bad Debts , 3. Shown More Depreciation , 4. More Liabilities Shown, 5. Low Value Of Fixed Assets, 6. Under Value Of Current Assets
208. When Inflation Was High Also The Recession Was High Howthese Two Contradictorythings Occur At A Same Time
It is totally depend on the mentality of the people because if inflation is high,result is that price is high of the commedities so people think about the future so they start to invest thier money and save expenses. Result is that lack of the liquidity in market and if there is no proper liquidation in market recession is high.
221. Who Are Under Writers? What Is Their Work?An underwriter is a person or firm who assumes financial risks on behalf of another. The term is used in a number of industries; it can refer to an insurance company, an investment bank, or an individual sponsor of an event. Generally, an underwriter receives special terms in exchange for its services; these terms often include a financial stake in the thing which the company agrees to underwrite.
In a company or other entity that administers the public issuance and distribution of securities from a corporation or other issuing body an underwriter works closely with the issuing body to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.
222. What Do You Mean By GAAP?The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes.
223. Which Is The Biggest Stock Exchange In India?
The National Stock Exchange (NSE) located at Mumbai, India. It is the 11th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US$1 trillion and over 1,652 listings as of July 2012. NSE is mutually owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities.
224. Are Bank Rate, Discount Rate And Repo Rate The Same In Indian Context?
Bank Rate is the rate at which central bank of the country (in India it is RBI) allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate. Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down, and it can also indicate an increase or decrease in your EMI.
However the bank rate and the discount rate are used in the same context in India as it is the rate at which the central bank rediscounts the first class bills of exchange of the commercial banks.
Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. It enables banks, to acquire funds from RBI by selling the securities and at the same time agreeing to repurchase them at a later date at a predetermined price. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rateSo keeping securities and borrowing is repo rate, simple borrowing is bank rate.
225. What is a Debenture?A type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.
226. What Are Quick AssetsAnything having commercial or exchange value that can easily be converted into cash, or that is already in cash form. Quick assets are the highly liquid assets held by a company, including cash, marketable securities and accounts receivable. Quick assets are often calculated as current assets (cash + marketable securities + accounts receivable) minus inventories (since inventories are often a firm's least-liquid current assets). Quick assets are used by companies to calculate certain financial ratios that are used in decision making, including the quick ratio.
234. Now a Day Which Type Of Fund Is Best In Share Market? Why
Now days Bluechip funds are best in share Market because they give high and stable returns with risks.
235. What Is The Official Criterion For Blue-Chip Companies?
The Company which is high in Market Capitalization, Volume, Profit, and Performance are Blue chip Companies
236. What Is Sensex?
Sensex is Sensitive Index of BSE best 30 stocks which often keep on changing in the Index as per their performance
237. What Is The Effect Of Crr Hike On Market?
The Crr hike will keep more Reserve funds in the Bank and Lending will be reduced.
238. What Is The Difference Between Debt And Equity?
Debt is borrowed and Equity is owned , debt does not dilute management control, Equity takes the share in Management Control
239. What Is E.T.F. Give The Name Of Any Company Who Is Famous For This Type Of Service?
Exchange traded fund. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day.BNP Paribas.
240.Recently I Heard In News That Bank Rate And Repo Rate Are Cut By 100, 50 Basis Points What Does This Mean Exactly,
This Means that its reduced by 1%, 0.5% respectively from their actual rate.
241. What Is Primary And Secondary Market?
The Primary market is where securities are issued in market by corporate bodies and government and secondary market is where the securities are traded.
242.What Is Risk Management?
The process of identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making. Risk management is a two-step process - determining what risks exist in an investment and then handling those risks in a way best-suited to your investment objectives.
243.What Is Fundamental Analysis?
Fundamental analysis is a stock valuation methodology that uses financial and economic analysis to envisage the movement of stock prices.
244.What Are The Various Methods To Curb Inflation?
There are broadly two ways of controlling inflation in an economy Monetary measures and Fiscal measures. In Monetary Policy use high interest rates as the traditional way to fight or prevent inflation. Fiscal measures to control inflation include taxation, government expenditure and public borrowings.
245.What is the difference between wealth, cash and money.
Wealth is the accumulated investment of a person. Cash is the liquid funds of individual and money is the object which used is cash and when invested becomes wealth
246.What Is The Product Of Money Market?
Money market products are short-term fixed-income products that are sold at a discount and then mature at face value. The difference between your purchase price and par value is your return. For example T-bills, Commercial Paper and Banker’s Acceptances etc.
247.What Is Consolidated Financial Statement?
The combined financial statements of a parent company and its subsidiaries. It is a representation of how the holding company is doing as a group. The guiding principle of consolidated financial statements is that of the 'single entity' principle.
248.What Are The Methods Of Accounting?
There are two types of accounting methods, which dictate how the company's transactions are recorded in the company's financial books: cash-basis accounting and accrual accounting. The key difference between the two types is how the company records cash coming into and going out of the business.
249.What Is The Meaning Of Holding Company? Give One Example?
A company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors. Example ICICI Bank and SBI Bank .
Q250. When Did Bonus Shares Issued?
When a company earns profit it can be issued either profit in the form of cash or share
Q251. What Is Share Premium?
Excess amount received by a firm over the par value of its shares. This amount forms a part of the non-distributable reserves of the firm which usually can be used only for purposes specified under corporate legislation. Also called paid-in surplus.
Deferred Revenue Expenditures are those expenditures which have been incurred in an accounting period and they do not create any assets but their benefit is spread in more than one accounting period Ex. Advertisement Cost
Q253. Why We Do Depreciation? What Is The Main Object Of Depreciation
We use depreciation because the asset is used for earning income. That's why the average value of the asset should be allocated to all those years in which it is used. If we don't distribute the cost to all years then profit will be higher than it really was and when in the last year of asset the asset is written off we would get less profit than was actually earned.
Q254. Which Situation Current Assets Become Working Capital?
If we use the assets in sale and purchase during a year and when there is NO current liabilities
Q255. What Will Happen If An Organization Does Not Maintain The Sufficient Working Capital?
Working Capital is the life blood of business organization. Working capital is the minimum amount of capital that requires meeting day to day business expenses. for eg:- purchase, payment of wages, salary, daily expenses, etc.
Q256. Explain the Role of Working Capital in Capital Budgeting?
Capital budgeting is the process by which the financial manager decides whether to invest in specific capital projects or assets. In some situations, the process may entail in acquiring assets that are completely new to the firm.
Q257. What Is Current Assets Minus Current Liabilities?
