IAS Mains Commerce Papers 1979

IAS Mains Commerce 1979

Time Allowed: 3 hours Maximum Marks: 300

The The answers must be written in the medium specified in the admission Certificate issued to you. No credit will be given for the answers written in a medium other than that specified in the Admission Certificate. Candidates should attempt Five questions, selecting at least two questions from each of the Part I and II or Part F and III.

All question carry equal marks.

Paper I

Part I

  1. Explain the concept of working capital. What are the constituents of working capital of a company

  2. Explain briefly the capital budgeting techniques. Give suitable illustrations.

  3. What do you understand by under-capitalization Suggest measures to correct undercapitalization.

  4. Although the payment of dividends is a matter of judgement by the directors, their decision must be made within the frame-work of various pressures, some of which are outside their control. Elucidate this statement.

  5. What is the importance of ratio analysis to business Explain briefly any two ratios each for measuring

    1. profitability

    2. liquidity.

Part II

  1. Explain the important monetary policy measures generally recommended to fight inflation. Give suitable illustrations of recent measures taken by the Reserve Bank of 1dia in this regard.

  2. Analyse the policy and evaluate the achievements of the nationalised banks in India is providing finance to priority sectors. What modifications and safeguards, if any, would you suggest in this regard

  3. Critically examine the role of Reserve Bank of India in regulating Commercial banks in the country.

  4. Explain the pattern of investment of bank funds in India in the light of various provisions of the Banking Regulation Act.

  5. Critically evaluate the working of the Industrial Development Bank of India. Suggest measures for its improvement.

Part III

  1. Examine briefly the problem of inventory valuation. Discuss the suitability of LIFO and FIFO methods.

  2. Discuss fully the auditors liability to third parties, citing leading cases on the point.

  3. The share capital of a company consists of fully-paid 2.000 equity shares of Rs. 100 each and 1, 000, 8 per cent preference shares of Rs. 100 each. In addition to their stipulated dividend, the preference shareholders are entitled to additional dividends upto 5 per cent after payment of a dividend of 10 per cent on equity shares. The annual average profits of the company are Rs. 1, 00, 000 on which incometax at the rate of 55 per cent is payble. The company normally transfers Rs. 5, 000 to reserves per year before paying dividends. The required rates of return are 8 per cent on preference shares and 10 per cent on equity shares. Compute the intrinsic value of the shares.

  4. The Konore Chemicals Ltd. is in the hands of a Receiver for Debenture holders who hold a charge on all assets except the uncalled capital. The position as regards creditors on 31 − 12 − 1978 is shown below:

    • Liabilities Assets
    • Rs. Rs.
    • Paid-up Capital: Cash in the 7, 200 shares of hand of the
    • Rs. 100 each, Receiver 5, 92, 000
    • Rs. 50 paid-up Assets
    • First Debentures 6, 00, 000 (Book value Second Debentures 12, 00, 000 Rs. 7, 80, 000) 3, 00, 000
    • Unsecured creditors 9, 00, 000____8, 92, 000
    • Charged under debenture holders
    • Uncalled capital 3, 60, 000
    • Deficiency 14, 48, 000
    • Rs. 27, 00, 000 Rs. 27, 00, 000

    A holds all the first Debentures and Second Debentures of Rs. 6, 00, 000. He has also given an unsecured loan of Rs. 1, 80, 000. B holds the remaining Second Debentures and has given unsecured loan of Rs. 1, 20, 000. The following scheme of reconstruction has been accepted:

    1. A to accept new debentures of Rs. 7, 00, 000 in full settlement of his claims.

    2. B to accept 4, 000 shares (new) of Rs. 60 each as fully paid in lieu of all his claims.

    3. other creditor to accept Rs. 1, 68, 000 in full settlement of their claims.

    4. uncalled capital be called and realised and share-holders be issued an equal number of shares of Rs. 60 each, Rs. 20 paid-up and the old shares be cancelled.

    Prepare the balance sheet of the company after the above scheme of reconstruction has been carried out. Also show the necessary calculations.

  5. Discuss the general principles governing deductions from gross receipts allowed in computing taxable business income.

Paper II

Section A

  1. The relationship between one corporate entity and another and between the members of a corporation inter se is to a large extant determined by the State. Discuss this statement and show how corporate structure is different from other forms of business organisation.

  2. Management control is the process by which managers assure that resources are obtained and used effectively and efficiently in the accomplishment of the organisations objectives. In the fight of this statement, discuss the concept of management control.

Section B

  1. How do you distinguish between vertical and horizontal integration Examine their merits and demerits with the help of suitable examples.

  2. What happens to authority and responsibility under committee management Give your suggestions for making such management effective.

  3. What in your view, is the most convincing theory of motivation Discuss the same and indicate the role of leadership in this connection.

  4. Write an essay on participation of labour in management with special reference to industrial relations in India.

  5. Public accountability is the essence of a socialized enterprise. The criterion to be fulfilled is the responsiveness of public undertakings to the wishes of the people. Explain in the context of Indian environment. Section C

  6. A firm is manufacturing three types of cotton cloth coarse, fine and superfine. There is a proposal for closing down the production of coarse cloth on account of the loss incurred thereon. The following figures are placed before you:

    • Year Type of Cloth
    • Coarse Pine Superfine
    • Sales (metres) 12, 000 60, 000 18, 000
    • Price (per metre) Rs. 310 Rs. 610 Rs. 910
    • Direct material cost (per metre) Rs. 1.50 Rs. 2.10 Rs. 3.50
    • Direct labour cost (per metre) Rs. 1.00 Rs. 1.15 Rs. 2.25
    • Variable overhead (percentage of prime cost) 12% 16% 20%
    • Fixed overhead (in rupees) 18, 000 54, 000 36, 000

    Make necessary calculations and give your advice (along with arguments) with regard to:

    1. closing down the production of coarse cloth (pre-ming) that no part of the fixed overhead can be saved even such closing down

    2. closing down the production of various types of cloth if raw material prices go up by 50% in all these cases (presuming that the fixed overhead for a particular type of cloth can be fully saved if the production of that type of cloth is closed down.)

  7. Critically examine the concept of Return on Investment (ROI) and indicate its usefulness with the help of a suitable illustration.

  8. The following Information relates to a certain factory for the month of July 1979-

    • Item Standard Actual Rs.
    • Material 1, 100 pieces 16, 500 1, 210 pieces 19, 360
    • Labour 3, 000 hours 13, 500 2, 700 hours 13, 500
    • Indirect cost 3, 000 hours 18, 000 2, 700 hours 17, 550
    • Total 48.000 50, 410

    You are required to calculate:

    1. Material Price Variance

    2. Material Quantity Variance:

    3. Labour Rite Variance:

    4. Labour Time Variance

    5. Indirect Cost Efficiency Variance.

    Also give your comments in about 150 words (total).

  9. What is job evaluation Examine its principal techniques with the help of suitable examples.

  10. Write short notes on any three of the following-

    1. Inventory Control

    2. Break-even Analysis

    3. Flexible Budgeting

    4. Marketing Channels: And

    5. Management Audit