Centurion Institute of Technology, CUTM Mid-term: 2 Sub: AM Duration: 1 hr. 30 min.

Full Mark: 30 (Question-1 is compulsory and answers any two from the rest) 1. Answer all questions a. What are the methods to calculate depreciation? b. How prepaid expenses are assets for a company? c. What is the importance of solvency ratio? d. What to create provision for bad debt? e. What is P/E ratio? 2. Answer any two A. Prepare trading and P/L account from the information given in the trial balance. Accounts Title Capital Building Net Sales Net purchases Opening Stock Discount Bank charges Salaries Sundry Debtors Sundry Creditors Manufacturing Wages Carriage Inwards Carriage Outwards Advertisement Bad debt provision Rent Cash in Hand Cash at Bank LF Debit (Rs.) 80000 120000 85000 25000 850 425 12500 38000 25000 14800 625 500 1300 750 250 9000 18000 286000 Adjustments: Closing stock Rs.42000 Depreciate building at 7% Bad debt provision required Rs.600 Interest on capital to be allowed at 5% per annum Wages prepaid Rs.800 286000 Credit (Rs.) 140000

3. Write short notes on Revenue expenditure Vs. Capital expenditure Depreciation on fixed assets 4. Write short notes on Profitability ratio Liquidity ratio Capital market ratio