UGC NET Management Unit - IV Syllabus

Unit - IV syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Unit - IV in UGC NET Management, not a summary of it.

1. 1

   Accounting Principles and Standards, Preparation of Financial Statements

   4 topics

   • Financial Statement Analysis
     • Ratio Analysis
     • Funds Flow Analysis
     • Cash Flow Analysis
     • DuPont Analysis
   • Preparation of Cost Sheet
   • Marginal Costing
   • Cost Volume Profit Analysis
2. 2

   Standard Costing & Variance Analysis

   2 topics

   • Standard Costing
   • Variance Analysis
3. 3

   Financial Management, Concept & Functions

   3 topics

   • Capital Structure
     • Theories
     • Cost of Capital
     • Sources and Finance
   • Budgeting and Budgetary Control
     • Types and Process
     • Zero base Budgeting
   • Leverages
     • Operating Leverages
     • Financial Leverages
     • Combined Leverages
     • EBIT-EPS Analysis
     • Financial Breakeven Point & Indifference Level

Unit - IV flashcards for UGC NET Management

25 of 50 cards from the Unit - IV deck — real questions with worked answers.

1. What is Financial Statement Analysis?

   The process of evaluating a firm's financial statements (balance sheet, income statement, cash flow) to assess its profitability, liquidity, solvency and operational efficiency for decision-making.

2. Name the three main techniques/tools of financial statement analysis.

   Comparative statements, Common-size statements, and Ratio analysis (also trend analysis and cash flow/fund flow analysis).

3. What is the difference between horizontal and vertical analysis of financial statements?

   Horizontal (dynamic) analysis compares figures across multiple periods to study trends; vertical (static) analysis expresses each item as a percentage of a base figure within a single period (common-size).

4. In a common-size income statement, what figure is taken as the 100% base?

   Net sales (revenue) — every other item is expressed as a percentage of net sales.

5. In a common-size balance sheet, what is taken as the 100% base?

   Total assets (or total liabilities and equity) — each item is shown as a percentage of the total.

6. What is the formula for the Current Ratio and its ideal standard?

   Current Ratio = Current Assets / Current Liabilities; the ideal standard is 2:1.

7. What is the Quick/Acid-Test Ratio and its ideal standard?

   Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities; ideal standard is 1:1.

8. What is a Cost Sheet?

   A statement that shows the detailed total cost and per-unit cost of a product, classified by elements and arranged in stages (prime, works, cost of production, cost of sales).

9. What is Prime Cost in a cost sheet?

   Prime Cost = Direct Materials + Direct Labour + Direct (chargeable) Expenses.

10. How is Works (Factory) Cost calculated in a cost sheet?

    Works Cost = Prime Cost + Factory/Works Overheads (adjusted for opening and closing work-in-progress).

11. How is Cost of Production derived from Works Cost?

    Cost of Production = Works Cost + Administration (Office) Overheads.

12. How is Cost of Goods Sold computed from Cost of Production?

    COGS = Cost of Production + Opening Finished Goods Stock - Closing Finished Goods Stock.

13. How is Cost of Sales (Total Cost) and Sales arrived at in a cost sheet?

    Cost of Sales = Cost of Goods Sold + Selling & Distribution Overheads; Sales = Cost of Sales + Profit.

14. What is Marginal Cost?

    The additional cost of producing one more unit; it equals total variable cost per unit (direct material + direct labour + variable overheads).

15. What is Marginal Costing?

    A costing technique in which only variable costs are charged to products, while fixed costs are treated as period costs and written off against contribution.

16. State the formula for Contribution.

    Contribution = Sales - Variable Cost; alternatively Contribution = Fixed Cost + Profit.

17. How does marginal costing differ from absorption costing in treating fixed overheads?

    Marginal costing treats fixed overheads as period costs (charged fully in the period); absorption costing treats them as product costs (absorbed into unit cost and carried in inventory).

18. What is the P/V (Profit-Volume) Ratio and its formula?

    P/V Ratio = (Contribution / Sales) x 100; it measures the rate at which profit changes with sales, or the proportion of each sales rupee available to cover fixed cost and profit.

19. What is Cost-Volume-Profit (CVP) Analysis?

    A technique that studies the interrelationship between cost, volume of output and profit to aid planning and decision-making, centred on the break-even point.

20. What is the Break-Even Point (BEP)?

    The level of output/sales at which total revenue equals total cost, so there is neither profit nor loss (contribution exactly equals fixed cost).

21. State the formula for Break-Even Point in units.

    BEP (units) = Fixed Costs / Contribution per unit (Selling price per unit - Variable cost per unit).

22. State the formula for Break-Even Point in sales value.

    BEP (in rupees) = Fixed Costs / P/V Ratio.

23. What is the Margin of Safety and its formula?

    Margin of Safety = Actual Sales - Break-Even Sales; it shows how much sales can fall before a loss occurs. MoS = Profit / P/V Ratio.

24. What is the formula for sales required to earn a desired profit?

    Required Sales = (Fixed Cost + Desired Profit) / P/V Ratio; in units = (Fixed Cost + Desired Profit) / Contribution per unit.

25. What is Standard Costing?

    A technique that sets predetermined (standard) costs for products, compares them with actual costs, and analyses the variances to control costs.

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