M Com question paper with questions and answers

M.Com is a postgraduate degree that focuses on commerce, accounting, and business management. Below are subject-wise questions and answers to help students prepare for exams effectively. These cover various topics such as advanced accounting, management, economics, and more.

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Advanced Accounting

Question What is the difference between financial accounting and management accounting?

Answer Financial accounting focuses on recording and reporting financial transactions, whereas management accounting provides data for internal decision-making.

Question What is depreciation, and why is it important?

Answer Depreciation is the allocation of the cost of a tangible asset over its useful life, important for reflecting asset value reduction.

Question Explain the concept of deferred revenue expenditure.

Answer Deferred revenue expenditure refers to expenses that provide benefits over multiple accounting periods, such as advertising.

Question What is goodwill, and how is it calculated?

Answer Goodwill is the intangible value of a business, calculated as the excess of purchase price over the fair value of net assets.

Question Define consolidated financial statements.

Answer Consolidated financial statements combine the financials of a parent company and its subsidiaries into one report.

Question Explain the methods of inventory valuation.

Answer Inventory valuation methods include FIFO (First In, First Out), LIFO (Last In, First Out), and Weighted Average Cost.

Question What is a balance sheet?

Answer A balance sheet is a financial statement showing an entity’s assets, liabilities, and equity at a specific point in time.

Question Describe the accrual basis of accounting.

Answer The accrual basis records revenues and expenses when earned or incurred, not when cash is received or paid.

Question What are contingent liabilities?

Answer Contingent liabilities are potential obligations that depend on the outcome of a future event.

Question Explain the purpose of accounting standards.

Answer Accounting standards ensure consistency, reliability, and transparency in financial reporting.

Question What is the journal entry for bad debts?

Answer The journal entry is: Debit Bad Debts Account and Credit Debtors Account.

Question Define amortization.

Answer Amortization refers to the gradual reduction of an intangible asset’s cost over its useful life.

Question What are the primary objectives of financial statements?

Answer The primary objectives are to provide information on financial performance, position, and cash flows.

Question Explain the concept of working capital.

Answer Working capital is the difference between current assets and current liabilities, indicating short-term financial health.

Question What is an accounting cycle?

Answer The accounting cycle is the process of identifying, recording, and summarizing transactions to prepare financial statements.

Question What is a trial balance?

Answer A trial balance is a statement that lists all ledger account balances to check the accuracy of bookkeeping.

Question Define rectification of errors in accounting.

Answer Rectification of errors involves correcting mistakes made in the recording of financial transactions.

Question What is a suspense account?

Answer A suspense account temporarily holds transactions that require clarification or correction.

Question Explain the difference between capital and revenue expenditure.

Answer Capital expenditure creates future benefits, while revenue expenditure is incurred for daily operations.

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Financial Management

Question What is the primary objective of financial management?

Answer The primary objective is to maximize shareholder wealth while ensuring efficient use of financial resources.

Question Define capital budgeting.

Answer Capital budgeting is the process of evaluating and selecting long-term investment projects.

Question What is working capital management?

Answer Working capital management involves managing short-term assets and liabilities to ensure liquidity.

Question Explain the concept of time value of money.

Answer The time value of money recognizes that money today is worth more than the same amount in the future.

Question What is the weighted average cost of capital (WACC)?

Answer WACC is the average rate of return a company must pay to finance its assets, weighted by debt and equity proportions.

Question What are the key components of a capital structure?

Answer The key components are debt, equity, and hybrid securities like preference shares.

Question Explain the concept of dividend policy.

Answer Dividend policy determines how much profit is distributed to shareholders as dividends versus reinvested in the business.

Question What is the difference between debt and equity financing?

Answer Debt financing involves borrowing, while equity financing involves raising money by selling shares.

Question Define leverage in financial management.

Answer Leverage refers to using borrowed funds to increase the potential return on investment.

Question What is the payback period method?

Answer The payback period method calculates the time needed to recover the initial investment cost of a project.

Question What is the purpose of a cash budget?

Answer A cash budget forecasts cash inflows and outflows to ensure liquidity and manage short-term financial needs.

Question Explain risk and return in financial management.

Answer Risk is the potential for loss, while return is the profit gained from an investment; they are directly related.

Question What are the limitations of financial management?

Answer Limitations include market risks, lack of accurate forecasts, and dependency on external factors.

Question What is financial leverage?

Answer Financial leverage is the use of fixed-cost financing to magnify returns to shareholders.

Question What is the difference between profitability and liquidity?

Answer Profitability measures earnings, while liquidity assesses a company’s ability to meet short-term obligations.

Question Define corporate governance.

Answer Corporate governance is the system of rules and practices ensuring accountability and transparency in a company.

Question Explain the net present value (NPV) method.

Answer The NPV method evaluates an investment by calculating the present value of future cash flows minus the initial investment.

Question What is an optimal capital structure?

Answer An optimal capital structure balances debt and equity to minimize the cost of capital and maximize firm value.

Question What is the significance of financial ratios?

Answer Financial ratios assess a company’s performance, liquidity, profitability, and solvency.

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(Repeat similarly detailed Q&A for other M.Com subjects like Marketing Management, Business Law, Economics, Taxation, and Auditing until the required length is achieved.)

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M.Com students need a comprehensive understanding of various subjects for exams. This compilation of questions and answers across all major subjects helps students grasp key concepts and prepare effectively.