Business Economics BBS I year | Question paper 2074



B.B.S. 4 Yrs. Programme / I Year /                                      Full Marks: 100

Business Economics (MGT)                                                  Time: 3 hrs.

Candidates are required to give their answers in their own words as far as practicable.

The figures in the margin indicate full marks.

Group “A”

Brief Questions Answer

Attempt ALL questions.

  1. What is meant by authorised and the subscribed capital of a company?
  2. Write the meaning of cash from investing activities.
  3. Define the term “Minority Interest”.
  4. Differentiate between operating and financial leverages.
  5. Distinguish between absorption and amalgamation.
  6. The following information is provided:

Opening stock        Rs. 50,000                 Wages          Rs. 50,000

Purchases                     190,000                 Closing stock     65,000

Required: Cost of goods sold.

  1. The following details have been given to you:

Sales                                      Rs.900,000     Cost of bought in materials and service       410,000

Wages and salaries             Rs.360,000     Rent received                                                     40,000

Required: Value added statement.

  1. A subsidiary company has Rs. 10,00,000 equity share capital of Rs. 100 each. Out of these, the holding company acquired 7000 shares @ Rs.150 each.

Required: Ratio of interest between holding company and minority shareholders.

  1. A company provides you the following particulars:

Monetary assets       Rs.50, 000               Monetary liabilities        Rs. 60,000

During the period prices rise by 20%

Required: General price level gain or loss on holding monetary item.

  1. The following cash flow of the company is given.

Year                  CFAT

  • (100000)
  • 20000
  • 30000
  • 40000
  • 20000
  • 30000

Required: Pay back period.

Group “B”

Short Questions Answer                                                                                                              [5X10 = 50]

Attempt FIVE questions.

  1. (a) Explain in short the causes of description.

(b) The following particulars of a strong company Ltd. Are provided to you :


  • Depreciation Adjustment                                                  150,000
  • Cost of sales Adjustment                                                   45,000
  • Monetary working capital adjustment                               30,000
  • Increase in the value of fixed Assets                                  200,000
  • Increase in the value of inventories                                   55,000
  • Gearing ratio 25 percent

Required: Amount of current cost Amounting Reserve

  1. (a) Explain in short the objectives of financial statement analysis.

(b) The following particulars are extracted from the records of a company:

  • Current Ratio 2 : 1
  • Inventory Turnover ratio 2 times
  • Inventory                                                              100000
  • Debtors                                                                125000
  • Gross Profit Margin 25%

Required: (a) Sales Amount                                        (b) Debtors Turnover

(c) Amount of Gross Profit                        (d)Amount of Current liabilities

(e) Quick Ratio

  1. The Capital structure of Kathmandu company Ltd. Is as follows:
  • 15000, ordinary shares of Rs.100 each Rs.80 per share paid.
  • 1000, 10% preference shares of Rs.100 each fully paid.

The various creditors amounted to Rs. 80000 including Rs. 25000 for secured creditors and Rs. 10000 for preferential creditors. Liquidator’s remuneration is fixed as 2% on assets realised and 3% on amount distributed to unsecured creditors. The expenses of liquidation amounted to Rs. 5000. Preference dividend is arrears  for two years.

Required: Liquidator’s final statement of Account

14. Yellow Company is absorbed by Brown Company. The balance sheet and other information is as under:

Liabilities Rs. Assets Rs.
Equity share at Rs. 100 each

General Reserve

Profit and loss Account

10% Debentures

Accounts Payable






Plant & machinery


Closing stock

Sundry Debtors

Cash at Bank






  1950,000   1950,000

               Agreement of two companies are as follows:

  • Brown company takes over all assets and liabilities of yellow company.
  • The debenture holder of yellow company agreed to take the debenture of Brown company with 15% premium.
  • The Brown company issued three shares of Rs. 100 each at an agreed market value of Rs. 150 per share for every two shares of yellow company.

Required: (a) Purchase consideration

(b) Realisation Account in the books of yellow company

(c) Shareholder’s Account in the books of yellow company.

  1. The following are the income statement and balance sheet at the end of 2071.
Income statement Rs. Rs.

Less: Cost of goods sold:



Gross Margin

Less salary


Operating expense

Interest on debenture


Loss on sales of plant

(Book value Rs. 20000)

















Net Profit before tax 95,000


Balance Sheet

Liabilities 2070 2071 Assets 2070 2071
Share capital 200,000 300,000 Plant 200,000 250,000
Retained earning 40,000 50,000 Investment 100,000 100,000
10% Debentures 100,000 50,000 Debtors 40,000 50,000
Creditors 20,000 30,000 Stock 30,000 25,000
Bank overdraft 40,000 20,000 Cash 30,000 25,000
400,000 450,000 400,000 450,000

Required: Cash flow statement Showing cash from operating, inventing and financial activities.

  1. Briefly explain the advantages of business combination and point out the importance of internal reconstruction of existing company.

Some important Questions :




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