Finance Questions

Bull market is that market where stock value are expected rise and people will have tendency to sell their stock so as to earn profit out of it. Thus sudden push from the suppliers will gradually niutalise the market.

1. A fixed budget is established for a specific level of activity whereas flexible budget is prepared for various levels of activity.

2. Fixed budget cannot be changed after the period commences, whereas a flexible budget can be changed after the period commence.

3. Fixed budget is more suitable for fixed expenses whereas flexible budget takes both fixed as well as variable expenses in account.

4. Fixed budget includes only fixed costs, whereas a flexible budget includes fixed costs, variable costs and semi variable costs.

5. Fixed budget is mainly used in planning stage whereas flexible budget is used in controlling stage.

Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses.

RBI issued currency notes under Fixed Minimum Reserve System.

Demand is said to be inelastic, when the demand for the good doesn't change much or it is negotiable when the price of the good changed.

Insurance can help you to protect your properties and assets like home, car, stocks,... against unexpected accidents.

Financial Reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the organization over a specified period of time. These stakeholders include – investors, creditors, public, debt providers, governments & government agencies.

Financial Reporting is very important and critical task of an organization. It is vital part of Corporate Governance.

The objectives & purposes of financial reporting :–

* Providing information to management of an organization which is used for the purpose of planning, analysis, benchmarking and decision making.

* Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc.

* Providing information to shareholders & public at large in case of listed companies about various aspects of an organization.

* Providing information about the economic resources of an organization, claims to those resources (liabilities & owner’s equity) and how these resources and claims have undergone change over a period of time.

* Providing information as to how an organization is procuring & using various resources.

* Providing information to various stakeholders regarding performance management of an organization as to how diligently & ethically they are discharging their fiduciary duties & responsibilities.

* Providing information to the statutory auditors which in turn facilitates audit.

* Enhancing social welfare by looking into the interest of employees, trade union & Government.

A Bank Reconciliation Statement is a statement prepared periodically by a customer to explain the divergence (difference) between the bank balance as per cash book and the bank balance as per Pass Book. It clearly shows the two differing balances and the outstanding items which causes the balances to disagree.

The objective of preparing such a statement is to know the causes of differences between the two balances and pass necessary correcting or adjusting entries in the books of the firm. But it is to be noted that some differences are automatically adjusted. For example - A cheque that has been sent for collection, but not yet collected, causes a difference between the balance as shown by the pass book and the balance as shown by the cash book, but no adjusting entry is required in the cash book for such a difference because, the bank will credit the firm’s account as soon as the cheque is collected.