Explanation

• If a capital expenditure is mistakenly treated as revenue expenditure, total assets are understated.
• This error reduces the recorded value of assets and expenses.
• It causing the net profit to be overstated because the capital expenditure.
• It should be capitalized, is incorrectly recorded as an expense.

Last verified on 14-08-2026

Explanation

• In variable costing and segment reporting, segment margin is calculated as Segment Contribution Margin − Traceable Fixed Costs.
• Segment Contribution Margin is sales revenue minus variable costs.
• Traceable fixed costs are fixed costs directly attributable to a specific segment.
• Segment margin shows how much a segment contributes toward common fixed costs and overall profit.

Last verified on 14-08-2026

Explanation

• The formula for the perimeter of a rectangle is 2(length + width).
• A rectangle has two equal lengths and two equal widths.
• Therefore, perimeter = length + width + length + width.
• Simplified formula: P = 2(l + w).

Last verified on 14-08-2026

Explanation

• In cumulative preferred stock, unpaid dividends must be paid before paying any future cash dividend to common shareholders.
• Unpaid preferred dividends are called dividends in arrears.
• These accumulated dividends must be paid before common shareholders receive cash dividends.

Last verified on 14-08-2026

Explanation

• According to OECD principles, institutional investors are expected to disclose their voting policies, voting records, and conflicts of interest.
• This promotes transparency and accountability in corporate governance.
• Institutional investors should exercise their ownership rights responsibly.

Last verified on 14-08-2026

Explanation

• A U.S. firm with €3 million payable in the future should buy a Call Option on Euro.
• The firm will need to buy euros in the future to make the payment.
• If the euro appreciates, the call option allows the firm to buy euros at the predetermined strike price.
• This protects the firm against an increase in the dollar cost of the euro payment.

Last verified on 14-08-2026

Explanation

Duration Gap = D_A - (L/A × D_L)

Here:

D_A = 5 years 

D_L = 2 years

A = 100 million

To get 3.4 years: 

3.4 = 5 - (L/100 × 2)  

(L/100 × 2) = 1.6  

L/100 = 0.8 → L = Rs. 80 million

So with Assets = 100m and Liabilities = 80m:  

Duration Gap = 5 - (80/100 × 2) = 5 - 1.6 = 3.4 years

Last verified on 14-08-2026

Explanation

Annual Coupon = 5% of 1000 = Rs. 50  

Market Price = Rs. 950

Approximate YTM = Annual Coupon / Market Price = 50 / 950 = 0.0526 = 5.26%

Last verified on 14-08-2026

Explanation

• The maximum tax adjustment is 90% of the output tax.
• This means the allowable adjustment cannot exceed 90% of the output tax.
• The remaining 10% represents the portion not adjustable under the stated rule.

Last verified on 14-08-2026

Explanation

• A company means an entity incorporated according to any law.
• A company is a legal entity created through incorporation under the applicable company law.
• Incorporation gives the company a separate legal identity from its owners or members.

Last verified on 14-08-2026