SAP-2

ACCOUNTING

Q.1

Cash Flow statement of PQ LIMITED AMOUNT AMOUNT

CASH FLOW FROM OPEARTING ACTIVITIES

Net profit after debenture interest and profit on sale of plant 76,500

ADD: Depreciation on plant 27,900 LESS: Increase in Trade receivable -50,000 LESS: increase in Inventory and WIP -38,500 ADD : Increase in Trade payable 11,800 ADD : Provision for Doubtful Debts 3,300 LESS : Profit on plant sold -2,500 ADD : interest on debentures 2,000 NET CASH GENERATED FROM OPERATING

ACTIVITIES 30,500

CASH FLOW FROM INVESTING ACTIVITIES Sale of fixed assets 7,000

ADD : Sale of free hold property 6,200 LESS :Purchase of free hold property -78,000 LESS :Purchase of trade investments -47,000 NET CASH FLOW FROM INVESTING ACTIVITIES -1,11,800

CASH FLOW FROM FINANCE ACTIVITIES Debentures issued (NET OF DISCOUNT) 49,000

LESS : Dividend paid -30,000 LESS : Debenture interest -2,000 NET CASH FLOW FROM FINANCE ACTIVITIES 17,000

NET DECREASE IN CASH AND CASH EQUIVALENTS (i. e. reason for increase in bank borrowings)

-64,300

WORKING NOTES:

ACCUMLATED DEPRECIATION A/c

TO ASSETS SOLD 13500 BY BALANCE b/d 14400

TO BAL C/d 28800 BY P&L A/c (depreciation

for current year) 27,900

42300

42300

FREE HOLD PROPERTY @ COST

TO BAL b/d 43,000 BY CASH (SALE) 6200

TO CAPITAL RESERVE 49200 BY BAL C/d 86000

92200

92200

CAPITAL RESERVE

TO BAL C/d 98400 BY BAL B/d 49200

BY FREE HOLD PROPERTY 49200

98400

98400

PLANT @ COST A/c

TO bal B/d 60000 BY CASH (SOLD) 18000

TO CASH A/c 78000 BY BAL C/d 120000

138000

138000

ASSETS SOLD

TO PLANT A/c 18000 BY DEPRECIATION 13500

TO P&L A/c 2500 BY CASH 7000

(profit)

20500

20500

INVESTMENTS @ COST A/c

TO BAL B/d 47000 BY BAL C/d 94000

TO CASH A/c 47000

94000

94000

Q.2

INVESTMENT A/C FOR THE YEAR ENDED 31.12.2013

Dr. INTEREST PAYABLE @ 5% p.a ON 31ST MARCH AND 30 TH SEPTEMBER Cr.

DATE PARTICUL

ARS

NOMINAL

VALUE

INTEREST

COST DATE PARTICUL

ARS

NOMINAL

VALUE

INTEREST

COST

01-Mar-13

TO BANK A/C 24,000 500 21,552

31-Mar-13

BY BANK A/C 600

01-Sep-13

TO P&LA/C 36

01-Sep-13

BY BANK A/C 10,000 208 9,016

30-Sep-13

TO BANK A/C 8,000 200 7,436

30-Sep-13

BY BANK A/C 550

30-Sep-13

TO P&LA/C 89

01-Dec-13

BY BANK A/C 6,000 50 5,477

31-Dec-13

TO P&LA/C 908

31-Dec-13

BY P&L A/C 460

31-

Dec-13 BY BAL C/d 16,000 200 14,160

32,000 1,608 29,113

32,000 1,608 29,113

NOTES:

1) Cost of debenture stock purchased on 1st march

=90% of RS. 24000+2% of RS. 21600 + 20 – Rs.500 (interest) =RS. 21,552

2) Sale of debentures on 1st September

=92% of RS. 10000 – 2% of RS. 9200 =RS.9016

3) Profit on above sale

=9016 – (21552* 100/240) = Rs. 36

4) Cost of debentures purchased on 30th September

-=91% of 8000 +2% of 7280 +10 =RS. 7436

5) Sale proceeds of debentures

= 94% of 6000 - 2% of 5640 – 50 (interest) =RS.5477

6) profit on sale on 30th September

= 5477 – (21552*60/240) =89

7) valuation of closing balance of debentures on FIFO basis

nominal value actual cost

market price

balance out of march purchase 8,000 7,184 7,080

Balance out of september puurchase 8,000 7,436 7,080

16,000 14,620 14,160

Closing balance has been valued at Rs.14160 being lower than actual cost

8) Interest accrued on 31st dec = (16000 * 5% * 3/12) = RS. 200

Q.3

NOTES:

1) BONUS SHARES = (25000+ 5000)/6 = 5000 shares

2) Rights shares = (25000 +5000 +5000)*3/7 =15000 shares

3) Rights shares renounced = (15000/3) = 5000 shares

4) Dividend received = (25000 * 10 * 20% ) = 50000

Dividend on shares purchased on 20th June = 50000 * 10 * 20% = RS. 10000 adjusted to

investment A/c

5) Cost of shares on 31st December

= (375000+ 80000 + 150000 – 10000)*20000/40000 = RS. 2,64,444.

DATE PARTICULARS

NOMINAL

VALUE DIVIDEND AMOUNT DATE PARTICULARS

NOMINA

L VALUE DIVIDEND AMOUNT

01-Apr-13 TO BAL B/d 2,50,000 3,75,000 30-Sep-13 BY BANK A/c 10,000

20-Jun-13 TO BANK A/c 50,000 80,000 (Sale of rights)

16-Aug-13 TO BONUS 50,000 31-Oct-13 BY BANK A/c 10,000

30-Sep-13 TO BANK A/c 1,00,000 1,50,000

(div on shares

accquired on

20th june)

(right shares) 31-Oct-13 BY BANK A/c 50,000

15-Nov-13 TO P&L A/c 44,444 15-Nov-13 BY BANK A/c 2,50,000

31-Dec-13 TO P&L A/c 60,000 (sale of shares) 3,75,000

31-Dec-13 BY BAL C/d 2,00,000 2,64,600

4,50,000 60,000 6,49,444 4,50,000 60,000 6,49,444

Dr (equity shares in X ltd.) Cr

Investment A/C for the year ended 31-12-13

Law, Ethics & communication

Q.1

In accordance with the provisions of Section 19 of the Companies Act, 2013, a subsidiary company cannot

either by itself or through its nominees hold any shares in its holding company and no holding company

shall allot or transfer its shares to any subsidiary companies. Any such allotment or transfer of shares in a

company to its subsidiary is void. The section however does not apply where:

(a) the subsidiary company holds shares in its holding company as the legal representative of a deceased

member of the holding company, or

(b) the subsidiary company holds such shares as a trustee, or

(c) the subsidiary company was a shareholder in the holding company even before it became its subsidiary.

Position of the following with regard to membership in a company:

(i) Partnership Firm: Section 2 (55) of the Companies Act 2013 defines a member as a subscriber to

the memorandum of association whose name is entered in the Register of Members following

the incorporation of the company, every other person who agrees in writing to become a

member of the company and whose name is entered in the register of members of the company

and any person holding shares in a company and whose name is entered as the beneficial

owner in the records of the depository.

A partnership firm may therefore hold shares in a company provided its name appears in the

register of members of the company. However, as a firm is not a legal entity it will be able to

hold shares in the individual names of partners as joint shareholders. However, this will not

apply to a “Limited Liability Partnership”. (Ganesh Das Ram Gopal v. R.G. Cotton Mills Ltd.

) Under section 8 (3) of the Companies Act 2013, a firm may be a member of a company

incorporated under section 8 i.e. a company formed as a charitable or social venture.

(ii) An Insolvent: An insolvent may be a member of a company. So long as his name appears in the

register of members, he is a member and is entitled to vote even though his shares vest in the

Official Assignee or Receiver. (Morgan v. Gray) allotment or transfer of shares is by way of

security for the purpose of a transaction.

Q.2

‘Underwriting’ is a contract entered into between the company and certain parties (called underwriters)

whereby the underwriters guarantee to purchase or get investors to purchase the whole or an agreed portion

of the securities that are not applied for by the public for subscription. In consideration of this guarantee the

company pays a commission to the underwriters as a percentage of the value of the shares offered to the public

The consideration payable to the underwriters for underwriting the issue of shares or debentures of a

company is called underwriting commission. Such a commission is paid at a specified rate on the issue

price of the whole of the shares or debentures underwritten whether or not the underwriters are called

upon to take up any shares or debentures. Thus, the underwriters are paid for the risk they bear in the

placing of shares before the public. Underwriting commission may be in addition to brokerage.

Under Section 40 (6) of the Companies Act 2013, provides that a company may pay commission to any

person in connection with the subscription or procurement of subscription to its securities, subject to

the following conditions which are prescribed under the Companies (Prospectus and Allotment of

Securities) Rules, 2014:

(a) the payment of such commission shall be authorized in the company’s articles of association;

(b) the commission may be paid out of proceeds of the issue or the profit of the company or both;

(c) the rate of commission paid or agreed to be paid shall not exceed, in case of shares, five percent

(5%) of the price at which the shares are issued or a rate authorised by the articles, whichever is

less, and in case of debentures, shall not exceed two and a half per cent (2.5 %) of the price at which

the debentures are issued, or as specified in the company’s articles, whichever is less;

(d) the prospectus of the company shall disclose - i. the name of the underwriters; ii. the rate and

amount of the commission payable to the underwriter; and iii. the number of securities which is to

be underwritten or subscribed by the underwriter absolutely or conditionally.

(e) there shall not be paid commission to any underwriter on securities which are not offered to the

public for subscription;

(f) a copy of the contract for the payment of commission is delivered to the Registrar at the time of

delivery of the prospectus for registration.

Thus, the Underwriting commission is limited to 5% of issue price in case of shares and 2.5% in case of

debentures. The rates of commission given above are maximum rates. The company is free to negotiate

lower rates with underwriters.

Q.3

The concept of Corporate Social Responsibility (CSR) focuses on the idea that beyond making profit, a business

has social obligations. It is the responsibility of the companies to produce an overall positive impact on the

society. CSR is pursued by business to balance their economic, environmental and social objectives while at the

same time addressing stakeholders’ expectations and enhancing shareholders’ values. Stakeholders, including

shareholders, analysts, regulators, labour unions, employees, community organisations and mass media expect

companies to be accountable not only for their own performance but for the performance of their entire supply

chain. Issues such as peace, sustainable development, security, poverty alleviation, environmental quality and

human rights have a profound effect on business and its environment. Corporate Social Responsibility is the

continuing commitment by businesses to behave ethically and contribute to economic development while

improving the quality of life of the workforce and their families as well as of the local community and society

at large.

Need for social responsibility:

1. The iron law of responsibility

2. To fulfill long term self-interest

3. To establish a better public image

4. To avoid government regulation and control

5. To avoid misuse of National Resources and Economic Power

6. To convert Resistances into Resources

7. To minimize Environmental damage.

Q.4

The Iron Law of Responsibility: The institution of business exists only because it performs invaluable services

for society. Society gives business its license to exist and this can be amended or revoked at any time if it fails

to live up to society’s expectations. Therefore, if a business intends to retain its existing social role and power,

it must respond to society’s needs constructively. This is known as the “Iron Law of Responsibility”. In the

long-term those who do not use power in a manner that society considers responsible, will tend to lose it.

Businesses have been delegated economic power and have access to productive resources of a community.

They are obliged to use these resources for the common good of society so that more wealth for its betterment

may be generated. Technical and creative resources are also helpful to it. A business organization sensitive to

community needs would in its own self interest like to have a better community within which the business

may be conducted. This way, the resulting benefits would be:

(a) Decrease in crime

(b) Easier labour recruitment

(c) Reduced employee absenteeism.

(d) Easier access to international capital, better conditions for loans on international money markets.

(e) Dependable and preferred as supplier, exporter, importer and retailer of responsibly manufactured

components and products.

This way a better society would produce a better environment in which the business may gain long term profit

maximization.

Q.5

In terms of section 4(1)(c) of the Companies Act, 2013, the powers of the company are limited to:

(i) Powers expressly given in the “Objects Clause” of the Memorandum (which is popularly known as

‘express’ power), or conferred by the Companies Act, or by any other statute and

(ii) powers reasonably incidental or necessary to the company’s main objects (termed as “Implied’ powers).

The Act further provides that the acts beyond the powers of a company are ultra vires and void and cannot be

ratified even though every member of the company may give his consent [Ashbury Railway Carriage

Company VsRichee]

The objects clause enables the shareholders, creditors or others to know what its powers are and what the

range of its activities is. The objects clause therefore is of fundamental importance to the shareholders,

creditors and every other person who deals with the company in any manner what so ever. A company being

an artificial legal person can act only within the ambit of the powers conferred upon it by the Memorandum

through the “Objects Clause”.

Every person who enters into a contractual relationship with a company on any matter is presumed to be

aware of its objects and is supposed to have examined the Memorandum of Articles of the company to ensure

proper contractual agreement. If a person fails to do so, it is entirely at his own peril.

It is also pertinent to note that the objects of a company may be changed by following the provisions for the

change of Memorandum as laid out in section 13 of the said Act.

M/s LSR Pvt. Ltd is authorized to trade directly on fruits and vegetables. It has no power to enter into a

partnership for Iron and steel with Mr. J. Such act cannot be treated as being within either the ‘express’ or

‘implied’ powers of the company. Mr J who entered into partnership is deemed to be aware of the lack of

powers of M/s LSR (Pvt) Ltd. In the light of the above, Mr, J cannot enforce the agreement or liability against

M/s LSR Pvt. Ltd under the Companies Act. Mr. J should be advised accordingly. This conclusion is

supported by the decision reported in the case of the ‘Ganga Mata Refinery Company (Pvt) Ltd CIT’.

However, under the Indian Contract Act, 1872 where a person derives any benefit either in the absence of a

contract or under a void agreement will be liable to make a reasonable payment for the value of such benefit.

(Please refer to Quasi Contracts and Void Agreements)

Q.6

Shelf Prospectus: Section 2 (70) of the Companies Act, 2013 defines a “Prospectus” and includes a red herring

prospectus and a shelf prospectus within the definition of “Prospectus”. Further the explanation to section 31

of the Companies Act,2013 defines a shelf prospectus as a prospectus in respect of which the securities or class

of securities included therein are issued for subscription in one or more issues over a certain period without

the issue of a further prospectus.

Section 31 of the Act states that any class or classes of companies, as the Securities and Exchange Board may

provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the first offer

of securities included therein which shall indicate a period not exceeding one year as the period of validity of

such prospectus which shall commence from the date of opening of the first offer of securities under that

prospectus, and in respect of a second or subsequent offer of such securities issued during the period of

validity of that prospectus, no further prospectus is required.

From the above, the key features of a shelf prospectus are as under:

a. A shelf prospectus is a prospectus; hence it must comply with all the provisions of Section 26 of the Act

which lays down the matters to be included in a prospectus and filing of the same with the Registrar. It must

also comply with the other relevant and applicable sections of the Act to a prospectus.

b. A shelf prospectus may be issued by a class of companies only if and subject to the regulations of SEBI;

c. A shelf prospectus can have a validity of a maximum period of one year during which time the company

may bring out a number of issue of securities, all covered by the same prospectus.

d. The validity of a shelf prospectus of a maximum period of one year shall commence from the date on

opening of the first offer

A company filing a shelf prospectus with the Registrar shall not be required to file prospectus afresh at every

stage of offer of securities by it within a period of validity of such shelf prospectus.

However, under section 31 (2), a company shall be required to file an information memorandum on all

material facts relating to new charges created, changes in the financial position of the company as have

occurred between the first offer of securities or any previous offer of securities and the succeeding offer of

securities and such other changes as may be prescribe, with the Registrar within the prescribed time, prior to

the issue of a second or subsequent offer of securities under the shelf prospectus.

Section 31 (3) states that where an information memorandum is filed every time an offer of securities is made,

such memorandum together with the shelf prospectus shall be deemed to be the prospectus.

Costing & Financial Management

Q.1

Q.2

Q.3

Q.4

When the cost and financial accounts are integrated-there is no need to have a separate reconciliation

statement between the two sets of accounts. Integration means that the same set of accounts fulfill the

requirement of both i.e cost and financial accounts.

Taxation

Q.1

Q.3

3. (i) The statement is not correct. As per the third proviso to section 32(1)(ii), 50% of the additional depreciation on new plant and machinery acquired and used for less than 180 days in the year of acquisition and installation which has not been allowed as deduction in that previous year, shall be allowed in the immediately succeeding previous year. Hence, the balance additional depreciation of 10% (i.e. 50% of 20%) can be claimed in the immediately succeeding previous year i.e., P.Y. 2017-18. (ii) The statement is not correct.

If an undertaking is set up in any notified backward area in the states of Andhra Pradesh or Bihar or

Telangana or West Bengal by a company, it shall be eligible to claim deduction under section 32AC as

well as under section 32AD, if it fulfills the conditions specified in section 32AC and the conditions

specified in section 32AD. In the given case, a manufacturing company set up in Vaishali i.e., a

notified backward area in the State of Bihar, acquires and installs new plant and machinery for Rs.30

crores in P.Y. 2015- 16. Hence, it will be entitled to deduction under section 32AC (since the

investment in new plant and machinery exceeds Rs.25 crores) as well as under section 32AD (since

the undertaking is set-up in a notified backward area in the State of Bihar), assuming that it fulfills

the other conditions specified there under.

Q.4

4.Since Legal Metrology Act, 2009 requires declaration of retail sale price on the package of pressure

cooker and pressure cookers are also notified under section 4A of Central Excise Act, 1944 (RSP based

valuation provisions), excise duty will be payable on the basis of RSP less abatement.

Notes:

1. Where more than one RSP is declared on the package of excisable goods, the maximum of such

price will be deemed to be the RSP.

2. If different RSPs on different packages are declared for different areas, each such RSP is deemed to

be the RSP.

3. If RSP on the package is increased after removal from factory, increased RSP would be deemed to

be the RSP.

All goods on which RSP has been declared will not be covered under the provisions of section 4A.

Only when the declaration of RSP on the goods is mandatory under the Legal Metrology Act, 2009 or

under any other law and such goods have been notified by the Central Government for the purpose

of section 4A, then the goods be valued under section 4A. Thus, provisions of section 4A of Central

Excise Act, 1944 would not apply if the goods had not been notified by Central Government and

manufacturer voluntarily affixed RSP on the products.

Q.5

Advanced Accounting

Q.1

Capital fund - Tier I Rs.(in lakhs) Rs.(in lakhs)

equity share capital

480,00

statutory reserve

280,00 capital reserve (arising out of sale of assets)

9,30

769,30

Capital fund - Tier II capital reserve (arising out of revaluation

of assets) 280 LESS : discount to the extent of 55% -154 126

770,56

Risk adjusted assets Funded risk assets Rs. (in lakhs) % weight Rs. (in lakhs)

cash balance with RBI 4,80 0 0

Balance with other banks 12,50 20 2,50

Claims on banks 28,50 20 5,70

other investments 782,50 100 782,50

Loans and Advances: i) Guaranteed by GOVT. 128,20 0 0

ii) Guaranteed by public sector undertakings of CENTRAL GOVT. 702,10 0 0

iii) others 52,02,50 100 52,02,50

premises, Furniture and Fixtures 1,82,00 100 1,82,00

Other assets 2,01,20 100 2,01,20

63,76,40

Off-Balance sheet items Rs. (in lakhs)

Credit conversion factor

Acceptable, Endorsements and letter of credit 37,02,50 100 37,02,50

100,78,90

Risk weighted assets ratio = (Capital funds (Tier I & tier II) /risk adjusted assets + off balance sheet items)*100 = 7,69,30+ 1,26 / 63,76,40 + 370250 Capital adequacy ratio = (77056 / 100, 78, 90) *100 = 7.65%

Expected ratio is 9%. So the bank has to improve the ratio by introducing further TIER I capital.

Q.2

PARTICULARS AMOUNT

outstanding value of doubtful assets(up to 3 years) 7,24,000

LESS: value of security (excluding ECGC cover) -1,75,000

sub total 5,49,000

LESS : ECGC cover (subject to RS. 150,000 maximum) -1,50,000

unsecured portion 3,99,000

Provision For Unsecured portion @100% of Rs. 399,000 3,99,000

For Secured portion @ 40% of RS. 175,000 70,000

Total Provision 4,69,000

Q.3

Profit and Loss A/c (an extract) for the period ending 31.12.2012

PARTICULARS AMOUNT

Transfer from 'rebate on bills discounted A/c' (1.1.2012) 8,340

ADD: discount for the year 2012 85,912

94,252

LESS : rebate on bills discounted carried forward to the year 2013 -13,274

80,978

BALANCE SHEET (an extract) as on 31.12.2012

AMOUNT

other liabilities and provisions:

rebate on bills discounted 13,274 Working note Statement of rebate on bills discounted as on 31.12.2012

DUE DATE

AMOUNT

NO.OF DAYS AFTER 31.12.2012

RATE OF DISCOUNT (%)

DISCOUNT OF THE UNEXPIRED PORTION

06-Mar-13 1,40,000 65 5 1,247

12-Mar-13 4,36,000 71 4.5 3,816

26-Mar-13 2,82,000 85 6 3,940

06-Apr-13 4,06,000 96 4 4,271

TOTAL REBATE ON BILLS DISCOUNTED TO BE CARRIED FORWARD 13,274

Q.4

Life insurance Other insurance

1

Timing of payment of claim

Insurance amount is payable either on the happening of the event (death) or at the maturity

Reimbursement or loss or liability incurred will be paid at the happening of the uncertain event only

2 value of policy

insurance can be done for any value depending upon the premiums the insured is willing to pay

the sum payable under it is limited to the amount o loss actually suffered or the liability incurred, notwithstanding the amount of policy

3 duration of contarct

These are long term contracts running over number of years

These are only for one year though renewable after year

4 Assurance

life insurance is also known by other term 'assurance' since the insured gets an assured sum other policies are known as insurance

5 Determination of liability

actuaries periodically estimate the liability under existing policies. On that basis a valuation balance sheet is prepared to determine the profit

A portion of the premium is carried forward as a provision for unexpired liability and the balance net of claims and expences is taken as profit or loss

Q.5

FORM B - RA

NAME OF THE INSURER: REGISTRATION NO. AND DTE OF REGISTRATION WITH IRDA:

FIRE INSURANCE REVENUE A/c for the year ended 31.3.2013

Particulars schedule Amount

premium earned 1 11,50,000

other income 0

interest, dividend and rent 0

TOTAL (A) 11,50,000

claims incurred 2 5,30,000

commission 3 3,00,000

operating expences related to insurance business 4 2,00,000

TOTAL (B) 10,30,000

OPERATING PROFIT (A-B) 1,20,000

schedule 1 : premium earned (net) AMOUNT

premium received 13,00,000

LESS : Re-insurance premium -1,00,000

net premium 12,00,000

Adjustment for change in reserve for unexpired risks (refer W.N.) -50,000

11,50,000

SEHEDULE 2 : claims incurred

claims paid including legal expenses (4,90,000 +10,000) 5,00,000

ADD: claims outstanding at the end of the year 80,000

LESS : claims outstanding at the beginning of the year -50,000

total claims incurred 530000

Schedule 3 : COMMISSION commission paid 3,00,000

300000

Schedule 4 : operating expenses

expenses of management 2,00,000

200000

Working note:

Change in provision for unexpired risk unexpired risk reserve on 31.3.2013 =50% of net

premium i.e. 50% of Rs. 12,00,000 6,00,000

LESS: unexpired risk reserve as on 1.4.2012 -5,50,000

change in the provision for unexpired reserve 50,000

Q.6

a) Insurable interest.(2 marks)

All and sundry cannot enter into contract of insurance. For eg. A cannot insure the life of B who is a total stranger. But if B happens to be his wife or debtor or business manager, A has insurable interest

i.e. vested interest and therefore he can insure the life of B. For every type of policy insurable interest is insisted upon. In the absence of such interest the contract will amount to a wagering contract.

b) Principle of uberrimaefidei :(2 marks) Under ordinary law of contract there is no positive duty to tell the whole truth in relation to the subject-matter of the contract. There is only the negative obligation to tell nothing but the truth. In a contract of insurance, however there is an implied condition that each party must disclose every material fact known to him. This is because all contract of insurance are contracts of uberrimaefidei, i.e. contract of utmost good faith. This is because the assessment of risk and the determination of the premium by the insurer depend on the full and frank disclosure of all material facts in the proposal form

Auditing & Assurance

Q.1

Q.2

Q.3

Q.4

Q.5

Q.6

Q.7

Information Technology

Q.1

Core Banking System (CBS) may be defined as the set of basic software components that manage the services provided by a bank to its customers through its branches (branch network).The absolute bank's branches access applications from centralized data centers. All transactions budge through core systems, which, at an absolute minimum, must remain running and responsive during business hours. Increasingly, these systems are running 24x7 to support Internet banking, global operations, and real time transactions via ATM, Internet, phone, and debit card.The various elements of core banking include making and servicing loans; opening new accounts; processing cash deposits and withdrawals; processing payments and cheques; calculating interest; Customer Relationship Management (CRM) activities; managing customer accounts; establishing criteria for minimum balances, interest rates, number of withdrawals allowed and so on; establishing interest rates; and maintaining records for all the bank’s transactions. Normal core banking functions include deposit accounts, loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking, and branches. Examples of major core banking products include Infosys’ Finacle, Nucleus FinnOne and Oracle's Flexcube application (from their acquisition of Indian IT vendor i-flex).

Q.2

Artificial Intelligence (AI) is the vicinity of computer science focusing on creating machines that can

fit into place on behaviors that humans regard as intelligent. It is a research field that studies how to

comprehend the intelligent human behaviors on a computer. The decisive objective of AI is to make a

computer that can discover, sketch, and crack problems in parallel. The subject of artificial

intelligence spans a wide horizon dealing with various kinds of knowledge representation schemes,

different techniques of intelligent search, various methods for resolving uncertainty of data and

knowledge, different schemes for automated machine learning and many others. Expert systems,

Pattern Recognition, Natural language processing, and many others are some of the various purposes

on which AI may be applied.

Q.3

Q.4

The ACID Test refers to the following prerequisites for any Transaction Processing System (TPS).

• Atomicity: This means that a transaction is either completed in full or not at all.TPS systems

ensure that transactions take place in their entirety.

• Consistency: TPS systems exist within a set of operating rules or integrity constraints. For

Example - If an integrity constraint states that all transactions in a database must have a

positive value, any transaction with a negative value would be refused.

• Isolation: Transactions must appear to take place in seclusion. For example, the funds cannot

be credited to an account before they are debited from another.

• Durability: Once transactions are completed they cannot be undone. To ensure this, a log

will be created to document all completed transactions.

Q.5

Knowledge Management System (KMS) refer to any kind of IT system that stores and retrieves

knowledge, improves collaboration, locates knowledge sources, mines repositories for hidden

knowledge, captures and uses knowledge, or in some other way enhances the KM process. Explicit

and Tacit are two broad types of knowledge. A Knowledge discovery in database system is a value –

added Intranet with facilities to search and identify captured knowledge or identify experts who

have the knowledge.

Knowledge Discovery and Data Mining (KDD) fundamentally deals with ways and means of

capturing and making obtainable knowledge of the experts to others, in electronic form. KDD

systems also assist us establish, contact and communicate with experts (knowledgeable people) on

various subjects, surrounded by our organization, or perhaps even outside.

Strategic Management

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