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JAIIB AFM MARATHON 3
What does the term 'accrual basis of accounting' mean in the context of bank financial statements?
Under accrual basis, income and expenses are recognised when they are earned or incurred, regardless of when cash is actually received or paid. Banks in India are required to follow this basis as per RBI guidelines.
What is 'Quick Ratio' and how does it differ from the Current Ratio?
Quick Ratio excludes inventory; measures immediate short-term liquidity.
What is the formula for calculating the Current Ratio?
Current Ratio = Current Assets / Current Liabilities. A ratio of 2:1 is generally considered satisfactory for assessing short-term liquidity.
What is 'Net Present Value' (NPV) and what does a positive NPV indicate?
NPV is present value of cash inflows minus outflows; positive NPV means project is viable.
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