JAIIB AFM MARATHON 1
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the fundamental accounting equation?
Assets = Liabilities + Capital (Owner's Equity). This equation forms the basis of double-entry bookkeeping and must always remain balanced.
What is the Return on Equity (ROE) ratio and what does it measure?
Net profit divided by shareholders equity; measures profitability for owners.
What does the term 'going concern' assumption mean in accounting?
It assumes that the business will continue to operate indefinitely and is not likely to be liquidated in the near future, allowing assets to be recorded at cost rather than liquidation value.
What is the Earnings Per Share (EPS) formula?
Net profit after tax divided by number of equity shares outstanding.
What is the difference between capital expenditure and revenue expenditure?
Capital expenditure creates long-term assets or improves earning capacity (e.g., purchase of machinery), while revenue expenditure is incurred for day-to-day operations and is charged to the Profit & Loss account in the same period.
What is the Price-to-Earnings (P/E) ratio used for?
Compares market price of share to its earnings per share.
What is depreciation and why is it charged?
Depreciation is the systematic allocation of the cost of a fixed asset over its useful life. It is charged to match the cost of using an asset against the revenue it generates, following the matching principle.
What is the difference between book value and market value of a share?
Book value is net assets per share; market value is current trading price.
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