Financial Management - 25

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question
In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ________
Correct Answer
discount charges
Your Answer
interest charges

Match The Following
Question
Correct Answer
Your Answer
Nayak committee
to recognize the contribution made by the SSI sector to the economy
to determine the quantum of bank advances
Dahejia committee
to examine the extent to which credit needs of industry and trade are likely to be inflated and how such trends could be checked
to review mainly the system of cash credit management policy by banks
Chhore committee
to review mainly the system of cash credit management policy by banks
to find measures to improve the present manner and style of lending
Marathe committee
to review the credit authorization scheme
to recognize the contribution made by the SSI sector to the economy

Multiple Choice Multiple Answer
Question
Before investing in the project, Venture capitalist is interested in ensuring that
Correct Answer
The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent
Your Answer
The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent

Multiple Choice Single Answer
Question
The reduction in the market value of the shares may cause due to
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation

Multiple Choice Multiple Answer
Question
The internal factors affecting the dividend policy are
Correct Answer
Growth rate of the company , Composition of the shareholding
Your Answer
Growth rate of the company , Composition of the shareholding

Multiple Choice Single Answer
Question
The time required by the company to process the received cheque and deposit the same in the bank is called
Correct Answer
Deposit float
Your Answer
Bank float

Multiple Choice Single Answer
Question
Minimum application money payable by the applicant along with the application shall not be less than
Correct Answer
25% of the issue price
Your Answer
20% of the issue price

True/False
Question
Overdraft is given by the bank for a very short period of time, at the end of which the company is supposed to repay the same
Correct Answer
True
Your Answer
True

True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True

True/False
Question
Internal rate of return is difficult to use , calculate and understand
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer
Capital Structure
Your Answer
Capital Budgeting

Multiple Choice Single Answer
Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds

Select The Blank
Question
Cost management is the function of a ________.
Correct Answer
Treasurer
Your Answer
Finance manager

Multiple Choice Single Answer
Question
Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer
Current assets
Your Answer
Current assets

Select The Blank
Question
The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits
Correct Answer
Company Law board
Your Answer
Company Law board

True/False
Question
With limited funds, the company must obtain the optimum combination of acceptable investment proposals
Correct Answer
True
Your Answer
True

Select The Blank
Question
The projects having Profitability index of less than ________ will be rejected
Correct Answer
one
Your Answer
one

Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Financing

Multiple Choice Single Answer
Question
The value created by the use of resources is more than the total of the input resources is referred to as
Correct Answer
Profit
Your Answer
Income

Multiple Choice Single Answer
Question
Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer
Bonneville and Dewey
Your Answer
Kenneth Midgley and Ronald Burns

Multiple Choice Multiple Answer
Question
The advantages of operating lease is
Correct Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , Reduces expenditure on maintenance
Your Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment

True/False
Question
The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Undercapitalisation is
Correct Answer
Excess of real worth of the assets over the aggregate of shares and debentures outstanding
Your Answer
Excess of real worth of the assets over the aggregate of shares and debentures outstanding

Multiple Choice Single Answer
Question
The main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Procurement of funds

Multiple Choice Multiple Answer
Question
The cost of managing inventory includes
Correct Answer
Ordering cost , Carrying cost
Your Answer
Maintenance cost , Ordering cost , Carrying cost

True/False
Question
Internal rate of return does not considers cash inflows from the project throughout its life
Correct Answer
False
Your Answer
False

True/False
Question
If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months
Correct Answer
False
Your Answer
True

True/False
Question
Informal method of capital budgeting does not follow any mathematical or statistical model to consider the risk factor
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
Utility of cash flow analysis
Correct Answer
Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash
Your Answer
Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash

Multiple Choice Multiple Answer
Question
Undue decrease in Gross Profit ratio may indicate
Correct Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities
Your Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities

Multiple Choice Multiple Answer
Question
The techniques of Analysis and Interpretation of financial statements are
Correct Answer
Ratio Analysis , Cash flow Analysis
Your Answer
Profit and loss account , Balance Sheet

Multiple Choice Multiple Answer
Question
The importance of various items of inventory may be decided on the following factors
Correct Answer
Value of material consumption , Critical nature of inventory items , Amount of investment in inventory
Your Answer
Amount of investment in inventory , Value of material consumption , Critical nature of inventory items

Multiple Choice Single Answer
Question
Receivable management is also called as
Correct Answer
Trade Credit management
Your Answer
Trade Credit management

Multiple Choice Multiple Answer
Question
The avenues available to the company to invest the excess cash balance on short term basis may be in the form of
Correct Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Your Answer
Commercial paper , inter-corporate bills discounting , Bank deposits

Select The Blank
Question
The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer
Danger level
Your Answer
Danger level

Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital

True/False
Question
The objective of funds flow statement may be to find out uses of loans raised by the business
Correct Answer
True
Your Answer
False

Match The Following
Question
Correct Answer
Your Answer
Contribution
Sales less variable operating cost
Sales less variable operating cost
Operating Profit
Contribution less Fixed Operating cost
Contribution less Fixed Operating cost
Fixed cost
remains constant
remains constant
Variable cost
varies in direct proportion to the sales revenue
varies in direct proportion to the sales revenue

True/False
Question
Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer
False
Your Answer
True

Select The Blank
Question
________ and return always go hand in hand
Correct Answer
Risk
Your Answer
Risk

Select The Blank
Question
Inflow of funds may not necessarily result in ________
Correct Answer
Inflow of cash
Your Answer
Inflow of cash

Multiple Choice Single Answer
Question
If the issue of Debentures is having the maturity period of more than 18 months, the company shall create
Correct Answer
Debenture Redemption reserve
Your Answer
Debenture Redemption reserve

Multiple Choice Single Answer
Question
Tax paid is
Correct Answer
Application of funds
Your Answer
Application of funds

Select The Blank
Question
The most crucial financial decisions of the organisation are taken by ________
Correct Answer
Board of Directors
Your Answer
Vice President (finance)

Multiple Choice Single Answer
Question
Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer
Current liabilities and Provisions
Your Answer
Reserves

Select The Blank
Question
________ is clubbed with Current Assets in the Balance Sheet
Correct Answer
Loans and advances
Your Answer
Investments

Multiple Choice Multiple Answer
Question
The recommendations of the Chhore committee included
Correct Answer
increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels
Your Answer
increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels