Thursday, July 2, 2009

Strategic Finance - 18

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Inventory valuation , Booking depreciation , Methods of provisions
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Question Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the accounting policies followed
by the company , There are no standard procedures for valuation of intangible assets , No importance
to the market value of the asset
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Question In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance
Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Question The main assumption in comparative analysis is the possibility of :-
Correct Answer Combination or co-location of similar functions
Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases
Question Equity includes :-
Correct Answer Development Rebate Reserve
Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Segment liabilities Enterprise liabilities Enterprise liabilities
Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets
Question Organisational changes are similar to mission changes.
Correct Answer True
Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
Segment liabilities Do not include borrowings that are incurred for financing purposes Does not
include extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
Segment expenses Does not include income tax expenses Determined after intra - enterprise
balances are eliminated
Segment assets Do not include income tax assets Do not include income tax assets
Question Total risk reduces if operations of combining firms are ________.
Correct Answer Negatively correlated
Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Question In today's world, knowledge has become the key determinant for economic & business
Correct Answer True
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
Correct Answer False
Question A company under siege may look for support & help from its :-
Correct Answer Friends
Question If the segment result of a segment includes interest expense its segment liabilities
include :-
Correct Answer The related interest bearing liabilities
Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Question The following Act contains the provisions permitting the companies to buy back their
shares :-
Correct Answer Companies (Amendment) Act, 1999
Question Shortage costs are mainly in the form of :-
Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill
Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Question When a company is able to assess an individual's worth, it helps in increasing its own
Correct Answer True
Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition
Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares
Question A long term investment is an investment other than a current investment.
Correct Answer True
Question Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True
Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
Correct Answer Segment assets
Question Segment result is segment revenue less segment expenses.
Correct Answer True

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