LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
Mortgage mode of security pertains to immovable properties like land and buildings
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 Structure
Multiple Choice Multiple Answer
Question
The approaches to compute the cost of equity shares are
Correct Answer
Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
Your Answer
Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
Multiple Choice Single Answer
Question
The cost which remains constant irrespective of changes in the sales revenue is termed as
Correct Answer
Fixed cost
Your Answer
Fixed cost
Multiple Choice Multiple Answer
Question
Internal sources of cash are
Correct Answer
Depreciation , Amortization of intangible assets
Your Answer
Issue of new shares , Raising long term loans , Depreciation
Match The Following
Question
Correct Answer
Your Answer
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
Disadvantage of Pay back period
ignores time value of money
ignores time value of money
Advantage of Discounted Pay back period
considers time value of money
considers time value of money
Advantage of Net present value
considers cash inflows from the project throughout its life
considers cash inflows from the project throughout its life
Multiple Choice Multiple Answer
Question
Disadvantages of Net Present value
Correct Answer
It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
Your Answer
It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible
True/False
Question
Cash from operation is the main internal source of cash
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
The working Partner is a Partner who
Correct Answer
participates in day-to-day affairs of the firm
Your Answer
does not participate in day to day affairs, only takes remuneration
Select The Blank
Question
________ is an example of Intangible asset
Correct Answer
Goodwill
Your Answer
Land
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
True/False
Question
Internal rate of return is difficult to use , calculate and understand
Correct Answer
True
Your Answer
True
Select The Blank
Question
As per the Tandon Committee, the norms suggested for consumption of raw materials should be in ________
Correct Answer
months
Your Answer
days
Multiple Choice Single Answer
Question
The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer
No change in cash
Your Answer
Increase in cash
Multiple Choice Single Answer
Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Minimum two persons
True/False
Question
Profitability Statement is a period statement
Correct Answer
True
Your Answer
False
Select The Blank
Question
The comparison of the ratios of one organisation with that of the other organisation is termed as ________ comparison
Correct Answer
Inter-firm
Your Answer
Intra-firm
True/False
Question
Public deposits are unsecured borrowings for the company
Correct Answer
True
Your Answer
False
Multiple Choice Single Answer
Question
A systematic record of the events of the business leading to a presentation of a complete financial picture is known as
Correct Answer
Accounting
Your Answer
Accounting
Multiple Choice Multiple Answer
Question
External sources of cash are as follows :
Correct Answer
Issue of new shares , long term loans , short term borrowings
Your Answer
Issue of new shares , long term loans
Multiple Choice Single Answer
Question
In financial terms, Profit before Interest and taxes can be referred as
Correct Answer
Earnings before Interest and taxes
Your Answer
Earnings before Interest and taxes
Multiple Choice Multiple Answer
Question
Fixation of Inventory levels are based on the following propositions
Correct Answer
There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Your Answer
There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
True/False
Question
Income tax paid in the case of sole proprietor firms should be treated as a personal expense of the proprietor
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Limitations of Average collection period
Correct Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
Your Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , Not proper cost benefit analysis made by the company
Match The Following
Question
Correct Answer
Your Answer
The relation of Net Sales and Working Capital
Working Capital turnover ratio
Working Capital turnover ratio
The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash
Debtors turnover ratio
Debtors turnover ratio
The ratio which indicates the efficiency of the organisation with which the capital employed is being utilised
Capital turnover ratio
Return on Asset
Ratio which measures the profitability of the investments in a firm
Return on Asset
Dividend Payment ratio
True/False
Question
Under pledge mode of security, possession of the goods is with the Bank and the goods pledged are in the custody of the Bank
Correct Answer
True
Your Answer
True
Select The Blank
Question
The situation of watered capital may arise due to ________
Correct Answer
Company pays higher price to the vendors of the assets transferred
Your Answer
Company pays higher price to the vendors of the assets transferred
Multiple Choice Single Answer
Question
The term receivables is defined as
Correct Answer
Debts owned to the firm by customers arising from sale of goods or services in the ordinary course of business
Your Answer
Amount paid by the company in respect of prepaid expenses
Multiple Choice Single Answer
Question
The 'going concern concept' is the underlying basis for
Correct Answer
depreciating fixed asset over their useful lives
Your Answer
disclosing the sales and other operating information in the income statement
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
Select The Blank
Question
Operating Lease is also referred to as ________ lease
Correct Answer
Service
Your Answer
Leverage
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 , The lessee is responsible for maintenance, insurance and taxes
Select The Blank
Question
The projects having Profitability index of less than ________ will be rejected
Correct Answer
one
Your Answer
one
Multiple Choice Multiple Answer
Question
Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the
Correct Answer
Bankers , Financial Institutions
Your Answer
Bankers , Financial Institutions
Multiple Choice Single Answer
Question
Variable Working Capital is
Correct Answer
the working capital required over and above the permanent working capital
Your Answer
the working capital required over and above the permanent working capital
Select The Blank
Question
In case of Internal Rate of Return Method, the resultant IRR is compared with the ________
Correct Answer
cost of capital
Your Answer
cost of capital
Multiple Choice Multiple Answer
Question
The shares of the company can be bought back out of the following amounts
Correct Answer
Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Your Answer
Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Select The Blank
Question
Financial Institution plays the role of ________ in factoring service offered
Correct Answer
Factor
Your Answer
Client
Multiple Choice Single Answer
Question
Stock at the end results in the
Correct Answer
Source of funds
Your Answer
Sinking fund
Select The Blank
Question
The operating profit earned by the company is in the form of contribution duly reduced by the ________
Correct Answer
Fixed operating cost
Your Answer
Variable operating cost
Multiple Choice Multiple Answer
Question
Projects for which profitability is not the criterion are
Correct Answer
Service Department projects , Welfare projects , Educational projects
Your Answer
Educational projects , Projects for replacement of manual operations by labour saving device
Select The Blank
Question
________ in liabilities involves outflow of funds
Correct Answer
Decrease
Your Answer
Decrease
True/False
Question
Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Public deposits
True/False
Question
Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of cash flow statement are
Correct Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning
Your Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning
Select The Blank
Question
________ ratio will be useful in indicating the symptom of inability to pay dues to financial institutions
Correct Answer
Debt Service Coverage ratio
Your Answer
Debt Service Coverage ratio
Showing posts with label Financial Management (Set III). Show all posts
Showing posts with label Financial Management (Set III). Show all posts
Monday, August 11, 2008
Financial Management - 10
Multiple Choice Multiple Answer
Question The causes of undercapitalisation are
Correct Answer Future earnings may be underestimated , Company following too conservative policy for paying the dividends
Your Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Select The Blank
Question Subscription list of a public issue of shares shall be kept open for minimum ________ working days
Correct Answer 3
Your Answer 3
Select The Blank
Question ________ in liabilities involves outflow of funds
Correct Answer Decrease
Your Answer Decrease
Multiple Choice Single Answer
Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Multiple Answer
Question The following techniques can be used to delay cash payments
Correct Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Your Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Select The Blank
Question Till the sales revenue reaches the break even point, the company ________
Correct Answer incurs the losses
Your Answer incurs the losses
Select The Blank
Question Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Non-recurring
Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners' funds are sunk in different kinds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio
Select The Blank
Question ________ is the summary of cash book or Receipts and Payments Statement
Correct Answer Cash flow statement
Your Answer Cash flow statement
True/False
Question Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company
Correct Answer True
Your Answer True
True/False
Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee , Management committee
Multiple Choice Multiple Answer
Question The approaches to compute the cost of equity shares are
Correct Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
Your Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
True/False
Question Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer True
Your Answer True
True/False
Question Before the company can pay the dividend on Equity shares, it is bound to pay the dividend on Preference shares
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Term loan represents a source of debt finance which is generally repayable in more than one year but less than ten years represents a source of debt finance which is generally repayable in more than one year but less than ten years
Lessee Not able to claim depreciation on asset Not able to claim depreciation on asset
Hirer Claims the depreciation on the asset Claims the depreciation on the asset
Retained earnings Residue left behind from earnings available to equity shareholders after the payment of annual dividend Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Multiple Choice Multiple Answer
Question Uses of financial leverage are
Correct Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax
Your Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It provides useful guidelines for determining the optimal capital structure
Multiple Choice Multiple Answer
Question The methods which consider the risk in capital budgeting decision are
Correct Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Your Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Select The Blank
Question Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer dividend
Your Answer dividend
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer Profit before Interest and taxes / Interest charges
True/False
Question Internal rate of return indicates that the discounting rate at which net present value is zero
Correct Answer True
Your Answer True
Select The Blank
Question In ABC analysis C class consist of ________.
Correct Answer a very large number of items which are less important
Your Answer a very large number of items which are less important
True/False
Question Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer False
Your Answer False
True/False
Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Tangible net worth means
Correct Answer share capital plus free reserves
Your Answer Current assets less Current liabilities
Multiple Choice Multiple Answer
Question Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
True/False
Question Solvency ratios consists of current ratio and Price earnings ratio
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of normal business operations
Your Answer Accumulated retained earnings from the profits of normal business operations
Select The Blank
Question For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer Too long
Multiple Choice Multiple Answer
Question The shares of the company can be bought back out of the following amounts
Correct Answer Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Your Answer Free Reserves of the company , Share Premium Account of the company
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
Multiple Choice Single Answer
Question Increase in average credit period to maintain sales in view of falling demand can be indicated by
Correct Answer Debtors turnover ratio
Your Answer Debtors turnover ratio
Match The Following
Question Correct Answer Your Answer
Increase in current liabilities decreases working capital increases working capital
Increase in liabilities inflow of funds inflow of funds
Decrease in liabilities outflow of funds outflow of funds
Increase in current assets increases working capital cash flow analysis
Select The Blank
Question The situation of watered capital may arise due to ________
Correct Answer Company pays higher price to the vendors of the assets transferred
Your Answer Company pays higher price to the vendors of the assets transferred
True/False
Question Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer True
Your Answer True
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 , Reduces expenditure on maintenance
Select The Blank
Question ________ in assets involves inflow of funds
Correct Answer Decrease
Your Answer Decrease
Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
Question The symptom of low capacity utilisation will be shown by
Correct Answer Fixed Assets Turnover ratio
Your Answer Fixed Assets Turnover ratio
Multiple Choice Single Answer
Question If a company decides to invite public deposits
Correct Answer It should publish an advertising in leading newspaper
Your Answer It should publish an advertising in leading newspaper
Multiple Choice Multiple Answer
Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
Multiple Choice Multiple Answer
Question Advantages of ABC Analysis are
Correct Answer A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured
Your Answer It enables to locate slow and non-moving items , A close and strict control is facilitated on the most important items , Optimum utilisation of the available funds can be assured
Select The Blank
Question The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer Profit before taxes
Your Answer Profit before taxes
Multiple Choice Single Answer
Question Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years
Correct Answer Rs. 12,100
Your Answer Rs. 12,100
Multiple Choice Single Answer
Question Increase in the amount of bills payable results in
Correct Answer Increase in cash
Your Answer Decrease in cash
Multiple Choice Single Answer
Question The assets held by a business which can be converted in the form of cash or used during the course of normal operations is termed as
Correct Answer Current assets
Your Answer Current assets
True/False
Question Inadequate provision for depreciation may be the cause of overcapitalisation
Correct Answer True
Your Answer True
Question The causes of undercapitalisation are
Correct Answer Future earnings may be underestimated , Company following too conservative policy for paying the dividends
Your Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Select The Blank
Question Subscription list of a public issue of shares shall be kept open for minimum ________ working days
Correct Answer 3
Your Answer 3
Select The Blank
Question ________ in liabilities involves outflow of funds
Correct Answer Decrease
Your Answer Decrease
Multiple Choice Single Answer
Question The Investment decisions are mainly concerned with
Correct Answer Application of funds
Your Answer Application of funds
Multiple Choice Multiple Answer
Question The following techniques can be used to delay cash payments
Correct Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Your Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Select The Blank
Question Till the sales revenue reaches the break even point, the company ________
Correct Answer incurs the losses
Your Answer incurs the losses
Select The Blank
Question Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Non-recurring
Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners' funds are sunk in different kinds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio
Select The Blank
Question ________ is the summary of cash book or Receipts and Payments Statement
Correct Answer Cash flow statement
Your Answer Cash flow statement
True/False
Question Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company
Correct Answer True
Your Answer True
True/False
Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee , Management committee
Multiple Choice Multiple Answer
Question The approaches to compute the cost of equity shares are
Correct Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
Your Answer Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach
True/False
Question Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer True
Your Answer True
True/False
Question Before the company can pay the dividend on Equity shares, it is bound to pay the dividend on Preference shares
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
Term loan represents a source of debt finance which is generally repayable in more than one year but less than ten years represents a source of debt finance which is generally repayable in more than one year but less than ten years
Lessee Not able to claim depreciation on asset Not able to claim depreciation on asset
Hirer Claims the depreciation on the asset Claims the depreciation on the asset
Retained earnings Residue left behind from earnings available to equity shareholders after the payment of annual dividend Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Multiple Choice Multiple Answer
Question Uses of financial leverage are
Correct Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax
Your Answer It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax , It provides useful guidelines for determining the optimal capital structure
Multiple Choice Multiple Answer
Question The methods which consider the risk in capital budgeting decision are
Correct Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Your Answer Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach
Select The Blank
Question Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer dividend
Your Answer dividend
Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer Profit before Interest and taxes / Interest charges
True/False
Question Internal rate of return indicates that the discounting rate at which net present value is zero
Correct Answer True
Your Answer True
Select The Blank
Question In ABC analysis C class consist of ________.
Correct Answer a very large number of items which are less important
Your Answer a very large number of items which are less important
True/False
Question Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer False
Your Answer False
True/False
Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Tangible net worth means
Correct Answer share capital plus free reserves
Your Answer Current assets less Current liabilities
Multiple Choice Multiple Answer
Question Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
True/False
Question Solvency ratios consists of current ratio and Price earnings ratio
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of normal business operations
Your Answer Accumulated retained earnings from the profits of normal business operations
Select The Blank
Question For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer Too long
Multiple Choice Multiple Answer
Question The shares of the company can be bought back out of the following amounts
Correct Answer Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities
Your Answer Free Reserves of the company , Share Premium Account of the company
Multiple Choice Single Answer
Question From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer 200 units
Multiple Choice Single Answer
Question Increase in average credit period to maintain sales in view of falling demand can be indicated by
Correct Answer Debtors turnover ratio
Your Answer Debtors turnover ratio
Match The Following
Question Correct Answer Your Answer
Increase in current liabilities decreases working capital increases working capital
Increase in liabilities inflow of funds inflow of funds
Decrease in liabilities outflow of funds outflow of funds
Increase in current assets increases working capital cash flow analysis
Select The Blank
Question The situation of watered capital may arise due to ________
Correct Answer Company pays higher price to the vendors of the assets transferred
Your Answer Company pays higher price to the vendors of the assets transferred
True/False
Question Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer True
Your Answer True
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 , Reduces expenditure on maintenance
Select The Blank
Question ________ in assets involves inflow of funds
Correct Answer Decrease
Your Answer Decrease
Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
Question The symptom of low capacity utilisation will be shown by
Correct Answer Fixed Assets Turnover ratio
Your Answer Fixed Assets Turnover ratio
Multiple Choice Single Answer
Question If a company decides to invite public deposits
Correct Answer It should publish an advertising in leading newspaper
Your Answer It should publish an advertising in leading newspaper
Multiple Choice Multiple Answer
Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Ratio Analysis , Cash flow Analysis
Multiple Choice Multiple Answer
Question Advantages of ABC Analysis are
Correct Answer A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured
Your Answer It enables to locate slow and non-moving items , A close and strict control is facilitated on the most important items , Optimum utilisation of the available funds can be assured
Select The Blank
Question The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer Profit before taxes
Your Answer Profit before taxes
Multiple Choice Single Answer
Question Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years
Correct Answer Rs. 12,100
Your Answer Rs. 12,100
Multiple Choice Single Answer
Question Increase in the amount of bills payable results in
Correct Answer Increase in cash
Your Answer Decrease in cash
Multiple Choice Single Answer
Question The assets held by a business which can be converted in the form of cash or used during the course of normal operations is termed as
Correct Answer Current assets
Your Answer Current assets
True/False
Question Inadequate provision for depreciation may be the cause of overcapitalisation
Correct Answer True
Your Answer True
Financial Management - 9
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
Interest in provision for doubtful debts should be added back in order to find out cash from operations
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of factoring
Correct Answer
Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables , The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities
Your Answer
The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities , Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables
Multiple Choice Single Answer
Question
The products which are ready for sale in the market are termed as
Correct Answer
Finished goods
Your Answer
Finished goods
Multiple Choice Single Answer
Question
If the company buys the raw material from the suppliers on credit basis, it is termed as
Correct Answer
Trade Credit
Your Answer
Trade Credit
Multiple Choice Single Answer
Question
Discounted Payback period is an improvement over the pay back period method as it considers
Correct Answer
time value of money
Your Answer
time value of money
True/False
Question
Funds flow statements and cash flow statement are one and the same
Correct Answer
False
Your Answer
True
Select The Blank
Question
From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-
Correct Answer
9
Your Answer
10
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
Fund based lending of banks include
Correct Answer
Overdraft , Bills Purchased
Your Answer
Bank Guarantee , Overdraft , Letter of credit
True/False
Question
A good Budget manual promotes standardization and simplification of budgetary procedures
Correct Answer
True
Your Answer
True
Select The Blank
Question
Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer
0.49
Your Answer
0.49
True/False
Question
Cross-sectional Analysis is the comparison of financial data of same time period of different organisations engaged in similar business
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Expected future earnings of ABC Ltd. are Rs. 2,00,000. Find out the amount of capitalisation if the rate of return earned by similar types of companies is 10%.
Correct Answer
Rs. 20,00,000
Your Answer
Rs. 20,000
Match The Following
Question
Correct Answer
Your Answer
Financial leverage
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earnings per share
(Profit after tax - Preference dividend) / Number of Equity shares
(Profit after tax - Preference dividend) / Number of Equity shares
Price earning ratio
Market Price per share / Earnings per share
Market Price per share / Earnings per share
Operating leverage
Contribution / Earnings before interest and tax
( Sales - Variable cost ) / ( Earning before interest and tax - Interest )
Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Debentures
True/False
Question
The Stock Dividends are more expensive to administer as compared to cash dividends
Correct Answer
True
Your Answer
True
True/False
Question
The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Advantage of term loan from the company's point of view is
Correct Answer
In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital
Your Answer
In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital
Select The Blank
Question
Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose
Correct Answer
Dividend
Your Answer
Dividend
Multiple Choice Single Answer
Question
Rights issue is
Correct Answer
Selling the securities in the primary market to the existing shareholders
Your Answer
Bonus Issue
Multiple Choice Single Answer
Question
The period that indicates the period within which the discounted cash inflows equal to the discounted cash outflows involved in the project is termed as
Correct Answer
Discounted Pay back period
Your Answer
Discounted Pay back period
Select The Blank
Question
The current ratio of ________ is considered to be standard
Correct Answer
2 : 1
Your Answer
2 : 1
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Individuals
Multiple Choice Multiple Answer
Question
Operating cost incurred by the company can be classified into
Correct Answer
Variable cost , Fixed cost , Semi-variable cost
Your Answer
Variable cost , Fixed cost , Semi-variable cost
True/False
Question
Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials
Correct Answer
True
Your Answer
True
Select The Blank
Question
Interest on overdraft is payable on the actual amount drawn and is calculated on ________ product basis
Correct Answer
daily
Your Answer
daily
Match The Following
Question
Correct Answer
Your Answer
Financial ratios
Ratios disclosing the financial position or solvency of the firm
The ratios indicate the long term financial prospects of the company
Profitability ratio
Ratios which reflect the final results of business operations
Ratios measuring the efficiency with which the assets are employed by a firm
Turnover ratios
Ratios measuring the efficiency with which the assets are employed by a firm
Ratios disclosing the financial position or solvency of the firm
Overall profitability ratio
Ratios which indicates the percentage of return on the total capital employed in the business
Ratios which reflect the final results of business operations
Multiple Choice Single Answer
Question
The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation
Select The Blank
Question
Without Recourses factoring is also referred to as ________
Correct Answer
Full factoring
Your Answer
Zero factoring
Multiple Choice Multiple Answer
Question
Indicate which of these are Profitability ratios
Correct Answer
Operating ratio , Gross Profit ratio
Your Answer
Operating ratio , Gross Profit ratio
Multiple Choice Multiple Answer
Question
The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes
Correct Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding
Your Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Preparing financial statements
Select The Blank
Question
________ is more useful to the management as a tool of financial analysis in short periods
Correct Answer
Cash flow analysis
Your Answer
Ratio analysis
Multiple Choice Single Answer
Question
Accounting rate of return is calculated as
Correct Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100
Your Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100
True/False
Question
Interest in provision for doubtful debts should be added back in order to find out cash from operations
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of factoring
Correct Answer
Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables , The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities
Your Answer
The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities , Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables
Multiple Choice Single Answer
Question
The products which are ready for sale in the market are termed as
Correct Answer
Finished goods
Your Answer
Finished goods
Multiple Choice Single Answer
Question
If the company buys the raw material from the suppliers on credit basis, it is termed as
Correct Answer
Trade Credit
Your Answer
Trade Credit
Multiple Choice Single Answer
Question
Discounted Payback period is an improvement over the pay back period method as it considers
Correct Answer
time value of money
Your Answer
time value of money
True/False
Question
Funds flow statements and cash flow statement are one and the same
Correct Answer
False
Your Answer
True
Select The Blank
Question
From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-
Correct Answer
9
Your Answer
10
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
Fund based lending of banks include
Correct Answer
Overdraft , Bills Purchased
Your Answer
Bank Guarantee , Overdraft , Letter of credit
True/False
Question
A good Budget manual promotes standardization and simplification of budgetary procedures
Correct Answer
True
Your Answer
True
Select The Blank
Question
Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer
0.49
Your Answer
0.49
True/False
Question
Cross-sectional Analysis is the comparison of financial data of same time period of different organisations engaged in similar business
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Expected future earnings of ABC Ltd. are Rs. 2,00,000. Find out the amount of capitalisation if the rate of return earned by similar types of companies is 10%.
Correct Answer
Rs. 20,00,000
Your Answer
Rs. 20,000
Match The Following
Question
Correct Answer
Your Answer
Financial leverage
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earning before interest and tax / ( Earning before interest and tax - Interest )
Earnings per share
(Profit after tax - Preference dividend) / Number of Equity shares
(Profit after tax - Preference dividend) / Number of Equity shares
Price earning ratio
Market Price per share / Earnings per share
Market Price per share / Earnings per share
Operating leverage
Contribution / Earnings before interest and tax
( Sales - Variable cost ) / ( Earning before interest and tax - Interest )
Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Debentures
True/False
Question
The Stock Dividends are more expensive to administer as compared to cash dividends
Correct Answer
True
Your Answer
True
True/False
Question
The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Advantage of term loan from the company's point of view is
Correct Answer
In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital
Your Answer
In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital
Select The Blank
Question
Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose
Correct Answer
Dividend
Your Answer
Dividend
Multiple Choice Single Answer
Question
Rights issue is
Correct Answer
Selling the securities in the primary market to the existing shareholders
Your Answer
Bonus Issue
Multiple Choice Single Answer
Question
The period that indicates the period within which the discounted cash inflows equal to the discounted cash outflows involved in the project is termed as
Correct Answer
Discounted Pay back period
Your Answer
Discounted Pay back period
Select The Blank
Question
The current ratio of ________ is considered to be standard
Correct Answer
2 : 1
Your Answer
2 : 1
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Individuals
Multiple Choice Multiple Answer
Question
Operating cost incurred by the company can be classified into
Correct Answer
Variable cost , Fixed cost , Semi-variable cost
Your Answer
Variable cost , Fixed cost , Semi-variable cost
True/False
Question
Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials
Correct Answer
True
Your Answer
True
Select The Blank
Question
Interest on overdraft is payable on the actual amount drawn and is calculated on ________ product basis
Correct Answer
daily
Your Answer
daily
Match The Following
Question
Correct Answer
Your Answer
Financial ratios
Ratios disclosing the financial position or solvency of the firm
The ratios indicate the long term financial prospects of the company
Profitability ratio
Ratios which reflect the final results of business operations
Ratios measuring the efficiency with which the assets are employed by a firm
Turnover ratios
Ratios measuring the efficiency with which the assets are employed by a firm
Ratios disclosing the financial position or solvency of the firm
Overall profitability ratio
Ratios which indicates the percentage of return on the total capital employed in the business
Ratios which reflect the final results of business operations
Multiple Choice Single Answer
Question
The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation
Select The Blank
Question
Without Recourses factoring is also referred to as ________
Correct Answer
Full factoring
Your Answer
Zero factoring
Multiple Choice Multiple Answer
Question
Indicate which of these are Profitability ratios
Correct Answer
Operating ratio , Gross Profit ratio
Your Answer
Operating ratio , Gross Profit ratio
Multiple Choice Multiple Answer
Question
The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes
Correct Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding
Your Answer
Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Preparing financial statements
Select The Blank
Question
________ is more useful to the management as a tool of financial analysis in short periods
Correct Answer
Cash flow analysis
Your Answer
Ratio analysis
Multiple Choice Single Answer
Question
Accounting rate of return is calculated as
Correct Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100
Your Answer
[Total Profits / (Net Investment * No. of years of Profits)] * 100
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