LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
*Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Telegraphic and Telephonic advice to customers around the due date , Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching
Select The Blank
*Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Directors
Select The Blank
*Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Increase
Match The Following
*Question
Correct Answer
Your Answer
Recurring duties of finance executive
Raising of funds
Cost management
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
International Finance
Finance Controller
Internal Auditing
Raising of funds
Multiple Choice Multiple Answer
*Question
The advantages of leasing for the lessee are
Correct Answer
The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
Your Answer
The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
Select The Blank
*Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Select The Blank
*Question
Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer
Legal
Your Answer
Legal
True/False
*Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True
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 Single Answer
*Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Only one person
Multiple Choice Multiple Answer
*Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis provides data for inter-firm comparison
Multiple Choice Multiple Answer
*Question
The disadvantages of a Partnership firm are
Correct Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Multiple Choice Single Answer
*Question
Float indicates
Correct Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
Your Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
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
Select The Blank
*Question
If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer
0.1
Your Answer
0.1
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 Single Answer
*Question
An increase in the share premium account is
Correct Answer
Source of funds
Your Answer
Source of funds
Multiple Choice Single Answer
*Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Creditors
True/False
*Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Select The Blank
*Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash
Match The Following
*Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the project throughout its life
presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
considers cash inflows from the project throughout its life
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
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 , 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 , Not proper cost benefit analysis made by the company
True/False
*Question
Traditional approach believes the existence of Optimal Capital structure
Correct Answer
True
Your Answer
True
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
Issue of new shares , Purchase of fixed Assets , Cash collected from customers
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 Interest and Taxes
Select The Blank
*Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer
Promotion
Your Answer
Promotion
True/False
*Question
Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc.
Correct Answer
True
Your Answer
True
True/False
*Question
A good Budget manual promotes standardization and simplification of budgetary procedures
Correct Answer
True
Your Answer
True
True/False
*Question
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Increase in the amount in debtors results in
Correct Answer
Decrease in cash
Your Answer
No change in cash
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
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
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 Equity
Multiple Choice Multiple Answer
*Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Single Answer
*Question
The Walter and Gordon's approach of Dividend policy is based on the assumption of
Correct Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Your Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Select The Blank
*Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Multiple Choice Single Answer
*Question
Gross Profit ratio is calculated as
Correct Answer
[(Gross Profit / Net Sales)] * 100
Your Answer
[(Gross Profit / Net Sales)] * 100
True/False
*Question
If the process of capital rationing is strictly followed it may result into the exclusion of various smaller projects by larger projects
Correct Answer
True
Your Answer
True
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 , short term borrowings
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
The Policy which attracts the shareholders who are willing to devote short term dividend income for long term capital gains and share in the increased prosperity of the company is termed as
Correct Answer
No immediate Dividend policy
Your Answer
No immediate Dividend policy
Multiple Choice Multiple Answer
*Question
The Economic Order Quantity model is based on the assumption of
Correct Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer
The prices of the material remain unstable , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Multiple Choice Multiple Answer
*Question
Measurement of cost of capital can be done through
Correct Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
True/False
*Question
Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Capital cost is
Correct Answer
cost on the use of additional capital to support credit sales
Your Answer
additional expenses on the creation and maintenance of a credit department
Multiple Choice Single Answer
*Question
The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as
Correct Answer
cost of capital
Your Answer
cost of investment
Multiple Choice Multiple Answer
*Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Telegraphic and Telephonic advice to customers around the due date , Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching
Select The Blank
*Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Directors
Select The Blank
*Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Increase
Match The Following
*Question
Correct Answer
Your Answer
Recurring duties of finance executive
Raising of funds
Cost management
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
International Finance
Finance Controller
Internal Auditing
Raising of funds
Multiple Choice Multiple Answer
*Question
The advantages of leasing for the lessee are
Correct Answer
The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
Your Answer
The payment of lease rents is the tax deductible expenditure , It is the quickest method of financing the requirements of long term capital , Avoids risk of ownership
Select The Blank
*Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Select The Blank
*Question
Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer
Legal
Your Answer
Legal
True/False
*Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True
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 Single Answer
*Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Only one person
Multiple Choice Multiple Answer
*Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis provides data for inter-firm comparison
Multiple Choice Multiple Answer
*Question
The disadvantages of a Partnership firm are
Correct Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Multiple Choice Single Answer
*Question
Float indicates
Correct Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
Your Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
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
Select The Blank
*Question
If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer
0.1
Your Answer
0.1
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 Single Answer
*Question
An increase in the share premium account is
Correct Answer
Source of funds
Your Answer
Source of funds
Multiple Choice Single Answer
*Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Creditors
True/False
*Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Select The Blank
*Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash
Match The Following
*Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the project throughout its life
presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
considers cash inflows from the project throughout its life
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
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 , 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 , Not proper cost benefit analysis made by the company
True/False
*Question
Traditional approach believes the existence of Optimal Capital structure
Correct Answer
True
Your Answer
True
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
Issue of new shares , Purchase of fixed Assets , Cash collected from customers
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 Interest and Taxes
Select The Blank
*Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer
Promotion
Your Answer
Promotion
True/False
*Question
Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc.
Correct Answer
True
Your Answer
True
True/False
*Question
A good Budget manual promotes standardization and simplification of budgetary procedures
Correct Answer
True
Your Answer
True
True/False
*Question
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Increase in the amount in debtors results in
Correct Answer
Decrease in cash
Your Answer
No change in cash
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
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
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 Equity
Multiple Choice Multiple Answer
*Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Single Answer
*Question
The Walter and Gordon's approach of Dividend policy is based on the assumption of
Correct Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Your Answer
Retained earnings represent the only source of financing for the firm, EPS, dividend per share, internal rate of return and cost of capital are all constant
Select The Blank
*Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Multiple Choice Single Answer
*Question
Gross Profit ratio is calculated as
Correct Answer
[(Gross Profit / Net Sales)] * 100
Your Answer
[(Gross Profit / Net Sales)] * 100
True/False
*Question
If the process of capital rationing is strictly followed it may result into the exclusion of various smaller projects by larger projects
Correct Answer
True
Your Answer
True
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 , short term borrowings
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
The Policy which attracts the shareholders who are willing to devote short term dividend income for long term capital gains and share in the increased prosperity of the company is termed as
Correct Answer
No immediate Dividend policy
Your Answer
No immediate Dividend policy
Multiple Choice Multiple Answer
*Question
The Economic Order Quantity model is based on the assumption of
Correct Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer
The prices of the material remain unstable , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Multiple Choice Multiple Answer
*Question
Measurement of cost of capital can be done through
Correct Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
True/False
*Question
Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
*Question
Capital cost is
Correct Answer
cost on the use of additional capital to support credit sales
Your Answer
additional expenses on the creation and maintenance of a credit department
Multiple Choice Single Answer
*Question
The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as
Correct Answer
cost of capital
Your Answer
cost of investment
Labels: Financial Management (Set VII)
Monday, January 19, 2009
LIST OF ATTEMPTED *QUESTIONS AND ANSWERS
True/False
*Question
The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation
Correct Answer
True
Your Answer
True
Select The Blank
*Question
When a company issues bonus shares ________ of the company get reduced
Correct Answer
Reserves
Your Answer
Reserves
Multiple Choice Single Answer
*Question
Current assets is in the form of
Correct Answer
Receivables
Your Answer
Investments
Multiple Choice Single Answer
*Question
The rate of return which computes the average annual yield on the net investment in the project is known as
Correct Answer
Accounting rate of return
Your Answer
Accounting rate of return
Select The Blank
*Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Profits
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 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 , Represents real liquid position
True/False
*Question
Debt Service Coverage Ratio is one of the most important ratios calculated by the bankers of financial institutions giving long term finance to the organisation
Correct Answer
True
Your Answer
True
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
Pay Back period
Multiple Choice Single Answer
*Question
Which important accounting ratios would be used by a shareholder who is examining his portfolio and who is to decide whether he should hold or sell his shares in the company
Correct Answer
Earning per share
Your Answer
Liquid ratio
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 Single Answer
*Question
The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer
Semi-variable cost
Your Answer
Semi-variable cost
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
Bonneville and Dewey
Multiple Choice Multiple Answer
*Question
The sources of cash are
Correct Answer
Cash from operations , sale of machinery , Issue of new shares
Your Answer
Cash from operations , Issue of new shares
True/False
*Question
Credit rating does not create any legal relationship between the rating agency and the investor
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
*Question
For the calculation of Operating Profit / Loss , Goodwill written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
ignored
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
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
True/False
*Question
According to Net Operating Income Approach there exists a direct relationship between the capital structure and valuation of the firm and the cost of capital
Correct Answer
False
Your Answer
True
Select The Blank
*Question
If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital
Correct Answer
more
Your Answer
more
Select The Blank
*Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow
Multiple Choice Single Answer
*Question
Shortcoming of term loans from company's point of view
Correct Answer
The interest and capital repayment are obligatory payments
Your Answer
Term loans represent unsecured lending
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
A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Limitations of credit rating are
Correct Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating , It only considers equity shares
True/False
*Question
The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
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 Multiple Answer
*Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Multiple Answer
*Question
Advantages of letter of credit to the Importer
Correct Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods
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
Multiple Choice Multiple Answer
*Question
Shortcomings of Debentures from company's point of view
Correct Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm
Your Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm , They have lowest priority in the event of liquidation
Select The Blank
*Question
Break even point is that level of sales revenue at which there is ________
Correct Answer
no profit no loss
Your Answer
no profit no loss
Multiple Choice Multiple Answer
*Question
The characteristics of assets are
Correct Answer
They are acquired for use for long periods , They are ordinarily not meant for resale
Your Answer
They are acquired for use for long periods
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
Match The Following
*Question
Correct Answer
Your Answer
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
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
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
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 Multiple Answer
*Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Multiple Choice Multiple Answer
*Question
The effects of undercapitalisation are
Correct Answer
Increase tax liability of the company , Demand of the employees to increase wages
Your Answer
Increase tax liability of the company , Credit standing of the company in the market falls down and difficulty in raising futher capital , Shares become non-transferable
Select The Blank
*Question
Retained earnings is a source of ________ finance
Correct Answer
Internal
Your Answer
Internal
Select The Blank
*Question
Private limited company and Public limited company are the companies based on the classification of ________
Correct Answer
Number of members
Your Answer
Number of members
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
Ordering cost and carrying cost are directly related to each other , 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 , Minimum level indicate the level above which the actual stock should not exceed
Multiple Choice Multiple Answer
*Question
Objective of perpetual inventory system are
Correct Answer
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies
Your Answer
A close and strict control is facilitated on the most important items , Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Single Answer
*Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Transaction motive
Select The Blank
*Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions
Multiple Choice Single Answer
*Question
According to the Irrelevance approach of dividend policy, the value of the company
Correct Answer
remains unaffected by the dividend policy of the company
Your Answer
remains unaffected by the dividend policy of the company
True/False
*Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer
True
Your Answer
True
True/False
*Question
The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation
Correct Answer
True
Your Answer
True
Select The Blank
*Question
When a company issues bonus shares ________ of the company get reduced
Correct Answer
Reserves
Your Answer
Reserves
Multiple Choice Single Answer
*Question
Current assets is in the form of
Correct Answer
Receivables
Your Answer
Investments
Multiple Choice Single Answer
*Question
The rate of return which computes the average annual yield on the net investment in the project is known as
Correct Answer
Accounting rate of return
Your Answer
Accounting rate of return
Select The Blank
*Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Profits
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 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 , Represents real liquid position
True/False
*Question
Debt Service Coverage Ratio is one of the most important ratios calculated by the bankers of financial institutions giving long term finance to the organisation
Correct Answer
True
Your Answer
True
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
Pay Back period
Multiple Choice Single Answer
*Question
Which important accounting ratios would be used by a shareholder who is examining his portfolio and who is to decide whether he should hold or sell his shares in the company
Correct Answer
Earning per share
Your Answer
Liquid ratio
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 Single Answer
*Question
The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer
Semi-variable cost
Your Answer
Semi-variable cost
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
Bonneville and Dewey
Multiple Choice Multiple Answer
*Question
The sources of cash are
Correct Answer
Cash from operations , sale of machinery , Issue of new shares
Your Answer
Cash from operations , Issue of new shares
True/False
*Question
Credit rating does not create any legal relationship between the rating agency and the investor
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
*Question
For the calculation of Operating Profit / Loss , Goodwill written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
ignored
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
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
True/False
*Question
According to Net Operating Income Approach there exists a direct relationship between the capital structure and valuation of the firm and the cost of capital
Correct Answer
False
Your Answer
True
Select The Blank
*Question
If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital
Correct Answer
more
Your Answer
more
Select The Blank
*Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow
Multiple Choice Single Answer
*Question
Shortcoming of term loans from company's point of view
Correct Answer
The interest and capital repayment are obligatory payments
Your Answer
Term loans represent unsecured lending
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
A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Limitations of credit rating are
Correct Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating , It only considers equity shares
True/False
*Question
The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
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 Multiple Answer
*Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Multiple Choice Multiple Answer
*Question
Advantages of letter of credit to the Importer
Correct Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods
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
Multiple Choice Multiple Answer
*Question
Shortcomings of Debentures from company's point of view
Correct Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm
Your Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm , They have lowest priority in the event of liquidation
Select The Blank
*Question
Break even point is that level of sales revenue at which there is ________
Correct Answer
no profit no loss
Your Answer
no profit no loss
Multiple Choice Multiple Answer
*Question
The characteristics of assets are
Correct Answer
They are acquired for use for long periods , They are ordinarily not meant for resale
Your Answer
They are acquired for use for long periods
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
Match The Following
*Question
Correct Answer
Your Answer
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
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
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
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 Multiple Answer
*Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Multiple Choice Multiple Answer
*Question
The effects of undercapitalisation are
Correct Answer
Increase tax liability of the company , Demand of the employees to increase wages
Your Answer
Increase tax liability of the company , Credit standing of the company in the market falls down and difficulty in raising futher capital , Shares become non-transferable
Select The Blank
*Question
Retained earnings is a source of ________ finance
Correct Answer
Internal
Your Answer
Internal
Select The Blank
*Question
Private limited company and Public limited company are the companies based on the classification of ________
Correct Answer
Number of members
Your Answer
Number of members
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
Ordering cost and carrying cost are directly related to each other , 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 , Minimum level indicate the level above which the actual stock should not exceed
Multiple Choice Multiple Answer
*Question
Objective of perpetual inventory system are
Correct Answer
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies
Your Answer
A close and strict control is facilitated on the most important items , Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies , It may serve as a base for the Production department for placing the material requisition slips
Multiple Choice Single Answer
*Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Transaction motive
Select The Blank
*Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions
Multiple Choice Single Answer
*Question
According to the Irrelevance approach of dividend policy, the value of the company
Correct Answer
remains unaffected by the dividend policy of the company
Your Answer
remains unaffected by the dividend policy of the company
True/False
*Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer
True
Your Answer
True
Labels: Financial Management (Set VII)
LIST OF ATTEMPTED *QUESTIONS AND ANSWERS
True/False
*Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
*Question
In financial terms, Profit after tax can be referred as
Correct Answer
Earning after tax
Your Answer
Gain after tax
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
Bonneville and Dewey
Select The Blank
*Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Deficit
Multiple Choice Single Answer
*Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Multiple Choice Multiple Answer
*Question
Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer
Purchases Account , Loss by theft Account
Your Answer
Stock Account , Loss by theft Account
Select The Blank
*Question
________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer
Earnings per share
Your Answer
Earnings per share
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
Deposit float
Multiple Choice Multiple Answer
*Question
Limitations of credit rating are
Correct Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating , It only considers equity shares
Multiple Choice Single Answer
*Question
The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer
Precautionary motive
Your Answer
Precautionary motive
True/False
*Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer
True
Your Answer
True
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 Single Answer
*Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds
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
Multiple Choice Multiple Answer
*Question
The Economic Order Quantity model is based on the assumption of
Correct Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
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 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 , Capital market , inter-corporate bills discounting , Bank deposits
Multiple Choice Multiple Answer
*Question
External sources of funds are
Correct Answer
Funds from long term loans , Sale of fixed assets
Your Answer
Funds from operations , Funds from long term loans , Sale of fixed assets
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
Multiple Choice Single Answer
*Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Investment
True/False
*Question
Private limited company can commence business immediately on incorporation
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates
Multiple Choice Multiple Answer
*Question
The causes of undercapitalisation are
Correct Answer
Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer
The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Purchasing of asssets during inflationary situations
Multiple Choice Multiple Answer
*Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
*Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit
Select The Blank
*Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors
Select The Blank
*Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Multiple Choice Single Answer
*Question
The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is
Correct Answer
Past experience of the customer
Your Answer
Bank Reference
Select The Blank
*Question
The fixed assets are expressed at ________
Correct Answer
Cost - Depreciation
Your Answer
Cost - Depreciation
Multiple Choice Multiple Answer
*Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
they are irreversible , they require assessment of future events which are uncertain
Multiple Choice Single Answer
*Question
Equity Warrants are
Correct Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Multiple Choice Single Answer
*Question
Gross Working Capital means
Correct Answer
Current assets
Your Answer
Current assets
True/False
*Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True
True/False
*Question
The basic objective behind fixation of the levels is to avoid overstocking and understocking
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Revocable Packing credit
True/False
*Question
Loans from financial corporations etc. are sources of cash
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
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
Match The Following
*Question
Correct Answer
Your Answer
Net Profit ratio
Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Undue increase in Gross Profit ratio
Over-valuation of closing stock
Over-valuation of closing stock
Undue decrease in Gross Profit ratio
Under-valuation of closing stock
Under-valuation of closing stock
Gross Profit ratio
Indicates the relation between production cost and Sales
Indicates the relation between production cost and Sales
Multiple Choice Single Answer
*Question
The weighted average cost of capital is referred to as
Correct Answer
Average cost
Your Answer
Average cost
Multiple Choice Multiple Answer
*Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Select The Blank
*Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Select The Blank
*Question
The mathematical expression of ________ is Value of material consumed / Average inventory held
Correct Answer
Inventory turnover
Your Answer
Inventory turnover
Multiple Choice Single Answer
*Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
Dividend per share varying according to the level of earnings
Multiple Choice Multiple Answer
*Question
The sources of cash are
Correct Answer
Long term loans , cash from other sources
Your Answer
Long term loans , cash from other sources
Multiple Choice Multiple Answer
*Question
The advantages of ratio analysis are
Correct Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements
Your Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements , It takes into consideration only monetary transactions
Match The Following
*Question
Correct Answer
Your Answer
Safety Stock
below which the actual stock should not be allowed to fall
below which the actual stock should not be allowed to fall
ABC Analysis
Vital few Trivial Many
Vital few Trivial Many
Bill of Materials
Details of the necessary materials as well as quantity of each item
Details of the necessary materials as well as quantity of each item
Perpetual Inventory System
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
True/False
*Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
*Question
In financial terms, Profit after tax can be referred as
Correct Answer
Earning after tax
Your Answer
Gain after tax
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
Bonneville and Dewey
Select The Blank
*Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Deficit
Multiple Choice Single Answer
*Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
Multiple Choice Multiple Answer
*Question
Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer
Purchases Account , Loss by theft Account
Your Answer
Stock Account , Loss by theft Account
Select The Blank
*Question
________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer
Earnings per share
Your Answer
Earnings per share
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
Deposit float
Multiple Choice Multiple Answer
*Question
Limitations of credit rating are
Correct Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating , It only considers equity shares
Multiple Choice Single Answer
*Question
The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer
Precautionary motive
Your Answer
Precautionary motive
True/False
*Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer
True
Your Answer
True
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 Single Answer
*Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds
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
Multiple Choice Multiple Answer
*Question
The Economic Order Quantity model is based on the assumption of
Correct Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
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 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 , Capital market , inter-corporate bills discounting , Bank deposits
Multiple Choice Multiple Answer
*Question
External sources of funds are
Correct Answer
Funds from long term loans , Sale of fixed assets
Your Answer
Funds from operations , Funds from long term loans , Sale of fixed assets
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
Multiple Choice Single Answer
*Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Investment
True/False
*Question
Private limited company can commence business immediately on incorporation
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates
Multiple Choice Multiple Answer
*Question
The causes of undercapitalisation are
Correct Answer
Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer
The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Purchasing of asssets during inflationary situations
Multiple Choice Multiple Answer
*Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
*Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit
Select The Blank
*Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors
Select The Blank
*Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Multiple Choice Single Answer
*Question
The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is
Correct Answer
Past experience of the customer
Your Answer
Bank Reference
Select The Blank
*Question
The fixed assets are expressed at ________
Correct Answer
Cost - Depreciation
Your Answer
Cost - Depreciation
Multiple Choice Multiple Answer
*Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
they are irreversible , they require assessment of future events which are uncertain
Multiple Choice Single Answer
*Question
Equity Warrants are
Correct Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Multiple Choice Single Answer
*Question
Gross Working Capital means
Correct Answer
Current assets
Your Answer
Current assets
True/False
*Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True
True/False
*Question
The basic objective behind fixation of the levels is to avoid overstocking and understocking
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
*Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Revocable Packing credit
True/False
*Question
Loans from financial corporations etc. are sources of cash
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
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
Match The Following
*Question
Correct Answer
Your Answer
Net Profit ratio
Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Indicates that portion of sales available to the owners after consideration of all types of expenses and cost
Undue increase in Gross Profit ratio
Over-valuation of closing stock
Over-valuation of closing stock
Undue decrease in Gross Profit ratio
Under-valuation of closing stock
Under-valuation of closing stock
Gross Profit ratio
Indicates the relation between production cost and Sales
Indicates the relation between production cost and Sales
Multiple Choice Single Answer
*Question
The weighted average cost of capital is referred to as
Correct Answer
Average cost
Your Answer
Average cost
Multiple Choice Multiple Answer
*Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Select The Blank
*Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Select The Blank
*Question
The mathematical expression of ________ is Value of material consumed / Average inventory held
Correct Answer
Inventory turnover
Your Answer
Inventory turnover
Multiple Choice Single Answer
*Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
Dividend per share varying according to the level of earnings
Multiple Choice Multiple Answer
*Question
The sources of cash are
Correct Answer
Long term loans , cash from other sources
Your Answer
Long term loans , cash from other sources
Multiple Choice Multiple Answer
*Question
The advantages of ratio analysis are
Correct Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements
Your Answer
It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements , It takes into consideration only monetary transactions
Match The Following
*Question
Correct Answer
Your Answer
Safety Stock
below which the actual stock should not be allowed to fall
below which the actual stock should not be allowed to fall
ABC Analysis
Vital few Trivial Many
Vital few Trivial Many
Bill of Materials
Details of the necessary materials as well as quantity of each item
Details of the necessary materials as well as quantity of each item
Perpetual Inventory System
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
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