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-today 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
Advantage of Net
present value
Correct Answer
Your Answer
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
uses profits after
considers cash inflows
Accounting rate of return depreciation and taxes
from the project
and not the cash inflows throughout its life
for evaluating the
projects
Disadvantage of Pay
back period
ignores time value of
money
Advantage of Discounted considers time value of
Pay back period
money
ignores 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/False
True
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
Your Answer
variable in nature and they behave exactly opposite to each
other , The demand for the material concerned is uniform
throughout the year
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