Document 16045768

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

True/False

Question Cash flow statement is important financial tool for the management

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Advantages of Debentures from Investor's point of view

Correct Answer They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period

Your Answer They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period


Question Fund based lending of banks include

Correct Answer Overdraft , Bills Purchased

Your Answer Overdraft , Bills Purchased


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


Question If the size of the issue is more than Rs. 100 crores, the issue is required to be rated by at least ________ credit rating agencies

Correct Answer two

Your Answer two

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 No change in cash

True/False

Question Mortgage mode of security pertains to immovable properties like land and buildings

Correct Answer True

Your Answer True

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


Question Net cash inflow is arrived at

Correct Answer Revenue after tax add depreciation

Your Answer Revenue after tax add depreciation


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 Precautionary motive


Question In financial terms, the operating profit earned by the company is also referred to as ________

Correct Answer Profit before Interest and Taxes

Your Answer Profit before Interest and Taxes

Match The Following

Question Correct Answer

Role of Client

Your Answer

Sends the invoice copy Places the order

Without Recourses factoring risk of non-payment assumed by factor

With Recourses factoring risk of non-payment

Follows up

Sends the invoice copy

Role of factor assumed by selling company

Follows up Bills Discounting


Question Depreciation is sometimes treated as ________ funds

Correct Answer source

Your Answer source


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

True/False

Question Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds

Correct Answer False

Your Answer True


Question Economic Order quantity indicates that

Correct Answer Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised

Your Answer Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised


Question The current ratio of ________ is considered to be standard

Correct Answer 2 : 1

Your Answer 1 : 1


Question Limitations of cash flow analysis are

Correct Answer It cannot be equated with the income statement , Cannot replace the fund flow statement , Dose not represent real liquid position

Your Answer It cannot be equated with the income statement , Cannot replace the fund flow statement , Discloses the success or failure of cash planning

Match The Following

Question Correct Answer Your Answer

Term loan

Lessee

Hirer

Retained earnings represents a source of debt finance which is generally repayable in more than one year but less than ten years

Not able to claim depreciation on asset

Claims the depreciation on the asset instruments to raise long term debt capital

Claims the depreciation on the asset

Not able to claim depreciation on asset

Residue left behind from earnings available to equity shareholders after the payment of annual dividend represents a source of debt finance which is generally repayable in more than one year but less than ten years


Question Limitations of capital budgeting is

Correct Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital

Your Answer Cash inflows cannot be eatimated accurately , Inaccurate estimation of the fixed assets , Difficulties in deciding the cost of capital


Question The traditional approach to financial management refers only to the procurement of funds by

Correct Answer Corporate entity

Your Answer Corporate entity


Question The assumptions made while preparing the funds flow statement are

Correct Answer The bank credit has been taken as short term advance from the bank , In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year

Your Answer In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year , It represents real liquid position , It can be equated with the income statement

True/False

Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners

Correct Answer True

Your Answer True


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


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 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


Question Overcapitalisation is

Correct Answer Existence of excess capital as compared to the level of activity and requirements

Your Answer Existence of excess capital as compared to the level of activity and requirements


Question ________ in assets involves inflow of funds

Correct Answer Decrease

Your Answer Increase

True/False

Question The combination of irrevocable and confirmed letter of credit can be considered to be a guaranteed payment on the part of the exporter

Correct Answer True

Your Answer True


Question Financial Institution plays the role of ________ in factoring service offered

Correct Answer Factor

Your Answer lender


Question The functions of a Finance Controller are :

Correct Answer Budgeting , Record Keeping , Annual Reporting

Your Answer Banking Relations , Budgeting , Annual Reporting

True/False

Question In case of cash credit, the company need not have a formal current account

Correct Answer True

Your Answer False


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 ,

Confirmed Packing credit


Question Interest and Dividend are categorised under

Correct Answer Non-operating expenses

Your Answer Non-operating expenses

True/False

Question Turnover ratios measure efficiency of a business in using its resources

Correct Answer True

Your Answer True


Question Among all the intermediaries in Capital market, probably the most important and significant intermediary is the

Correct Answer Merchant Banker

Your Answer Merchant Banker


Question The most accepted interpretation of the term 'funds' is in the form of ________

Correct Answer Working capital

Your Answer Working capital

True/False

Question Under hypothecation mode of security neither the property not the possession of the goods hypothecated is transferred to the Bank

Correct Answer True

Your Answer True


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 Ignores risk factor , Does not consider social obligation ,

Ignores quality aspect of benefits associated with a financial course of action


Question The technique where the interest is compounded and becomes a part of initial principal at the end of compounding period is termed as

Correct Answer Compounding

Your Answer Compounding


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

True/False

Question Earnings per share is calculated as ( Profit after tax -

Preference Dividend ) / Number of Equity shares

Correct Answer True

Your Answer True


Question The "Pre-emptive right" of the equity shareholder is

Correct Answer the right to purchase new shares in the same proportion as their current ownership

Your Answer the right to purchase new shares in the same proportion as their current ownership


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 Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments


Question The cost of equity shares may be decided on the basis of yields actually realised over the period of past few years which may be expected to be continued in future also as per the

Correct Answer Realised Yield Approach

Your Answer Realised Yield Approach


Question Irregular Dividend Policy refers to

Correct Answer Dividend per share varying according to the level of earnings

Your Answer The company does not pay any dividend despite the huge earnings


Question Shortcomings of Debentures from Investor's point of view

Correct Answer The interest on debentures is fully taxable , They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates

Your Answer They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates

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