FM assgn :9: Rajesh
Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss, Depreciation on fixed assets should be
Correct Answer added to the Net Profit as per Profit and loss account
Your Answer
Deducted from the Net Profit as per Profit and loss account
Multiple Choice Single Answer
Question
The return which the company pays on borrowed funds is termed as
Correct Answer Interest
Your Answer
Interest
Multiple Choice Single Answer
Question
Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn
interest of 10% p.a. on his investment, what should be the amount which he should
invest today so that he may be able to receive Rs. 10,000 after two years
Correct Answer Rs. 8,264
Your Answer
Rs. 8,156
Select The Blank
Question
A wrong decision in respect of capital expenditure proposals may disturb the entire
________ structure of the organisation
Correct Answer financial
Your Answer
financial
True/False
Question
Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of
Equity shares
Correct Answer True
Your Answer
True
Multiple Choice Single Answer
Question
Advantage of term loan from the company's point of view is
Correct Answer In post tax terms, the cost of term loans is lower than the cost of equity capital or
preference capital
Your Answer
There is no liability for repayment
True/False
Question
Proprietary ratios is the relationship between owners funds and total assets
Correct Answer True
Your Answer
True
1
Multiple Choice Single Answer
Question
Increase in the amount in debtors results in
Correct Answer Decrease in cash
Your Answer
Decrease in cash
Multiple Choice Single Answer
Question
The products which are ready for sale in the market are termed as
Correct Answer Finished goods
Your Answer
Finished goods
Multiple Choice Single Answer
Question
The market price per share is equal to the present value of the expected dividends
discounted at the rate of return required by equity shareholders is determined under
Correct Answer Dividend /Price Approach
Your Answer
Dividend /Price Approach
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 , Borrow
Money on an Interest bearing promissory note
Multiple Choice Multiple Answer
Question
Advantages of Net Present value is
Correct Answer It considers time value of money , It considers cash inflows from the project throughout
its life
Your Answer
It considers time value of money , It considers cash inflows from the project throughout
its life , It is easy to calculate , It is easy to understand
Match The Following
Question
Correct Answer
Your Answer
Credit rating symbol for
Commercial Paper of Default by
Investment Information and
Credit rating agency
A5
B
Credit rating symbol for
Debentures of Inadequate safety
by CRISIL
BB
FC
Credit rating symbol for Fixed
Deposits of High risk by CRISIL
FC
FA
Credit rating symbol for Fixed
Deposits of Adequate safety by
Investment Information and
MA
A5
2
Credit rating agency
Multiple Choice Multiple Answer
Question
Types of capital budgeting decisions
Correct Answer Replacements , Expansion , Diversification
Your Answer
Replacements , Expansion , Diversification , Liquidation
Select The Blank
Question
The ________ collections may be useful for reducing the postal float as well as bank
float
Correct Answer Decentralised
Your Answer
Debtors
Select The Blank
Question
As per the Tandon committee, variations between the projected figures and actuals may
be permitted to the extent of ________
Correct Answer 0.1
Your Answer
0.05
Select The Blank
Question
Operating Lease is also referred to as ________ lease
Correct Answer Service
Your Answer
Financial
Multiple Choice Single Answer
Question
The formula for Current ratio is
Correct Answer Current assets / Current liabilities
Your Answer
Liquid assets / Current liabilities
Multiple Choice Multiple Answer
Question
The assumptions for the theories of capital structure are
Correct Answer Firm use only long term debt capital or equity share capital to raise funds , Firm follow
policy of paying 100% of its earnings by way of dividend , Operating earnings are not
expected to grow
Your Answer
Firm use only long term debt capital or equity share capital to raise funds , Corporate
Income Tax does exists , Firm follow policy of paying 100% of its earnings by way of
dividend , Operating earnings are not expected to grow
Multiple Choice Single Answer
Question
Capital turnover ratio is calculated as
Correct Answer Sales / Capital employed
3
Your Answer
Total assets / Owners fund
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
above which the actual stock
should not exceed
Bill of Materials
Details of the necessary materials Details of the necessary materials
as well as quantity of each item
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
True/False
Question
Vital few Trivial Many
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer False
Your Answer
True
Multiple Choice Single Answer
Question
The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer
External liabilities / Shareholders funds
Multiple Choice Multiple Answer
Question
Disadvantages of factoring are
Correct Answer The financial burden on the company increases , It may be considered to be a symptom
of financial weakness on the part of the selling company , In Indian circumstances,
factoring is mainly with-recourse factoring. The risk of non-payment on the part of
customer is borne by the selling firm. This restricts its popularity
Your Answer
The financial burden on the company increases , It may be considered to be a symptom
of financial weakness on the part of the selling company , In Indian circumstances,
factoring is mainly with-recourse factoring. The risk of non-payment on the part of
customer is borne by the selling firm. This restricts its popularity
Select The Blank
Question
In ABC analysis C class consist of ________.
Correct Answer a very large number of items which are less important
Your Answer
True/False
Question
that quantity which is fixed in such a way that the total variable cost of managing the
inventory can be minimised
In Regular Stock Dividend policy, the company may pay dividend in the form of bonus
shares instead of cash
4
Correct Answer True
Your Answer
True
Select The Blank
Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer Financial institutions
Your Answer
Financial institutions
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 represent the true earning assets of the firm , it helps in preparation of financial
statements , they require assessment of future events which are uncertain
Multiple Choice Single Answer
Question
Fixed Income bearing securities for the computation of Capital gearing ratio consists of
Correct Answer Debentures
Your Answer
Debentures
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
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 ,
Maintaining record of bills payable
Multiple Choice Multiple Answer
Question
Dividend / Price Approach to compute cost of equity shares is objected on the following
grounds
Correct Answer This presupposes that an investor looks forward only to receive dividend on equity
shares which may not be correct , It assumes that the company will not earn on its
retained earnings which is a wrong assumption
Your Answer
This presupposes that an investor looks forward only to receive dividend on equity
shares which may not be correct , It assumes that the company will not earn on its
retained earnings which is a wrong assumption , It wrongly assumes that earnings per
share will remain constant in future , All the earnings may not be distributed among the
shareholders by way of dividend
Select The Blank
Question
The operating profit earned by the company is in the form of contribution duly reduced
by the ________
Correct Answer Fixed operating cost
Your Answer
Variable operating cost
5
Multiple Choice Multiple Answer
Question
The following techniques can be used to delay cash payments
Correct Answer Payments can be made from a bank which is distant from the bank of the company to
which payment is to be made , Attempts should be made by the company to get the
maximum credit for the goods or service supplied , Avoid early payments
Your Answer
Payments can be made from a bank which is distant from the bank of the company to
which payment is to be made , Insist upon payment in the form of demand draft, letters
of credit , Attempts should be made by the company to get the maximum credit for the
goods or service supplied , Avoid early payments
Multiple Choice Single Answer
Question
Net Working Capital means
Correct Answer Current assets less Current liabilities
Your Answer
True/False
Question
Current assets less Current liabilities
Wages/salaries is considered under Operating cashinflow
Correct Answer False
Your Answer
True
Select The Blank
Question
Sometimes the term ________ is interpreted as cash equivalent i.e. cash and
marketable securities
Correct Answer Fund
Your Answer
Investment
Select The Blank
Question
If a deposit is repaid after 6 months from the date of deposit but before its expiry, the
rate of interest on such deposit shall be reduced by ________ from the rate which the
company would have paid had the deposit been accepted for the period for which such
deposit had run
Correct Answer 0.01
Your Answer
0.01
True/False
Question
The requirement of Fixed Working Capital is unaffected due to the changes in the level
of activity
Correct Answer True
Your Answer
True
True/False
Question
Internal rate of return can be computed even in the absence of the knowledge about the
firm's cost of capital
Correct Answer True
6
Your Answer
False
Multiple Choice Multiple Answer
Question
Benefits of cash flow information
Correct Answer It enhances the comparability of the reporting of operating performance by different
enterprise , Historical cash flow information is often used as an indicator of the amount ,
timing and certainty of future cash flows , It enables the users to evaluate the changes
in net assets of an enterprise
Your Answer
It enhances the comparability of the reporting of operating performance by different
enterprise , Historical cash flow information is often used as an indicator of the amount ,
timing and certainty of future cash flows , It enables the users to evaluate the changes
in net assets of an enterprise , information is useful to construct financial statements
Multiple Choice Single Answer
Question
The real owners of the company are
Correct Answer Equity shareholders
Your Answer
Preference shareholders
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
Select The Blank
Question
The mathematical expression of ________ is Normal Usage * Lead time for emergency
purchases
Correct Answer Danger level
Your Answer
Re-order level
Select The Blank
Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer Assets
Your Answer
Assets
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
True/False
Question
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy ,
Increasing Dividend policy
Economic order quantity is based on the assumption that the demand for the material
concerned is uniform throughout a year
7
Correct Answer True
Your Answer
True
True/False
Question
Inventory is the intermediate stage between purchase of raw materials and consumption
of raw materials
Correct Answer True
Your Answer
True
8