FF46
1.
2.
3.
4.
5.
6.
7.
8.
Assets and liabilities of a firm are
classified on the basis of –
(a) Price
(b) Monetary value
(c) Duration
(d) Ownership
Current liabilities are usually payable
within –
(a) Accounting period
(b) One year
(c) Two year
(d) Six month
Working
capital
management
is
concerned with –
(a) Current assets
(b) Current liabilities
(c) Both current assets and current
liabilities
(d) Fixed assets and current liabilities
The difference between current assets
and current liabilities is called –
(a) Gross working capital
(b) Net working capital
(c) Total working capital
(d) Current capital
Which of the following is considered as
part of current assets?
(a) WIP
(b) Finished goods inventory
(c) Raw materials in stock
(d) All of the above
The speed with which turn over of
capital is available is dependent upon –
(a) Conversion of cash into material
(b) Conversion of material into goods
(c) Conversion of goods into sale
(d) Complete cash cycle circulation
Which of the following is not a current
liability?
(a) Trade creditors
(b) Inventory
(c) Provision of taxes
(d) Bank overdraft
If any payment is received in advance,
the item would be listed as –
(a) Current liability
(b) Current assets
(c) Creditors
(d) Debtors
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9.
10.
11.
12.
13.
14.
15.
16.
Operating cycle consists of –
(a) Conversion period
(b) Finished goods storage period
(c) Collection period
(d) All of the above
A budget covering all aspects of a firms
working is –
(a) Total budget
(b) Master budget
(c) Capital budget
(d) Gross budget
Ratio of receivable to average credit
sale per day is –
(a) Average collection period
(b) Receivable ratio
(c) Credit sales ratio
(d) Receivables period
Ratio of cost goods sold and average
inventory is called –
(a) Turnover ratio
(b) Inventory ratio
(c) Sale ratio
(d) Inventory turnover ratio
Which of the following statements is not true?
(a) Interest is charged on full loan
amount in note tending
(b) Interest is charged only on part of
loan utilized in note lending
(c) Interest is charged only on part of
loan actually drawn in cash credit
(d) Interest is charged only on amount
overdrawn in overdraft
Under letter of credit arrangement, the
risk is borne by –
(a) Customer
(b) Customer’s banker
(c) Supplier
(d) Supplier’s banker
In_______, the possession of security
or goods remain with the borrower –
(a) Pledge
(b) Hypothecation
(c) Commercial paper
(d) Trade credit
Short term promising notes with a fixed
maturity period, issued by reputed
corporations, are known as –
(a) Note lending
(b) Letter of credit
(c) Commercial paper
(d) Public deposits
(1)
FF46
17. ________ is an arrangement between
a financial intermediary and the seller
with regard to collection of accounts
receivables –
(a) Factoring
(b) Discounting
(c) Pledge
(d) Security
18. Kannan committee was set up by RBI
in the year –
(a) 1987
(b) 1977
(c) 1981
(d) 1997
19. Discounting of bills is done by –
(a) Banks
(b) Customer
(c) Seller
(d) Government
20. Which company suggested bifurcation
of cash credit limit?
(a) Marathe committee
(b) Tandon committee
(c) Chore committee
(d) Kannan committee
21. A statement showing estimated cash
inflow and cash outflow is called –
(a) Cash budget
(b) Profit and loss statement
(c) Master budget
(d) Revenue budget
22. First step to reduce the collection cycle
time is –
(a) Regular follow-up
(b) Reduction in mailing time
(c) Prompt billing
(d) Prompt cheque clearance
23. The system of collection though post
office box known as –
(a) Lock box system
(b) P.O. box system
(c) Box lock system
(d) Post box system
24. A bank with which a firm has major
account for disbursement, is called –
(a) Collection bank
(b) Concentration bank
(c) Disbursement bank
(d) Lock box bank
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25. Good inventory management helps in –
(a) Reducing order cost
(b) Avoiding lost cost
(c) Gaining quantity discounts
(d) All of the above
26. The term ‘inventory’ refers to –
(a) Raw materials in stock
(b) Work in progress
(c) Finished goods in stock
(d) All of the above
27. What is ‘E’ in EOQ?
(a) Efficiency
(b) Effective
(c) Economic
(d) Excellent
28. EOQ is the level at which –
(a) Ordering cost is minimum
(b) Carrying costs are minimum
(c) Total cost are minimum
(d) Set-up cost is minimum
29. A-B-C analysis is based on –
(a) Total annual consumption value
(b) Total purchase value
(c) Unit highest price
(d) Total inventory cost
30. Lead time is –
(a) Time taken for collection of
accounts receivables
(b) Time between order placement and
receipt of goods
(c) Time taken for can version from
material to goods
(d) Time between submission of
quotation and receipt of order
31. Safety stock is also known as –
(a) Lead stock
(b) Temporary stock
(c) Buffer stock
(d) All of the above
32. Which method of pricing of inventories
takes material price at the value that is
realizable at the time of issue?
(a) LIFO
(b) FIFO
(c) Weighted average cost method
(d) Replacement price method
33. LR means –
(a) Lorry receipt
(b) Late receipt
(c) Low receivables
(d) Latest receivables
(2)
FF46
34. IFCI was established in the year –
(a) 1947
(b) 1948
(c) 1955
(d) 1966
35. Marketable receipt for funds deposited in a
bank for a fixed period of time is called –
(a) Certificate of deposit
(b) Marketing security
(c) Registered security
(d) Treasury bill
36. Draft drawn on a specific bank for
payment to exporter is –
(a) Letter of credit
(b) Banker’s acceptance
(c) Overdraft
(d) Banker’s cheque
37. LIC was formed in the year –
(a) 1955
(b) 1966
(c) 1956
(d) 1967
38. Which financial institution is the oldest?
(a) IFCI
(b) IDBI
(c) LIC
(d) ICICI
39. The difference between current assets
& current liabilities is known as –
(a) Working capital
(b) Gross working capital
(c) Net working capital
(d) Total working capital
40. _________ is a measure of the liquidity
of the firm.
(a) Net working capital
(b) Gross working capital
(c) Current assets
(d) Current liabilities
41. The continuing flow from cash to
supplies to sales to cash is known as –
(a) Cash cycle
(b) Operating cycle
(c) Accounts cycle
(d) Supply cycle
42. Any amount over & above permanent
level of working capital is known as –
(a) Temporary working capital
(b) Variable working capital
(c) Fluctuating working capital
(d) All of the above
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43. Which of the following is not an
example of current assets?
(a) Cash
(b) Inventory
(c) Bank overdraft
(d) Bank balance
44. In order of liquidity, which form of
current assets would be highest?
(a) Trade debtors
(b) WIP inventory
(c) Finished inventory
(d) Bank balance
45. Which of the following relates to current
liabilities?
(a) Debtors
(b) WIP
(c) Cash
(d) Wages
46. If a firm is able to sell its goods in cash,
the operating cycle period is –
(a) Increased
(b) Decreased
(c) Remains same
(d) Not affected
47. Conversion period in an operating cycle
is –
(a) Period in selling finished goods
(b) Period in collecting cash against
credit sales
(c) Period in producing goods from raw
materials
(d) Period
in
final
packing
&
transportation
48. A budget coring all aspects of a firm’s
working is called –
(a) Master budget
(b) Company budget
(c) Operating budget
(d) Production budget
49. The assets that are reading convertible
into money reflect a firm’s _______.
(a) Insolvency
(b) Efficiency
(c) Liquidity
(d) Collection
50. ‘Quick assets’ mean –
(a) Assets that can be acquired quickly
(b) Assets that can be sold quickly
(c) Current assets
(d) Current assets minus inventories
(3)
FF46
51. Accounts receivable ratio is also known
as –
(a) Quick ratio
(b) Conversion ratio
(c) Debtors turnover ration
(d) All of the above
52. A higher creditor turnover ratio may
lead to –
(a) Loss of goodwill
(b) Loss of turnover
(c) Delay in getting dues
(d) More credit purchases
53. Commercial paper are used to finance
–
(a) Current transactions
(b) Fixed assets
(c) Permanent working capital
(d) All of the above
54. Inventory purchased on credit are
example of –
(a) Creation lag
(b) Storage lag
(c) Sale lag
(d) All of the above
55. If a bank accept a bill and pays
immediately against a deal of credit
sales, it is called –
(a) Factoring
(b) Collection
(c) Discounting
(d) Overdraft
56. The minimum criterion for extension of
credit to a customer, is known as –
(a) Credit policy
(b) Credit standard
(c) Credit period
(d) Collection policy
57. Industrial finance corporation of India
was established in the year –
(a) 1947
(b) 1948
(c) 1951
(d) 1956
58. In securities, CDs means –
(a) Compact disc
(b) Comprehensive discount
(c) Certificate of deposit
(d) Certificate of discount
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59. Draft drawn on a specific bank against
which an exporter can obtain payable
for supplies, is known as –
(a) Letter of credit
(b) Banker’s acceptance
(c) Banker’s cheque
(d) Overdraft
60. Which of the following is not a section
criteria for marketable securities?
(a) Amount of investments
(b) Liquidity
(c) Taxability
(d) Interest rate risk
61. Which method is used to evaluate the
price of raw materials
(a) Standard price method
(b) LIFO
(c) Replacement / current price method
(d) All of the above
62. Quick test is a ratio of quick assets and
–
(a) Current assets
(b) Current liabilities
(c) Accounts payable
(d) Accounts receivable
63. ‘Working capital’ is also know as–
(a) Operating capital
(b) Revolving capital
(c) Circulating capital
(d) Both (b) and (c)
64. Permanent Working Capital is also
known as–
(a) Fixed Working Capital
(b) Core Working Capital
(c) Regular Working Capital
(d) All the Above
65. The rate of return on investments–with
the shortage of working capital.
(a) Increases
(b) Decreases
(c) No impact
(d) Adequate
66. Temporary working capital is also
called–
(a) Variable Working Capital
(b) Fluctuating Working Capital
(c) Revolving Working Capital
(d) Both (b) and (c)
(4)
FF46
67. Ratio of current assets and current
liabilities is called–
(a) Current ratio
(b) Stock ratio
(c) Velocity ratio
(d) Liquidity ratio
68. Liquid Ratio is also termed as–
(a) Gross profit ratio
(b) Turnover ratio
(c) Proprietary ratio
(d) Acid test ratio
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69. Current liabilities are payable in–
(a) More than 5 years
(b) Less than 5 years
(c) Less than a year
(d) Less than 2 years
70. Which of following is not included in
current ratio?
(a) Goodwill
(b) Sundry creditors
(c) Sundry Debtors
(d) Bolls receivable
(5)