FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT

Multiple Choice Multiple Answer              

Question  Under the Financial Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered

Correct Answer  Accounting policies followed by the company , Adequacy of cash flows for fixed capital

Select The Blank                 

Question  The amount of shares bought back by the company should not be more than ________ of total paid-up capital of the company and its free reserves

Correct Answer  0.25

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

Multiple Choice Single Answer                 

Question  Receipt of loans/borrowings appear in the cash budget under the head

Correct Answer  Non-operating cash inflow

True/False               

Question  One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables

Correct Answer  FALSE

Select The Blank                 

Question  In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ______

Correct Answer  discount charges

Match The Following                      

Question        Correct Answer       

1) Risk adjusting discounting rate method of capital budgeting decision=discounting rate is increased in case of projects involving greater risk       

2) Capital rationing=situation where the company has more acceptable proposals requiring a greater amount of funds

3) Problems relating to situation of capital rationing=Project Indivisibility

4) Informal method of capital budgeting decision=subjective method

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

Multiple Choice Single Answer                 

Question  The amount of cheques deposited by a Bank awaiting clearance is called

Correct Answer  Collection float

Select The Blank                 

Question  The fixed assets are expressed at ________

Correct Answer  Cost - Depreciation

Multiple Choice Multiple Answer              

Question  The functions of a Finance Controller are :

Correct Answer  Budgeting , Record Keeping , Annual Reporting

 Multiple Choice Multiple Answer            

  Question  Proprietory ratio can be calculated as

Correct Answer  Total Assets / Owners Funds , Fixed Assets / Owners Funds , Current Assets / Owners Funds

Select The Blank                 

Question  Debt Equity ratio is alternatively called ________ ratios

Correct Answer  Leverage

True/False               

Question  Interest in provision for doubtful debts should be added back in order to find out cash from operations

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  Denomination of the equity shares in the public issue or rights issue can be decided by

Correct Answer  the company

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

Multiple Choice Multiple Answer              

Question  Projects for which profitability is not the criterion are

Correct Answer  Service Department projects , Welfare projects , Educational projects

Multiple Choice Single Answer                 

Question  The Investment decisions are mainly concerned with

Correct Answer  Application of funds

Select The Blank                 

Question  ________ is the most important ratio to measure whether the firm has earned sufficient returns for its shareholders or not

Correct Answer  Return on Shareholders funds

Multiple Choice Multiple Answer              

Question  The methods which consider the risk in capital budgeting decision are

Correct Answer  Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach

True/False               

Question  Economic Order Quantity model is a very useful model of determining the order quantity

Correct Answer  TRUE

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

Multiple Choice Single Answer                 

Question  The ratio which indicate the long term financial prospects of the company are

Correct Answer  Solvency ratios

True/False               

Question  The capital expenditure has to be planned properly taking into consideration the present and future needs of the business

Correct Answer TRUE

Multiple Choice Single Answer                 

Question  Current assets are also referred to as

Correct Answer  Working Capital

Multiple Choice Single Answer                 

Question  The Capital Structure decision mainly refers to the decision of

Correct Answer                  Financing

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

Select The Blank                 

Question  In case of Mortgage, the party who transfers the interest is called ________

Correct Answer  Mortgager

True/False

Question  Internal rate of return considers time value of money

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  Interest coverage ratio is useful in indicating the symptom of

Correct Answer  Inability to pay interest

Multiple Choice Single Answer                 

Question  Collection cost in connection with accounts receivables involves

Correct Answer  Administrative cost

Multiple Choice Multiple Answer  

Question  The depreciation is being charged for the following assets

Correct Answer  Plant and Machinery , Building

True/False

Question  Cash from operation is the main internal source of cash

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The accounting report which summarises the revenues and expenses for a specified accounting period is referred to as

Correct Answer  Profit and loss Account

Multiple Choice Single Answer                 

Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be

Correct Answer  No effect on the funds flow

Multiple Choice Single Answer                 

Question  Term loan is

Correct Answer  liabilities accepted by the company which are for the purpose of purchasing the fixed assets

True/False               

Question  The approved credit rating agencies prevailing in the country are promoted by the government controlled organisations

Correct Answer  TRUE

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

Multiple Choice Single Answer                 

Question  A manufacturer uses 300 units of a component every month and he buys them entirely from outside supplier. The order placing cost is Rs. 120 per order and annual carrying cost per unit is Rs. 15. Calculate Economic Order Quantity

Correct Answer  240 units

Multiple Choice Single Answer                 

Question  While computing liquid ratio, liquid liability includes all liability except

Correct Answer  Bank overdraft

Match The Following                      

Question        Correct Answer       

1) Financial leverage=indicates firm's ability to use fixed financial charges to magnify the effects of changes in earning before interest and tax on the firm's earning per share 

2) Earnings per share=ratio to measure the profits available to the equity shareholders on a per share basis         

3) Price earning ratio=indicates the price currently being paid in the stock market for every one rupee of Earning per share    

4) Operating leverage=measures the effect of change in sales quantity on earnings before interest and taxes

True/False               

Question  The term Accrued Income and Outstanding Income have synonymous meaning

Correct Answer  FALSE

Multiple Choice Single Answer                 

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

Correct Answer  Corporate entity

Multiple Choice Single Answer                 

Question  The main function of finance under the traditional approach comprises of

Correct Answer  Procurement of funds

True/False               

Question  If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers

Correct Answer  FALSE

Select The Blank                 

Question  A list of all the material required for a job, process or production order is termed as ________.

Correct Answer  Bill of materials

Multiple Choice Multiple Answer              

Question  Advantages of ABC Analysis are

Correct Answer  A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured

Select The Blank                 

Question  Net Present value considers ________ from the project throughout its life

Correct Answer  cash inflow

Multiple Choice Single Answer                 

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

Correct Answer  Corporate entity

Multiple Choice Single Answer                 

Question  The ratio used to measure the profits available to the equity shareholders on a per share basis is referred to as

Correct Answer  Earnings per share

True/False               

Question  Financial lease is also referred to as Capital lease

Correct Answer  TRUE

True/False               

Question  If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers

Correct Answer  FALSE

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

True/False               

Question  Interest and Dividend are to be considered while calculating Operating ratio

Correct Answer  FALSE

Match The Following                      

Question        Correct Answer

1) Legal charges=Miscellaneous expenditure

2) Unclaimed dividend=Current liabilities

3) Risk Capital=Equity Capital

4) Loose tools=Current assets

Select The Blank                 

Question  If the amount of interest is considered as a part of expenses, the ________ liability of the company reduces proportionately

Correct Answer  tax

True/False               

Question  According to Net Income Approach, the valuation of the firm and its cost of capital is independent of its capital structure

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  The accounting report which summarises the revenues and expenses for a specified accounting period is referred to as

Correct Answer  Profit and loss Account

Select The Blank                 

Question  As per the II method suggested by the Tandon committee, the borrower should finance ________ of current assets out of long term funds and the banks provide the remaining finance

Correct Answer  0.25

Select The Blank                 

Question  Suggestions made by the Tandon committee regarding the information system were accepted by Reserve Bank of India and were made applicable to all the borrowers having the overall banking limits of more than Rs.________

Correct Answer  1 crore

Multiple Choice Multiple Answer              

Question  Types of capital budgeting decisions

Correct Answer  Replacements , Expansion , Diversification

Multiple Choice Single Answer                 

Question  An organized collection of data according to logical and consistent accounting procedure is known as

Correct Answer  Financial Statement

Multiple Choice Multiple Answer              

Question  The term cost of capital is important for a company basically for the following purposes

Correct Answer  It is used as a tool for screening the investment proposals , It is used as the capitalisation rate to decide the amount of capitalisation in case of a new concern , It provides useful guidelines for determining the optimal capital structure

Multiple Choice Single Answer                 

Question  Increase in the amount of bills payable results in

Correct Answer  Increase in cash

Multiple Choice Single Answer                 

Question  Debtors turnover ratio is normally supported by the calculations of

Correct Answer  Average collection period

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

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

Select The Blank                 

Question  If the process of capital rationing is strictly followed then there will be avoidance of ________ projects

Correct Answer  smaller

 

Select The Blank                 

Question  Depreciation is sometimes treated as ________ funds

Correct Answer  source

Select The Blank                 

Question  Return Inward is deducted from________

Correct Answer  Sales

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

 

Select The Blank                 

Question  ________ is one of the current assets that takes the longest time to get converted into cash

Correct Answer  Stock

Select The Blank                 

Question  ________ and return always go hand in hand

Correct Answer  Risk

Multiple Choice Multiple Answer              

Question  Utility of cash flow analysis

Correct Answer  Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash

Multiple Choice Single Answer                 

Question  Calculate the Gross Profit Ratio from the following figures : Sales Rs. 1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs. 10,000/-, Opening stock Rs. 20,000/-, Purchases Return Rs. 15,000/-, Closing Stock Rs. 5,000/-

Correct Answer  0.3333

Multiple Choice Multiple Answer              

Question  The normal process which may be followed under the capital rationing situations may be

Correct Answer  Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted

True/False               

Question  During the phase of boom and prosperity the company will like to retain more profits which can be used during the depression which is likely to follow

Correct Answer  TRUE

True/False               

Question  A revenue budget has time horizon of just a year and so many things can be reasonably forecast and estimated

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The amount of cheques issued by the company awaiting payment by the bank is called as

Correct Answer  Payment float

Match The Following                      

Question        Correct Answer

1) Recurring duties of finance executive=Raising of funds

2) Objective of finance function=Profit maximization

3) Treasurer=Cost management

4) Finance Controller=Internal Auditing

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

Multiple Choice Multiple Answer              

Question  The cost of managing inventory includes

Correct Answer  Ordering cost , Carrying cost

Multiple Choice Single Answer                 

Question  Which of the following current asset is the least liquid asset

Correct Answer  Inventories

True/False               

Question  By issuing the debentures, the controlling position of the existing equity shareholders does not get affected as the debentures do not carry any voting rights

Correct Answer  TRUE

Select The Blank                 

Question  From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/-

Correct Answer  9

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

Multiple Choice Multiple Answer              

Question  Uses of financial leverage are

Correct Answer  It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax

True/False               

Question  In narrow sense funds means only cash resources of the business

Correct 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

Multiple Choice Single Answer                 

Question  Dividends can be paid only out of

Correct Answer  Current year's profits

Multiple Choice Single Answer                 

Question  Gross Profit ratio is calculated as

Correct Answer  [(Gross Profit / Net Sales)] * 100

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

Multiple Choice Multiple Answer              

Question  The recommendations of the Chhore committee included

Correct Answer  increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels

Multiple Choice Single Answer                 

Question  The ratios giving the relationship between the financial charges of a firm and its ability to service them is known as

Correct Answer  Coverage ratios

Multiple Choice Multiple Answer              

Question  Under the Financial Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered

Correct Answer  Accounting policies followed by the company , Adequacy of cash flows for fixed capital

Multiple Choice Single Answer                 

Question  Collection from debtors appear in the cash budget under the head

Correct Answer  Operating Cash Inflow

True/False               

Question  Secured Premium notes did not carry any interest during the first three years

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The working Partner is a Partner who

Correct Answer  participates in day-to-day affairs of the firm

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

Multiple Choice Multiple Answer              

Question  Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered

Correct Answer  Existing as well as potential competitors in the industry , Market position of the company

Multiple Choice Single Answer                 

Question  A project requires an outlay of Rs. 4,00,000 and earns, an annual cash inflow of Rs. 1,00,000 for 8 years. Calculate pay back period

Correct Answer  4 years

True/False               

Question  In Regular Stock Dividend policy, the company may pay dividend in the form of bonus shares instead of cash

Correct Answer  TRUE

Select The Blank                 

Question  ________ in assets involves outflow of funds

Correct Answer  Increase

True/False               

Question  Internal rate of return indicates that the discounting rate at which net present value is zero

Correct Answer  TRUE

True/False               

Question  Accounts Receivable is an example of current assets

Correct Answer  TRUE

Select The Blank                 

Question  In case of Mortgage, the party in whose favour the interest is so transferred is called ________

Correct Answer  Mortgagee

Select The Blank                 

Question  The factor makes the prepayment of the invoice to the selling company after keeping the ________ as stipulated

Correct Answer  Margin

Multiple Choice Single Answer                 

Question  Share Premium account is shown on the liability side in the balance sheet under the heading

Correct Answer  Reserves and Surplus

Multiple Choice Single Answer                 

Question  The main function of finance under the traditional approach comprises of

Correct Answer  Procurement of funds

Multiple Choice Single Answer                 

Question  Capital turnover ratio is calculated as

Correct Answer  Sales / Capital employed

Select The Blank                 

Question  Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company

Correct Answer  Shareholders

Multiple Choice Single Answer                 

Question  Cost theory of capitalisation considers the amount of capitalisation

Correct Answer  On the basis of cost of various assets required to set up the organisation

Multiple Choice Single Answer                 

Question  The term receivables is defined as

Correct Answer  Debts owned to the firm by customers arising from sale of goods or services in the ordinary course of business

Multiple Choice Multiple Answer              

Question  Internal sources of funds are

Correct Answer  Funds from operations , Loss on sale of fixed assets , Goodwill written off

Multiple Choice Multiple Answer              

Question  Advantages of Centralised disbursements

Correct Answer  It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different  branches may prove to be administratively difficult

Multiple Choice Single Answer                 

Question  Current assets are also referred to as

Correct Answer  Working Capital

Multiple Choice Multiple Answer              

Question  Projects for which profitability is not the criterion are

Correct Answer  Service Department projects , Welfare projects , Educational projects

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

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

True/False               

Question  A high inventory turnover ratio indicates a high holding period of the inventory

Correct Answer  FALSE

Multiple Choice Multiple Answer              

Question  The sources of cash are

Correct Answer  Long term loans , cash from other sources

Select The Blank                 

Question  In ABC analysis C class consist of ________.

Correct Answer  a very large number of items which are less important

Multiple Choice Multiple Answer              

Question  Items under Cash from operations include

Correct Answer  Profit made during the year , Increase in creditors , Increase in Bills receivables

Multiple Choice Single Answer                 

Question  The ratios which help the present or future stockholder in assessing the value of his investment is known as

Correct Answer  Ownership ratios

Select The Blank                 

Question  Chhore committee has suggested that the banks should appraise and fix separate limits for normal non-peak levels and also peak levels, it should be done in respect of all borrowers enjoying the banking credit limits of more than Rs. ________

Correct Answer  10 lakhs

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

Multiple Choice Single Answer                 

Question  In order to ensure that the outstanding receivables are within the framework of the credit policy decided by the company, it may be required to apply regular checks, this system is called

Correct Answer  Monitoring the receivables

True/False               

Question  Private limited company can commence business immediately on incorporation

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The company granting credit may insist on giving the names of those who are currently dealing with the company. This is termed as

Correct Answer  Trade Reference

Match The Following                      

Question        Correct Answer       

1) Mortgage=Mode of security pertains to immovable properties like land and building

2) Hypothecation=Neither the property not the possession of the goods is transferred to the bank

3) Pledge=Possession of the goods is with the bank       

4) Lien =Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid         

Select The Blank                 

Question  The projects having Profitability index of less than ________ will be rejected

Correct Answer  one

Multiple Choice Multiple Answer              

Question  The classification of ratios under miscellaneous group includes

Correct Answer  Earnings per share , Dividend Payment ratio

Match The Following                      

Question        Correct Answer       

1) Operating leverage = Contribution / Earnings before interest and tax

2) Financial leverage = Earning before interest and tax / ( Earning before interest and tax - Interest )

3) Earnings per share = (Profit after tax - Preference dividend) / Number of Equity shares  

4) Price earning ratio Market Price per share / Earnings per share

True/False               

Question  Current ratio and Acid test ratio are categorised under liquidity group

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The ratio which measures the profits available to the equity shareholders on a per are basis is termed as

Correct Answer  Earning per share

Multiple Choice Single Answer                 

Question  The return which the company pays on borrowed funds is termed as

Correct Answer  Interest

True/False               

Question  Proprietary ratios is the relationship between owners funds and total assets

Correct Answer  TRUE

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

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

Select The Blank                 

Question  Carriage Inward is normally debited to ________

Correct Answer  Manufacturing Account

True/False               

Question  As per the SEBI guidelines revaluation reserve can be used for issue of bonus share

Correct Answer  FALSE

True/False               

Question  Carrying cost of inventory includes cost incurred for preparation of purchase requisition

Correct Answer  FALSE

True/False               

Question  Cash flow statement is important financial tool for the management

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  The functions of a Finance Controller are :

Correct Answer  Budgeting , Record Keeping , Annual Reporting

Select The Blank                 

Question  Informal method of capital budgeting decisions is a ________ method

Correct Answer  subjective

Multiple Choice Single Answer                 

Question  Internal rate of return may be called as

Correct Answer  breakeven rate of the borrowing for the company

Multiple Choice Single Answer                 

Question  A decrease in current assets

Correct Answer  decreases working capital

True/False               

Question  The composite cost of capital considers weighted average for giving consideration to the proportion of various sources of funds in the capital structure of the company

Correct Answer  TRUE

True/False               

Question  It is only after crossing the break even point that the profit generating capacity of the company starts

Correct Answer  TRUE

True/False               

Question  There are essentially two parties in case of a letter of credit

Correct Answer  FALSE

Select The Blank                 

Question  ________ in assets involves inflow of funds

Correct Answer  Decrease

Multiple Choice Single Answer                 

Question  Funds flow statement is also known as

Correct Answer  Sources and application of funds

Select The Blank                 

Question  Venture Capitalist is not interested in keeping his investment in the project on a ________ basis

Correct Answer Permanent

Multiple Choice Single Answer                 

Question  The effect of Purchase of goods for cash on funds ( cash concept ) is

Correct Answer  Decrease in cash

Multiple Choice Multiple Answer              

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

Multiple Choice Single Answer                 

Question  Return of Shareholders funds being much higher than the overall return on investment can be judged by

Correct Answer  Debt Equity ratio

Select The Blank                 

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

Multiple Choice Single Answer                 

Question  The Investment decisions are mainly concerned with

Correct Answer  Application of funds

Multiple Choice Multiple Answer              

Question  The Purpose of cash budget is

Correct Answer  to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds

Multiple Choice Multiple Answer              

Question  The current ratio of a company is 2:1 ; Which of the following suggestions would improve the current ratio

Correct Answer  Payment of current liability , To sell a motor car for cash at a slight loss

Match The Following                      

Question        Correct Answer       

1) Advantage of Net present value = considers cash inflows from the project throughout its life

2) Disadvantage of Accounting rate of return = uses profits after depreciation and taxes and not the cash inflows for evaluating the projects 

3) Disadvantage of Pay back period = ignores time value of money

4) Advantage of Discounted Pay back period = considers time value of money

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

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

Multiple Choice Single Answer                 

Question  A systematic record of the events of the business leading to a presentation of a complete financial picture is known as

Correct Answer  Accounting

Multiple Choice Single Answer                 

Question  Inventory turnover ratio is a measure to discover

Correct Answer  The possible trouble in the form of overstocking or overvaluation

Multiple Choice Multiple Answer           

Question  The recommendations of the Dahejia committee included

Correct Answer  the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories

Select The Blank                 

Question  The dealing with the financial matters of the government is termed as ________ field of finance

Correct Answer  Public

Multiple Choice Single Answer                 

Question  The symptom of low capacity utilisation will be shown by

Correct Answer  Fixed Assets Turnover ratio

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

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

Select The Blank                 

Question  Break even point is that level of sales revenue at which there is ________

Correct Answer  no profit no loss

True/False               

Question  Semi-variable cost is the cost which varies in direct proportion to the sales revenue

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  From company's point of view return on borrowed capital is

Correct Answer  is a tax deductible expenditure

Multiple Choice Multiple Answer              

Question  Earnings / Price Approach to compute cost of equity shares is objected on the following grounds

Correct Answer  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  In ABC analysis B class consist of ________.

Correct Answer  relatively less important items

Match The Following                      

Question        Correct Answer       

1) Net Profit ratio = Indicates that portion of sales available to the owners after consideration of all types of expenses and cost   

2) Undue increase in Gross Profit ratio = Over-valuation of closing stock        

3) Undue decrease in Gross Profit ratio = Under-valuation of closing stock

4) Gross Profit ratio  Indicates the relation between production cost and Sales 

Multiple Choice Single Answer                 

Question  Revenue from sale of products ordinarily is reported as part of the earning in the period

Correct Answer  the sale is made

Select The Blank                 

Question  Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose

Correct Answer  Dividend

True/False               

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

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  The letter of credit may be

Correct Answer  Revocable letter of credit , Confirmed letter of credit

True/False               

Question  Operating leverage is calculated as Earnings Before Interest and Tax / ( Earnings before Interest and Tax - Interest )

Correct Answer  FALSE

 

Select The Blank                 

Question  ________ will be shown as source of funds net of proposed dividend

Correct Answer  Operating Profit

Multiple Choice Single Answer                 

Question  Increase in a fixed asset due to purchase is

Correct Answer  Use of funds

Multiple Choice Multiple Answer              

Question  The function of Bill of Materials are

Correct Answer  It may serve as a base for the Production department for placing the material requisition slips , It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order

Multiple Choice Multiple Answer              

Question  Undue increase in Gross Profit ratio may indicate

Correct Answer  Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction

True/False               

Question  The mostly used methods of short term forcasting is the Receipt and Payment method

Correct Answer  TRUE

Select The Blank                 

Question  Modigliani - Miller approach closely resembles ________ approach

Correct Answer  Net operating income

Multiple Choice Multiple Answer              

Question  Advantages of Preference shares from shareholders point of view

Correct Answer  For a corporate investor, preference dividend income , It earns a stable dividend rate

Multiple Choice Single Answer                 

Question  What do you understand by the difference between the specification limits within which manufacturing process is expected to produce?

Correct Answer  Design tolerance

Select The Blank                 

Question  Capacity decisions have a direct influence on performance of production system in respect of ________

Correct Answer  Delivery performance

True/False               

Question  Since value of c can never be negativee, hence" if LCLp works out to be negative, it is taken as zero."

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Which are three different times considered in PERT?

Correct Answer  Most likely time , Optimistic Time , Pessimistic time

True/False               

Question  MRP software generates time periodwise requiremetn of subassemblies

Correct Answer  TRUE

True/False               

Question  In case of X bar, if the process is not under control indicated by some points falling outside the control limits, such points outside the control limits are eliminated and new trial control limits for the remaining points are computed.

Correct Answer  TRUE

Select The Blank                 

Question  An Ideal OC curve is ________ shaped curve that accpets all the lots with quality equal to or better than AQL .

Correct Answer  Rectangular

Select The Blank                 

Question  Goods after final inspection should accompany ________to enable dispatch department to identify and draw correct reference.

Correct Answer  Forwarding note

Select The Blank                 

Question  The ________ is a set of tools and techniques by which products are made to comply with the specifications at minimum cost to the firm.

Correct Answer  Quality control system

Match The Following                      

Question        Correct Answer       

1) Critical operation inspection = After whose no rework is possible      

2) Patrolling inspection =  Inspection at the place of actual production   

3) Key operation inspection  = Costlier operation 

4) First off inspection = First piece produced after tool change  

Multiple Choice Multiple Answer              

Question  Following are some of the Principles of Management advocated by F W Taylor

Correct Answer  Selection of best worker for each particular task , Division of work between worker and management , Training and development of the workmen

True/False               

Question  For p-chart, the central line of fraction defectives is determined by average percentage defectives.

Correct Answer  TRUE

Select The Blank                 

Question  An ________ history card is the record of all repairs, replacements and engineering changes carried out in the equipment during it's period of service.

Correct Answer  Equipment history card

Multiple Choice Single Answer                 

  Question  What is the purpose of squares used in progress chart?

  Correct Answer  To record the progress of work for each operation

Multiple Choice Single Answer                 

Question  Which is the ideal place to inspect jigs and fixtures in a mass manufacturing unit?

Correct Answer  Separate inspection room

Multiple Choice Multiple Answer              

Question  Which are the different methods of recording actual progress of work?

Correct Answer  Display boards , Progress cards , Network updating

Select The Blank                 

Question  A ________helps to avoid crowding of jobs at a particular machine by change of route of some of the jobs or by diverting work to other machine.

Correct Answer  Control board

Multiple Choice Multiple Answer              

Question  The advantages of Factor Analysis method over Balancing advantages against disadvantage methods are

Correct Answer  Considers intangible costs/benefits , Is a rational method , Analysis is more objective

Multiple Choice Multiple Answer              

Question  Which of the following schedules are recommended to prepare and follow as a part of preventive maintenance system?

Correct Answer  Preventive inspection schedule , Cleaning and upkeep schedule , Lubrication schedule

Select The Blank                 

Question  The ________ are the definitions of the measurable as well as nonmeasurable characteristics of the product.

Correct Answer  Specifications

 

Multiple Choice Single Answer                 

Question  What is represented by an arrow in a network?

Correct Answer  Activity

 

Multiple Choice Single Answer                 

Question  What is the reason of fluctuations, if the control chart evaluates that the process is in a state of statistical control?

Correct Answer  Random variability

 

Multiple Choice Multiple Answer              

Question  Which of the following activities are used while recording for method study?

Correct Answer  Delay , Operation , Inspection

 

Multiple Choice Multiple Answer              

Question  Which of the following are examples of attributes?

Correct Answer  Texture , Cracks , Burrs

 

Multiple Choice Multiple Answer              

Question  Which of the following factors decide the choice between the cent percent and sampling inspection?

Correct Answer  Nature of inspection , Natural tolerance versus design tolerance , Vendor's quality rating

 

Select The Blank                 

Question  The ________ breakdowns usually cost more, partly due to damage done to the adjustment components and partly due to emergency actions.

Correct Answer  Unexpected

 

Multiple Choice Single Answer                 

Question  Which is the alternative way of indicating the load other than numerical way, in case of Gantt chart ?

Correct Answer  Graphical approach

Multiple Choice Single Answer                 

Question  Providing flexibility in plant layout means

Correct Answer  Layout can be changed without much cost if required

 

Multiple Choice Multiple Answer              

Question  Which of the following aspects are essential to ensure quality of purchased items?

Correct Answer  Defining right quality for the job , Vendor performance evaluation , Making sure that suppliers understand the requirements

 

True/False               

Question  Shape od an OC curve is a function of sample size and the acceptance number.

Correct Answer  TRUE

 

Multiple Choice Single Answer                 

Question  MRP is based on the concept of inventory demand which is of following type

Correct Answer  Dependent and independent

Multiple Choice Multiple Answer              

Question  Which of the following factors play important role while selecting or rejecting a particular site from legislation and taxation point of view?

Correct Answer  Labour laws , Building codes , Policies regarding issue of licences

Multiple Choice Multiple Answer              

Question  Which of the following are assignable cause?

Correct Answer  Large varaitions in hardness of material , Tool wear , Errors in setting

True/False               

Question  Inspection should be avoided prior to long run of a manufacturing stage as it becomes duplication of work and cost.

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  How many types of charts are used for the purpose of method study?

Correct Answer  Four

Multiple Choice Single Answer                 

Question  Which of the following is the most popular technique for Project Production?

Correct Answer  PERT & CPM

Select The Blank                 

Question  The ________ must ensure that the product satisfy the functional requirements of it's usage.

Correct Answer  Quality of design

True/False               

Question  Shop order is one of the subsidiary order

Correct Answer  TRUE

Select The Blank                 

Question  A good maintenance system is not a luxary but a ________.

Correct Answer  Necessity

True/False               

Question  Process Planning is concerned with decisions regarding requirement of machines and manpower for meeting customer demand

Correct Answer  FALSE

True/False               

Question  Skill of labour force in a product type layout is usually higher than in the process type of layout

Correct Answer  FALSE

Select The Blank                 

Question  OC curve of ideal sampling plan suggests that all lots less than 3% defectives have the probability of acceptance of ________.

Correct Answer  One

Multiple Choice Multiple Answer              

Question  Which of the following are examples of incentives offered by the Central and State Governments for setting up industries in particular locations?

Correct Answer  Exemption from excise duty , Soft loans , Subsidy in electrical charges

Match The Following                      

Question        Correct Answer

1) Parts lubricated with oil nipple = Daily   

2) Tools and slideways = two to three times a day

3) Table lubrication = Weekly        

4) Draining and refilling of oil reserviors of plunger pump = Yearly

Multiple Choice Single Answer                 

Question  Product layout is suitable when

Correct Answer  Products have reasonable stable demand

 

Multiple Choice Multiple Answer              

Question  Which are the different situations in which the process capability studies of the various process are likely to fit?

Correct Answer  Process variability is just adequate , Good process variability but bad process centering , Good process variability but poor process centering

True/False               

Question  For p-chart, p bar is the ratio of total number of units inspected to the total number of units defectives.

Correct Answer  FALSE

Select The Blank                 

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

Correct Answer  Profit before Interest and Taxes

Select The Blank                 

Question  Chhore committee has suggested that the banks should appraise and fix separate limits for normal non-peak levels and also peak levels, it should be done in respect of all borrowers enjoying the banking credit limits of more than Rs. ________

Correct Answer  10 lakhs

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

Multiple Choice Single Answer                 

Question  The most easiest form of organisation to form and operate is

Correct Answer  Proprietary concern

Match The Following                      

Question        Correct Answer        Your Answer

Recurring duties of finance executive        Raising of funds       Raising of funds

Objective of finance function          Profit maximization   Profit maximization

Treasurer      Cost management     Cost management

Finance Controller     Internal Auditing       Internal Auditing

Multiple Choice Multiple Answer              

Question  Gross Profit is ascertained by the difference between sales and normally the following expenses

Correct Answer  Cost of Purchases , Expenses related to Purchases , Stock Adjustments

Multiple Choice Single Answer                 

Question  The Pay Bank period is calculated as

Correct Answer  Cash outlay / Annual cash inflow

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

 

Multiple Choice Multiple Answer              

Question  Operating cost incurred by the company can be classified into

Correct Answer  Variable cost , Fixed cost , Semi-variable cost

True/False               

Question  Wages/salaries is considered under Operating cashinflow

Correct Answer  FALSE

Your Answer  FALSE

True/False               

Question  Issue of Bonus shares is the remedy used in the situation of overcapitalisation

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  The Investment decisions are mainly concerned with

Correct Answer  Application of funds

Select The Blank                 

Question  Redemtion of shares/debentures is categorised under ________

Correct Answer  Non-operating cash outflow

True/False               

Question  If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers

Correct Answer  FALSE

Match The Following                      

Question        Correct Answer        Your Answer

Advantage of Net present value      considers cash inflows from the project throughout its life         considers cash inflows from the project throughout its life

Disadvantage of Accounting rate of return uses profits after depreciation and taxes and not the cash inflows for evaluating the projects   uses profits after depreciation and taxes and not the cash inflows for evaluating the projects

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

True/False               

Question  In narrow sense funds means only cash resources of the business

Correct Answer  TRUE

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

Multiple Choice Multiple Answer              

Question  Packing credit facility can take the following form

Correct Answer  Pre-shipment Packing credit , Post-shipment Packing credit

Multiple Choice Single Answer                 

Question  The term receivables is defined as

Correct Answer  Debts owned to the firm by customers arising from sale of goods or services in the ordinary course of business

Multiple Choice Multiple Answer              

Question  External sources of cash are as follows :

Correct Answer  short term borrowings , Issue of new shares , long term loans

True/False               

Question  The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  Irregular Dividend Policy refers to

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

 

True/False               

Question  Cross-sectional Analysis is the comparison of financial data of same time period of different organisations engaged in similar business

Correct Answer  TRUE

 

Multiple Choice Single Answer                 

Question  Current assets are also referred to as

Correct Answer  Working Capital

 

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

True/False               

Question  Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship

Correct Answer  TRUE

 

Multiple Choice Multiple Answer              

Question  The sources of cash are

Correct Answer  Cash from operations , sale of machinery , Issue of new shares

 

Multiple Choice Single Answer                 

Question  Debtors turnover ratio is normally supported by the calculations of

Correct Answer  Average collection period

Multiple Choice Single Answer                 

Question  A long term creditor is interested in determining whether his claims are adequately secured. Which accounting ratio will be used by the creditors

Correct Answer  Debt Service coverage ratio

 

Multiple Choice Multiple Answer              

Question  Advantages of the issue of Bonus shares in the form of Dividend to the company are

Correct Answer  Remedy for undercapitalisation , Increase marketability of shares , Increase credit standing of the company in the eyes of the lending financial institutions

 

Multiple Choice Multiple Answer              

Question  Undue increase in Gross Profit ratio may indicate

Correct Answer  Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction

 

Select The Blank                 

Question  When a company issues bonus shares ________ of the company get reduced

Correct Answer  Reserves

Multiple Choice Single Answer                 

Question  Current liabilities consist of

Correct Answer  Creditors

 

Select The Blank                 

Question  Till the sales revenue reaches the break even point, the company ________

Correct Answer  incurs the losses

Multiple Choice Single Answer                 

Question  Revenue from sale of products ordinarily is reported as part of the earning in the period

Correct Answer  the sale is made

 

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

 

Multiple Choice Single Answer                 

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

Correct Answer  Corporate entity

 

True/False               

Question  The funds flow statements can be prepared on monthly basis, six monthly basis or annual basis

Correct Answer  TRUE

 

Multiple Choice Single Answer                 

Question  The entire requirement of working capital arises due to the

Correct Answer  time gap involved in various stages of the cycle

 

Select The Blank                 

Question  The project having ________ profitability index will be ranked highest

Correct Answer  highest

 

Multiple Choice Single Answer                 

Question  The cost of individual items of capital is termed as

Correct Answer  Component cost

 

Multiple Choice Single Answer                 

Question  Increase in the amount in debtors results in

Correct Answer  Decrease in cash

 

Multiple Choice Single Answer                 

Question  The main function of finance under the traditional approach comprises of

Correct Answer  Procurement of funds

 

Select The Blank                 

Question  Liquidity ratios indicate the ________ position of the organisation

Correct Answer  Short term

 

Multiple Choice Single Answer                 

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

Select The Blank                 

Question  Return Inward is deducted from________

Correct Answer  Sales

True/False               

Question  The mostly used methods of short term forcasting is the Receipt and Payment method

Correct Answer  TRUE

 

True/False               

Question  Retained earnings involves cost in terms of dividend foregone by or withheld from the equity shareholders

Correct Answer  TRUE

True/False               

Question  When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Before investing in the project, Venture capitalist is interested in ensuring that

Correct Answer  The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent

Multiple Choice Single Answer                 

Question  Technical terminology used to invest in the current assets being

Correct Answer  Working Capital Management

Select The Blank                 

Question  Chhore committee has suggested that the banks should appraise and fix separate limits for normal non-peak levels and also peak levels, it should be done in respect of all borrowers enjoying the banking credit limits of more than Rs. ________

Correct Answer  10 lakhs

Select The Blank                 

Question  As per the Tandon Committee, the norms suggested for consumption of raw materials should be in ________

Correct Answer  months

Multiple Choice Multiple Answer              

Question  Advantages of letter of credit to the Exporter

Correct Answer  He is assured to get the payment for the goods exported by him, if he satisfies all the terms and conditions specified in the letter of credit , He can get the advance pending against export proceeds receivable from the importer from its local bank

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

Multiple Choice Single Answer                 

Question  The combined or weighted average cost of capital of the various individual components is termed as

Correct Answer  Composite cost

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

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 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

True/False               

Question  The approved credit rating agencies prevailing in the country are promoted by the government controlled organisations

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  Feature of term loan is

Correct Answer  They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.

Select The Blank                 

Question        One of the tools available to the company to ensure the maintenance of ________ cash balance is to prepare cash budget

Correct Answer  Optimum

True/False   

Question  For the computation of Gross Profit ratio, manufacturing cost is to be considered in case of manufacturing companies

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Limitations of financial leverage is

Correct Answer  It ignores implicit cost of debt , It assumes that cost of debt remains constant regardless of degree of leverage which is not true

Select The Blank                 

Question  Debt Service coverage ratio is calculated as ________

Correct Answer  (Net Profit after taxes + Depreciation + Interest on term loan) / (Interest + Instalment)

Select The Blank                 

Question  ________ committee has extended the recommendations of Nayak committee to all the business organisations

Correct Answer  Vaz

True/False               

Question  According to Net Income Approach, the valuation of the firm and its cost of capital is independent of its capital structure

Correct Answer  FALSE

Select The Blank                 

Question  The indication given by Internal rate of return is that it is the ________ rate at which the company will be able to pay towards the interest on amounts borrowed for investing in the projects

Correct Answer  maximum

True/False               

Question  An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The lenders of the borrowed funds are

Correct Answer  Debentures

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

Select The Blank                 

Question  The situation of watered capital may arise due to ________

Correct Answer  Company pays higher price to the vendors of the assets transferred

Multiple Choice Multiple Answer              

Question  External sources of funds are

Correct Answer  Funds from long term loans , Sale of fixed assets

True/False               

Question  Loans from financial corporations etc. are sources of cash

Correct Answer  TRUE

True/False               

Question  Internal rate of return considers time value of money

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Undue decrease in Gross Profit ratio may indicate

Correct Answer  Improper utilisation of infrastructural facilities , Non-consideration of sales invoices , Under-valuation of closing stock

True/False               

Question  The cycle in which cash available to the organisation is converted back in the form of cash is referred to as Working Capital cycle

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  The trading Account consists of the following items

Correct Answer  Purchases , Closing Stock

Multiple Choice Single Answer                 

Question  Increase in the amount of bills payable results in

Correct Answer  Increase in cash

Multiple Choice Single Answer                 

Question  Increase in a fixed asset due to purchase is

Correct Answer  Use of funds

Multiple Choice Single Answer                 

Question  The cost which varies in direct proportion to the sales revenue is termed as

Correct Answer  Variable cost

True/False               

Question  Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The value created by the use of resources is more than the total of the input resources is referred to as

Correct Answer  Profit

Match The Following                      

Question        Correct Answer        Your Answer

Classification of ratios         Profitability ratio       Profitability ratio

Advantages of Ratio Analysis          It helps in planning and forecasting  It helps in planning and forecasting

Limitation of Ratio Analysis   Facts only those which can be expressed in financial terms are considered          Impact of the inflationary conditions of changing price levels to be taken in account

Precautions before using ratio analysis technique  Impact of the inflationary conditions of changing price levels to be taken in account         It is a creative technique

Multiple Choice Single Answer                 

Question  The financing of the working capital requirement which arises during the course of normal business operations is termed as

Correct Answer  Spontaneous sources

Multiple Choice Multiple Answer              

Question  The cost of managing inventory includes

Correct Answer  Ordering cost , Carrying cost

Multiple Choice Multiple Answer              

Question  Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered

Correct Answer  Existing as well as potential competitors in the industry , Market position of the company

Select The Blank                 

Question  If the amount of interest is considered as a part of expenses, the ________ liability of the company reduces proportionately

Correct Answer  tax

Multiple Choice Multiple Answer              

Question  The depreciation is being charged for the following assets

Correct Answer  Plant and Machinery , Building

Select The Blank                 

Question  ________ indicates the symptom of liquidity crisis

Correct Answer  Current ratio

Multiple Choice Single Answer                 

Question  The entire requirement of working capital arises due to the

Correct Answer  time gap involved in various stages of the cycle

 

Multiple Choice Multiple Answer              

Question  The advantages of continuous stock taking are

Correct Answer  The figures of stock can be readily available for the purpose of periodic Profit and Loss Account , It enables to locate slow and non-moving items

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

Multiple Choice Single Answer                 

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

Correct Answer  Merchant Banker

 

Multiple Choice Multiple Answer              

Question  The recurring duties of Finance Executive includes

Correct Answer  Fixed Assets management , Control of funds , Working Capital Management

Multiple Choice Multiple Answer              

Question  External sources of funds are

Correct Answer  Funds from long term loans , Sale of fixed assets

Select The Blank                 

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

Correct Answer  Factor

 

Multiple Choice Multiple Answer              

Question  Types of capital budgeting decisions

Correct Answer  Replacements , Expansion , Diversification

 

Multiple Choice Multiple Answer              

Question  Packing credit facility can take the following form

Correct Answer  Pre-shipment Packing credit , Post-shipment Packing credit

 

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

 

Select The Blank                 

Question  ________ and return always go hand in hand

Correct Answer  Risk

Multiple Choice Multiple Answer              

Question  The classification of ratios under miscellaneous group includes

Correct Answer  Earnings per share , Dividend Payment ratio

 

True/False               

Question  In certain cases, the capital expenditure may not involve any specific inflow of funds, but only outflow of funds

Correct Answer  TRUE

 

Multiple Choice Single Answer                 

Question  Fixed Income bearing securities for the computation of Capital gearing ratio consists of

Correct Answer  Debentures

 

Match The Following                      

Question        Correct Answer        Your Answer

Recurring duties of finance executive        Raising of funds       Raising of funds

Objective of finance function          Profit maximization   Profit maximization

Treasurer      Cost management     Cost management

Finance Controller     Internal Auditing       Internal Auditing

 

Select The Blank                 

Question  Proprietory ratio indicates the relationship between the owner's fund and ________

Correct Answer  Total assets

True/False               

Question  Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship

Correct Answer  TRUE

 

True/False               

Question  The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity

Correct Answer  TRUE

 

Select The Blank                 

Question  ________ in liabilities involves outflow of funds

Correct Answer  Decrease

 

Multiple Choice Single Answer                 

Question  Capital turnover ratio is calculated as

Correct Answer  Sales / Capital employed

 

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

 

Multiple Choice Multiple Answer              

Question  Projects for which profitability is not the criterion are

Correct Answer  Service Department projects , Welfare projects , Educational projects

 

Multiple Choice Single Answer                 

Question  Current liabilities consist of

Correct Answer  Creditors

 

True/False               

Question  By issuing the debentures, the controlling position of the existing equity shareholders does not get affected as the debentures do not carry any voting rights

Correct Answer  TRUE

 

Multiple Choice Single Answer                 

Question  Live Stock is an example of

Correct Answer  Fixed Asset

 

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

Multiple Choice Single Answer                 

Question  The Pay Bank period is calculated as

Correct Answer  Cash outlay / Annual cash inflow

Select The Blank                 

Question  Redemtion of shares/debentures is categorised under ________

Correct Answer  Non-operating cash outflow

True/False               

Question  Income tax paid in the case of sole proprietor firms should be treated as a personal expense of the proprietor

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  If the issue of Debentures is having the maturity period of more than 18 months, the company shall create

Correct Answer  Debenture Redemption reserve

Multiple Choice Single Answer                 

Question  From company's point of view return on borrowed capital is

Correct Answer  is a tax deductible expenditure

 

Multiple Choice Single Answer                 

Question  The value created by the use of resources is more than the total of the input resources is referred to as

Correct Answer  Profit

 

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

 

True/False               

Question  Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company

Correct Answer  TRUE

 

Multiple Choice Multiple Answer              

Question  The advantages of continuous stock taking are

Correct Answer  The figures of stock can be readily available for the purpose of periodic Profit and Loss Account , It enables to locate slow and non-moving items

 

 Match The Following                     

Question        Correct Answer        Your Answer

Ratio which measures the profitability of the investments in a firm        Return on Asset        Dividend Payment ratio

The relation of Net Sales and Working Capital       Working Capital turnover ratio        Working Capital turnover ratio

The ratio which indicates the speed at which the Sundry debtors are converted in the form of cash   Debtors turnover ratio Debtors turnover ratio

The ratio which indicates the efficiency of the organisation with which the capital employed is being utilised          Capital turnover ratio Current Assets turnover ratio

 

Select The Blank                 

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

 

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

 

Select The Blank                 

Question  ________ approach is the mean between two extreme approaches of net income approach and net operating income approach

Correct Answer  Traditional

Multiple Choice Multiple Answer              

Question  The trading Account consists of the following items

Correct Answer  Purchases , Closing Stock

True/False               

Question  The assumptions of capital structure theories is that Operating earnings are not expected to grow

Correct Answer  TRUE

 

Select The Blank                 

Question  In ABC analysis C class consist of ________.

Correct Answer  a very large number of items which are less important

 

Multiple Choice Single Answer                 

Question  The lending Bank does not commit any physical outflow of funds in a

Correct Answer  Non-Fund based lending

 

Multiple Choice Single Answer                 

Question  Minimum tradable lot in case of shares having the face value of Rs. 10 per share shall not be more than

Correct Answer  100 shares

 

True/False               

Question  In an organisation, Dividend distribution is the function of a Finance Controller

Correct Answer FALSE

 

True/False               

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

Correct Answer  FALSE

 

Multiple Choice Single Answer                 

Question  The discounted cash inflows match with discounted cash outflows is known as

Correct Answer  Internal Rate of return

 

Select The Blank                 

Question  Net Present value considers ________ from the project throughout its life

Correct Answer  cash inflow

 

Multiple Choice Multiple Answer              

Question  Earnings / Price Approach to compute cost of equity shares is objected on the following grounds

Correct Answer  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

 

Multiple Choice Single Answer                 

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

Correct Answer  Corporate entity

 

Select The Blank                 

Question  under no circumstances , ________ term requirement of funds should be met out of short term sources of funds

Correct Answer  long

 

Multiple Choice Multiple Answer              

Question  The recommendations of the Dahejia committee included

Correct Answer  the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories

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

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

 

True/False               

Question  Internal rate of return is difficult to use , calculate and understand

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  Overcapitalisation is

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

 

True/False               

Question  It is only after crossing the break even point that the profit generating capacity of the company starts

Correct Answer  TRUE

 

Select The Blank                 

Question  The ________ collections may be useful for reducing the postal float as well as bank float

Correct Answer  Decentralised

 

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

 

True/False               

Question  Under Hire Purchase agreement, depreciation is considered by the hirer as an expenditure, debited the same to Profit and Loss account and hence becomes the tax deductible expenditure

Correct Answer  TRUE

 

True/False               

Question  Semi-variable cost is the cost which varies in direct proportion to the sales revenue

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  The Proprietary concern is owned by

Correct Answer  Only one person

 

True/False               

Question  Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy

Correct Answer  FALSE

 

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

True/False               

Question  Operating leverage is calculated as Earnings Before Interest and Tax / ( Earnings before Interest and Tax - Interest )

Correct Answer  FALSE

 

True/False               

Question  According to Net Income Approach, the valuation of the firm and its cost of capital is independent of its capital structure

Correct Answer  FALSE

Multiple Choice Single Answer                 

Question  Current assets are also referred to as

Correct Answer  Working Capital

Select The Blank                 

Question  Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive

Correct Answer  Non-recurring

 

Select The Blank                 

Question  Modigliani - Miller approach closely resembles ________ approach

Correct Answer  Net operating income

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

Multiple Choice Multiple Answer              

Question  The recommendations of the Chhore committee included

Correct Answer  increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels

Multiple Choice Single Answer                 

Question  Denomination of the equity shares in the public issue or rights issue can be decided by

Correct Answer  the company

Select The Blank                 

Question  Carriage Inward is normally debited to ________

Correct Answer  Manufacturing Account

Multiple Choice Single Answer                 

Question  The method of subtracting present value of cash outflows from present value of cash inflows is known as

Correct Answer  Net present value

 

Multiple Choice Single Answer                 

Question  The main function of finance under the traditional approach comprises of

Correct Answer Procurement of funds

Multiple Choice Single Answer                 

Question  The Capital Structure decision mainly refers to the decision of

Correct Answer  Financing

 

Multiple Choice Single Answer                 

Question  Capital cost is

Correct Answer  cost on the use of additional capital to support credit sales

Multiple Choice Single Answer                 

Question  Debtors turnover ratio is normally supported by the calculations of

Correct Answer  Average collection period

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

Multiple Choice Multiple Answer              

Question  Internal sources of cash are

Correct Answer  Depreciation , Amortization of intangible assets

Multiple Choice Multiple Answer              

Question  Advantages of Preference shares from shareholders point of view

Correct Answer  For a corporate investor, preference dividend income , It earns a stable dividend rate

Multiple Choice Multiple Answer              

Question  The letter of credit may be

Correct Answer  Confirmed letter of credit , Revocable letter of credit

True/False               

Question  In the funds flow statement, net increase in working capital is shown on application side

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Unsecured loans includes

Correct Answer  Fixed Deposit , Inter corporate unsecured deposits

True/False               

Question  Public deposits are unsecured borrowings for the company

Correct Answer  TRUE

 

Match The Following                      

Question        Correct Answer        Your Answer

Operating Profit        Contribution less Fixed Operating cost        Contribution less Fixed Operating cost

Fixed cost      remains constant      remains constant

Variable cost  varies in direct proportion to the sales revenue     varies in direct proportion to the sales revenue

Contribution   Sales less variable operating cost    Sales less variable operating cost

 

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

Multiple Choice Multiple Answer              

Question  Limitation of Economic Order Quantity assumptions

Correct Answer  Demand throughout the year may not be constant, may fluctuate according to fluctuations in production , Prices of the materials may not remain same throughout the year , Materials may not be available at the same price, discounts allowed by the suppliers should also be considered

Multiple Choice Single Answer                 

Question  The relationship between the earnings belonging to the equity shareholders and the amount finally paid to them by way of dividend is termed as

Correct Answer  Dividend payment ratio

Multiple Choice Multiple Answer              

Question  Items under Cash from operations include

Correct Answer  Profit made during the year , Increase in creditors , Increase in Bills receivables

Multiple Choice Multiple Answer              

Question  Indicate which of these are Profitability ratios

Correct Answer  Operating ratio , Gross Profit ratio

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

Select The Blank                 

Question  In ABC analysis A class consist of ________.

Correct Answer  only a small percentage of total number of items handled but are most important in nature

Select The Blank                 

Question  Operating Lease is also referred to as ________ lease

Correct Answer  Service

Match The Following                      

Question        Correct Answer        Your Answer

Risk adjusting discounting rate method of capital budgeting decision      discounting rate is increased in case of projects involving greater risk        discounting rate is increased in case of projects involving greater risk

Capital rationing        situation where the company has more acceptable proposals requiring a greater amount of funds        situation where the company has more acceptable proposals requiring a greater amount of funds

Problems relating to situation of capital rationing   Project Indivisibility   Project Indivisibility

Informal method of capital budgeting decision      subjective method    subjective method

Multiple Choice Single Answer                 

Question  The Investment decisions are mainly concerned with

Correct Answer  Application of funds

Select The Blank                 

Question  Inflow of funds may not necessarily result in ________

Correct Answer  Inflow of cash

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

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

Multiple Choice Multiple Answer              

Question  In financial analysis, generally the following leverages are computed

Correct Answer  Operating leverage , Financial leverage , Combined leverage

Multiple Choice Multiple Answer              

Question  The advantages of stable Dividend policy are

Correct Answer  Credit standing of the company in the market increases , Share price of the company increases , Enjoys Confidence of the shareholders

Select The Blank                 

Question  ________ leverage also acts as a guideline in setting maximum limit upto which the company should use the debt capital

Correct Answer  Financial

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

Multiple Choice Multiple Answer              

Question  Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered

Correct Answer  Existing as well as potential competitors in the industry , Market position of the company

Multiple Choice Multiple Answer              

Question  Undue increase in Gross Profit ratio may indicate

Correct Answer  Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction

Multiple Choice Single Answer                 

Question  The comparison of ratios of the same organisation for different years is termed as

Correct Answer  Intra-firm comparison

Multiple Choice Multiple Answer              

Question  Disadvantages of Net Present value

Correct Answer  It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible

Select The Blank                 

  Question  The factor makes the prepayment of the invoice to the selling company after keeping the ________ as stipulated

  Correct Answer  Margin

Multiple Choice Multiple Answer              

Question  The depreciation is being charged for the following assets

Correct Answer  Plant and Machinery , Building

Multiple Choice Multiple Answer              

Question  While using Trade credit as a source of working capital financing, following factor play an important role

Correct Answer  Liquidity position of the company , Earnings of the company over a period of time , Relationship of the company with the suppliers

True/False               

Question  Traditional approach believes the existence of Optimal Capital structure

Correct Answer  TRUE

Select The Blank                 

Question  To meet the working capital needs of the company, banks may grant the working capital term loans for a period of ________

Correct Answer  3 to 7 years

Multiple Choice Single Answer                 

Question  'Yield on capital' is another term employed for

Correct Answer  Return on Capital invested

Multiple Choice Multiple Answer              

Question  The external users of financial statements are

Correct Answer  Lenders , Suppliers

True/False               

Question  There are essentially two parties in case of a letter of credit

Correct Answer  FALSE

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

Match The Following                      

Question        Correct Answer        Your Answer

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      Measures the profitability of the investments in a firm

Gross Profit ratio      Indicates the relation between production cost and Sales  Under-valuation of closing stock

Net Profit ratio         Indicates that portion of sales available to the owners after consideration of all types of expenses and cost    Indicates the percentage of net sales which is absorbed by the operating costs

Multiple Choice Single Answer                 

Question  The ratio which measures the profits available to the equity shareholders on a per share basis is termed as

Correct Answer  Earning per share

 

True/False               

Question  Debt equity ratio indicates the stake of share holders and creditors in the organisation

Correct Answer  TRUE

 

Select The Blank                 

Question  The most crucial financial decisions of the organisation are taken by ________

Correct Answer  Board of Directors

Multiple Choice Single Answer                 

Question  A decrease in current assets

Correct Answer  decreases working capital

Multiple Choice Multiple Answer              

Question  The techniques of Analysis and Interpretation of financial statements are

Correct Answer  Ratio Analysis , Cash flow Analysis

  

Multiple Choice Single Answer                 

Question  The deposit receipt should contain

Correct Answer  Amount of deposit

Select The Blank                 

Question  ________ are basically interested in the solvency position of the organisation

Correct Answer  Financial institution lending long term finance

Multiple Choice Single Answer                 

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

True/False               

Question  Interest and Dividend are to be considered while calculating Operating ratio

Correct Answer  FALSE

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

Match The Following                      

Question        Correct Answer        Your Answer

Hypothecation Neither the property not the possession of the goods is transferred to the bank         Type of assistance may be considered by the bank to take care of specific needs of the company when it receives some export order

Pledge Possession of the goods is with the bank    Mode of security pertains to immovable properties like land and building

Lien    Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid Non fund based lending

Mortgage       Mode of security pertains to immovable properties like land and building Neither the property not the possession of the goods is transferred to the bank

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

Multiple Choice Multiple Answer              

Question The normal process which may be followed under the capital rationing situations may be

Correct Answer  Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted

Select The Blank                 

Question  The projects having Profitability index of more than ________ will be accepted

Correct Answer  one

Multiple Choice Multiple Answer              

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

True/False               

Question  The cycle in which cash available to the organisation is converted back in the form of cash is referred to as Working Capital cycle

Correct Answer  TRUE

True/False               

Question  In any organisation, low creditors turnover ratio is considered to be favourable

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The combined or weighted average cost of capital of the various individual components is termed as

Correct Answer  Composite cost

 

Select The Blank                 

Question  A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation

Correct Answer  financial

True/False               

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

Correct Answer  TRUE

 

Select The Blank                 

Question  ________ is the most important ratio to measure whether the firm has earned sufficient returns for its shareholders or not

Correct Answer  Return on Shareholders funds

Multiple Choice Single Answer                 

Question  The financing of the working capital requirement which arises during the course of normal business operations is termed as

Correct Answer  Spontaneous sources

 

True/False               

Question  Re-order level is the highest level of inventory to be maintained above which the inventory should not rise

Correct Answer  FALSE

 

True/False               

Question  Net Present value presupposes that the cash inflows can be reinvested to yield the return equivalent to the Internal rate of return

Correct Answer  FALSE

True/False               

Question  One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables

Correct Answer  FALSE

Select The Blank                 

Question  The introduction of debt capital in the capital structure increases the earnings per share of ________

Correct Answer  Equity shareholders

 

Multiple Choice Single Answer                 

Question  Average Collection Period may be calculated as

Correct Answer  Sundry Debtors / Daily or monthly sales

Multiple Choice Single Answer                 

Question  Feature of term loan is

Correct Answer  They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.

  

 True/False              

Question  The cost of the factor is slightly higher than the interest which the client would have paid had he borrowed the funds from the Bank

Correct Answer  TRUE

Multiple Choice Single Answer                 

Question  The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into

Correct Answer  Overcapitalisation

Select The Blank                 

Question  A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation

Correct Answer  financial

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

True/False               

Question  An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share

Correct Answer  TRUE

Match The Following                      

Question        Correct Answer        Your Answer

Recurring duties of finance executive        Raising of funds       Raising of funds

Objective of finance function          Profit maximization   Profit maximization

Treasurer      Cost management     Cost management

Finance Controller     Internal Auditing       Internal Auditing

Multiple Choice Multiple Answer              

Question  Undue decrease in Gross Profit ratio may indicate

Correct Answer  Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities

Multiple Choice Single Answer                 

Question  Cost theory of capitalisation considers the amount of capitalisation

Correct Answer  On the basis of cost of various assets required to set up the organisation

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

Multiple Choice Multiple Answer              

Question  Overall profitability ratio includes

Correct Answer  Return on Asset , Return on Shareholders Funds

True/False               

Question  Internal rate of return is difficult to use , calculate and understand

Correct Answer  TRUE

Multiple Choice Multiple Answer              

Question  Before investing in the project, Venture capitalist is interested in ensuring that

Correct Answer  The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent

Select The Blank                 

Question  Private limited company and Public limited company are the companies based on the classification of ________

Correct Answer  Number of members

Multiple Choice Single Answer                 

Question  The ratio which indicates the protection available to the lenders of long term capital in the form of funds available to pay the interest charges is

Correct Answer  Interest coverage ratio

 

True/False               

Question  Re-order level is the highest level of inventory to be maintained above which the inventory should not rise

Correct Answer  FALSE

 

Multiple Choice Multiple Answer              

Question  The functions of a Finance Controller are :

Correct Answer  Budgeting , Record Keeping , Annual Reporting

 

Multiple Choice Multiple Answer              

Question  The advantages of operating lease is

Correct Answer  In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , Reduces expenditure on maintenance

 

Select The Blank                 

Question  The fixed assets are expressed at ________

Correct Answer  Cost - Depreciation

Multiple Choice Multiple Answer              

Question  The recurring duties of Finance Executive includes

Correct Answer  Working Capital Management , Fixed Assets management , Control of funds

 

Multiple Choice Single Answer                 

Question  The Dividend in the form of cash is payable out of the current year's profit after providing for sufficient amount of

Correct Answer  Depreciation

Multiple Choice Single Answer                 

Question  Collection from debtors appear in the cash budget under the head

Correct Answer  Operating Cash Inflow

 

True/False               

Question  If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months

Correct Answer  FALSE

 

Multiple Choice Multiple Answer              

Question  External sources of cash are as follows :

Correct Answer  Issue of new shares , long term loans , short term borrowings

 

True/False               

Question  Undercapitalisation indicates sound financial position and efficient management of the company

Correct Answer  TRUE

 

Multiple Choice Multiple Answer              

Question  International financial function of the organisation comprises of :

Correct Answer  Exchange of currencies , Study of flow of funds beyond national boundaries

Multiple Choice Single Answer                 

Question  Which of the following current asset is the least liquid asset

Correct Answer  Inventories

True/False               

Question  Budgeting is the main function of a Treasurer

Correct Answer  FALSE

True/False               

Question  The Stock Dividends are more expensive to administer as compared to cash dividends

Correct Answer  TRUE

True/False               

Question  Semi-variable cost is the cost which varies in direct proportion to the sales revenue

Correct Answer  FALSE