Financial Management 21:
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
In financial terms, Profit after tax can be referred as
Correct Answer
Earning after tax
Your Answer
Gain after tax
Multiple Choice Single Answer
Question
Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer
Bonneville and Dewey
Your Answer
Bonneville and Dewey
Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Deficit
Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital
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
Your Answer
Stock Account , Loss by theft Account
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
Your Answer
Earnings per share
Multiple Choice Single Answer
Question
The time required by the company to process the received cheque and deposit the same in the bank is called
Correct Answer
Deposit float
Your Answer
Deposit float
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
Your 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 , It only considers equity shares
Multiple Choice Single Answer
Question
The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as
Correct Answer
Precautionary motive
Your Answer
Precautionary motive
True/False
Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer
True
Your Answer
True
True/False
Question
Economic Order Quantity model is a very useful model of determining the order quantity
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds
Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity
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
Your 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 main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Procurement of funds
Multiple Choice Multiple Answer
Question
The avenues available to the company to invest the excess cash balance on short term basis may be in the form of
Correct Answer
Commercial paper , inter-corporate bills discounting , Bank deposits
Your Answer
Commercial paper , Capital market , inter-corporate bills discounting , Bank deposits
Multiple Choice Multiple Answer
Question
External sources of funds are
Correct Answer
Funds from long term loans , Sale of fixed assets
Your Answer
Funds from operations , Funds from long term loans , Sale of fixed assets
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
Your Answer
Current assets
Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Investment
True/False
Question
Private limited company can commence business immediately on incorporation
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control , Debenture prices are vulnerable to increase in interest rates
Multiple Choice Multiple Answer
Question
The causes of undercapitalisation are
Correct Answer
Company following too conservative policy for paying the dividends , Future earnings may be underestimated
Your Answer
The company might have spent huge amounts during its formation stage , Company following too conservative policy for paying the dividends , Purchasing of asssets during inflationary situations
Multiple Choice Multiple Answer
Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Record Keeping , Annual Reporting
Multiple Choice Single Answer
Question
The deposit receipt should contain
Correct Answer
Amount of deposit
Your Answer
Amount of deposit
Select The Blank
Question
________ is one of the current assets that takes the longest time to get converted into cash
Correct Answer
Stock
Your Answer
Debtors
Select The Blank
Question
The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________
Correct Answer
ABC Analysis
Your Answer
ABC Analysis
Multiple Choice Single Answer
Question
The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is
Correct Answer
Past experience of the customer
Your Answer
Bank Reference
Select The Blank
Question
The fixed assets are expressed at ________
Correct Answer
Cost - Depreciation
Your Answer
Cost - Depreciation
Multiple Choice Multiple Answer
Question
Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain
Your Answer
they are irreversible , they require assessment of future events which are uncertain
Multiple Choice Single Answer
Question
Equity Warrants are
Correct Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Your Answer
where the holders are entitled to purchase the equity shares at a specific price during the specified period
Multiple Choice Single Answer
Question
Gross Working Capital means
Correct Answer
Current assets
Your Answer
Current assets
True/False
Question
Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year
Correct Answer
True
Your Answer
True
True/False
Question
The basic objective behind fixation of the levels is to avoid overstocking and understocking
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Revocable Packing credit
True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True
Select The Blank
Question
Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur
Correct Answer
0.49
Your Answer
0.49
Select The Blank
Question
The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________
Correct Answer
Profit before taxes
Your Answer
Profit before taxes
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 weighted average cost of capital is referred to as
Correct Answer
Average cost
Your Answer
Average cost
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
Your Answer
Does take into consideration time value of money , Ignores risk factor , Does not consider social obligation
Select The Blank
Question
The payment of Dividend in the form of Bonus shares involves ________
Correct Answer
only transfer of retained earnings to share capital
Your Answer
only transfer of retained earnings to share capital
Select The Blank
Question
The mathematical expression of ________ is Value of material consumed / Average inventory held
Correct Answer
Inventory turnover
Your Answer
Inventory turnover
Multiple Choice Single Answer
Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
Dividend per share varying according to the level of earnings
Multiple Choice Multiple Answer
Question
The sources of cash are
Correct Answer
Long term loans , cash from other sources
Your Answer
Long term loans , cash from other sources
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
Your 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 , It takes into consideration only monetary transactions
Match The Following
Question
Correct Answer
Your Answer
Safety Stock
below which the actual stock should not be allowed to fall
below which the actual stock should not be allowed to fall
ABC Analysis
Vital few Trivial Many
Vital few Trivial Many
Bill of Materials
Details of the necessary materials as well as quantity of each item
Details of the necessary materials as well as quantity of each item
Perpetual Inventory System
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time
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