Financial Management Set 9--SCDL

Plz Click on the link Below to access the Papers of Financial Management


Financial Management 27


Financial Management 28


Financial Management 29

Financial Management 29--SCDL

Financial Management 29:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


Select The Blank
Question For accounting and tax purposes of hire purchase agreement,
________ is treated as revenue expenditure and is considered to be a tax
deductible expenditure
Correct Answer Only interest
Your Answer Total instalment


True/False
Question There are essentially two parties in case of a letter of
credit
Correct Answer False
Your Answer False


True/False
Question Operating leverage is calculated as Earnings Before Interest
and Tax / ( Earnings before Interest and Tax - Interest )
Correct Answer False
Your Answer True


Multiple Choice Multiple Answer
Question The sources of cash are
Correct Answer Cash from operations , sale of machinery , Issue of
new shares
Your Answer Cash from operations , sale of machinery , Issue of new
shares


True/False
Question In an organisation, Dividend distribution is the function of
a Finance Controller
Correct Answer False
Your Answer True


Multiple Choice Multiple Answer
Question Benefits of cash flow information
Correct Answer It enhances the comparability of the reporting of
operating performance by different enterprise , Historical cash flow
information is often used as an indicator of the amount , timing and
certainty of future cash flows , It enables the users to evaluate the
changes in net assets of an enterprise
Your Answer Historical cash flow information is often used as an
indicator of the amount , timing and certainty of future cash flows , It
enables the users to evaluate the changes in net assets of an enterprise ,
information is useful to construct financial statements


Multiple Choice Single Answer
Question If the issue of Debentures is having the maturity period of
more than 18 months, the company shall create
Correct Answer Debenture Redemption reserve
Your Answer Revaluation reserve


Select The Blank
Question The current ratio of ________ is considered to be standard
Correct Answer 2 : 1
Your Answer 2 : 1


Multiple Choice Single Answer
Question The lenders of the borrowed funds are
Correct Answer Debentures
Your Answer Equity shares


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
Your Answer Future earnings may be underestimated


Multiple Choice Single Answer
Question Which important accounting ratios would be used by a
shareholder who is examining his portfolio and who is to decide whether he
should hold or sell his shares in the company
Correct Answer Earning per share
Your Answer Earning per share


Multiple Choice Single Answer
Question In financial terms, Profit after tax can be referred as
Correct Answer Earning after tax
Your Answer Earning after tax


True/False
Question Projects for venture capital financing are more risky in
nature and involve larger gestation period
Correct Answer True
Your Answer True


Multiple Choice Multiple Answer
Question Projects for which profitability is not the criterion are
Correct Answer Service Department projects , Welfare projects ,
Educational projects
Your Answer Service Department projects , Welfare projects , Educational
projects


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
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
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


True/False
Question The funds flow statements can be prepared on monthly basis,
six monthly basis or annual basis
Correct Answer True
Your Answer True


Select The Blank
Question ________ implies arithmetical relationship between two
related figures
Correct Answer Ratio
Your Answer Ratio


Select The Blank
Question ________ is clubbed with Current Assets in the Balance Sheet
Correct Answer Loans and advances
Your Answer Miscellaneous expenditure


Multiple Choice Multiple Answer
Question The depreciation is being charged for the following assets
Correct Answer Plant and Machinery , Building
Your Answer Plant and Machinery , Building , Stock


Multiple Choice Multiple Answer
Question Fixation of Inventory levels are based on the following
propositions
Correct Answer There has to be a constant watch on the actual stock
level of various kinds of materials so that proper action can be taken , The
various levels fixed are not fixed on a permanent basis and are subject to
revision regularly
Your Answer Ordering cost and carrying cost are directly related to each
other , There has to be a constant watch on the actual stock level of
various kinds of materials so that proper action can be taken , Minimum
level indicate the level above which the actual stock should not exceed


True/False
Question Fixed Assets turnover ratio is the relationship between
fixed assets and owner's funds
Correct Answer False
Your Answer False


Select The Blank
Question Preparation of Financial plan at the time of company
promotion is ________ duty of the finance executive
Correct Answer Non-recurring
Your Answer Long term


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
Your Answer True


Multiple Choice Single Answer
Question An increase in the share premium account is
Correct Answer Source of funds
Your Answer Application of funds


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
Your Answer Under-valuation of closing stock , Consideration of
non-sales transactions as sales transaction , Improper utilisation of
infrastructural facilities


Select The Blank
Question In the case of Overcapitalisation ________ is the worst
affected class
Correct Answer Shareholders
Your Answer Society


Multiple Choice Single Answer
Question The most important decisions regarding the amount to be
invested in fixed assets is technically referred to as
Correct Answer Capital budgeting
Your Answer Capital forecasting


Select The Blank
Question The mathematical expression of ________ is ( Minimum level +
Maximum level ) / 2
Correct Answer Average level
Your Answer Average level


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
Your Answer 5 years


True/False
Question Cash from operation is the main internal source of cash
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question The technique of Ratio Analysis is
Correct Answer The interpretation of financial statements by
grouping or regrouping the various figures with the intention to draw
conclusions.
Your Answer The interpretation of financial statements by grouping or
regrouping the various figures with the intention to draw conclusions.


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
Your Answer maximum


True/False
Question Internal rate of return can be computed even in the absence
of the knowledge about the firm's cost of capital
Correct Answer True
Your Answer False


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
Your Answer Profit made during the year , Increase in Bills receivables
, Issue of new shares


Select The Blank
Question The mathematical expression of ________ is Normal Usage *
Lead time for emergency purchases
Correct Answer Danger level
Your Answer Danger level


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
Your Answer For a corporate investor, preference dividend income , It
earns a stable dividend rate , No collateral is pledged in favour of
preference shareholders


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
Your Answer Tax


Select The Blank
Question The economical use of the asset is permitted by the lessor
on the payment of periodical amount which is in the form of ________.
Correct Answer Lease rent
Your Answer Lease rent


True/False
Question Wealth maximization goal is only an extension of Profit
maximization goal of the organisation
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question The addition of Equity capital, preference capital and
reserves and surplus is termed as
Correct Answer Shareholders funds
Your Answer Capital employed


True/False
Question In case of Without Recourses factoring, the risk on account
of non-payment by the customer is assumed by the selling company
Correct Answer False
Your Answer True


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 , Purchase of
fixed assets


Select The Blank
Question The dealing with the financial matters of the government is
termed as ________ field of finance
Correct Answer Public
Your Answer Corporate


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
Your Answer True


Match The Following
Question Correct Answer Your Answer
Classification of ratios Profitability ratio It is a creative
technique
Advantages of Ratio Analysis It helps in planning and forecasting
Inter firm comparison
Limitation of Ratio Analysis Facts only those which can be expressed in
financial terms are considered Facts only those which can be expressed in
financial terms are considered
Precautions before using ratio analysis technique Impact of the
inflationary conditions of changing price levels to be taken in account
Impact of the inflationary conditions of changing price levels to be taken
in account


Select The Blank
Question Cost management is the function of a ________.
Correct Answer Treasurer
Your Answer Finance manager


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

Financial Management 28--SCDL

Financial Management 28:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


Multiple Choice Multiple Answer
Question Assuming the current ratio is 2, in which cases would the
current ratio decline
Correct Answer Purchase of fixed Assets , Borrow Money on an
Interest bearing promissory note
Your Answer Purchase of fixed Assets , Borrow Money on an Interest
bearing promissory note


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
Your Answer This presupposes that an investor looks forward only to
receive dividend on equity shares which may not be correct , It assumes that
the company will not earn on its retained earnings which is a wrong
assumption , It wrongly assumes that earnings per share will remain constant
in future


Select The Blank
Question Interest on overdraft is payable on the actual amount drawn
and is calculated on ________ product basis
Correct Answer daily
Your Answer quarterly


Multiple Choice Single Answer
Question The amount of cheques deposited by a Bank awaiting clearance
is called
Correct Answer Collection float
Your Answer Deposit float


Multiple Choice Single Answer
Question Interest Coverage ratio is calculated as
Correct Answer Profit before Interest and taxes / Interest charges
Your Answer (Profit after tax + Depreciation) / Interest on term loan


Multiple Choice Single Answer
Question Ratio analysis is a widely used tool of
Correct Answer Financial analysis
Your Answer Financial analysis


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
Your Answer False


Multiple Choice Single Answer
Question Undercapitalisation is
Correct Answer Excess of real worth of the assets over the
aggregate of shares and debentures outstanding
Your Answer Excess of real worth of the assets over the aggregate of
shares and debentures outstanding


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
Your Answer The interest and capital repayment are obligatory payments


True/False
Question Budgeting is the main function of a Treasurer
Correct Answer False
Your Answer False


Multiple Choice Multiple Answer
Question The recurring duties of Finance Executive includes
Correct Answer Fixed Assets management , Working Capital Management
, Control of funds
Your Answer Working Capital Management , Financing re-adjustments in
times of liquidity crisis , Control of funds


True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True


True/False
Question A good Budget manual promotes standardization and
simplification of budgetary procedures
Correct Answer True
Your Answer True


Select The Blank
Question Modigliani - Miller approach closely resembles ________
approach
Correct Answer Net operating income
Your Answer Net operating income


True/False
Question Internal rate of return presupposes that the cash inflows
can be reinvested immediately to yield the return equivalent to the Internal
rate of return
Correct Answer True
Your Answer False


True/False
Question Funds flow statements and cash flow statement are one and
the same
Correct Answer False
Your Answer False


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
Your Answer Interest coverage ratio


Select The Blank
Question The project having ________ profitability index will be
ranked highest
Correct Answer highest
Your Answer Optimal


True/False
Question Debt equity ratio is alternately called Leverage ratio
Correct Answer True
Your Answer True


Match The Following
Question Correct Answer Your Answer
Recurring duties of finance executive Raising of funds Cost
management
Objective of finance function Profit maximization Profit maximization
Treasurer Cost management Internal Auditing
Finance Controller Internal Auditing Raising of funds


Select The Blank
Question Where share capital is not represented by the assets of
equal value, the situation may mean introduction of ________
Correct Answer Watered capital
Your Answer Watered capital


Multiple Choice Multiple Answer
Question Overall profitability ratio includes
Correct Answer Return on Asset , Return on Shareholders Funds
Your Answer Return on Asset , Return on Shareholders Funds , Gross
Profit ratio


Select The Blank
Question The ________ is used as the capitalisation rate to decide
the amount of capitalisation in case of a new concern
Correct Answer cost of capital
Your Answer cost of capital


Multiple Choice Single Answer
Question Current liabilities consist of
Correct Answer Creditors
Your Answer Creditors


True/False
Question The combination of irrevocable and confirmed letter of
credit can be considered to be a guaranteed payment on the part of the
exporter
Correct Answer True
Your Answer False


Multiple Choice Single Answer
Question From company's point of view return on borrowed capital is
Correct Answer is a tax deductible expenditure
Your Answer is a tax deductible expenditure


Multiple Choice Single Answer
Question The ratio which indicates the credit policy followed by a
business firm is known as
Correct Answer Debtors turnover ratio
Your Answer Creditors turnover ratio


Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Maintenance cost , Ordering cost , Labour cost


Multiple Choice Multiple Answer
Question Advantages of cash flow statement are
Correct Answer Discloses the movements of cash , Discloses the
success or failure of cash planning , Helps in efficient cash management
Your Answer Helps in efficient cash management , Discloses the movements
of cash , Represents real liquid position


Match The Following
Question Correct Answer Your Answer
Internal rate of return less than cost of capital Project rejected
Project rejected
Internal rate of return breakeven rate of borrowing for the company
indicates that period within which the discounted cash inflows equal to the
discounted cash outflows
Profitability Index ratio between total discounted cash inflows and
total discounted cash outflows ratio between total discounted cash inflows
and total discounted cash outflows
Profitability Index more than one Project accepted Project
accepted


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
Your Answer True


Multiple Choice Single Answer
Question Rights issue is
Correct Answer Selling the securities in the primary market to the
existing shareholders
Your Answer Selling the securities in the primary market to the existing
shareholders


Multiple Choice Multiple Answer
Question The trading Account consists of the following items
Correct Answer Purchases , Closing Stock
Your Answer Purchases , Advertisement , Closing Stock


Select The Blank
Question The debt equity ratio of the company after such buy back of
shares should not be more than ________ except where the Central Government
allows a higher ratio in case of certain companies
Correct Answer 2:1
Your Answer 2:1


Multiple Choice Multiple Answer
Question The functions of a Finance Controller are :
Correct Answer Budgeting , Record Keeping , Annual Reporting
Your Answer Banking Relations , Record Keeping , Annual Reporting


Select The Blank
Question Turnover ratios measures how efficiently the ________ are
employed by the firm
Correct Answer Assets
Your Answer Capital


Select The Blank
Question The ratios under overall profitability group indicate the
relationship between the profits of a firm and ________ in the firm
Correct Answer Investment
Your Answer Sales


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
Your Answer True


Select The Blank
Question ________ indicates the symptom of liquidity crisis
Correct Answer Current ratio
Your Answer Current ratio


Multiple Choice Multiple Answer
Question The book-keeping and accounting activities in relation to
the receivables management undertaken by the factor includes
Correct Answer Maintenance of debtors ledger , Various periodical
reports about outstanding from the customers , Age-wise analysis of the
outstanding
Your Answer Maintenance of debtors ledger , Various periodical reports
about outstanding from the customers , Preparing financial statements


True/False
Question Debt equity ratio indicates the stake of share holders and
creditors in the organisation
Correct Answer True
Your Answer False


Select The Blank
Question The following data are extracted from the published accounts
of a company : Sales Rs. 38,00,000/-, Net Profit after tax Rs. 2,50,000/-,
Equity capital Rs. 10,00,000/-,General Reserve Rs. 6,50,000/-, Rs. Long term
debt Rs. 7,00,000/-, Creditors Rs. 6,90,000/-, Bank credit/short term loan
Rs. 2,30,000/-, Fixed Assets Rs. 17,50,000/-, Inventories Rs. 7,25,000/-,
Other Current assets Rs. 5,25,000/-. The Capital employed Turnover ratio is
________
Correct Answer 1.61
Your Answer 2.25


Multiple Choice Multiple Answer
Question Internal sources of funds are
Correct Answer Funds from operations , Loss on sale of fixed assets
, Goodwill written off
Your Answer Funds from operations , Loss on sale of fixed assets


True/False
Question It is only after crossing the break even point that the
profit generating capacity of the company starts
Correct Answer True
Your Answer True


Multiple Choice Multiple Answer
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Interest Coverage ratio , Operating ratio , Gross Profit
ratio


Multiple Choice Multiple Answer
Question Types of capital budgeting decisions
Correct Answer Replacements , Expansion , Diversification
Your Answer Replacements , Expansion , Diversification


Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Trading organisation

Financial Management 27--SCDL

Financial Management 27:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Single Answer
Question Gross Working Capital means
Correct Answer Current assets
Your Answer Current assets

Select The Blank
Question ________ approach is the mean between two extreme approaches of
net income approach and net operating income approach
Correct Answer Traditional
Your Answer Traditional

True/False
Question Secured Premium notes did not carry any interest during the
first three years
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer
Question Objective of perpetual inventory system are
Correct Answer Maintenance of Bin Cards and Stores ledger in order to
know about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies
Your Answer Maintenance of Bin Cards and Stores ledger in order to know
about the stock in quantity and value at any given point of time ,
Continuous verification of physical stock to ensure that the physical
balance and the book balance tallies

True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum
Usage
Correct Answer False
Your Answer False

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
Your Answer 4 years

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

Multiple Choice Single Answer
Question A decrease in current liabilities
Correct Answer increases working capital
Your Answer increases working capital

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 Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow

Select The Blank
Question Retained earnings is a source of ________ finance
Correct Answer Internal
Your Answer Internal

Multiple Choice Single Answer
Question An increase in current liabilities
Correct Answer decreases working capital
Your Answer decreases working capital

Multiple Choice Single Answer
Question Own capital of the company includes
Correct Answer Shares
Your Answer Shares

Multiple Choice Single Answer
Question The period that within which the cost of the project will be
completely recovered is known as
Correct Answer Pay Back period
Your Answer Pay Back period

Select The Blank
Question For accounting and tax purposes of hire purchase agreement,
________ is treated as revenue expenditure and is considered to be a tax
deductible expenditure
Correct Answer Only interest
Your Answer Only interest

Multiple Choice Single Answer
Question For the calculation of Operating Profit / Loss , Preliminary
expenses written off should be
Correct Answer added to the Net Profit as per Profit and loss account
Your Answer added to the Net Profit as per Profit and loss account

Select The Blank
Question For the selection of the period for which capital expenditure
budget should be prepared , ________ a period may not be useful
Correct Answer Too long
Your Answer Too long

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
Your 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

Select The Blank
Question ________ can be issued for the maturity period of 15 days to
one year
Correct Answer Commercial Paper
Your Answer Commercial Paper

Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital

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
Your Answer Return on investment

True/False
Question Debt Service Coverage Ratio is one of the most important ratios
calculated by the bankers of financial institutions giving long term finance
to the organisation
Correct Answer True
Your 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
Your Answer Bonneville and Dewey

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 Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing

Multiple Choice Single Answer
Question Fixed Working Capital is
Correct Answer the minimum working capital required to be maintained in
the business on permanent or uninterrupted basis
Your Answer the minimum working capital required to be maintained in the
business on permanent or uninterrupted basis

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
Your Answer 1 crore

Multiple Choice Single Answer
Question Cash Budget is
Correct Answer the statement showing the various estimated sources of
cash receipts on one hand and the various applications of cash on another
hand
Your Answer the statement showing the various estimated sources of cash
receipts on one hand and the various applications of cash on another hand

Match The Following
Question Correct Answer Your Answer

Nayak committee to recognize the contribution made by the SSI sector to the
economy to recognize the contribution made by the SSI sector to the economy

Dahejia committee to examine the extent to which credit needs of industry
and trade are likely to be inflated and how such trends could be checked to
examine the extent to which credit needs of industry and trade are likely to
be inflated and how such trends could be checked

Chhore committee to review mainly the system of cash credit management
policy by banks to review mainly the system of cash credit management policy
by banks

Marathe committee to review the credit authorization scheme to review the
credit authorization scheme


Select The Blank
Question The projects having Profitability index of more than ________
will be accepted
Correct Answer one
Your Answer one

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
Your Answer False

Multiple Choice Multiple Answer
Question Indicate which of these are Profitability ratios
Correct Answer Operating ratio , Gross Profit ratio
Your Answer Operating ratio , Gross Profit ratio

True/False
Question Semi-variable cost is the cost which varies in direct
proportion to the sales revenue
Correct Answer False
Your Answer True

Multiple Choice Single Answer
Question The Current assets and current liabilities of a company were
Rs. 10 lakhs and Rs. 5 Lakhs respectively. What will be the current ratio if
the company purchases fixed assets for Rs. 4 lakhs on a Medium term loan
from bank with 15% margin
Correct Answer 1.88 : 1.00
Your Answer 1.88 : 1.00

True/False
Question Internal rate of return can be computed even in the absence of
the knowledge about the firm's cost of capital
Correct Answer True
Your Answer False

Select The Blank
Question ________ financing is more preferred route for venture capital
funding
Correct Answer Equity
Your Answer Equity

True/False
Question In funds flow statement, net decrease in working capital is
shown on sources side
Correct Answer True
Your 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
Your Answer Trade Reference

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

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
Your 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 Composite cost is calculated as
Correct Answer Total weighted cost / Total weights
Your Answer Total weighted cost / Total weights

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 Company following too conservative policy for paying the
dividends , Future earnings may be underestimated

Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds
in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending

Select The Blank
Question As per the Tandon committee, variations between the projected
figures and actuals may be permitted to the extent of ________
Correct Answer 0.1
Your Answer 0.1

Select The Blank
Question Till the sales revenue reaches the break even point, the
company ________
Correct Answer incurs the losses
Your Answer incurs the losses

Match The Following
Question Correct Answer Your Answer

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

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

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

Financial Management Set 8--SCDL

Plz Click on the link Below to access the Papers of Financial Management


Financial Management 24

Financial Management 25


Financial Management 26

Financial Management 26--SCDL

Financial Management 26:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question When a company issues bonus shares ________ of the company get reduced
Correct Answer Reserves
Your Answer Reserves

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


Select The Blank
Question The fixed assets are expressed at ________
Correct Answer Cost - Depreciation
Your Answer Cost - Depreciation

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
Your Answer Shareholders

Multiple Choice Single Answer
Question Earnings per share is calculated as
Correct Answer ( Profit after tax - Preference Dividend ) / No. of equity shares
Your Answer ( Profit after tax - Preference Dividend ) / No. of equity shares

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

Select The Blank
Question In case of Mortgage, the party in whose favour the interest is so transferred is called ________
Correct Answer Mortgagee
Your Answer Mortgagee

Multiple Choice Multiple Answer
Question The following techniques can be used to delay cash payments
Correct Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Your Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments

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
Your Answer False

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
Your Answer Company Law board

Multiple Choice Single Answer
Question How many days in a year are to be considered for the calculation of daily sales
Correct Answer 360
Your Answer 360

True/False
Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation
Correct Answer True
Your Answer True

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


True/False
Question Internal rate of return considers time value of money
Correct Answer True
Your Answer True

True/False
Question Reorder level is calculated as Maximum Lead Time * Minimum Usage
Correct Answer False
Your Answer False

Multiple Choice Single Answer
Question Floor rate is
Correct Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit
Your Answer the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit

Multiple Choice Single Answer
Question The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by
Correct Answer Inventory turnover ratio
Your Answer Inventory turnover ratio

True/False
Question Current ratio and Acid test ratio are categorised under liquidity group
Correct Answer True
Your Answer True

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
Your 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 Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital

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

Multiple Choice Multiple Answer
Question Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note

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
Your Answer Composite cost

Multiple Choice Single Answer
Question The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer Capital Structure
Your Answer Capital Structure

Multiple Choice Single Answer
Question Revenue reserves represents
Correct Answer Accumulated retained earnings from the profits of normal business operations
Your Answer Accumulated retained earnings from the profits of normal business operations

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

Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Ordering cost , Carrying cost

True/False
Question Projects for venture capital financing are more risky in nature and involve larger gestation period
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer
Question The effects of undercapitalisation are
Correct Answer Increase tax liability of the company , Demand of the employees to increase wages
Your Answer Increase tax liability of the company , Demand of the employees to increase wages

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

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

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 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
Your Answer No effect on the funds flow

Multiple Choice Multiple Answer
Question Advantages of letter of credit to the Importer
Correct Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods

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 An organized collection of data according to logical and consistent accounting procedure is known as
Correct Answer Financial Statement
Your Answer Financial Statement

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

Multiple Choice Multiple Answer
Question Fixation of Inventory levels are based on the following propositions
Correct Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Your Answer There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly

Select The Blank
Question Operating Lease is also referred to as ________ lease
Correct Answer Service
Your Answer Service

Multiple Choice Single Answer
Question The lending Bank does not commit any physical outflow of funds in a
Correct Answer Non-Fund based lending
Your Answer Non-Fund based lending

True/False
Question The assumptions of capital structure theories is that Operating earnings are not expected to grow
Correct Answer True
Your Answer True

Select The Blank
Question According to the provisions of the companies Act 1956, ________ can declare the interim dividend
Correct Answer Board of Directors
Your Answer Board of Directors

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

True/False
Question Accounts Receivable is an example of current assets
Correct Answer True
Your Answer True

Multiple Choice Single Answer
Question The amount of cheques deposited by a Bank awaiting clearance is called
Correct Answer Collection float
Your Answer Collection float

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
Your Answer Profit before Interest and Taxes

Select The Blank
Question Depreciation is sometimes treated as ________ funds
Correct Answer source
Your Answer source

Financial Management 25--SCDL

Financial Management 25:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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
Your Answer
interest charges

Match The Following
Question
Correct Answer
Your Answer
Nayak committee
to recognize the contribution made by the SSI sector to the economy
to determine the quantum of bank advances
Dahejia committee
to examine the extent to which credit needs of industry and trade are likely to be inflated and how such trends could be checked
to review mainly the system of cash credit management policy by banks
Chhore committee
to review mainly the system of cash credit management policy by banks
to find measures to improve the present manner and style of lending
Marathe committee
to review the credit authorization scheme
to recognize the contribution made by the SSI sector to the economy

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

Multiple Choice Single Answer
Question
The reduction in the market value of the shares may cause due to
Correct Answer
Overcapitalisation
Your Answer
Overcapitalisation

Multiple Choice Multiple Answer
Question
The internal factors affecting the dividend policy are
Correct Answer
Growth rate of the company , Composition of the shareholding
Your Answer
Growth rate of the company , Composition of the shareholding

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
Bank float

Multiple Choice Single Answer
Question
Minimum application money payable by the applicant along with the application shall not be less than
Correct Answer
25% of the issue price
Your Answer
20% of the issue price

True/False
Question
Overdraft is given by the bank for a very short period of time, at the end of which the company is supposed to repay the same
Correct Answer
True
Your Answer
True

True/False
Question
One of the basic objectives of cash management is to maintain the optimum cash balance
Correct Answer
True
Your Answer
True

True/False
Question
Internal rate of return is difficult to use , calculate and understand
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
The mix of sources from which the long term funds required by a business are raised is termed as
Correct Answer
Capital Structure
Your Answer
Capital Budgeting

Multiple Choice Single Answer
Question
The Investment decisions are mainly concerned with
Correct Answer
Application of funds
Your Answer
Application of funds

Select The Blank
Question
Cost management is the function of a ________.
Correct Answer
Treasurer
Your Answer
Finance manager

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

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
Your Answer
Company Law board

True/False
Question
With limited funds, the company must obtain the optimum combination of acceptable investment proposals
Correct Answer
True
Your Answer
True

Select The Blank
Question
The projects having Profitability index of less than ________ will be rejected
Correct Answer
one
Your Answer
one

Multiple Choice Single Answer
Question
The Capital Structure decision mainly refers to the decision of
Correct Answer
Financing
Your Answer
Financing

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
Your Answer
Income

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
Kenneth Midgley and Ronald Burns

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
Your Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment

True/False
Question
The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Undercapitalisation is
Correct Answer
Excess of real worth of the assets over the aggregate of shares and debentures outstanding
Your Answer
Excess of real worth of the assets over the aggregate of shares and debentures outstanding

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 cost of managing inventory includes
Correct Answer
Ordering cost , Carrying cost
Your Answer
Maintenance cost , Ordering cost , Carrying cost

True/False
Question
Internal rate of return does not considers cash inflows from the project throughout its life
Correct Answer
False
Your Answer
False

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
Your Answer
True

True/False
Question
Informal method of capital budgeting does not follow any mathematical or statistical model to consider the risk factor
Correct Answer
True
Your Answer
True

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

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

Multiple Choice Multiple Answer
Question
The techniques of Analysis and Interpretation of financial statements are
Correct Answer
Ratio Analysis , Cash flow Analysis
Your Answer
Profit and loss account , Balance Sheet

Multiple Choice Multiple Answer
Question
The importance of various items of inventory may be decided on the following factors
Correct Answer
Value of material consumption , Critical nature of inventory items , Amount of investment in inventory
Your Answer
Amount of investment in inventory , Value of material consumption , Critical nature of inventory items

Multiple Choice Single Answer
Question
Receivable management is also called as
Correct Answer
Trade Credit management
Your Answer
Trade Credit management

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 , inter-corporate bills discounting , Bank deposits

Select The Blank
Question
The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases
Correct Answer
Danger level
Your Answer
Danger level

Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital

True/False
Question
The objective of funds flow statement may be to find out uses of loans raised by the business
Correct Answer
True
Your Answer
False

Match The Following
Question
Correct Answer
Your Answer
Contribution
Sales less variable operating cost
Sales less variable operating cost
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

True/False
Question
Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer
False
Your Answer
True

Select The Blank
Question
________ and return always go hand in hand
Correct Answer
Risk
Your Answer
Risk

Select The Blank
Question
Inflow of funds may not necessarily result in ________
Correct Answer
Inflow of cash
Your Answer
Inflow of cash

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
Your Answer
Debenture Redemption reserve

Multiple Choice Single Answer
Question
Tax paid is
Correct Answer
Application of funds
Your Answer
Application of funds

Select The Blank
Question
The most crucial financial decisions of the organisation are taken by ________
Correct Answer
Board of Directors
Your Answer
Vice President (finance)

Multiple Choice Single Answer
Question
Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer
Current liabilities and Provisions
Your Answer
Reserves

Select The Blank
Question
________ is clubbed with Current Assets in the Balance Sheet
Correct Answer
Loans and advances
Your Answer
Investments

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
Your 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

Financial Management 24--SCDL

Financial Management 24:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question
Interest on overdraft is payable on the actual amount drawn and is calculated on ________ product basis
Correct Answer
daily
Your Answer
daily

True/False
Question
Cash flow statement is important financial tool for the management
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
Advantages of Debentures from Investor's point of view
Correct Answer
They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period
Your Answer
They earn a stable rate of return , They are protected by the various provisions of the debenture Trust Deed , They generally have a fixed maturity period

Multiple Choice Multiple Answer
Question
Fund based lending of banks include
Correct Answer
Overdraft , Bills Purchased
Your Answer
Overdraft , Bills Purchased

Select The Blank
Question
In ABC analysis C class consist of ________.
Correct Answer
a very large number of items which are less important
Your Answer
a very large number of items which are less important

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
Your Answer
two

Multiple Choice Single Answer
Question
The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is
Correct Answer
No change in cash
Your Answer
No change in cash

True/False
Question
Mortgage mode of security pertains to immovable properties like land and buildings
Correct Answer
True
Your Answer
True

True/False
Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Net cash inflow is arrived at
Correct Answer
Revenue after tax add depreciation
Your Answer
Revenue after tax add depreciation

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
Your Answer
Precautionary motive

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
Your Answer
Profit before Interest and Taxes

Match The Following
Question
Correct Answer
Your Answer
Role of Client
Sends the invoice copy
Places the order
Without Recourses factoring
risk of non-payment assumed by factor
Follows up
With Recourses factoring
risk of non-payment assumed by selling company
Sends the invoice copy
Role of factor
Follows up
Bills Discounting

Select The Blank
Question
Depreciation is sometimes treated as ________ funds
Correct Answer
source
Your Answer
source

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

True/False
Question
Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds
Correct Answer
False
Your Answer
True

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
Your 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
The current ratio of ________ is considered to be standard
Correct Answer
2 : 1
Your Answer
1 : 1

Multiple Choice Multiple Answer
Question
Limitations of cash flow analysis are
Correct Answer
It cannot be equated with the income statement , Cannot replace the fund flow statement , Dose not represent real liquid position
Your Answer
It cannot be equated with the income statement , Cannot replace the fund flow statement , Discloses the success or failure of cash planning

Match The Following
Question
Correct Answer
Your Answer
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
Lessee
Not able to claim depreciation on asset
Claims the depreciation on the asset
Hirer
Claims the depreciation on the asset
Not able to claim depreciation on asset
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
represents a source of debt finance which is generally repayable in more than one year but less than ten years

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

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 assumptions made while preparing the funds flow statement are
Correct Answer
The bank credit has been taken as short term advance from the bank , In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year
Your Answer
In the absence of information about the actual amount of dividend and tax paid, it has been presumed that the proposed dividend and tax provision for the current year were paid in the next year , It represents real liquid position , It can be equated with the income statement

True/False
Question
A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years
Correct Answer
Rs. 12,100
Your Answer
Rs. 12,100

Multiple Choice Multiple Answer
Question
Objective of perpetual inventory system are
Correct Answer
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies
Your Answer
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies

Multiple Choice Single Answer
Question
Overcapitalisation is
Correct Answer
Existence of excess capital as compared to the level of activity and requirements
Your Answer
Existence of excess capital as compared to the level of activity and requirements

Select The Blank
Question
________ in assets involves inflow of funds
Correct Answer
Decrease
Your Answer
Increase

True/False
Question
The combination of irrevocable and confirmed letter of credit can be considered to be a guaranteed payment on the part of the exporter
Correct Answer
True
Your Answer
True

Select The Blank
Question
Financial Institution plays the role of ________ in factoring service offered
Correct Answer
Factor
Your Answer
lender

Multiple Choice Multiple Answer
Question
The functions of a Finance Controller are :
Correct Answer
Budgeting , Record Keeping , Annual Reporting
Your Answer
Banking Relations , Budgeting , Annual Reporting

True/False
Question
In case of cash credit, the company need not have a formal current account
Correct Answer
True
Your Answer
False

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 , Confirmed Packing credit

Multiple Choice Single Answer
Question
Interest and Dividend are categorised under
Correct Answer
Non-operating expenses
Your Answer
Non-operating expenses

True/False
Question
Turnover ratios measure efficiency of a business in using its resources
Correct Answer
True
Your Answer
True

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
Your Answer
Merchant Banker

Select The Blank
Question
The most accepted interpretation of the term 'funds' is in the form of ________
Correct Answer
Working capital
Your Answer
Working capital

True/False
Question
Under hypothecation mode of security neither the property not the possession of the goods hypothecated is transferred to the Bank
Correct Answer
True
Your Answer
True

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
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action

Multiple Choice Single Answer
Question
The technique where the interest is compounded and becomes a part of initial principal at the end of compounding period is termed as
Correct Answer
Compounding
Your Answer
Compounding

Select The Blank
Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash

True/False
Question
Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of Equity shares
Correct Answer
True
Your Answer
True

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

Multiple Choice Multiple Answer
Question
The following techniques can be used to delay cash payments
Correct Answer
Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments
Your Answer
Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments

Multiple Choice Single Answer
Question
The cost of equity shares may be decided on the basis of yields actually realised over the period of past few years which may be expected to be continued in future also as per the
Correct Answer
Realised Yield Approach
Your Answer
Realised Yield Approach

Multiple Choice Single Answer
Question
Irregular Dividend Policy refers to
Correct Answer
Dividend per share varying according to the level of earnings
Your Answer
The company does not pay any dividend despite the huge earnings

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

Financial Management 23--SCDL

Financial Management 23:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer
Question
The collection programme of the firm consists of
Correct Answer
Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching , Telegraphic and Telephonic advice to customers around the due date
Your Answer
Telegraphic and Telephonic advice to customers around the due date , Maintaining the state of receivables , Dispatch of letters to customers whose due date is approaching

Select The Blank
Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company
Correct Answer
Directors
Your Answer
Directors

Select The Blank
Question
________ in liabilities involves inflow of funds
Correct Answer
Increase
Your Answer
Increase

Match The Following
Question
Correct Answer
Your Answer
Recurring duties of finance executive
Raising of funds
Cost management
Objective of finance function
Profit maximization
Profit maximization
Treasurer
Cost management
International Finance
Finance Controller
Internal Auditing
Raising of funds

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
Your 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

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

Select The Blank
Question
Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee
Correct Answer
Legal
Your Answer
Legal

True/False
Question
Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship
Correct Answer
True
Your Answer
True

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 Single Answer
Question
The Proprietary concern is owned by
Correct Answer
Only one person
Your Answer
Only one person

Multiple Choice Multiple Answer
Question
The limitations of ratio analysis are
Correct Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis takes in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future happenings , Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business , Ratio analysis provides data for inter-firm comparison

Multiple Choice Multiple Answer
Question
The disadvantages of a Partnership firm are
Correct Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited
Your Answer
Unlimited liability , Capacity to raise funds to meet complex business operations is limited

Multiple Choice Single Answer
Question
Float indicates
Correct Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement
Your Answer
the difference between the bank balance as per the bank book and as per the bank pass book/bank statement

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
Kenneth Midgley and Ronald Burns

Select The Blank
Question
If the company pays the dividend out of retained profits, then the amount to be drawn from the reserve shall not exceed an amount equal to ________ of its paid up capital and free reserves
Correct Answer
0.1
Your Answer
0.1

True/False
Question
Introduction of a heavy amount of debt capital in the capital structure will not only reduce the valuation of the firm but will also increase the cost of capital
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
An increase in the share premium account is
Correct Answer
Source of funds
Your Answer
Source of funds

Multiple Choice Single Answer
Question
Current liabilities consist of
Correct Answer
Creditors
Your Answer
Creditors

True/False
Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Your Answer
True

Multiple Choice Single Answer
Question
Current assets are also referred to as
Correct Answer
Working Capital
Your Answer
Working Capital

Select The Blank
Question
The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions.
Correct Answer
Cash
Your Answer
Cash

Match The Following
Question
Correct Answer
Your Answer
Advantage of Net present value
considers cash inflows from the project throughout its life
presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return
Disadvantage of Accounting rate of return
uses profits after depreciation and taxes and not the cash inflows for evaluating the projects
considers cash inflows from the project throughout its life
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

Multiple Choice Multiple Answer
Question
Limitations of Average collection period
Correct Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements
Your Answer
Average Collection period assumes that the credit sales are evenly spread throughout the year. In practical circumstances, credit sales are not evenly spread throughout the year , The amount of credit sales made by company or the normal credit period offered by the company are not available in the published financial statements , Not proper cost benefit analysis made by the company

True/False
Question
Traditional approach believes the existence of Optimal Capital structure
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
Assuming the current ratio is 2, in which cases would the current ratio decline
Correct Answer
Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note
Your Answer
Issue of new shares , Purchase of fixed Assets , Cash collected from customers

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 Interest and Taxes

Select The Blank
Question
The concept of watered capital is confined to the time of ________ of the company
Correct Answer
Promotion
Your Answer
Promotion

True/False
Question
Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc.
Correct Answer
True
Your Answer
True

True/False
Question
A good Budget manual promotes standardization and simplification of budgetary procedures
Correct Answer
True
Your Answer
True

True/False
Question
Return on Assets is a ratio of relationship between Assets and Sales
Correct Answer
False
Your Answer
True

Multiple Choice Single Answer
Question
Increase in the amount in debtors results in
Correct Answer
Decrease in cash
Your Answer
No change in cash

Multiple Choice Single Answer
Question
The symptom of low capacity utilisation will be shown by
Correct Answer
Fixed Assets Turnover ratio
Your Answer
Fixed Assets Turnover ratio

Multiple Choice Single Answer
Question
From the following data, work out the Economic order quantity : Annual Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100, Inventory carrying cost is 15% on average inventory
Correct Answer
200 units
Your Answer
200 units

Select The Blank
Question
________ ratio will be useful in indicating the symptom of inability to pay dues to financial institutions
Correct Answer
Debt Service Coverage ratio
Your Answer
Debt Equity

Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy

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
Your 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

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

Multiple Choice Single Answer
Question
Gross Profit ratio is calculated as
Correct Answer
[(Gross Profit / Net Sales)] * 100
Your Answer
[(Gross Profit / Net Sales)] * 100

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
Your Answer
True

Multiple Choice Multiple Answer
Question
External sources of cash are as follows :
Correct Answer
Issue of new shares , long term loans , short term borrowings
Your Answer
Issue of new shares , long term loans , short term borrowings

Select The Blank
Question
Profit after taxes can be distributed among the owners of the company by way of ________
Correct Answer
dividend
Your Answer
dividend

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
Your Answer
No immediate Dividend policy

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
The prices of the material remain unstable , 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
Measurement of cost of capital can be done through
Correct Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares
Your Answer
Cost of Debt , Cost of Preference shares , Cost of Equity shares

True/False
Question
Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest )
Correct Answer
False
Your Answer
True

Multiple Choice Single Answer
Question
Capital cost is
Correct Answer
cost on the use of additional capital to support credit sales
Your Answer
additional expenses on the creation and maintenance of a credit department

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
Your Answer
cost of investment

Financial Management Set 7--SCDL

Plz Click on the link Below to access the Papers of Financial Management


Financial Management 21


Financial Management 22


Financial Management 23

Financial Management 22--SCDL

Financial Management 22:

LIST OF ATTEMPTED QUESTIONS AND ANSWERS



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
Your Answer
True

Select The Blank
Question
When a company issues bonus shares ________ of the company get reduced
Correct Answer
Reserves
Your Answer
Reserves

Multiple Choice Single Answer
Question
Current assets is in the form of
Correct Answer
Receivables
Your Answer
Investments

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
Your Answer
Accounting rate of return

Select The Blank
Question
Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer
Assets
Your Answer
Profits

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
Your Answer
Bankers , Financial Institutions




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
Your Answer
Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning , Represents real liquid position

True/False
Question
Debt Service Coverage Ratio is one of the most important ratios calculated by the bankers of financial institutions giving long term finance to the organisation
Correct Answer
True
Your Answer
True

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
Your Answer
Pay Back period

Multiple Choice Single Answer
Question
Which important accounting ratios would be used by a shareholder who is examining his portfolio and who is to decide whether he should hold or sell his shares in the company
Correct Answer
Earning per share
Your Answer
Liquid ratio

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 Single Answer
Question
The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as
Correct Answer
Semi-variable cost
Your Answer
Semi-variable cost

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

Multiple Choice Multiple Answer
Question
The sources of cash are
Correct Answer
Cash from operations , sale of machinery , Issue of new shares
Your Answer
Cash from operations , Issue of new shares

True/False
Question
Credit rating does not create any legal relationship between the rating agency and the investor
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Goodwill written off should be
Correct Answer
added to the Net Profit as per Profit and loss account
Your Answer
ignored

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

True/False
Question
Loans from financial corporations etc. are sources of cash
Correct Answer
True
Your Answer
True

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
Your Answer
True

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
Your Answer
more

Select The Blank
Question
Redemtion of shares/debentures is categorised under ________
Correct Answer
Non-operating cash outflow
Your Answer
Non-operating cash inflow

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
Your Answer
Term loans represent unsecured lending

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
Your Answer
time value of money

True/False
Question
A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same
Correct Answer
True
Your 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
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

True/False
Question
The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee
Correct Answer
True
Your Answer
True

True/False
Question
The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost
Correct Answer
True
Your Answer
True

Multiple Choice Multiple Answer
Question
The patterns of Dividend policy are
Correct Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy
Your Answer
Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy

Multiple Choice Multiple Answer
Question
Advantages of letter of credit to the Importer
Correct Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods
Your Answer
the importer can bargain for better trading terms , he is assured to get proper supply of the goods

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
Your Answer
Company Law board

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
Your Answer
The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm , They have lowest priority in the event of liquidation

Select The Blank
Question
Break even point is that level of sales revenue at which there is ________
Correct Answer
no profit no loss
Your Answer
no profit no loss

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
Your Answer
They are acquired for use for long periods

Multiple Choice Single Answer
Question
A secured instrument usually secured by a charge on the immovable properties of the company where there is a promise to pay interest and repay principal at a stipulated period of time is known as
Correct Answer
Debentures
Your Answer
Debentures

Match The Following
Question
Correct Answer
Your Answer
Retained earnings
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Residue left behind from earnings available to equity shareholders after the payment of annual dividend
Term loan
represents a source of debt finance which is generally repayable in more than one year but less than ten years
instruments to raise long term debt capital
Lessee
Not able to claim depreciation on asset
Not able to claim depreciation on asset
Hirer
Claims the depreciation on the asset
Claims the depreciation on the asset

Select The Blank
Question
Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive
Correct Answer
Non-recurring
Your Answer
Non-recurring



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

Multiple Choice Multiple Answer
Question
The effects of undercapitalisation are
Correct Answer
Increase tax liability of the company , Demand of the employees to increase wages
Your Answer
Increase tax liability of the company , Credit standing of the company in the market falls down and difficulty in raising futher capital , Shares become non-transferable

Select The Blank
Question
Retained earnings is a source of ________ finance
Correct Answer
Internal
Your Answer
Internal

Select The Blank
Question
Private limited company and Public limited company are the companies based on the classification of ________
Correct Answer
Number of members
Your Answer
Number of members

Multiple Choice Multiple Answer
Question
Fixation of Inventory levels are based on the following propositions
Correct Answer
There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly
Your Answer
Ordering cost and carrying cost are directly related to each other , There has to be a constant watch on the actual stock level of various kinds of materials so that proper action can be taken , The various levels fixed are not fixed on a permanent basis and are subject to revision regularly , Minimum level indicate the level above which the actual stock should not exceed

Multiple Choice Multiple Answer
Question
Objective of perpetual inventory system are
Correct Answer
Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies
Your Answer
A close and strict control is facilitated on the most important items , Maintenance of Bin Cards and Stores ledger in order to know about the stock in quantity and value at any given point of time , Continuous verification of physical stock to ensure that the physical balance and the book balance tallies , It may serve as a base for the Production department for placing the material requisition slips

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
Your Answer
Transaction motive

Select The Blank
Question
Factoring indicates the relationship between ________ and a business organisation
Correct Answer
Financial institutions
Your Answer
Financial institutions

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
Your Answer
remains unaffected by the dividend policy of the company

True/False
Question
Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales
Correct Answer
True
Your Answer
True