Financial Management-16

Financial Management


True/False
Question The factor need not factor all the debts of the client
Correct Answer True
Your Answer True


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


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 If the customer fails to pay the amount due from him the legal action should be initiated against the customer after the limitation period is over
Correct Answer False
Your Answer True


Multiple Choice Multiple Answer
Question Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction
Correct Answer Purchases Account , Loss by theft Account
Your Answer Sales Account , Purchases Account


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


True/False
Question Income tax paid in the case of sole proprietor firms should be treated as a personal expense of the proprietor
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question The technique which tries to find out the present value of Re 1 if received or spent after n years, provided that the interest rate of I can be earned on investment is termed as
Correct Answer Discounting
Your Answer Compounding


True/False
Question Quick Assets are the most liquid of current assets
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question Debtors turnover ratio is normally supported by the calculations of
Correct Answer Average collection period
Your Answer Inventory turnover


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 Over-valuation of closing stock

Undue increase in Gross Profit ratio Over-valuation of closing stock Indicates the relation between production cost and Sales

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 that portion of sales available to the owners after consideration of all types of expenses and cost



Multiple Choice Single Answer
Question The ratio which indicates the extent to which the Owners' funds are sunk in different kinds of assets is termed as
Correct Answer Proprietory ratio
Your Answer Proprietory ratio


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


Multiple Choice Single Answer
Question Net Working Capital means
Correct Answer Current assets less Current liabilities
Your Answer Current assets


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


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


Multiple Choice Single Answer
Question Collection cost in connection with accounts receivables involves
Correct Answer Administrative cost
Your Answer Administrative cost


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 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 , Carry voting rights


Multiple Choice Single Answer
Question The capability of the organisation to repay the dues arising as a result of long term borrowing is caculated by
Correct Answer Debt Service coverage ratio
Your Answer Operating ratio


Select The Blank
Question Continuous verification of physical stock to ensure that the physical balance and the book balance tallies is carried under ________.
Correct Answer Perpetual Inventory system
Your Answer Bill of materials


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


Match The Following
Question Correct Answer Your Answer

Recurring duties of finance executive Raising of funds Internal Auditing

Objective of finance function Profit maximization Profit maximization

Treasurer Cost management International Finance

Finance Controller Internal Auditing Raising of funds



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 Company pays higher price to the vendors of the assets transferred


Multiple Choice Multiple Answer
Question Gross Profit can be increased by either
Correct Answer Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced Production cost , Increased Sales price, Production cost remaining the same
Your Answer Reduced Production cost, sales price remaining the same , Increase in Advertising cost, Sales price remaining the same


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


Multiple Choice 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


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 True


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 The external users of financial statements are
Correct Answer Lenders , Suppliers
Your Answer Board of Directors , Accountant of the company , Suppliers


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


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


Select The Blank
Question ________ leverage also acts as a guideline in setting maximum limit upto which the company should use the debt capital
Correct Answer Financial
Your Answer Operating


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 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 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 Over-valuation of closing stock , Under-valuation of closing stock


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


Multiple Choice Multiple Answer
Question Top management who can accept or reject capital expenditure proposals may be in the form of
Correct Answer Board of Directors , Executive committee , Management committee
Your Answer Board of Directors , Executive committee , Management committee


Select The Blank
Question Return Inward is deducted from________
Correct Answer Sales
Your Answer Purchases


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 Debtors turnover ratio


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


Multiple Choice Single Answer
Question The capital of Samir Ltd. is as follows : Equity shares of Rs. 100 each Rs. 10,00,000/-, 12% Preference shares of Rs. 10 each Rs. 5,00,000/-, Profit after tax Rs. 4,00,000/-, Equity dividend paid 20%, Market price of equity share Rs. 120. Calculate Earnings per equity share
Correct Answer 34
Your Answer 25


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 Economic Order Quantity


True/False
Question Profitability Statement is a period statement
Correct Answer True
Your Answer True


Multiple Choice Multiple Answer
Question Factors determining the required cash balance are
Correct Answer Shortage of cash cost , Surplus cash balance costs , Procurement and Management cost
Your Answer Shortage of cash cost , Surplus cash balance costs


Multiple Choice Single Answer
Question The hidden cost of capital which is not incurred directly is referred to as
Correct Answer Implicit cost
Your Answer Component 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 Budgeting