Financial management SCDL Assignment for 2011
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Please check below SCDL Solved Assignment on Financial management.
Thank you very much Ravi Prakash for sharing your love by providing solved assignment of SCDL financial management.
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| A | B | |
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| 1 | Financial management Questions | Answer |
| 2 | Limitations of credit rating are | - 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 |
| 3 | Question Limitations of credit rating are | 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 |
| 4 | The recommendations of the Tandon committee included | The norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry. The amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrower's resources in carrying a reasonable level of current assets in relation to his production requirement |
| 5 | Question The recommendations of the Tandon committee included | the norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry , that the amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrower's resources in carrying a reasonable level of current assets in relation to his production requirement |
| 6 | Limitations of Average collection period | - 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 |
| 7 | Question The characteristics of Debentures are | - Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company - The interest on debentures is payable even if the company does not earn the profits - In financial terms, debentures prove to be a cheap source of funds from the company's point of view |
| 8 | Question Limitations of Average collection period | 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 |
| 9 | Question Disadvantages of factoring are | - The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company - In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This restricts its popularity |
| 10 | Disadvantages of factoring are | The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This restricts its popularity |
| 11 | The factor may provide the following services to the client | It may undertake the credit analysis of the customers of the client , It will undertake the various book-keeping and accounting activities in relation to the receivables management , It undertakes the responsibility of following up with the customers for the purpose of making the collection from the customer |
| 12 | Question The factor may provide the following services to the client | It may undertake the credit analysis of the customers of the client , It will undertake the various book-keeping and accounting activities in relation to the receivables management , It undertakes the responsibility of following up with the customers for the purpose of making the collection from the customer |
| 13 | The function of Bill of Materials are | - It may serve as a base for the Production department for placing the material requisition slips - It gives an indication about the orders to be executed to all the persons concerned - A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order |
| 14 | Question The function of Bill of Materials are | It may serve as a base for the Production department for placing the material requisition slips , It gives an indication about the orders to be executed to all the persons concerned , A bill of material prepared and valued in advance may serve as base for quoting the price for the job or production order |
| 15 | Question Benefits of cash flow information | - 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 |
| 16 | Benefits of cash flow information | 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 |
| 17 | Question Disadvantages of Net Present value | It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible |
| 18 | Disadvantages of Net Present value | It presupposes that the discounting rate is known , It may give dissatisfactory results if the alternative projects involve varying investment outlay , It presupposes that cash inflows can be reinvested immediately to yield the return equivalent to the discounting rate which may not be possible |
| 19 | Advantages of factoring | The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities , Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables |
| 20 | Question Advantages of factoring | Factoring is the way in which the company can finance its requirement of Working capital in respect of receivables , The company can take advantage of the expertise of the factor in various fields , With the help of factoring the company can be relieved of administrative responsibilities |
| 21 | The limitations of ratio analysis are | 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 |
| 22 | Question The limitations of ratio analysis are | 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 |
| 23 | The assumptions made while preparing the funds flow statement are | 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 |
| 24 | Question The Economic Order Quantity model is based on the assumption of | 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 |
| 25 | The Economic Order Quantity model is based on the assumption of | 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 |
| 26 | Question The term cost of capital is important for a company basically for the following purposes | It is used as a tool for screening the investment proposals , It is used as the capitalisation rate to decide the amount of capitalisation in case of a new concern , It provides useful guidelines for determining the optimal capital structure |
| 27 | Question Uses of financial leverage are | It acts as a guideline in setting maximum limit upto which the company should use the debt capital , It gives an indication regarding the extent to which Earning per share may be affected due to every change in Earning before Interest and tax |
| 28 | Question Advantages of Centralised disbursements | It increases the transit time , Minimum cash balance can be maintained only in case of central bank account instead of four different branches , To maintain the bank accounts at different branches may prove to be administratively difficult |
| 29 | The following techniques can be used to delay cash payments | 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 |
| 30 | Question The following techniques can be used to delay cash payments | 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 |
| 31 | Objective of perpetual inventory system are | - 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 |
| 32 | Question Objective of perpetual inventory system are | 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 |
| 33 | Question Fixation of Inventory levels are based on the following propositions | - 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 |
| 34 | Fixation of Inventory levels are based on the following propositions | 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 |
| 35 | Question The Purpose of cash budget is | - 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 |
| 36 | Dividend / Price Approach to compute cost of equity shares is objected on the following grounds | 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 |
| 37 | 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 normalnon-peak levels and also peak levels |
| 38 | Disadvantages of Preference shares from shareholders point of view | - Preference Dividend rate is rather modest - Price fluctuation preference shares is greater than price fluctuation of debentures - Preference shareholders are vulnerable to arbitrary managerial actions |
| 39 | The recommendations of the Chhore committee included | 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 |
| 40 | Question The recommendations of the Chhore committee included | 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 |
| 41 | Question Disadvantages of Internal rate of return is | - It is difficult to use and understand - It presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to Internal rate of return which is not very realistic |
| 42 | Question Advantages of Internal rate of return is | It considers time value of money , It considers cash inflows from the project throughout its life , It can be computed even in the absence of the knowledge about the firm's cost of capital |
| 43 | Advantages of Internal rate of return is | It considers time value of money , It considers cash inflows from the project throughout its life , It can be computed even in the absence of the knowledge about the firm's cost of capital |
| 44 | The advantages of operating lease is | In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , The lessee is responsible for maintenance, insurance and taxes |
| 45 | Question Advantages of ABC Analysis are | A close and strict control is facilitated on the most important items , Helps in maintaining a high inventory turnover ratio , Optimum utilisation of the available funds can be assured |
| 46 | The advantages of ratio analysis are | It helps in planning and forecasting , It makes possible comparison of the performance of the different divisions of the firm , It simplifies the comprehension of financial statements |
| 47 | Advantages of Debentures from company's point of view are | 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 |
| 48 | The collection programme of the firm consists of | 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 |
| 49 | Limitation of Economic Order Quantity assumptions | Demand throughout the year may not be constant, may fluctuate according to fluctuations in production , Prices of the materials may not remain same throughout the year |
| 50 | The advantages of leasing for the lessee are | 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 |
| 51 | Question The advantages of leasing for the lessee are | 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 |
| 52 | Question The Irrelevance approach is based on the assumption of | Capital markets are perfect, Investors are rational, transactions are instaneous and costless. Securities are divisible and no investor can influence the market price |
| 53 | Gross Profit can be increased by either | Reduced Production cost, sales price remaining the same , Increased Sales price, Reduced Production cost , Increased Sales price, Production cost remaining the same |
| 54 | Question The normal process which may be followed under the capital rationing situations may be | Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted |
| 55 | Advantages of the issue of Bonus shares in the form of Dividend to the company are | Remedy for undercapitalisation , Increase marketability of shares , Increase credit standing of the company in the eyes of the lending financial institutions |
| 56 | Question Earnings / Price Approach to compute cost of equity shares is objected on the following grounds | 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 |
| 57 | Earnings / Price Approach to compute cost of equity shares is objected on the following grounds | 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 |
| 58 | The Walter and Gordon's approach of Dividend policy is based on the assumption of | 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 |
| 59 | Question Advantages of Debentures from Investor's point of view | 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 |
| 60 | Advantages of Debentures from Investor's point of view | 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 |
| 61 | Question The advantages of operating lease is | In an operating lease arrangement the equipment risk is transferred to thelessor,It minimizes investment in equipment , Reduces expenditure on maintenance |
| 62 | The advantages of continuous stock taking are | The figures of stock can be readily available for the purpose of periodic Profit and Loss Account , It enables to locate slow and non-moving items |
| 63 | Shortcomings of Debentures from Investor's point of view | The interest on debentures is fully taxable , They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates |
| 64 | Shortcomings of Debentures from company's point of view | The debenture interest and capital repayment are obligatory payments , Debenture financing enhances the financial risk associated with the firm |
| 65 | Question Limitations of capital budgeting is | Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital |
| 66 | Limitations of capital budgeting is | Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital |
| 67 | Question The effects of overcapitalisation are | Reduction in the market value of the shares , Credit standing of the company in the market falls down and difficulty in raising futher capital |
| 68 | Question If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds | Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action |
| 69 | If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds | Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action |
| 70 | Importance of capital budgeting decisions | They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain |
| 71 | The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes | Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding |
| 72 | Question The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes | Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding |
| 73 | Question The book-keeping and accounting activities in relation to the receivables management undertaken by the factor includes | Maintenance of debtors ledger , Various periodical reports about outstanding from the customers , Age-wise analysis of the outstanding |
| 74 | Question Cash Budget is | the statement showing the various estimated sources of cash receipts on one hand and the various applications of cash on another hand |
| 75 | The advantages of stable Dividend policy are | Credit standing of the company in the market increases , Share price of the company increases , Enjoys Confidence of the shareholders |
| 76 | The characteristics of assets are | They are acquired for use over short period , They are acquired for use for long periods , They are ordinarily not meant for resale |
| 77 | Question Limitations of financial leverage is | It ignores implicit cost of debt , It assumes that cost of debt remains constant regardless of degree of leverage which is not true |
| 78 | The shares of the company can be bought back out of the following amounts | Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities |
| 79 | Question The shares of the company can be bought back out of the following amounts | Free Reserves of the company , Share Premium Account of the company , Proceeds of issue of any shares or other specified securities |
| 80 | Question Feature of term loan is | They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc. |
| 81 | Limitations of cash flow analysis are | It cannot be equated with the income statement , Cannot replace the fund flow statement , Dose not represent real liquid position |
| 82 | Question The technique of Ratio Analysis is | The interpretation of financial statements by grouping or regrouping the various figures with the intention to draw conclusions. |
| 83 | Undue decrease in Gross Profit ratio may indicate | Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities |
| 84 | 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 |
| 85 | Question Undue decrease in Gross Profit ratio may indicate | Non-consideration of sales invoices , Under-valuation of closing stock ,Improper utilisation of infrastructural facilities |
| 86 | Advantages of cash flow statement are | Helps in efficient cash management , Discloses the movements of cash , Discloses the success or failure of cash planning |
| 87 | Question Advantages of cash flow statement are | Discloses the movements of cash , Discloses the success or failure of cash planning , Helps in efficient cash management |
| 88 | Question The causes of undercapitalisation are | Your Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated |
| 89 | The function of the underwriter is to | provide a protection to the company in the situation of investors not fully subscribing to the issue of the securities |
| 90 | Question Floor rate is | the minimum rate of interest payable by the company on the bonds even is the base rate falls below a certain limit |
| 91 | Economic Order quantity indicates that | Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised |
| 92 | Utility of cash flow analysis | Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash |
| 93 | Question Equity Warrants are | where the holders are entitled to purchase the equity shares at a specific price during the specified period |
| 94 | Equity Warrants are | where the holders are entitled to purchase the equity shares at a specific price during the specified period |
| 95 | Question Utility of cash flow analysis | Helps in efficient cash management , helps in internal financial management ,Discloses the movements of cash |
| 96 | Before investing in the project, Venture capitalist is interested in ensuring that | The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent |
| 97 | The causes of undercapitalisation are | Company following too conservative policy for paying the dividends , Future earnings may be underestimated |
| 98 | Question Fixed Working Capital is | the minimum working capital required to be maintained in the business on permanent or uninterrupted basis |
| 99 | Float indicates | the difference between the bank balance as per the bank book and as per the bank pass book/bank statement |
| 100 | Question Advantage of term loan from the company's point of view is | In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital |
| 101 | Advantage of term loan from the company's point of view is | In post tax terms, the cost of term loans is lower than the cost of equity capital or preference capital |
| 102 | The importance of various items of inventory may be decided on the following factors | Value of material consumption , Critical nature of inventory items , Amount of investment in inventory |
| 103 | Question The importance of various items of inventory may be decided on the following factors | Value of material consumption , Critical nature of inventory items , Amount of investment in inventory |
| 104 | Question Advantages of letter of credit to the Importer | the importer can bargain for better trading terms , he is assured to get proper supply of the goods |
| 105 | Advantages of letter of credit to the Importer | the importer can bargain for better trading terms , he is assured to get proper supply of the goods |
| 106 | Advantages of Net Present value is | It considers time value of money , It considers cash inflows from the project throughout its life |
| 107 | Question Undue increase in Gross Profit ratio may indicate | Over-valuation of closing stock , Consideration of non-sales transactions as sales transaction |
| 108 | The disadvantages of a Partnership firm are | Unlimited liability , Capacity to raise funds to meet complex business operations is limited |
| 109 | Question The disadvantages of a Partnership firm are | Unlimited liability , Capacity to raise funds to meet complex business operations is limited |
| 110 | The current ratio of a company is 2:1 ; Which of the following suggestions have no effect on the ratio | Cash collected from customers , Bills Receivable dishonoured , Purchase stocks against cash |
| 111 | Under the Financial Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered | Existing as well as potential competitors in the industry , Market position of the company |
| 112 | Question Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered | Existing as well as potential competitors in the industry , Market position of the company |
| 113 | Question Advantages of Preference shares from shareholders point of view | For a corporate investor, preference dividend income , It earns a stable dividend rate |
| 114 | Advantages of Preference shares from shareholders point of view | For a corporate investor, preference dividend income , It earns a stable dividend rate |
| 115 | Factors determining the required cash balance are | Shortage of cash cost , Surplus cash balance costs , Procurement and Management cost |
| 116 | The patterns of Dividend policy are | Stable Dividend policy , No immediate Dividend policy , Increasing Dividend policy |
| 117 | Question Items under Cash from operations include | Profit made during the year , Increase in creditors, Increase in Bills receivables |
| 118 | Question The patterns of Dividend policy are | Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy |
| 119 | The effects of undercapitalisation are | Increase tax liability of the company , Demand of the employees to increase wages |
| 120 | Question The effects of undercapitalisation are | Increase tax liability of the company , Demand of the employees to increase wages |
| 121 | Question The methods which consider the risk in capital budgeting decision are | Informal method , Risk adjusted discounting rate , Certainty-Equivalent approach |
| 122 | The approaches to compute the cost of equity shares are | Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach |
| 123 | Question The approaches to compute the cost of equity shares are | Dividend / Price Approach , Realised Yield Approach , Earnings / Price Approach |
| 124 | Question Assuming the current ratio is 2, in which cases would the current ratio decline | Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note |
| 125 | Assuming the current ratio is 2, in which cases would the current ratio decline | Purchase of fixed Assets , Borrow Money on an Interest bearing promissory note |
| 126 | The current ratio of a company is 2:1 ; Which of the following suggestions would improve the current ratio | Payment of current liability , To sell a motor car for cash at a slight loss |
| 127 | Question: The internal factors affecting the dividend policy are | Correct Answer: Growth rate of the company , Composition of the shareholding |
| 128 | Question Internal sources of funds are | Funds from operations , Loss on sale of fixed assets , Goodwill written off |
| 129 | Question International financial function of the organisation comprises of : | Study of flow of funds beyond national boundaries , Exchange of currencies |
| 130 | Question Situation of capital rationing may involve problems in the form of | Project Indivisibility , Mutually dependent project , Multi period projects |
| 131 | Question The recurring duties of Finance Executive includes | Working Capital Management , Fixed Assets management , Control of funds |
| 132 | The recurring duties of Finance Executive includes | Fixed Assets management , Control of funds , Working Capital Management |
| 133 | Question Projects for which profitability is not the criterion are | Service Department projects , Welfare projects , Educational projects |
| 134 | Projects for which profitability is not the criterion are | Service Department projects , Welfare projects , Educational projects |
| 135 | Gross Profit is ascertained by the difference between sales and normally the following expenses | Cost of Purchases , Expenses related to Purchases , Stock Adjustments |
| 136 | Question Gross Profit is ascertained by the difference between sales and normally the following expenses | Cost of Purchases , Expenses related to Purchases ,Stock Adjustments |
| 137 | The avenues available to the company to invest the excess cash balance on short term basis may be in the form of | Commercial paper , inter-corporate bills discounting , Bank deposits |
| 138 | Question The avenues available to the company to invest the excess cash balance on short term basis may be in the form of | Commercial paper , inter-corporate bills discounting , Bank deposits |
| 139 | The working Partner is a Partner who | does not participate in day to day affairs, only takes remuneration |
| 140 | The classification of return on Investment are | Return on Asset , Return on Capital Employed , Debt Equity ratio |
| 141 | Question Measurement of cost of capital can be done through | Cost of Debt , Cost of Preference shares , Cost of Equity shares |
| 142 | Question Measurement of cost of capital can be done through | Cost of Debt , Cost of Preference shares , Cost of Equity shares |
| 143 | Question Top management who can accept or reject capital expenditure proposals may be in the form of | Board of Directors , Executive committee ,Management committee |
| 144 | Question External sources of cash are as follows : | Issue of new shares , long term loans , short term borrowings |
| 145 | External sources of cash are as follows : | Issue of new shares , long term loans , short term borrowings |
| 146 | The Proprietary concern is better than the Partnership concern on the following points | Minimum Government regulations , Where the business is small |
| 147 | Question The Proprietary concern is better than the Partnership concern on the following points | Minimum Government regulations , Where the business is small |
| 148 | The internal factors affecting the dividend policy are | Growth rate of the company , Composition of the shareholding |
| 149 | Question The internal factors affecting the dividend policy are | Growth rate of the company , Composition of the shareholding |
| 150 | Packing credit facility can take the following form | Pre-shipment Packing credit , Post-shipment Packing credit |
| 151 | The letter of credit may be | Revocable letter of credit , Confirmed letter of credit |
| 152 | Question Factoring can be classified as | Without Recourses factoring , With Recourse factoring |
| 153 | Question External sources of funds are | Funds from long term loans , Sale of fixed assets |
| 154 | External sources of funds are | Funds from long term loans , Sale of fixed assets |
| 155 | Measurement of cost of capital can be done through | Cost of Equity shares , Cost of other liabilities |
| 156 | Unsecured loans includes | Fixed Deposit , Inter corporate unsecured deposits |
| 157 | Question Unsecured loans includes | Fixed Deposit , Inter corporate unsecured deposits |
| 158 | Question Internal sources of cash are | Depreciation , Amortization of intangible assets |
| 159 | Operating cost incurred by the company can be classified into | Variable cost , Fixed cost , Semi-variable cost |
| 160 | Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the | Bankers , Financial Institutions |
| 161 | Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the | Bankers , Financial Institutions |
| 162 | Question Fund based lending of banks include | Overdraft , Bills Purchased |
| 163 | Fund based lending of banks include | Overdraft , Bills Purchased |
| 164 | The depreciation is being charged for the following assets | Plant and Machinery , Building |
| 165 | Question The depreciation is being charged for the following assets | Plant and Machinery , Building |
| 166 | The cost of managing inventory includes | Ordering cost , Carrying cost |
| 167 | Question The cost of managing inventory includes | Ordering cost , Carrying cost |
| 168 | Question Indicate which of these are Profitability ratios | Operating ratio , Gross Profit ratio |
| 169 | Indicate which of these are Profitability ratios | Operating ratio , Gross Profit ratio |
| 170 | Undercapitalisation is | Excess of real worth of the assets over the aggregate of shares and debentures outstanding |
| 171 | Question Undercapitalisation is | Excess of real worth of the assets over the aggregate of shares and debentures outstanding |
| 172 | Question In ABC analysis A class consist of ________. | only a small percentage of total number of items handled but are most important in nature |
| 173 | In ABC analysis A class consist of ________. | only a small percentage of total number of items handled but are most important in nature |
| 174 | Debt Service coverage ratio is calculated as ________ | (Net Profit after taxes + Depreciation + Interest on term loan) / (Interest + Instalment) |
| 175 | Question A company cannot make the public issue of equity shares unless | It has made an application for listing of these equity shares in the stock exchange |
| 176 | A company cannot make the public issue of equity shares unless | It has made an application for listing of these equity shares in the stock exchange |
| 177 | The "Pre-emptive right" of the equity shareholder is | the right to purchase new shares in the same proportion as their current ownership |
| 178 | Question The "Pre-emptive right" of the equity shareholder is | the right to purchase new shares in the same proportion as their current ownership |
| 179 | Overcapitalisation is | Existence of excess capital as compared to the level of activity and requirements |
| 180 | The 'going concern concept' is the underlying basis for | disclosing the sales and other operating information in the income statement |
| 181 | Question Revenue reserves represents | Accumulated retained earnings from the profits of normal business operations |
| 182 | Cost theory of capitalisation considers the amount of capitalisation | On the basis of cost of various assets required to set up the organisation |
| 183 | Variable Working Capital is | the working capital required over and above the permanent working capital |
| 184 | Question Rights issue is | Selling the securities in the primary market to the existing shareholders |
| 185 | Question The situation of watered capital may arise due to ________ | Company pays higher price to the vendors of the assets transferred |
| 186 | Accounting rate of return is calculated as | [Total Profits / (Net Investment * No. of years of Profits)] * 100 |
| 187 | Question Inventory turnover ratio is a measure to discover | The possible trouble in the form of overstocking or overvaluation |
| 188 | Question Earnings per share is calculated as | ( Profit after tax - Preference Dividend ) / No. of equity shares |
| 189 | Question Irregular Dividend Policy refers to | Dividend per share varying according to the level of earnings |
| 190 | Irregular Dividend Policy refers to | Dividend per share varying according to the level of earnings |
| 191 | Capital cost is | cost on the use of additional capital to support credit sales |
| 192 | Shortcoming of term loans from company's point of view | The interest and capital repayment are obligatory payments |
| 193 | The term receivables is defined as | Amount paid by the company in respect of prepaid expenses |
| 194 | According to the Irrelevance approach of dividend policy, the value of the company | remains unaffected by the dividend policy of the company |
| 195 | Question For the calculation of Operating Profit / Loss , Preliminary expenses written off should be | added to the Net Profit as per Profit and loss account |
| 196 | For the calculation of Operating Profit / Loss , Preliminary expenses written off should be | added to the Net Profit as per Profit and loss account |
| 197 | For the calculation of Operating Profit / Loss , Goodwill written off should be | added to the Net Profit as per Profit and loss account |
| 198 | For the calculation of Operating Profit / Loss , Depreciation on fixed assets should be | added to the Net Profit as per Profit and loss account |
| 199 | Question If a company decides to invite public deposits | It should publish an advertising in leading newspaper |
| 200 | Question In ABC analysis C class consist of ________. | a very large number of items which are less important |
| 201 | In ABC analysis C class consist of ________. | a very large number of items which are less important |
| 202 | Question Interest Coverage ratio is calculated as | Profit before Interest and taxes / Interest charges |
| 203 | The payment of Dividend in the form of Bonus shares involves ________ | only transfer of retained earnings to share capital |
| 204 | Question Shortcoming of term loans from company's point of view | The interest and capital repayment are obligatory |
| 205 | Cash from operation is equal to | Net Profit plus increase in outstanding expenses |
| 206 | Question ________ are basically interested in the solvency position of the organisation | Financial institution lending long term finance |
| 207 | Question Overall profitability ratio includes | Return on Asset , Return on Shareholders Funds |
| 208 | The objective of the management in the investment decisions is in the form of ________ | maximisation of the wealth of the shareholders |
| 209 | The functions of a Finance Controller are : | Budgeting , Record Keeping , Annual Reporting |
| 210 | Question The functions of a Finance Controller are : | Budgeting , Record Keeping , Annual Reporting |
| 211 | Question Price Earnings ratio is calculated as | Market Price per share / Earnings per share |
| 212 | The situation of watered capital may arise due to ________ | Going for constant modernisation programmes |
| 213 | The classification of ratios under miscellaneous group includes | Earnings per share , Dividend Payment ratio |
| 214 | Question The classification of ratios under miscellaneous group includes | Earnings per share , Dividend Payment ratio |
| 215 | Types of capital budgeting decisions | Replacements , Expansion , Diversification |
| 216 | Question Types of capital budgeting decisions | Replacements , Expansion , Diversification |
| 217 | Goods Stolen ( Sale price Rs. 1000/- Cost Rs. 800/- ) ; Which of the accounts will be affected by this transaction | Purchases Account , Loss by theft Account |
| 218 | The sources of cash are | Long term loans , cash from other sources |
| 219 | Question The sources of cash are | Long term loans , cash from other sources |
| 220 | Question Net Working Capital means | Current assets less Current liabilities |
| 221 | Net Working Capital means | Current assets less Current liabilities |
| 222 | The investor is prepared to pay the market price of the shares as he expects not only the payment of the dividend but also expects a growth in the dividend rate at a uniform rate perpetually under the | Dividend /Price + Growth rate Approach |
| 223 | Question: Minimum application money payable by the applicant along with the application shall not be less than | Correct Answer: 25% of the issue price |
| 224 | Question The objective of Working Capital management is to ensure | Optimum investment in current assets |
| 225 | The formula for Current ratio is | Current assets / Current liabilities |
| 226 | Working Capital is computed as | Current assets - Current liabilities |
| 227 | Question: The Investment decisions are mainly concerned with | Correct Answer: Application of funds |
| 228 | Question Composite cost is calculated as | Total weighted cost / Total weights |
| 229 | Composite cost is calculated as | Total weighted cost / Total weights |
| 230 | The techniques of Analysis and Interpretation of financial statements are | Ratio Analysis , Cash flow Analysis |
| 231 | Question The techniques of Analysis and Interpretation of financial statements are | Ratio Analysis , Cash flow Analysis |
| 232 | From company's point of view return paid on own capital is | is not a tax deductible expenditure |
| 233 | The highest form of maintaining liquidity of cash is | Cash balance in the current account |
| 234 | Question Net cash inflow is arrived at | Revenue after tax add depreciation |
| 235 | Net cash inflow is arrived at | Revenue after tax add depreciation |
| 236 | Question In financial terms, Profit before Interest and taxes can be referred as | Earnings before Interest and taxes |
| 237 | In financial terms, Profit before Interest and taxes can be referred as | Earnings before Interest and taxes |
| 238 | Unclaimed Dividends is shown in the balance sheet under the head | Current liabilities and Provisions |
| 239 | Question Unclaimed Dividends is shown in the balance sheet under the head | Current liabilities and Provisions |
| 240 | Question: The reduction in the market value of the shares may cause due to | Correct Answer: Overcapitalisation |
| 241 | Gross Profit ratio is calculated as | [(Gross Profit / Net Sales)] * 100 |
| 242 | 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 |
| 243 | Question: The mix of sources from which the long term funds required by a business are raised is termed as | Correct Answer: Capital Structure |
| 244 | Question Tangible net worth means | share capital plus free reserves |
| 245 | Question In financial terms, the operating profit earned by the company is also referred to as ________ | Profit before Interest and Taxes |
| 246 | In financial terms, the operating profit earned by the company is also referred to as ________ | Profit before Interest and Taxes |
| 247 | 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 | Kenneth Midgley and Ronald Burns |
| 248 | Requirement of working capital is low is case of | Infrastructure oriented projects |
| 249 | Question Requirement of working capital is low is case of | Infrastructure oriented projects |
| 250 | 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 |
| 251 | The Pay Bank period is calculated as | Cash outlay / Annual cash inflow |
| 252 | Question The Pay Bank period is calculated as | Cash outlay / Annual cash inflow |
| 253 | In ABC analysis B class consist of ________. | relatively less important items |
| 254 | The most reliable source of getting the information about the creditworthiness of the customer who is dealing with the company presently is | Past experience of the customer |
| 255 | Question From company's point of view return on borrowed capital is | is a tax deductible expenditure |
| 256 | From company's point of view return on borrowed capital is | is a tax deductible expenditure |
| 257 | Question: Which of the following assets get generated during course of operations or get utilized within one year | Correct Answer: Current assets |
| 258 | 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 |
| 259 | Question ________ is the most important ratio to measure whether the firm has earned sufficient returns for its shareholders or not | Return on Shareholders funds |
| 260 | Question If the policy of the lending banks or financial institutions is too harsh or rigid, it will be advisable to | not to go for borrowed funds |
| 261 | 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 | No immediate Dividend policy |
| 262 | 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 | No immediate Dividend policy |
| 263 | Question If the issue of Debentures is having the maturity period of more than 18 months, the company shall create | Debenture Redemption reserve |
| 264 | If the issue of Debentures is having the maturity period of more than 18 months, the company shall create | Debenture Redemption reserve |
| 265 | The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be | No effect on the funds flow |
| 266 | The effect of Old furniture the book value of which is Rs. 5,000 discarded and written off in the Profit and loss account on the funds flow is that there will be | No effect on the funds flow |
| 267 | Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be | No effect on the funds flow |
| 268 | Question The effect of Cash collected from Debtors on the funds flow is that there will be | No effect on the funds flow |
| 269 | Question Net Profit earned plus non-working capital expenses is equal to | Fund provided by operations |
| 270 | The symptom of low capacity utilisation will be shown by | Fixed Assets Turnover ratio |
| 271 | Question The symptom of low capacity utilisation will be shown by | Fixed Assets Turnover ratio |
| 272 | Question The capability of the organisation to repay the dues arising as a result of long term borrowing is caculated by | Debt Service coverage ratio |
| 273 | ________ ratio will be useful in indicating the symptom of inability to pay dues to financial institutions | Debt Service Coverage ratio |
| 274 | Technical terminology used to invest in the current assets being | Working Capital Management |
| 275 | Question Continuous verification of physical stock to ensure that the physical balance and the book balance tallies is carried under ________. | Perpetual Inventory system |
| 276 | Redemtion of shares/debentures is categorised under ________ | Non-operating cash outflow |
| 277 | Current Assets Turnover ratio is calculated as | Net Sales / Current Assets |
| 278 | 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 | Discounted Pay back period |
| 279 | Private limited company and Public limited company are the companies based on the classification of ________ | Your Answer Incorporation |
| 280 | The trading Account consists of the following items | Purchases , Closing Stock |
| 281 | Question The trading Account consists of the following items | Purchases , Closing Stock |
| 282 | Receipt of loans/borrowings appear in the cash budget under the head | Non-operating cash inflow |
| 283 | Question An increase in current asset | increases working capital |
| 284 | Question A decrease in current liabilities | increases working capital |
| 285 | Interest coverage ratio is useful in indicating the symptom of | Inability to pay interest |
| 286 | Labels: Financial Management (Set VIII) | Financial Management - 24 |
| 287 | Labels: Financial Management (Set V) | Financial Management - 15 |
| 288 | Question An increase in current liabilities | decreases working capital |
| 289 | Question: Cost management is the function of a ________. | Correct Answer: Treasurer |
| 290 | The rate of return which computes the average annual yield on the net investment in the project is known as | Accounting rate of return |
| 291 | Question The rate of return which computes the average annual yield on the net investment in the project is known as | Accounting rate of return |
| 292 | Capital turnover ratio is calculated as | Sales / Capital employed |
| 293 | Question The formula for Fixed assets turnover ratio is | Net Sales / Fixed Assets |
| 294 | Question The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by | Inventory turnover ratio |
| 295 | The market price per share is equal to the present value of the expected dividends discounted at the rate of return required by equity shareholders is determined under | Dividend /Price Approach |
| 296 | The operating profit earned by the company is in the form of contribution duly reduced by the ________ | Variable operating cost |
| 297 | Receivable management is also called as | Trade Credit management |
| 298 | Question Receivable management is also called as | Trade Credit management |
| 299 | Net revenue is arrived at | Sales revenue less cost |
| 300 | 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 | Realised Yield Approach |
| 301 | The accounting report which summarises the revenues and expenses for a specified accounting period is referred to as | Profit and loss Account |
| 302 | The discounted cash inflows match with discounted cash outflows is known as | Internal Rate of return |
| 303 | 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 | Interest coverage ratio |
| 304 | Question ________ of the company should authorise the company to buy back its own shares | Articles of Association |
| 305 | ________ of the company should authorise the company to buy back its own shares | Articles of Association |
| 306 | Question The company which pays a fixed amount of dividend irrespective of the fluctuations in income is categorised under | Stable Dividend policy |
| 307 | Question Purchases of raw material appear in the cash budget under the head | Operating cash outflow |
| 308 | Purchases of raw material appear in the cash budget under the head | Operating cash outflow |
| 309 | Question Interest and Dividend are categorised under | Non-operating expenses |
| 310 | Interest and Dividend are categorised under | Non-operating expenses |
| 311 | The lending Bank does not commit any physical outflow of funds in a | Non-Fund based lending |
| 312 | Question The lending Bank does not commit any physical outflow of funds in a | Non-Fund based lending |
| 313 | Question Factoring indicates the relationship between ________ and a business organisation | Financial institutions |
| 314 | Factoring indicates the relationship between ________ and a business organisation | Financial institutions |
| 315 | The relationship between the earnings belonging to the equity shareholders and the amount finally paid to them by way of dividend is termed as | Dividend payment ratio |
| 316 | Question The relationship between the earnings belonging to the equity shareholders and the amount finally paid to them by way of dividend is termed as | Dividend payment ratio |
| 317 | The ratio which indicates the credit policy followed by a business firm is known as | Debtors turnover ratio |
| 318 | Question The ratio which indicates the credit policy followed by a business firm is known as | Debtors turnover ratio |
| 319 | Question Increase in average credit period to maintain sales in view of falling demand can be indicated by | Debtors turnover ratio |
| 320 | Minimum application money payable by the applicant along with the application shall not be less than | 25% of the issue price |
| 321 | Question Carriage Inward is normally debited to ________ | Manufacturing Account |
| 322 | Carriage Inward is normally debited to ________ | Manufacturing Account |
| 323 | The comparison of ratios of the same organisation for different years is termed as | Intra-firm comparison |
| 324 | Increase in average credit period to maintain sales in view of falling demand can be indicated by | Return on Investment |
| 325 | The main function of finance under the traditional approach comprises of | Procurement of funds |
| 326 | Question The main function of finance under the traditional approach comprises of | Procurement of funds |
| 327 | The ratio of Market Price per share and Earning per share is termed as ________ | Price earnings ratio |
| 328 | The motive of the company to hold inventory to guard against the risk of unpredictable changes in demand and supply forces is known as | Precautionary motive |
| 329 | Question Modigliani - Miller approach closely resembles ________ approach | Net operating income |
| 330 | Modigliani - Miller approach closely resembles ________ approach | Net operating income |
| 331 | The ratio which compares the dividend per share with the market price of the share is termed as | Dividend yield ratio |
| 332 | In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account | TRUE |
| 333 | 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 |
| 334 | Question: One of the basic objectives of cash management is to maintain the optimum cash balance | Correct Answer: True |
| 335 | Question: Internal rate of return is difficult to use , calculate and understand | Correct Answer: True |
| 336 | 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 | Bonneville and Dewey |
| 337 | The Investment decisions are mainly concerned with | Application of funds |
| 338 | Tax paid is | Application of funds |
| 339 | Question The Investment decisions are mainly concerned with | Application of funds |
| 340 | Question Tax paid is | Application of funds |
| 341 | Question Stock in the beginning results in | Application of funds |
| 342 | Discounted Payback period is an improvement over the pay back period method as it considers | time value of money |
| 343 | Question That part of the inventory which does not become a part of final product but are required for production process is termed as | Stores and supplies |
| 344 | The financing of the working capital requirement which arises during the course of normal business operations is termed as | Spontaneous sources |
| 345 | Question The most easiest form of organisation to form and operate is | Proprietary concern |
| 346 | The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________ | Profit before taxes |
| 347 | Question The amount of profit earned after recovering the interest on long term sources of capital is referred to as ________ | Profit before taxes |
| 348 | The price currently being paid in the stock market for every one rupee of Earnings per share is termed as | Price Earning ratio |
| 349 | Question The external users of financial statements are | Lenders , Suppliers |
| 350 | Question An organized collection of data according to logical and consistent accounting procedure is known as | Financial Statement |
| 351 | An organized collection of data according to logical and consistent accounting procedure is known as | Financial Statement |
| 352 | The real owners of the company are | Equity shareholders |
| 353 | The introduction of debt capital in the capital structure increases the earnings per share of ________ | Equity shareholders |
| 354 | Question The introduction of debt capital in the capital structure increases the earnings per share of ________ | Equity shareholders |
| 355 | The fixed assets are expressed at ________ | Cost - Depreciation |
| 356 | Question The fixed assets are expressed at ________ | Cost - Depreciation |
| 357 | Question ________ is the summary of cash book or Receipts and Payments Statement | Cash flow statement |
| 358 | The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as | Transaction motive |
| 359 | Question The motive of the company to hold inventory to get the advantage in terms of quantity discounts connected with bulk purchasing is known as | Speculative motive |
| 360 | Question The addition of Equity capital, preference capital and reserves and surplus is termed as | Shareholders funds |
| 361 | The cost which remains constant upto a certain sales revenue and increases if the sales revenue increases beyond a certain point is termed as | Semi-variable cost |
| 362 | The reduction in the market value of the shares may cause due to | Overcapitalisation |
| 363 | The real value of the assets is less than the book value of the assets due to purchase of the assets during inflationary situations results into | Overcapitalisation |
| 364 | Question ________ is clubbed with Current Assets in the Balance Sheet | Loans and advances |
| 365 | ________ is clubbed with Current Assets in the Balance Sheet | Loans and advances |
| 366 | The mathematical expression of ________ is Value of material consumed / Average inventory held | Inventory turnover |
| 367 | Question Ratio analysis is a widely used tool of | Financial analysis |
| 368 | Question ________ is calculated on the basis of current profits and not on the basis of retained profits | Earnings per share |
| 369 | ________ is calculated on the basis of current profits and not on the basis of retained profits | Earnings per share |
| 370 | The rate at which an organisation must pay to the suppliers of capital for the use of their funds is termed as | cost of investment |
| 371 | The most crucial financial decisions of the organisation are taken by ________ | Board of Directors |
| 372 | Question The most crucial financial decisions of the organisation are taken by ________ | Board of Directors |
| 373 | Question According to the provisions of the companies Act 1956, ________ can declare the interim dividend | Board of Directors |
| 374 | According to the provisions of the companies Act 1956, ________ can declare the interim dividend | Board of Directors |
| 375 | 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 | 2:01 |
| 376 | 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 | 2:01 |
| 377 | Question The current ratio of ________ is considered to be standard | 2:01 |
| 378 | Question The ratio which indicates the extent to which the Owners' funds are sunk in different kinds of assets is termed as | Proprietory ratio |
| 379 | Break even point is that level of sales revenue at which there is ________ | no profit no loss |
| 380 | The effect of Purchase of building against a long term loan payable on funds ( cash concept ) is | No change in cash |
| 381 | The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is | No change in cash |
| 382 | Question The effect of Bonus paid in the form of fully paid shares on funds ( cash concept ) is | No change in cash |
| 383 | Increase in the amount in debtors results in | No change in cash |
| 384 | The method of subtracting present value of cash outflows from present value of cash inflows is known as | Net present value |
| 385 | Question Till the sales revenue reaches the break even point, the company ________ | incurs the losses |
| 386 | 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 | Earning per share |
| 387 | 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 | Earning per share |
| 388 | Question In financial terms, Profit after tax can be referred as | Earning after tax |
| 389 | In financial terms, Profit after tax can be referred as | Earning after tax |
| 390 | If the issue of Debentures is having the maturity period of more than 18 months, the company shall appoint a | Debenture Trustee |
| 391 | The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits | Company Law board |
| 392 | Question The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits | Company Law board |
| 393 | The mix of sources from which the long term funds required by a business are raised is termed as | Capital Structure |
| 394 | Question The mix of sources from which the long term funds required by a business are raised is termed as | Capital Structure |
| 395 | Question Under ________, it is not only necessary to decide profitable investments but also necessary to rank the acceptable proposals according to their relative profitabilities | Capital rationing |
| 396 | Question The most important decisions regarding the amount to be invested in fixed assets is technically referred to as | Capital budgeting |
| 397 | The deposit receipt should contain | Amount of deposit |
| 398 | Question Revenue from sale of products ordinarily is reported as part of the earning in the period | the sale is made |
| 399 | Question Increase in the amount of bills payable results in | Increase in cash |
| 400 | 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 ________ | discount charges |
| 401 | The ratio which measures the extent to which borrowed funds support the firm's assets is termed as | Debt-Asset ratio |
| 402 | Question The traditional approach to financial management refers only to the procurement of funds by | Corporate entity |
| 403 | Question ________ can be issued for the maturity period of 15 days to one year | Commercial Paper |
| 404 | The amount of cheques deposited by a Bank awaiting clearance is called | Collection float |
| 405 | Question The amount of cheques deposited by a Bank awaiting clearance is called | Collection float |
| 406 | The most accepted interpretation of the term 'funds' is in the form of ________ | Working capital |
| 407 | Question Factor can purchase the debts of the client making the immediate payment of the same, this reduces the strain on the ________ requirements of the client | Working Capital |
| 408 | Question Current assets are also referred to as | Working Capital |
| 409 | Factor can purchase the debts of the client making the immediate payment of the same, this reduces the strain on the ________ requirements of the client | Working Capital |
| 410 | Current assets are also referred to as | Working Capital |
| 411 | Question Where share capital is not represented by the assets of equal value, the situation may mean introduction of ________ | Watered capital |
| 412 | Question The company granting credit may insist on giving the names of those who are currently dealing with the company. This is termed as | Trade Reference |
| 413 | Question An increase in the share premium account is | Source of funds |
| 414 | An increase in the share premium account is | Source of funds |
| 415 | The ratio which indicate the long term financial prospects of the company are | Solvency ratios |
| 416 | 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 | Public deposits |
| 417 | Question The period that within which the cost of the project will be completely recovered is known as | Pay Back period |
| 418 | The Proprietary concern is owned by | Only one person |
| 419 | Among all the intermediaries in Capital market, probably the most important and significant intermediary is the | Merchant Banker |
| 420 | The company can raise the funds in the form of Public deposits which can be used | For any purpose |
| 421 | The ________ is used as the capitalisation rate to decide the amount of capitalisation in case of a new concern | cost of capital |
| 422 | Question The ________ is used as the capitalisation rate to decide the amount of capitalisation in case of a new concern | cost of capital |
| 423 | Question In case of Internal Rate of Return Method, the resultant IRR is compared with the ________ | cost of capital |
| 424 | In case of Internal Rate of Return Method, the resultant IRR is compared with the ________ | cost of capital |
| 425 | Without Recourses factoring is also referred to as ________ | Zero factoring |
| 426 | ________ is more useful to the management as a tool of financial analysis in short periods | Ratio analysis |
| 427 | Question Inflow of funds may not necessarily result in ________ | Inflow of cash |
| 428 | Inflow of funds may not necessarily result in ________ | Inflow of cash |
| 429 | The products which are ready for sale in the market are termed as | Finished goods |
| 430 | Which of the following assets get generated during course of operations or get utilized within one year | Current assets |
| 431 | Question Which of the following assets get generated during course of operations or get utilized within one year | Current assets |
| 432 | Question The assets held by a business which can be converted in the form of cash or used during the course of normal operations is termed as | Current assets |
| 433 | Question Gross Working Capital means | Current assets |
| 434 | Gross Working Capital means | Current assets |
| 435 | Question Importance of capital budgeting decisions | Correct Answer |
| 436 | Question The combined or weighted average cost of capital of the various individual components is termed as | Composite cost |
| 437 | The market available to the company for raising the long term requirement of funds is termed as | Capital market |
| 438 | While computing liquid ratio, liquid liability includes all liability except | Bank overdraft |
| 439 | Question The cost which varies in direct proportion to the sales revenue is termed as | Variable cost |
| 440 | Question For accounting and tax purposes of hire purchase agreement,________ is treated as revenue expenditure and is considered to be a tax deductible expenditure | Only interest |
| 441 | Question For accounting and tax purposes of hire purchase agreement, ________ is treated as revenue expenditure and is considered to be a tax deductible expenditure | Only interest |
| 442 | For accounting and tax purposes of hire purchase agreement, ________ is treated as revenue expenditure and is considered to be a tax deductible expenditure | Only interest |
| 443 | Question Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive | Non-recurring |
| 444 | Preparation of Financial plan at the time of company promotion is ________ duty of the finance executive | Non-recurring |
| 445 | Question The incremental cost attached with new funds raised by the company is referred to as | Marginal cost |
| 446 | The hidden cost of capital which is not incurred directly is referred to as | Implicit cost |
| 447 | The cost which is attached with the source of capital apparently is termed as | Explicit cost |
| 448 | The time required by the company to process the received cheque and deposit the same in the bank is called | Deposit float |
| 449 | The ________ collections may be useful for reducing the postal float as well as bank float | Decentralised |
| 450 | Question The ________ collections may be useful for reducing the postal float as well as bank float | Decentralised |
| 451 | Question ________ indicates the symptom of liquidity crisis | Current ratio |
| 452 | The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2 | Average level |
| 453 | Question The mathematical expression of ________ is ( Minimum level + Maximum level ) / 2 | Average level |
| 454 | If the company buys the raw material from the suppliers on credit basis, it is termed as | Trade Credit |
| 455 | Question Proprietory ratio indicates the relationship between the owner's fund and ________ | Total assets |
| 456 | Proprietory ratio indicates the relationship between the owner's fund and ________ | Total assets |
| 457 | Stock at the end results in the | Sinking fund |
| 458 | Question In the case of Overcapitalisation ________ is the worst affected class | Shareholders |
| 459 | Question Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company | Shareholders |
| 460 | Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company | Shareholders |
| 461 | The Dividend in the form of cash is payable out of the current year's profit after providing for sufficient amount of | Depreciation |
| 462 | Question The Dividend in the form of cash is payable out of the current year's profit after providing for sufficient amount of | Depreciation |
| 463 | The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases | Danger level |
| 464 | Question The mathematical expression of ________ is Normal Usage * Lead time for emergency purchases | Danger level |
| 465 | M/s X Ltd. buys a plot of land for Rs. 25,000/-, the asset recorded in the books at Rs. 25,000/- even if its market value at that time happens to be Rs. 35,000/-. This concept of recording in the books of accounts is referred as | Cost concept |
| 466 | The weighted average cost of capital is referred to as | Average cost |
| 467 | The analytical method of inventory control which aims at concentrating efforts in those areas where attention is required most is termed as ________ | ABC Analysis |
| 468 | Question To meet the working capital needs of the company, banks may grant the working capital term loans for a period of ________ | 3 to 7 years |
| 469 | Correct Answer | Your Answer |
| 470 | Question ________ approach is the mean between two extreme approaches of net income approach and net operating income approach | Traditional |
| 471 | ________ approach is the mean between two extreme approaches of net income approach and net operating income approach | Traditional |
| 472 | Denomination of the equity shares in the public issue or rights issue can be decided by | the company |
| 473 | Current assets is in the form of | Receivables |
| 474 | The traditional approach to financial management refers only to the procurement of funds by | Individuals |
| 475 | Question Live Stock is an example of | Fixed Asset |
| 476 | Live Stock is an example of | Fixed Asset |
| 477 | 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 | Discounting |
| 478 | The technique where the interest is compounded and becomes a part of initial principal at the end of compounding period is termed as | Compounding |
| 479 | Question Net Present value considers ________ from the project throughout its life | cash inflow |
| 480 | Net Present value considers ________ from the project throughout its life | cash inflow |
| 481 | Rights issue is | Bonus Issue |
| 482 | Question The Current assets and current liabilities of a company wereRs. 10 lakhs and Rs. 5 Lakhs respectively. What will be the current ratio ifthe company purchases fixed assets for Rs. 4 lakhs on a Medium term loanfrom bank with 15% margin | 1.88 : 1.00 |
| 483 | 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 | 1.88 : 1.00 |
| 484 | Question Informal method of capital budgeting decisions is a ________method | subjective |
| 485 | Question Liquidity ratios indicate the ________ position of the organisation | Short term |
| 486 | Expected future earnings of ABC Ltd. are Rs. 2,00,000. Find out the amount of capitalisation if the rate of return earned by similar types of companies is 10%. | Rs. 20,000 |
| 487 | 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 | Rs. 12,100 |
| 488 | Mr. A invested Rs. 10,000 in fixed deposit carrying interest @10% p.a. compounded annually. Calculate the value of investment after two years | Rs. 12,100 |
| 489 | The economical use of the asset is permitted by the lessor on the payment of periodical amount which is in the form of ________. | Lease rent |
| 490 | Question The economical use of the asset is permitted by the lessor on the payment of periodical amount which is in the form of ________. | Lease rent |
| 491 | Question The ratios under overall profitability group indicate the relationship between the profits of a firm and ________ in the firm | Investment |
| 492 | The comparison of the ratios of one organisation with that of the other organisation is termed as ________ comparison | Intra-firm |
| 493 | Question The comparison of the ratios of one organisation with that of the other organisation is termed as ________ comparison | Inter-firm |
| 494 | Assets and liabilities in the Balance Sheet are shown at ________ prices | Historical |
| 495 | The cost which remains constant irrespective of changes in the sales revenue is termed as | Fixed cost |
| 496 | Question The lenders of the borrowed funds are | Debentures |
| 497 | Fixed Income bearing securities for the computation of Capital gearing ratio consists of | Debentures |
| 498 | A systematic record of the events of the business leading to a presentation of a complete financial picture is known as | Accounting |
| 499 | Question Minimum tradable lot in case of shares having the face value of Rs. 10 per share shall not be more than | 100 shares |
| 500 | Minimum tradable lot in case of shares having the face value of Rs. 10 per share shall not be more than | 100 shares |
| 501 | Question The Current assets and current liabilities of a company were Rs. 10 lakhs and Rs. 5 Lakhs respecively. What will be the current ratio if the company purchases land for Rs. 4 lakhs on Cash on Delivery basis | 1.2 : 1.00 |
| 502 | Question Cost management is the function of a ________. | Treasurer |
| 503 | Cost management is the function of a ________. | Treasurer |
| 504 | Question Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn interest of 10% p.a. on his investment, what should be the amount which he should invest today so that he may be able to receive Rs. 10,000 after two years | Rs. 8,264 |
| 505 | Mr. A is given the opportunity to receive Rs. 10,000 after two years, when he can earn interest of 10% p.a. on his investment, what should be the amount which he should invest today so that he may be able to receive Rs. 10,000 after two years | Rs. 8,264 |
| 506 | The concept of watered capital is confined to the time of ________ of the company | Promotion |
| 507 | Question In case of Mortgage, the party in whose favour the interest is so transferred is called ________ | Mortgagee |
| 508 | The Capital Structure decision mainly refers to the decision of | Financing |
| 509 | Question The Capital Structure decision mainly refers to the decision of | Financing |
| 510 | A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation | financial |
| 511 | ________ leverage also acts as a guideline in setting maximum limit upto which the company should use the debt capital | Financial |
| 512 | Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company | Directors |
| 513 | Question Current liabilities consist of | Creditors |
| 514 | Current liabilities consist of | Creditors |
| 515 | 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 | 200 units |
| 516 | 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 | 200 units |
| 517 | Question For the selection of the period for which capital expenditure budget should be prepared , ________ a period may not be useful | Too long |
| 518 | When a company issues bonus shares ________ of the company get reduced | Reserves |
| 519 | Question When a company issues bonus shares ________ of the company get reduced | Reserves |
| 520 | Question Debt Equity ratio is alternatively called ________ ratios | Leverage |
| 521 | Retained earnings is a source of ________ finance | Internal |
| 522 | Question Retained earnings is a source of ________ finance | Internal |
| 523 | The return which the company pays on borrowed funds is termed as | Interest |
| 524 | ________ in liabilities involves inflow of funds | Increase |
| 525 | Question ________ is an example of Intangible asset | Goodwill |
| 526 | Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose | Dividend |
| 527 | Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use in future for expansion or other purpose | Dividend |
| 528 | Question Profit after taxes can be distributed among the owners of the company by way of ________ | dividend |
| 529 | Profit after taxes can be distributed among the owners of the company by way of ________ | dividend |
| 530 | Question ________ in liabilities involves outflow of funds | Decrease |
| 531 | Question ________ in assets involves inflow of funds | Decrease |
| 532 | ________ in liabilities involves outflow of funds | Decrease |
| 533 | ________ in assets involves inflow of funds | Decrease |
| 534 | Question If the process of capital rationing is strictly followed then there will be avoidance of ________ projects | smaller |
| 535 | Question Operating Lease is also referred to as ________ lease | Service |
| 536 | Operating Lease is also referred to as ________ lease | Service |
| 537 | One of the tools available to the company to ensure the maintenance of ________ cash balance is to prepare cash budget | Optimum |
| 538 | 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 | maximum |
| 539 | The projects having maximum positive Net present value will be ranked ________ | highest |
| 540 | Question The projects having maximum positive Net present value will be ranked ________ | highest |
| 541 | Question The project having ________ profitability index will be ranked highest | highest |
| 542 | 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 | 4 years |
| 543 | 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.________ | 1 crore |
| 544 | 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.________ | 1 crore |
| 545 | Question Depreciation is sometimes treated as ________ funds | source |
| 546 | Depreciation is sometimes treated as ________ funds | source |
| 547 | Question Own capital of the company includes | Shares |
| 548 | The dealing with the financial matters of the government is termed as ________ field of finance | Public |
| 549 | Question The dealing with the financial matters of the government is termed as ________ field of finance | Public |
| 550 | The value created by the use of resources is more than the total of the input resources is referred to as | Profit |
| 551 | Question The value created by the use of resources is more than the total of the input resources is referred to as | Profit |
| 552 | As per the Tandon Committee, the norms suggested for consumption of raw materials should be in ________ | months |
| 553 | Financial Institution plays the role of ________ in factoring service offered | Factor |
| 554 | Question ________ financing is more preferred route for venture capital funding | Equity |
| 555 | ________ financing is more preferred route for venture capital funding | Equity |
| 556 | Turnover ratios measures how efficiently the ________ are employed by the firm | Assets |
| 557 | Question Turnover ratios measures how efficiently the ________ are employed by the firm | Assets |
| 558 | Calculate the Gross Profit Ratio from the following figures : Sales Rs. 1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs. 10,000/-, Opening stock Rs. 20,000/-, Purchases Return Rs. 15,000/-, Closing Stock Rs. 5,000/- | 0.3333 |
| 559 | ________ is one of the current assets that takes the longest time to get converted into cash | Stock |
| 560 | Question ________ implies arithmetical relationship between two related figures | Ratio |
| 561 | ________ implies arithmetical relationship between two related figures | Ratio |
| 562 | Lease agreement is the most important document as it starts the ________ relationship between the lessor and lessee | Legal |
| 563 | Question Interest on overdraft is payable on the actual amount drawn and is calculated on ________ product basis | daily |
| 564 | Interest on overdraft is payable on the actual amount drawn and is calculated on ________ product basis | daily |
| 565 | Question ________ and return always go hand in hand | Risk |
| 566 | ________ and return always go hand in hand | Risk |
| 567 | If the project is accepted, Internal Rate of return resulting from the same should be ________ than cost of capital | more |
| 568 | under no circumstances , ________ term requirement of funds should be met out of short term sources of funds | long |
| 569 | Question under no circumstances , ________ term requirement of funds should be met out of short term sources of funds | long |
| 570 | ________ is an example of Intangible asset | Land |
| 571 | Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities | Fund |
| 572 | The basic objective of ________ management is to reduce the operating cash requirement to the minimum possible extent without affecting the routine transactions. | Cash |
| 573 | 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 Inventory Turnover ratio is ________ | 3.04 |
| 574 | 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 Current assets turnover ratio is ________ . | 3.04 |
| 575 | 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 Fixed assets turnover ratio is ________ . | 2.17 |
| 576 | 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 ________ | 1.61 |
| 577 | Question Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur | 0.49 |
| 578 | Investment of the venture capitalist does not exceed ________ so that the effective control of the project remains with the entrepreneur | 0.49 |
| 579 | Question The amount of shares bought back by the company should not be more than ________ of total paid-up capital of the company and its free reserves | 0.25 |
| 580 | As per the II method suggested by the Tandon committee, the borrower should finance ________ of current assets out of long term funds and the banks provide the remaining finance | 0.25 |
| 581 | If a deposit is repaid after 6 months from the date of deposit but before its expiry, the rate of interest on such deposit shall be reduced by ________ from the rate which the company would have paid had the deposit been accepted for the period for which such deposit had run | 0.01 |
| 582 | 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 | two |
| 583 | 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 | two |
| 584 | If the amount of interest is considered as a part of expenses, the ________ liability of the company reduces proportionately | tax |
| 585 | The projects having Profitability index of more than ________ will be accepted | one |
| 586 | The projects having Profitability index of less than ________ will be rejected | one |
| 587 | Question The projects having Profitability index of more than ________will be accepted | one |
| 588 | Question The projects having Profitability index of more than ________ will be accepted | one |
| 589 | Question The projects having Profitability index of less than ________ will be rejected | one |
| 590 | The current ratio of ________ is considered to be standard | 2:1 |
| 591 | Question How many days in a year are to be considered for the calculation of daily sales | 360 |
| 592 | Question As per the Tandon committee, variations between the projected figures and actuals may be permitted to the extent of ________ | 0.1 |
| 593 | 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 | 0.1 |
| 594 | As per the Tandon committee, variations between the projected figures and actuals may be permitted to the extent of ________ | 0.1 |
| 595 | A project involves the investment of Rs. 5,00,000 which yields profit after depreciation and tax Rs. 2,30,000. At the end of 5 years, the machineries in the project can be sold for Rs. 40,000. Find the Average rate of return | 0.1 |
| 596 | Question From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/- | 9 |
| 597 | From the following data, the Earning per share is ________ : Net Profit before tax Rs. 2,00,000/-, Taxation at 50% of Net Profit, 10% Preference Share Capital (Rs. 10 each) Rs. 1,00,000/-, Equity Share Capital (Rs. 10 each) Rs. 1,00,000/- | 9 |
| 598 | Question Subscription list of a public issue of shares shall be kept open for minimum ________ working days | 3 |
| 599 | ||
| 600 | ||
| 601 | True/False | |
| 602 | Wages/salaries is considered under Operating cashinflow | FALSE |
| 603 | The term Current Assets and Liquid assets have synonymous meanings | FALSE |
| 604 | Semi-variable cost is the cost which varies in direct proportion to the sales revenue | FALSE |
| 605 | Reorder level is calculated as Maximum Lead Time * Minimum Usage | FALSE |
| 606 | Ratios can be expressed only in percentage | FALSE |
| 607 | Question Wages/salaries is considered under Operating cashinflow | FALSE |
| 608 | Question There are essentially two parties in case of a letter of credit | FALSE |
| 609 | Question Solvency ratios consists of current ratio and Price earnings ratio | FALSE |
| 610 | Question Semi-variable cost is the cost which varies in direct proportion to the sales revenue | FALSE |
| 611 | Question Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy | FALSE |
| 612 | Question Reorder level is calculated as Maximum Lead Time * Minimum Usage | FALSE |
| 613 | Question Premium paid on the life policy of the proprietor is debited to the Profit and Loss Account | FALSE |
| 614 | Question Operating leverage is calculated as Earnings Before Interest and Tax / ( Earnings before Interest and Tax - Interest ) | FALSE |
| 615 | Question One of the most common methods to monitor the receivables on macro basis is to calculate age-wise analysis of receivables | FALSE |
| 616 | Question Liquid liabilities includes all current liabilities except bills payable | FALSE |
| 617 | Question Issue of Bonus shares is the remedy used in the situation of overcapitalisation | FALSE |
| 618 | Question Internal rate of return does not considers cash inflows from the project throughout its Life | FALSE |
| 619 | Question In case of Without Recourses factoring, the risk on account of non-payment by the customer is assumed by the selling company | FALSE |
| 620 | Question In an organisation, Dividend distribution is the function of a Finance Controller | FALSE |
| 621 | 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 | FALSE |
| 622 | Question If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months | FALSE |
| 623 | 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 | FALSE |
| 624 | Question Funds flow statements and cash flow statement are one and the same | FALSE |
| 625 | Question Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds | FALSE |
| 626 | Question Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest ) | FALSE |
| 627 | Question Earnings per share is of great significance to an operator on the stock exchange buying and selling the shares | FALSE |
| 628 | Question Budgeting is the main function of a Treasurer | FALSE |
| 629 | Question As per the SEBI guidelines revaluation reserve can be used for issue of bonus share | FALSE |
| 630 | 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 | FALSE |
| 631 | Question A partnership is an incorporated association of individuals. | FALSE |
| 632 | Question A high inventory turnover ratio indicates a high holding period of the inventory | FALSE |
| 633 | Public deposits are unsecured borrowings for the company | FALSE |
| 634 | Profitability Statement is a period statement | FALSE |
| 635 | Ordering cost of inventory includes cost incurred for insurance | FALSE |
| 636 | Internal rate of return does not considers cash inflows from the project throughout its life | FALSE |
| 637 | In an organisation, Dividend distribution is the function of a Finance Controller | FALSE |
| 638 | If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months | FALSE |
| 639 | If the cash is held to take advantage of profit making opportunities arising out of changes in the value of securities, the cash holding is called Precautionary motive | FALSE |
| 640 | Following lenient dividend policy without bothering much about building up the reserves may be the cause for undercapitalisation | FALSE |
| 641 | Fixed Assets turnover ratio is the relationship between fixed assets and owner's funds | FALSE |
| 642 | 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 | FALSE |
| 643 | According to Net Income Approach, the valuation of the firm and its cost of capital is independent of its capital structure | FALSE |
| 644 | A partnership is an incorporated association of individuals. | FALSE |
| 645 | With limited funds, the company must obtain the optimum combination of acceptable investment proposals | TRUE |
| 646 | When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float' | TRUE |
| 647 | Wealth maximization goal is only an extension of Profit maximization goal of the organisation | TRUE |
| 648 | Undercapitalisation indicates sound financial position and efficient management of the company | TRUE |
| 649 | Under pledge mode of security, possession of the goods is with the Bank and the goods pledged are in the custody of the Bank | TRUE |
| 650 | Under hypothecation mode of security neither the property not the possession of the goods hypothecated is transferred to the Bank | TRUE |
| 651 | Turnover ratios measure efficiency of a business in using its resources | TRUE |
| 652 | Turnover ratios indicate the efficiency of the organisation to use the various kinds of assets by converting them in the form of Sales | TRUE |
| 653 | Traditional approach believes the existence of Optimal Capital structure | TRUE |
| 654 | The Stock Dividends are more expensive to administer as compared to cash dividends | TRUE |
| 655 | The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity | TRUE |
| 656 | The redemption of preference shares if they carry too high rate of dividend is the remedy to overcome the situation of overcapitalisation | TRUE |
| 657 | The operating profit is computed as Sales Revenue Less Variable Operating Cost Less Fixed Operating cost | TRUE |
| 658 | The objective of funds flow statement may be to find out uses of loans raised by the business | TRUE |
| 659 | The mostly used methods of short term forcasting is the Receipt and Payment method | TRUE |
| 660 | The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee | TRUE |
| 661 | The excessive issue of equity shares may result in over-capitalisation to be realized in future | TRUE |
| 662 | The cost of the factor is slightly higher than the interest which the client would have paid had he borrowed the funds from the Bank | TRUE |
| 663 | The combination of irrevocable and confirmed letter of credit can be considered to be a guaranteed payment on the part of the exporter | TRUE |
| 664 | The capital expenditure has to be planned properly taking into consideration the present and future needs of the business | TRUE |
| 665 | The basic objective behind fixation of the levels is to avoid overstocking and understocking | TRUE |
| 666 | The basic limitation of the capital budgeting process lies in this fact that it involves various estimations | TRUE |
| 667 | The assumptions of capital structure theories is that Operating earnings are not expected to grow | TRUE |
| 668 | The assumptions of capital structure theories is that Corporate Income Tax does not exist | TRUE |
| 669 | Secured Premium notes did not carry any interest during the first three years | TRUE |
| 670 | Return on Assets is a ratio of relationship between Assets and Sales | TRUE |
| 671 | Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company | TRUE |
| 672 | Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship | TRUE |
| 673 | Question: With limited funds, the company must obtain the optimum combination of acceptable investment proposals | TRUE |
| 674 | Question With limited funds, the company must obtain the optimum combination of acceptable investment proposals | TRUE |
| 675 | Question When a company issues bonus shares, reserves of the company get reduced and share capital of the company increases | TRUE |
| 676 | Question Wealth maximization goal is only an extension of Profit maximization goal of the organisation | TRUE |
| 677 | Question The requirement of Fixed Working Capital is unaffected due to the changes in the level of activity | TRUE |
| 678 | Question The objective of funds flow statement may be to find out uses of loans raised by the business | TRUE |
| 679 | Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee | TRUE |
| 680 | Question The funds flow statements can be prepared on monthly basis, six monthly basis or annual basis | TRUE |
| 681 | Question The excessive issue of equity shares may result in over-capitalisation to be realized in future | TRUE |
| 682 | 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 | TRUE |
| 683 | Question The combination of irrevocable and confirmed letter of credit can be considered to be a guaranteed payment on the part of the exporter | TRUE |
| 684 | Question The assumptions of capital structure theories is that Operating earnings are not expected to grow | TRUE |
| 685 | Question The assumptions of capital structure theories is that Corporate Income Tax does not exist | TRUE |
| 686 | Question Secured Premium notes did not carry any interest during the first three years | TRUE |
| 687 | Question Retained earnings or ploughed back profits is one of the best source of raising long term funds for the company | TRUE |
| 688 | Question Retained earnings involves cost in terms of dividend foregone by or withheld from the equity shareholders | TRUE |
| 689 | Question Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship | TRUE |
| 690 | Question Projects for venture capital financing are more risky in nature and involve larger gestation period | TRUE |
| 691 | Question Profitability Statement is a period statement | TRUE |
| 692 | Question It is only after crossing the break even point that the profit generating capacity of the company starts | TRUE |
| 693 | 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 | TRUE |
| 694 | 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 | TRUE |
| 695 | Question Internal rate of return indicates that the discounting rate at which net present value is zero | TRUE |
| 696 | Question Internal rate of return considers time value of money | TRUE |
| 697 | Question Internal rate of return can be computed even in the absence of the knowledge about the firm's cost of capital | TRUE |
| 698 | Question Informal method of capital budgeting does not follow any mathematical or statistical model to consider the risk factor | TRUE |
| 699 | Question Inadequate provision for depreciation may be the cause of overcapitalisation | TRUE |
| 700 | Question In Regular Stock Dividend policy, the company may pay dividend in the form of bonus shares instead of cash | TRUE |
| 701 | Question In funds flow statement, net decrease in working capital is shown on sources side | TRUE |
| 702 | Question In certain cases, the capital expenditure may not involve any specific inflow of funds, but only outflow of funds | TRUE |
| 703 | Question In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected | TRUE |
| 704 | Question In case of cash credit, the company need not have a formal current account | TRUE |
| 705 | Question In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account | TRUE |
| 706 | Question Financial statements do not provide information about sources of raising funds as well as the applications of these funds | TRUE |
| 707 | Question Economic Order Quantity model is a very useful model of determining the order quantity | TRUE |
| 708 | Question Debtors turnover ratio is normally supported by the calculations of average collection period | TRUE |
| 709 | 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 | TRUE |
| 710 | Question Debt equity ratio is alternately called Leverage ratio | TRUE |
| 711 | Question Debt equity ratio indicates the stake of share holders and creditors in the organisation | TRUE |
| 712 | Question Current ratio and Acid test ratio are categorised under liquidity group | TRUE |
| 713 | Question Credit rating is obligatory only in case of the debt instruments | TRUE |
| 714 | Question Credit rating does not create any legal relationship between the rating agency and the investor | TRUE |
| 715 | Question Cash from operation is the main internal source of cash | TRUE |
| 716 | Question By issuing the debentures, the controlling position of the existing equity shareholders does not get affected as the debentures do not carry any voting rights | TRUE |
| 717 | Question Before the company can pay the dividend on Equity shares, it is bound to pay the dividend on Preference shares | TRUE |
| 718 | Question An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share | TRUE |
| 719 | Question Accounts Receivable is an example of current assets | TRUE |
| 720 | Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners | TRUE |
| 721 | Question A good Budget manual promotes standardization and simplification of budgetary procedures | TRUE |
| 722 | Question :In narrow sense funds means only cash resources of the business | TRUE |
| 723 | Proprietary ratios is the relationship between owners funds and total assets | TRUE |
| 724 | Private limited company can commence business immediately on incorporation | TRUE |
| 725 | 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 | TRUE |
| 726 | One of the basic objectives of cash management is to maintain the optimum cash balance | TRUE |
| 727 | Mortgage mode of security pertains to immovable properties like land and buildings | TRUE |
| 728 | Loans from financial corporations etc. are sources of cash | TRUE |
| 729 | Issue of Bonus shares is the remedy used in the situation of overcapitalisation | TRUE |
| 730 | Inventory is the intermediate stage between purchase of raw materials and consumption of raw materials | TRUE |
| 731 | 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 | TRUE |
| 732 | Internal rate of return presupposes that the cash inflows can be reinvested immediately to yield the return equivalent to the Internal rate of return | TRUE |
| 733 | Internal rate of return is difficult to use , calculate and understand | TRUE |
| 734 | Internal rate of return indicates that the discounting rate at which net present value is zero | TRUE |
| 735 | Internal rate of return considers time value of money | TRUE |
| 736 | Internal rate of return can be computed even in the absence of the knowledge about the firm's cost of capital | TRUE |
| 737 | Interest in provision for doubtful debts should be added back in order to find out cash from operations | TRUE |
| 738 | Informal method of capital budgeting does not follow any mathematical or statistical model to consider the risk factor | TRUE |
| 739 | Income tax paid in the case of sole proprietor firms should be treated as a personal expense of the proprietor | TRUE |
| 740 | In Regular Stock Dividend policy, the company may pay dividend in the form of bonus shares instead of cash | TRUE |
| 741 | In narrow sense funds means only cash resources of the business | TRUE |
| 742 | In funds flow statement, net decrease in working capital is shown on sources side | TRUE |
| 743 | In certain cases, the capital expenditure may not involve any specific inflow of funds, but only outflow of funds | TRUE |
| 744 | In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected | TRUE |
| 745 | In case of cash credit, the company need not have a formal current account | TRUE |
| 746 | In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account | TRUE |
| 747 | If the process of capital rationing is strictly followed it may result into the exclusion of various smaller projects by larger projects | TRUE |
| 748 | 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 | TRUE |
| 749 | Higher Earnings per share indicates higher amount of profits available to the investor | TRUE |
| 750 | Funds flow statements and cash flow statement are one and the same | TRUE |
| 751 | Financial statements do not provide information about sources of raising funds as well as the applications of these funds | TRUE |
| 752 | Financial leverage is calculated as ( Sales - Variable cost ) / ( Earnings before Interest and tax - Interest ) | TRUE |
| 753 | Financial lease is also referred to as Capital lease | TRUE |
| 754 | Economic Order Quantity model is a very useful model of determining the order quantity | TRUE |
| 755 | Economic order quantity is based on the assumption that the demand for the material concerned is uniform throughout a year | TRUE |
| 756 | Earnings per share is calculated as ( Profit after tax - Preference Dividend ) / Number of Equity shares | TRUE |
| 757 | Debtors turnover ratio is normally supported by the calculations of average collection period | TRUE |
| 758 | 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 | TRUE |
| 759 | Debt equity ratio is alternately called Leverage ratio | TRUE |
| 760 | Current ratio and Acid test ratio are categorised under liquidity group | TRUE |
| 761 | Cross-sectional Analysis is the comparison of financial data of same time period of different organisations engaged in similar business | TRUE |
| 762 | Credit rating does not create any legal relationship between the rating agency and the investor | TRUE |
| 763 | Cash from operation is the main internal source of cash | TRUE |
| 764 | Cash flow statement is important financial tool for the management | TRUE |
| 765 | Carrying cost of inventory includes cost incurred for preparation of purchase requisition | TRUE |
| 766 | Capital budgeting process involves the estimation of various future aspects regarding future cash inflows, life of the project etc. | TRUE |
| 767 | By issuing the debentures, the controlling position of the existing equity shareholders does not get affected as the debentures do not carry any voting rights | TRUE |
| 768 | An ideal investor makes an comparison between the current market price and future Earning per share as the market value of shares depends upon the future Earnings per share | TRUE |
| 769 | A systematic maintenance of perpetual inventory system enables to locate slow and non-moving items and to take remedial action for the same | TRUE |
| 770 | A high degree of operating leverage means that the component of fixed cost is too high in the overall cost structure | TRUE |
| 771 | A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners | TRUE |
| 772 | A good Budget manual promotes standardization and simplification of budgetary procedures | TRUE |
| 773 |
