Multiple Choice Multiple Answer

Question The factor may provide the following services to the client

Correct It may undertake the credit analysis of the customers of the client , It will
Answer 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
Your Answer It will undertake the various book-keeping and accounting activities in relation
to the receivables management

True/False
Question Liquid assets includes all current assets except Inventories and Prepaid
expenses
Correct True
Answer
Your Answer False

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

True/False
Question The basic limitation of the capital budgeting process lies in this fact that it
involves various estimations
Correct True
Answer
Your Answer True

Multiple Choice Single Answer

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

Correct Procurement of funds

Answer
Your Answer Application of funds

Multiple Choice Single Answer

Question Net Working Capital means

Correct Current assets less Current liabilities

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

Correct True
Answer
Your Answer True

Multiple Choice Multiple Answer

Question Disadvantages of Preference shares from shareholders point of view

Correct Preference Dividend rate is rather modest , Price fluctuation preference shares
Answer is greater than price fluctuation of debentures , Preference shareholders are
vulnerable to arbitrary managerial actions
Your Answer Price fluctuation preference shares is greater than price fluctuation of
debentures

Multiple Choice Single Answer

Question Earnings per share is calculated as

Correct ( Profit after tax - Preference Dividend ) / No. of equity shares

Answer
Your Answer Net Profit after tax / Total shareholders funds

Multiple Choice Multiple Answer

Question Proprietory ratio can be calculated as

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

Multiple Choice Single Answer

Question The operating profit of A ltd. after charging interest on debentures and tax is a
sum of Rs. 10,000/-. The amount of interest charged is Rs. 2,000/- and the
provision for tax has been made of Rs. 4,000/-. Calculate the interest charges
cover ratio
Correct 8
Answer
Your Answer 9

True/False
Question A high debt equity ratio may indicate that the financial stake of the creditors is
more than that of the owners
Correct True
Answer
Your Answer True
Multiple Choice Single Answer
Question The Dividend in the form of cash is payable out of the current year's profit after
providing for sufficient amount of
Correct Depreciation
Answer
Your Answer Interest

Multiple Choice Multiple Answer

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

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

Answer approach
Your Answer Formal method

Match The Following

Question Correct Answer Your Answer

The ratio which indicates the Debtors turnover ratio Dividend Payment ratio
speed at which the Sundry
debtors are converted in the
form of cash
The ratio which indicates the Capital turnover ratio Debtors turnover ratio
efficiency of the organisation
with which the capital employed
is being utilised
Ratio which measures the Return on Asset Current Assets turnover ratio
profitability of the investments
in a firm
The relation of Net Sales and Working Capital turnover ratio Return on Asset
Working Capital

Multiple Choice Multiple Answer

Question The avenues available to the company to invest the excess cash balance on
short term basis may be in the form of
Correct Commercial paper , inter-corporate bills discounting , Bank deposits
Answer
Your Answer inter-corporate bills discounting

Select The Blank

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

Multiple Choice Single Answer

Question Undercapitalisation is

Correct Excess of real worth of the assets over the aggregate of shares and
Answer debentures outstanding
Your Answer Excess of current assets over current liabilities

Multiple Choice Multiple Answer

Question The committees appointed by the Reserve Bank of India to control the working
capital financing
Correct Marathe committee , Nayak committee , Tandon committee
Answer
Your Answer Tandon committee

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

Correct True
Answer
Your Answer True

Multiple Choice Single Answer

Question The ratio which measures the profits available to the equity shareholders on a
per share basis is termed as
Correct Earning per share
Answer
Your Answer Price Earnings ratio

Multiple Choice Multiple Answer

Question The advantages of leasing for the lessee are

Correct The payment of lease rents is the tax deductible expenditure , It is the quickest
Answer method of financing the requirements of long term capital , Avoids risk of
ownership
Your Answer Avoids risk of ownership

Multiple Choice Single Answer

Question The motive of the company to hold the inventories in order to facilitate the
smooth and uninterrupted production and sales operations is known as
Correct Transaction motive
Answer
Your Answer Speculative motive
Select The Blank
Question Operating Lease is also referred to as ________ lease

Correct Service
Answer
Your Answer Financial

Select The Blank

Question Under ________, it is not only necessary to decide profitable investments but
also necessary to rank the acceptable proposals according to their relative
profitabilities
Correct Capital rationing
Answer
Your Answer capital expenditure

Match The Following

Question Correct Answer Your Answer

Credit rating symbol for Fixed MA B

Deposits of Adequate safety by
Investment Information and
Credit rating agency
Credit rating symbol for A5 A5
Commercial Paper of Default
by Investment Information and
Credit rating agency
Credit rating symbol for BB FA
Debentures of Inadequate
safety by CRISIL
Credit rating symbol for Fixed FC MA
Deposits of High risk by CRISIL

True/False
Question Economic Order Quantity model is a very useful model of determining the order
quantity
Correct True
Answer
Your Answer True

Select The Blank

Question In the case of Overcapitalisation ________ is the worst affected class

Correct Shareholders
Answer
 Your Answer Society

Multiple Choice Single Answer

Question If the company buys the raw material from the suppliers on credit basis, it is
termed as
Correct Trade Credit
Answer
Your Answer Outstanding expenses

Multiple Choice Multiple Answer

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

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

Correct True
Answer
Your Answer False

Multiple Choice Single Answer

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

Correct Solvency ratios

Answer
Your Answer Solvency ratios

Select The Blank

Question ________ is clubbed with Current Assets in the Balance Sheet

Correct Loans and advances

Answer
Your Answer Investments

Multiple Choice Single Answer

Question The amount of cheques issued by the company awaiting payment by the bank
is called as
Correct Payment float
Answer
Your Answer Postal float
Select The Blank
Question In case of Bills Purchased, the company gets only the present worth of the
amount of the bill, the difference between the face value of the bill and the
amount of assistance being in the form of ________
Correct discount charges
Answer
Your Answer interest charges

Multiple Choice Multiple Answer

Question Advantages of letter of credit to the Importer

Correct the importer can bargain for better trading terms , he is assured to get proper
Answer supply of the goods
Your Answer he is assured to get proper supply of the goods , he can get qualitative goods

Multiple Choice Multiple Answer

Question The advantages of ratio analysis are

Correct It helps in planning and forecasting , It makes possible comparison of the

Answer performance of the different divisions of the firm , It simplifies the
comprehension of financial statements
Your Answer It simplifies the comprehension of financial statements

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

Multiple Choice Single Answer

Question Stock at the end results in the

Correct Source of funds

Answer
Your Answer Application of funds

Multiple Choice Single Answer

Question Current Assets Turnover ratio is calculated as

Correct Net Sales / Current Assets

Answer
Your Answer Current assets / Current liabilities
Select The Blank
Question ________ is the most important ratio to measure whether the firm has earned
sufficient returns for its shareholders or not
Correct Return on Shareholders funds
Answer
Your Answer Return on Asset

Multiple Choice Multiple Answer

Question The Proprietary concern is better than the Partnership concern on the following
points
Correct Minimum Government regulations , Where the business is small
Answer
Your Answer Where the business is small , Capacity to raise large amount of funds

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

Correct True
Answer
Your Answer False

Select The Blank

Question In case of Internal Rate of Return Method, the resultant IRR is compared with
the ________
Correct cost of capital
Answer
Your Answer cost of capital

Multiple Choice Multiple Answer

Question The letter of credit may be

Correct Revocable letter of credit , Confirmed letter of credit

Answer
Your Answer Permanent letter of credit

Select The Blank

Question A wider connotation of the term fund is found in the interpretation of the term
'funds' as ________ concept
Correct Resources
Answer
Your Answer Cost

Select The Blank

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

Correct Operating Profit

Answer
Your Answer Operating Profit