Financial Management - 26

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

Match The Following
Question Correct Answer Your Answer

Net Profit ratio Indicates that portion of sales available to the owners after consideration of all types of expenses and cost Indicates that portion of sales available to the owners after consideration of all types of expenses and cost

Undue increase in Gross Profit ratio Over-valuation of closing stock Over-valuation of closing stock

Undue decrease in Gross Profit ratio Under-valuation of closing stock Under-valuation of closing stock

Gross Profit ratio Indicates the relation between production cost and Sales Indicates the relation between production cost and Sales


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

Select The Blank
Question Financial Statement is useful to ________ in order to enable to decide whether to retain the investment in the company
Correct Answer Shareholders
Your Answer Shareholders

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

Multiple Choice Single Answer
Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds

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

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

True/False
Question If Average credit period works out to be more than the Normal credit period, it indicates efficiency on the part of collection department of the company in collecting the dues from the customers
Correct Answer False
Your Answer False

Select The Blank
Question The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits
Correct Answer Company Law board
Your Answer Company Law board

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

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

Match The Following
Question Correct Answer Your Answer

Risk adjusting discounting rate method of capital budgeting decision discounting rate is increased in case of projects involving greater risk discounting rate is increased in case of projects involving greater risk

Capital rationing situation where the company has more acceptable proposals requiring a greater amount of funds situation where the company has more acceptable proposals requiring a greater amount of funds

Problems relating to situation of capital rationing Project Indivisibility Project Indivisibility

Informal method of capital budgeting decision subjective method subjective method


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

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

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

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

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

Multiple Choice Multiple Answer
Question The Purpose of cash budget is
Correct Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds
Your Answer to co-ordinate the timings of cash needs , It pinpoints the period when there is likely to be excess cash , it helps to arrange needed funds on the most favourable terms and prevents the accumulation of excess funds

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

Multiple Choice Multiple Answer
Question Under the Business Analysis of the company done by Credit rating and Information Services of India Ltd. the following points are covered
Correct Answer Existing as well as potential competitors in the industry , Market position of the company
Your Answer Existing as well as potential competitors in the industry , Market position of the company

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

Multiple Choice Single Answer
Question The combined or weighted average cost of capital of the various individual components is termed as
Correct Answer Composite cost
Your Answer Composite cost

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

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

Multiple Choice Multiple Answer
Question Undue decrease in Gross Profit ratio may indicate
Correct Answer Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities
Your Answer Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities

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

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

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

Multiple Choice Multiple Answer
Question Utility of cash flow analysis
Correct Answer Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash
Your Answer Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash

Multiple Choice Single Answer
Question The traditional approach to financial management refers only to the procurement of funds by
Correct Answer Corporate entity
Your Answer Corporate entity

Select The Blank
Question ________ is calculated on the basis of current profits and not on the basis of retained profits
Correct Answer Earnings per share
Your Answer Earnings per share

Multiple Choice Single Answer
Question The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be
Correct Answer No effect on the funds flow
Your Answer No effect on the funds flow

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

Multiple Choice Multiple Answer
Question The Economic Order Quantity model is based on the assumption of
Correct Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year
Your Answer Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year

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

Multiple Choice Multiple Answer
Question Limitations of capital budgeting is
Correct Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Your Answer Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital

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

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

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

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

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

Multiple Choice Single Answer
Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer Bonneville and Dewey
Your Answer Bonneville and Dewey

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

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

Select The Blank
Question In financial terms, the operating profit earned by the company is also referred to as ________
Correct Answer Profit before Interest and Taxes
Your Answer Profit before Interest and Taxes

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

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Posted in: Financial Management (Set VIII)

Financial Management - 25

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question
In case of Bills Purchased, the company gets only the present worth of the amount of the bill, the difference between the face value of the bill and the amount of assistance being in the form of ________
Correct Answer
discount charges
Your Answer
interest charges

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

Multiple Choice Multiple Answer
Question
Before investing in the project, Venture capitalist is interested in ensuring that
Correct Answer
The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent
Your Answer
The project is technically feasible , It is commercial viable , The entrepreneurs are technically competent

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

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

Multiple Choice Single Answer
Question
The time required by the company to process the received cheque and deposit the same in the bank is called
Correct Answer
Deposit float
Your Answer
Bank float

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

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

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

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

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

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

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

Multiple Choice Single Answer
Question
Which of the following assets get generated during course of operations or get utilized within one year
Correct Answer
Current assets
Your Answer
Current assets

Select The Blank
Question
The ________ has been empowered to order the company that fails to repay any deposit to make the repayment of such deposits
Correct Answer
Company Law board
Your Answer
Company Law board

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

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

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

Multiple Choice Single Answer
Question
The value created by the use of resources is more than the total of the input resources is referred to as
Correct Answer
Profit
Your Answer
Income

Multiple Choice Single Answer
Question
Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by
Correct Answer
Bonneville and Dewey
Your Answer
Kenneth Midgley and Ronald Burns

Multiple Choice Multiple Answer
Question
The advantages of operating lease is
Correct Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment , Reduces expenditure on maintenance
Your Answer
In an operating lease arrangement the equipment risk is transferred to the lessor , It minimizes investment in equipment

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

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

Multiple Choice Single Answer
Question
The main function of finance under the traditional approach comprises of
Correct Answer
Procurement of funds
Your Answer
Procurement of funds

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

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

True/False
Question
If the company buys back its own shares, it shall not make further issue of Bonus shares within a period of 24 months
Correct Answer
False
Your Answer
True

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

Multiple Choice Multiple Answer
Question
Utility of cash flow analysis
Correct Answer
Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash
Your Answer
Helps in efficient cash management , helps in internal financial management , Discloses the movements of cash

Multiple Choice Multiple Answer
Question
Undue decrease in Gross Profit ratio may indicate
Correct Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities
Your Answer
Non-consideration of sales invoices , Under-valuation of closing stock , Improper utilisation of infrastructural facilities

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

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

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

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

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

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

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

Match The Following
Question
Correct Answer
Your Answer
Contribution
Sales less variable operating cost
Sales less variable operating cost
Operating Profit
Contribution less Fixed Operating cost
Contribution less Fixed Operating cost
Fixed cost
remains constant
remains constant
Variable cost
varies in direct proportion to the sales revenue
varies in direct proportion to the sales revenue

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

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

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

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

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

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

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

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

Multiple Choice Multiple Answer
Question
The recommendations of the Chhore committee included
Correct Answer
increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels
Your Answer
increasing role of short term loans and bill finance and curbing the role of cash credit limits , the bank should appraise and fix separate limits for normal non-peak levels and also peak levels

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Posted in: Financial Management (Set VIII)

Financial Management - 24

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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

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

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

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

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

Select The Blank
Question
If the size of the issue is more than Rs. 100 crores, the issue is required to be rated by at least ________ credit rating agencies
Correct Answer
two
Your Answer
two

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

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

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

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

Multiple Choice Single Answer
Question
The motive of the company to hold the inventories in order to facilitate the smooth and uninterrupted production and sales operations is known as
Correct Answer
Transaction motive
Your Answer
Precautionary motive

Select The Blank
Question
In financial terms, the operating profit earned by the company is also referred to as ________
Correct Answer
Profit before Interest and Taxes
Your Answer
Profit before Interest and Taxes

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

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

Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the cost of preference or equity capital , Debenture financing does not result in dilution of control

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

Multiple Choice Single Answer
Question
Economic Order quantity indicates that
Correct Answer
Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised
Your Answer
Quantity which is fixed in such a way that the total variable cost of managing the inventory can be minimised

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

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

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

Multiple Choice Multiple Answer
Question
Limitations of capital budgeting is
Correct Answer
Life of the project cannot be estimated accurately , Cash inflows cannot be eatimated accurately , Difficulties in deciding the cost of capital
Your Answer
Cash inflows cannot be eatimated accurately , Inaccurate estimation of the fixed assets , Difficulties in deciding the cost of capital

Multiple Choice Single Answer
Question
The traditional approach to financial management refers only to the procurement of funds by
Correct Answer
Corporate entity
Your Answer
Corporate entity

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

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

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

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

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

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

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

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

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

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

Multiple Choice Multiple Answer
Question
Packing credit facility can take the following form
Correct Answer
Pre-shipment Packing credit , Post-shipment Packing credit
Your Answer
Pre-shipment Packing credit , Post-shipment Packing credit , Confirmed Packing credit

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

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

Multiple Choice Single Answer
Question
Among all the intermediaries in Capital market, probably the most important and significant intermediary is the
Correct Answer
Merchant Banker
Your Answer
Merchant Banker

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

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

Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is criticised on the following grounds
Correct Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action
Your Answer
Ignores risk factor , Does not consider social obligation , Ignores quality aspect of benefits associated with a financial course of action

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

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

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

Multiple Choice Single Answer
Question
The "Pre-emptive right" of the equity shareholder is
Correct Answer
the right to purchase new shares in the same proportion as their current ownership
Your Answer
the right to purchase new shares in the same proportion as their current ownership

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

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

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

Multiple Choice Multiple Answer
Question
Shortcomings of Debentures from Investor's point of view
Correct Answer
The interest on debentures is fully taxable , They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates
Your Answer
They do not carry the right to vote , Debenture prices are vulnerable to increase in interest rates

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Posted in: Financial Management (Set VIII)