Strategic Finance - 19

Question Walter's model on dividend relevance is based on the following assumptions :-
Correct Answer 100 Per cent payout or retention , Internal financing , Constant return and cost of
capital
Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Question Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True
Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Question In the past, costing mainly focused on :-
CorrectAnswer Manufacturing costs
Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True
Question Increase in cost of capital means decrease in ________.
Correct Answer Profitability
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False
Question Short term sources of funds include :-
Correct Answer Current Liabilities
Question A high payout policy means :-
Correct Answer More current dividends
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value
Question Investment decisions are mainly concerned with :-
Correct Answer Assets
Question current liabilities arise in the context of :-
Correct Answer Current assets
Question A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Question In the stock repurchase model one of the main assumption is that ________.
Correct Answer The market is efficient
Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Question AS 13 Accounting for investments - Accounting standard comes into effect for financial
statements covering periods commencing on or after ________.
Correct Answer `April 1, 1995
Question Comparative analysis is :-
Correct Answer A review to ensure consistency within the activity model & process flow
Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute
Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Question ________ is never a part of the output.
Correct Answer Mechanisms
Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
AS 4 Contingencies & events occurring after the balance sheet date
AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements
Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
Question Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination
pay. Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit
costs of the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when
they are the target of an alternative use.
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Question AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions
Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

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Posted in: Strategic Finance (Set VII)

Strategic Finance - 18

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Inventory valuation , Booking depreciation , Methods of provisions
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Question Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the accounting policies followed
by the company , There are no standard procedures for valuation of intangible assets , No importance
to the market value of the asset
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Question In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance
Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Question The main assumption in comparative analysis is the possibility of :-
Correct Answer Combination or co-location of similar functions
Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases
Question Equity includes :-
Correct Answer Development Rebate Reserve
Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Segment liabilities Enterprise liabilities Enterprise liabilities
Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets
Question Organisational changes are similar to mission changes.
Correct Answer True
Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
Segment liabilities Do not include borrowings that are incurred for financing purposes Does not
include extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise
balances are eliminated
Segment assets Do not include income tax assets Do not include income tax assets
Question Total risk reduces if operations of combining firms are ________.
Correct Answer Negatively correlated
Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False
Question A company under siege may look for support & help from its :-
Correct Answer Friends
Question If the segment result of a segment includes interest expense its segment liabilities
include :-
Correct Answer The related interest bearing liabilities
Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Question The following Act contains the provisions permitting the companies to buy back their
shares :-
Correct Answer Companies (Amendment) Act, 1999
Question Shortage costs are mainly in the form of :-
Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill
Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True
Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition
Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares
Question A long term investment is an investment other than a current investment.
Correct Answer True
Question Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True
Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
Correct Answer Segment assets
Question Segment result is segment revenue less segment expenses.
Correct Answer True

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Posted in: Strategic Finance (Set VII)

Strategic Finance - 17

Question 1 The accounting records serve as the major source of cost data.
Correct Answer True
Question 2 ________ know the best about a firm's performance.
Correct Answer Firm Managers
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Question 5 Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom
Question 6 Dividends increase the current returns for shareholders.
Correct Answer True
Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings
Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest
firm's ________.
Correct Answer Management & board
Question 10 Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion
of fluctuating working capital requirement
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Question 12 AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on
investments , Operating or finance leases , Investment in mutual funds
Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital
Question 14 A long term investment is an investment other than a current investment.
Correct Answer True
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True
Question 16 Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Question 17 Retained earnings are the most important internal sources of financing the growth of
the firm.
Correct Answer True
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True
Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Question 20 Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Question 21 In many companies, there is no formal record of________.
Correct Answer Investment in employees
Question 22 Value added analysis is a method to determine, if elements within a process flow
provide the :-
Correct Answer Values
Question 24 The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Question 25 traditionally avails are provided by ________.
Correct Answer Banks
Question 26 ________ is not a example of segment liability.
Correct Answer Goodwill
Question 27 Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Question 28 Liquidation value is also known as ________.
Correct Answer Realizable value
Question 29 Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False
Question 32 Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares
Question 36 usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Question 37 When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Question 38 Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment
Question 39 Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals
Question 40 Management of working capital refers to the management of total assets and
liabilities of a company.
Correct Answer False
Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings
Question 43 When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method
Question 44 Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial
risk do not have any influence on accounting numbers
Question 45 Profitability of a company depends upon :-
Correct Answer Cost of capital
Question 46 A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer Growth

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Posted in: Strategic Finance (Set VII)

Strategic Finance - 16

Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Question 2 Value implies that something has :-
Correct Answer Worth
Question 3 Organisational changes are similar to mission changes.
Correct Answer True
Question 4 In value of assets method the following is also to be included as they are also of value
to the company :-
Correct Answer Non trading assets
Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Question 6 Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Question 7 Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Question 8 Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds
Question 9 The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Question 13 ________ are not diversible.
Correct Answer Market related risks
Question 14 The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders ,
Amount to be retained in the firm
Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Question 16 The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information
or signalling hypothesis
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Question 18 The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as
derivatives , Expected security return = Riskless return + beta x (expected market risk premium)
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer True
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Question 22 Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise
Question 23 Deferred payment plan is also known as:-
Correct Answer Earn out plan
Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Question 26 In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial
characteristics of acquiring firm
Question 27 In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Question 29 Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy
decisions
Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into
a co-ordinated plan.
Correct Answer True
Question 32 During the costing process, we look at ________.
Correct Answer Resource consumption
Question 33 Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True
Question 34 The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Question 36 One of the selective developments that has taken place in recent times is companies
are going in for :-
Correct Answer Activity based costing and management
Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Question 38 An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Question 41 During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account
Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Question 45 The amount to be invested by any single investor in a commercial paper shall not be
less than Rs. ________.
Correct Answer 25 lacs
Question 46 Tender offers are used primarily for :-
Correct Answer Large Equity repurchases
Question 47 Many companies claim their main assets are their :-
Correct Answer People

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Posted in: Strategic Finance (Set VI)

Strategic Finance - 15

Question 1 If a company is following multiple accounting system, the activity accountant will
have to match data across
Correct Answer Codes , Time periods , Systems
Question 2 Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Question 5 A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Question 8 The total cost of the activitymodel allocated by the applied activity drivers to the
output of the activity model is called________.
Correct Answer The cost of the output
Question 9 The voluntary market based method means :-
Correct Answer Develop a consistent framework which can be operational across sectors and
countries
Question 10 Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Question 11 The offer price by the acquiring company should be an average of the weekly high &
low for :-
Correct Answer The last 26 months
Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Question 14 The acquirer should intimate to the target company & the concerned stock exchanges
as soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Question 15 What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Question 19 Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Question 20 Articles of association should authorise buy back of securities as per the Company's
Act.
Correct Answer True
Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Question 22 Suppliers of equity are interested in :-
Correct Answer High share prices
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Question 26 Segment liabilities do not include :-
Correct Answer Borrowings & other liabilities that are incurred for financing rather than
operating purpose
Question 27 Economic analysis usually covers :-
Correct Answer A small number of improvement alternatives
Question 28 A firm using a conservative policy for determining the requirements of current assets
:-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Question 29 Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that
the value of his investment is maximized.
Correct Answer False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Question 33 As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Question 34 Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and business risk
Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
Question 36 The development aspect of training in firms focus on :-
Correct Answer Promotion to higher job levels
Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True
Question 38 A company is permitted to buy back its shares through stock exchange in the
following situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of
the payout , The identity of the company as a purchaser shall appear on the electronic screen when
the order is placed , The buy back shall be made only on stock exchanges with electronic trading
facility
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False
Question 40 The ________ cost tier has the advantage of being the simplest to calculate and
justify.
Correct Answer Direct
Question 41 Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment
Question 43 The HHI index reflects :-
Correct Answer Inequality & degree of concentration
Question 44 ________ is never a part of the output.
Correct Answer Mechanisms
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Question 46 In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

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Posted in: Strategic Finance (Set VI)

Strategic Finance - 14

Multiple Choice Multiple Answer
Question A firm using a conservative policy for determining the requirements of
current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to
customers , Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to
customers , Increases the ROI
Multiple Choice Multiple Answer
Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis ,
Information or signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis ,
Information or signalling hypothesis
Multiple Choice Single Answer
Question In respect of depreciable assets, which do not have material value,
depreciation is often allocated :-
Correct Answer Fully in the accounting period for which they are acquired
Your Answer Over the residual value
Multiple Choice Single Answer
Question What is the maximum amount involved in the buy back of the total
paid up capital & free reserves of the company?
Correct Answer 0.25
Your Answer 0.25
True/False
Question Tender offers us an alternative approach to acquire another firm.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Ideas to determine which is faster, better or cheaper
Multiple Choice Multiple Answer
Question For ABC Analysis the available cost data :-
Correct Answer Has to be adjusted for change , Has to be corrected for
undocumented element costs , Has to be combined with different
types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for
undocumented element costs , Has to be combined with different
types of data from alternate sources
Multiple Choice Single Answer
Question Today knowledge has become a key determinant for :-
Correct Answer Economic & business success
Your Answer For determining a firm's value
Select The Blank
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses
Multiple Choice Single Answer
Question A firm can manage with small inventory if the supply is :-
Correct Answer Prompt & adequate
Your Answer Prompt & adequate
Multiple Choice Multiple Answer
Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer People , Equipment , Overheads
Select The Blank
Question If firms have same technology ________ makes the difference i.e.
firms become more productive .
Correct Answer Solid human resource team
Your Answer Solid human resource team
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity
True/False
Question There are few methods of allocating depreciation over the useful life
of an assets.
Correct Answer False
Your Answer True
True/False
Question Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Financial statements classify the following into separate categories :-
Correct Answer Fixed assets , Investments , Current assets
Your Answer Fixed assets , Current assets
Multiple Choice Multiple Answer
Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Your Answer Brokerage , Advertisements , Fees , Duties
Match The Following
Question Correct Answer Your Answer
Information or signalling
hypothesis
Management believes that
the common stock of the
company is undervalued
Management believes that
the common stock of the
company is undervalued
Dividend or Personal
Taxation Hypothesis
Cash dividends are taxable
at ordinary tax rates
Cash dividends are taxable
at ordinary tax rates
Leverage hypothesis Stock repurchases
increases the debt / equity
ratio
Stock repurchases increases
the debt / equity ratio
Wealth transfer among
shareholders
The largest portion of
wealth effect goes to the
non - tendering
shareholders
The largest portion of wealth
effect goes to the non -
tendering shareholders
Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for expenses
incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration
Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Current Liabilities
Select The Blank
Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 118 Bn
True/False
Question Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True
True/False
Question If a company has resorted to buyback its shares, it cannot make a
further issue of the same kind of securities within a period of 1 year.
Correct Answer False
Your Answer True
Select The Blank
Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Your Answer 1 to 2 months
Multiple Choice Single Answer
Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business pf the
organisation
Your Answer To achieve a better method of doing the right business pf the
organisation
Select The Blank
Question If a segment is not designated as a ________ it should be included
as an unallocated reconciling item.
Correct Answer Reportable segment
Your Answer Operating segment
Multiple Choice Single Answer
Question If a particular item of depreciation or amortisation is included in
segment expense, the related asset is included in :-
Correct Answer Segment assets
Your Answer Segment assets
True/False
Question The intellectual assets of a company are often worth 3 or 4 times the
tangible book value.
Correct Answer True
Your Answer True
True/False
Question Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm
True/False
Question Book value is based on the balance sheet value of owner's equity.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Daily wages , Maintenance , Security
Match The Following
Question Correct Answer Your Answer
Amount involved in buy
back
Not to exceed 25 % of the
total paid up capital
Not to exceed 25 % of the
total paid up capital
Articles of Association Authorize buy back of
securities
The ratio of debt to total
capital & free reserves
should be 1 : 1
Board of Directors Resolution permitting the
buy back of shares
Authorize buy back of
securities
Shares to be bought back Fully paid up Resolution permitting the
buy back of shares
True/False
Question It is necessary to identify all costs that may be related to an
acquisition.
Correct Answer True
Your Answer True
True/False
Question Notes payable means the buyer signs a note that evidences a debt to
the seller.
Correct Answer True
Your Answer True
Select The Blank
Question ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Firm Managers
Multiple Choice Single Answer
Question The FEA Tools encompass a vast array of information & policy into :-
Correct Answer One evaluation
Your Answer Many evaluations
Multiple Choice Multiple Answer
Question The employer in offering the job contract assumes a range of legal
obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies ,
Pensions & contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies ,
Pensions & contributions to social security payments
Select The Blank
Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers
Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from
the date on which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from
the date on which investment is made , Can be held for more than 1
year
Multiple Choice Single Answer
Question The depreciation rates or the useful lives of the assets are disclosed
only :-
Correct Answer If they are different from the principle rates specified in the statute
Your Answer If they are different from the principle rates specified in the statute
Multiple Choice Multiple Answer
Question The net income approach is based on following 3 assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity capitalization
rate , Use of debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization
rate , Use of debt doesn't change the risk perception of investors
Select The Blank
Question In case of direct placement of commercial papers it may be issued for
maturities ________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year
Select The Blank
Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Big ticket items & durable goods
Select The Blank
Question ________ government has made it mandatory to include in their
annual reports information on customers, processes & human capital.
Correct Answer Danish (Denmark)
Your Answer Japanese
Select The Blank
Question ________ are those operating assets that are employed by a
segment in its operating activities.
Correct Answer Segment assets
Your Answer Current assets
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

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Posted in: Strategic Finance (Set VI)

Strategic Finance -13

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
Question The support elements consists of important functions
such as :-
Correct Answer Accounting , Automatic data processing , Payroll
Your Answer Payroll , Co-ordination , Accounting
Multiple Choice Single Answer
Question The value of the asset does not include:-
Correct Answer Price per share
Your Answer Price per share
Multiple Choice Single Answer
Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business
pf the organisation
Your Answer To achieve a better method of doing the right business
pf the organisation
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets
True/False
Question Articles of association should authorise buy back of
securities as per the Company's Act.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question During Share repurchase, it is necessary to transfer
certain sum to :-
Correct Answer Capital redemption reserve Account
Your Answer Capital redemption reserve Account
Multiple Choice Single Answer
Question Comparative analysis is :-
Correct Answer A review to ensure consistency within the activity
model & process flow
Your Answer A review to ensure consistency within the activity
model & process flow
Multiple Choice Multiple Answer
Question Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost
during the new search , Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost
during the new search , Termination pay
Multiple Choice Multiple Answer
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined
moment , Prepayment adjustments , Capitalized
expenses
Your Answer A good or a right that a firm owns in a determined
moment , Prepayment adjustments , Capitalized
expenses
Select The Blank
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Resource consumption
Select The Blank
Question Credit standards should be relaxed upon the point
where incremental returns ________ incremental
costs.
Correct Answer Equals
Your Answer Equals
True/False
Question Usually cost data is perfect for ABC Analysis &
distribution.
Correct Answer False
Your Answer False
True/False
Question An activity model is a tool to assist in understanding &
defining the organisation.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The acquiring firm for any M & A will require data
about the target firm which will include :-
Correct Answer Quality of management , Production capabilities ,
Profitability
Your Answer Production capabilities , Capital & labour intensity ,
Profitability
Select The Blank
Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Goodwill
Multiple Choice Single Answer
Question The value based approach of HRA Tracking suggests
that the value of human resources depends upon :-
Correct Answer Capacity to generate revenue
Your Answer Opportunity cost
Select The Blank
Question ________ are considered most desirable from
shareholders point of view.
Correct Answer Dividends
Your Answer Dividends
Multiple Choice Multiple Answer
Question Shareholders returns consists of 2 components :-
Correct Answer Dividend , Capital gains
Your Answer Capital gains , Dividend
Multiple Choice Single Answer
Question In the book building method, the company makes an
offer to buy back :-
Correct Answer Its specified number of shares at a specified offer
price range
Your Answer Its specified number of shares at a specified offer
price range
Multiple Choice Multiple Answer
Question A company is permitted to buy back its shares through
stock exchange in the following situations :-
Correct Answer The company shall complete the verification of
acceptances within 15 days of the payout , The
identity of the company as a purchaser shall appear
on the electronic screen when the order is placed ,
The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of
acceptances within 15 days of the payout , The
identity of the company as a purchaser shall appear
on the electronic screen when the order is placed ,
The buy back shall be made only on stock exchanges
with electronic trading facility
Multiple Choice Single Answer
Question Research into true human resources accounting
began in :-
Correct Answer 1960`s
Your Answer 1960`s
Select The Blank
Question If firms have same technology ________ makes the
difference i.e. firms become more productive .
Correct Answer Solid human resource team
Your Answer Latest & updated techniques
True/False
Question It is necessary to identify all costs that may be related
to an acquisition.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question It is the activity accountant's job to do the following for
the existing organisational structure :-
Correct Answer To define the costs , To refine the costs , To
document the costs
Your Answer To define the costs , To document the costs , Support
the costing of the activities
Multiple Choice Multiple Answer
Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in
time to all lenders , Freedom of decisions
Your Answer Agency cost of free cash flow , Commitment to pay in
time to all lenders , Freedom of decisions
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases
Select The Blank
Question If total external revenue attributable to reportable
segments constitutes less than ________ of the total
enterprise revenue additional segments should be
identified as reportable segments.
Correct Answer 75 percent
Your Answer 75 percent
Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature
:-
Correct Answer Readily realisable , Intended to be held for not more
than 1year from the date on which investment is made
Your Answer Readily realisable , Intended to be held for not more
than 1year from the date on which investment is made
, Not similar to current assets
Select The Blank
Question If the segment result of a segment includes interest or
dividend income its segment assets will not include
________.
Correct Answer Payables
Your Answer Related receivables
Multiple Choice Single Answer
Question What is the maximum amount involved in the buy
back of the total paid up capital & free reserves of the
company?
Correct Answer 0.25
Your Answer 0.25
Select The Blank
Question Economies of scale arises with increase in volume of
production leading to________.
Correct Answer Reduction in the cost of production
Your Answer Reduction in the cost of production
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Multiple Answer
Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed
to shareholders , Amount to be retained in the firm
Your Answer To determine the amount of earnings to be distributed
to shareholders , Amount to be retained in the firm
True/False
Question Baumul`s Model is similar to EOQ model in inventory
management.
Correct Answer True
Your Answer True
True/False
Question To `gather costs', means capturing all relevant
expenses that pertain to the selected model and
processes.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question When the seller asks for the payment beforemaking
the delivery in order to avoid all risks it is known as :-
Correct Answer Cash before delivery
Your Answer Cash before delivery
True/False
Question When a company is able to assess an individual's
worth, it helps in increasing its own worth.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question The depreciation rates or the useful lives of the assets
are disclosed only :-
Correct Answer If they are different from the principle rates specified in
the statute
Your Answer If they are different from the principle rates specified in
the statute
Select The Blank
Question Depreciation is ________ of an asset.
Correct Answer Loss of value
Your Answer Loss of value
Multiple Choice Single Answer
Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent
True/False
Question Money becomes less valuable when received at a
latter stage instead of in present time.
Correct Answer True
Your Answer False
True/False
Question Diversification helps in preserving a firm's reputation &
goodwill.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Overall cost of capital
Multiple Choice Multiple Answer
Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the
accounting policies followed by the company , There
are no standard procedures for valuation of intangible
assets , No importance to the market value of the
asset
Your Answer Book value of the assets is directly dependent on the
accounting policies followed by the company , There
are no standard procedures for valuation of intangible
assets , No importance to the market value of the
asset
True/False
Question The chance of bankruptcy is small when the leverage
of a firm is small.
Correct Answer True
Your Answer False

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Posted in: Strategic Finance (Set V)