McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) .
Chapters
| 101. |
Opening stock + purchases + direct expenses – closing stock = |
| A. | net profit. |
| B. | cost of production |
| C. | administrative expenses. |
| D. | cost of goods sold |
| Answer» D. cost of goods sold | |
| 102. |
Which ratio measures the number of times the receivables are rotated in a year in terms of sales? |
| A. | stock turnover ratio. |
| B. | debtors turnover ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors turnover ratio. | |
| 103. |
Debtors turnover ratio is also called . |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio |
| Answer» B. debtors velocity ratio. | |
| 104. |
Creditors turnover ratio is also called |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | accounts payables ratio. |
| D. | working capital turnover ratio. |
| Answer» C. accounts payables ratio. | |
| 105. |
The primary purpose of the liquidity ratios is to determine |
| A. | how much working capital is tied up in inventory? |
| B. | the relative level of short-term debt. |
| C. | how well a firm is able to pay off short-term obligations? |
| D. | more than one of the above. |
| Answer» C. how well a firm is able to pay off short-term obligations? | |
| 106. |
Which of the following statements about liquidity ratios is true? |
| A. | the higher the current ratio, the more likely a firm is able to pay its short-term obligations. |
| B. | the lower the quick ratios relative to the current ratio, the safer a firm is in terms of liquidity. |
| C. | the ratio of net working capital to total assets always lies between 0 and 1. |
| D. | relatively high current ratios are usually a sign of efficient working capital management. |
| Answer» A. the higher the current ratio, the more likely a firm is able to pay its short-term obligations. | |
| 107. |
The ________ ratios help determines the degree of financial risk and earnings volatility present in a firm. |
| A. | profitability |
| B. | asset utilization |
| C. | liquidity |
| D. | none of the above. |
| Answer» D. none of the above. | |
| 108. |
Which of the following statements are true? |
| A. | debt to equity and debt to asset ratios measure capital structure and vary widely among industries. |
| B. | debt utilization ratios alone do not measure a firm\s ability to meet its cash obligations. |
| C. | dupont analysis considers the impact of debt on the profitability of the firm. |
| D. | two of the above are true. |
| Answer» D. two of the above are true. | |
| 109. |
Debt-equity ratio is a sub-part of |
| A. | short-term solvency ratio |
| B. | long-term solvency ratio |
| C. | debtors turnover ratio |
| D. | none of the above |
| Answer» D. none of the above | |
| 110. |
The most precise test of liquidity is |
| A. | quick ratio |
| B. | current ratio |
| C. | absolute liquid ratio |
| D. | none of the above |
| Answer» C. absolute liquid ratio | |
| 111. |
Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock. |
| A. | rs 54,000 |
| B. | rs 60,000 |
| C. | rs 1, 62,000 |
| D. | none of the above |
| Answer» A. rs 54,000 | |
| 112. |
Statement of cash flows includes |
| A. | financing activities |
| B. | operating activities |
| C. | investing activities |
| D. | all of the above |
| Answer» D. all of the above | |
| 113. |
In cash flows, when a firm invests in fixed assets and short-term financial investments results in |
| A. | increased equity |
| B. | increased liabilities |
| C. | decreased cash |
| D. | increased cash |
| Answer» C. decreased cash | |
| 114. |
A firm that issues stocks and bonds to raise funds results in |
| A. | decreases cash |
| B. | increases cash |
| C. | increases equity |
| D. | indian overseas bank |
| Answer» B. increases cash | |
| 115. |
The purchase value of assets over its serviceable life is categorised as |
| A. | appreciated liabilities |
| B. | appreciated assets |
| C. | depreciation |
| D. | appreciation |
| Answer» C. depreciation | |
| 116. |
The basic financial statements include |
| A. | statement of cash flows |
| B. | income statement |
| C. | balance sheet |
| D. | all of the above |
| Answer» D. all of the above | |
| 117. |
Cash flow example from a financing activity is |
| A. | payment of dividends |
| B. | receipt of dividend on investment |
| C. | cash received from customers |
| D. | purchase of fixed asset |
| Answer» A. payment of dividends | |
| 118. |
Cash flow example from an investing activity is |
| A. | issue of debenture |
| B. | repayment of long-term loan |
| C. | purchase of raw materials for cash |
| D. | sale of investment by non-financial enterprise |
| Answer» D. sale of investment by non-financial enterprise | |
| 119. |
Cash flow example from an operating activity is |
| A. | purchase of own debenture |
| B. | sale of fixed assets |
| C. | interest paid on term-deposits by a bank |
| D. | issue of equity share capital |
| Answer» C. interest paid on term-deposits by a bank | |
| 120. |
Which item comes under financial activities in cash flow? |
| A. | redemption of preference share |
| B. | issue of preference share |
| C. | interest paid |
| D. | all the above |
| Answer» D. all the above | |
| 121. |
As per Accounting Standard-3, Cash Flow is classified into |
| A. | operating activities and investing activities |
| B. | investing activities and financing activities |
| C. | operating activities and financing activities |
| D. | operating activities, financing activities and investing activities |
| Answer» D. operating activities, financing activities and investing activities | |
| 122. |
Cash Flow Statement is also known as |
| A. | statement of changes in financial position on cash basis |
| B. | statement accounting for variation in cash |
| C. | both a and b |
| D. | none of the above. |
| Answer» C. both a and b | |
| 123. |
The objectives of Cash Flow Statement are |
| A. | analysis of cash position |
| B. | short-term cash planning |
| C. | evaluation of liquidity |
| D. | comparison of operating performance |
| Answer» D. comparison of operating performance | |
| 124. |
Cash Flow Statement is based upon |
| A. | cash basis of accounting |
| B. | accrual basis of accounting |
| C. | credit basis of accounting |
| D. | none of the above |
| Answer» A. cash basis of accounting | |
| 125. |
Which of the following statements are true? |
| A. | cash flow reveals only the inflow of cash |
| B. | cash flow reveals only the outflow of cash |
| C. | cash flow is a substitute for income statement |
| D. | cash flow statement is not a replacement of funds flow statement. |
| Answer» D. cash flow statement is not a replacement of funds flow statement. | |
| 126. |
In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» B. financing activities, investing activities | |
| 127. |
When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» B. financing activities, investing activities | |
| 128. |
Which of the following statements are false? |
| A. | old furniture written off doesn’t affect cash flow. |
| B. | cash flow statement is a substitute for cash account. |
| C. | appropriation of retained earnings is not shown in cash flow statement. |
| D. | net cash flow during a period can never be negative. |
| Answer» B. cash flow statement is a substitute for cash account. | |
| 129. |
Which of the following is not a cash outflow? |
| A. | increase in prepaid expenses |
| B. | increase in debtors |
| C. | increase in stock |
| D. | increase in creditors |
| Answer» D. increase in creditors | |
| 130. |
Cash flow statement is prepared for financial planning of |
| A. | long range |
| B. | medium range |
| C. | short range |
| D. | very long range |
| Answer» C. short range | |
| 131. |
Which of the following is source of cash? |
| A. | cash deposited into bank |
| B. | cash withdrawn from bank |
| C. | sale of goods costing ₹10,000 for ₹8,000 |
| D. | sale of marketable securities for cash |
| Answer» C. sale of goods costing ₹10,000 for ₹8,000 | |
| 132. |
Which of the following is not source of cash? |
| A. | issue of shares |
| B. | purchase of machinery |
| C. | sale of asset |
| D. | dividend received |
| Answer» B. purchase of machinery | |
| 133. |
Which of the following is not application of cash? |
| A. | increase in debtors |
| B. | increase in inventory |
| C. | increase in bills payable |
| D. | increase in prepaid expenses |
| Answer» C. increase in bills payable | |
| 134. |
If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be : |
| A. | cash used from financing activities ₹2,12,000 |
| B. | cash received from financing activities ₹2,12,000 |
| C. | cash used (payment) from financial activities ₹2,10,000 |
| D. | cash used (payment) from financial activities ₹2,00,000 |
| Answer» C. cash used (payment) from financial activities ₹2,10,000 | |
| 135. |
If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be : |
| A. | cash used (payment) in investing activities ₹8,000 |
| B. | cash received from operating activities ₹8,000 |
| C. | cash used (payment) from operating activities ₹8,000 |
| D. | cash used (payment) from financial activities ₹8,000 |
| Answer» A. cash used (payment) in investing activities ₹8,000 | |
| 136. |
How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 137. |
A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be : |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» B. cash flow from investing activities | |
| 138. |
How will you treat Bank Overdraft in a Cash Flow Statement? |
| A. | cash flow from operating activities ’ |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 139. |
Where will you show purchase of Goodwill in a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» B. cash flow from investing activities | |
| 140. |
How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 141. |
State whether cash deposited in bank will be classified under which kind of activity? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | no cash flow |
| Answer» D. no cash flow | |
| 142. |
A company has to prepare its balance sheet once in.. |
| A. | six months |
| B. | two years |
| C. | a year |
| D. | as and when it needs |
| Answer» C. a year | |
| 143. |
Income statement of a business shows… |
| A. | net profit |
| B. | net operating result of specified period |
| C. | net loss |
| D. | none of these |
| Answer» B. net operating result of specified period | |
| 144. |
The statement which shows the periodical increase or decrease of funds is called___________ statement. |
| A. | funds flow |
| B. | cash flow |
| C. | income |
| D. | working capital |
| Answer» A. funds flow | |
| 145. |
Fund flow statement is based on the concept of… |
| A. | business entity |
| B. | accounting period |
| C. | going concern |
| D. | all of the above |
| Answer» C. going concern | |
| 146. |
Funds means… |
| A. | money |
| B. | cash |
| C. | machinery |
| D. | any form of financial resources |
| Answer» D. any form of financial resources | |
| 147. |
Which of the following is the component of current assets? |
| A. | stock |
| B. | prepaid expenses |
| C. | income earned but not received |
| D. | all of the above |
| Answer» D. all of the above | |
| 148. |
The term flow of funds refers to… |
| A. | change in funds |
| B. | change in working capital |
| C. | both |
| D. | none |
| Answer» C. both | |
| 149. |
Transaction between_________ may cause the flow of funds. |
| A. | current assets and fixed assets |
| B. | current assets and long term liabilities, and capital |
| C. | current liabilities and fixed assets |
| D. | all of the above |
| Answer» D. all of the above | |
| 150. |
The term current account refers to…. |
| A. | current assets |
| B. | current liabilities |
| C. | both |
| D. | none |
| Answer» C. both | |
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