McqMate
Chapters
1. |
The financial decision making that relates to current assets or short term asset is known as __________________. |
A. | working capital |
B. | non-working capital |
C. | venture capital |
D. | all of the above |
Answer» A. working capital |
2. |
In what order should current assets be present on a statement of financial position? |
A. | cash, bank, trade receivables, inventories |
B. | trade receivables, bank, cash, inventories |
C. | inventories, cash, bank, trade receivables |
D. | inventories, trade receivables, bank, cash |
Answer» D. inventories, trade receivables, bank, cash |
3. |
If value of opening inventories increases, what happens to the value of gross profit? |
A. | decreases |
B. | increases |
C. | stays the same |
D. | gets closer to net profit |
Answer» A. decreases |
4. |
What does the statement of comprehensive income show? |
A. | the liquidity position of a business at a point in time |
B. | the value of assets bought by a business over a period point in time |
C. | the profit or loss made by a business over a period of time |
D. | the value of a business at a point in time |
Answer» C. the profit or loss made by a business over a period of time |
5. |
Depreciation is applied to non-current assets in the statement of financial position in order to |
A. | show a profitability valuation of the non-current assets |
B. | show a true and fair value of the non-current assets |
C. | show how the non-current assets are affected by inflation |
D. | show what the non-current assets could make if leased out |
Answer» B. show a true and fair value of the non-current assets |
6. |
What would be the most likely impact on trade receivables days if invoice discounting was offered to and accepted by a large customer of a business? |
A. | trade receivables days would no longer exist |
B. | trade receivables days would reduce |
C. | trade receivables days would increase |
D. | trade receivable days would not be affected |
Answer» B. trade receivables days would reduce |
7. |
___________in accounting, is when the costs to acquire an asset are expensed over the life of that asset rather than in the period it was incurred? |
A. | purchasing. |
B. | capitalization. |
C. | selling. |
D. | financing |
Answer» B. capitalization. |
8. |
Capitalization is the sum of a corporation’s stock, long term debts &________? |
A. | liquid liability |
B. | retained earnings |
C. | fixed asset. |
D. | short term debts. |
Answer» B. retained earnings |
9. |
__________ is a situation in which actual profits of a company are not sufficient enough to pay interest on debentures, on loans and pay dividends on shares over a period of time? |
A. | under capitalization |
B. | over capitalization |
C. | market capitalization |
D. | none of the above |
Answer» B. over capitalization |
10. |
Asset structure = _________+__________. |
A. | current asset+fixed asset |
B. | tangible asset+fixed asset |
C. | fixed asset+current asset |
D. | intangible asset+current asset |
Answer» C. fixed asset+current asset |
11. |
In finance, "working capital" means the same thing as __________. |
A. | total assets. |
B. | fixed assets. |
C. | current assets. |
D. | current assets minus current liabilities. |
Answer» C. current assets. |
12. |
In deciding the appropriate level of current assets for the firm, management is confronted
|
A. | a trade-off between profitability and risk. |
B. | a trade-off between liquidity and marketability. |
C. | a trade-off between equity and debt. |
D. | a trade-off between current assets and profitability. |
Answer» A. a trade-off between profitability and risk. |
13. |
Permanent working capital ___________. |
A. | varies with seasonal needs. |
B. | includes fixed assets. |
C. | is the amount of current assets required to meet a firm\s long-term minimum needs. |
D. | includes accounts payable. |
Answer» C. is the amount of current assets required to meet a firm\s long-term minimum needs. |
14. |
Net working capital refers to ___________. |
A. | total assets minus fixed assets. |
B. | current assets minus current liabilities. |
C. | current assets minus inventories. |
D. | current assets. |
Answer» B. current assets minus current liabilities. |
15. |
To financial analysts, "gross working capital" means the same thing as ________. |
A. | fixed assets. |
B. | current assets. |
C. | working capital. |
D. | cost of capital. |
Answer» B. current assets. |
16. |
An example of fixed asset is________. |
A. | live stock. |
B. | value stock. |
C. | income stock. |
D. | all of the above. |
Answer» A. live stock. |
17. |
Which one of the following is not the determinant of the working capital? |
A. | size of the firm |
B. | operating cycle |
C. | terms of credit |
D. | competitors |
Answer» D. competitors |
18. |
Permanent working capital ___ |
A. | will vary at all times |
B. | will vary with volumes |
C. | fixed at all times |
D. | fluctuates according to the season |
Answer» C. fixed at all times |
19. |
Which one of the following is not a method to find working capital requirement? |
A. | percent of sales method |
B. | working capital components method |
C. | operating cycle method |
D. | physical method |
Answer» D. physical method |
20. |
The Capital used for meeting routine and repetitive expenses of day to day business operations is called____. |
A. | reserve capital |
B. | working capital |
C. | fixed capital |
D. | regular capital |
Answer» B. working capital |
21. |
Gross working capital represents __________. |
A. | total current liabilities |
B. | the excess of current assets over current liabilities |
C. | total current assets |
D. | total liquid assets |
Answer» C. total current assets |
22. |
Net working capital is the excess of current assets over ________. |
A. | current liabilities |
B. | long term liabilities |
C. | contingent liabilities |
D. | fixed liabilities |
Answer» A. current liabilities |
23. |
A positive (net) working capital will arise when current assets exceed _________. |
A. | fixed liabilities |
B. | contingent liabilities |
C. | long term liabilities |
D. | current liabilities |
Answer» D. current liabilities |
24. |
The net working capital, being the difference between current assets and current liabilities is a _______. |
A. | misleading concept |
B. | quantitative concept |
C. | qualitative concept |
D. | none of the above |
Answer» C. qualitative concept |
25. |
The Funds required by way of permanent working capital should be provided by __________. |
A. | indigenous banks |
B. | commercial banks |
C. | rbi |
D. | proprietors |
Answer» D. proprietors |
26. |
Service and Financial concerns may have _____. |
A. | longest operating cycle |
B. | shortest operating cycle |
C. | manufacturing phase |
D. | none of these |
Answer» B. shortest operating cycle |
27. |
_____ is that minimum amount which should always be present in the business to carry out the activities without a break. |
A. | net working capital |
B. | gross working capital |
C. | permanent working capital |
D. | temporary working capital |
Answer» C. permanent working capital |
28. |
Working capital over and above the fixed working capital would be termed as _______. |
A. | temporary working capital |
B. | permanent working capital |
C. | net working capital |
D. | gross working capital |
Answer» A. temporary working capital |
29. |
__________ denotes a situation of too much or excessive working capital. |
A. | gross working capital |
B. | redundant working capital |
C. | permanent working capital |
D. | temporary working capital |
Answer» B. redundant working capital |
30. |
_________ being the life blood of a business requires to be maintained in reasonably adequate quantity to run business successfully. |
A. | working capital |
B. | proper documents |
C. | assets |
D. | petty cash |
Answer» A. working capital |
31. |
According to ________ working capital refers to the company’s total investment in current assets. |
A. | net concept |
B. | gross concept |
C. | equal concept |
D. | accounting concept |
Answer» B. gross concept |
32. |
According to ________ working capital refers to the difference between current assets and current liabilities. |
A. | equal concept |
B. | accounting concept |
C. | net concept |
D. | gross concept |
Answer» C. net concept |
33. |
The funds required for running an organisation are generally called as ____________. |
A. | overdraft |
B. | cash credit |
C. | working capital |
D. | operating profit |
Answer» C. working capital |
34. |
The __________ is required to ensure circulation of operating cycle. |
A. | regular working capital |
B. | fixed working capital |
C. | reserve working capital |
D. | variable working capital |
Answer» A. regular working capital |
35. |
________ is the excess amount over the requirement for regular working capital. |
A. | variable working capital |
B. | fixed working capital |
C. | reserve working capital |
D. | regular working capital |
Answer» C. reserve working capital |
36. |
The working capital required to meet the seasonal need of the business is called _______. |
A. | fixed working capital |
B. | variable working capital |
C. | special working capital |
D. | seasonal working capital |
Answer» D. seasonal working capital |
37. |
___________ is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research. |
A. | seasonal working capital |
B. | special working capital |
C. | reserve working capital |
D. | regular working capital |
Answer» B. special working capital |
38. |
The statement of changes in financial position prepared to determine only the sources and uses of working capital between two dates of balance sheet is known as __________. |
A. | cash flow statement |
B. | memorandum balance sheet |
C. | fund flow statement |
D. | profit and loss account |
Answer» C. fund flow statement |
39. |
What are the aspects of working capital management? |
A. | inventory management |
B. | receivable management |
C. | cash management |
D. | all of the above |
Answer» D. all of the above |
40. |
_________ function includes a firm’s attempts to balance cash inflows and outflows. |
A. | finance |
B. | liquidity |
C. | investment |
D. | dividend |
Answer» B. liquidity |
41. |
Firms which are capital intensive rely on _________. |
A. | equity |
B. | short term debt |
C. | debt |
D. | retained earnings |
Answer» C. debt |
42. |
Hirer is entitled to claim ___________. |
A. | depreciation |
B. | salvage value |
C. | hp payments |
D. | none of above |
Answer» A. depreciation |
43. |
Which of the following is not an advantages of trade credit? |
A. | easy availability |
B. | flexibility |
C. | informality |
D. | buyout financing |
Answer» D. buyout financing |
44. |
Which of the following are theories for dividend relevance? |
A. | walter’s model |
B. | mm approach |
C. | game theory |
D. | market value theory |
Answer» A. walter’s model |
45. |
What is not a form of dividend? |
A. | cash dividends |
B. | bonus shares(stock dividend) |
C. | share split |
D. | split reverse |
Answer» D. split reverse |
46. |
The percentage of earnings paid as dividends is called __________. |
A. | dividend policy |
B. | payout ration |
C. | cash dividends |
D. | reverse split |
Answer» B. payout ration |
47. |
What are the various methods of estimating cash? |
A. | receipts and payment method |
B. | adjusted profit & loss method |
C. | balance sheet method |
D. | all of the above |
Answer» D. all of the above |
48. |
The art of managing, within the acceptable level of risk, the consolidated funds optimally and profitably is called _________. |
A. | integrated treasury |
B. | treasury management |
C. | merchant banking |
D. | none of the above |
Answer» B. treasury management |
49. |
What are the different types of underlying assets? |
A. | stocks |
B. | bonds |
C. | currency |
D. | stock indices |
Answer» D. stock indices |
50. |
What are people who buy or sell in the market to make profits called? |
A. | hedgers |
B. | speculators |
C. | arbitrageurs |
D. | none of the above |
Answer» B. speculators |
51. |
Which of the following is a technique that helps the exporter to sell the receivables to any bank or financial institution without recourse? |
A. | forfeiting |
B. | leading & lagging |
C. | derivatives |
D. | netting |
Answer» A. forfeiting |
52. |
Money market financial services not include: |
A. | bill discounting |
B. | merchant banking |
C. | leasing |
D. | securitization |
Answer» B. merchant banking |
53. |
Factoring involves: |
A. | providing short term loan |
B. | providing long term loan |
C. | financing of export receivables |
D. | management of receivables of borrower |
Answer» D. management of receivables of borrower |
54. |
The tools of treasury management does not include: |
A. | foreign exchange management |
B. | cash management |
C. | receivable management |
D. | risk management |
Answer» D. risk management |
55. |
Under which type of bank borrowing can a borrower obtain credit from a bank against its bills? |
A. | letter of credit |
B. | cash |
C. | purchase or discounting of bills |
D. | working capital loan |
Answer» C. purchase or discounting of bills |
56. |
The factors that affect dividend policy are: |
A. | tax consideration |
B. | privatization |
C. | foreign investment |
D. | working cash flow |
Answer» A. tax consideration |
57. |
To financial analysts, "working capital" means the same thing as __________. |
A. | total assets |
B. | fixed assets |
C. | current assets |
D. | current assets minus current liabilities. |
Answer» C. current assets |
58. |
Which of the following would be consistent with an aggressive approach to financing working capital? |
A. | financing short-term needs with short-term funds. |
B. | financing permanent inventory buildup with long-term debt. |
C. | financing seasonal needs with short-term funds. |
D. | financing some long-term needs with short-term funds. |
Answer» D. financing some long-term needs with short-term funds. |
59. |
Which of the following would be consistent with a conservative approach to financing working capital? |
A. | financing short-term needs with short-term funds. |
B. | financing short-term needs with long-term debt. |
C. | financing seasonal needs with short-term funds. |
D. | financing some long-term needs with short-term funds. |
Answer» B. financing short-term needs with long-term debt. |
60. |
-Which of the following would be consistent with a hedging (maturity matching) approach to financing working capital? |
A. | financing short-term needs with short-term funds. |
B. | financing short-term needs with long-term debt. |
C. | financing seasonal needs with long-term funds. |
D. | financing some long-term needs with short-term funds. |
Answer» A. financing short-term needs with short-term funds. |
61. |
The amount of current assets that varies with seasonal requirements is referred to as __________ working capital. |
A. | permanent |
B. | net |
C. | temporary |
D. | gross |
Answer» C. temporary |
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