McqMate
Chapters
1. |
Business finance includes........ |
A. | procurement of funds and utilization of funds |
B. | management of funds |
C. | allocation |
D. | insurance |
Answer» A. procurement of funds and utilization of funds |
2. |
Funds are required for the.......... |
A. | purchase of land & building |
B. | purchase of machinery |
C. | purchase of another fixed asset |
D. | all of the above |
Answer» D. all of the above |
3. |
Which report gives a review on the profitability of a business? |
A. | statement of changes in equity |
B. | cash flow statement |
C. | balance sheet |
D. | income statement |
Answer» D. income statement |
4. |
The term ‘Financial Statement’ covers |
A. | profit & loss statement |
B. | balance sheet and profit & loss statement appropriation account |
C. | profit & loss statement and balance sheet |
D. | all of above are false |
Answer» C. profit & loss statement and balance sheet |
5. |
Which of the following is true about financial statements?
|
A. | only a |
B. | only b |
C. | both a and b |
D. | none of the above |
Answer» C. both a and b |
6. |
P&L statement is also known as |
A. | statement of operations |
B. | statement of income |
C. | statement of earnings |
D. | all of the above |
Answer» B. statement of income |
7. |
Which statement shows the flow of cash and cash equivalents during the financial period? |
A. | statement of changes in equity |
B. | cash flow statement |
C. | balance sheet |
D. | income statement |
Answer» B. cash flow statement |
8. |
Subtracting all expenses from revenues yields? |
A. | net profit / net loss |
B. | carrying value |
C. | long term assets |
D. | net liabilities |
Answer» A. net profit / net loss |
9. |
Balance sheet of a company is required to be prepared in the format given in ……………………… |
A. | schedule iii part ii |
B. | schedule iii part i |
C. | schedule iii part iii |
D. | table a |
Answer» B. schedule iii part i |
10. |
As per Companies Act, the Balance Sheet of a company is required to be presented in ……………………… |
A. | horizontal form |
B. | vertical form |
C. | either horizontal or vertical form |
D. | neither of the above |
Answer» B. vertical form |
11. |
Which of the following is not required to be prepared under the Companies Act? |
A. | statement of profit and loss |
B. | balance sheet |
C. | report of director’s and auditor’s |
D. | funds flow statement |
Answer» D. funds flow statement |
12. |
According to prescribed order of assets in a Company’s Balance Sheet ……………………… assets should be shown first of all. |
A. | non-current assets |
B. | current assets |
C. | current investments |
D. | loans and advances |
Answer» A. non-current assets |
13. |
Calls in Arrears appear in a Company’s Balance Sheet under ……………….. |
A. | reserve & surplus |
B. | shareholder’s funds |
C. | contingent liabilities |
D. | short-term borrowings |
Answer» B. shareholder’s funds |
14. |
Calls in advance appear in a Company’s Balance Sheet under ……………….. |
A. | share capital |
B. | current liability |
C. | long-term borrowings |
D. | reserve & surplus |
Answer» B. current liability |
15. |
Bills Receivables appear in a Company’s Balance Sheet under the Sub-head …………………….. |
A. | current investments |
B. | cash equivalents |
C. | trade receivables |
D. | short term loans and advances |
Answer» C. trade receivables |
16. |
Which of the following options is not recorded in the Balance sheet? |
A. | cash |
B. | rent expenses |
C. | building |
D. | goodwill |
Answer» B. rent expenses |
17. |
Which of the given area is NOT addressed by Business Finance? |
A. | financing |
B. | investing |
C. | managing day today expenses |
D. | none of the given options |
Answer» D. none of the given options |
18. |
Which of the following is measured by profit margin? |
A. | operating efficiency |
B. | asset use efficiency |
C. | financial policy |
D. | dividend policy |
Answer» A. operating efficiency |
19. |
Business Finance addresses which of the following? |
A. | capital budgeting |
B. | capital structure |
C. | working capital management |
D. | all of the given options |
Answer» D. all of the given options |
20. |
Finance is vital for which of the following business activity (activities)? |
A. | marketing research |
B. | product pricing |
C. | design of marketing and distribution channels |
D. | all of the given options |
Answer» D. all of the given options |
21. |
Which of the following refers to the difference between the sale price and cost of inventory? |
A. | net loss |
B. | net worth |
C. | markup |
D. | markdown |
Answer» C. markup |
22. |
Who of the following make a broader use of accounting information? |
A. | accountants |
B. | financial analysts |
C. | auditors |
D. | marketers |
Answer» B. financial analysts |
23. |
Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value as of a particular date? |
A. | income statement |
B. | balance sheet |
C. | cash flow statement |
D. | retained earning statement |
Answer» B. balance sheet |
24. |
Balance Sheet is based upon which of the following formula? |
A. | assets = liabilities – stockholder’s equity |
B. | assets + liabilities = stockholder’s equity |
C. | assets + stockholder’s equity = liabilities |
D. | assets = liabilities + stockholder’s equity |
Answer» D. assets = liabilities + stockholder’s equity |
25. |
The conflict of interest between stockholders and management is known as: |
A. | agency problem |
B. | interest conflict |
C. | management conflict |
D. | agency cost |
Answer» A. agency problem |
26. |
Which from the following is NOT an example of intangible assets? |
A. | trademarks |
B. | patents |
C. | buildings |
D. | technical expertise |
Answer» C. buildings |
27. |
The following are the examples of financial assets except? |
A. | stocks |
B. | bank loan |
C. | bond |
D. | raw material |
Answer» D. raw material |
28. |
Business finance refers to ...... and ........ employed in a business. |
A. | money |
B. | credit |
C. | both a & b |
D. | none of the above |
Answer» C. both a & b |
29. |
Business finances is concerned with _________ funds and _______ funds from different sources. |
A. | estimation of funds |
B. | raising of funds |
C. | short term finance |
D. | both a & b |
Answer» D. both a & b |
30. |
Which of the following is not a function of finance manager? |
A. | mobilization of funds |
B. | deployment of funds |
C. | control over use of funds |
D. | manipulate share price of the company |
Answer» D. manipulate share price of the company |
31. |
Which is the following main decision taken by the financial manager in a company? |
A. | income decision |
B. | financing decision |
C. | appraisal decision |
D. | budget decision |
Answer» B. financing decision |
32. |
Finance Function comprises |
A. | safe custody of funds only |
B. | expenditure of funds only |
C. | procurement of finance only |
D. | procurement & effective use of funds |
Answer» D. procurement & effective use of funds |
33. |
The finance manager is accountable for. |
A. | earning capital assets of the company |
B. | effective management of a fund |
C. | arrangement of financial resources |
D. | proper utilization of funds |
Answer» C. arrangement of financial resources |
34. |
The focal point of financial management in a firm is: |
A. | the number and types of products or services provided by the firm. |
B. | the minimization of the amount of taxes paid by the firm. |
C. | the creation of value for shareholders. |
D. | the dollars profits earned by the firm. |
Answer» C. the creation of value for shareholders. |
35. |
The term financial statement refers to… |
A. | income statement |
B. | cash flow and fund flow |
C. | balance sheet |
D. | all |
Answer» D. all |
36. |
Which of the following is the main objective of a financial statement? |
A. | to know the solvency |
B. | to know the debt capacity |
C. | to know the earning capacity |
D. | all |
Answer» D. all |
37. |
In financial statements, the fixed assets are shown at … |
A. | market price |
B. | cost price |
C. | replacement price |
D. | none |
Answer» A. market price |
38. |
What is followed while preparing the financial statements? |
A. | accounting conventions |
B. | accounting principles |
C. | accounting concepts |
D. | all |
Answer» D. all |
39. |
In financial statement the stock is valued at cost or market price whichever is less on the basis of… |
A. | accounting concepts |
B. | accounting conventions |
C. | accounting principles |
D. | none |
Answer» B. accounting conventions |
40. |
The balance sheet shows … |
A. | the source of working capital |
B. | the change in working capital |
C. | both |
D. | none |
Answer» D. none |
41. |
The analysis and interpretations of the financial statement will reveal … |
A. | the financial position |
B. | the profitability |
C. | none |
D. | both |
Answer» D. both |
42. |
The process of explaining the meaning, significance and relationship between two financial factors is called … |
A. | summarization |
B. | analysis |
C. | interpretation |
D. | none |
Answer» C. interpretation |
43. |
The process of comparing various financial factors of a company over a period of time is known as … |
A. | inter‐firm comparison |
B. | ratio analysis |
C. | intra‐firm comparison |
D. | inter‐industry comparison |
Answer» C. intra‐firm comparison |
44. |
Which of the following is technique of financial statement analysis? |
A. | common‐size statement |
B. | comparative statement |
C. | trend analysis |
D. | all |
Answer» D. all |
45. |
________is a simply the amount of cash coming in to a business. |
A. | cash flow |
B. | inflow |
C. | both a and b |
D. | none of the above. |
Answer» A. cash flow |
46. |
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 |
47. |
Incorrect cash flow planning can lead to ________ |
A. | solvency |
B. | insolvency |
C. | bankruptcy |
D. | failure |
Answer» C. bankruptcy |
48. |
Analysis of any financial Statement comprises |
A. | balance sheet |
B. | p&l account |
C. | trading account |
D. | all of the above |
Answer» D. all of the above |
49. |
Which of the following are techniques, tools or methods of analysis and interpretation of financial statements? |
A. | ratio analysis |
B. | average analysis |
C. | trend analysis |
D. | all of the above |
Answer» D. all of the above |
50. |
Interpretation of accounts is the |
A. | art and science of translating the figures |
B. | to know financial strengths and weaknesses of a business |
C. | to know the causes for the prevailing performance of business |
D. | all of the above |
Answer» D. all of the above |
51. |
The major device for measuring the profitability of a firm over a defined period of time is the |
A. | income statement. |
B. | balance sheet. |
C. | statement of cash flow. |
D. | none of the above. |
Answer» A. income statement. |
52. |
The ________ does not represent continuing operations in any way, but is simply a snapshot of the total worth of a firm at a given point in time. |
A. | income statement |
B. | balance sheet |
C. | sources and uses of funds statement |
D. | none of the above |
Answer» B. balance sheet |
53. |
Cash inflows arise from _____ assets, ________ liabilities, and ___________ stockholders' equity. |
A. | increasing; increasing; decreasing |
B. | increasing; decreasing; decreasing |
C. | decreasing; increasing; increasing |
D. | decreasing; increasing; decreasing |
Answer» C. decreasing; increasing; increasing |
54. |
Which of the following is NOT a key ratio in the prediction of bankruptcy as developed by Edward Altman? |
A. | debt to equity |
B. | current ratio |
C. | retained earnings as a percent of total assets |
D. | total assets |
Answer» A. debt to equity |
55. |
__________ analysis is the process of studying a series of ratios for a company and/or industry over time. |
A. | dupont |
B. | trend |
C. | common size |
D. | all of the above. |
Answer» B. trend |
56. |
The statement of cash flows tells us |
A. | accounting profit or loss |
B. | how cash was created |
C. | actual profit or loss |
D. | two of the above |
Answer» B. how cash was created |
57. |
The primary sections of a statement of cash flows are: |
A. | cash flows from investing, operating, and financing activities. |
B. | cash flows from investing and operating activities plus investments. |
C. | cash flows from investing, financing, and accounting activities. |
D. | cash flows from investing, operating, financing, and accounting activities. |
Answer» A. cash flows from investing, operating, and financing activities. |
58. |
Which of the following are Non-current assets? |
A. | land, building and plant |
B. | leasehold property |
C. | computer software |
D. | all of the above |
Answer» D. all of the above |
59. |
Funds flow statements are prepared so as to |
A. | to identify the changes in working capital |
B. | to identify reasons behind change in working capital |
C. | to know the item-wise outflow of funds during given period |
D. | all of the above |
Answer» D. all of the above |
60. |
Financial statements are ____________. |
A. | anticipated facts |
B. | recorded facts |
C. | estimated of facts |
D. | unknown facts |
Answer» B. recorded facts |
61. |
Trend analysis is significant for ____________. |
A. | forecasting and budgeting |
B. | profit planning |
C. | capital rationing |
D. | working capital management |
Answer» B. profit planning |
62. |
In common size income statement analysis, which is taken as 100 percent? |
A. | sales |
B. | cost of goods sold |
C. | purchases |
D. | total assets |
Answer» A. sales |
63. |
Comparative statement analysis sheet is __________. |
A. | vertical analysis |
B. | horizontal analysis |
C. | either vertical or horizontal analysis |
D. | neither vertical nor horizontal analysis |
Answer» B. horizontal analysis |
64. |
Financial statements are meaningful and useful only when they are ___________. |
A. | verified |
B. | presented to owners |
C. | analyzed and interpreted |
D. | published |
Answer» C. analyzed and interpreted |
65. |
Vertical analysis is made on the basis of __________. |
A. | single set of financial statements |
B. | multiple sets of financial statements |
C. | different schedules attached to financial statements |
D. | similar set of financial statements |
Answer» A. single set of financial statements |
66. |
Horizontal analysis is done by analyzing ____________. |
A. | quarterly statement |
B. | half yearly statement |
C. | financial statements of several years |
D. | financial statements of a particular year |
Answer» D. financial statements of a particular year |
67. |
When the concept of ratio is defined in respect to the item shown in the financial statements, it is termed as |
A. | accounting ratio |
B. | financial ratio |
C. | costing ratio |
D. | none of the above |
Answer» B. financial ratio |
68. |
The relationship between two financial variables can be expressed in: |
A. | pure ratio |
B. | percentage |
C. | rate or time |
D. | all the above |
Answer» D. all the above |
69. |
Stock is considered as a liquid asset as anytime it can be converted into cash immediately. |
A. | yes |
B. | no |
C. | only yes |
D. | none of the above |
Answer» B. no |
70. |
Return on properties funds is also known as. |
A. | return on net worth |
B. | return on shareholders fun |
C. | return on the shareholders’ investment |
D. | all the above |
Answer» D. all the above |
71. |
What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & sales return is Rs10,000 ? |
A. | 13 % |
B. | 28% |
C. | 26% |
D. | 20% |
Answer» D. 20% |
72. |
Which of the following is not included in current assets. |
A. | debtors |
B. | stock |
C. | cash at bank |
D. | cash in hand |
Answer» B. stock |
73. |
Liquidity ratios are expressed in |
A. | pure ratio form |
B. | percentage |
C. | rate or time |
D. | none of the above |
Answer» A. pure ratio form |
74. |
Working capital turnover ratio can be determined by : |
A. | ( gross profit / working capital ) |
B. | ( cost of goods sold / net sales ) |
C. | ( cost of goods sold / working capital) |
D. | none of the above |
Answer» A. ( gross profit / working capital ) |
75. |
Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000 & cost of goods sold is Rs 3,00,000. |
A. | 5 times |
B. | 6 times |
C. | 3 times |
D. | 1.5 times |
Answer» B. 6 times |
76. |
Profit for the objective of calculating a ratio may be taken as |
A. | profit before tax but after interest |
B. | profit before interest &tax |
C. | profit after interest & tax |
D. | all the above |
Answer» D. all the above |
77. |
If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is |
A. | 24% |
B. | 41% |
C. | 60% |
D. | none of the above |
Answer» A. 24% |
78. |
General profitability ratios are based on |
A. | investment |
B. | sales |
C. | a & b |
D. | none of the above |
Answer» B. sales |
79. |
Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs 3,20,000 & Gross profit ratio is 25% on sales. |
A. | 31 times |
B. | 11 times |
C. | 8 times |
D. | 32 times |
Answer» C. 8 times |
80. |
The ratios which reveal the final result of the managerial policies and performance is . |
A. | turnover ratios. |
B. | profitability ratios. |
C. | short term solvency ratio. |
D. | long term solvency ratio. |
Answer» B. profitability ratios. |
81. |
Return on investment is a |
A. | turnover ratios. |
B. | short term solvency ratio. |
C. | profitability ratios. |
D. | long term solvency ratio. |
Answer» C. profitability ratios. |
82. |
Net profit ratio is a . |
A. | turnover ratio. |
B. | long term solvency ratio. |
C. | short term solvency ratio |
D. | profitability ratio. |
Answer» D. profitability ratio. |
83. |
Stock turnover ratio is a . |
A. | turnover ratio. |
B. | profitability ratio. |
C. | short term solvency ratio. |
D. | long term solvency ratio. |
Answer» A. turnover ratio. |
84. |
Current ratio is a |
A. | short-term solvency ratio. |
B. | long-term solvency ratio. |
C. | profitability ratio. |
D. | turnover ratio. |
Answer» A. short-term solvency ratio. |
85. |
Proprietary ratio is a |
A. | short-term solvency ratio. |
B. | long-term solvency ratio. |
C. | profitability ratio. |
D. | turnover ratio. |
Answer» B. long-term solvency ratio. |
86. |
Fixed assets ratio is a |
A. | short-term solvency ratio. |
B. | long-term solvency ratio. |
C. | profitability ratio. |
D. | turnover ratio. |
Answer» B. long-term solvency ratio. |
87. |
Fixed assets turnover ratio is a |
A. | short-term solvency ratio. |
B. | long-term solvency ratio. |
C. | profitability ratio. |
D. | turnover ratio. |
Answer» D. turnover ratio. |
88. |
The ratio which measures the profit in relation to capital employed is known as |
A. | return on investment. |
B. | gross profit ratio. |
C. | operating ratio. |
D. | operating profit ratio. |
Answer» A. return on investment. |
89. |
Return on equity is also called |
A. | return on investment. |
B. | gross profit ratio. |
C. | return on shareholders’ funds. |
D. | return on net worth. |
Answer» D. return on net worth. |
90. |
Preliminary expenses is an example of . |
A. | fixed assets. |
B. | current assets. |
C. | fictitious assets. |
D. | current liabilities. |
Answer» C. fictitious assets. |
91. |
Prepaid expenses is an example of . |
A. | fixed assets. |
B. | current assets. |
C. | fictitious assets. |
D. | current liabilities. |
Answer» B. current assets. |
92. |
The ratio which is calculated to measure the productivity of total assets is |
A. | return on equity. |
B. | return on shareholders’ funds. |
C. | return on total assets. |
D. | return on equity share holders’ funds. |
Answer» C. return on total assets. |
93. |
The ratio which shows the proportion of profits retained in the business out of the current year’s profits is |
A. | retained earnings ratio. |
B. | payout ratio |
C. | earnings per share. |
D. | price earnings ratio |
Answer» A. retained earnings ratio. |
94. |
The ratio establishes the relationship between profit before interest and tax and fixed interest charges is |
A. | interest cover ratio. |
B. | fixed dividend cover ratio. |
C. | debt service coverage ratio. |
D. | dividend yield ratio. |
Answer» A. interest cover ratio. |
95. |
The ratio shows the preference dividend as a proportion of profit available for shareholders is |
A. | interest cover ratio. |
B. | fixed dividend cover ratio. |
C. | debt service coverage ratio. |
D. | dividend yield ratio. |
Answer» B. fixed dividend cover ratio. |
96. |
The dividend is related to the market value of shares in . |
A. | interest cover ratio. |
B. | fixed dividend cover ratio. |
C. | debt service coverage ratio. |
D. | dividend yield ratio. |
Answer» D. dividend yield ratio. |
97. |
Turnover ratio is also known as . |
A. | activity ratios. |
B. | solvency ratios. |
C. | liquidity ratios. |
D. | profitability ratios. |
Answer» A. activity ratios. |
98. |
Inventory or stock turnover ratio is also called . |
A. | stock velocity ratio. |
B. | debtors velocity ratio. |
C. | creditors velocity ratio. |
D. | working capital turnover ratio. |
Answer» A. stock velocity ratio. |
99. |
The ratio which measures the relationship between the cost of goods sold and the amount of average inventory is |
A. | stock turnover ratio. |
B. | debtors velocity ratio. |
C. | creditors velocity ratio. |
D. | working capital turnover ratio. |
Answer» A. stock turnover ratio. |
100. |
Sales – Gross Profit = . |
A. | net profit. |
B. | administrative expenses. |
C. | cost of production. |
D. | cost of goods sold. |
Answer» D. cost of goods sold. |
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