McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Uncategorized topics .
Chapters
| 1. |
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 | |
| 2. |
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 | |
| 3. |
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 | |
| 4. |
In cash flow statement, the item of interest is shown in A) Operating Activities B) Financing Activities C) Investing Activities |
| A. | Both A and B |
| B. | Both A and C |
| C. | Both B and C |
| D. | A, B, C |
| Answer» C. Both B and C | |
| 5. |
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 | |
| 6. |
Which of the following statements are false? A) Cash Flow Statement is helpful in the formation of policies. B) Cash Flow Statement is useful for external analysis C) Cash Flow Statement is helpful in estimating future cash flow |
| A. | Both A and B |
| B. | Both A and C |
| C. | Both B and C |
| D. | None of the above |
| Answer» D. None of the above | |
| 7. |
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. | |
| 8. |
Cash flow statement is based upon _________ while Funds Flow Statement recognizes _______. |
| A. | Cash basis of accounting, accrual basis of accounting |
| B. | Accrual basis of accounting, cash basis of accounting |
| C. | Both are based on cash basis of accounting |
| D. | None of the above |
| Answer» A. Cash basis of accounting, accrual basis of accounting | |
| 9. |
Statement of changes in working capital is prepared separately in |
| A. | Cash Flow Statement |
| B. | Funds Flow Statement |
| C. | Both a and b |
| D. | None of the above |
| Answer» B. Funds Flow Statement | |
| 10. |
Cash Flow Statement studies causes of change in working capital. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 11. |
_________ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period. |
| A. | Cash Flow Statement |
| B. | Funds Flow Statement |
| C. | Both a and b |
| D. | None of the above |
| Answer» A. Cash Flow Statement | |
| 12. |
Which of the following statements are true? A) Cash flow statement is more useful for short term cash planning. B) Funds Flow statement is more useful in planning medium term and long term financing. C) Cash Flow statement discloses the position of liquidity in a better way |
| A. | Only A |
| B. | Only B |
| C. | Only C |
| D. | A, B and C |
| Answer» D. A, B and C | |
| 13. |
_____ has/have accepted cash flow statement is more useful than funds flow statement, particularly from view of analysis of liquidity of a firm. |
| A. | Institute Of Chartered Accountants of India |
| B. | FASB, America |
| C. | SEBI |
| D. | All of the above |
| Answer» D. All of the above | |
| 14. |
Time value of money indicates that |
| A. | A unit of money obtained today is worth more than a unit of money obtained in future |
| B. | A unit of money obtained today is worth less than a unit of money obtained in future |
| C. | There is no difference in the value of money obtained today and tomorrow |
| D. | None of the above |
| Answer» A. A unit of money obtained today is worth more than a unit of money obtained in future | |
| 15. |
Time value of money supports the comparison of cash flows recorded at different time period by |
| A. | Discounting all cash flows to a common point of time |
| B. | Compounding all cash flows to a common point of time |
| C. | Using either a or b |
| D. | None of the above. |
| Answer» C. Using either a or b | |
| 16. |
If the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be: |
| A. | 10% per annum |
| B. | 10.10 per annum |
| C. | 10.25%per annum |
| D. | 10.38% per annum |
| Answer» D. 10.38% per annum | |
| 17. |
Relationship between annual nominal rate of interest and annual effective rate of interest, if frequency of compounding is greater than one: |
| A. | Effective rate > Nominal rate |
| B. | Effective rate < Nominal rate |
| C. | Effective rate = Nominal rate |
| D. | None of the above |
| Answer» A. Effective rate > Nominal rate | |
| 18. |
Mr. X takes a loan of Rs 50,000 from HDFC Bank. The rate of interest is 10% per annum. The first installment will be paid at the end of year 5. Determine the amount of equal annual installments if Mr. X wishes to repay the amount in five installments. |
| A. | Rs 19500 |
| B. | Rs 19400 |
| C. | Rs 19310 |
| D. | None of the above |
| Answer» C. Rs 19310 | |
| 19. |
If nominal rate of return is 10% per annum and annual effective rate of interest is 10.25% per annum, determine the frequency of compounding: |
| A. | 1 |
| B. | 2 |
| C. | 3 |
| D. | None of the above |
| Answer» B. 2 | |
| 20. |
Present value tables for annuity cannot be straight away applied to varied stream of cash flows. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 21. |
Heterogeneous cash flows can be made comparable by |
| A. | Discounting technique |
| B. | Compounding technique |
| C. | Either a or b |
| D. | None of the above |
| Answer» C. Either a or b | |
| 22. |
The term marginal cost can be used as a substitute of variable cost while measuring Contribution. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 23. |
Determine total as well as per unit contribution if Sales is Rs 40,000, Sales in units is 4,000 and variable cost is Rs 30,000. |
| A. | Rs 10,000 and Rs 2.5 |
| B. | Rs 70,000 and Rs 3.5 |
| C. | Rs 36,000 and Rs 3.6 |
| D. | None of the above |
| Answer» A. Rs 10,000 and Rs 2.5 | |
| 24. |
Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%. |
| A. | Rs 60,000 |
| B. | Rs 70,000 |
| C. | Rs 30,000 |
| D. | None of the above |
| Answer» A. Rs 60,000 | |
| 25. |
Determine Contribution if Fixed cost is Rs 40,000 and profit is Rs 30,000. |
| A. | Rs 60,000 |
| B. | Rs 70,000 |
| C. | Rs 30,000 |
| D. | None of the above |
| Answer» B. Rs 70,000 | |
| 26. |
Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000. |
| A. | Rs 60,000 |
| B. | Rs 70,000 |
| C. | Rs 30,000 |
| D. | None of the above |
| Answer» C. Rs 30,000 | |
| 27. |
Contribution and profit both are same concepts. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 28. |
Which of the following statements are true? |
| A. | Contribution doesn’t include fixed cost whereas profit includes fixed cost. |
| B. | Contribution is not based on the concept of marginal cost. |
| C. | Contribution above breakeven point becomes profit. |
| D. | All of the above |
| Answer» C. Contribution above breakeven point becomes profit. | |
| 29. |
Profit-Volume ratio is also known as |
| A. | Contribution ratio |
| B. | Contribution/Sales ratio |
| C. | Marginal Income percentage |
| D. | All of the above |
| Answer» D. All of the above | |
| 30. |
Which of the following statements are true? |
| A. | P/V Ratio can never be used to measure break-even point |
| B. | Higher the P/V ratio less will be the profit and vice versa |
| C. | Concept of P/V ratio is also used to determine profit at a given volume of sales |
| D. | All of the above |
| Answer» C. Concept of P/V ratio is also used to determine profit at a given volume of sales | |
| 31. |
The P/V ratio can be improved by |
| A. | Decreasing the selling price per unit |
| B. | Increasing variable cost |
| C. | Changing the sales mix |
| D. | None of the above |
| Answer» C. Changing the sales mix | |
| 32. |
The Break-even Point of a company is that level of sales income which will equal the sum of its fixed cost. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 33. |
Which of the following are characteristics of B.E.P? |
| A. | There is no loss and no profit to the firm. |
| B. | Total revenue is equal to total cost. |
| C. | Contribution is equal to fixed cost. |
| D. | All of the above. |
| Answer» D. All of the above. | |
| 34. |
Which of the following are assumptions for break-even analysis? |
| A. | Elements of cost cannot be divided in different groups. |
| B. | Fixed cost remains certain from zero production to full capacity. |
| C. | Behavior of different costs is linear |
| D. | Selling per price unit remains constant. |
| Answer» B. Fixed cost remains certain from zero production to full capacity. | |
| 35. |
While measuring break-even analysis, it is considered that during a specific period there will be no change in general price level, i.e., labor, cost of material and other overheads. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 36. |
Which of the following are limitations of break-even analysis? |
| A. | Static concept |
| B. | Capital employed is taken into account. |
| C. | Limitation of non-linear behavior of costs |
| D. | Limitation of presence of perfect competition |
| Answer» A. Static concept | |
| 37. |
Break-even analysis is used in “Make or Buy” decision. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 38. |
Using equation method, Break-even point is calculated as |
| A. | Sales = Variable expenses + Fixed expenses + Profit |
| B. | Sales = Variable expenses + Fixed expenses - Profit |
| C. | Sales = Variable expenses - Fixed expenses + Profit |
| D. | None of the above |
| Answer» A. Sales = Variable expenses + Fixed expenses + Profit | |
| 39. |
Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point? |
| A. | 500 units |
| B. | 1,000 units |
| C. | 1,250 units |
| D. | None of the above |
| Answer» C. 1,250 units | |
| 40. |
Contribution is also known as |
| A. | Contribution margin |
| B. | Net Margin |
| C. | Both a and b |
| D. | None of the above |
| Answer» A. Contribution margin | |
| 41. |
Given selling price is Rs 20 per unit, variable cost is Rs 16 per unit contribution is |
| A. | Rs 1.25 per unit |
| B. | Rs 4 per unit |
| C. | Rs 0.8 per unit |
| D. | None of the above |
| Answer» B. Rs 4 per unit | |
| 42. |
Risk of two securities with different expected return can be compared with: |
| A. | Coefficient of variation |
| B. | Standard deviation of securities |
| C. | Variance of Securities |
| D. | None of the above |
| Answer» A. Coefficient of variation | |
| 43. |
A portfolio having two risky securities can be turned risk less if |
| A. | The securities are completely positively correlated |
| B. | If the correlation ranges between zero and one |
| C. | The securities are completely negatively correlated |
| D. | None of the above. |
| Answer» C. The securities are completely negatively correlated | |
| 44. |
Efficient frontier comprises of |
| A. | Portfolios that have negatively correlated securities |
| B. | Portfolios that have positively correlated securities |
| C. | Inefficient portfolios |
| D. | Efficient portfolios |
| Answer» D. Efficient portfolios | |
| 45. |
Efficient portfolios can be defined as those portfolios which for a given level of risk provides |
| A. | Maximum return |
| B. | Average return |
| C. | Minimum return |
| D. | None of the above |
| Answer» A. Maximum return | |
| 46. |
Capital market line is: |
| A. | Capital allocation line of a market portfolio |
| B. | Capital allocation line of a risk free asset |
| C. | Both a and b |
| D. | None of the above |
| Answer» C. Both a and b | |
| 47. |
CAPM accounts for: |
| A. | Unsystematic risk |
| B. | Systematic risk |
| C. | Both a and b |
| D. | None of the above |
| Answer» B. Systematic risk | |
| 48. |
The point of tangency between risk return indifferences curves and efficient frontier highlights: |
| A. | Optimal portfolio |
| B. | Efficient portfolio |
| C. | Sub-optimal portfolio |
| D. | None of the above |
| Answer» C. Sub-optimal portfolio | |
| 49. |
Return on any financial asset consists of capital yield and current yield. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 50. |
There is no difference between the capital market line and security market line as both the terms are same. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
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