McqMate
| 201. |
Which of the following appearing in the balance! generates tax advantage and hence affects the c, structure decision ? |
| A. | Reserves and Surplus |
| B. | Long-term debt |
| C. | Preference Share Capital |
| D. | Equity Share Capital |
| Answer» B. Long-term debt | |
| 202. |
In MM Model with taxes, where 'r' is the interest rate, ‘D’ is the total debt and 't' is tax rate, then present valued shields would be: |
| A. | r×D×t |
| B. | r×D |
| C. | D×t |
| D. | (D× r)/(l-t). |
| Answer» C. D×t | |
| 203. |
‘Bird in hand' argument is given by |
| A. | Walker's Model |
| B. | Gordon's Model |
| C. | MM Mode |
| D. | Residuals Theory |
| Answer» B. Gordon's Model | |
| 204. |
Residuals Theory argues that dividend is a |
| A. | Relevant Decision |
| B. | Active Decision |
| C. | Passive Decision |
| D. | Irrelevant Decision |
| Answer» C. Passive Decision | |
| 205. |
Dividend irrelevance argument of MM Model is based on: |
| A. | Issue of Debentures |
| B. | Issue of Bonus Share, |
| C. | Arbitrage |
| D. | Hedging |
| Answer» C. Arbitrage | |
| 206. |
Which of the following is not true for MM Model? |
| A. | Share price goes up if dividend is paid |
| B. | Share price goes down if dividend is not paid, |
| C. | Market value is unaffected by Dividend policy, |
| D. | All of the above |
| Answer» C. Market value is unaffected by Dividend policy, | |
| 207. |
Which of the following stresses on investor's preference reorient dividend than higher future capital gains ? |
| A. | Walter's Model |
| B. | Residuals Theory |
| C. | Gordon's Model |
| D. | MM Model |
| Answer» C. Gordon's Model | |
| 208. |
MM Model of Dividend irrelevance uses arbitrage between |
| A. | Dividend and Bonus |
| B. | Dividend and Capital Issue |
| C. | Profit and Investment |
| D. | None of the above |
| Answer» B. Dividend and Capital Issue | |
| 209. |
If ke = r, then under Walter's Model, which of the following is irrelevant? |
| A. | Earnings per share |
| B. | Dividend per share |
| C. | DP Ratio |
| D. | None of the above |
| Answer» C. DP Ratio | |
| 210. |
MM Model argues that dividend is irrelevant as |
| A. | the value of the firm depends upon earning power |
| B. | the investors buy shares for capital gain, |
| C. | dividend is payable after deciding the retained earnings, |
| D. | dividend is a small amount |
| Answer» A. the value of the firm depends upon earning power | |
| 211. |
Which of the following represents passive dividend policy ? |
| A. | that dividend is paid as a % of EPS, |
| B. | that dividend is paid as a constant amount, |
| C. | that dividend is paid after retaining profits for reinvestment, |
| D. | all of the above |
| Answer» C. that dividend is paid after retaining profits for reinvestment, | |
| 212. |
In case of Gordon's Model, the MP for zero payout is zero. It means that |
| A. | Shares are not traded |
| B. | Shares available free of cost |
| C. | Investors are not ready to offer any price |
| D. | None of the above |
| Answer» C. Investors are not ready to offer any price | |
| 213. |
Gordon's Model of dividend relevance is same as |
| A. | No-growth Model of equity valuation, |
| B. | Constant growth Model of equity valuation, |
| C. | Price-Earning Ratio |
| D. | Inverse of Price Earnings Ratio |
| Answer» B. Constant growth Model of equity valuation, | |
| 214. |
If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratios would be |
| A. | Unequal |
| B. | Zero |
| C. | Equal |
| D. | Negative |
| Answer» C. Equal | |
| 215. |
Dividend declared by a company must be paid in |
| A. | 20 days |
| B. | 30 days |
| C. | 32 days |
| D. | 42 days |
| Answer» B. 30 days | |
| 216. |
Dividend Distribution Tax is payable by |
| A. | Shareholders to Government |
| B. | Shareholders to Company, |
| C. | Company to Government, |
| D. | Holding to Subsidiary Company |
| Answer» C. Company to Government, | |
| 217. |
Shares of face value of 10 are 80% paid up. The company declares a dividend of 50%. Amount of dividend per share is |
| A. | 5 |
| B. | 4 |
| C. | 80 |
| D. | 50 |
| Answer» B. 4 | |
| 218. |
Which of the following generally not result in increase in total dividend liability ? |
| A. | Share-split |
| B. | Right Issue |
| C. | Bonus Issue |
| D. | All of the above |
| Answer» A. Share-split | |
| 219. |
Dividends are paid out of |
| A. | Accumulated Profits |
| B. | Gross Profit |
| C. | Profit after Tax |
| D. | General Reserve |
| Answer» C. Profit after Tax | |
| 220. |
In India, Dividend Distribution tax is paid on |
| A. | Equity Share |
| B. | Preference Share |
| C. | Debenture |
| D. | Both (a) and (b) |
| Answer» D. Both (a) and (b) | |
| 221. |
Every company should follow |
| A. | High Dividend Payment |
| B. | Low Dividend Payment |
| C. | Stable Dividend Payment |
| D. | Fixed Dividend Payment |
| Answer» C. Stable Dividend Payment | |
| 222. |
'Constant Dividend Per Share' Policy is considered as: |
| A. | Increasing Dividend Policy |
| B. | Decreasing Dividend Policy |
| C. | Stable Dividend Policy |
| D. | None of the above |
| Answer» C. Stable Dividend Policy | |
| 223. |
Which of the following is not a type of dividend payment? |
| A. | Bonus Issue |
| B. | Right Issue |
| C. | Share Split |
| D. | Both (b) and (c) |
| Answer» C. Share Split | |
| 224. |
If the following is an element of dividend policy? |
| A. | Production capacity, |
| B. | Change in Management, |
| C. | Informational content, |
| D. | Debt service capacity |
| Answer» C. Informational content, | |
| 225. |
Stock split is a form of |
| A. | Dividend Payment, |
| B. | Bonus Issue, |
| C. | Financial restructuring, |
| D. | Dividend in kind |
| Answer» C. Financial restructuring, | |
| 226. |
In stock dividend: |
| A. | Authorized capital always increases |
| B. | Paid up capital always increases |
| C. | Face value per share decreases |
| D. | Market price for share decreases |
| Answer» D. Market price for share decreases | |
| 227. |
Which of the following is not considered in Lintner's Model ? |
| A. | Dividend payout ratio, |
| B. | Current EPS, |
| C. | Speed of Adjustment, |
| D. | Preceding year EPS |
| Answer» D. Preceding year EPS | |
| 228. |
Which of the following is not relevant for dividend payment for a year ? |
| A. | Cash flow position |
| B. | Profit position, |
| C. | Paid up capital, |
| D. | Retained Earnings |
| Answer» D. Retained Earnings | |
| 229. |
Cash Budget does not include |
| A. | Dividend Payable |
| B. | Postal Expenditure, |
| C. | Issue of Capital, |
| D. | Total Sales Figure. |
| Answer» D. Total Sales Figure. | |
| 230. |
Which of the following is not a motive to hold cash? |
| A. | Transactionary Motive, |
| B. | Pre-scautionary Motive, |
| C. | Captal Investment, |
| D. | None of the above. |
| Answer» C. Captal Investment, | |
| 231. |
Cheques deposited in bank may not be available for immediate use due to |
| A. | Payment Float |
| B. | Recceipt Float |
| C. | Net Float, |
| D. | Playing the Float. |
| Answer» B. Recceipt Float | |
| 232. |
Difference between between the bank balance as per Cash Book and Pass Book may be due to: |
| A. | Overdraft, |
| B. | Float, |
| C. | Factoring, |
| D. | None of the above. |
| Answer» B. Float, | |
| 233. |
Concentration Banking helps in |
| A. | Reducing Idle Bank Balance |
| B. | Increasing Collection, |
| C. | Increasing Creditors, |
| D. | Reducing Bank Transactions. |
| Answer» B. Increasing Collection, | |
| 234. |
The Transaction Motive for holding cash is for |
| A. | Safety Cushion |
| B. | Daily Operations, |
| C. | Purchase of Assets |
| D. | Payment of Dividends. |
| Answer» B. Daily Operations, | |
| 235. |
Miller-Orr Model deals with |
| A. | Optimum Cash Balance, |
| B. | Optimum Finished goods, |
| C. | Optimum Receivables, |
| D. | All of the above. |
| Answer» A. Optimum Cash Balance, | |
| 236. |
Float management is related to |
| A. | Cash Management, |
| B. | Inventory Management, |
| C. | Receivables Management, |
| D. | Raw Materials Management |
| Answer» A. Cash Management, | |
| 237. |
Which of the following is not an objective of cash management ? |
| A. | Maximization of cash balance |
| B. | Minimization of cash balance |
| C. | Optimization of cash balance |
| D. | Zero cash balance. |
| Answer» C. Optimization of cash balance | |
| 238. |
Which of the following is not true of cash budget ? |
| A. | Cash budget indicates timings of short-term borrowing, |
| B. | Cash budget is based on accrual concept |
| C. | Cash budget is based on cash flow concept |
| D. | Repayment of principal amount of law is shown in cash budget. |
| Answer» B. Cash budget is based on accrual concept | |
| 239. |
Baumol's Model of Cash Management attempts to: |
| A. | Minimise the holding cost, |
| B. | Minimization of transaction cost, |
| C. | Minimization of total cost, |
| D. | Minimization of cash balance |
| Answer» C. Minimization of total cost, | |
| 240. |
Which of the following is not considered by Miller-Orr Model? |
| A. | Variability in cash requirement |
| B. | Cost of transaction, |
| C. | Holding cost, |
| D. | Total annual requirement of cash. |
| Answer» D. Total annual requirement of cash. | |
| 241. |
Marketable securities are primarily |
| A. | Equity shares,' |
| B. | Preference shares, |
| C. | Fixed deposits with companies |
| D. | Short-term debt investments. |
| Answer» D. Short-term debt investments. | |
| 242. |
5Cs of the credit does not include |
| A. | Collateral |
| B. | Character, |
| C. | Conditions, |
| D. | None of the above |
| Answer» D. None of the above | |
| 243. |
Which of the following is not an element of credit policy? |
| A. | Credit Terms |
| B. | Collection Policy |
| C. | Cash Discount Terms, |
| D. | Sales Price |
| Answer» D. Sales Price | |
| 244. |
Ageing schedule incorporates the relationship between |
| A. | Creditors and Days Outstanding |
| B. | Debtors and Days Outstanding |
| C. | Average Age of Directors, |
| D. | Average Age of All Employees. |
| Answer» B. Debtors and Days Outstanding | |
| 245. |
Bad debt cost is not borne by factor in case of |
| A. | Pure Factoring |
| B. | Without Recourse Factoring, |
| C. | With Recourse Factoring |
| D. | None of the above |
| Answer» C. With Recourse Factoring | |
| 246. |
Which of the following is not a technique of receivables Management? |
| A. | Funds Flow Analysis |
| B. | Ageing Schedule, |
| C. | Days sales outstanding |
| D. | Collection Matrix. |
| Answer» A. Funds Flow Analysis | |
| 247. |
Which of the following is not a part of credit policy? |
| A. | Collection Effort |
| B. | Cash Discount, |
| C. | Credit Standard |
| D. | Paying Practices of debtors. |
| Answer» D. Paying Practices of debtors. | |
| 248. |
Which is not a service of a factor? |
| A. | Administrating Sales Ledger |
| B. | Advancing against Credit Sales, |
| C. | Assuming bad debt losses, |
| D. | None of the above. |
| Answer» D. None of the above. | |
| 249. |
Credit Policy of a firm should involve a trade-off between increased |
| A. | Sales and Increased Profit |
| B. | Profit and Increased Costs of Receivables, |
| C. | Sales and Cost of goods sold, |
| D. | None of the above. |
| Answer» B. Profit and Increased Costs of Receivables, | |
| 250. |
Out of the following, what is not true in respect of factoring? |
| A. | Continuous Arrangement between Factor and Seller, |
| B. | Sale of Receivables to the factor, |
| C. | Factor provides cost free finance to seller |
| D. | None of the above. |
| Answer» C. Factor provides cost free finance to seller | |
| 251. |
Payment to creditors is a manifestation of cash held for: |
| A. | Transactionery Motive, |
| B. | Precautionary Motive, |
| C. | Speculative Motive, |
| D. | All of the above. |
| Answer» A. Transactionery Motive, | |
| 252. |
If the closing balance of receivables is less than the opening balance for a month then which one is true out of |
| A. | Collections>Current Purchases, |
| B. | Collections>Current Sales, |
| C. | Collections<Current Purchases, |
| D. | Collections < Current Sales. |
| Answer» B. Collections>Current Sales, | |
| 253. |
If the average balance of debtors has increased, which of the following might not show a change in general? |
| A. | Total Sales, |
| B. | Average Payables |
| C. | Current Ratio |
| D. | Bad Debt loss |
| Answer» B. Average Payables | |
| 254. |
Securitization is related to conversion of |
| A. | Receivables, |
| B. | Stock, |
| C. | Investments, |
| D. | Creditors. |
| Answer» A. Receivables, | |
| 255. |
80% of sales of 10,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm? |
| A. | 45 days and 1,00,000 |
| B. | 360 days and 1,00,000, |
| C. | 45 days and 8,00,000 |
| D. | 360 days and 1,25,000 |
| Answer» A. 45 days and 1,00,000 | |
| 256. |
In response to market expectations, the credit pence r j been increased from 45 days to 60 days. This would result in |
| A. | Decrease in Sales, |
| B. | Decrease in Debtors, |
| C. | Increase in Bad Debts, |
| D. | Increase in Average Collection Period. |
| Answer» D. Increase in Average Collection Period. | |
| 257. |
If a company sells its receivable to another party to raise funds, it is known as |
| A. | Securitization |
| B. | Factoring, |
| C. | Pledging |
| D. | None of the above. |
| Answer» B. Factoring, | |
| 258. |
Cash Discount term 3/15, net 40 means |
| A. | 3% Discount if payment in 15 days, otherwise full payment in 40 days, |
| B. | 15% Discount if payment in 3 days, otherwise full payment 40 days, |
| C. | 3% Interest if payment made in 40 days and 15%,interest thereafter, |
| D. | None of the above. |
| Answer» A. 3% Discount if payment in 15 days, otherwise full payment in 40 days, | |
| 259. |
If the sales of the firm are . 60,00,000 and the average debtors are . 15,00,000 then the receivables turnover is |
| A. | 4 times |
| B. | 25% |
| C. | 400% |
| D. | 0.25 times |
| Answer» A. 4 times | |
| 260. |
If cash discount is offered to customers, then which of the following would increase? |
| A. | Sales |
| B. | Debtors |
| C. | Debt collection period |
| D. | All of the above |
| Answer» A. Sales | |
| 261. |
Receivables Management deals with |
| A. | Receipts of raw materials |
| B. | Debtors collection, |
| C. | Creditors Management |
| D. | Inventory Management |
| Answer» B. Debtors collection, | |
| 262. |
Which of the following is related to Receivables Management? |
| A. | Cash Budget |
| B. | Economic Order Quantity, |
| C. | Ageing schedule |
| D. | All of the above. |
| Answer» C. Ageing schedule | |
| 263. |
EOQ is the quantity that minimizes |
| A. | Total Ordering Cost |
| B. | Total Inventory Cost, |
| C. | Total Interest Cost |
| D. | Safety Stock Level |
| Answer» A. Total Ordering Cost | |
| 264. |
ABC Analysis is used in |
| A. | Inventory Management |
| B. | Receivables Management |
| C. | Accounting Policies, |
| D. | Corporate Governance. |
| Answer» A. Inventory Management | |
| 265. |
If no information is available, the General Rule for valuation of stock for balance sheet is |
| A. | Replacement Cost |
| B. | Realizable Value, |
| C. | Historical Cost |
| D. | Standard Cost |
| Answer» C. Historical Cost | |
| 266. |
In ABC inventory management system, class A items may require |
| A. | Higher Safety Stock |
| B. | Frequent Deliveries |
| C. | Periodic Inventory system |
| D. | Updating of inventory records. |
| Answer» A. Higher Safety Stock | |
| 267. |
Inventory holding cost may include |
| A. | Material Purchase Cost |
| B. | Penalty charge for default, |
| C. | Interest on loan, |
| D. | None of the above |
| Answer» D. None of the above | |
| 268. |
Use of safety stock by a firm would |
| A. | Increase Inventory Cost |
| B. | Decrease Inventory Cost, |
| C. | No effect on cost |
| D. | None of the above |
| Answer» A. Increase Inventory Cost | |
| 269. |
Which of the following is true for a company which uses continuous review inventory system |
| A. | Order Interval is fixed |
| B. | Order Interval varies, |
| C. | Order Quantity is fixed |
| D. | Both (a) and (c) |
| Answer» C. Order Quantity is fixed | |
| 270. |
ABC Analysis is useful for analyzing the inventories: |
| A. | Based on their Quality |
| B. | Based on their Usage and value |
| C. | Based on Physical Volume |
| D. | All of the above |
| Answer» B. Based on their Usage and value | |
| 271. |
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ |
| A. | (2AO/C) 2 |
| B. | 2AO/C |
| C. | 2A÷OC |
| D. | 2AOC |
| Answer» B. 2AO/C | |
| 272. |
Inventory is generally valued as lower of |
| A. | Market Price and Replacement Cost |
| B. | Cost and Net Realizable Value |
| C. | Cost and Sales Value |
| D. | Sales Value and Profit. |
| Answer» B. Cost and Net Realizable Value | |
| 273. |
Which of the following is not included in cost of inventory? |
| A. | Purchase cost |
| B. | Transport in Cost, |
| C. | Import Duty, |
| D. | Selling Costs. |
| Answer» D. Selling Costs. | |
| 274. |
Cost of not carrying sufficient inventory is known as |
| A. | Carrying Cost |
| B. | Holding Cost |
| C. | Total Cost |
| D. | Stock-out Cost |
| Answer» D. Stock-out Cost | |
| 275. |
Which of the following is not a benefit of carrying inventories |
| A. | Reduction in ordering cost, |
| B. | Avoiding lost sales, |
| C. | Reducing carrying cost, |
| D. | Avoiding Production Shortages. |
| Answer» C. Reducing carrying cost, | |
| 276. |
Which of the following is not a standard method of inventory valuation? |
| A. | First in First out |
| B. | Standard Cost |
| C. | Average Pricing |
| D. | Realizable Value |
| Answer» C. Average Pricing | |
| 277. |
System of procuring goods when required, is known as, |
| A. | Free on Board (FOB) (b)always Butter Control |
| B. | , |
| C. | Jest in Time (JIT) |
| D. | Economic Order Quantity. |
| Answer» C. Jest in Time (JIT) | |
| 278. |
A firm has inventory turnover of 6 and cost of goods sold is 7,50,000. With better inventory management, the inventory turnover is increased to 10. This would result in: |
| A. | Increase in inventory by 50,000, |
| B. | Decrease in inventory by . 50,000, |
| C. | Decrease in cost of goods sold, |
| D. | Increase in cost of goods sold. |
| Answer» B. Decrease in inventory by . 50,000, | |
| 279. |
What is Economic Order Quantity? |
| A. | Cost of an Order |
| B. | Cost of Stock |
| C. | Reorder level |
| D. | Optimum order size. |
| Answer» D. Optimum order size. | |
| 280. |
The type of collateral (security) used for short-term loan is |
| A. | Real estate, |
| B. | Plant & Machinery, |
| C. | Stock of good |
| D. | Equity share capital |
| Answer» C. Stock of good | |
| 281. |
Which of the following is a liability of a bank? |
| A. | Treasury Bills, |
| B. | Commercial papers, |
| C. | Certificate of Deposits, |
| D. | Junk Bonds. |
| Answer» C. Certificate of Deposits, | |
| 282. |
Commercial paper is a type of |
| A. | Fixed coupon Bond |
| B. | Unsecured short-term debt |
| C. | Equity share capital, |
| D. | Government Bond |
| Answer» B. Unsecured short-term debt | |
| 283. |
Which of the following is not a spontaneous source of short-term funds ? |
| A. | Trade credit, |
| B. | Accrued expenses, |
| C. | Provision for dividend, |
| D. | All of the above. |
| Answer» C. Provision for dividend, | |
| 284. |
Concept of Maximum Permissible Bank finance was introduced by |
| A. | Kannan Committee |
| B. | Chore Committee, |
| C. | Nayak Committee, |
| D. | Tandon Committee. |
| Answer» D. Tandon Committee. | |
| 285. |
In India, Commercial Papers are issued as per the guidelines issued by |
| A. | Securities and Exchange Board of India, |
| B. | Reserve Bank of India, |
| C. | Forward Market Commission, |
| D. | None of the above. |
| Answer» B. Reserve Bank of India, | |
| 286. |
Commercial paper are generally issued at a pries |
| A. | Equal to face value, |
| B. | More than face value, |
| C. | Less than face value, |
| D. | Equal to redemption value |
| Answer» C. Less than face value, | |
| 287. |
Which of the following is not applicable to commercial paper |
| A. | Face Value |
| B. | Issue Price |
| C. | Coupon Rate |
| D. | None of the above. |
| Answer» D. None of the above. | |
| 288. |
The basic objective of Tandon Committee recommendations is that the dependence of industry on bank should gradually |
| A. | Increase, |
| B. | Remain Stable |
| C. | Decrease |
| D. | None of the above |
| Answer» C. Decrease | |
| 289. |
Cash discount terms offered by trade creditors never be accepted because |
| A. | Benefit in very small |
| B. | Cost is very high |
| C. | No sense to pay earlier |
| D. | None of the above. |
| Answer» D. None of the above. | |
| 290. |
In lease system, interest is calculated on |
| A. | Cash down payment |
| B. | Cash price outstanding |
| C. | Hire purchase price |
| D. | None of the above |
| Answer» B. Cash price outstanding | |
| 291. |
A short-term lease which is often cancellable is known as |
| A. | Finance Lease |
| B. | Net Lease, |
| C. | Operating Lease |
| D. | Leverage Lease |
| Answer» C. Operating Lease | |
| 292. |
Which of the following is not a usual type of lease arrangement? |
| A. | Sale & leaseback, |
| B. | Goods on Approval, |
| C. | Leverage Lease, |
| D. | Direct Lease |
| Answer» B. Goods on Approval, | |
| 293. |
Under income-tax provisions, depreciation on lease asset is allowed to |
| A. | Lessor |
| B. | Lessee |
| C. | Any of the two |
| D. | None of the two |
| Answer» A. Lessor | |
| 294. |
Under the provisions of AS-19 'Leases', a leased asset is shown is the balance sheet of |
| A. | Manufacturer |
| B. | Lessor |
| C. | Lessee |
| D. | Financing bank |
| Answer» C. Lessee | |
| 295. |
A lease which is generally not cancellable and covers full economic life of the asset is known as |
| A. | Sale and leaseback, |
| B. | Operating Lease |
| C. | Finance Lease, |
| D. | Economic Lease |
| Answer» C. Finance Lease, | |
| 296. |
Lease which includes a third party (a lender) is known as |
| A. | Sale and leaseback |
| B. | Direct Lease, |
| C. | Inverse Lease, |
| D. | Leveraged Lease |
| Answer» D. Leveraged Lease | |
| 297. |
One difference between Operating and Financial lease is: |
| A. | There is often an option to buy in operating lease |
| B. | There is often a call option in financial lease. |
| C. | An operating lease is generally cancelable by lease |
| D. | A financial lease in generally cancelable by lease. |
| Answer» C. An operating lease is generally cancelable by lease | |
| 298. |
From the point of view of the lessee, a lease is a: |
| A. | Working capital decision, |
| B. | Financing decision, |
| C. | Buy or make decision, |
| D. | Investment decision |
| Answer» B. Financing decision, | |
| 299. |
For a lesser, a lease is a |
| A. | Investment decision, |
| B. | Financing decision, |
| C. | Dividend decision |
| D. | None of the above. |
| Answer» A. Investment decision, | |
| 300. |
Which of the following is not true for a "Lease decision for the lessee? |
| A. | Helps in project selection |
| B. | Helps in project financing |
| C. | Helps in project location |
| D. | All of the above. |
| Answer» B. Helps in project financing | |
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