McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Banking and Insurance (BBI) , Bachelor of Commerce (B Com) .
Chapters
| 51. |
Which technique used for figures of two or more periods are placed side by side to facilitate easy and meaningful comparisons? |
| A. | comparative statement |
| B. | common‐size statement |
| C. | trend analysis |
| D. | none |
| Answer» A. comparative statement | |
| 52. |
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 | |
| 53. |
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 | |
| 54. |
_______________ ratios measure the ability of a firm to earn an adequate return on sales, total assets and invested capital. |
| A. | asset utilization |
| B. | liquidity |
| C. | profitability |
| D. | debt utilization |
| Answer» C. profitability | |
| 55. |
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» C. liquidity | |
| 56. |
__________ 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» C. common size | |
| 57. |
The ideal level of current ratio is |
| A. | 4:2 |
| B. | 2:1 |
| C. | both a and b |
| D. | none of the above |
| Answer» B. 2:1 | |
| 58. |
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 | |
| 59. |
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» A. short-term solvency ratio | |
| 60. |
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» C. rs 1, 62,000 | |
| 61. |
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 | |
| 62. |
Net Profit ratio is calculated by |
| A. | (gross profit/gross sales) *100 |
| B. | (gross profit/net sales) *100 |
| C. | (net profit/net sales) *100 |
| D. | none of the above |
| Answer» C. (net profit/net sales) *100 | |
| 63. |
If sales is Rs 5, 00,000 and 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% | |
| 64. |
Operating ratio is calculated by |
| A. | (operating cost/gross sales) *100 |
| B. | (operating cost/gross sales) *100 |
| C. | (operating cost/net sales) *100 |
| D. | none of the above |
| Answer» A. (operating cost/gross sales) *100 | |
| 65. |
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 | |
| 66. |
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 | |
| 67. |
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 | |
| 68. |
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 | |
| 69. |
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 | |
| 70. |
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 | |
| 71. |
___________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. | |
| 72. |
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 | |
| 73. |
__________ 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 | |
| 74. |
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 | |
| 75. |
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. | |
| 76. |
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. | |
| 77. |
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. | |
| 78. |
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. | |
| 79. |
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. | |
| 80. |
An example of fixed asset is________. |
| A. | live stock. |
| B. | value stock. |
| C. | income stock. |
| D. | all of the above. |
| Answer» A. live stock. | |
| 81. |
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 | |
| 82. |
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 | |
| 83. |
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 | |
| 84. |
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 | |
| 85. |
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 | |
| 86. |
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 | |
| 87. |
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 | |
| 88. |
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 | |
| 89. |
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 | |
| 90. |
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 | |
| 91. |
_____ 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 | |
| 92. |
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 | |
| 93. |
__________ 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 | |
| 94. |
_________ 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 | |
| 95. |
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 | |
| 96. |
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 | |
| 97. |
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 | |
| 98. |
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 | |
| 99. |
________ 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 | |
| 100. |
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 | |
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