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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS Powered By Docstoc
					                                          FM assgn :18: Amit Arora

 Multiple Choice Multiple Answer
 Question Gross Profit can be increased by either
 Correct Answer Increased Sales price, Reduced Production cost, Increased Sales price, Production cost
remaining the same , Reduced Production cost, sales price remaining the same
 Your Answer Reduced Production cost, sales price remaining the same, Increased Sales price, Reduced
Production cost, Increased Sales price, Production cost remaining the same

 Select The Blank
  Question If the amount of interest is considered as a part of expenses, the ________ liability of the
company reduces proportionately
  Correct Answer tax
  Your Answer current

Multiple Choice Multiple Answer
Question The sources of cash are
Correct Answer Cash from operations, sale of machinery, Issue of new shares
Your Answer Cash from operations , sale of machinery , Issue of new shares

Select The Blank
 Question In case of Mortgage, the party who transfers the interest is called ________
 Correct Answer Mortgager
 Your Answer Mortgagee

 Select The Blank
  Question Private limited company and Public limited company are the companies based on the
classification of ________
  Correct Answer Number of members
  Your Answer Control

True/False
 Question The Stock Dividends are more expensive to administer as compared to cash dividends
 Correct Answer True
 Your Answer True

 Multiple Choice Multiple Answer
 Question Earnings / Price Approach to compute cost of equity shares is objected on the following
grounds
 Correct Answer It wrongly assumes that earnings per share will remain constant in future , All the
earnings may not be distributed among the shareholders by way of dividend
 Your Answer This presupposes that an investor looks forward only to receive dividend on equity shares
which may not be correct , It wrongly assumes that earnings per share will remain constant in future , All
the earnings may not be distributed among the shareholders by way of dividend

Match The Following
Question Correct Answer Your Answer

Increase in liabilities inflow of funds inflow of funds

Decrease in liabilities outflow of funds outflow of funds

Increase in current assets increases working capital decreases working capital

Increase in current liabilities decreases working capital increases working capital


Multiple Choice Multiple Answer
                                                          1
 Question The internal factors affecting the dividend policy are
 Correct Answer Growth rate of the company , Composition of the
shareholding
 Your Answer Growth rate of the company , Composition of the
shareholding

 Select The Blank
  Question Modigliani - Miller approach closely resembles ________
approach
  Correct Answer Net operating income
  Your Answer Net Profitability

 Select The Blank
  Question Factoring indicates the relationship between ________ and
a business organisation
  Correct Answer Financial institutions
  Your Answer Financial institutions

 True/False
  Question In an organisation, Dividend distribution is the function
of a Finance Controller
  Correct Answer False
  Your Answer True

 Multiple Choice Single Answer
 Question Registered Debentures are those
 Correct Answer which can be transferred to another person only
through the company
 Your Answer which can be transferred to another person only through
the company

Select The Blank
 Question The fixed assets are expressed at ________
 Correct Answer Cost - Depreciation
 Your Answer Market value - Depreciation

 Multiple Choice Multiple Answer
 Question The causes of undercapitalisation are
 Correct Answer Company following too conservative policy for paying
the dividends , Future earnings may be underestimated
 Your Answer Company following too conservative policy for paying
the dividends , Future earnings may be underestimated

 Multiple Choice Multiple Answer
  Question Disadvantages of Preference shares from shareholders point
of view
  Correct Answer Preference Dividend rate is rather modest , Price
fluctuation preference shares is greater than price fluctuation of
debentures , Preference shareholders are vulnerable to arbitrary managerial
actions
  Your Answer Preference shareholders are vulnerable to arbitrary
managerial actions , They enjoy the lowest priority on income and assets
of the firm

 True/False
  Question Under hypothecation mode of security neither the property
not the possession of the goods hypothecated is transferred to the Bank
  Correct Answer True
                                                     2
 Your Answer    True

 True/False
  Question Introduction of a heavy amount of debt capital in the
capital structure will not only reduce the valuation of the firm but will
also increase the cost of capital
  Correct Answer True
  Your Answer True

Multiple Choice Single Answer
Question Requirement of working capital is low is case of
Correct Answer Infrastructure oriented projects
Your Answer Machine tool industry

 True/False
  Question Retained earnings or ploughed back profits is one of the
best source of raising long term funds for the company
  Correct Answer True
  Your Answer False

 Select The Blank
  Question ________ is clubbed with Current Assets in the Balance
Sheet
  Correct Answer Loans and advances
  Your Answer Loans and advances

 Multiple Choice Single Answer
 Question The cost which remains constant irrespective of changes in
the sales revenue is termed as
 Correct Answer Fixed cost
 Your Answer Fixed cost

True/False
 Question Internal rate of return considers time value of money
 Correct Answer True
 Your Answer True

 True/False
  Question Proprietary ratios is the relationship between owners
funds and total assets
  Correct Answer True
  Your Answer True

 Select The Blank
  Question The analytical method of inventory control which aims at
concentrating efforts in those areas where attention is required most is
termed as ________
  Correct Answer ABC Analysis
  Your Answer ABC Analysis

 True/False
  Question Overdraft is given by the bank for a very short period of
time, at the end of which the company is supposed to repay the same
  Correct Answer True
  Your Answer True

Multiple Choice Single Answer
Question The Proprietary concern is owned by
                                                       3
 Correct Answer Only one person
 Your Answer Only one person

 True/False
  Question The approved credit rating agencies prevailing in the
country are promoted by the government controlled organisations
  Correct Answer True
  Your Answer True

Multiple Choice Single Answer
Question The Pay Bank period is calculated as
Correct Answer Cash outlay / Annual cash inflow
Your Answer Cash outlay / Annual cash inflow

 Select The Blank
  Question Financial Statement is useful to ________ in order to
enable to decide whether to retain the investment in the company
  Correct Answer Shareholders
  Your Answer Shareholders

 Multiple Choice Single Answer
 Question Revenue reserves represents
 Correct Answer Accumulated retained earnings from the profits of
normal business operations
 Your Answer Accumulated retained earnings from the profits of
normal business operations

 Multiple Choice Single Answer
 Question Capital cost is
 Correct Answer cost on the use of additional capital to support
credit sales
 Your Answer additional expenses on the creation and maintenance of
a credit department

 Multiple Choice Single Answer
 Question Earnings per share is calculated as
 Correct Answer ( Profit after tax - Preference Dividend ) / No. of
equity shares
 Your Answer ( Profit after tax - Preference Dividend ) / No. of
equity shares

 Multiple Choice Multiple Answer
  Question Situation of capital rationing may involve problems in the
form of
  Correct Answer Project Indivisibility , Mutually dependent project
, Multi period projects
  Your Answer Project Indivisibility , Mutually dependent project ,
Avoidance of larger projects

 Multiple Choice Single Answer
  Question Calculate the Gross Profit Ratio from the following
figures : Sales Rs. 1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs.
10,000/-, Opening stock Rs. 20,000/-, Purchases Return Rs. 15,000/-,
Closing Stock Rs. 5,000/-
  Correct Answer 0.3333
  Your Answer 0.3333

Multiple Choice Multiple Answer
                                                    4
 Question Indicate which of these are Profitability ratios
 Correct Answer Operating ratio , Gross Profit ratio
 Your Answer Operating ratio , Gross Profit ratio

 Multiple Choice Multiple Answer
  Question The Economic Order Quantity model is based on the
assumption of
  Correct Answer Placing and receiving orders is without any delay ,
Ordering costs and carrying costs associated with the orders are
variable in nature and they behave exactly opposite to each other , The
demand for the material concerned is uniform throughout the year
  Your Answer Placing and receiving orders is without any delay ,
Ordering costs and carrying costs associated with the orders are variable
in nature and they behave exactly opposite to each other , The demand
for the material concerned is uniform throughout the year

 Multiple Choice Single Answer
 Question The assets held by a business which can be converted in
the form of cash or used during the course of normal operations is termed
as
 Correct Answer Current assets
 Your Answer Current assets

 Multiple Choice Single Answer
 Question The function of the Bankers to the issue is to
 Correct Answer collect the application money on behalf of the
company
 Your Answer develop strategies for marketing the issue properly

 Select The Blank
  Question As per the II method suggested by the Tandon committee,
the borrower should finance ________ of current assets out of long term
funds and the banks provide the remaining finance
  Correct Answer 0.25
  Your Answer 0.25

Multiple Choice Multiple Answer
 Question Advantages of cash flow statement are
 Correct Answer Helps in efficient cash management , Discloses the
movements of cash , Discloses the success or failure of cash planning
 Your Answer Helps in efficient cash management , Discloses the
movements of cash , Discloses the success or failure of cash planning

Multiple Choice Multiple Answer
Question The depreciation is being charged for the following assets
Correct Answer Plant and Machinery , Building
Your Answer Plant and Machinery , Building , Stock

Match The Following
Question Correct Answer Your Answer

Earnings per share ratio to measure the profits available to the equity
shareholders on a per share basis ratio to measure the profits
available to the equity shareholders on a per share basis

Price earning ratio indicates the price currently being paid in the
stock market for every one rupee of Earning per share indicates the price
currently being paid in the stock market for every one rupee of Earning
                                                     5
per share

Operating leverage measures the effect of change in sales quantity on
earnings before interest and taxes measures the effect of change in
sales quantity on earnings before interest and taxes

Financial leverage indicates firm's ability to use fixed financial
charges to magnify the effects of changes in earning before interest and
tax on the firm's earning per share indicates firm's ability to use fixed
financial charges to magnify the effects of changes in earning before
interest and tax on the firm's earning per share


 Select The Blank
  Question The projects having Profitability index of more than
________ will be accepted
  Correct Answer one
  Your Answer one

 Multiple Choice Multiple Answer
  Question Shortcomings of Debentures from company's point of view
  Correct Answer The debenture interest and capital repayment are
obligatory payments , Debenture financing enhances the financial risk
associated with the firm
  Your Answer The debenture interest and capital repayment are
obligatory payments , Debenture financing enhances the financial risk
associated with the firm , They have lowest priority in the event of
liquidation

 Multiple Choice Single Answer
 Question Interest coverage ratio is useful in indicating the
symptom of
 Correct Answer Inability to pay interest
 Your Answer Borrowing for short term and investing in long term
assets

 True/False
  Question Liquid assets includes all current assets except
Inventories and Prepaid expenses
  Correct Answer True
  Your Answer True




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