Accounting and Financial Management 15

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Objective Questions and Answers of MBA: Accounting and Financial Management 15

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 15

Part 15: Objective questions and answers of Accounting and Financial Management


Q1. Which of the following does not cause a distortion in the reporting of income?

a) The reporting of revenue.

b) The treatment of non-recurring items.

c) The tax-write off policy.

d) The firm's dividend policy.


Q2. To determine production requirements, which of the following would be appropriate?

a) Beginning inventory-ending inventory.

b) Sales + beginning inventory-ending inventory.

c) Sales – ending inventory

d) Projected sales + desired ending inventory – beginning inventory.


Q3. The degree of financial leverage for the conservative firm:

a) Is higher than the dfl for the highly leveraged firm

b) Is the same as the dfl for the highly leveraged firm

c) Is lower than the dfl for the highly leveraged firm

d) Cannot be compared to the dfl for the highly leveraged firm


Q4. The belief that current assets should always be financed by current liabilities:

a) Is sound financial practice and should always be followed

b) Doesn't necessarily hold true

c) Is grounded in the belief that a permanent building of current assets occurs

d) Will often result in bankruptcy for the firm


Q5. The primary focus of the bank of canada's short-term money policy is now

a) The overnight rate

b) The treasury bill rate

c) The prime rate

d) The bank rate


Q6. To an investor, the most desirable compounding period is:

a) Annually

b) Semi-annually

c) Monthly

d) Daily


Q7. The yield to maturity on a bond:

a) Is determined by government regulations

b) Equates principal and interest payments to the price of the bond

c) Is constant with varying maturities

d) Tends to move inversely with share prices


Q8. The portfolio effect analyzes:

a) The return on the portfolio

b) The risk of the portfolio

c) The impact of a given investment on the overall risk level

d) None of the above are correct


Q9. Which of the following statements about securities markets is incorrect?

a) They aid in the allocation of capital

b) They provide liquidity to investors

c) Securities are initially placed in the secondary market

d) The keep prices competitive among alternative security investments


Q10. Under a leveraged buy-out scenario, all of the following are true except:

a) A public firm is taken private

b) Cash is borrowed to finance the purchase

c) Equity is usually sold to pay off the debt

d) A corporate restructuring normally follows


Q11. In a cash budget, net cash flow for the month is defined as:

a) Revenues minus cost of goods sold

b) Monthly receipts minus monthly payments

c) Earning before taxes minus income taxes

d) Operating profit minus interest expense and income taxes


Q12. Degree of operating leverage may be defined as:

a) The extent to which the firm utilizes debt in its financing plan

b) The percent change in operating income/percent change in unit volume

c) The percent change in operating income/percent change in sales

d) The percent change in net income/percent change in unit volume


Q13. Working capital management is mainly concerned with:

a) The placement of the firm's debt and equity issues

b) The financing and management of the firm's current assets

c) Inventory management

d) Management of the firm's capital assets


Q14. Level production methods tend to:

a) Use manpower and equipment efficiently at a lower cost

b) Be more difficult to manage than those matching sales and productions

c) Result in a more stable value for current assets

d) Eliminate seasonal bulges or reductions in current assets


Q15. Before establishing a collection center or lockbox system, the firm must:

a) Obtain regulatory approval

b) Establish that the benefits outweigh the substantial costs

c) Survey its customers to determine if they are agreeable

d) Set up an electronic funds transfer (eft) system


Q16. A series of consecutive cash flows of equal amounts is known as:

a) A present value

b) A compound sum

c) A present sum

d) An annuity


Q17. The market required rate of return depends on:

a) The present value of future cash flows

b) The market's perceived level of risk associated with the individual security

c) The yield to maturity

d) The valuation of the financial asset


Q18. The two most important measures of risk are:

a) The variance and standard deviation

b) The expected value and standard deviation

c) The arithmetic mean and variance

d) The arithmetic mean and standard deviation


Q19. With respect to corporate bonds, all of the following are true except:

a) The market for corporate bonds dwarfs the market for stock

b) The percentage of bond financing is affected by common share prices

c) Interest rate levels are less significant than common share prices

d) Corporate bond markets are dominated in size by the stock market


Q20. Perhaps the biggest change of all in the investment industry has been:

a) The consolidation of financial resources among a few large firms

b) The acquisition of retail brokerage firms

c) The increase in bond underwriting

d) The increasing generalization of investment firms


Part 15: Objective questions and answers of Accounting and Financial Management


Q1. Answer d


Q2. Answer d


Q3. Answer c


Q4. Answer b


Q5. Answer a


Q6. Answer d


Q7. Answer b


Q8. Answer c


Q9. Answer c


Q10. Answer c


Q11. Answer b


Q12. Answer b


Q13. Answer b


Q14. Answer a


Q15. Answer b


Q16. Answer d


Q17. Answer b


Q18. Answer b


Q19. Answer d


Q20. Answer a

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