Accounting and Financial Management 19

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Objective Questions and Answers of MBA: Accounting and Financial Management 19

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 19

Part 19: Objective questions and answers of Accounting and Financial Management


Q1. Dividend distribution tax is payable by

a) Shareholders to government

b) Shareholders to company

c) Company to government

d) Holding to subsidiary company


Q2. 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


Q3. 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


Q4. 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


Q5. 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


Q6. 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


Q7. System of procuring goods when required, is known as,

a) Free on board (fob)

b) Always butter control (abc)

c) Jest in time (jit)

d) Economic order quantity


Q8. 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


Q9. 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


Q10. Net profit ratio signifies:

a) Operational profitability

b) Liquidity position

c) Solvency

d) Profit


Q11. Gross profit ratio for a firm remains same but the net profit ratio is decreasing. The reason for such behavior could be:

a) Increase in costs of goods sold

b) If increase in expense

c) Increase in dividend

d) Decrease in sales


Q12. Which of the following is not a capital budgeting decision?

a) Expansion programme

b) Merger

c) Replacement of an asset

d) Inventory level


Q13. Which of the following is not included in incremental a flows?

a) Opportunity costs

b) Sunk costs

c) Change in working capital

d) Inflation effect


Q14. Two mutually exclusive projects with different economic lives can be compared on the basis of

a) Internal rate of return

b) Profitability index

c) Net present value

d) Equivalent annuity value


Q15. Cost of capital for government securities is also known as:

a) Risk-free rate of interest

b) Maximum rate of return

c) Rate of interest on fixed deposits

d) None of the above


Q16. Cost of capital may be defined as:

a) Weighted average cost of all debts

b) Rate of return expected by equity shareholders

c) Average irr of the projects of the firm

d) Minimum rate of return that the firm should earn


Q17. Which of the following is studied with the help of financial leverage?

a) Marketing risk

b) Interest rate risk

c) Foreign exchange risk

d) Financing risk


Q18. If the fixed cost of production is zero, which one of the following is correct?

a) Ol is zero

b) Fl is zero

c) Cl is zero

d) None of the above


Q19. There is deterioration in the management of working capital of xyz ltd. What does it refer to?

a) That the capital employed has reduced

b) That the profitability has gone up

c) That debtors collection period has increased

d) That sales has decreased


Q20. Which of the following is not a relevant cost in capital budgeting?

a) Sunk cost

b) Opportunity cost

c) Allocated overheads

d) Both (a) and (c) above


Part 19: Objective questions and answers of Accounting and Financial Management


Q1. Answer c


Q2. Answer d


Q3. Answer c


Q4. Answer b


Q5. Answer d


Q6. Answer a


Q7. Answer c


Q8. Answer d


Q9. Answer b


Q10. Answer a


Q11. Answer b


Q12. Answer d


Q13. Answer b


Q14. Answer d


Q15. Answer a


Q16. Answer d


Q17. Answer d


Q18. Answer d


Q19. Answer c


Q20. Answer d

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