Accounting and Financial Management 21

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Objective Questions and Answers of MBA: Accounting and Financial Management 21

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 21

Part 21: Objective questions and answers of Accounting and Financial Management


Q1. If the following is an element of dividend policy?

a) Production capacity

b) Change in management

c) Informational content

d) Debt service capacity


Q2. 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


Q3. 5cs of the credit does not include

a) Collateral

b) Character

c) Conditions

d) None of the above


Q4. 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


Q5. Abc analysis is used in

a) Inventory management

b) Receivables management

c) Accounting policies

d) Corporate governance


Q6. Which of the following is not included in cost of inventory?

a) Purchase cost

b) Transport in cost

c) Import duty

d) Selling costs


Q7. Concept of maximum permissible bank finance was introduced by

a) Kannan committee

b) Chore committee

c) Nayak committee

d) Tandon committee


Q8. 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


Q9. The job of a finance manager is confined to

a) Raising funds

b) Management of cash

c) Raising of funds and their effective utilization

d) None of these


Q10. Debt to total assets of a firm is 2. The debt to equity would be:

a) 0.80

b) 0.25

c) 1.00

d) 0.75


Q11. Cash inflows from a project include:

a) Tax shield of depreciation

b) After-tax operating profits

c) Raising of funds

d) Both (a) and (b)


Q12. In certainty-equivalent approach, adjusted cash flows are discounted at:

a) Accounting rate of return

b) Internal rate of return

c) Hurdle rate

d) Risk-free rate


Q13. Weighted average cost of capital is generally denoted by:

a) Ka

b) Kw

c) K0

d) Kc


Q14. Minimum rate of return that a firm must earn in order to satisfy its investors, is also known as:

a) Average return on investment

b) Weighted average cost of capital

c) Net profit ratio

d) Average cost of borrowing


Q15. High degree of financial leverage means:

a) High debt proportion

b) Lower debt proportion

c) Equal debt and equity

d) No debt


Q16. If a firm has a dol of 2.8, it means:

a) If sales increase by 2.8%, the ebit will increase by 1%

b) If ebit increase by 2.896, the eps will increase by 1 %

c) If sales rise by 1%, ebit will rise by 2.8%

d) None of the above


Q17. Between two capital plans, if expected ebit is more than indifference level of ebit, then

a) Both plans be rejected

b) Both plans are good

c) One is better than other

d) None of the above


Q18. In traditional approach, which one is correct?

a) Ke rises constantly

b) Kd decreases constantly

c) K0 decreases constantly

d) None of the above


Q19. Walter’s model suggests that a firm can always increase i.e. Of the share by

a) Increasing dividend

b) Decreasing dividend

c) Constant dividend

d) None of the above


Q20. 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


Part 21: Objective questions and answers of Accounting and Financial Management


Q1. Answer c


Q2. Answer b


Q3. Answer d


Q4. Answer a


Q5. Answer a


Q6. Answer c


Q7. Answer d


Q8. Answer c


Q9. Answer c


Q10. Answer b


Q11. Answer d


Q12. Answer d


Q13. Answer c


Q14. Answer b


Q15. Answer a


Q16. Answer c


Q17. Answer c


Q18. Answer d


Q19. Answer d


Q20. Answer b

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