Accounting and Financial Management 22

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Objective Questions and Answers of MBA: Accounting and Financial Management 22

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 22

Part 22: Objective questions and answers of Accounting and Financial Management

 

Q1. In stock dividend:

a) Authorized capital always increases

b) Paid up capital always increases

c) Face value per share decreases

d) Market price for share decreases

 

Q2. Float management is related to

a) Cash management

b) Inventory management

c) Receivables management

d) Raw materials management

 

Q3. Which of the following is not a part of credit policy?

a) Collection effort

b) Cash discount

c) Credit standard

d) Paying practices of debtors

 

Q4. If the closing balance of receivables is less than the opening balance for a month then which one is true out of

a) Collections>current purchases

b) Collections>current sales

c) Collections<current purchases

d) Collections < current sales

 

Q5. If cash discount is offered to customers, then which of the following would increase?

a) Sales

b) Debtors

c) Debt collection period

d) All of the above

 

Q6. Which of the following is true for a company which uses continuous review inventory system?

a) Order interval is fixed

b) Order interval varies

c) Order quantity is fixed

d) Both (a) and (c)

 

Q7. What is economic order quantity?

a) Cost of an order

b) Cost of stock

c) Reorder level

d) Optimum order size

 

Q8. A short-term lease which is often cancellable is known as

a) Finance lease

b) Net lease

c) Operating lease

d) Leverage lease

 

Q9. Basic objective of diversification is

a) Increasing return

b) Maximizing return

c) Decreasing risk

d) Maximizing risk

 

Q10. Inventory turnover measures the relationship of inventory with:

a) Average sales

b) Cost of goods sold

c) Total purchases

d) Total assets

 

Q11. Capital budgeting is a part of:

a) Investment decision

b) Working capital management

c) Marketing management

d) Capital structure

 

Q12. In capital budgeting, sunk cost is excluded because it is:

a) Of small amount

b) Not incremental

c) Not reversible

d) All of the above

 

Q13. Cost of capital refers to:

a) Flotation cost

b) Dividend

c) Required rate of return

d) None of the above

 

Q14. An implicit cost of increasing proportion of debt is:

a) Tax would not be available on new debt

b) P.e. Ratio would increase

c) Equity shareholders would demand higher return

d) Rate of return of the company would decrease

 

Q15. Cost of issuing new shares to the public is known as:

a) Cost of equity

b) Cost of capital

c) Flotation cost

d) Marginal cost of capital

 

Q16. Financial leverage measures relationship between

a) Ebit and pbt

b) Ebit and eps

c) Sales and pbt

d) Sales and eps

 

Q17. Benefit of 'trading on equity' is available only if:

a) Rate of interest < rate of return

b) Rate of interest > rate of return

c) Both (a) and (b)

d) None of (d) and (b)

 

Q18. In the traditional approach, which one of the following remains constant?

a) Cost of equity

b) Cost of debt

c) Wacc

d) None of the above

 

Q19. Which of the following is incorrect for value of the firm?

a) In the initial preposition, mm model argues that value is independent of the financing mix

b) Total value of levered and unlevered firms is otherwise arbitrage will take place

c) Total value incorporates borrowings by firm but excludes personal borrowing

d) Total value does not change because underlying does not change with financing mix

 

Q20. Which of the following stresses on investor's preference reorient dividend than higher future capital gains?

a) Walter's model

b) Residuals theory

c) Gordon's model

d) Mm model

 

Part 22: Objective questions and answers of Accounting and Financial Management

 

Q1. Answer d

 

Q2. Answer a

 

Q3. Answer d

 

Q4. Answer b

 

Q5. Answer a

 

Q6. Answer b

 

Q7. Answer d

 

Q8. Answer c

 

Q9. Answer c

 

Q10. Answer b

 

Q11. Answer a

 

Q12. Answer b

 

Q13. Answer c

 

Q14. Answer c

 

Q15. Answer c

 

Q16. Answer b

 

Q17. Answer a

 

Q18. Answer d

 

Q19. Answer d

 

Q20. Answer c

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