Accounting and Financial Management 31

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Objective Questions and Answers of MBA: Accounting and Financial Management 31

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 31

Part 31: Objective questions and answers of Accounting and Financial Management


Q1. Net profit ratio signifies:

a) Operational profitability

b) Liquidity position

c) Big-term solvency

d) Profit for lenders


Q2. Suppliers and creditors of a firm are interested in

a) Profitability position

b) Liquidity position

c) Market share position

d) Debt position


Q3. Debt equity ratio is 3:1, the amount of total assets rs.20 lac, current ratio is 1.5:1 and owned funds rs.3 lac. What is the amount of current asset?

a) Rs.5 lac

b) Rs.3 lac

c) Rs.12 lac

d) None of the above


Q4. The transaction motive for holding cash is for

a) A safety cushion

b) Daily operating requirements

c) Compensating balance requirements

d) None of the above


Q5. The net working capital measures

a) Ability

b) Liquidity

c) Credibility

d) None


Q6. Financial decisions involve ______________.

a) Investment, financing and dividend decisions

b) Investment sales decisions

c) Financing cash decisions

d) Investment dividend decisions


Q7. Financial risk arises due to the

a) Variability of returns due to fluctuations in the securities market

b) Changes in prevailing interest rates in the market

c) Leverage used by the company

d) Liquidity of the assets of the company


Q8. Traditional approach confines finance function only to ______________ funds.

a) Raising

b) Mobilising

c) Utilising

d) Financing


Q9. Investing activities include

a) Collecting cash on loans made

b) Obtaining cash from creditors

c) Obtaining capital from owners

d) Repaying money previously borrowed


Q10. Which of the following would not be an adjustment to net income using the indirect method?

a) Depreciation expense

b) An increase in prepaid insurance

c) Amortization expense

d) An increase in land


Q11. The long term use is 120% of long term source. This indicates the unit has

a) Current ratio 1.2:1

b) Negative tnw

c) Low capitalization

d) Negative nwc


Q12. What type of ratios measure the liquidity of specific assets and the efficiency of managing assets?

a) Leverage ratios

b) Profitability ratios

c) Liquidity ratios

d) Activity ratios


Q13. Return on investment may be improved by:

a) Increasing turnover

b) Reducing expenses

c) Increasing capital utilization

d) All of the above


Q14. A firm has capital of rs. 10,00,000; sales of rs. 5,00,000; gross profit of rs. 2,00,000 and expenses of rs. 1,00,000. What is the net profit ratio?

a) 20%

b) 50%

c) 10%

d) 40%


Q15. In inventory turnover calculation, what is taken in the numerator?

a) Sales

b) Cost of goods sold

c) Opening stock

d) Closing stock


Q16. The degree of solvency of two firms can be compared by measuring

a) Net worth

b) Tangible net worth

c) Asset coverage ratio

d) Solvency ratio


Q17. Stock is not included in the current assets when calculating the acid test ratio because:

a) Stock is not a liquid asset

b) Only debtors can be included, as they will be converted into cash shortly

c) It makes comparison easier as only two current liabilities are included in the acid test ratio

d) Banks only recognize cash and debtors as liquid assets


Q18. The objective of financial management is to maximize ______________ wealth.

Select correct option:

a) Stakeholders

b) Shareholders

c) Bondholders

d) Directors


Q19. 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


Q20. ______________ reflect past performance and are usually prepared on a quarterly and annual basis

a) Chronological financial statements

b) Ad-hoc financial statements

c) Historical financial statements

d) Concurrent financial statement


Part 31: Objective questions and answers of Accounting and Financial Management


Q1. Answer d


Q2. Answer b


Q3. Answer c


Q4. Answer b


Q5. Answer b


Q6. Answer c


Q7. Answer d


Q8. Answer a


Q9. Answer a


Q10. Answer d


Q11. Answer d


Q12. Answer d


Q13. Answer d


Q14. Answer a


Q15. Answer b


Q16. Answer d


Q17. Answer a


Q18. Answer c


Q19. Answer c


Q20. Answer c

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