Accounting and Financial Management 32

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Objective Questions and Answers of MBA: Accounting and Financial Management 33

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 33

Part 32: Objective questions and answers of Accounting and Financial Management


Q1. Abc ltd. Has a current ratio of 1.5: 1 and net current assets of rs. 5,00,000. What are the current assets?

a) Rs. 5,00,000

b) Rs. 10,00,000

c) Rs. 15,00,000

d) Rs. 25,00,000


Q2. Xyz ltd. Has a debt equity ratio of 1.5 as compared to 1.3 industry average. It means that the firm has:

a) Higher liquidity

b) Higher financial risk

c) Higher profitability

d) Higher capital employed


Q3. Which one of the following is not a tool of financial forecasting?

a) Cash budget

b) Capital budget

c) Pro forma balance sheet

d) Pro forma income statement


Q4. Adequate working capital means

a) Sufficient funds

b) Insufficient funds

c) Lack of funds

d) All of the above


Q5. A level of working capital which is required by the firm always is knows as

a) Gross working capital

b) Permanent working capital

c) Temporary working capital

d) Net working capital


Q6. Greater the size of a business unit ______________ will be the requirements of working capital

a) Larger

b) Lower

c) No change

d) Fixed


Q7. Retained earnings are

a) An indication of a company's liquidity

b) The same as cash in the bank

c) Not important when determining dividends

d) The cumulative earnings of the company after dividends


Q8. The statement of cash flows will not report the

a) Amount of checks outstanding at the end of the period

b) Sources of cash in the current period

c) Uses of cash in the current period

d) Change in the cash balance for the current period


Q9. Of the items below, the one that appears first on the statement of cash flows is

a) Non cash investing and financing activities

b) Net increase (decrease) in cash

c) Cash at the end of the period

d) Cash at the beginning of the period


Q10. Banks generally prefer debt equity ratio at:

a) 1:1

b) 1:3

c) 2:1

d) 3:1


Q11. Current ratio is working capital is rs.30,000. find the amount of current assets.

a) Rs. 10,000

b) Rs. 40,000

c) Rs.24,000

d) Rs.6,000


Q12. What is the net trade cycle?

a) The amount of time needed to complete the normal operating cycle of a firm

b) The amount of time it takes to manufacture or buy inventory

c) The amount of time it takes to sell inventory

d) None of the above


Q13. Which of the following does not help to increase current ratio?

a) Issue of debentures to buy stock

b) Issue of debentures to pay creditors

c) Sale of investment to pay creditors

d) Avail bank overdraft to buy machine


Q14. 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) Increase in expense

c) Increase in dividend

d) Decrease in sales


Q15. If a company revalues its assets, its net worth:

a) Will improve

b) Will remain same

c) Will be positively affected

d) None of the above


Q16. Current ratio is 2:5.current liability is rs.30000.the net working capital is

a) Rs.18,000

b) Rs.45,000

c) Rs.(-) 45,000

d) Rs.(-)18000


Q17. Which of the following is not an efficiency ratio?

a) Asset turnover

b) Stock turnover

c) Debtor days

d) Interest cover


Q18. The four main financial objectives of a firm are:

a) Efficiency, effectiveness, strength, and flexibility

b) Power, success, efficiency, and effectiveness

c) Control, effectiveness, liquidity, and power

d) Success, strength, liquidity, and profitability

e) Profitability, liquidity, efficiency, and stability


Q19. The strength and vigor of a firm's overall financial posture is referred to as:

a) Liquidity

b) Stability

c) Effectiveness

d) Profitability

e) Efficiency


Q20. A source of funds is a:

a) Decrease in a current asset

b) Decrease in a current liability

c) Increase in a current liability

d) A and c above


Part 32: Objective questions and answers of Accounting and Financial Management


Q1. Answer c


Q2. Answer b


Q3. Answer b


Q4. Answer a


Q5. Answer b


Q6. Answer b


Q7. Answer d


Q8. Answer a


Q9. Answer b


Q10. Answer c


Q11. Answer b


Q12. Answer a


Q13. Answer d


Q14. Answer b


Q15. Answer a


Q16. Answer d


Q17. Answer d


Q18. Answer e


Q19. Answer b


Q20. Answer d

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