Accounting and Financial Management 35

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Objective Questions and Answers of MBA: Accounting and Financial Management 35

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 35

Part 35: Objective questions and answers of Accounting and Financial Management


Q1. Financing activities involve

a) Lending money

b) Acquiring investments

c) Issuing debt

d) Acquiring long-lived assets


Q2. In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as.

a) Subtraction from net income

b) An addition to net income

c) An addition to cash flow from investing activities

d) A subtraction from cash flow from investing activities


Q3. Current ratio of a concern is 1, its net working capital will be 

a) Positive

b) Negative

c) Nil

d) None of the above


Q4. Why is it important to calculate cash flow ratios?

a) Firms need cash to service debt, dividends and expenses

b) Companies that generate healthy profit may be unable to convert profits into cash

c) Cash flow ratios help the analyst assess the long-term profitability of a firm

d) Both (a) and (b)


Q5. In current ratio, current assets are compared with:

a) Current profit

b) Current liabilities

c) Fixed assets

d) Equity share capital


Q6. Which of the following helps analyzing return to equity shareholders?

a) Return on assets

b) Earnings per share

c) Net profit ratio

d) Return on investment


Q7. In last year the current ratio was 3:1 and quick ratio was 2:1. Presently current ratio is

3:1 but quick ratio is 1:1.this indicates comparably

a) High liquidity

b) Higher stock

c) Lower stock

d) Low liquidity


Q8. If a firm sold stock on credit then which of the following would be the result ?

a) Acid test ratio increases

b) Acid test ratio decreases

c) Current ratio decreases

d) Current ratio increases


Q9. ______________ Capital structure means an ideal combination of borrowed and owned capital that may attain the marginal goal.

a) Preference share

b) Optimum

c) Equity

d) Debt


Q10. A firm's ______________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss

a) Statement of cash flows

b) Balance sheet

c) Statement of owners' equity

d) Income statement


Q11. Which of the following transactions does not affect cash during a period?

a) Write-off of an uncollectible account

b) Collection of an accounts receivable

c) Sale of treasury stock

d) Exercise of the call option on bonds payable


Q12. If a company issues bonus shares the debt equity ratio will

a) Remain unaffected

b) Will be affected

c) Will improve

d) None of the above


Q13. A very high current ratio indicates

a) High efficiency

b) Flabby inventory

c) Position of more long term funds

d) B or c


Q14. Dividend payout ratio is:

a) Pat capital

b) Dps ÷ eps

c) Pref. Dividend ÷ pat

d) Pref. Dividend ÷ equity dividend


Q15. A current ratio of less than one means:

a) Current liabilities < current assets

b) Fixed assets > current assets

c) Current assets < current liabilities

d) Share capital > current assets


Q16. In the balance sheet of a firm, the debt equity ratio is 2:1.the amount of long term sources is rs.12 lac. what is the amount of tangible net worth of the firm?

a) Rs.12 lac

b) Rs.8 lac

c) Rs.4 lac

d) Rs.2 lac


Q17. Proprietary ratio is calculated by

a) Total assets/total outside liability

b) Total outside liability/total tangible assets

c) Fixed assets/long term source of fund

d) Proprietors' funds/total tangible assets


Q18. The ability of a firm to convert an asset to cash is called ______________.

a) Liquidity

b) Solvency

c) Return

d) Marketability


Q19. The appropriate objective of an enterprise is:

a) Maximization of sale

b) Maximization of owner’s wealth

c) Maximization of profits

d) None of these


Q20. A financial statement is an:

a) Written report that quantitatively describes a firm's financial health

b) Set of ratios which depict relationships between a firm's financial items

c) Itemized forecast of a company's income, expenses, and capital needs

d) Estimate of a firm's future income and expenses


Part 35: Objective questions and answers of Accounting and Financial Management


Q1. Answer c


Q2. Answer b


Q3. Answer c


Q4. Answer d


Q5. Answer b


Q6. Answer b


Q7. Answer b


Q8. Answer b


Q9. Answer b


Q10. Answer d


Q11. Answer a


Q12. Answer c


Q13. Answer d


Q14. Answer b


Q15. Answer c


Q16. Answer b


Q17. Answer d


Q18. Answer a


Q19. Answer b


Q20. Answer a

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