Accounting and Financial Management 7

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Objective Questions and Answers of MBA: Accounting and Financial Management 7

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 7

Part 7: Objective questions and answers of Accounting and Financial Management


Q1. In preparing the pro forma balance sheet, all of the following will normally remain unchanged from the prior period except:

a) Accounts receivable

b) Marketable securities

c) Long term debt

d) Common stock


Q2. The degree of financial leverage may be defined as:

a) Percent change in sales/percent change in volume

b) Percent change in eps/percent change in net income

c) Percent change in eps/percent change in ebit

d) Percent change in eps/percent change in sales


Q3. A major advantage of using short term funds is:

a) There is no advantage

b) There are always more easily obtained

c) There are no governmental procedures with which to comply

d) Interest rates are normally lower


Q4. A collection center:

a) Involves using geographically disbursed centers to collect from non-paying customers

b) Utilizes local banks to clear local payments made to the collection center

c) Is lower in cost to the firm than a lockbox system

d) Results in checks being forwarded to a p.o. Box and clearing through local bank branches


Q5. In return for providing loans and other services, banks may require that business customers maintain

a) A specified profit margin

b) A compensating balance

c) A sinking fund

d) A specified growth rate


Q6. The value today of an amount to be received at some point in the future is known as:

a) Present value-annuity

b) Future value-annuity

c) Present value-single amount

d) Future value-single amount


Q7. Financial risk relates to:

a) The ability of the firm to pay dividends

b) The ability of the firm to access capital markets for additional funds

c) The ability of the firm to meet debt obligations as they come due

d) The firm's financial risk premium


Q8. All of the following are steps in the decision-making process of a good capital budgeting process except:

a) Obtaining the necessary financing

b) Collection of data

c) Evaluation and decision making

d) Re-evaluation and adjustment


Q9. Risk in capital budgeting may be defined as:

a) The chance the firm won't be able to meet its debt obligations

b) The possibility of the firm losing its competitive position

c) The variability of possible outcomes from a given investment

d) The possibility that the firm can't obtain funds needed to finance the desired asset


Q10. In recent years government of canada funding requirements have:

a) Increased and become more short term

b) Increased and become more long term

c) Decreased and become more short term

d) Decreased and become more long term


Q11. The main function of the investment dealer is to serve as:

a) The middleperson between the firm in need of funds and investors

b) Underwriter

c) An advisor to the firm

d) A market maker


Q12. The coupon rate on a bond is:

a) The initial or face value of the bond

b) The yield to maturity

c) The rate at which the principal of the bond accrues

d) The stated interest rate of the bond


Q13. As the owners of the firm, common shareholders:

a) Have a primary claim on earnings

b) Have the right to vote on all important corporate issues

c) Have a legally enforceable right to dividends

d) Play a secondary role in financing the firm


Q14. All of the following are characteristics of the expansion stage of corporate growth except:

a) Sales expansion continues, but at a decreasing rate

b) Returns on investment decline

c) The asset expansion rate increases

d) The firm is better able to pay higher cash dividends


Q15. If a bond with a face value of $1,000, coupon rate and yield to maturity of 8%, and conversion ratio of 20, sees a drop in the common price to 25, the value of the security will be:

a) $500

b) Greater than $1,000

c) Less than $1,000

d) $1,000


Q16. The main focus of a stock-for-stock exchange is on:

a) The earnings per share impact of the exchange

b) The capital budgeting implications

c) The shareholders of the acquired firms

d) The growth opportunities


Q17. Fundamental factors influencing exchange rates include:

a) Inflation, government policies, translation exposure

b) Interest rates, government policies, and expropriation

c) Balance of payments, spot rates, and expropriation

d) Government policies, balance of payments, inflation


Q18. Which of the following are not among the daily activities of financial management?

a) Sale of stocks and bonds

b) Credit management

c) Inventory control

d) The receipt and disbursement of funds


Q19. All of the following are decisions heavily impacted by federal income tax considerations except:

a) Lease versus purchase decisions

b) The issuance of common shares versus debt

c) Cash budgeting and dividend policy decisions

d) The decision to replace on asset


Q20. Analyzing the performance of the firm through ratios over a number of years is referred to as:

a) Financial analysis

b) Ratio analysis

c) Trend analysis

d) Operations analysis


Part 7: Objective questions and answers of Accounting and Financial Management


Q1. Answer a


Q2. Answer c


Q3. Answer d


Q4. Answer b


Q5. Answer b


Q6. Answer c


Q7. Answer c


Q8. Answer a


Q9. Answer c


Q10. Answer d


Q11. Answer a


Q12. Answer d


Q13. Answer b


Q14. Answer c


Q15. Answer d


Q16. Answer a


Q17. Answer d


Q18. Answer a


Q19. Answer c


Q20. Answer c

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