# Basic Accounting 15

Objective Questions and Answers of MBA: Basic Accounting 15

Subject: Objective Questions and Answers of MBA: Basic Accounting 15

Part 15: Objective questions and answers of Basic Accounting

Q1. Life of security simply refer to

a) Yield

b) Liquidity

c) Maturity

d) Safety

Q2. The ______________ is responsible for accounting, maintaining and auditing of the accounts.

a) Shareholders

b) Treasurer

c) Controller

d) Board of Directors

Q3. The fixed-based method is the subcategory of which of the following analysis.

a) Ratio analysis

b) Vertical analysis

c) Horizontal analysis

d) None of the above

Q4. Which of the following is NOT the present value of the bond?

a) Intrinsic value

b) Market price

c) Fair price

d) Theoretical price

Q5. Oliver Incorporated has a current ratio equal to 1.6 and a quick ratio equal to 1.2. The company has \$2 million in sales and its current liabilities are \$1 million. What is the company’s inventory turnover ratio?

a) 5.0

b) 5.2

c) 5.5

d) 6.0

Q6. Which of the following is NOT an example of hybrid equity?

a) Convertible bonds

b) Convertible debenture

c) Common shares

d) Preferred shares

Q7. Convertible debt is debt that

a) The issuing firm can pay off early

b) The bondholder can sell back to the firm at a guaranteed price

c) The bondholder can convert into shares

d) All of above

Q8. When the market's Required Rate of Return for a particular Bond is equal to its Coupon Rate, the Bond is selling at

b) Discount

c) Par

d) None

Q9. A bond with a \$1,000 face value and an 8 percent annual coupon pays interest semiannually. The bond will mature in 15 years. The nominal yield to maturity (i) is 11 percent. What is the price of the bond today?

a) \$ 784.27

b) \$ 781.99

c) \$ 1,259.38

d) \$ 739.19

Q10. ______________ is the set of possible values that a random variable can assume and their association probabilities of occurrence.

a) Expected Rate of Return

b) Probability Distribution

c) Variance

d) Standard deviation

Q11. The ratio of present value of project’s future net cash flows to projects initial cash flow is

a) Profitability index

b) Internal rate of return

c) Net present value

d) Average rate of return

Q12. The financial ratio measured as EBIT/Interest expense is known as the firm's

a) Profit margin

b) Return on assets

c) Interest coverage

d) Earnings before interest and taxes (EBIT)

Q13. Which of the following best represents the total inventory costs, T, where S is total usage of the inventory item for the period, Q is the q

a) T = C (Q/2) + O (S/Q)

b) T = SQRT [2 (O) (S) / C]

c) T = SQRT [2 (C) (S) / O

d) T = C (S/Q) + O (Q/2)

Q14. ______________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

a) Financial management

b) Profit maximization

c) Agency theory

d) Social responsibility

Q15. Share and bonds floats in ______________

a) Money market

b) Capital market

c) Commercial bank

d) Equity market

Q16. What are the three interrelated areas of finance?

a) Financial markets, option and forwards

b) Investment, Financial management, and Money & capital markets

c) Banking, financial institutions, and swap currency

d) All of above

Q17. ______________ means value at some future time of a present amount of money evaluated at a given interest rate.

a) Compounding

b) Discounting

c) Nominal rate

d) Continuous rate

Q18. A Bond has a \$1,000 Face Value, a Market Price of \$1,115, and pays interest payments of \$ 90 every year. What is the coupon rate?

a) 4.50 %

b) 6.75 %

c) 7.39 %

d) 9.00 %

Q19. The goal of fundamental analysts is to find securities

a) Whose intrinsic value exceeds the market price

b) With a positive present value of growth opportunities

c) With high market capitalization rates

d) All of the above

Q20. Which of the following is not a component of the financial report?

a) Balance sheet

b) Notes of the account

c) Comparative figure of the previous period

d) None of the given option

Part 15: Objective questions and answers of Basic Accounting