Financial Management - 12

MANAGEMENT

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Select The Blank
Question: In case of Bills Purchased, the company gets only the present worth of the amount of
the bill, the difference between the face value of the bill and the amount of assistance
being in the form of ________
Correct Answer: discount charges
Your Answer: interest charges

Match The Following
Question Correct Answer Your Answer
Nayak committee to recognize the contribution made by the SSI sector to the economy
to determine the quantum of bank advances
Dahejia committee to examine the extent to which credit needs of industry and trade are
likely to be inflated and how such trends could be checked
to review mainly the system of cash credit management policy by
banks
Chhore committee to review mainly the system of cash credit management policy by
banks
to find measures to improve the present manner and style of lending
Marathe committee to review the credit authorization scheme
to recognize the contribution made by the SSI sector to the
economy

Multiple Choice Multiple Answer
Question: Before investing in the project, Venture capitalist is interested in ensuring that
Correct Answer: The project is technically feasible , It is commercial viable , The
entrepreneurs are technically competent
Your Answer: The project is technically feasible , It is commercial viable , The
entrepreneurs are technically competent

Multiple Choice Single Answer
Question: The reduction in the market value of the shares may cause due to
Correct Answer: Overcapitalisation
Your Answer: Overcapitalisation

Multiple Choice Multiple Answer
Question: The internal factors affecting the dividend policy are
Correct Answer: Growth rate of the company , Composition of the shareholding
Your Answer: Growth rate of the company , Composition of the shareholding

Multiple Choice Single Answer
Question: The time required by the company to process the received cheque and deposit
the same in the bank is called
Correct Answer: Deposit float
Your Answer: Bank float



Multiple Choice Single Answer
Question: Minimum application money payable by the applicant along with the
application shall not be less than
Correct Answer: 25% of the issue price
Your Answer: 20% of the issue price

True/False
Question: Overdraft is given by the bank for a very short period of time, at the end of
which the company is supposed to repay the same
Correct Answer: True
Your Answer: True

True/False
Question: One of the basic objectives of cash management is to maintain the optimum
cash balance
Correct Answer: True
Your Answer: True

True/False
Question: Internal rate of return is difficult to use , calculate and understand
Correct Answer: True
Your Answer: True

Multiple Choice Single Answer
Question: The mix of sources from which the long term funds required by a business are
raised is termed as
Correct Answer: Capital Structure
Your Answer: Capital Budgeting

Multiple Choice Single Answer
Question: The Investment decisions are mainly concerned with
Correct Answer: Application of funds
Your Answer: Application of funds

Select The Blank
Question: Cost management is the function of a ________.
Correct Answer: Treasurer
Your Answer: Finance manager

Multiple Choice Single Answer
Question: Which of the following assets get generated during course of operations or get
utilized within one year
Correct Answer: Current assets
Your Answer: Current assets

Select The Blank
Question: The ________ has been empowered to order the company that fails to repay
any deposit to make the repayment of such deposits
Correct Answer: Company Law board
Your Answer: Company Law board



True/False
Question: With limited funds, the company must obtain the optimum combination of
acceptable investment proposals
Correct Answer True
Your Answer True

Select The Blank
Question The projects having Profitability index of less than ________ will be rejected
Correct Answer one
Your Answer one

Multiple Choice Single Answer
Question The Capital Structure decision mainly refers to the decision of
Correct Answer Financing
Your Answer Financing

Multiple Choice Single Answer
Question The value created by the use of resources is more than the total of the input
resources is referred to as
Correct Answer Profit
Your Answer Income

Multiple Choice Single Answer
Question Financing consists of the raising, providing, managing of all the money, capital
or funds of any kind to be used in connection with the business' is defined by
Correct Answer Bonneville and Dewey
Your Answer Kenneth Midgley and Ronald Burns

Multiple Choice Multiple Answer
Question The advantages of operating lease is
Correct Answer In an operating lease arrangement the equipment risk is transferred to thelessor,
It minimizes investment in equipment , Reduces expenditure on maintenance
Your Answer In an operating lease arrangement the equipment risk is transferred to the lessor ,
It minimizes investment in equipment

True/False
Question The requirement of Fixed Working Capital is unaffected due to the changes in the
level of activity
Correct Answer True
Your Answer True

Multiple Choice Single Answer
Question Undercapitalisation is
Correct Answer Excess of real worth of the assets over the aggregate of shares and debentures
outstanding
Your Answer Excess of real worth of the assets over the aggregate of shares and debentures
outstanding


Multiple Choice Single Answer
Question The main function of finance under the traditional approach comprises of
Correct Answer Procurement of funds
Your Answer Procurement of funds

Multiple Choice Multiple Answer
Question The cost of managing inventory includes
Correct Answer Ordering cost , Carrying cost
Your Answer Maintenance cost , Ordering cost , Carrying cost

True/False
Question Internal rate of return does not considers cash inflows from the project throughout its
Life
Correct Answer False
Your Answer False

True/False
Question If the company buys back its own shares, it shall not make further issue of Bonus
shares within a period of 24 months
Correct Answer False
Your Answer True

True/False
Question Informal method of capital budgeting does not follow any mathematical or statistical
model to consider the risk factor
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer
Question Utility of cash flow analysis
Correct Answer Helps in efficient cash management , helps in internal financial management ,
Discloses the movements of cash
Your Answer Helps in efficient cash management , helps in internal financial management ,
Discloses the movements of cash

Multiple Choice Multiple Answer
Question Undue decrease in Gross Profit ratio may indicate
Correct Answer Non-consideration of sales invoices , Under-valuation of closing stock ,
Improper utilisation of infrastructural facilities
Your Answer Non-consideration of sales invoices , Under-valuation of closing stock ,
Improper utilisation of infrastructural facilities

Multiple Choice Multiple Answer
Question The techniques of Analysis and Interpretation of financial statements are
Correct Answer Ratio Analysis , Cash flow Analysis
Your Answer Profit and loss account , Balance Sheet





Multiple Choice Multiple Answer
Question The importance of various items of inventory may be decided on the following factors
Correct Answer Value of material consumption , Critical nature of inventory items , Amount
of investment in inventory
Your Answer Amount of investment in inventory , Value of material consumption , Critical
nature of inventory items

Multiple Choice Single Answer
Question Receivable management is also called as
Correct Answer Trade Credit management
Your Answer Trade Credit management

Multiple Choice Multiple Answer
Question The avenues available to the company to invest the excess cash balance on short term
basis may be in the form of
Correct Answer Commercial paper , inter-corporate bills discounting , Bank deposits
Your Answer Commercial paper , inter-corporate bills discounting , Bank deposits

Select The Blank
Question The mathematical expression of ________ is Normal Usage * Lead time for
emergency purchases
Correct Answer Danger level
Your Answer Danger level

Multiple Choice Single Answer
Question Current assets are also referred to as
Correct Answer Working Capital
Your Answer Working Capital

True/False
Question The objective of funds flow statement may be to find out uses of loans raised by the
business
Correct Answer True
Your Answer False

Match The Following
Question Correct Answer Your Answer
Contribution Sales less variable operating cost - Sales less variable operating cost
Operating Profit Contribution less Fixed Operating cost- Contribution less Fixed Operating cost
Fixed cost remains constant - remains constant
Variable cost varies in direct proportion to the sales revenue - varies in direct proportion to the
sales revenue

True/False
Question Semi-variable cost is the cost which varies in direct proportion to the sales revenue
Correct Answer False
Your Answer True





Select The Blank
Question ________ and return always go hand in hand
Correct Answer Risk
Your Answer Risk

Select The Blank
Question Inflow of funds may not necessarily result in ________
Correct Answer Inflow of cash
Your Answer Inflow of cash

Multiple Choice Single Answer
Question If the issue of Debentures is having the maturity period of more than 18 months, the
company shall create
Correct Answer Debenture Redemption reserve
Your Answer Debenture Redemption reserve

Multiple Choice Single Answer
Question Tax paid is
Correct Answer Application of funds
Your Answer Application of funds

Select The Blank
Question The most crucial financial decisions of the organisation are taken by ________
Correct Answer Board of Directors
Your Answer Vice President (finance)

Multiple Choice Single Answer
Question Unclaimed Dividends is shown in the balance sheet under the head
Correct Answer Current liabilities and Provisions
Your Answer Reserves

Select The Blank
Question ________ is clubbed with Current Assets in the Balance Sheet
Correct Answer Loans and advances
Your Answer Investments

Multiple Choice Multiple Answer
Question: The recommendations of the Chhore committee included
Correct Answer: increasing role of short term loans and bill finance and curbing the role of cash
credit limits , the bank should appraise and fix separate limits for normalnon-
peak levels and also peak levels
Your Answer: increasing role of short term loans and bill finance and curbing the role of cash
credit limits , the bank should appraise and fix separate limits for normalnon-
peak levels and also peak levels