Financial Management - 13

LIST OF ATTEMPTED QUESTIONS AND ANSWERS FM



Select The Blank

Question
Shareholders of a joint stock company appoint their representative in the form of ________ to carry on the day-to-day affairs of the company

Correct Answer Directors
Your Answer Directors

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 commission charges
True/False
Question Profitability Statement is a period statement
Correct Answer True
Match The Following

Question
Correct Answer
Your Answer

Profitability ratio
Ratios which reflect the final results of business operations
Ratios which reflect the final results of business operations

Turnover ratios
Ratios measuring the efficiency with which the assets are employed by a firm
Ratios measuring the efficiency with which the assets are employed by a firm

Overall profitability ratio
Ratios which indicates the percentage of return on the total capital employed in the business
Ratios which indicates the percentage of return on the total capital employed in the business

Financial ratios
Ratios disclosing the financial position or solvency of the firm
Ratios disclosing the financial position or solvency of the firm


Select The Blank

Question
The debt equity ratio of the company after such buy back of shares should not be more than ________ except where the Central Government allows a higher ratio in case of certain companies

Correct Answer 2:1
Your Answer 2:1
Multiple Choice Single Answer

Question
An organized collection of data according to logical and consistent accounting procedure is known as
Correct Answer Financial Statement
Select The Blank
Question
If the amount of interest is considered as a part of expenses, the ________ liability of the company reduces proportionately

Correct Answer tax
Your Answer current

Select The Blank

Question
________ financing is more preferred route for venture capital funding

Correct Answer Equity
Your Answer Lease
Multiple Choice Multiple Answer

Question Overall profitability ratio includes
Correct Answer
Return on Asset , Return on Shareholders Funds
Multiple Choice Single Answer
Question The traditional approach to financial management refers only to the procurement of funds by
Correct Answer Corporate entity
Multiple Choice Multiple Answer

Question The recommendations of the Tandon committee included
Correct Answer
the norms for inventory and accounts receivables for as many as 15 industries excluding heavy engineering industry , that the amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrower's resources in carrying a reasonable level of current assets in relation to his production requirement

True/False

Question
In case of lease transactions, neither the assets side nor the liabilities side of the balance sheet of lessee gets affected

Correct Answer True

Multiple Choice Single Answer

Question
The effect of Purchase of machinery by issue of debentures on the funds flow is that there will be

Correct Answer No effect on the funds flow
Multiple Choice Single Answer
Question Stock in the beginning results in
Correct Answer Application of funds
True/False
Question
Issue of Bonus shares is the remedy used in the situation of overcapitalisation
Correct Answer
False
Multiple Choice Single Answer

Question
A company cannot make the public issue of equity shares unless

Correct Answer
It has made an application for listing of these equity shares in the stock exchange

Multiple Choice Multiple Answer

Question
The current ratio of a company is 2:1 ; Which of the following suggestions would improve the current ratio
Correct Answer
Payment of current liability , To sell a motor car for cash at a slight loss
Your Answer
To borrow money on an interest bearing promissory note , Payment of current liability , To purchase stocks against cash
Multiple Choice Single Answer
Question The Policy which attracts the shareholders who are willing to devote short term dividend income for long term capital gains and share in the increased prosperity of the company is termed as

Correct Answer
No immediate Dividend policy
Select The Blank

Question
Private limited company and Public limited company are the companies based on the classification of ________

Correct Answer Number of members
Your Answer Incorporation

Multiple Choice Single Answer

Question
The main function of finance under the traditional approach comprises of

Correct Answer Procurement of funds
Your Answer Working Capital management
True/False
Question :In narrow sense funds means only cash resources of the business
Correct Answer True
Multiple Choice Multiple Answer
Question Importance of capital budgeting decisions
Correct Answer
They represent the true earning assets of the firm , they are irreversible , they require assessment of future events which are uncertain

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
Multiple Choice Single Answer
Question Net Profit earned plus non-working capital expenses is equal to

Correct Answer Fund provided by operations
Your Answer Source of funds
True/False

Question
Economic Order Quantity model is a very useful model of determining the order quantity

Correct Answer True
Multiple Choice Multiple Answer

Question Situation of capital rationing may involve problems in the form of
Correct Answer
Project Indivisibility , Mutually dependent project , Multi period projects

Multiple Choice Single Answer

Question Live Stock is an example of
Correct Answer Fixed Asset
True/False
Question
In calculating funds from operations non-business expenses like dividends paid etc. as well as non cash expenses like depreciation etc. are added back in the net profits shown by the Profit & Loss Account

Correct Answer True

Multiple Choice Single Answer
Question Minimum tradable lot in case of shares having the face value of Rs. 10 per share shall not be more than

Correct Answer 100 shares

Select The Blank
Question The dealing with the financial matters of the government is termed as ________ field of finance

Correct Answer Public
Select The Blank

Question Liquidity ratios indicate the ________ position of the organisation

Correct Answer Short term
Select The Blank

Question ________ are basically interested in the solvency position of the organisation

Correct Answer Financial institution lending long term finance

Match The Following
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
Chhore committee
to review mainly the system of cash credit management policy by banks
Marathe committee
to review the credit authorization scheme
Nayak committee
to recognize the contribution made by the SSI sector to the economy

Multiple Choice Multiple Answer

Question Unsecured loans includes
Correct Answer Fixed Deposit , Inter corporate unsecured deposits
Your Answer Inter corporate unsecured deposits , Debentures
Multiple Choice Single Answer

Question
The ratio which compares the dividend per share with the market price of the share is termed as
Correct Answer Dividend yield ratio
Your Answer Dividend payout ratio
True/False
Question
When the firm's actual bank balance is greater than the balance shown by the firm's books, the difference is called as 'payment float'
Correct Answer True
Select The Blank
Question Turnover ratios measures how efficiently the ________ are employed by the firm
Correct Answer Assets
Multiple Choice Single Answer

Question
The investor is prepared to pay the market price of the shares as he expects not only the payment of the dividend but also expects a growth in the dividend rate at a uniform rate perpetually under the

Correct Answer Dividend /Price + Growth rate Approach
True/False
Question Liquid liabilities includes all current liabilities except bills payable
Correct Answer False
True/False
Question A partnership is an incorporated association of individuals.
Correct Answer False
Multiple Choice Multiple Answer
Question The external users of financial statements are
Correct Answer Lenders , Suppliers
Your Answer Lenders , Board of Directors , Suppliers
Multiple Choice Multiple Answer

Question Measurement of cost of capital can be done through
Correct Answer Cost of Debt , Cost of Preference shares , Cost of Equity shares
Multiple Choice Multiple Answer

Question The Proprietary concern is better than the Partnership concern on the following points
Correct Answer
Minimum Government regulations , Where the business is small

Multiple Choice Single Answer

Question The semi-manufactured products which need further processing are termed as

Correct Answer Work in Progress
Multiple Choice Multiple Answer

Question
Disadvantages of factoring are

Correct Answer
The financial burden on the company increases , It may be considered to be a symptom of financial weakness on the part of the selling company , In Indian circumstances, factoring is mainly with-recourse factoring. The risk of non-payment on the part of customer is borne by the selling firm. This restricts its popularity

True/False
Question Internal rate of return indicates that the discounting rate at which net present value is zero
Correct Answer True
Multiple Choice Multiple Answer
Question The Economic Order Quantity model is based on the assumption of
Correct Answer
Placing and receiving orders is without any delay , Ordering costs and carrying costs associated with the orders are variable in nature and they behave exactly opposite to each other , The demand for the material concerned is uniform throughout the year