Strategic Finance - 8

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question Any addition or extension to an existing asset which retains a separate
identify & is capable of being used after the existing asset is disposed of :-
CorrectAnswer Is depreciated independently
Your Answer Is depreciated along with the existing asset
True/False
Question In market value approach, interested parties never manipulate the stock
markets.
Correct Answer False
Your Answer True
Multiple Choice Multiple Answer
Question For accounting standard (AS) 27, Significant influence may be gained by
:-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement
Multiple Choice Single Answer
Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Your Answer Trade credit from suppliers
Select The Blank
Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Current value of the assets
Match The Following
Question Correct Answer Your Answer
Free cash flow theory Enormous conflicts of interest between Stakeholders and
shareholders Enormous conflicts of interest between Stakeholders and shareholders
Net income approach Cost of debt & equity do not change with a change in leverage
ratio Cost of debt & equity do not change with a change in leverage ratio
Net operating income approach The overall capitalization rate remains constant for
all levels of financial leverages The overall capitalization rate remains constant for
all levels of financial leverages
Modigliani - Miller Theory weighted average cost of capital does not change with a
change in the proportion of debt to equity in the capital structure weighted average cost
of capital does not change with a change in the proportion of debt to equity in the capital
structure
Multiple Choice Single Answer
Question Where the management's estimate of the useful life of an asset of the
enterprise is shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate
Multiple Choice Single Answer
Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Post merger price
Select The Blank
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on
a reasonable basis to a segment
Your Answer General administrative expenses
Multiple Choice Single Answer
Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
Your Answer During more than 1 accounting period
True/False
Question Arbitrage process implies that security cannot sell at different prices.
CorrectAnswer True
Your Answer True
Multiple Choice Single Answer
Question Which is an example out of the following to which special consideration
apply for depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources
True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a
merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a
merger
Multiple Choice Single Answer
Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases
Multiple Choice Single Answer
Question Which of the following systems identifies each of the organizational
elements of the traditional bureaucratic structure and applies the identifiable costs of that
element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting
Multiple Choice Multiple Answer
Question The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer Articles of association should authorize buyback of shares , The
shares which are sought to be bought back should be fully paid up , After the buy back
the ratio of debt to total capital and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free
reserves should not be more than 2 : 1 , Articles of association should authorize buyback
of shares , The shares which are sought to be bought back should be fully paid up
True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity
Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Capital
True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question When a company has resorted to buyback of its shares it cannot make a
further issue of the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months
Select The Blank
Question At times managers invest in projects that improve the company's
________.
Correct Answer Prestige or power
Your Answer Value
Multiple Choice Multiple Answer
Question It is the activity accountant's job to do the following for the existing
organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of
the activities
Multiple Choice Single Answer
Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True
Select The Blank
Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable
Multiple Choice Single Answer
Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share
Select The Blank
Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 1000 crores
Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Your Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm
Multiple Choice Single Answer
Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Your Answer The shareholder
Multiple Choice Multiple Answer
Question To overcome the problems of matching data the actions can be taken as
follows :-
Correct Answer Keep extensive records of the process , Maintain detailed
procedures , Keep records of assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed
procedures , Keep records of assumptions as an audit trail
Select The Blank
Question In the shareholding pattern of a company, the promoter's holding
includes________.
Correct Answer Foreign Promoters
Your Answer Foreign Promoters
Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year
from the date on which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year
from the date on which investment is made
True/False
Question Trade credit creates book debts which the firm is expected to collect in the
near future.
Correct Answer True
Your Answer True
True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Multiple Answer
Question The financial managers of a company consume a great deal of their time in
activities like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable
credit terms , Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable
credit terms , Defining a proper strategy for product promotion
True/False
Question Appraisal value of a firm can be acquired from an independent appraisal
agency.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The following categories of personnel are taken into account to calculate
the actual manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Casual workers
Multiple Choice Multiple Answer
Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly
discretionary financing
Select The Blank
Question There is a ________ relationship between the number of employees & the
use of operating supplies.
Correct Answer Natural
Your Answer Natural
Match The Following
Question Correct Answer Your Answer
Mechanisms Performs or provides energy to an activity Performs or provides energy
to an activity
Inputs Information or material used to produce the output of an activity Information or
material used to produce the output of an activity
Controls Information or material that constrains an activity Information or
material that constrains an activity
Outputs Information or material produced by an activity Information or
material produced by an activity
Multiple Choice Single Answer
Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted
immediately
Your Answer Does not assist the planners & project teams
True/False
Question Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True
Your Answer True