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Monday, January 4, 2010

Strategic Finance - 27

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Match The Following
Question Correct Answer Your Answer
AS 21 Consolidated financial statements Consolidated financial statements
AS 4 Contingencies & events occurring after the balance sheet date Contingencies & events occurring after the balance sheet date
AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for investments in associates in consolidated financial statements

Select The Blank
Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Multiple Answer
Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer
Question A firm using a conservative policy for determining the requirements of current assets:-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales

Multiple Choice Single Answer
Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Select The Blank
Question ________ are those operating assets that are employed by a segment in its
operating activities.
Correct Answer Segment assets
Your Answer Segment assets

Multiple Choice Multiple Answer
Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Utilities , Maintenance , Security

Multiple Choice Multiple Answer
Question Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Your Answer Wages , Income tax , Property tax

Multiple Choice Single Answer
Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value
Your Answer Realizable value

Select The Blank
Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
Your Answer 30

Multiple Choice Single Answer
Question Conservative policy for determining the requirements of current assets is also known
as :-
Correct Answer Flexible policy
Your Answer Flexible policy

True/False
Question Management of working capital refers to the management of total assets and
liabilities of a company.
Correct Answer False
Your Answer False

Multiple Choice Single Answer
Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

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 Conglomerate mergers are also called ________.
Correct Answer Concentric mergers
Your Answer Concentric mergers

Multiple Choice Multiple Answer
Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Multiple Choice Single Answer
Question In value of assets method the following is also to be included as they are also of
value to the company :-
Correct Answer Non trading assets
Your Answer Non trading assets

Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

Multiple Choice Single Answer
Question Investment decisions are mainly concerned with :-
Correct Answer Assets
Your Answer Assets

Match The Following
Question Correct Answer Your Answer
Unsecured loans Form of debt not backed by the
pledge of specific assets
Form of debt not backed by the
pledge of specific assets
Line of credit Does not constitute any legal
commitments on the part of the
bank
Does not constitute any legal
commitments on the part of the
bank
Revolving credit agreements While the commitment is in force
the bank must extend credit
whenever the borrower wishes to
borrow
While the commitment is in force
the bank must extend credit
whenever the borrower wishes to
borrow
Transaction loan The cash flow ability of the
borrower to pay the loan is
usually of paramount importance
The cash flow ability of the
borrower to pay the loan is usually
of paramount importance

Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Reserves

Multiple Choice Single Answer
Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

True/False
Question DCF is not a method used to calculate market value of a firm.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer
Question Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do
not have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and
financial risk do not have any influence on accounting numbers

Multiple Choice Multiple Answer
Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer True
Your Answer True

Select The Blank
Question Non value added activities helps ________.
Correct Answer To analyse the activities more carefully
Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Select The Blank
Question In the reproduction value method of valuation, the value of assets is taken to be on
the basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

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 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

Multiple Choice Single Answer
Question The Public announcement of share buy back has to be made at least :-
Correct Answer 7 Days prior to the commencement of buy back
Your Answer 7 Days prior to the commencement of buy back

Select The Blank
Question Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Select The Blank
Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Accrued liabilities

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

True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True
Your Answer True

Select The Blank
Question AS 23 - Accounting for investments in associates in consolidated financial
statements comes into effect in respect of accounting periods commencing on or
after ________.
Correct Answer 01.04.2002
Your Answer 01.04.2002

True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Your Answer False

True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer
Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Development Rebate Reserve

Select The Blank
Question A geographical segment cannot be ________.
Correct Answer Countries in different zones
Your Answer Countries in different zones

Multiple Choice Single Answer
Question The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Your Answer Greenfield

Multiple Choice Single Answer
Question The acquirer should intimate to the target company & the concerned stock
exchanges as soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Your Answer 5 % of the voting capital of the target company

Multiple Choice Multiple Answer
Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions

Multiple Choice Multiple Answer
Question An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise

Multiple Choice Single Answer
Question The following analysis is more targeted on similar activities or firms that exist in
parallel within the activity model or process flow to ensure that they are being done
the same best way :-
Correct Answer Comparative analysis
Your Answer Comparative analysis

1 Comment:

Writer said...

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