Multiple Choice Questions (MCQ) and Answers on Financial Management

Multiple Choice Questions (MCQ) and Answers on Financial Management – Set 1

1-The formula used to calculate current ratio is a.

Current assets / Current liabilities

 b.

Current liabilities / Current assets

c.

Inventory / Current liabilities

d.

Current liabilities / Inventory

(Ans: a)

-For a health! "usiness the current ratio lies "etween a.

0 to 1.5

 b.

1.5 to 3

c.

3 to 4.5

d.

4.5 to 6

(Ans: b)

#-$n A%C anal!sis &A' class consist of items haing * a.  b.

Accurate records Good records

c.

ini!al records

d.

"o records

(Ans: a)

+-The s!mptom of large inentor! accumulation in anticipation of price rise in future will "e indicated "! a.  b.

Asset turnover ratio #or$in% Ca&ital turnover ratio

c.

Inventory turnover ratio

d.

All o' te above

(Ans: c)

,-The comparison of financial data of same time period of different organisations engaged in similar "usiness* a.  b.

i!e series analysis Cross*sectional analysis

c.

+&atial data analysis

d.

"one o' te above

(Ans: b)

-An e.ample of fi.ed asset is a.  b.

,ive stoc$ -alue stoc$

c.

Inco!e stoc$

d.

All o' te above

(Ans: a)

/-The following is (are) the limitation of 0conomic rder Quantit! assumption(s)* a.

e!and !ay vary trou%out te year

 b.

It assu!es tat te stora%e s&ace is unli!ited

c.

rices o' !aterials can%e trou%out te year

d.

All o' te above

(Ans: d)

2-The assets held "! a "usiness which can "e conerted in the form of cash3 without distur"ing the normal operations of a "usiness* a.  b.

an%ible assets Intan%ible assets

c.

ied assets

d.

Current assets

(Ans: d)

4-The return which the compan! pa!s on "orrowed funds is termed as a.

ividend

 b.

Interest

c.

2onus

d.

All o' te above

(Ans: b)

15-The following is(are) the t!pe(s) of capital "udgeting decision(s) a.

iversi'ication

 b.

e&lace!ents

c.

&ansion

d.

All o' te above

(Ans: d)

11-The following is(are) the e.ternal source(s) of cash a.  b.

,on% ter!s loans +ort ter! borroin%s

c.

Issue o' ne sares

d.

All o' te above

(Ans: d)

1-The total cost that arises when the 6uantit! produced is increased "! one unit is called a.

Avera%e cost

 b.

ar%inal cost

c.

ied cost

d.

nit cost

(Ans: b)

1#-Current assets are also referred to as a.  b.

#or$in% ca&ital Invest!ents

c.

Inventory

d.

,ivestoc$

(Ans: a)

1+-Carriage $nward is normall! de"ited to   a.

ro'it and ,oss account

 b.

anu'acturin% Account

c.

ar$etin% Account

d.

"one o' te above

(Ans: b)

1,-The standard li6uid ratio is a.

7:1

 b.

1:7

c.

1:1

d.

1:3

(Ans:c)