Correct : A. procurement of funds and utilization of funds
2. Funds are required for the..........
Correct : D. all of the above
3. Which report gives a review on the profitability of a business?
Correct : D. income statement
4. The term ‘Financial Statement’ covers
Correct : C. profit & loss statement and balance sheet
5. Which of the following is true about financial statements?
A) Financial statement gives a summary of accounts. B) Financial statements can be stated as
recorded facts.
Correct : C. both a and b
6. P&L statement is also known as
Correct : B. statement of income
7. Which statement shows the flow of cash and cash equivalents during the financial period?
Correct : B. cash flow statement
8. Subtracting all expenses from revenues yields?
Correct : A. net profit / net loss
9. Balance sheet of a company is required to be prepared in the format given in ………………………
Correct : B. schedule iii part i
10. As per Companies Act, the Balance Sheet of a company is required to be presented in ………………………
Correct : B. vertical form
11. Which of the following is not required to be prepared under the Companies Act?
Correct : D. funds flow statement
12. According to prescribed order of assets in a Company’s Balance Sheet ……………………… assets should
be shown first of all.
Correct : A. non-current assets
13. Calls in Arrears appear in a Company’s Balance Sheet under ………………..
Correct : B. shareholder’s funds
14. Calls in advance appear in a Company’s Balance Sheet under ………………..
Correct : B. current liability
15. Bills Receivables appear in a Company’s Balance Sheet under the Sub-head ……………………..
Correct : C. trade receivables
16. Which of the following options is not recorded in the Balance sheet?
Correct : B. rent expenses
17. Which of the given area is NOT addressed by Business Finance?
Correct : D. none of the given options
18. Which of the following is measured by profit margin?
Correct : A. operating efficiency
19. Business Finance addresses which of the following?
Correct : D. all of the given options
20. Finance is vital for which of the following business activity (activities)?
Correct : D. all of the given options
21. Which of the following refers to the difference between the sale price and cost of inventory?
Correct : C. markup
22. Who of the following make a broader use of accounting information?
Correct : B. financial analysts
23. Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value
as of a particular date?
Correct : B. balance sheet
24. Balance Sheet is based upon which of the following formula?
Correct : D. assets = liabilities + stockholder’s equity
25. The conflict of interest between stockholders and management is known as:
Correct : A. agency problem
26. Which from the following is NOT an example of intangible assets?
Correct : C. buildings
27. The following are the examples of financial assets except?
Correct : D. raw material
28. Business finance refers to ...... and ........ employed in a business.
Correct : C. both a & b
29. Business finances is concerned with _________ funds and _______ funds from different sources.
Correct : D. both a & b
30. Which of the following is not a function of finance manager?
Correct : D. manipulate share price of the company
31. Which is the following main decision taken by the financial manager in a company?
Correct : B. financing decision
32. Finance Function comprises
Correct : D. procurement & effective use of funds
33. The finance manager is accountable for.
Correct : C. arrangement of financial resources
34. The focal point of financial management in a firm is:
Correct : C. the creation of value for shareholders.
35. The term financial statement refers to…
Correct : D. all
36. Which of the following is the main objective of a financial statement?
Correct : D. all
37. In financial statements, the fixed assets are shown at …
Correct : A. market price
38. What is followed while preparing the financial statements?
Correct : D. all
39. In financial statement the stock is valued at cost or market price whichever is less on the basis of…
Correct : B. accounting conventions
40. The balance sheet shows …
Correct : D. none
41. The analysis and interpretations of the financial statement will reveal …
Correct : D. both
42. The process of explaining the meaning, significance and relationship between two financial factors is
called …
Correct : C. interpretation
43. The process of comparing various financial factors of a company over a period of time is known as …
Correct : C. intra‐firm comparison
44. Which of the following is technique of financial statement analysis?
Correct : D. all
45. ________is a simply the amount of cash coming in to a business.
Correct : A. cash flow
46. If value of opening inventories increases, what happens to the value of gross profit?
Correct : A. decreases
47. Incorrect cash flow planning can lead to ________
Correct : C. bankruptcy
48. Analysis of any financial Statement comprises
Correct : D. all of the above
49. Which of the following are techniques, tools or methods of analysis and interpretation of financial
statements?
Correct : D. all of the above
50. Interpretation of accounts is the
Correct : D. all of the above
51. The major device for measuring the profitability of a firm over a defined period of time is the
Correct : A. income statement.
52. The ________ does not represent continuing operations in any way, but is simply a snapshot of the total
worth of a firm at a given point in time.
Correct : B. balance sheet
53. Cash inflows arise from _____ assets, ________ liabilities, and ___________ stockholders' equity.
Correct : C. decreasing; increasing; increasing
54. Which of the following is NOT a key ratio in the prediction of bankruptcy as developed by Edward
Altman?
Correct : A. debt to equity
55. __________ analysis is the process of studying a series of ratios for a company and/or industry over
time.
Correct : B. trend
56. The statement of cash flows tells us
Correct : B. how cash was created
57. The primary sections of a statement of cash flows are:
Correct : A. cash flows from investing, operating, and financing activities.
58. Which of the following are Non-current assets?
Correct : D. all of the above
59. Funds flow statements are prepared so as to
Correct : D. all of the above
60. Financial statements are ____________.
Correct : B. recorded facts
61. Trend analysis is significant for ____________.
Correct : B. profit planning
62. In common size income statement analysis, which is taken as 100 percent?
Correct : A. sales
63. Comparative statement analysis sheet is __________.
Correct : B. horizontal analysis
64. Financial statements are meaningful and useful only when they are ___________.
Correct : C. analyzed and interpreted
65. Vertical analysis is made on the basis of __________.
Correct : A. single set of financial statements
66. Horizontal analysis is done by analyzing ____________.
Correct : D. financial statements of a particular year
67. When the concept of ratio is defined in respect to the item shown in the financial statements, it is termed
as
Correct : B. financial ratio
68. The relationship between two financial variables can be expressed in:
Correct : D. all the above
69. Stock is considered as a liquid asset as anytime it can be converted into cash immediately.
Correct : B. no
70. Return on properties funds is also known as.
Correct : D. all the above
71. What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & sales
return is Rs10,000 ?
Correct : D. 20%
72. Which of the following is not included in current assets.
Correct : B. stock
73. Liquidity ratios are expressed in
Correct : A. pure ratio form
74. Working capital turnover ratio can be determined by :
Correct : A. ( gross profit / working capital )
75. Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000
& cost of goods sold is Rs 3,00,000.
Correct : B. 6 times
76. Profit for the objective of calculating a ratio may be taken as
Correct : D. all the above
77. If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is
Correct : A. 24%
78. General profitability ratios are based on
Correct : B. sales
79. Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs
3,20,000 & Gross profit ratio is 25% on sales.
Correct : C. 8 times
80. The ratios which reveal the final result of the managerial policies and performance is .
Correct : B. profitability ratios.
81. Return on investment is a
Correct : C. profitability ratios.
82. Net profit ratio is a .
Correct : D. profitability ratio.
83. Stock turnover ratio is a .
Correct : A. turnover ratio.
84. Current ratio is a
Correct : A. short-term solvency ratio.
85. Proprietary ratio is a
Correct : B. long-term solvency ratio.
86. Fixed assets ratio is a
Correct : B. long-term solvency ratio.
87. Fixed assets turnover ratio is a
Correct : D. turnover ratio.
88. The ratio which measures the profit in relation to capital employed is known as
Correct : A. return on investment.
89. Return on equity is also called
Correct : D. return on net worth.
90. Preliminary expenses is an example of .
Correct : C. fictitious assets.
91. Prepaid expenses is an example of .
Correct : B. current assets.
92. The ratio which is calculated to measure the productivity of total assets is
Correct : C. return on total assets.
93. The ratio which shows the proportion of profits retained in the business out of the current year’s profits
is
Correct : A. retained earnings ratio.
94. The ratio establishes the relationship between profit before interest and tax and fixed interest charges is
Correct : A. interest cover ratio.
95. The ratio shows the preference dividend as a proportion of profit available for shareholders is
Correct : B. fixed dividend cover ratio.
96. The dividend is related to the market value of shares in .
Correct : D. dividend yield ratio.
97. Turnover ratio is also known as .
Correct : A. activity ratios.
98. Inventory or stock turnover ratio is also called .
Correct : A. stock velocity ratio.
99. The ratio which measures the relationship between the cost of goods sold and the amount of average
inventory is