2. Which ratio measures the number of times the receivables are rotated in a year in terms of sales?
Correct : B. debtors turnover ratio.
3. Debtors turnover ratio is also called .
Correct : B. debtors velocity ratio.
4. Creditors turnover ratio is also called
Correct : C. accounts payables ratio.
5. The primary purpose of the liquidity ratios is to determine
Correct : C. how well a firm is able to pay off short-term obligations?
6. Which of the following statements about liquidity ratios is true?
Correct : A. the higher the current ratio, the more likely a firm is able to pay its short-term obligations.
7. The ________ ratios help determines the degree of financial risk and earnings volatility present in a
firm.
Correct : D. none of the above.
8. Which of the following statements are true?
Correct : D. two of the above are true.
9. Debt-equity ratio is a sub-part of
Correct : D. none of the above
10. The most precise test of liquidity is
Correct : C. absolute liquid ratio
11. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.
Correct : A. rs 54,000
12. Statement of cash flows includes
Correct : D. all of the above
13. In cash flows, when a firm invests in fixed assets and short-term financial investments results in
Correct : C. decreased cash
14. A firm that issues stocks and bonds to raise funds results in
Correct : B. increases cash
15. The purchase value of assets over its serviceable life is categorised as
Correct : C. depreciation
16. The basic financial statements include
Correct : D. all of the above
17. Cash flow example from a financing activity is
Correct : A. payment of dividends
18. Cash flow example from an investing activity is
Correct : D. sale of investment by non-financial enterprise
19. Cash flow example from an operating activity is
Correct : C. interest paid on term-deposits by a bank
20. Which item comes under financial activities in cash flow?
Correct : D. all the above
21. As per Accounting Standard-3, Cash Flow is classified into
Correct : D. operating activities, financing activities and investing activities
22. Cash Flow Statement is also known as
Correct : C. both a and b
23. The objectives of Cash Flow Statement are
Correct : D. comparison of operating performance
24. Cash Flow Statement is based upon
Correct : A. cash basis of accounting
25. Which of the following statements are true?
Correct : D. cash flow statement is not a replacement of funds flow statement.
26. In case of other enterprises cash flow arising from interest paid should be classified as cash flow from
________ while dividends and interest received should be stated as cash flow from ____.
Correct : B. financing activities, investing activities
27. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan
element is classified under________.
Correct : B. financing activities, investing activities
28. Which of the following statements are false?
Correct : B. cash flow statement is a substitute for cash account.
29. Which of the following is not a cash outflow?
Correct : D. increase in creditors
30. Cash flow statement is prepared for financial planning of
Correct : C. short range
31. Which of the following is source of cash?
Correct : C. sale of goods costing ₹10,000 for ₹8,000
32. Which of the following is not source of cash?
Correct : B. purchase of machinery
33. Which of the following is not application of cash?
Correct : C. increase in bills payable
34. If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow
Statement its effect on cash flow will be :
Correct : C. cash used (payment) from financial activities ₹2,10,000
35. If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year then
while preparing cash flow statement its effect on cash flow will be :
Correct : A. cash used (payment) in investing activities ₹8,000
36. How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash Flow
Statement?
Correct : C. cash flow from financing activities
37. A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of a
manufacturing company. Dividend received on this investment will be :
Correct : B. cash flow from investing activities
38. How will you treat Bank Overdraft in a Cash Flow Statement?
Correct : C. cash flow from financing activities
39. Where will you show purchase of Goodwill in a Cash Flow Statement?
Correct : B. cash flow from investing activities
40. How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement?
Correct : C. cash flow from financing activities
41. State whether cash deposited in bank will be classified under which kind of activity?
Correct : D. no cash flow
42. A company has to prepare its balance sheet once in..
Correct : C. a year
43. Income statement of a business shows…
Correct : B. net operating result of specified period
44. The statement which shows the periodical increase or decrease of funds is called___________
statement.
Correct : A. funds flow
45. Fund flow statement is based on the concept of…
Correct : C. going concern
46. Funds means…
Correct : D. any form of financial resources
47. Which of the following is the component of current assets?
Correct : D. all of the above
48. The term flow of funds refers to…
Correct : C. both
49. Transaction between_________ may cause the flow of funds.
Correct : D. all of the above
50. The term current account refers to….
Correct : C. both
51. The term non-current account refers to…
Correct : D. both (a) & (c)
52. Share premium, share forfeited, profit and loss account, balance of profit are the examples of…
Correct : B. permanent liabilities
53. The funds flow analysis is of primary importance to…
Correct : B. financial management
54. Basically, the funds flow statement is considered a tool for…
Correct : B. financial analysis
55. Who uses the funds flow statement widely?
Correct : D. all of the above
56. Basically, the funds flow statement shows the causes for changes of _________ during a period.
Correct : C. both
57. The sources of side of funds flow statement shows the______ sources of funds of a firm.
Correct : C. both
58. Funds flow statement is a substitute for…
Correct : D. none
59. Which of following are original statements?
Correct : B. financial statement
60. Which of the following statement is dynamic in nature?
Correct : B. funds flow
61. Funds flow statement is complementary to…
Correct : C. both
62. Which of the following is the source of funds?
Correct : D. all of these
63. Which of the following is an application of funds?
Correct : A. funds lost in operation
64. What is meant by funds from operation?
Correct : A. operating profit
65. Working capital requirements depends on the credit policy of …