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

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

 

1-The formula used to calculate current ratio is

1. Current assets / Current liabilities
2. Current liabilities / Current assets
3. Inventory / Current liabilities
4. Current liabilities / Inventory

(Ans: a)

 

2-For a healthy business the current ratio lies between

1. 0 to 1.5
2. 1.5 to 3
3. 3 to 4.5
4. 4.5 to 6

(Ans: b)

 

3-In ABC analysis ‘A’ class consist of items having ________.

1. Accurate records
2. Good records
3. Minimal records
4. No records

(Ans: a)

 

4-The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by

1. Asset turnover ratio
2. Working Capital turnover ratio
3. Inventory turnover ratio
4. All of the above

(Ans: c)

 

5-The comparison of financial data of same time period of different organisations engaged in similar business.

1. Time series analysis
2. Cross-sectional analysis
3. Spatial data analysis
4. None of the above

(Ans: b)

 

6-An example of fixed asset is

1. Live stock
2. Value stock
3. Income stock
4. All of the above

(Ans: a)

 

7-The following is (are) the limitation of Economic Order Quantity assumption(s).

1. Demand may vary throughout the year
2. It assumes that the storage space is unlimited
3. Prices of materials change throughout the year
4. All of the above

(Ans: d)

 

8-The assets held by a business which can be converted in the form of cash, without disturbing the normal operations of a business.

1. Tangible assets
2. Intangible assets
3. Fixed assets
4. Current assets

(Ans: d)

 

9-The return which the company pays on borrowed funds is termed as

1. Dividend
2. Interest
3. Bonus
4. All of the above

(Ans: b)

 

10-The following is(are) the type(s) of capital budgeting decision(s)

1. Diversification
2. Replacements
3. Expansion
4. All of the above

(Ans: d)

 

11-The following is(are) the external source(s) of cash

1. Long terms loans
2. Short term borrowings
3. Issue of new shares
4. All of the above

(Ans: d)

 

12-The total cost that arises when the quantity produced is increased by one unit is called

1. Average cost
2. Marginal cost
3. Fixed cost
4. Unit cost

(Ans: b)

 

13-Current assets are also referred to as

1. Working capital
2. Investments
3. Inventory
4. Livestock

(Ans: a)

 

14-Carriage Inward is normally debited to ________

1. Profit and Loss account
2. Manufacturing Account
3. Marketing Account
4. None of the above

(Ans: b)

 

15-The standard liquid ratio is

1. 2:1
2. 1:2
3. 1:1
4. 1:3

(Ans:c)