MCQOPTIONS
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MCQOPTIONS
This section includes 233 Mcqs, each offering curated multiple-choice questions to sharpen your Bachelor of Business Administration (BBA) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following is true about financial statements?A) Financial statement gives a summary of accounts. B) Financial statements can be stated asrecorded facts. |
| A. | only a |
| B. | only b |
| C. | both a and b |
| D. | none of the above |
| Answer» D. none of the above | |
| 2. |
According to prescribed order of assets in a Company s Balance Sheet assets should be shown first of all. |
| A. | non-current assets |
| B. | current assets |
| C. | current investments |
| D. | loans and advances |
| Answer» B. current assets | |
| 3. |
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 : |
| A. | cash used from financing activities 2,12,000 |
| B. | cash received from financing activities 2,12,000 |
| C. | cash used (payment) from financial activities 2,10,000 |
| D. | cash used (payment) from financial activities 2,00,000 |
| Answer» D. cash used (payment) from financial activities 2,00,000 | |
| 4. |
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 : |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 5. |
How will you deal increase in the balance of Securities Premium Reserve while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» D. cash equivalent | |
| 6. |
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 : |
| A. | cash used (payment) in investing activities 8,000 |
| B. | cash received from operating activities 8,000 |
| C. | cash used (payment) from operating activities 8,000 |
| D. | cash used (payment) from financial activities 8,000 |
| Answer» B. cash received from operating activities 8,000 | |
| 7. |
The ratio which shows the proportion of profits retained in the business out of the current year s profits is |
| A. | retained earnings ratio. |
| B. | payout ratio |
| C. | earnings per share. |
| D. | price earnings ratio |
| Answer» B. payout ratio | |
| 8. |
The process of explaining the meaning, significance and relationship between two financial factors is called |
| A. | summarization |
| B. | analysis |
| C. | interpretation |
| D. | none |
| Answer» D. none | |
| 9. |
Which of the following statement is considered as the accountant s snapshot of firm s accounting value as of a particular date? |
| A. | income statement |
| B. | balance sheet |
| C. | cash flow statement |
| D. | retained earning statement |
| Answer» C. cash flow statement | |
| 10. |
Working capital requirements depends on the credit policy of … |
| A. | the company |
| B. | the suppliers |
| C. | both |
| D. | none |
| Answer» D. none | |
| 11. |
Funds flow statement is complementary to… |
| A. | balance sheet |
| B. | income statement |
| C. | both |
| D. | none |
| Answer» D. none | |
| 12. |
Funds flow statement is a substitute for… |
| A. | income statement |
| B. | balance sheet |
| C. | both |
| D. | none |
| Answer» E. | |
| 13. |
Basically, the funds flow statement is considered a tool for… |
| A. | cost control |
| B. | financial analysis |
| C. | performance analysis |
| D. | none |
| Answer» C. performance analysis | |
| 14. |
Share premium, share forfeited, profit and loss account, balance of profit are the examples of… |
| A. | current assets |
| B. | permanent liabilities |
| C. | fixed assets |
| D. | current liabilities |
| Answer» C. fixed assets | |
| 15. |
The funds flow analysis is of primary importance to… |
| A. | personnel management |
| B. | financial management |
| C. | quality control management |
| D. | auditing |
| Answer» C. quality control management | |
| 16. |
The term non-current account refers to… |
| A. | capital |
| B. | liabilities |
| C. | long term liabilities |
| D. | both (a) & (c) |
| Answer» E. | |
| 17. |
The term current account refers to…. |
| A. | current assets |
| B. | current liabilities |
| C. | both |
| D. | none |
| Answer» D. none | |
| 18. |
The term flow of funds refers to… |
| A. | change in funds |
| B. | change in working capital |
| C. | both |
| D. | none |
| Answer» D. none | |
| 19. |
Funds means… |
| A. | money |
| B. | cash |
| C. | machinery |
| D. | any form of financial resources |
| Answer» E. | |
| 20. |
Fund flow statement is based on the concept of… |
| A. | business entity |
| B. | accounting period |
| C. | going concern |
| D. | all of the above |
| Answer» D. all of the above | |
| 21. |
The statement which shows the periodical increase or decrease of funds is called___________statement. |
| A. | funds flow |
| B. | cash flow |
| C. | income |
| D. | working capital |
| Answer» B. cash flow | |
| 22. |
Income statement of a business shows… |
| A. | net profit |
| B. | net operating result of specified period |
| C. | net loss |
| D. | none of these |
| Answer» C. net loss | |
| 23. |
How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» D. cash equivalent | |
| 24. |
A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of amanufacturing company. Dividend received on this investment will be : |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 25. |
How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash FlowStatement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» D. cash equivalent | |
| 26. |
If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year thenwhile preparing cash flow statement its effect on cash flow will be : |
| A. | cash used (payment) in investing activities ₹8,000 |
| B. | cash received from operating activities ₹8,000 |
| C. | cash used (payment) from operating activities ₹8,000 |
| D. | cash used (payment) from financial activities ₹8,000 |
| Answer» B. cash received from operating activities ₹8,000 | |
| 27. |
If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash FlowStatement its effect on cash flow will be : |
| A. | cash used from financing activities ₹2,12,000 |
| B. | cash received from financing activities ₹2,12,000 |
| C. | cash used (payment) from financial activities ₹2,10,000 |
| D. | cash used (payment) from financial activities ₹2,00,000 |
| Answer» D. cash used (payment) from financial activities ₹2,00,000 | |
| 28. |
When a fixed asset is bought as hire purchase, interest element is classified under ______ and loanelement is classified under________. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» C. investing activities, operating activities | |
| 29. |
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 ____. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» C. investing activities, operating activities | |
| 30. |
The most precise test of liquidity is |
| A. | quick ratio |
| B. | current ratio |
| C. | absolute liquid ratio |
| D. | none of the above |
| Answer» D. none of the above | |
| 31. |
Debt-equity ratio is a sub-part of |
| A. | short-term solvency ratio |
| B. | long-term solvency ratio |
| C. | debtors turnover ratio |
| D. | none of the above |
| Answer» E. | |
| 32. |
The ________ ratios help determines the degree of financial risk and earnings volatility present in afirm. |
| A. | profitability |
| B. | asset utilization |
| C. | liquidity |
| D. | none of the above. |
| Answer» E. | |
| 33. |
The ratio which measures the relationship between the cost of goods sold and the amount of averageinventory is |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors velocity ratio. | |
| 34. |
The ratio which shows the proportion of profits retained in the business out of the current year’s profitsis |
| A. | retained earnings ratio. |
| B. | payout ratio |
| C. | earnings per share. |
| D. | price earnings ratio |
| Answer» B. payout ratio | |
| 35. |
Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs3,20,000 & Gross profit ratio is 25% on sales. |
| A. | 31 times |
| B. | 11 times |
| C. | 8 times |
| D. | 32 times |
| Answer» D. 32 times | |
| 36. |
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. |
| A. | 5 times |
| B. | 6 times |
| C. | 3 times |
| D. | 1.5 times |
| Answer» C. 3 times | |
| 37. |
What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & salesreturn is Rs10,000 ? |
| A. | 13 % |
| B. | 28% |
| C. | 26% |
| D. | 20% |
| Answer» E. | |
| 38. |
When the concept of ratio is defined in respect to the item shown in the financial statements, it is termedas |
| A. | accounting ratio |
| B. | financial ratio |
| C. | costing ratio |
| D. | none of the above |
| Answer» C. costing ratio | |
| 39. |
Funds flow statements are prepared so as to |
| A. | to identify the changes in working capital |
| B. | to identify reasons behind change in working capital |
| C. | to know the item-wise outflow of funds during given period |
| D. | all of the above |
| Answer» E. | |
| 40. |
__________ analysis is the process of studying a series of ratios for a company and/or industry overtime. |
| A. | dupont |
| B. | trend |
| C. | common size |
| D. | all of the above. |
| Answer» C. common size | |
| 41. |
Which of the following is NOT a key ratio in the prediction of bankruptcy as developed by EdwardAltman? |
| A. | debt to equity |
| B. | current ratio |
| C. | retained earnings as a percent of total assets |
| D. | total assets |
| Answer» B. current ratio | |
| 42. |
The ________ does not represent continuing operations in any way, but is simply a snapshot of the totalworth of a firm at a given point in time. |
| A. | income statement |
| B. | balance sheet |
| C. | sources and uses of funds statement |
| D. | none of the above |
| Answer» C. sources and uses of funds statement | |
| 43. |
Which of the following are techniques, tools or methods of analysis and interpretation of financialstatements? |
| A. | ratio analysis |
| B. | average analysis |
| C. | trend analysis |
| D. | all of the above |
| Answer» E. | |
| 44. |
If value of opening inventories increases, what happens to the value of gross profit? |
| A. | decreases |
| B. | increases |
| C. | stays the same |
| D. | gets closer to net profit |
| Answer» B. increases | |
| 45. |
The process of comparing various financial factors of a company over a period of time is known as … |
| A. | inter‐firm comparison |
| B. | ratio analysis |
| C. | intra‐firm comparison |
| D. | inter‐industry comparison |
| Answer» D. inter‐industry comparison | |
| 46. |
The process of explaining the meaning, significance and relationship between two financial factors iscalled … |
| A. | summarization |
| B. | analysis |
| C. | interpretation |
| D. | none |
| Answer» D. none | |
| 47. |
The analysis and interpretations of the financial statement will reveal … |
| A. | the financial position |
| B. | the profitability |
| C. | none |
| D. | both |
| Answer» E. | |
| 48. |
The balance sheet shows … |
| A. | the source of working capital |
| B. | the change in working capital |
| C. | both |
| D. | none |
| Answer» E. | |
| 49. |
In financial statement the stock is valued at cost or market price whichever is less on the basis of… |
| A. | accounting concepts |
| B. | accounting conventions |
| C. | accounting principles |
| D. | none |
| Answer» C. accounting principles | |
| 50. |
In financial statements, the fixed assets are shown at … |
| A. | market price |
| B. | cost price |
| C. | replacement price |
| D. | none |
| Answer» B. cost price | |