Explore topic-wise MCQs in Finance & Accounting.

This section includes 1706 Mcqs, each offering curated multiple-choice questions to sharpen your Finance & Accounting knowledge and support exam preparation. Choose a topic below to get started.

1651.

Prepaid rent is a –

A. Nominal A/c ;
B. Representative Personal A/c ;
C. Tangible Assets A/c ;
D. None
Answer» C. Tangible Assets A/c ;
Discussion
1652.

The following are details of closing stock items in Aarvi Limited: Items Historical Cost (` in Lakh) Net Realizable Value (` in Lakh) (a) 30 27 (b) 15 18 (c) 35 35 (d) 40 45 The value of Closing Stock will be

A. 120 Lakh
B. 125 Lakh
C. 117 Lakh
D. 128 Lakh
Answer» D. 128 Lakh
Discussion
1653.

A sends goods costing ` 1,00,000 on consignment to yield a profit of 20% on cost. What is the invoice price

A. 1,37,500 ;
B. 1,25,000 ;
C. 1,20,000 ;
D. None
Answer» D. None
Discussion
1654.

Which of the following is not a main column of sales or return journal?

A. Goods sent on approval column ;
B. Goods returned column
C. Goods approved column ;
D. Purchase column
Answer» E.
Discussion
1655.

Which shareholders are returned their capital after some specified time :

A. Redeemable Preference Shares
B. Irredeemable Preference Shares
C. Cumulative Preference Shares
D. Participating Preference Shares
Answer» B. Irredeemable Preference Shares
Discussion
1656.

Which of the following payment is made from petty cash?

A. Purchase of non-current asset
B. Payment to creditors
C. Cash deposited into bank
D. Payment of postage & telegrams
Answer» E.
Discussion
1657.

Which one refers to cash in How under pay back period method?
A. Cash flow before depreciation and taxes
B. Cash flow after depreciation and taxes
C. Cash flow after depreciation but before taxes
D. Cash flow before depreciation and after taxes
Answer» E.
Discussion
1658.

According to which of the following the firms market value is not affected by capital market.
A. M.M. Hypothesis
B. Net Income Approach
C. The Traditional View
D. None of the above
Answer» B. Net Income Approach
Discussion
1659.

 Which of the following statement are correct

(i) Inventory includes raw materials, finished goods, and work in progress, 

(ii) Inventory is a part of the working capitaL

(iii) Inventory includes goods likely to be purchased,
A. (i), (ii), and (iii)
B. (ii) and (iii)
C. (i) and (iii)
D. (i) and (ii)
Answer» E.
Discussion
1660.

 Business Plans designed to achieve the organisation objective is called
A. Human Resource Planning
B. Human Resource forecasting
C. Strategic plan
D. Corporate Development Plan
Answer» D. Corporate Development Plan
Discussion
1661.

 Which one is not an important objective of financial Management?
A. Profit Maximisation
B. Wealth Maximisation
C. Value Maximisation
D. Maximisation of Social benefits
Answer» E.
Discussion
1662.

Read the following statement

(i) "The rate of return on investment increase with the shortage of working capital."

(ii) "Net working Capital is the excess of current assets over current liabilities.

(iii) "Greater the size of the business unit larger will be the requirement of working capital."

(iv) "Working Capital is also known as circulating capital."

Which one of the following consists of the correct statements.
A. (i), (ii) and (iii)
B. (ii), (iii) and (iv)
C. (iii), (iv) and (i)
D. (i), (ii) and (iv)
Answer» C. (iii), (iv) and (i)
Discussion
1663.

Which of the following is not followed in capital budgeting?
A. Cash flows principle
B. Interest Exclusion Principle
C. Accrual Principle
D. Post-tax Principle
Answer» D. Post-tax Principle
Discussion
1664.

Match List-I with List-II and select the correct answer using the codes given below the lists:

     List-I                                                                   List-II

a. Modigiiani-Miller approach                         I. Commercial  Paper

b. Net operating income approach               ll. Working capital

c. Short term money market instrument     Ill. Capital Structure

d. Factoring   
A. a b c d IV III I II
B. a b c d III IV I II
C. a b c d III II I IV
D. a b c d IV II III I
Answer» B. a b c d III IV I II
Discussion
1665.

A view that dividend policy of a firm has a bearing on share valuation advocated by James E. Walter is based on which one of the following assumptions.
A. Retained earning is only source of financing
B. Cost of capital does not remain constant
C. Return of investment function
D. All of the above.
Answer» B. Cost of capital does not remain constant
Discussion
1666.

 The presence of fixed costs in the total cost structure of a firm results into
A. Financial Leverage
B. Operating Leverage
C. Super Leverage
D. None of the above
Answer» C. Super Leverage
Discussion
1667.

Scruting of financial transactions is called
A. Budgeting
B. Auditing
C. Programming
D. Accounting
Answer» C. Programming
Discussion
1668.

Modigliani and Miller's dividend policy of a firm is
A. Relevant
B. Irrelevant
C. Unrealistic
D. None of these
Answer» C. Unrealistic
Discussion
1669.

Given, Ke = (DPS / MP) X 100, may be used in
A. calculating capital structure
B. calculating cost of equity capital
C. calculating dividend yield on equity share
D. All of the above
Answer» C. calculating dividend yield on equity share
Discussion
1670.

Which one of the following is not a sources of conflict in project ranking in capital budgeting decision as per NPV and IRR.
A. Independent Investment project
B. No capital Budget constraints
C. No time disparity
D. None of the above.
Answer» E.
Discussion
1671.

Which is the importance of the concept of cost of capital?
A. Helpful in comparative analysis of various sources of finance
B. Helpful in Capital structure decisions
C. Helpful in Capital budgeting process
D. All of the above
Answer» E.
Discussion
1672.

 In case the finn is all equity financed, WACC would be equal to
A. Cost of Debt
B. Cost of Equity
C. Neither
D. Both (A) and (B)
Answer» C. Neither
Discussion
1673.

Discounted cash flow criteria for investment appraisal does not include
A. Not present value
B. Benefit cost ratio
C. Accounting rate of return
D. Internal rate of return
Answer» C. Accounting rate of return
Discussion
1674.

Dividend policy of a company mainly concern with

(i) dividend payout and

(ii) Stability of dividend
A. Only (i) is correct
B. Only (ii) is correct
C. Both (i) and (ii) are correct.
D. Both (i) and (ii) are incorrect.
Answer» D. Both (i) and (ii) are incorrect.
Discussion
1675.

 Cost of depreciation fund computed as
A. Long term loan capital
B. Dividend
C. Short term loan capital
D. Profit
Answer» B. Dividend
Discussion
1676.

 

The formula , ((1 - ti) EPS / MP )  X 100 , may be used for
A. cost of equity capital
B. cost of retained earnings
C. cost of preference share capital
D. cost of debt capital
Answer» C. cost of preference share capital
Discussion
1677.

The cost of capital declines when the degree of financial leverage increases 'who advocated it'.
A. Net operating income approach
B. Net income approach
C. Modigliani - Miller approach
D. Traditional Approach
Answer» C. Modigliani - Miller approach
Discussion
1678.

Which of the following statement(s) regarding IRR is true?
A. If IRR is less than the firms cost of capital, the project should be rejected
B. A project can have multiple IRRs depending on the cash flow streams.
C. A project can have only one IRR.
D. Both (A) and (B)
Answer» E.
Discussion
1679.

Accounting rate of return is the ratio of average value of
A. profit after tax to salvage value of the investment.
B. profit before tax to present value of the investment.
C. profit after tax to book value of the investment.
D. profit after tax to present value of the investment.
Answer» D. profit after tax to present value of the investment.
Discussion
1680.

 Which one of the following is correct.

(i) Liquidity ratios measure's long term solvency of a concern.

(ii) Inventory is a part of liquidity assets.

(iii) Rule of thumb for acid test ratio is 2 : 1

(iv) The amount of gross assets is equal to net capital employed.
A. (i), (ii) and (iv)
B. (ii), (iii) and (iv)
C. (i), (ii), (iii) and (iv)
D. None of the above
Answer» E.
Discussion
1681.

The degree of financial leverage reflects the responsiveness of
A. Operating income to change in total revenue
B. EPS to change in EBIT
C. EPS to change in total revenue
D. None of the above.
Answer» C. EPS to change in total revenue
Discussion
1682.

A risk-free stock has a beta value equals
A. - 1
B. Zero
C. 0.5
D. 1
Answer» C. 0.5
Discussion
1683.

 A newly established company cannot be successful in obtaining finance by way of
A. issue of equity capital
B. issue of preference share
C. issue of debenture
D. None of the above
Answer» D. None of the above
Discussion
1684.

Capital gearing ratio indicates the relationship between
A. assets and capital
B. loans and capital
C. equity shareholders fund and long term borrowed funds
D. debentures and share capital
Answer» D. debentures and share capital
Discussion
1685.

The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of
A. Size disparity
B. Time disparity
C. Life disparity
D. All of the above
Answer» E.
Discussion
1686.

If compounding is done quarterly in year, the effective rate of interest is equal to
A. 4 x nominal rate of interest
B. (1 + nominal rate of interest / 4)4
C. (1 + nominal rate of interest)/ 4
D. All of the above
Answer» C. (1 + nominal rate of interest)/ 4
Discussion
1687.

Which one of the following is correct

(i) A ratio is an arithmetical relationship of one number to another number.

(ii) Liquid ratio is also known as acid test ratio.

(iii) Role of thumb for current ratio is 2: 1

(iv) Debt equity ratio is the relationship between outsiders fund and shareholders fund
A. Only (i), (ii) and (iii) are correct.
B. Only (ii), (iii) and (iv) are correct.
C. Only (ii) and (iii) are correct.
D. All of the above.
Answer» E.
Discussion
1688.

 

Which of the following steps of purchase decision process is in sequence?

(i) Problem recognition

(ii) Search for alternative

(iii) Evaluation of alternative

(iv) Purchase action

(v) Post purchase action
A. 1,3,2,4,5
B. 1,2,4,3,5
C. 2,1,3,5,4
D. 1,2,3,4,5
Answer» E.
Discussion
1689.

Debt financing is a cheaper source of finance because of
A. Time value of Money
B. Rate of Interest
C. Tax deductibility of Interest
D. Dividends not payable to lenders.
Answer» D. Dividends not payable to lenders.
Discussion
1690.

 Which one is more appropriate for cost of retained earning?
A. Weighted Average cost of capital
B. Opportunity cost to the firm
C. Expected rate of return by the investor
D. None of the above
Answer» C. Expected rate of return by the investor
Discussion
1691.

Depreciation is incorporated in cash flows because it
A. Is unavoidable cost
B. Is a cash flow
C. Involves an outflow
D. Reduces tax liability
Answer» E.
Discussion
1692.

 

Arrange the following steps involved in capital budgeting in order of their occurrence

(i) Project Selection

(ii) Project appraisal

(iii) Project generation

(iv) Follow up

(v) Project execution
A. (ii), (iii), (i), (v), (iv)
B. (iii), (ii), (i), (v), (iv)
C. (i), (iii), (ii), (v), (iv)
D. (i), (ii), (iii), (v), (iv)
Answer» C. (i), (iii), (ii), (v), (iv)
Discussion
1693.

 If the current ratio is 2: 1 and working capital is Rs. 60,000, What is the value of the current assets?
A. Rs. 60,000
B. Rs. 1,00,000
C. Rs. 1,20,000
D. Rs. 1,80,000
Answer» D. Rs. 1,80,000
Discussion
1694.

Which is called as Dividend Ratio Method?
A. Dividend Yield Method
B. Debt Equity Method
C. Asset Method
D. Equity Method
Answer» B. Debt Equity Method
Discussion
1695.

Examine the following statements.

(i) Payback period method measure the true profitability of a project.

(ii) Capital Rationing and capital budgeting mean the same thing.

(iii) Internal Rate of Return and Time Adjusted rate of Return are the same thing.

(iv) Rate of Return takes into account the time value of money.
A. (i), (ii) and (iii) are correct.
B. (ii) and (iii) are correct.
C. Only (iii) is correct.
D. All (i), (ii), (iii) and (iv) are false.
Answer» B. (ii) and (iii) are correct.
Discussion
1696.

Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation
A. Retained earning the only source of financing
B. Finite Life of the firm
C. Taxes do not exist
D. Constant rate of return on firms investment.
Answer» C. Taxes do not exist
Discussion
1697.

Match List-I with List-ll and select the correct answer using the codes given below the lists:

      List-I                                   List-II

a. Matching approach         I. Dividend policy

b. Structural ratios              II. Inventory Management

c. Ordering quality              Ill. Financing Working Capital

d. Bonus-Shares               IV. Capital Structure
A. a b c d I II III IV
B. a b c d III IV I II
C. a b c d III IV II I
D. a b c d II I III IV
Answer» D. a b c d II I III IV
Discussion
1698.

 The cost of debt capital is calculated on the basis of
A. Net proceeds
B. Annual Interest
C. Capital
D. Arumal Depreciation
Answer» C. Capital
Discussion
1699.

Read the following statements

(i) "Working capital is the amount of funds necessary to cover the cost of operating the enterprise."

(ii) "Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another."
A. (i) and (ii) both are correct.
B. (i) and (ii) both are false.
C. (i) is correct but (ii) is false.
D. (i) is false but (ii) is correct.
Answer» C. (i) is correct but (ii) is false.
Discussion
1700.

The overall capitalisation rate and the cost of debt remain constant for all degrees of financial leverage is advocated by
A. Traditional Approach
B. Net Income Approach
C. Net operating Income Approach
D. M-M Approach
Answer» E.
Discussion