MCQOPTIONS
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MCQOPTIONS
This section includes 2436 Mcqs, each offering curated multiple-choice questions to sharpen your Commerce knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
The appropriate objective of an enterprise is; |
| A. | Maximisation of sale |
| B. | Maximisation of owners wealth. |
| C. | Maximisation of profits. |
| D. | None of these. |
| Answer» C. Maximisation of profits. | |
| 2. |
The job of a finance manager is confined to |
| A. | Raising funds |
| B. | Management of cash |
| C. | Raising of funds and their effective utilization. |
| D. | None of these. |
| Answer» D. None of these. | |
| 3. |
Financial decision involve; |
| A. | Investment ,financing and dividend decision |
| B. | Investment ,financing and sales decision |
| C. | Financing , dividend and cash decision |
| D. | None of these. |
| Answer» B. Investment ,financing and sales decision | |
| 4. |
Net Profit Ratio Signifies: |
| A. | Operational Profitability |
| B. | Liquidity Position |
| C. | Solvency |
| D. | Profit |
| Answer» B. Liquidity Position | |
| 5. |
Working Capital Turnover measures the relationship of Working Capital with: |
| A. | Fixed Assets |
| B. | Sales |
| C. | Purchases |
| D. | Stock. |
| Answer» B. Sales | |
| 6. |
Dividend Payout Ratio is: |
| A. | PAT Capital |
| B. | DPS ÷ EPS |
| C. | Pref. Dividend ÷ PAT |
| D. | Pref. Dividend ÷ Equity Dividend |
| Answer» C. Pref. Dividend ÷ PAT | |
| 7. |
Inventory Turnover measures the relationship of inventory with: |
| A. | Average Sales |
| B. | Cost of Goods Sold |
| C. | Total Purchases |
| D. | Total Assets |
| Answer» C. Total Purchases | |
| 8. |
Return on Investment may be improved by: |
| A. | Increasing Turnover |
| B. | Reducing Expenses |
| C. | Increasing Capital Utilization |
| D. | All of the above |
| Answer» E. | |
| 9. |
In Current Ratio, Current Assets are compared with: |
| A. | Current Profit |
| B. | Current Liabilities |
| C. | Fixed Assets |
| D. | Equity Share Capital |
| Answer» C. Fixed Assets | |
| 10. |
There is deterioration in the management of working capital of XYZ Ltd. What does itrefer to? |
| A. | That the Capital Employed has reduced, |
| B. | That the Profitability has gone up, |
| C. | That debtors collection period has increased, |
| D. | That Sales has decreased. |
| Answer» D. That Sales has decreased. | |
| 11. |
Debt to Total Assets Ratio can be improved by: |
| A. | Borrowing More |
| B. | Issue of Debentures |
| C. | Issue of Equity Shares |
| D. | Redemption of Debt. |
| Answer» E. | |
| 12. |
Ratio of Net Income to Number of Equity Shares known as: |
| A. | Price Earnings Ratio |
| B. | Net Profit Ratio, |
| C. | Earnings per Share |
| D. | Dividend per Share. |
| Answer» D. Dividend per Share. | |
| 13. |
A Current Ratio of Less than One means: |
| A. | Current Liabilities < Current Assets |
| B. | Fixed Assets > Current Assets |
| C. | Current Assets < Current Liabilities |
| D. | Share Capital > Current Assets |
| Answer» D. Share Capital > Current Assets | |
| 14. |
A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of . 2,00,000 andExpenses of . 1,00,000. What is the Net Profit Ratio? |
| A. | 20% |
| B. | 50% |
| C. | 10% |
| D. | 40% |
| Answer» B. 50% | |
| 15. |
Which of the following is a measure of Debt Service capacity of a firm? |
| A. | Current Ratio |
| B. | Acid Test Ratio |
| C. | Interest Coverage Ratio |
| D. | Debtors Turnover |
| Answer» D. Debtors Turnover | |
| 16. |
Suppliers and Creditors of a firm are interested in |
| A. | Profitability Position |
| B. | Liquidity Position |
| C. | Market Share Position |
| D. | Debt Position |
| Answer» C. Market Share Position | |
| 17. |
Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. Thereason for such behavior could be: |
| A. | Increase in Costs of Goods Sold |
| B. | If Increase in Expense |
| C. | Increase in Dividend |
| D. | Decrease in Sales. |
| Answer» C. Increase in Dividend | |
| 18. |
Debt to Total Assets of a firm is .2. The Debt to Equity boo would be: |
| A. | 0.80 |
| B. | 0.25 |
| C. | 1.00 |
| D. | 0.75 |
| Answer» C. 1.00 | |
| 19. |
Which of the following helps analysing return to equity Shareholders? |
| A. | Return on Assets |
| B. | Earnings Per Share |
| C. | Net Profit Ratio |
| D. | Return on Investment. |
| Answer» C. Net Profit Ratio | |
| 20. |
In Inventory Turnover calculation, what is taken in the numerator? |
| A. | Sales |
| B. | Cost of Goods Sold, |
| C. | Opening Stock |
| D. | Closing Stock. |
| Answer» C. Opening Stock | |
| 21. |
Financial Planning deals with: |
| A. | Preparation of Financial Statements |
| B. | Planning for a Capital Issue |
| C. | Preparing Budgets |
| D. | All of the above |
| Answer» D. All of the above | |
| 22. |
Financial planning starts with the preparation of: |
| A. | Master Budget |
| B. | Cash Budget |
| C. | Balance Sheet |
| D. | None of the above. |
| Answer» E. | |
| 23. |
Process of Financial Planning ends with: |
| A. | Preparation of Projected Statements |
| B. | Preparation of Actual Statements |
| C. | Comparison of Actual with Projected |
| D. | Ordering the employees that projected figures m come true. |
| Answer» D. Ordering the employees that projected figures m come true. | |
| 24. |
Which of the following is not a relevant cost in Capital Budgeting? |
| A. | Sunk Cost |
| B. | Opportunity Cost |
| C. | Allocated Overheads |
| D. | Both (a) and (c) above. |
| Answer» E. | |
| 25. |
Which of the following does not effect cash flows proposal? |
| A. | Salvage Value |
| B. | Depreciation Amount |
| C. | Tax Rate Change |
| D. | Method of Project Financing |
| Answer» E. | |
| 26. |
Cash Inflows from a project include: |
| A. | Tax Shield of Depreciation |
| B. | After-tax Operating Profits |
| C. | Raising of Funds |
| D. | Both (a) and (b) |
| Answer» E. | |
| 27. |
Which of the following is not true with reference capital budgeting? |
| A. | Capital budgeting is related to asset replacement decisions, |
| B. | Cost of capital is equal to minimum required return, |
| C. | Existing investment in a project is not treated as sunk cost, |
| D. | Timing of cash flows is relevant. |
| Answer» D. Timing of cash flows is relevant. | |
| 28. |
Depreciation is incorporated in cash flows because it: |
| A. | Is unavoidable cost |
| B. | Is a cash flow |
| C. | Reduces Tax liability |
| D. | Involves an outflow |
| Answer» D. Involves an outflow | |
| 29. |
Which of the following is not included in incremental A flows? |
| A. | Opportunity Costs |
| B. | Sunk Costs |
| C. | Change in Working Capital |
| D. | Inflation effect |
| Answer» C. Change in Working Capital | |
| 30. |
A proposal is not a Capital Budgeting proposal if it: |
| A. | is related to Fixed Assets |
| B. | brings long-term benefits |
| C. | brings short-term benefits only |
| D. | has very large investment. |
| Answer» D. has very large investment. | |
| 31. |
In Capital Budgeting, Sunk cost is excluded because it is: |
| A. | of small amount |
| B. | not incremental |
| C. | not reversible |
| D. | All of the above |
| Answer» C. not reversible | |
| 32. |
Savings in respect of a cost is treated in capital budgeting as: |
| A. | An Inflow |
| B. | An Outflow |
| C. | Nil |
| D. | None of the above. |
| Answer» B. An Outflow | |
| 33. |
In capital budgeting, the term Capital Rationing implies: |
| A. | That no retained earnings available |
| B. | That limited funds are available for investment |
| C. | That no external funds can be raised, |
| D. | That no fresh investment is required in current year |
| Answer» C. That no external funds can be raised, | |
| 34. |
Feasibility Set Approach to Capital Rationing can be applied in: |
| A. | Accept-Reject Situations |
| B. | Divisible Projects |
| C. | Mutually Exclusive Projects |
| D. | None of the above |
| Answer» B. Divisible Projects | |
| 35. |
In case of divisible projects, which of the following can be used to attain maximumNPV? |
| A. | Feasibility Set Approach |
| B. | Internal Rate of Return |
| C. | Profitability Index Approach |
| D. | Any of the above |
| Answer» D. Any of the above | |
| 36. |
In case of the indivisible projects, which of the following may not give the optimumresult? |
| A. | Internal Rate of Return |
| B. | Profitability Index |
| C. | Feasibility Set Approach |
| D. | All of the above |
| Answer» D. All of the above | |
| 37. |
Profitability Index, when applied to Divisible Projects, impliedly assumes that: |
| A. | Project cannot be taken in parts |
| B. | NPV is linearly proportionate to part of the project taken up |
| C. | NPV is additive in nature |
| D. | Both (b) and (c) |
| Answer» E. | |
| 38. |
If there is no inflation during a period, then the Money Cashflow would be equal to: |
| A. | Present Value |
| B. | Real Cash flow |
| C. | Real Cash flow + Present Value |
| D. | Real Cash flow - Present Value |
| Answer» C. Real Cash flow + Present Value | |
| 39. |
The Real Cashflows must be discounted to get the present value at a rate equal to: |
| A. | Money Discount Rate |
| B. | Inflation Rate |
| C. | Real Discount Rate |
| D. | Risk free rate of interest |
| Answer» D. Risk free rate of interest | |
| 40. |
Real rate of return is equal to: |
| A. | Nominal Rate × Inflation Rate |
| B. | Nominal Rate ÷ Inflation Rate |
| C. | Nominal Rate - Inflation Rate |
| D. | Nominal Rate + Inflation Rate |
| Answer» C. Nominal Rate - Inflation Rate | |
| 41. |
If the Real rate of return is 10% and Inflation s Money Discount Rate is: |
| A. | 14.4% |
| B. | 2.5% |
| C. | 25% |
| D. | 14% |
| Answer» B. 2.5% | |
| 42. |
If the Money Discount Rate is 19% and Inflation Rate is 12%, then the Real DiscountRate is: |
| A. | 7% |
| B. | 5% |
| C. | 5.70% |
| D. | 6.25% |
| Answer» E. | |
| 43. |
Two mutually exclusive projects with different economic lives can be compared on thebasis of |
| A. | Internal Rate of Return |
| B. | Profitability Index |
| C. | Net Present Value |
| D. | Equivalent Annuity Value |
| Answer» E. | |
| 44. |
Real Discount Rate is equal to: |
| A. | (1 + Inf. Rate) (1 + Money D Rate)-1 |
| B. | (1 + Money D Rate) + (1 + Inf. Rate)-1 |
| C. | (1 + Money D Rate) 4- (1 + Inf. Rate)-1 |
| D. | (1 + Money D Rate) - (1 + Inf. Rate)-1 |
| Answer» D. (1 + Money D Rate) - (1 + Inf. Rate)-1 | |
| 45. |
Money Discount Rate if equal to: |
| A. | (1 + Inflation Rate) (1 + Real Rate)-1 |
| B. | (1 + Inflation Rate) 4- (1 + Real Rate)-1 |
| C. | (1 + Real Rate) 4- (1 + Inflation Rate)-1 |
| D. | (1 + Real Rate) + (1 + Inflation Rate)-1 |
| Answer» B. (1 + Inflation Rate) 4- (1 + Real Rate)-1 | |
| 46. |
Cost of Capital refers to: |
| A. | Flotation Cost |
| B. | Dividend |
| C. | Required Rate of Return |
| D. | None of the above. |
| Answer» C. Required Rate of Return | |
| 47. |
Which of the following sources of funds has an Implicit Cost of Capital? |
| A. | Equity Share Capital |
| B. | Preference Share Capital |
| C. | Debentures |
| D. | Retained earnings |
| Answer» E. | |
| 48. |
Which of the following has the highest cost of capital? |
| A. | Equity shares |
| B. | Loans |
| C. | Bonds |
| D. | Preference shares |
| Answer» B. Loans | |
| 49. |
Cost of Capital for Bonds and Debentures is calculated on: |
| A. | Before Tax basis |
| B. | After Tax basis |
| C. | Risk-free Rate of Interest basis |
| D. | None of the above. |
| Answer» C. Risk-free Rate of Interest basis | |
| 50. |
Cost of Capital for Government securities is also known as: |
| A. | Risk-free Rate of Interest |
| B. | Maximum Rate of Return |
| C. | Rate of Interest on Fixed Deposits |
| D. | None of the above |
| Answer» B. Maximum Rate of Return | |