Explore topic-wise MCQs in Bachelor of Business Administration (BBA).

This section includes 182 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.

101.

_______________ refers to a firm holding some cash to meet its routine expenses that are incurred in the ordinary course of business.

A. Speculative motive
B. Transaction motive
C. Precautionary motive
D. Compensating motive
Answer» C. Precautionary motive
Discussion
102.

Palo Alto Industries has a debt-to-equity ratio of 1.6 compared with the industry average of 1.4. This means that the company

A. will not experience any difficulty with its creditors.
B. has less liquidity than other firms in the industry.
C. will be viewed as having high creditworthiness.
D. has greater than average financial risk when compared to other firms in its industry.
Answer» E.
Discussion
103.

Amounts due from customers when goods are sold on credit are called _____________.

A. Trade balance
B. Trade debits
C. Trade discount
D. Trade off
Answer» C. Trade discount
Discussion
104.

____________________ and __________________________ are the two versions of goals of the financial management of the firm.

A. Profit maximisation, Wealth maximization
B. Production maximisation, Sales maximisation
C. Sales maximisation, Profit maximization
D. Value maximisation, Wealth maximisation
Answer» B. Production maximisation, Sales maximisation
Discussion
105.

The basic objective of Tandon Committee recommendations is that the dependence of industry on bank should gradually

A. Increase,
B. Remain Stable
C. Decrease
D. None of the above
Answer» D. None of the above
Discussion
106.

In deciding the appropriate level of current assets for the firm, management is confronted with

A. a trade-off between profitability and risk.
B. a trade-off between liquidity and marketability.
C. a trade-off between equity and debt.
D. a trade-off between short-term versus long-term borrowing.
Answer» B. a trade-off between liquidity and marketability.
Discussion
107.

Credit policy of every company is largely influenced by _____________ and _____________.

A. Liquidity, accountability
B. Liquidity, profitability
C. Liability, profitability
D. Liability, liquidity
Answer» C. Liability, profitability
Discussion
108.

The rate of interest offered by the fixed deposit scheme of a bank for 365 days and above is 12%. What will be the status of Rs. 20000, after two years if it is invested at this point of time?

A. Rs. 28032
B. Rs. 24048
C. Rs. 22056
D. Rs. 25088
Answer» E.
Discussion
109.

If the following are balance sheet changes:Rs. 5,005 decrease in accounts receivableRs. 7,000 decrease in cashRs. 12,012 decrease in notes payableRs. 10,001 increase in accounts payablea "use" of funds would be the:

A. Rs. 7,000 decrease in cash.
B. Rs. 5,005 decrease in accounts receivable.
C. Rs. 10,001 increase in accounts payable.
D. Rs. 12,012 decrease in notes payable.
Answer» E.
Discussion
110.

______________ is the price at which the bond is traded in the stock exchange.

A. Redemption value
B. Face value
C. Market value
D. Maturity value
Answer» D. Maturity value
Discussion
111.

____________ and____________ carry a fixed rate of interest and are to be paid off irrespective of the firm s revenues.

A. Debentures, Dividends
B. Debentures, Bonds
C. Dividends, Bonds
D. Dividends, Treasury notes
Answer» C. Dividends, Bonds
Discussion
112.

Which of the following is NOT a cash outflow for the firm?

A. depreciation.
B. dividends.
C. interest payments.
D. taxes.
Answer» B. dividends.
Discussion
113.

Collateralized borrowing and lending obligation (CBLO) is a discounted instrument available in electronic book entry for the maturity period ranging from __________.

A. 1 day to 19 days
B. 1 day to 15 days
C. 1 day to 30 days
D. None of the above
Answer» B. 1 day to 15 days
Discussion
114.

Which of the following relationships hold true for safety stock?

A. the greater the risk of running out of stock, the smaller the safety of stock.
B. the larger the opportunity cost of the funds invested in inventory, the larger the safety stock.
C. the greater the uncertainty associated with forecasted demand, the smaller the safety stock.
D. the higher the profit margin per unit, the higher the safety stock necessary.
Answer» E.
Discussion
115.

Which of the following would be included in a cash estimation/ budget?

A. depreciation charges.
B. dividends.
C. goodwill.
D. patent amortization.
Answer» C. goodwill.
Discussion
116.

The treatment of interest and dividends received and paid depends upon the nature of the enterprise. For this purpose, the enterprises are classified as ____________.

A. (i) Financial enterprises, and (ii) Operating enterprises
B. (i) Financial enterprises, and (ii) Other enterprises
C. (i) Financial enterprises, and (ii) Non-Financial enterprises
D. (i) Trading enterprises, and (ii) Non - Trading enterprises
Answer» C. (i) Financial enterprises, and (ii) Non-Financial enterprises
Discussion
117.

Permanent working capital

A. varies with seasonal needs.
B. includes fixed assets.
C. is the amount of current assets required to meet a firm's long-term minimum needs.
D. includes accounts payable
Answer» D. includes accounts payable
Discussion
118.

Which of the following is not the responsibility of financial management?

A. allocation of funds to current and capital assets
B. obtaining the best mix of financing alternatives
C. preparation of the firm's accounting statements
D. development of an appropriate dividend policy
Answer» D. development of an appropriate dividend policy
Discussion
119.

Which would be an appropriate investment for temporarily idle corporate cash that will be used to pay quarterly dividends three months from now?

A. A long-term AAA-rated corporate bond with a current annual yield of 9.4 percent.
B. A 30-year Treasury bond with a current annual yield of 8.7 percent.
C. Ninety-day commercial paper with a current annual yield of 6.2 percent.
D. Common stock that has been appreciating in price 8 percent annually, on average, and paying a quarterly dividend that is the equivalent of a 5 percent annual yield.
Answer» D. Common stock that has been appreciating in price 8 percent annually, on average, and paying a quarterly dividend that is the equivalent of a 5 percent annual yield.
Discussion
120.

Ratio analysis is the process of determining and interpreting numerical relationships based on _______.

A. Financial values
B. Financial statements
C. Financial numerical information
D. All of the above
Answer» E.
Discussion
121.

The long-run objective of financial management is to:

A. maximize earnings per share.
B. maximize the value of the firm's common stock.
C. maximize return on investment.
D. maximize market share.
Answer» C. maximize return on investment.
Discussion
122.

"Shareholder wealth" in a firm is represented by:

A. the number of people employed in the firm.
B. the book value of the firm's assets less the book value of its liabilities
C. the amount of salary paid to its employees.
D. the market price per share of the firm's common stock.
Answer» E.
Discussion
123.

Which of the following marketable securities is the obligation of a commercial bank?

A. Commercial paper
B. Negotiable certificate of deposit
C. Repurchase agreement
D. T-bills
Answer» C. Repurchase agreement
Discussion
124.

The persons interested in the analysis of financial statements can be grouped as _________.

A. Owners or investors
B. Creditors
C. Financial executives
D. All of the above
Answer» E.
Discussion
125.

The basic requirement for a firm's marketable securities.

A. Safety
B. Yield
C. Marketability
D. All of the above.
Answer» E.
Discussion
126.

In the _______________, the future value of all cash inflow at the end of time horizon at a particular rate of interest is calculated.

A. Risk-free rate
B. Compounding technique
C. Discounting technique
D. Risk Premium
Answer» D. Risk Premium
Discussion
127.

All of the following influence capital budgeting cash flows EXCEPT:

A. accelerated depreciation.
B. salvage value.
C. tax rate changes.
D. method of project financing used.
Answer» E.
Discussion
128.

Find the present value of Rs. 1,000 receivable 6 years hence if the rate of discount is 10 percent.

A. 564.5
B. 554.5
C. 574.5
D. 600
Answer» B. 554.5
Discussion
129.

To increase a given present value, the discount rate should be adjusted

A. upward.
B. downward.
C. No change.
D. constant
Answer» C. No change.
Discussion
130.

If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ

A. (2AO/C) 2
B. 2AO/C
C. 2A OC
D. 2AOC
Answer» C. 2A OC
Discussion
131.

A firm's operating cycle is equal to its inventory turnover in days (ITD)

A. plus its receivable turnover in days (RTD).
B. minus its RTD.
C. plus its RTD minus its payable turnover in days (P
D. .
Answer» B. minus its RTD.
Discussion
132.

A company can improve (lower) its debt-to-total assets ratio by doing which of the following?

A. Borrow more.
B. Shift short-term to long-term debt.
C. Shift long-term to short-term debt.
D. Sell common stock.
Answer» E.
Discussion
133.

Costs of not carrying enough inventory include:

A. lost sales.
B. customer disappointment.
C. possible worker layoffs.
D. all of these.
Answer» E.
Discussion
134.

1,00,000; 10% Debentures of Rs. 100 each of company, the interest payable for quarter is:

A. Rs. 10,00,000
B. Rs. 2,50,000
C. Rs. 5,00,000
D. None of these
Answer» C. Rs. 5,00,000
Discussion
135.

Axis Ltd is issuing 15% debentures ( face value Rs60). The net amount realized per debenture is Rs54 and they are redeemable at par after 6 years. At a corporate tax rate of 40%, what is the cost of debt?

A. 16.54%
B. 17.54%
C. 10%
D. 14.74%
Answer» D. 14.74%
Discussion
136.

In case of the indivisible projects, which of the following may not give the optimum result?

A. Internal Rate of Return
B. Profitability Index
C. Feasibility Set Approach
D. All of the above
Answer» D. All of the above
Discussion
137.

Funds Flow Statement reveals the change in _______________ between two Balance Sheet dates.

A. Working capital
B. Internal capital
C. Share capital
D. Both (A) & (C)
Answer» B. Internal capital
Discussion
138.

Which of the following is true for a company which uses continuous review inventory system

A. Order Interval is fixed
B. Order Interval varies,
C. Order Quantity is fixed
D. Both (a) and (c)
Answer» D. Both (a) and (c)
Discussion
139.

The lease period in such a contract is less than the useful life of asset. Here we are talking about _______.

A. Operating or Service Lease
B. Service Lease
C. Financial Lease
D. None of the above
Answer» B. Service Lease
Discussion
140.

Spontaneous financing includes

A. accounts receivable.
B. accounts payable.
C. short-term loans.
D. a line of credit.
Answer» C. short-term loans.
Discussion
141.

Present value of inflows Rs. 10 lakhs from a project and initial investment is Rs. 7.5 lakhs. The NPV is:

A. Rs. 17.5 lakhs
B. Rs. 7.5 lakhs
C. Rs. 10 Lakhs
D. Rs. 2.5 lakhs
Answer» E.
Discussion
142.

The estimated benefits from a project are expressed as cash flows instead of income flows because:

A. it is simpler to calculate cash flows than income flows.
B. it is cash, not accounting income, that is central to the firm's capital budgeting decision.
C. this is required by the Internal Revenue Service.
D. this is required by the Securities and Exchange Commission.
Answer» C. this is required by the Internal Revenue Service.
Discussion
143.

___________________ of a firm refers to the composition of its long-term funds and its capital structure.

A. Capitalisation
B. Over-capitalisation
C. Under-capitalisation
D. Market capitalization
Answer» B. Over-capitalisation
Discussion
144.

To judge the comparative risk of projects having same cost and different NPV which method is used

A. Certainty equivalent method
B. Sensitivity technique
C. Standard deviation method
D. Coefficient of variation method
Answer» E.
Discussion
145.

The cash inflows on account of operations are presumed to have been reinvested at the cut off rate in case of

A. Pay back method
B. NPV
C. Accounting rate of return
D. IRR
Answer» C. Accounting rate of return
Discussion
146.

According to ------ method it is assumed that each of the future cash flows is immediately reinvested in another project at a certain rate of return until the termination of the project

A. NPV
B. IRR
C. Pay back method
D. Terminal value method
Answer» E.
Discussion
147.

When __________ is greater than zero the project should be accepted.

A. Internal rate of return
B. Profitability index
C. Net present value
D. Modified internal rate of return
Answer» D. Modified internal rate of return
Discussion
148.

Which of the following would not be financed from working capital?

A. Cash float.
B. Accounts receivable.
C. Credit sales.
D. A new personal computer for the office.
Answer» E.
Discussion
149.

Which asset-liability combination would most likely result in the firm's having the greatest risk of technical insolvency?

A. Increasing current assets while lowering current liabilities.
B. Increasing current assets while incurring more current liabilities.
C. Reducing current assets, increasing current liabilities, and reducing long-term debt.
D. Replacing short-term debt with equity.
Answer» D. Replacing short-term debt with equity.
Discussion
150.

Which of the following illustrates the use of a hedging (or matching) approach to financing?

A. Short-term assets financed with long-term liabilities.
B. Permanent working capital financed with long-term liabilities.
C. Short-term assets financed with equity.
D. All assets financed with 50 percent equity, 50 percent long-term debt mixture.
Answer» C. Short-term assets financed with equity.
Discussion