MCQOPTIONS
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MCQOPTIONS
This section includes 237 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.
| 151. |
The net working capital, being the difference between current assets and current liabilities is a _______. |
| A. | misleading concept |
| B. | quantitative concept |
| C. | qualitative concept |
| D. | none of the above |
| Answer» D. none of the above | |
| 152. |
Net working capital is the excess of current assets over ________. |
| A. | current liabilities |
| B. | long term liabilities |
| C. | contingent liabilities |
| D. | fixed liabilities |
| Answer» B. long term liabilities | |
| 153. |
Gross working capital represents __________. |
| A. | total current liabilities |
| B. | the excess of current assets over current liabilities |
| C. | total current assets |
| D. | total liquid assets |
| Answer» D. total liquid assets | |
| 154. |
The Capital used for meeting routine and repetitive expenses of day to day business operations is called____. |
| A. | reserve capital |
| B. | working capital |
| C. | fixed capital |
| D. | regular capital |
| Answer» C. fixed capital | |
| 155. |
Which one of the following is not a method to find working capital requirement? |
| A. | percent of sales method |
| B. | working capital components method |
| C. | operating cycle method |
| D. | physical method |
| Answer» E. | |
| 156. |
Permanent working capital ___ |
| A. | will vary at all times |
| B. | will vary with volumes |
| C. | fixed at all times |
| D. | fluctuates according to the season |
| Answer» D. fluctuates according to the season | |
| 157. |
Which one of the following is not the determinant of the working capital? |
| A. | size of the firm |
| B. | operating cycle |
| C. | terms of credit |
| D. | competitors |
| Answer» E. | |
| 158. |
An example of fixed asset is________. |
| A. | live stock. |
| B. | value stock. |
| C. | income stock. |
| D. | all of the above. |
| Answer» B. value stock. | |
| 159. |
Net working capital refers to ___________. |
| A. | total assets minus fixed assets. |
| B. | current assets minus current liabilities. |
| C. | current assets minus inventories. |
| D. | current assets. |
| Answer» C. current assets minus inventories. | |
| 160. |
To financial analysts, "gross working capital" means the same thing as ________. |
| A. | fixed assets. |
| B. | current assets. |
| C. | working capital. |
| D. | cost of capital. |
| Answer» C. working capital. | |
| 161. |
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. | |
| 162. |
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 current assets and profitability. |
| Answer» B. a trade-off between liquidity and marketability. | |
| 163. |
In finance, "working capital" means the same thing as __________. |
| A. | total assets. |
| B. | fixed assets. |
| C. | current assets. |
| D. | current assets minus current liabilities. |
| Answer» D. current assets minus current liabilities. | |
| 164. |
Asset structure = _________+__________. |
| A. | current asset+fixed asset |
| B. | tangible asset+fixed asset |
| C. | fixed asset+current asset |
| D. | intangible asset+current asset |
| Answer» D. intangible asset+current asset | |
| 165. |
__________ is a situation in which actual profits of a company are not sufficient enough to pay interest on debentures, on loans and pay dividends on shares over a period of time? |
| A. | under capitalization |
| B. | over capitalization |
| C. | market capitalization |
| D. | none of the above |
| Answer» C. market capitalization | |
| 166. |
Capitalization is the sum of a corporation’s stock, long term debts &________? |
| A. | liquid liability |
| B. | retained earnings |
| C. | fixed asset. |
| D. | short term debts. |
| Answer» C. fixed asset. | |
| 167. |
___________in accounting, is when the costs to acquire an asset are expensed over the life of that asset rather than in the period it was incurred? |
| A. | purchasing. |
| B. | capitalization. |
| C. | selling. |
| D. | financing |
| Answer» C. selling. | |
| 168. |
What would be the most likely impact on trade receivables days if invoice discounting was offered to and accepted by a large customer of a business? |
| A. | trade receivables days would no longer exist |
| B. | trade receivables days would reduce |
| C. | trade receivables days would increase |
| D. | trade receivable days would not be affected |
| Answer» C. trade receivables days would increase | |
| 169. |
Depreciation is applied to non-current assets in the statement of financial position in order to |
| A. | show a profitability valuation of the non-current assets |
| B. | show a true and fair value of the non-current assets |
| C. | show how the non-current assets are affected by inflation |
| D. | show what the non-current assets could make if leased out |
| Answer» C. show how the non-current assets are affected by inflation | |
| 170. |
What does the statement of comprehensive income show? |
| A. | the liquidity position of a business at a point in time |
| B. | the value of assets bought by a business over a period point in time |
| C. | the profit or loss made by a business over a period of time |
| D. | the value of a business at a point in time |
| Answer» D. the value of a business at a point in time | |
| 171. |
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 | |
| 172. |
In what order should current assets be present on a statement of financial position? |
| A. | cash, bank, trade receivables, inventories |
| B. | trade receivables, bank, cash, inventories |
| C. | inventories, cash, bank, trade receivables |
| D. | inventories, trade receivables, bank, cash |
| Answer» E. | |
| 173. |
The financial decision making that relates to current assets or short term asset is known as __________________. |
| A. | working capital |
| B. | non-working capital |
| C. | venture capital |
| D. | all of the above |
| Answer» B. non-working capital | |
| 174. |
Operating ratio is calculated by |
| A. | (operating cost/gross sales) *100 |
| B. | (operating cost/gross sales) *100 |
| C. | (operating cost/net sales) *100 |
| D. | none of the above |
| Answer» B. (operating cost/gross sales) *100 | |
| 175. |
If sales is Rs 5, 00,000 and net profit is Rs 1, 20,000 Net Profit ratio is |
| A. | 24% |
| B. | 41% |
| C. | 60% |
| D. | none of the above |
| Answer» B. 41% | |
| 176. |
Net Profit ratio is calculated by |
| A. | (gross profit/gross sales) *100 |
| B. | (gross profit/net sales) *100 |
| C. | (net profit/net sales) *100 |
| D. | none of the above |
| Answer» D. none of the above | |
| 177. |
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. | |
| 178. |
Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock. |
| A. | rs 54,000 |
| B. | rs 60,000 |
| C. | rs 1, 62,000 |
| D. | none of the above |
| Answer» D. none of the above | |
| 179. |
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 | |
| 180. |
The ideal level of current ratio is |
| A. | 4:2 |
| B. | 2:1 |
| C. | both a and b |
| D. | none of the above |
| Answer» C. both a and b | |
| 181. |
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» B. long-term solvency ratio | |
| 182. |
The ________ ratios help determines the degree of financial risk and earnings volatility present in a firm. |
| A. | profitability |
| B. | asset utilization |
| C. | liquidity |
| D. | none of the above. |
| Answer» D. none of the above. | |
| 183. |
Which of the following is NOT a key ratio in the prediction of bankruptcy as developed by Edward Altman? |
| A. | debt to equity |
| B. | current ratio |
| C. | retained earnings as a percent of total assets |
| D. | total assets |
| Answer» B. current ratio | |
| 184. |
__________ analysis is the process of studying a series of ratios for a company and/or industry over time. |
| A. | dupont |
| B. | trend |
| C. | common size |
| D. | all of the above |
| Answer» D. all of the above | |
| 185. |
Which of the following are techniques, tools or methods of analysis and interpretation of financial statements? |
| A. | ratio analysis |
| B. | average analysis |
| C. | trend analysis |
| D. | all of the above |
| Answer» E. | |
| 186. |
_______________ ratios measure the ability of a firm to earn an adequate return on sales, total assets and invested capital. |
| A. | asset utilization |
| B. | liquidity |
| C. | profitability |
| D. | debt utilization |
| Answer» D. debt utilization | |
| 187. |
Which technique used for figures of two or more periods are placed side by side to facilitate easy and meaningful comparisons? |
| A. | comparative statement |
| B. | commonâ€size statement |
| C. | trend analysis |
| D. | none |
| Answer» B. commonâ€size statement | |
| 188. |
A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs. 2,00,000 and Expenses of Rs.1,00,000. What is the Net Profit Ratio? |
| A. | 20%, |
| B. | 50%, |
| C. | 10%, |
| D. | 40% |
| Answer» B. 50%, | |
| 189. |
Which of the following financial statements is also known as a statement of financial position? |
| A. | balance sheet |
| B. | statement of cash flows |
| C. | income statement |
| D. | none of the above |
| Answer» B. statement of cash flows | |
| 190. |
Which of the following shows details and results of the company's profitrelated activities for a period of time? |
| A. | balance sheet |
| B. | income statement |
| C. | statement of cash flows |
| D. | statement of financial position |
| Answer» C. statement of cash flows | |
| 191. |
Creditors turnover ratio is also called . |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | accounts payables ratio. |
| D. | working capital turnover ratio. |
| Answer» D. working capital turnover ratio. | |
| 192. |
Debtors turnover ratio is also called . |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio |
| Answer» C. creditors velocity ratio. | |
| 193. |
Opening stock + purchases + direct expenses – closing stock = |
| A. | net profit. |
| B. | cost of production |
| C. | administrative expenses. |
| D. | cost of goods sold |
| Answer» E. | |
| 194. |
Sales – Gross Profit = . |
| A. | net profit. |
| B. | administrative expenses. |
| C. | cost of production. |
| D. | cost of goods sold. |
| Answer» E. | |
| 195. |
The ratio which measures the relationship between the cost of goods sold and the amount of average inventory is |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors velocity ratio. | |
| 196. |
Which ratio is calculated to ascertain the efficiency of inventory management in terms of capital investment? |
| A. | stock velocity ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors velocity ratio. | |
| 197. |
Inventory or stock turnover ratio is also called . |
| A. | stock velocity ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors velocity ratio. | |
| 198. |
Turnover ratio is also known as . |
| A. | activity ratios. |
| B. | solvency ratios. |
| C. | liquidity ratios. |
| D. | profitability ratios. |
| Answer» B. solvency ratios. | |
| 199. |
The dividend is related to the market value of shares in . |
| A. | interest cover ratio. |
| B. | fixed dividend cover ratio. |
| C. | debt service coverage ratio. |
| D. | dividend yield ratio. |
| Answer» E. | |
| 200. |
The ratio shows the preference dividend as a proportion of profit available for shareholders is |
| A. | interest cover ratio. |
| B. | fixed dividend cover ratio. |
| C. | debt service coverage ratio. |
| D. | dividend yield ratio. |
| Answer» C. debt service coverage ratio. | |