ALL4MBA: Financial accounting

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Quiz Questions

1.
What is customer value?
- A.
  Ratio between the customer's perceived benefits and the resources used to obtained these benefits.
- B.
  Excess of satisfaction over expectation.
- C.
  Post purchase dissonance
- D.
  None of the above.
2.
The cost of capital method includes
- A.
  dividend yield method
- B.
  earning yield method
- C.
  dividend yield + growth in dividend method
- D.
  All of the above
3.
Risk in capital budgeting implies that the decision maker knows _ of the cash flows.
- A.
  Variability
- B.
  Certainity
- C.
  Probability
- D.
  None of these
4.
Cost of capital is helpful in corporative analysis of various
- A.
  Source of Finance
- B.
  Source of Services
- C.
  Source of material
- D.
  Product
5.
Which of the following has the highest cost of capital?
- A.
  Loans
- B.
  Equity shares
- C.
  Bonds
- D.
  Preference shares
6.
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
7.
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.
8.
The cost of debt capital is calculated on the basis of
- A.
  Net proceeds
- B.
  Annual Interest
- C.
  Capital
- D.
  Arumal Depreciation
9.
Which of the following is not included in the assumption on which Myron Gorden proposed a model on Stock valuation
- A.
  Finite Life of the firm
- B.
  Retained earning the only source of financing
- C.
  Taxes do not exist
- D.
  Constant rate of return on firms investment.
10.
Which is called as Dividend Ratio Method?
- A.
  Dividend Yield Method
- B.
  Debt Equity Method
- C.
  Asset Method
- D.
  Equity Method
11.
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
12.
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)
13.
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
14.
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
15.
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.
16.
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
17.
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
18.
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
19.
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
20.
A risk-free stock has a beta value equals
- A.
  - 1
- B.
  Zero
- C.
  0.5
- D.
  1
21.
The degree of financial leverage reflects the responsiveness of
- A.
  EPS to change in EBIT
- B.
  Operating income to change in total revenue
- C.
  EPS to change in total revenue
- D.
  None of the above.
22.
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.

Quiz Outcomes

1.
Beginner
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2.
You Know More Than The Average Management student
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3.
Well, You nailed it
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ALL4MBA: Financial accounting

Take our management quiz to assess your knowledge on Financial accounting and to identify scope for improvement.

Quiz Questions

Quiz Outcomes