Basic Theory Concepts of Financial Management online Test

The term “Financial Assets” includes all of the following except:
Shares, Bonds and Debentures
Technical know-how
Lease obligations
Borrowings from banks and Financial Institutions
The term “owners of residue” in Finance refers to:
Ordinary shareholders
Bank that lends money
Preference shareholders
Debenture holders
In what order does the financial jargon in List B match the general terms in List A List A: 1)Long-term Asset Mix 2)Short-term Asset Mix 3)Profit Allocation 4)Capital Mix List B: a)Matters relating to Investment b)Matters relating to Financing c)Matters relating to Liquidity d)Matters relating to Dividend
1a, 2b, 3c, 4d
1b, 2c, 3a, 4d
1d, 2b, 3a, 4c
1a, 2c, 3d, 4b
The term Fixed Assets includes all of the following except:
Furniture
Franchises and Patents
Long term investments in Government Bonds
Prepaid expenses
In finance, the term Gross block refers to:
The written down value of total fixed assets
The original cost of total fixed assets
The total capital value of the firm
The blocks and buildings of the firm
The “Provision for taxes” and the “Provision for dividends” fall under which of the following category in Financial Statements:
Loans and Advances
Current Assets
Current Liabilities
Long term Loans
/
Loans and Advances
Current Assets
Current Liabilities
Long term Loans
All of the following are true for “Reserves and Surplus” in the Balance Sheet EXCEPT:
“Reserves and Surplus” is also known as “Retained Earnings”.
It amounts to total undistributed earnings.
It is also known as “Net Worth”.
It is the difference between total earnings and the total amount of dividends till date.
For any firm, TA = TL + OE Where TA is Total Assets, TL is Total Liabilities and OE is Owner’s Equity. Also, OE = TA – TL The Owner’s Equity will increase if:
Assets decrease and Liabilities remain unchanged.
Assets remain unchanged and Liabilities decrease
Assets decrease and Liabilities increase or decrease less than the decrease in the assets.
Both Assets and Liabilities increase by the same amount.
Revenue arises from all of the following sources EXCEPT:
Sale of personal jewelry of the Director or proprietor.
Sale of goods to customers
Rendering services or supplying the firm’s resources
Sale of fixed assets that are not of use to the firm.
All of the following are true for the tem “Unexpired Costs” EXCEPT:
These costs have helped the firm to produce Revenue and are included in the Income Statement.
These costs will help produce Revenue in the future.
These are also known as “Capital Expenditure”.
These are included as Assets in the Balance Sheet.
The right classification of the Balance Sheet items given in List A under the headings given in List B is: List A a)Debentures (Unsecured) b)Capital c)Cash and Bank Balances d)Project expenses to be capitalised e)Unsecured Loans f)Capital work in progress List B 1)Share Capital 2)Fixed Assets 3)Long term Loans 4)Current Assets
1 b, d, f; 2 a; 3 e; 4 c
1 b, d, e; 2 c; 3 a; 4 f
1 a; 2 b, c; 3 d, e; 4 f
1 b; 2 d, f; 3 a, e; 4 c
In which of the following cases is the Net Working Capital affected?
Issue of shares to Vendors for the purchase of Building
Issue of Bills Payable to Creditors
Receipt of cash on account of sale of Machinery
Loss on Sale of Machinery
Which of the following is NOT a Source of Cash?
Payments of Cash dividends
Decrease in assets other than cash
Increase in Debentures
Increase in Liabilities
Which of the following would increase the Cash Flow of a firm?
Decrease in “Income in Advance”
An increase in the Prepaid expenses of the firm
An increase in Debtors
A decrease in Inventory
The “Statement of Changes in Financial Position” is used to analyse and plan all of the following EXCEPT:
The Gross Block in the Balance Sheet
The liquidity position of the firm
Causes of the changes in Working Capital or cash position
How much of the firm’s Working Capital needs have been met by the funds generated from current operations
In Ratio Analysis, “Time Series Analysis” refers to:
Making a Time Series of various ratios to assess the firm’s profitability.
A graphical comparison of the firm’s sources of finance.
The comparison of financial ratios over a period of time to assess the direction of change and the financial performance of the firm.
A comparison of Time values for various ratios of the firm.
In Ratio Analysis, “Cross-sectional Analysis” refers to:
Comparison of a firm’s ratios with those of a few selected firms (especially the competitors) computed at the same point of time
Picking up selected ratios and comparing it with other ratios
Comparison of the ratios of one section of the firm with the ratios of another department of the firm
Comparison of ratios of the firm over a period of time
Calculating Ratios for Industry Analysis implies all of the following EXCEPT:
Comparison of average of the industry with those of the firm.
It is not possible to standardize the accounting data of various firms following varied accounting policies.
It helps to assess the financial standing of the firm as compared to other firms in the same industry.
It is difficult to assess and rely on the average of ratios of the strong and weak firms in the industry.
In Ratio Analysis, “Pro Forma Analysis” implies:
Comparison of Liquidity Ratios with other kind of ratios of the firm.
Making a list of all the present Ratios of the firm
Comparison of the firm’s Past and Current Ratios with future Ratios to ascertain the relative strengths and weaknesses in the past and future.
Comparison of the ratios of the firm relating to the performance of the firm