Basic Theory Concepts of Financial Management Online Test

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

Test on Basic Theory Concepts of Financial Management checks the extent of clarity you have on the basics of Financial Management. These basic concepts come handy not just after the 10th Grade, but at all stages from Graduation to Post Graduation and other entrance and finance related Exams like Company Secretary, Chartered Financial Analyst and Chartered Accountancy. Here is an objective type Test on Basic Theory Concepts of Financial Management that covers topics including Nature and Scope of Financial Management and Analysis. You’ll also find questions on Financial Ratios, Financial Statements and Changes in Cash Flow and Fund Flow. Take this Test on Basic Theory Concepts of Financial Management and check your scores.

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K.Raja Shekar

what is owners residue

20 days 23 hours 51 minutes ago

G Ramesh

it is very usefull......

121 days 10 minutes ago

Rajiv Sobti

how do we know incorrect answers of the questions

125 days 16 hours 39 minutes ago


very very good.i wish to atempt more and more questions.

251 days 1 hours 43 minutes ago


good quiz but there should be time limit.

268 days 3 hours 54 minutes ago


good one

277 days 2 hours 13 minutes ago


This was a very intense quiz

1545 days 14 hours 39 minutes ago



1694 days 2 hours 6 minutes ago

Englishteacher Namrata Arora

Everyone attempting this test is eligible for the online Test Discussion class; irrespective of your score. Book your time slot for the Test Solutions classes starting from June 21, 2010. Mail Namrata on

1753 days 21 hours 59 minutes ago


great test..

1754 days 8 hours 45 minutes ago

Englishteacher Namrata Arora
English, Oral and Written English, CAT, GRE, IELTS, TOEFL, Management
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