1. Profit is (a)
a. Liability for a Business
b. Asset for a Business
c. Revenue earned for a Business
d. None of the above.
2. Debit in Accounts implies ( c )
a. A loss to the Business
b. The incurring of expenses
c. Writing on the left hand side of the T account.
d. None of the above.
3. Deferred revenue is ( a )
a. A liability
b. Asset
c. Capital expenditure
d. None of the above.
4. The difference between accounting treatment of interest and dividend is that,(b)
a. Both interest and dividend are charged as expenses.
b. Interest is charged as an expense, dividends are appropriated.
c. Dividends are charged as expense and interest is appropriated.
d. None of the above.
5. In the absence of profit sharing agreement partners share profits (a)
a. Equally.
b. In the ratio of invested capital.
c. They do not share profits but only take salaries.
d. None of the above.
6. Trial Balance contains items ( c )
a. Belonging to Profit and Loss account only.
b. Belonging to Balance Sheet only.
c. Belonging to both Balance Sheet and Profit and Loss Account without adjustments.
d. Belonging to both Balance Sheet and Profit and Loss Account with adjustments
7. Amongst Financial Accounting, Management Accounting and Cost Accounting, which discipline acts as an input provider to the other two,(b)
a. Financial Accounting provides inputs to Cost and Management Accounting.
b. Cost Accounting provides inputs to Financial Accounting and Management Accounting.
c. Management Accounting provides inputs to Cost Accounting and Financial Accounting.
d. None of the above.
8. Deferred Tax Assets are created when ( c )
a. Accounting income is equal to Taxable Income .
b. Accounting income exceeds taxable income.
c. Accounting income is less than the taxable income.
d. None of the above.
9. Deferred Tax Liabilities are created when (b)
a. Accounting income is equal to taxable income .
b. Accounting income exceeds taxable income.
c. Accounting income is less than the taxable income.
d. None of the above.
10. An organization expends INR 1,00,000 each on Research, Development, Manufacturing, Marketing, Distribution and Customer Support. While valuing inventory (d)
a. Cost incurred in all 6 disciplines should be included.
b. Cost incurred in Manufacturing, Marketing and Distribution to be included.
c. Cost incurred in Manufacturing, Marketing, Distribution and Customer Support to be included.
d. Cost incurred in Manufacturing to be included.
11. All things remaining same, increase in debtors implies (a)
a. Reduction in cash and cash equivalents.
b. Increase in cash and cash equivalents.
c. No impact on cash and cash equivalents.
d. None of the above.
12. In a cash flow statement , interest paid on loans taken for working capital purposes is classified as,
a. Operational Activity
b. Financing Activity.
c. Investment Activity.
d. Not considered in the cash flow statement.
13. Which of the following is a correct statement?(b)
a. Accounting in India is rule based.
b. Accounting in the EU is based.on principles
c. Accounting in the US is rule based
d. None of the above
14. Identify the correct statement from the following,(d)
a. The companies act directs the making of AS, the ICAI formulates and issues such standards.
b. The companies act requires accounting standards to be draw, the ICAI formulates such standards and the MCA issues them after validation.
c. The companies act requires the formulation of AS, the ASB of ICAI formulates them and the same are prescribed by the NACAS.
d. The central government prescribes the AS recommended by the ICAI in consultation with the NACAS.
15. Amortization in the accounting language refers to (d)
a. Depreciation on tangible assets
b. Depreciation on fixed assets.
c. Impairment.
d. Depreciation on intangible assets.
16. Identify the most correct statement from the following,(a)
a. Direct costs are costs which can economically and feasibly be traced with the cost object.
b. Direct costs are costs which can economically and feasibly be traced with the finished product.
c. Direct Costs refer to all costs incurred in manufacturing.
d. Direct costs are variable costs.
17. Standard fixed cost per unit in a manufacturing plant (b)
a. Should be imputed upon the higher of the installed and actually available capacities of the plant.
b. Should be imputed upon the lower of the installed and actually available capacities of the plant.
c. Should be imputed on the production budget of the plant.
d. Should be imputed upon the actual production of the previous year.
18. Which of the following statements is most correct ( c )
a. Identification of more variability in the cost structure helps being more precise in cost ascertainment and is always desirable.
b. Identification of more fixedness in the cost structure helps being more precise in cost ascertainment.
c. Identification of more variability requires more resources and makes it an expensive exercise, hence benefits of precision need to be weighed against such additional costs.
d. Identification of more fixedness requires more resources and makes it an expensive exercise, hence benefits of precision need to be weighed against such additional costs.
19. Identify the correct value chain from the following,(a)
a. Research –Development—Manufacturing—Marketing—Distribution—Customer Support.
b. Development - Research –Manufacturing—Marketing—Distribution—Customer Support
c. Research –Development—Manufacturing——Distribution— Marketing Customer Support
d. Marketing --- Research –Development—Manufacturing—Distribution—Customer Support
20. The max capacity of a plant is to produce 200 units per month. Standard fixed costs total INR 30,00,000/-. Variable costs per unit have been estimated as INR 40,000 per unit. 50% of these variable costs pertain to direct material. In a particular month 100 units were produced and available for sale. Assume zero inventory in beginning and end. The company desires a profit of 20% over cost. The selling price of this unit should be ,(a)
a. INR 66000
b. INR 84000
c. INR 80000
d. INR 55000
21. Refer to the question above. The production volume variance equals,(a)
a. (INR 15,00,000)
b. INR 15,00,000
c. (INR 55,00,000)
d. INR 55,00,000
22. Identify the correct statement, ( both ‘a’ or ‘d’)
a. Fixed cost per unit is variable.
b. Variable cost per unit is variable.
c. Fixed cost per unit is fixed.
d. Variable cost per unit is fixed.
23. If INR 10,00,000 is spend on electricity for producing 10000 units and INR 10,50,000 spend for producing 12500 units then variable cost per unit is,(a)
a. INR 20/ unit
b. INR 40/unit
c. INR 10/unit
d. None of the above.
24. Refer to question no 23. The fixed costs equal(a)
a. INR 800000
b. INR 1000000
c. INR 1050000
d. None of the above
25. A fixed cost that would be considered a direct cost is: ( c )
a. a controller’s salary if the cost object is a unit of product.
b. the cost of renting a warehouse to store inventory if the cost object is the Purchasing Department.
c. an order clerk’s salary if the cost object is the Purchasing Department.
d. the cost of electricity if the cost object is the Internal Audit Department.
26. In general, costs that can be most reliably predicted are: (d)
a. fixed cost per unit.
b. total cost per unit.
c. total variable costs.
d. variable cost per unit.
27. The monthly cost of renting a manufacturing plant is: ( c )
a. a prime cost and an inventoriable cost.
b. a prime cost and a period cost.
c. a conversion cost and an inventori-able cost.
d. a conversion cost and a period cost.
28. Anthony Company has budgeted its cost of goods sold at INR 4,000,000, including fixed costs of INR 800,000. The variable cost of goods sold is expected to be 75% of revenues. Budgeted revenues are: (a)
a. INR 4,266,667.
b. INR 4,800,000.
c. INR 5,333,333.
d. INR 6,400,000.
29. An assembly worker at a manufacturing company earns INR 12 per hour for straight time and INR 18 per hour for time over 40 hours per week. In a given week, the assembler worked 47 hours. The overtime premium for the week is: (b)
a. INR 6.
b. INR 42.
c. INR 84.
d. INR 126.
30. CVP analysis does not assume that: (a)
a. selling prices remain constant.
b. there is a single revenue and cost driver.
c. total fixed costs vary inversely with the output level.
d. total costs are linear within the relevant range.
31. The objective of financial management is,( C )
a. Profit maximization
b. EPS maximization
c. Wealth maximization
d. None of the above.
32. Cost of equity represents (a)
a. The expectations of shareholders.
b. The actual dividend paid to the share holders in the immediately preceding year.
c. The actual dividend paid to the shareholders in the previous few years..
d. The actual dividend to be paid to the shareholders in the forthcoming year.
33. Generally, cost of debt is (a)
a. Lower than cost of equity
b. Higher than cost of equity
c. Equal to cost of equity.
d. Independent of cost of equity.
34. EVA refers to (a)
a. A company earning more than its cost of capital.
b. A company earning less than its cost of capital.
c. A company earning equal to its cost of capital.
d. The difference between the issue price of share and its current market price.
35. All investment projects financed by long term loans should earn, (d)
a. More than the interest to be paid on loan..
b. More than the interest and principal to be paid on loan.
c. Equal to the interest and principal to be paid on loan.
d. Equal to or more than the cost of capital.
36. CAPM is used , (a)
a. To determine cost of equity
b. To determine cost of debt.
c. To evaluate a lease.
d. None of the above.
37. Debt is cheaper than equity because, ( c )
a. Of the tax shield.
b. The loan provider bears lesser risk than the equity holder.
c. Of both ‘a’ and ‘b’.
d. None of the above.
38. The discounting factor utilized for evaluating a lease ( c )
a. Equals the cost of capital
b. Equals the cost of equity
c. Equals the cost of debt.
d. Is decided by the management.
39. Trading on equity refers to (a)
a. The use of loan capital to maximize EPS.
b. The use of equity to minimize detrimental impact of loan capital.
c. The use of reserves for diversification purposes.
d. None of the above.
40. 2/10 net 30 implies (a)
a. Normal duration of payment is 30 days; 2% discount to be provided if payment made in 10 days.
b. Normal duration of payment is 10 days; 2% extra payment to be taken if payment made in 30 days
c. Normal duration of payment is 30 days; 10 % discount to be provided if payment made in 2 days
d. None of the above.
41. How many stock markets are there in India?
a. 2
b. 14
c. 21
d. 25
e. 30
42. Stock market is a
a. Private Corporate body
b. Public-Private Partnership
c. Government Corporate body
d. Public Sector Enterprises
43. SEBI rules are applicable on
a. Indian Banks
b. Reserve Bank of India
c. Stock Markets
d. Foreign Currency transactions
44. National Stock Exchange started its operation in
a. 1980
b. 1990
c. 1994
d. 2000
45. If Net Present Value and Internal Rate of Return are providing contradictory result then we should rely on
a. Net Present Value
b. International Rate of Return
c. Adjusted Present Value
d. Economic Value
46. For valuation of a company the manages has to rely on
a. Net Present Value of the company
b. Book Value of the company
c. Market value of the company
d. Economic Value of the company
e. All of the above
47. Certificate of deposit is a
a. Money market instrument
b. Capital Market instrument
c. Call money market instrument
d. None of the above
48. European option can be exercised on
a. The day of maturity
b. Before the day of maturity
c. Both a and b are correct
d. None of a and b is correct
49. Identify the correct statement, (d)
a. Firms with high fixed costs have high degree of operating leverage.
b. Firms with low fixed costs have high degree of operating leverage.
c. Firms with high variable costs have high degree operating leverage.
d. None of the above.
50. According to the dividend valuation model ( c )
a. Market price of the share is a function of current dividend.
b. Market price of the share is a function of past dividend
c. Market price of the share is a function of future dividend
d. Market price of the share is independent of dividend.
