Financial Management Set 11
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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 11
Q1 | Payment to creditors is a manifestation of cash held for:
- Transactionery Motive,
- Precautionary Motive,
- Speculative Motive,
- All of the above.
Q2 | If the closing balance of receivables is less than the opening balance for a month thenwhich one is true out of
- Collections>Current Purchases,
- Collections>Current Sales,
- Collections
- Collections < Current Sales.
Q3 | If the average balance of debtors has increased, which of the following might notshow a change in general?
- Total Sales,
- Average Payables
- Current Ratio
- Bad Debt loss
Q4 | Securitization is related to conversion of
- Receivables,
- Stock,
- Investments,
- Creditors.
Q5 | 80% of sales of 10,00,000 of a firm are on credit. It has a Receivable Turnover of 8.What is the Average collection period (360 days a year) and Average Debtors of the firm?
- 45 days and 1,00,000
- 360 days and 1,00,000,
- 45 days and 8,00,000
- 360 days and 1,25,000
Q6 | In response to market expectations, the credit pence r j been increased from 45 days to60 days. This would result in
- Decrease in Sales,
- Decrease in Debtors,
- Increase in Bad Debts,
- Increase in Average Collection Period.
Q7 | If a company sells its receivable to another party to raise funds, it is known as
- Securitization
- Factoring,
- Pledging
- None of the above.
Q8 | Cash Discount term 3/15, net 40 means
- 3% Discount if payment in 15 days, otherwise full payment in 40 days,
- 15% Discount if payment in 3 days, otherwise full payment 40 days,
- 3% Interest if payment made in 40 days and 15%,interest thereafter,
- None of the above.
Q9 | If the sales of the firm are . 60,00,000 and the average debtors are . 15,00,000 thenthe receivables turnover is
- 4 times
- 25%
- 400%
- 0.25 times
Q10 | If cash discount is offered to customers, then which of the following would increase?
- Sales
- Debtors
- Debt collection period
- All of the above
Q11 | Receivables Management deals with
- Receipts of raw materials
- Debtors collection,
- Creditors Management
- Inventory Management
Q12 | Which of the following is related to Receivables Management?
- Cash Budget
- Economic Order Quantity,
- Ageing schedule
- All of the above.
Q13 | EOQ is the quantity that minimizes
- Total Ordering Cost
- Total Inventory Cost,
- Total Interest Cost
- Safety Stock Level
Q14 | ABC Analysis is used in
- Inventory Management
- Receivables Management
- Accounting Policies,
- Corporate Governance.
Q15 | If no information is available, the General Rule for valuation of stock for balancesheet is
- Replacement Cost
- Realizable Value,
- Historical Cost
- Standard Cost
Q16 | In ABC inventory management system, class A items may require
- Higher Safety Stock
- Frequent Deliveries
- Periodic Inventory system
- Updating of inventory records.
Q17 | Inventory holding cost may include
- Material Purchase Cost
- Penalty charge for default,
- Interest on loan,
- None of the above
Q18 | Use of safety stock by a firm would
- Increase Inventory Cost
- Decrease Inventory Cost,
- No effect on cost
- None of the above
Q19 | Which of the following is true for a company which uses continuous review inventorysystem
- Order Interval is fixed
- Order Interval varies,
- Order Quantity is fixed
- Both (a) and (c)
Q20 | ABC Analysis is useful for analyzing the inventories:
- Based on their Quality
- Based on their Usage and value
- Based on Physical Volume
- All of the above
Q21 | If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit perannum, then EOQ
- (2AO/C) 2
- 2AO/C
- 2AĆ·OC
- 2AOC
Q22 | Inventory is generally valued as lower of
- Market Price and Replacement Cost
- Cost and Net Realizable Value
- Cost and Sales Value
- Sales Value and Profit.
Q23 | Which of the following is not included in cost of inventory?
- Purchase cost
- Transport in Cost,
- Import Duty,
- Selling Costs.
Q24 | Cost of not carrying sufficient inventory is known as
- Carrying Cost
- Holding Cost
- Total Cost
- Stock-out Cost
Q25 | Which of the following is not a benefit of carrying inventories
- Reduction in ordering cost,
- Avoiding lost sales,
- Reducing carrying cost,
- Avoiding Production Shortages.