Working Capital Management Set 5
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This set of Working Capital Management Multiple Choice Questions & Answers (MCQs) focuses on Working Capital Management Set 5
Q1 | 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.
Q2 | If the sales of the firm are . 60,00,000 and the average debtors are . 15,00,000 then the receivables turnover is
- 4 times,
- 25%,
- 400%,
- 0.25 times
Q3 | If cash discount is offered to customers, then which of the following wouldincrease?
- sales
- debtors,
- debt collection period,
- all of the above
Q4 | Receivables Management deals with
- receipts of raw materials,
- debtors collection,
- creditors management,
- inventory management
Q5 | Which of the following is related to Receivables Management?
- cash budget,
- economic order quantity,
- ageing schedule,
- all of the above.
Q6 | EOQ is the quantity that minimizes
- total ordering cost,
- total inventory cost,
- total interest cost,
- safety stock level.
Q7 | ABC Analysis is used in
- inventory management
- receivables management
- accounting policies,
- corporate governance.
Q8 | If no information is available, the General Rule for valuation of stock forbalance sheet is
- replacement cost,
- realizable value,
- historical cost,
- standard cost.
Q9 | In ABC inventory management system, class A items may require
- higher safety stock
- frequent deliveries
- periodic inventory system
- updating of inventory records.
Q10 | Inventory holding cost may include
- material purchase cost,
- penalty charge for default,
- interest on loan,
- none of the above.
Q11 | Use of safety stock by a firm would
- increase inventory cost
- decrease inventory cost,
- no effect on cost
- none of the above.
Q12 | Which of the following is true for a company which uses continuous reviewinventory system
- order interval is fixed,
- order interval varies,
- order quantity is fixed,
- both (a) and (c).
Q13 | EOQ determines the order size when
- total order cost is minimum
- total number of order is least,
- total inventory costs are minimum,
- none of the above.
Q14 | 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.
Q15 | If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unitper annum, then EOQ
- (2ao/c) 2 ,
- 2ao/c
- 2a÷oc,
- 2aoc.
Q16 | 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.
Q17 | Which of the following is not included in cost of inventory?
- purchase cost
- transport in cost,
- import duty,
- selling costs.
Q18 | Cost of not carrying sufficient inventory is known as
- carrying cost,
- holding cost,
- total cost
- stock-out cost
Q19 | Which of the following is not a benefit of carrying inventories
- reduction in ordering cost,
- avoiding lost sales,
- reducing carrying cost,
- avoiding production shortages.
Q20 | Which of the following is not a standard method of inventory valuation?
- first in first out
- standard cost,
- average pricing,
- realizable value.
Q21 | System of procuring goods when required, is known as,
- free on board (fob),
- always butter control (abc),
- jest in time (jit)
- economic order quantity.
Q22 | What is Economic Order Quantity?
- cost of an order,
- cost of stock
- reorder level,
- optimum order size.
Q23 | The type of collateral (security) used for short-term loan is
- real estate,
- plant & machinery,
- stock of good,
- equity share capital
Q24 | Which of the following is a liability of a bank?
- treasury bills,
- commercial papers,
- certificate of deposits,
- junk bonds.
Q25 | Commercial paper is a type of
- fixed coupon bond
- unsecured short-term debt
- equity share capital,
- government bond