Strategic Finance

1. Requirement for short term finance can be met through which of the following :
Ans - Issue of short term debentures, debenture can be issued at any predetermined fixed rate
also,offered at a floating rate,issue of share
2. Which of these are revealed in Gordon’s model of dividend policy?
Ans-the market value of the share po increase with the retention ratio,b,for thr firm with growth
opporunties when r>k, mrkt value of the share po,increase with the payout ratio(1-b)for declining
firm with r<k,mrkt value of the share is not affected by dividend policy when r=k,mkt value of the
share po increases with the payout ratio (1-b)for deciling firm with r=k
3. Tha company loses out on growth opportunities after a share buy-back to erosion of cash
resources
4. The close interaction among working capital implies what? : Efficient management
5. If according to terms of credit availability to the company it is required to make payment within the
stipulated period it should not make the payment before specified date : false
6. The traditional subject matter of merger and acquisition has been expended to include which of
the following groups of restructuring : Expansions, sell offs, corporate control
7. Defining a Asset value for individual staff may assist in decisions regarding the adoption of such
alternative form of organization
8. According to which of the methods of share repurchase, a company announces that it is willing to
buy its shares at a substantial premium above the market share : Signaling hypothesis
9. Long term investments are usually carried at cost
10. Capital structure implies the proportion of debt and equity in the total capital of a company
11. According to which of the following Modigliani Miller theorem it is considered unrealistic :
Transaction cost
12. Investment in current assets represents a substantial portion of total investment
13. The activity accountant will have to apply professional judgment while selecting data and
source
14. According to net operating income approach, Ko and Kd are constants for all level of leverage :
True
15. According to which method of share repurchase, if there is a tax subsidy associated with the
deductibility of interest payments on debt, and if this subsidy is passed through top the
shareholders, would the price of the stock increase : Leverage hypothesis
16. When a change in the method of depreciation is made, depreciation should be recalculated in
accordance with the new method from date of liability coming into use
17. Which of these costs cannot be identified under traditional system of accounting : services,
customer relationship, advertising
18. According to which of assumptions of walter’s model of dividend, do beginning earnings and
dividends never change : Constant EPS & DIV
19. Horizontal Merger - Glaxo welcome PLC and smith Beecham PLC Mega merger
Vertical Merger - Usha martin and usha beltron
Conglomeate Merger - Formed though the combination of unrelated business
Concentic Merger - Prudential’s acquisition of bache & company
20. Where a company has resorted to buyback of its shares, it can not make a further issue of the
same kind of securities within a period of 6 months
21. Which of these are the features of regular and stable dividend payments policy : Firms are
generally careful to set the dividend at a sustainable level, firms may cut dividends in adverse
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situations, firms are against cutting dividends because of the extremely unfavorable news it
conveys to the market
22. A business segment is a distinguishable component of an enterprise that is engaged in providing
an individual product or service or a group of related products or services : True
23. Which of these are the criticisms of walter’s model of dividend policy : No external financing is
simply valid, assumption of constant rate of return is not valid, constant opportunity cost of capital
does not hold true
24. An enterprises should disclose which of the following for each reportable segment : segment
revenue classified into segment revenue from sales to external customers and segment revenue
from transactions with other segments, segment result, total carrying amount of segment assets
25. According to cost and benefit of merger, benefit of merger is equal to the difference between the
value of the combined identity (PVAB) and the sum of the value of both firms as a separate unity :
True
26. Which of these policies results in slower growth and lower market price per share : High payout
policy
27. A primary issue in accounting for inventories in which of the following : determination of the value
at which inventories are called out
28. According to Gordon’s model of dividend policy assumption of constant cost of capital,
appropriate discount rate for the firm keeps on changing : True
29. Asset acquired under finance lease : for each class of assets the net carrying amount at the
balance sheet date; A reconciliation between total of minimum lease payments : Balance sheet
date and present value; Contingent rents : Income statement of profit and loss; Description of
lessee’s leasing arrangements including but not limited to : Basis on which contingent rent
payments are determined
30. The management of a business selects the most appropriate method of depreciation based on
various important factors like Type of asset
31. According to the capital structure theory of stakeholder which of these are implicit claims : Right
to provide service to customers, Job security for employers, satisfy the lenders
32. Determination of useful life of a depreciable asset is a matter of estimating and is normally
based on various factors including experience with similar type of assets.
33. According to Modigliani Miller theorem, time span of money has no influence on accounting
numbers : True
34. Mandatory implies Compulsory : True
35. According to Modigliani Miller theorem, which of these are shortcominigs of accounting numbers :
Firms use different kinds of accounting methods, business and financial risk do not have any
influence on accounting numbers, dividend policy has no influence on accounting numbers
36. In case of a company which has branches at different places, the company can have
decentralized collection centres : True
37. The cost of conversion include costs directly related to the units of production such as : Direct
Labour
38. The financial statements should disclose : The acc policies adopted in measuring inventories
39. Central disbursements involve increase in the transit time : True
40. Wastage is considered in direct traceable cost : False
41. A cash discount is different from a trade discount or a quality discount
42. Which of this information is required in order to apply DCF technique of the mergers : Estimation
of cash flow, Time of cash flow, Discount rate
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43. According to method of share buy-back, when the management of a company enters into a
negotiated purchase, what is it referred as : Greenfield
44. Which of these are the basic assumptions of the Modigliani Miller approach : Capital markets are
perfect, companies can be divided in homogeneous risk classes, there are no taxes
45. According to which of the processes the investors would borrow in the proportion of the degree of
leverage present in the firm : Arbitrage
46. For which of the financial decisions, the financial manager use the concepts of Capital Asset
Pricing Method (CAPM) : Valuation of securities, cost of capital measurement, investment risk
analysis
47. The quantum of depreciation to be provided in an accounting period involves the exercise of
judgment by management in the light of technical, accounting and Legal requirements
48. Examples of segment liabilities include which of the following : Trade and other payables,
Accured liabilities, Customer advances
49. Sales Per employee : General employment productivity; Recovery Rate : Aggregate
compensation and benefits then divide by revenue; Utilisation : Allocating appropriate work, profit
per head : Shareholders and business analysts
50. Developing the activity model involves knowledge of which of the following : Organisation
51. Which of these are the features of constant payout dividend policy : very few firms elect to pay
dividends that equal to a constant percentage of their earnings, For most firms earnings are quite
volatile fluctuating with changes in the economy and firms’c own special circumstances, the
volatility in the dividends will match the volatility in earnings
52. Field warehouse receipt is required when : The pledged inventory is located at the borrower’s
premises, company reserves a designated area on the borrower’s premises for inventory pledged
as collateral, company has sole access to the area and is supposed to maintain strict control over
it
53. Which of these are the results of the smoothing theory of dividends : Firms have long run target
dividend payout ratios, Managers focus more on dividend changes than absolute levels, dividend
changes follow shifts in the long run sustainable earnings
54. According to Investor theory of dividend, some of the investments would be in shares with high
payout ratio for consumption needs and others with low payout ratio for capital appreciation
55. Which of these are assumptions of Pecking order theory : Firms prefer internal ways to finance
projects, Firms adapt their target dividend payout ratios to available investment resources,
internal resources of a firm are fluctuating because of unpredictable fluctuations of profitability
56. Which of these are traceable cost : Personnel cost
57. Which of these are the important steps involved in the analysis of merger and acquisitions:
Planning, Searching and screening, Financial evaluation
58. The Specific costs that are attributed to identified items of inventory are termed as Specific
identification of costs
59. Compile bill of activities, find cost per cost object, ass direction cost and non traceable cost : are
steps involved in costing of raw materials, products and services : True
60. According to Modigliani Miller theorem, one of the problem of asymmetric information is that when
a company needs external capital, and therefore issues stocks, gains a lower price than the fair
value of the stocks : True
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61. According to capital asset pricing model, which of these are alpha risks, The risk that the
company managers will turn out to be bad, Global recession can not be eliminated through
diversification
62. All the risks and rewards incident to legal ownership are transferred by lessor in finance lease
63. Which of the following documents represents some investments that have no physical existence :
Shares, Debentures, Bonds
64. According to which type of merger, backword integration takes place when a manufacturer , finds
a cheap source of raw material : Vertical merger
65. Firm’s value in merger : Quantitative and qualitative factors; Book value in Merger : Balance
sheet value of owner’s equity; Appraisal value in merger : Replacement cost of assets; market
value in merger : Stock market quotations
66. Throughout the activity of the accounting process the resultant cost is a true cost : True
67. A single organization activity model allows for : More than one project team, multiple teams in
operations at the same time, no different perceptions
68. In which of these activities the value of the output is less than the value of inputs : Significant cost
consumption
69. The input in the activity are in the form of : Materials and information
70. Traditional accounting systems are adequate for more than the intended purpose : False
71. According to Modigliani Miller theorem, the more a firm finances his business with debts, the less
the corporate taxes are
72. When two companies merge through an exchange of shares, the shareholders of selling
company can save tax : True
73. Which theory of merger states that when the cash flow rate of the acquirer is greater than that of
the acquired firm, capital is relocated to the acquired firm and its investment opportunities
improve : Financial synergy theory
74. Which of these are the cons of the share repurchase : May have a negative signaling effect on
the market place, management may not seek to utilize any existing excess cash effectively by
acquiring new investments, possible mismanagement may arise if too high a price is paid for the
repurchased shares
75. An investment that is by nature readily realizable and is intended to be held for not more than one
year, is called current investment
76. Investment in current assets and level of current liabilities have to be quick to change in records
77. Unilateral action of the activity accountant does not display performance of organization
78. The deficiency or surplus arising from the retrospective recomputation of depreciation in
accordance with the new method should be adjusted in accounts in year in which the method of
depreciation in respect of past years
79. The wages bill may be understood but other financial aspects of employee / HRM decisions are
not always so well appreciated : True
80. From the investors point of view which of these documents is important : Divident documents
81. The primary aim of commercial business enterprises is to generate and secure wealth for its
owners
82. Revenues = total operating income
83. Expenses = operating expenditure excluding
84. Profit = R less E= Revenue less
85. Cash less rewards = emoluments, salaries
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86. according to Modigliani- Miller Theorem, the more a firm finances his business
with debt, the less the corporate taxes are.
87. according to which method of share buy-back, based on the old received the
company selects the offer price from lowest price onwards at which the
cumulative number of shares offered equals or exceeds the maximum
number of shares the company proposes to buy: book-building method.
88. which of the following are the methods of share buyback? Repurchase
tender offers; open market purchases; privately negotiated
repurchases
89. the tender offer is used primarily for large equity repurchases.
90. the management of a business selects the most appropriate method of
depreciation based on various important factors like type of asset.
91. the portions of organisations not involved in the project have a little
understanding.
92. according to the net income approach, capital structure is relevant to the
valuation of the firm. True
93. according to the net operating income approach, Ko and Kd are constants for
all levels of leverage. True
94. according to Modigliani- Miller Theorem, in asymmetric information costs,
who knows more about the firm than the shareholders and debt financiers?
Firm Managers
95. in case of a company which has branches at different places, the company
can have decentralized collection centres. True
96. if there is any suspicion or fear, the data becomes questionable.
97. “the corporate tax savings from interest deductions will be offset completely
by the gross- up of interest payments necessary to induce the marginal
investor to hold corporate debt” this is called the Miler equilibrium.
98. some of the most difficult portions of cost are: to capture; to distribute;
overheads
99. the activity based accounting analysis provides a meaningful appraisal of
the identified activity costs along several dimensions.
100. Assets acquired under finance lease = for each class of assets the net
101. A reconciliation between total of minimum lease payments = balance sheet
date and present
102. Contingent rents = income statement of profit and
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103. description of lessee’s leasing arrangements including but not limited to =

basis on which contingent rent
104. which of these costs are considered as overhead costs? Electricity; wages
and salaries
105. business and geographical segments of an enterprise for external reporting
purposes should be which of the following? Organisational units; Board of
Directors; CEO
106. according to Walter model of dividend, in case of growth firms, internal rate is
more than opportunity. True
107. the specific costs that are attributed to identified items of inventory are
termed as: specific identification of costs
108. which of these are the features of regular and stabled dividend payment
policy? Firms are generally careful to set the dividend at a
sustainable level; firms may cut dividends in adverse situations;
firms are against cutting dividends, because of the extremely
unfavourable news it conveys to the market
109. mergers and acquisitions lead to diseconomies of scale and decrease income
with proportionality high investment. False
110. which of these are the empirical results of capital asset pricing method
(CAPM)? The positive relationship between returns and betas are not
strong; no relationships between betas and returns; Ex-ante model
111. the resources and managerial efforts are realigned by the activity model with
which of the following? Real functions
112. which of the approaches is stated on a perfect market? Modigliani-Miller
Approach
113. according to Gordon’s dividend capitalization model, market value of a share
is equal to the present value of an infinite stream of dividends to be received
by shareholders. True
114. according to cost and benefits of the merger, the benefit of the merger is
equal to the difference between the value of the combined identity (PVAB)
and the sum of the value of both firms as a separate unity. True
115. segment expense is the aggregate of which of the following? The expenses
resulting from operating activities of a segment that is directly
attributable to the segment; relevant portion of enterprise expenses
that can be allocated on a reasonable basis to the segments;
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expense relating to transactions with other segments of the

enterprise
116. the organisation’s accounting system is not the major source of cost data.
False
117. according to which theory of capital structure does a firm not have a certain
target debt ratio? Pecking order theory
118. according to Modigliani- Miller Theorem, transaction costs keep firm
managers from 100% debt financing.
119. contingent rents are recognised as income in the statement of profit and
loss for the period.
120. which of these are traceable costs? Personnel costs
121. according to which of the approaches overall capitalization rate remains
constant for all levels of financial leverage? Net operating income
approach
122. the limitations of which of the dividend models are similar? Walter and
Gordon model
123. according to Modigliani- Miller Theorem, in agency costs, the conflict of
interest between the groups gives rise to costs, both opportunity and real
costs, which decrease the market value of the firm. True
124. the risks and returns of an enterprise are influenced by the geographical
location of its operations and also by: the location of its customers; the
location of production or service facilities and other assets of an
enterprise; the location of its employees
125. which of these steps are involved in costing of raw materials, products and
services? Ascertain nature of costs; separate primary and secondary
activities; account all traceable costs per activity
126. central disbursements involve increase in the transit time. True
127. the arbitrage process ensures the investor the same return at lower outlay
as he was getting by investing in the firm whose total value was higher and
yet his risk is not increased.
128. in which of these activities the value of the output is less than the value of
the inputs. Significant cost consumption
129. the objective of activity model is that the costs are to be gathered and
allocated within the organisation at lowest possible structural layer.
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130. depreciation in loss of value of an asset is described as: a measuring of

wearing out; consumption or other loss of value of a depreciable
asset arising from use, passage of time; distribution of total cost of
assets over its useful life
131. according to traditional system of accounting, which of these do not have a
proper system of allocation? Inflation; interest rate
132. what is the focus of the investor rationally theory of dividend? Psychological
preferences of individual investor
133. which of these models concludes that the expected return of an asset equals
the riskless return plus a measure of the assets non- diversifiable risk times
the market-wide risk premium? Capital asset pricing model
134. according to which model of share buy-back, shareholders are invited to
make bid quoting a price and the number of shares offered for buyback?
Book-building method
135. which of these models is more difficult to implement in practice compared to
binomial option pricing model. Capital asset pricing model
136. in case of a company which has branches at different places, the company
can have decentralized collection centres. True
137. which of these are important guidelines of SEBI for takeovers of listed
companies? Notification; trigger point for public offer; offer price
138. requirements for short term finance can also be met through which of the
following? Issue of short term debentures; debentures can be issued
at any predetermined fixed rate also; offered at a floating rate
139. which of these are the shortcomings of Modigliani- Miller Theorem: the
highly leveraged a firm, the less chance there is to obtain the tax
shield; there does not exist an optimum capital structure for a
individual firm; at a certain points, the raise of bankruptcy costs is
higher than the tax shield
140. according to legal provisions of the company’s act, which of these are the
prohibition for buyback in certain circumstances? Through any subsidiary
company including its own subsidiary companies; through any
investment company or group of investment companies; if a default
is subsisting in repayment of deposits or interest due, redemption of
debentures or preference shares
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141. which capital provides expert services as consulting, financial planning and
assurance services which are valuable and very much in demand? Human
capital
142. bill of activities = description of the route a product
143. performance measures = quality, cost, flexibility, efficiency
144. output measures = need to be measured for proper
145. cost objects = it may be services, marketing
146. financial statements classify fixed assets investments and: current assets
147. which of these costs are considered as overhead costs? Electricity; wages
and salaries
148. which factors should be considered in identifying geographical segments?
Similarity of economic and political conditions; proximity of
operations; exchange control regulations
149. which of these is a basic element of vertical merger? Costs of searching for
prices; contracting; payment collection and advertising
150. what type of date does the acquiring firm require during planning analysis?
Market growth; nature of competition; capital and labour intensity
151. returning excess cash by way of a share buy-back gives a company greater
flexibility with regard to its dividend policy.
152. according to Miller-Modigliani model of dividend, when does the situation
arise that the firm does not have sufficient cash to pay dividends? The firm
issues new shares to finance the payment of dividends; wealth of the
shareholders does not change; the existing shareholders transfer a
part of their claim to the new shareholder in exchange or cash
153. according to Modigliani- Miller Theorem, one of the problem of asymmetric
information is that when a company needs external capital, and therefore
issues stocks, gains a lower price than the fair value of the stocks. True
154. process analysis to be identified and focus should be on basis of which of the
following objections: not adhering to benchmarks
155. the specific costs that are attributed to identified items of inventory are
termed as: specific identification of costs
156. overtime = overstates true costs
157. overhead expense = utilities, maintenance
158. support elements = no contribution to output
159. operational = contribute to output
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160. according to which of the approaches any change in leverage will not lead to
any change in the total value of the firm and market price of shares? Net
operating income approach
161. the current accounting system is not able to provide the actual value of a
company, as each year the cost on human resource development are
recruitment increases.
162. according to the financial framework of a merger, which of these qualitative
factors of value are difficult to determine? Managerial talent; strong sales
staff; excellent production department
163. according to financial evaluation during merger and acquisition, in a
competitive market structure with capital market efficiency, the current
market value is the correct and fair value of the share of the target firm. True
164. the value of human capital to organisations is also known as intellectual
capital of the organisation.
165. which type of merger involves two firms that operate and complete in a
similar kind of business? Horizontal merger
166. FTE is full time equivalent staff. True
167. according to the net income approach, capital structure is relevant to the
valuation of the firm. True
168. an accountant sees an asset as something with a value on the balance sheet.
True
169. the cost of an investment includes acquisition charges such as brokerage,
fees and duties.
170. developing the activity model involves which of the following? Interviews
with other subject matter experts
171. the company cannot afford to keep the cash idle as it involves opportunity
cost in investment of excess cash balance. True
172. which of the following are the methods of share buyback? Repurchase
tender offers; open market purchases; privately negotiated
repurchases
173. the operational justification of Modigliani- Miller approach is the arbitrage
process.
174. a major deterrent of HRA is due to the lack of which aspect? Industry
standards
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175. a good working condition for a worker may increase worker efficiency, but
does not add value to a customer. True
176. which of these theory of merger, discuss indivisibilities of resources like
people, equipment and overhead? Operating synergy theory
177. estimates become more reliable when managers are not closer to actual
work. False
178. excessive levels of current assets can easily result in a firm realising a
substandard return on investment.
179. which of these policies has more current dividend and less retained earnings?
High payout policy
180. which of the following are the basic assumptions of the Net Income
Approach? There are no taxes; cost of debt is less than equity-
capitalization rate; use of debt does not change the risk perception
of investors
181. it is important to overcome the strain by keeping extensive records of
processes and procedures. True
182. at the inception of finance lease the lessee should recognise the lease as an
asset and a liability at an amount equal to value of leased asset at inception
of lease.
183. a trade discount is greater for one class of customers than for others; greater
for wholesalers than for Retailers.
184. non- traceable cost should be less than 5% of the activity.
185. from the investor’s point of view which of these documents is important?
Dividend document
186. what type of date does the acquiring firm require during planning analysis?
Market growth; nature of competition; capital and labour intensity
187. the voluntary rewarding method develops a consistent framework supported
by rewarding mechanisms once introduced and approved at enterprise
level.
188. which of these are types of value chain? Primary activities; secondary
activities
189. according to investor theory of dividend, some of the investments would be
in shares with high payout ratio for consumption needs and others with low
payout ratio for capital appreciation.
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190. according to activity based costing, which of these are involved in decision
process to construct the wall by the contractor? Design Wall; Build Wall;
Backfill Wall
191. according to residual theory of dividends, when a firm attracts investors
falling into a particular dividend clientele, it suggests that the firm should
vary the dividend policy for them. False
192. the activity based costing is a process that requires professional
judgement and creativity when applied to a traditional business process
model.
193. the activity accountant will have to apply professional judgement while
selecting data and source.
194. according to which of the methods of share repurchases, a company
announces that it is willing to buy its shares at a substantial premium above
the market share? Signaling hypothesis
195. according to which method of share buy-back, the deposit in the escrow shall
be made before the date of the public announcement? Book building
196. according to methods of buy-back, the tender offer price is generally higher
than the market price at the time of offer. True
197. which of these are the currently established accounting system to capture
and distribute resource cost? organisational element; budgetary
account; traditional cost accounting
198. warehouse receipt can be non-negotiable or negotiable. A non-negotiable
receipt is issued in favour of a specific party in which of the following cases?
In case the lender is given the title to the goods; lender has the sole
authority to release the title
199. which capital provides expert services as consulting, financial planning and
assurance services which are valuable and very much in demand? Human
capital
200. open market share repurchase occurs less often than tender offers to
repurchase. False
201. which of the following are advantages of Modigliani- Miller Theorem when
firm’s capital structure consists of a high proportion of debt? Fiscal
advantage; financing with a high percentage of debt prevents firms
from investing too much; employees are trade unions will diminish
their demands
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202. the difference between current assets and liabilities is called Net Working
Capital.
203. which of these are measured by activity based costing? Determined the
cost of business process outputs; identifies opportunities to improve
process efficiency and effectiveness; measures process and activity
performance
204. according to which theory of dividend, increase in the firm’s investment
schedule should result in growth in the value of shares to the extent that
retained cash flows are reinvested in profitable projects? Span of control
theory
205. according to financial evaluation during merger and acquisition, the acquiring
firm will pay premium if it thinks that after merger by improving the
operations and due to synergy it can increase the target firm’s market value.
True
206. time required from receiving the cheque from the customer through the post
office is called Postal Float.
207. there are no changes in the organisation and its missions. False
208. activity accounting is a fully inclusive management information concept.
209. bank credit = source of financing working
210. overdraft = borrower is allowed to withdraw
211. cash credit = company need not have a formal
212. bills purchased = borrower can obtain credit from
213. the raw materials of the firm required for production purposes may be bought
in cash or credit.
214. according to which method of share repurchases, do excess cash and
marketable securities finance the repurchases? Leverage hypothesis
215. arbitrary allocations based on the best understanding makes the selected
distribution as strong as accuracy of assumptions.
216. the activity accountant in full enterprise: interacts with major elements;
determines allocations; allocates overheads
217. according to regulations of mergers and acquisition, financial support is a
useful device for improving the quality of management and efficiency of
operations. True
218. according to which theory of dividends, the firm should follow its policy of
accepting all positive NPV projects? Residual theory
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219. in traditional organisations, the only costs that are identified to the
organisational elements are the direct salary costs.
220. which theory of dividend focuses on growth? Residual theory
221. Walter’s model of dividend = the payouts of cash dividends is
222. Gordon’s model of dividend = the retained earnings are
223. Miller-Modigliani model of dividend = dividend policy, growth and the
224. bird in the hand model of dividend = dividends are preferred to
225. which of these are direct traceable costs? Raw materials; sub assemblies
226. according to Modigliani- Miller Theorem managers also invest in projects that
will improve their prestige or power. True
227. according to Modigliani- Miller Theorem, the chances of bankruptcy are
small when the leverage of firm is small.
228. which of these types of cost are included in activity-based costing? Product
innovation cost; brand building cost; service cost
229. which of the theories of merger is not relevant to the conglomerate type of
mergers? Managerial synergy theory
230. according to mergers and acquisitions, total risk reduces if operations of
combining firms are positively correlated. False
231. according to traditional system of accounting, which costs in turn lead to
distortion of cost? cost of innovation; new technology; new methods
232. according to which of the assumptions of Miller- Modigliani model of dividend,
r = k = kr for all? No risk
233. open account credit appears on the buyer’s balance sheet as accounts
payable.
234. which of these are involved in financial evaluation of merger: Determining
the earnings and cash flows; area of risk; maximum price payable to
target company
235. which of these are quantitatively measured in activity based costing? Cost
and performance of activities; resources and cost objectives;
overheads
236. what does ROI stands for? Return on investment
237. for full activity model, pertinent costs are to be captured that pertain to
total cost structure.
238. costs of infrastructure for initiating and maintaining contracts of employment
and co ordinating the employer’s policies and practices in respect of
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delivering its obligations to those that it employs, is a legal obligation for the
employer.
239. firm’s value in merger = quantitative and qualitative factors
240. book value in merger = balance sheet value of owner’s equity
241. appraisal value in merger = replacement cost of assets
242. market value in merger = stock market quotations
243. in case of dividend taxation hypothesis, investors can offset tax liabilities in a
number of ways. True
244. for which of the financial decisions, the financial managers use the concepts
of capital asset pricing method (CAPM)? Valuation of securities; cost of
capital measurement; investment risk analysis
245. the inputs in the activity are in the form of: materials and information
246. which of these are the basic assumptions of the Modigliani-Miller approach?
Capital markets are perfect; companies can be divided in
homogeneous risk classes; there are no taxes
247. according to share buy-back, fixed price tender offers are accompanied by an
abnormal announcement period return of how much percentage? 8-10%
248. a business segment is a distinguishable component of an enterprise that is
engaged in providing an individual product or service or a group of related
products or services. True
249. while financing mergers, what is the future payment linked to the firm’s
earnings called? Earn-out plan
250. according to methods of share buy-back, which of these can be spread out
over longer time periods than tender offers? Open market purchase
251. the managerial cost data cannot be applied until the activities are defined for
the organisation model. This defines: activity based accounting
252. the primary aim of commercial business enterprise is to generate and secure
wealth for its owners.
253. according to which share repurchase model, the borrowing rate equals the
lending rate? Capital asset pricing method
254. the sale of an asset by the vendor and leasing of same asset back to the
vendor happens in sales and leaseback.
255. capturing all relevant expenses that pertain to selected model is called
gather costs.
 Strategic Finance

256. the best time to frame look for an appropriate and sufficient amount of data
is first previous full fiscal year. True
257. according to which method of financing merger, the purchaser approaches
the shareholders of the firm and encourages them to sell their shares
generally at a premium over the current market price? Tender offers
258. a merger will create an economic advantage when the combined present
value of the firms is greater than the sum of their individual present values as
separate entities.
259. according to Modigliani- Miller Theorem, in agency costs, which of these form
groups of participants in a firm? Supplier of equity; debt supplier; firm
managers
260. which of these are provided by financial conglomerates? Flow of funds to
every segment of their operations; exercise control; ultimate
financial risk taking
261. according to pure diversification theory of merger, how does a firm preserve
its reputation and goodwill? Investment in advertising; investment in
employees; research and development
262. costs are allocated based on the interviews with managers on the functions.
True
263. the most crucial financial decisions of the organisation are taken by financial
manager.
264. what does HRA stands for? Human resource accounting
265. types of trade credit are which of the following? Notes payable; trade
acceptances; open accounts
266. what type of data the target firm requires before planning for merger?
Quality of management; profitability; production and marketing
capabilities
267. investment in current assets represents a substantial portion of total
investment.
268. all the risks and rewards incident to legal ownership are transferred by lessor
in finance lease.
269. investment in current assets and level of current liabilities have to be quick to
change in records.
270. organisational changes are similar to mission changes. True
 Strategic Finance

271. the costs of conversion include costs directly related to the units of
production such as: direct labour
272. defining a asset value for individual staff may assist in decisions regarding
the adoption of such alternative forms of organisation.
273. time require by the banker of the company to collect the payment from
customer’s bank is called bank float.
274. according to the capital structures theories, which of the theory presumes
that there are enormous conflicts of interest between shareholders and
stakeholders? Free cash flow theory
275. when is this type of interest accrued before the acquisition of an interest-
bearing investment, and is therefore included in price paid for investment?
Unpaid interest
276. according to which model of dividend, in a world without any market
imperfections like taxes, transactions costs or asymmetric information, a
company’s dividend policy should have no effect on its market value? Miller-
Modigliani model
277. total cost of activity = is the total amount of direct and
278. cost driver = the number of iterations and
279. elapsed time = an iteration of the cost driver
280. cycle time = iteration of the cost driver without
281. which of these methods of value assets and calculating the cost of capital for
an alternative has come to dominate modern finance? Capital Asset Pricing
Model
282. the full enterprise model has: adequate time; adequate capability;
adequate funds
283. the service sector emphasizes the qualities and expertise of staff. True
284. which of these are assumptions of pecking order theory? Firms prefer
internal ways to finance projects; firms adapt their target dividend
pay-out ratios to available investment resources; internal resources
of a firm are fluctuating because of unpredictable fluctuations of
profitability
285. wastage is considered in direct traceable cost. False
286. investments = carried to profit
287. assets = stock in trade
288. shares and debentures = securities
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289. long term investments = carried to costs

290. the financial statements should disclose the accounting policies adopted in
measuring inventories. True
291. according to Gordon’s model of dividend policy assumption of constant cost
of capital, appropriate discount rate for the firm keeps on changing. False
292. if rights are not subscribed to but are sold in the market, the sale proceeds
considered in the profit and loss statement.
293. according to the dividend payment procedures, the date from which the stock
begins to trade without the right to receive the dividend declared is called
Ex-dividend date.
294. which of these are involved in financial evaluation of merger? Determining
the earnings and cash flows; areas of risk; maximum price payable
to target company
295. which of these are the features of constant payout dividend policy? Very few
firms elect to pay dividends that equal to a constant percentage of
their earnings; for most firms, earnings are quite volatile, fluctuating
with changes in the economy and firm’s own special circumstances;
the volatility in the dividends will match the volatility in earnings
296. according to mergers and acquisitions, how can the companies enhance
profitability? Economies of scale; operating economies; synergy
297. which of these may not accurately explain the investment behaviour of
investors and beta may fail to capture the risk of investment? Capital asset
pricing model
298. the activity is defined as a unique process when it processes which of the
following? Processes inputs and produces output
299. the equity method comprises which of the following: accounting whereby the
investment is initially recorded at cost; identification of good will or capital
reserve arising at the time of acquisition; the carrying amount of investment
is adjusted thereafter for the post-acquisition change in investor’s share of
results of operations of the investee
300. if according to terms of credit available to the company it is required to make
payment within the stipulated period it should not make the payment before
specified date. True
301. which of these are the problems of earn-out plan during financing merger?
Target firm should be capable of operating autonomous business
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entity; there should be freedom of operation to the management of

the newly acquired firm; there must be willing cooperation to work
towards the success and growth of target firm
302. which index takes into account the market shares of all firms in the industry.
Herfindhal-Hirchman Index
303. the classification of leases adopted in the statement, is based on the extent
to which risks and rewards incident to ownership of a leased asset lie with
lessor or the lessee.
304. according to the stakeholder theory of capital structure, financial structure
may also depend on a firm’s net organisational capital and on the nature of
its stakeholders. True
305. according to method of share buy-back, when the management of a company
enters into a negotiated purchase, what is it referred as? Greenfield
306. in pursuit of competitiveness and profits, firms will implement redundancies
also called: down-sizing or right sizing
307. a great deal of time is spend by finance manager in doing which of the
following? Controlling the movement of cash; monitoring investment
in inventories; administering accounts receivables
308. determination of residual value of an asset is normally a difficult matter.
309. the company shall buy-back its shares through the stock exchange as
provided the public announcement shall be made at least 7 days prior to the
commencement of buy-back.
310. which share repurchases model describes the relationship between risk and
expected return, and serves as a model for the pricing of risky securities?
Capital asset pricing model
311. according to Walter model of dividend, which of these are summarized in
declining firms? Optimum payout ratio is 100 percent; when r < k the
firm should not reinvest any profit
312. use of promissory notes instruments and trade acceptance is limited as
compared to open trade credit.
313. traditional accounting systems are adequate for more than the intended
purpose. False
314. which of this information is required in order to apply DCF technique of the
mergers? Estimation of cash flows: time of cash flows; discount rate
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315. which of these are the advantages of mergers and acquisitions? Infusion of
better management; consolidating capacities to economic level;
healthy growth of capital market
316. when two companies merge through an exchange of shares, the shareholders
of selling company can save tax. True
317. in which of these activities is there evidently larger consumptions of inputs
and mechanisms? Significant cost consumption
318. which of these types of cost are included in activity-based costing? Product
innovation cost; brand building cost, service cost
319. investment decisions of the firm affects the asset decisions.
320. according to Modigliani- Miller Theorem, which of these are shortcomings of
accounting numbers? Firms use different kinds of accounting numbers;
business and financial risks to not have any influence on accounting
numbers; dividend policy has no influence on accounting numbers
321. according to FEI survey, how much percentage of share repurchase is found
under use of shares in mergers and acquisitions? 5.7
322. according to financial evaluation during merger and acquisition, if the
acquiring firm pays cash equal to the value of the acquiring firm, then the
entire advantage of the merger will accrue to the shareholders of the
acquiring firm. True
323. hedging approach is a method of financing where each asset would be offset
with which of the following? Financing instruments; an instrument with
adequate maturity
324. conducting informal interviews within the other portions of organisation
determines casual relationships.
325. according to pure diversification theory, which of these results in financial
synergy and tax benefits? Increases the corporate debt capacity;
reduces the present value of future tax liability of the firm
326. which of these are disadvantages of tender offer during financing merger: if
the target firm’s management attempts to block it, the cost of
executing the offer may increase substantially; the purchasing
company may fail to acquire a sufficient number of shares to meet
the objective of controlling the firm
327. the capital asset pricing method provides a logic and quantitative
approach for estimating risk.
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328. the crux of Miller-Modigliani model is that shareholders do not necessarily

depend upon dividends for obtaining cash.
329. according to which of these theories of share repurchases are cash dividends
taxable at ordinary tax rates? Tax differential theory
330. disposal of investments = difference between carrying
331. profits and losses = difference between assets and
332. accounting standards = accounting for investments in
333. control = ownership
334.
335. dealers = buying or leasing an asset
336. customer = borrowing of funds
337. profit or loss = on basis of negotiation between
338. sales revenue = profit from outright sale of asset
339. ABC has to fit in with which of the following? Strategy of the company
340. according to which model of dividend, the market discounts future earnings
according to the risk of the company, regardless of whether those earnings
will be retained or distributed? Bird in hand theory
341. according to Modigliani- Miller Theorem, the result of asymmetrical
information is that companies must provide reliable information that is less
costly. False
342. gather costs involves capturing, constructing or synthesising correct
figures.
343. a tender offers as a method of acquiring a firm involves a bid by the
acquiring firm for controlling interest in the acquired firm.
344. examples of events or transactions that generally give rise to extraordinary
items for most enterprises are: attachment of property of the
enterprise; an earthquake
345. the revenue from sales to external customers, as reported in the statement of
profit and loss, is called enterprise revenue.
346. the firm’s investment in current assets like cash, inventory etc are called
gross working capital.
347. according to the dividend payment procedures, the date on which the
announcement is made of new dividend is called declaration date.
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348. mergers and acquisitions create an image of aggression and strategic

opportunism, empire building and amassing vast economic powers of the
company. True
349. lease income from operating leases should be recognised in statement of
profit and loss on a straight line basis over lease term.
350. according to which method of share repurchase, if there is a tax subsidy
associated with the deductibility of interest payments on debt, and if this
subsidy is passed through to the shareholders, would the price of the stock
increase. Leverage Hypothesis
351. the indirect costs of production that remain relatively constant regardless of
volume of production like depreciation and maintenance of factory buildings
are called as: Fixed Production Overhead
352. an enterprise should disclose which of the following for each reportable
segment: segment revenue classified into segment revenue from
sales to external customers and segment revenue from transactions
with other segments; segment result; total carrying amount of
segment assets
353. control of the composition of the board of directors in the case of a company,
of the corresponding governing body in case of any other enterprise, to
obtain economic benefits from its activities includes which of the following? A
subsidiary which is an enterprise that is controlled by another
enterprise; a parent which is an enterprise that has one or more
subsidiaries; a group which is a parent and all its subsidiaries
354. which of the types of strategies can be employed in corporate acquisitions?
Friendly takeover, hostile takeover
355. according to which theory of dividend, a firm should pay a low or zero
dividend in order to minimize its cost of capital and maximise its value. Tax
differential
356. the terms ‘2/10, net 30’ indicate that the seller offers a 2 percent discount if
the bill is paid within 10 days else the buyer may pay full amount within 30
days.
357. attempts should be made by the company to get maximum credit for goods
or service supplied. True
 Strategic Finance

358. according to the capital structure theory which of these reduces the freedom
of decisions, because a firm is forced to pay at certain times interest and
payoffs? Debt
359. a cash discount is different from a trade discount or a quantity discount.
360. according to which of the processes the investors would borrow in the
proportion of the degree of leverage present in the firm? Arbitrage
361. the quantum of depreciation to be provided in an accounting period involved
the exercise of judgement by management in the light of technical,
commercial accounting and legal requirements.
362. examples of segment liabilities include which of the following? Trade and
other payables; accrued liabilities; customer advances
363. sales per employee = general employee productivity
364. recovery rate = aggregate compensation and benefits then divide by
revenue
365. utilisation = allocating appropriate work
366. profit per head = shareholders and business analysts
367. developing the activity model involves knowledge of which of the following?
Organisation
368. field warehouse receipt is required when: the pledged inventory is
located at the borrower’s premises; company reserves a designated
area on the borrower’s premises for inventory pledged as collateral;
company has sole access to the area and is supposed to maintain
strict control over it
369. which of these are the results of the smoothing theory of dividend? Firms
have long-run target dividend payout ratios; managers focus more
on dividend changes than absolute levels; dividend changes follow
shifts in the long run, sustainable earnings
370. organisation can find out which of the following assets of a company are
often worth 3 or 4 times the tangible book value? Intellectual aspects
371. which of these are the important steps involved in the analysis of merger and
acquisitions? Planning; searching and screening; financial evaluation
372. compile bill of activities, find cost per cost object, add direct cost and non-
traceable cost’, are steps involved in costing of raw materials, products and
services. True
 Strategic Finance

373. according to capital asset pricing model, which of these are alpha risks? The
risk that the company managers will turn out to be bad; global
recession cannot be eliminated through diversification
374. the estimated selling price in the ordinary course of business less the
estimated costs of completion and estimated costs necessary to make the
sale, is called which of these? Gross realizable value
375. which of the following documents represent some investments that have no
physical existence? Shares; debentures; bonus
376. according to which type of merger, backward integration takes place when a
manufacturer, finds a cheap source of raw material? Vertical merger
377. throughout the activity of the accounting process the resultant cost is a true
cost. True
378. a single organisation activity model allows for: more than one project
team; multiple teams in operation at the same time; no different
perceptions
379. which theory of merger states that when the cash flow rate of the acquirer is
greater than that of the acquired firm, capital is relocated to the acquired firm
and its investment opportunities improves? Financial synergy theory
380. which of these are the cons of the share repurchase? May have a negative
signaling effect on the market place; management may not seek to
utilise any existing excess cash effectively by acquiring new
investments; possible mismanagement may arise if too high a price
is paid for the repurchased shares
381. an investment that is by nature readily realizable and is intended to be held
for not more than one year, is called current investment.
382. unilateral action of the activity accountant does not display performance of
organisation.
383. mandatory implies compulsory. False
384. the deficiency or surplus arising from the retrospective recomputation of
depreciation in accordance with the new method should be adjusted in
accounts in year in which the method of depreciation in respect of past
years.
385. the wages bill may be understood but other financial aspects of
employee/HRM decisions are not always so well appreciated. True
 Strategic Finance

386. requirement for short term finance can be met through which of the
following? Issue of short term debentures; debentures can be issued
at any predetermined fixed rate also; offered at a floating rate, issue
of share
387. which of these are revealed in Gordon’s model of dividend policy? The
market value of the share Po increase with the retention ratio, b, for
firms with growth opportunities when r>k; the market value of the
share Po, increase with the payout ratio(1-b)for declining firm with
r<k, the market value of the share is not affected by dividend policy
when r=k
388. the company loses out on growth opportunities after a share-buy back due
to erosion of cash resources.
389. the close interaction among working capital implies what? efficient
employees

Multiple Choice Multiple Answer

Question 1 If a company is following multiple accounting system, the activity accountant will have
to match data across :-
Correct Answer Codes , Time periods , Systems

Your Answer Codes , Time periods , Systems

Select The Blank

Question 2 Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Absorption

Multiple Choice Multiple Answer

Question 4 For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Multiple Answer

Question 5 A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

 Strategic Finance

Your Answer More current dividends , Less retained earnings

Select The Blank

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

Your Answer 118 Bn

True/False
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Your Answer True

Select The Blank

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output
of the activity model is called________.
Correct Answer The cost of the output

Your Answer Total cost of activity

Multiple Choice Single Answer

Question 9 The voluntary market based method means :-

Correct Answer Develop a consistent framework which can be operational across sectors and countries

Your Answer Develop a consistent framework which can be operational across sectors and countries

Multiple Choice Multiple Answer

Question 10 Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
new employee as a replacement of the left employee

Multiple Choice Single Answer

Question 11 The offer price by the acquiring company should be an average of the weekly high &
low for :-
Correct Answer The last 26 months

Your Answer Last 180 days

Multiple Choice Multiple Answer

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-

Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule

Your Answer Negotiate formally , Have to sign a note , Adhere to strict payment schedule
 Strategic Finance

Multiple Choice Multiple Answer

Question 13 A firm with a judicious mixture of debt and equity will have :-

Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Your Answer Good market reputation , Lowest cost of capital , High value of firm

Multiple Choice Single Answer

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges
as soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Your Answer 35 % of the voting capital of the target company

Multiple Choice Single Answer

Question 15 What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Your Answer Exchange ratio

True/False
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question 17 As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Secured debt

Select The Blank

Question 19 Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Your Answer Transaction costs

True/False
Question 20 Articles of association should authorise buy back of securities as per the Company's
Act.
Correct Answer True

Your Answer True

Select The Blank

 Strategic Finance

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Your Answer Internet

Multiple Choice Single Answer

Question 22 Suppliers of equity are interested in :-

Correct Answer High share prices

Your Answer High share prices

True/False
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

True/False
Question 25 Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question 26 Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Multiple Choice Single Answer

Question 27 Economic analysis usually covers :-

Correct Answer A small number of improvement alternatives

Your Answer Different projected costs of the suggested process

Multiple Choice Multiple Answer

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
 Strategic Finance

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Select The Blank

Question 29 Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods

Your Answer Industrial products

True/False
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that
the value of his investment is maximized.
Correct Answer False

Your Answer True

True/False
Question 31 firms use credit policy as a marketing tool for expanding sales.

Correct Answer True

Your Answer True

Select The Blank

Question 32 Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Your Answer Conservative policy regarding payouts

Multiple Choice Multiple Answer

Question 33 As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Your Answer Shares , Debentures , Other securities held as stock in trade

Multiple Choice Multiple Answer

Question 34 Accounting numbers are not influenced by :-

Correct Answer Dividend policy , Time span of money , Financial and business risk

Your Answer Dividend policy , Time span of money , Firm's solvency

Select The Blank

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
 Strategic Finance

Your Answer Intangible

Multiple Choice Single Answer

Question 36 The development aspect of training in firms focus on :-

Correct Answer Promotion to higher job levels

Your Answer Acquisition of necessary skills essential for a job

True/False
Question 37 work in progress means the inventories are semi manufactured products.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility

True/False
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False

Your Answer False

Select The Blank

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.

Correct Answer Direct

Your Answer General overheads

Multiple Choice Multiple Answer

Question 41 Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Your Answer Equipment , Overheads , Printing & stationary

Select The Blank

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
 Strategic Finance

Correct Answer Rental equipment

Your Answer Facilities

Multiple Choice Single Answer

Question 43 The HHI index reflects :-

Correct Answer Inequality & degree of concentration

Your Answer Inequality & degree of concentration

Select The Blank

Question 44 ________ is never a part of the output.

Correct Answer Mechanisms

Your Answer Activity

True/False
Question 45 It is essential that ABC must fit into the strategy of the company.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question 46 In a matching approach policy, :-

Correct Answer There is a small risk if shortage of funds

Your Answer Financing is totally independent of long term sources

Multiple Choice Single Answer

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Your Answer Regenerative natural resources

Multiple Choice Single Answer

Question 1 Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Your Answer Market value of debt

Multiple Choice Single Answer

Question 2 Value implies that something has :-

Correct Answer Worth

 Strategic Finance

Your Answer Appreciation

True/False
Question 3 Organisational changes are similar to mission changes.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question 4 In value of assets method the following is also to be included as they are also
of value to the company :-
Correct Answer Non trading assets

Your Answer Trading assets

Select The Blank

Question 5 In the reproduction value method of valuation, the value of assets is taken to be
on the basis of ________
Correct Answer Replacement cost

Your Answer Replacement cost

True/False
Question 6 Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question 7 Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Your Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question 8 Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Multiple Choice Multiple Answer

Question 9 The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

 Strategic Finance

Multiple Choice Single Answer

Question 11 A good accounting system does NOT have the characteristics such as :-

Correct Answer Does not cover decisions over the life cycle

Your Answer Have a multi dimensional focus

Multiple Choice Multiple Answer

Question 12 The direct costs tier normally only includes the following :-

Correct Answer The personnel payroll , Supplies , Individual rental equipment

Your Answer Support costs , Supplies

Select The Blank

Question 13 ________ are not diversible.

Correct Answer Market related risks

Your Answer Total risks of a company

Multiple Choice Multiple Answer

Question 14 The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount

to be retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm , To dispatch the dividend warrants in time

Multiple Choice Multiple Answer

Question 15 A company is prohibited to buy back its own shares in the following
circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company ,
Suppliers dues are pending for a very long time

Multiple Choice Multiple Answer

Question 16 The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth
transfer among employees and managers

True/False
Question 17 A change in the method of depreciation is treated as a change in an accounting
policy and is disclosed accordingly.
Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

 Strategic Finance

Question 18 The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as

derivatives , Expected security return = Riskless return + beta x (expected
market risk premium)
Your Answer It is an equilibrium Model , Expected security return = Riskless return + beta x
(expected market risk premium) , It is easy to implement in practice

True/False
Question 19 Segment result is segment revenue less segment expenses.

Correct Answer True

Your Answer True

True/False
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True

Your Answer True

Select The Blank

Question 21 The resource theory considers that the competitive position of a firm depends
on its ________ Assets.
Correct Answer Specific

Your Answer Specific

Select The Blank

Question 22 Segment revenue includes ________.

Correct Answer Revenue from transactions with other segments of the enterprise

Your Answer Revenue from transactions with other segments of the enterprise

Multiple Choice Single Answer

Question 23 Deferred payment plan is also known as:-

Correct Answer Earn out plan

Your Answer Cash payment plan

True/False
Question 24 The statute governing an enterprise may provide the basis for computation of
the depreciation.
Correct Answer True

Your Answer True

Select The Blank

 Strategic Finance

Question 25 The final selection of the method of shares valuation depends upon ________.

Correct Answer The purpose for which valuation is being done.

Your Answer The resolutions passed in the board of directors meeting

Multiple Choice Multiple Answer

Question 26 In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics

of acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm

Multiple Choice Single Answer

Question 27 In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Your Answer Financing is independent of short term sources

Multiple Choice Multiple Answer

Question 29 Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy
decisions
Your Answer Participate in the financial decisions , Participate in the operating policy
decisions , Control over the policies

Select The Blank

Question 30 The costs should be gathered & allocated within the organisation at the
________ structural layer.
Correct Answer Lowest possible

Your Answer Middle

True/False
Question 31 A single organisation model serves to keep all individual initiatives to be
targeted into a co-ordinated plan.
Correct Answer True

Your Answer True

Select The Blank

Question 32 During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Expenses

True/False
Question 33 Money becomes less valuable when received at a latter stage instead of in
present time.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 34 The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Your Answer Personnel services head count , Profit per head , Recovery rate

Multiple Choice Single Answer

Question 35 The Management of the Company may enter into a negotiated purchase, which
is referred to as :-
Correct Answer Greenfield

Your Answer Forward Contracts

Multiple Choice Single Answer

Question 36 One of the selective developments that has taken place in recent times is
companies are going in for :-
Correct Answer Activity based costing and management

Your Answer Activity based costing and management

Select The Blank

Question 37 ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Improve risk return ration

Multiple Choice Multiple Answer

Question 38 An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise , Intended to be
occupied immediately

True/False
Question 39 Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True

Your Answer True

Select The Blank

Question 40 Business risk & financial risk do not have any influence on ________.
 Strategic Finance

Correct Answer Accounting numbers

Your Answer Accounting numbers

Multiple Choice Single Answer

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Your Answer Company's cash credit Account

Multiple Choice Multiple Answer

Question 42 The main assumptions for stock repurchase models are as follows :-

Correct Answer The market is efficient , There is perfect competition in the securities market

Your Answer The market is efficient , There is perfect competition in the securities market ,
Investors are not very keen to maximize the value of their investment

True/False
Question 43 Cash dividends are taxable at ordinary tax rates.

Correct Answer True

Your Answer False

Select The Blank

Question 44 When a firm invests in human resources by acquisition & training, it anticipates
a ________
Correct Answer Future generation of profits & services

Your Answer Future generation of profits & services

Select The Blank

Question 45 The amount to be invested by any single investor in a commercial paper shall
not be less than Rs. ________.
Correct Answer 25 lacs

Your Answer 25 lacs

Multiple Choice Single Answer

Question 46 Tender offers are used primarily for :-

Correct Answer Large Equity repurchases

Your Answer Large Equity repurchases

Multiple Choice Single Answer

Question 47 Many companies claim their main assets are their :-

Correct Answer People

 Strategic Finance

Your Answer People

True/False
Question 1 The accounting records serve as the major source of cost data.

Correct Answer True

Your Answer True

Select The Blank

Question 2 ________ know the best about a firm's performance.

Correct Answer Firm Managers

Your Answer Debt financiers

True/False
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-

Correct Answer Planning , Searching & screening , Financial evaluation

Your Answer Consultation with shareholders , Planning , Financial evaluation

Multiple Choice Single Answer

Question 5 Developing a consistent framework supported by rewarding mechanisms once
it is introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom

Your Answer The green accounting method in Denmark

True/False
Question 6 Dividends increase the current returns for shareholders.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question 7 Internal financing means the firm finances all investments through :-

Correct Answer Retained earnings

Your Answer Retained earnings

 Strategic Finance

Select The Blank

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the
largest firm's ________.
Correct Answer Management & board

Your Answer Management & board

Multiple Choice Multiple Answer

Question 10 Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion
of fluctuating working capital requirement
Your Answer Fixed assets requirements , Investment in current assets , Portion of fluctuating
working capital requirement

True/False
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 12 AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on
investments , Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on
investments , Accounting for investments in the financial statements of an
enterprise , Operating or finance leases

Multiple Choice Single Answer

Question 13 the amount of working capital required to meet long term, minimum needs is
called :-
Correct Answer Permanent working capital

Your Answer Permanent working capital

True/False
Question 14 A long term investment is an investment other than a current investment.

Correct Answer True

Your Answer True

True/False
Question 15 Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

 Strategic Finance

Question 16 Share repurchase a form of restructuring comes under :-

Correct Answer Changes in ownership structure

Your Answer Corporate Control

True/False
Question 17 Retained earnings are the most important internal sources of financing the
growth of the firm.
Correct Answer True

Your Answer True

True/False
Question 18 Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 19 Investment are the assets held for earning income by way of :-

Correct Answer Dividend , Interest , Rentals

Your Answer Dividend , Interest , Rentals

Multiple Choice Multiple Answer

Question 20 Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer Cost of facilities , Training & development budgets , Organization size

Select The Blank

Question 21 In many companies, there is no formal record of________.

Correct Answer Investment in employees

Your Answer Investment in employees

Multiple Choice Single Answer

Question 22 Value added analysis is a method to determine, if elements within a process
flow provide the :-
Correct Answer Values

Your Answer Accurate costs

Multiple Choice Single Answer

Question 24 The Buy back of shares shall not be made from
 Strategic Finance

Correct Answer The promoters or persons in control of the company

Your Answer From financial Institutions

Select The Blank

Question 25 traditionally avails are provided by ________.

Correct Answer Banks

Your Answer Financial institutions

Select The Blank

Question 26 ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Goodwill

Multiple Choice Multiple Answer

Question 27 Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Your Answer Income tax , Property tax , Investments

Select The Blank

Question 28 Liquidation value is also known as ________.

Correct Answer Realizable value

Your Answer Net replacement value of the assets

Multiple Choice Multiple Answer

Question 29 Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash
flows from the investment
Your Answer Reference to its market value , The expected cash flows from the investment ,
Current investment valuation

Multiple Choice Multiple Answer

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the
ratio of debt to total capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , After the buy back
the ratio of debt to total capital and free reserves should not be more than 2 :
1 , The amount involved in the buyback should not exceed 50 % of the total
paid up capital & free reserves of the company

True/False
 Strategic Finance

Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow
to fluctuate.
Correct Answer False

Your Answer True

Select The Blank

Question 32 Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

Your Answer Non traceable cost

Multiple Choice Multiple Answer

Question 33 The following categories of personnel are taken into account to calculate the
actual manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Temporary staff , Part time personnel , Casual workers

Select The Blank

Question 34 The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Your Answer Overheads

Multiple Choice Single Answer

Question 35 In value of assets approach the value of which of the following should be
deducted to calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares

Your Answer Outstanding preference shares

Multiple Choice Single Answer

Question 36 usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

Multiple Choice Single Answer

Question 37 When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Your Answer Necessary that firms should have less working capital requirement

Select The Blank

Question 38 Segment expense includes ________.
 Strategic Finance

Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment

Select The Blank

Question 39 Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals

Your Answer Is more than

True/False
Question 40 Management of working capital refers to the management of total assets and
liabilities of a company.
Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question 41 The employer in offering the job contract assumes a range of legal obligations
such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Health & safety policies , Pensions & contributions to social security payments ,
Issue shares necessarily to employees on joining an organisation

Multiple Choice Single Answer

Question 42 The most important internal sources of financing the growth of the firm is
through :-
Correct Answer Retained earnings

Your Answer Retained earnings

Multiple Choice Single Answer

Question 43 When a change in the method of depreciation is made :-

Correct Answer Depreciation is recalculated in accordance with the new method

Your Answer Surplus is debited to the P & L Account

Multiple Choice Multiple Answer

Question 44 Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Your Answer Firms use different kind of accounting methods , Dividend policy has lot of
influence on accounting numbers , Business risk and financial risk do not have
any influence on accounting numbers

Multiple Choice Single Answer

Question 45 Profitability of a company depends upon :-
 Strategic Finance

Correct Answer Cost of capital

Your Answer Earning per share

Multiple Choice Multiple Answer

Question 46 A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Select The Blank

Question 47 As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Multiple Answer

Question 1 If a company is following multiple accounting system, the activity accountant
will have to match data across :-
Correct Answer Codes , Time periods , Systems

Select The Blank

Question 2 Combination of 2 or more companies into existing company is called
________.
Correct Answer Absorption

Multiple Choice Multiple Answer

Question 4 For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Multiple Answer

Question 5 A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Select The Blank

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

True/False
Question 7 The scope of the data required relates to the scope of the activity model &
processes under review.
Correct Answer True

Select The Blank

 Strategic Finance

Question 8 The total cost of the activity model allocated by the applied activity drivers to
the output of the activity model is called________.
Correct Answer The cost of the output

Your Answer Total cost of activity

Multiple Choice Single Answer

Question 9 The voluntary market based method means :-

Correct Answer Develop a consistent framework which can be operational across sectors
and countries

Multiple Choice Multiple Answer

Question 10 Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new
search , Termination pay

Multiple Choice Single Answer

Question 11 The offer price by the acquiring company should be an average of the
weekly high & low for :-
Correct Answer The last 26 months

Your Answer Last 180 days

Multiple Choice Multiple Answer

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-

Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule

Your Answer Negotiate formally ,

Multiple Choice Multiple Answer

Question 13 A firm with a judicious mixture of debt and equity will have :-

Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Multiple Choice Single Answer

Question 14 The acquirer should intimate to the target company & the concerned stock
exchanges as soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Multiple Choice Single Answer

Question 15 What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

True/False
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is
used.
 Strategic Finance

Correct Answer True

Multiple Choice Single Answer

Question 17 As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Select The Blank

Question 19 Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Your Answer Transaction costs

True/False
Question 20 Articles of association should authorise buy back of securities as per the
Company's Act.
Correct Answer True

Select The Blank

Question 21 In today's fast moving world, the quickest way to get information on a firm is
through ________.
Correct Answer Internet

Multiple Choice Single Answer

Question 22 Suppliers of equity are interested in :-

Correct Answer High share prices

True/False
Question 23 The buyback shall be made only on stock exchanges with electronic trading
facility.
Correct Answer True

Multiple Choice Multiple Answer

Question 24 Accounting standard 19 for leases statement is applied in accounting for all
leases other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to
use land

True/False
Question 25 Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Multiple Choice Single Answer

Question 26 Segment liabilities do not include :-
 Strategic Finance

Correct Answer Borrowings & other liabilities that are incurred for financing rather than
operating purpose

Multiple Choice Single Answer

Question 27 Economic analysis usually covers :-

Correct Answer A small number of improvement alternatives

Your Answer Different projected costs of the suggested process

Multiple Choice Multiple Answer

Question 28 A firm using a conservative policy for determining the requirements of
current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer , Increases the ROI

Select The Blank

Question 29 Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods

Your Answer Industrial products

True/False
Question 30 The objective of a dividend policy should be to maximize shareholder's
return so that the value of his investment is maximized.
Correct Answer False

True/False
Question 31 firms use credit policy as a marketing tool for expanding sales.

Correct Answer True

Select The Blank

Question 32 Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Multiple Choice Multiple Answer

Question 33 As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Multiple Choice Multiple Answer

Question 34 Accounting numbers are not influenced by :-

Correct Answer Dividend policy , Time span of money , Financial and business risk
 Strategic Finance

Your Answer , Firm's solvency

Select The Blank

Question 35 ________ Assets in the balance sheet are normally excluded from the value
of total assets.
Correct Answer Intangible

Multiple Choice Single Answer

Question 36 The development aspect of training in firms focus on :-

Correct Answer Promotion to higher job levels

Your Answer Acquisition of necessary skills essential for a job

True/False
Question 37 work in progress means the inventories are semi manufactured products.

Correct Answer True

Multiple Choice Multiple Answer

Question 38 A company is permitted to buy back its shares through stock exchange in
the following situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days
of the payout , The identity of the company as a purchaser shall appear on
the electronic screen when the order is placed , The buy back shall be made
only on stock exchanges with electronic trading facility

True/False
Question 39 Current accounting system is able to provide actual value of employee
capabilities & knowledge.
Correct Answer False

Select The Blank

Question 40 The ________ cost tier has the advantage of being the simplest to calculate
and justify.
Correct Answer Direct

Your Answer General overheads

Multiple Choice Multiple Answer

Question 41 Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Select The Blank

Question 42 ________ is a variable expense that can be readily eliminated with
organisational changes.
Correct Answer Rental equipment
 Strategic Finance

Your Answer Facilities

Multiple Choice Single Answer

Question 43 The HHI index reflects :-

Correct Answer Inequality & degree of concentration

Select The Blank

Question 44 ________ is never a part of the output.

Correct Answer Mechanisms

Your Answer Activity

True/False
Question 45 It is essential that ABC must fit into the strategy of the company.

Correct Answer True

Multiple Choice Single Answer

Question 46 In a matching approach policy, :-

Correct Answer There is a small risk of shortage of funds

Your Answer Financing is totally independent of long term sources

Multiple Choice Single Answer

Question 47 Which is an example out of the following to which special consideration
apply for depreciation :-
Correct Answer Regenerative natural resources

Multiple Choice Single Answer

Question 1 Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Your Answer Market value of debt

Multiple Choice Single Answer

Question 2 Value implies that something has :-

Correct Answer Worth

Your Answer Appreciation

True/False
Question 3 Organisational changes are similar to mission changes.

Correct Answer True

 Strategic Finance

Multiple Choice Single Answer

Question 4 In value of assets method the following is also to be included as they are
also of value to the company :-
Correct Answer Non trading assets

Your Answer Trading assets

Select The Blank

Question 5 In the reproduction value method of valuation, the value of assets is taken to
be on the basis of ________
Correct Answer Replacement cost

True/False
Question 6 Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Multiple Choice Single Answer

Question 7 Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question 8 Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Multiple Choice Multiple Answer

Question 9 The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question 11 A good accounting system does NOT have the characteristics such as :-

Correct Answer Does not cover decisions over the life cycle

Your Answer Have a multi dimensional focus

Multiple Choice Multiple Answer

Question 12 The direct costs tier normally only includes the following :-

Correct Answer The personnel payroll , Supplies , Individual rental equipment

Your Answer Support costs , Supplies

Select The Blank

Question 13 ________ are not diversible.
 Strategic Finance

Correct Answer Market related risks

Your Answer Total risks of a company

Multiple Choice Multiple Answer

Question 14 The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders ,

Amount to be retained in the firm
Your Answer , To dispatch the dividend warrants in time

Multiple Choice Multiple Answer

Question 15 A company is prohibited to buy back its own shares in the following
circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer , Suppliers dues are pending for a very long time

Multiple Choice Multiple Answer

Question 16 The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis ,

Information or signalling hypothesis
Your Answer Wealth transfer among employees and managers

True/False
Question 17 A change in the method of depreciation is treated as a change in an
accounting policy and is disclosed accordingly.
Correct Answer True

Multiple Choice Multiple Answer

Question 18 The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as

derivatives , Expected security return = Riskless return + beta x (expected
market risk premium)
Your Answer , It is easy to implement in practice

True/False
Question 19 Segment result is segment revenue less segment expenses.

Correct Answer True

True/False
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True

Select The Blank

 Strategic Finance

Question 21 The resource theory considers that the competitive position of a firm
depends on its ________ Assets.
Correct Answer Specific

Select The Blank

Question 22 Segment revenue includes ________.

Correct Answer Revenue from transactions with other segments of the enterprise

Multiple Choice Single Answer

Question 23 Deferred payment plan is also known as:-

Correct Answer Earn out plan

Your Answer Cash payment plan

True/False
Question 24 The statute governing an enterprise may provide the basis for computation
of the depreciation.
Correct Answer True

Select The Blank

Question 25 The final selection of the method of shares valuation depends upon
________.
Correct Answer The purpose for which valuation is being done.

Your Answer The resolutions passed in the board of directors meeting

Multiple Choice Multiple Answer

Question 26 In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial

characteristics of acquiring firm

Multiple Choice Single Answer

Question 27 In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Your Answer Financing is independent of short term sources

Multiple Choice Multiple Answer

Question 29 Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy
decisions

Select The Blank

Question 30 The costs should be gathered & allocated within the organisation at the
________ structural layer.
Correct Answer Lowest possible
 Strategic Finance

Your Answer Middle

True/False
Question 31 A single organisation model serves to keep all individual initiatives to be
targeted into a co-ordinated plan.
Correct Answer True

Select The Blank

Question 32 During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Expenses

True/False
Question 33 Money becomes less valuable when received at a latter stage instead of in
present time.
Correct Answer True

Multiple Choice Multiple Answer

Question 34 The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per
head
Your Answer , Recovery rate

Multiple Choice Single Answer

Question 35 The Management of the Company may enter into a negotiated purchase,
which is referred to as :-
Correct Answer Greenfield

Your Answer Forward Contracts

Multiple Choice Single Answer

Question 36 One of the selective developments that has taken place in recent times is
companies are going in for :-
Correct Answer Activity based costing and management

Select The Blank

Question 37 ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Improve risk return ration

Multiple Choice Multiple Answer

Question 38 An investment property is an investment in land or buildings :-
 Strategic Finance

Correct Answer Not intended to be occupied substantially for use by investing enterprise ,
Not intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise ,
Not intended to be in the operations of the investing enterprise , Intended to
be occupied immediately

True/False
Question 39 Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True

Select The Blank

Question 40 Business risk & financial risk do not have any influence on ________.

Correct Answer Accounting numbers

Multiple Choice Single Answer

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Multiple Choice Multiple Answer

Question 42 The main assumptions for stock repurchase models are as follows :-

Correct Answer The market is efficient , There is perfect competition in the securities market

Your Answer , Investors are not very keen to maximize the value of their investment

True/False
Question 43 Cash dividends are taxable at ordinary tax rates.

Correct Answer True

Select The Blank

Question 44 When a firm invests in human resources by acquisition & training, it
anticipates a ________
Correct Answer Future generation of profits & services

Select The Blank

Question 45 The amount to be invested by any single investor in a commercial paper
shall not be less than Rs. ________.
Correct Answer 25 lacs

Multiple Choice Single Answer

Question 46 Tender offers are used primarily for :-

Correct Answer Large Equity repurchases

Multiple Choice Single Answer

 Strategic Finance

Question 47 Many companies claim their main assets are their :-

Correct Answer People

True/False
Question 1 The accounting records serve as the major source of cost data.

Correct Answer True

Select The Blank

Question 2 ________ know the best about a firm's performance.

Correct Answer Firm Managers

Your Answer Debt financiers

True/False
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.

Correct Answer True

Multiple Choice Multiple Answer

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-

Correct Answer Planning , Searching & screening , Financial evaluation

Your Answer Consultation with shareholders ,

Multiple Choice Single Answer

Question 5 Developing a consistent framework supported by rewarding mechanisms
once it is introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom

Your Answer The green accounting method in Denmark

True/False
Question 6 Dividends increase the current returns for shareholders.

Correct Answer True

Multiple Choice Single Answer

Question 7 Internal financing means the firm finances all investments through :-

Correct Answer Retained earnings

Select The Blank

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the
largest firm's ________.
Correct Answer Management & board
 Strategic Finance

Multiple Choice Multiple Answer

Question 10 Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements ,

Portion of fluctuating working capital requirement
Your Answer , Investment in current assets ,

True/False
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.

Correct Answer True

Multiple Choice Multiple Answer

Question 12 AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on
investments , Operating or finance leases , Investment in mutual funds
Your Answer , Accounting for investments in the financial statements of an enterprise ,

Multiple Choice Single Answer

Question 13 the amount of working capital required to meet long term, minimum needs is
called :-
Correct Answer Permanent working capital

True/False
Question 14 A long term investment is an investment other than a current investment.

Correct Answer True

True/False
Question 15 Short term financing is meant for funding working capital of a company.

Correct Answer True

Multiple Choice Single Answer

Question 16 Share repurchase a form of restructuring comes under :-

Correct Answer Changes in ownership structure

Your Answer Corporate Control

True/False
Question 17 Retained earnings are the most important internal sources of financing the
growth of the firm.
Correct Answer True

True/False
Question 18 Receivables constitutes a substantial portion of current assets of several
firms.
 Strategic Finance

Correct Answer True

Multiple Choice Multiple Answer

Question 19 Investment are the assets held for earning income by way of :-

Correct Answer Dividend , Interest , Rentals

Multiple Choice Multiple Answer

Question 20 Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer , Organization size

Select The Blank

Question 21 In many companies, there is no formal record of________.

Correct Answer Investment in employees

Multiple Choice Single Answer

Question 22 Value added analysis is a method to determine, if elements within a process
flow provide the :-
Correct Answer Values

Your Answer Accurate costs

Multiple Choice Single Answer

Question 24 The Buy back of shares shall not be made from

Correct Answer The promoters or persons in control of the company

Your Answer From financial Institutions

Select The Blank

Question 25 traditionally avails are provided by ________.

Correct Answer Banks

Your Answer Financial institutions

Select The Blank

Question 26 ________ is not a example of segment liability.

Correct Answer Goodwill

Multiple Choice Multiple Answer

Question 27 Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

 Strategic Finance

Your Answer Income tax , Property tax , Investments

Select The Blank

Question 28 Liquidation value is also known as ________.

Correct Answer Realizable value

Your Answer Net replacement value of the assets

Multiple Choice Multiple Answer

Question 29 Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash
flows from the investment
Your Answer , Current investment valuation

Multiple Choice Multiple Answer

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up , After the buy
back the ratio of debt to total capital and free reserves should not be more
than 2 : 1
Your Answer , The amount involved in the buyback should not exceed 50 % of the total
paid up capital & free reserves of the company

True/False
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash
flow to fluctuate.
Correct Answer False

Select The Blank

Question 32 Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

Your Answer Non traceable cost

Multiple Choice Multiple Answer

Question 33 The following categories of personnel are taken into account to calculate the
actual manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer , Casual workers

Select The Blank

Question 34 The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Your Answer Overheads

 Strategic Finance

Multiple Choice Single Answer

Question 35 In value of assets approach the value of which of the following should be
deducted to calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares

Multiple Choice Single Answer

Question 36 usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Multiple Choice Single Answer

Question 37 When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Your Answer Necessary that firms should have less working capital requirement

Select The Blank

Question 38 Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment

Select The Blank

Question 39 Credit standards should be relaxed upon the point where incremental
returns ________ incremental costs.
Correct Answer Equals

Your Answer Is more than

True/False
Question 40 Management of working capital refers to the management of total assets
and liabilities of a company.
Correct Answer False

Multiple Choice Multiple Answer

Question 41 The employer in offering the job contract assumes a range of legal
obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer , Issue shares necessarily to employees on joining an organisation

Multiple Choice Single Answer

Question 42 The most important internal sources of financing the growth of the firm is
through :-
Correct Answer Retained earnings

Multiple Choice Single Answer

 Strategic Finance

Question 43 When a change in the method of depreciation is made :-

Correct Answer Depreciation is recalculated in accordance with the new method

Multiple Choice Multiple Answer

Question 44 Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial
risk do not have any influence on accounting numbers

Multiple Choice Single Answer

Question 45 Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Earning per share

Multiple Choice Multiple Answer

Question 46 A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Select The Blank

Question 47 As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Your Answer Payout of dividends even if the funds are unavailable

Select The Blank

Question The advantage of ________ is that the company is not required to wait for the
payment by the bill issuer.
Correct Answer Bill discounting

Your Answer Letter of credits

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment expense

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management
functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management
 Strategic Finance

functions

True/False
Question In today's world, knowledge has become the key determinant for economic &
business success.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When a change in the method of depreciation is made :-

Correct Answer Depreciation is recalculated in accordance with the new method

Your Answer Depreciation is recalculated in accordance with the new method

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-

Correct Answer Logs to record workflow , Specific costs , External and internal audit reports

Your Answer Logs to record workflow , General studies and processes , External and internal
audit reports

Multiple Choice Single Answer

Question The FEA Tools encompass a vast array of information & policy into :-

Correct Answer One evaluation

Your Answer One evaluation

True/False
Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question If the residual value of an asset is likely to be significant :-

Correct Answer It is estimated at the time of acquisition / installation

Your Answer It cannot be subsequently revalued

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Interest , Dividend

 Strategic Finance

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Multiple Choice Single Answer

Question 80 % of the total cost is normally generated by 20 % of the activity is a
characteristic of :-
Correct Answer Pareto analysis

Your Answer Pareto analysis

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate
and justify.
Correct Answer Direct

Your Answer Direct

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Your Answer It is impacted by numerous transactions on a continuous basis , It is continually
required for a going concern , Quantum of working capital fluctuates depending
on the level of activity

Select The Blank

Question If the segment result of a segment includes interest or dividend income its
segment assets will not include ________.
Correct Answer Payables

Your Answer Payables

Select The Blank

Question If a segment is not designated as a ________ it should be included as an
unallocated reconciling item.
Correct Answer Reportable segment

Your Answer Reportable segment

True/False
Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Your Answer True

 Strategic Finance

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals

Your Answer Is more than

Multiple Choice Single Answer

Question The traditional balance sheet of a company does not show the valuation of:-

Correct Answer Human Capital

Your Answer Human Capital

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-

Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question Companies often need to value its own :-

Correct Answer Shares

Your Answer Shares

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics

of acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics
of acquiring firm

True/False
Question Human assets accounting is still to become an accepted trend in the industry.

Correct Answer True

Your Answer True

Select The Blank

 Strategic Finance

Question In the reproduction value method of valuation, the value of assets is taken to be
on the basis of ________
Correct Answer Replacement cost

Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The overhead expenses include :-

Correct Answer Utilities , Maintenance , Security

Your Answer Utilities , Maintenance , Security

Multiple Choice Single Answer

Question The following Act contains the provisions permitting the companies to buy back
their shares :-
Correct Answer Companies (Amendment) Act, 1999

Your Answer Companies (Amendment) Act, 1999

Multiple Choice Single Answer

Question When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Your Answer Essential to maintain a larger inventory of finished goods

True/False
Question Opportunity costs and real costs decrease the market value of a firm.

Correct Answer True

Your Answer True

True/False
Question Segment result is segment revenue less segment expenses.

Correct Answer True

Your Answer True

Select The Blank

Question Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

Your Answer Direct traceable cost

True/False
Question The statute governing an enterprise may provide the basis for computation of
the depreciation.
 Strategic Finance

Correct Answer True

Your Answer False

Select The Blank

Question The final selection of the method of shares valuation depends upon ________.

Correct Answer The purpose for which valuation is being done.

Your Answer The purpose for which valuation is being done.

Multiple Choice Multiple Answer

Question Generally `Employees as balance sheet assets', show the following
characteristics:-
Correct Answer Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed
Your Answer Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal
agency.
Correct Answer True

Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer True

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near
future.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following
reasons except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer It cannot be used as a starting point to be compared & complimented by other
analysis

Multiple Choice Single Answer

Question In the past, costing mainly focused on :-

Correct Answer Manufacturing costs

 Strategic Finance

Your Answer Manufacturing costs

Multiple Choice Multiple Answer

Question A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Your Answer Less retained earnings

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which
will include :-
Correct Answer Quality of management , Production capabilities , Profitability

Your Answer Production capabilities , Capital & labour intensity , Profitability

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-

Correct Answer The optimum payout ratio for a declining firm is not 100 %

Your Answer The optimum payout ratio for a declining firm is not 100 %

Multiple Choice Single Answer

Question If the segment result of a segment includes interest expense its segment
liabilities include :-
Correct Answer The related interest bearing liabilities

Your Answer The related interest bearing liabilities

Select The Blank

Question Buy back through book building the process should be made through
________.
Correct Answer An electronically linked transparent facility

Your Answer An electronically linked transparent facility

Select The Blank

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a
reasonable basis to a segment

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following
reasons except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
 Strategic Finance

Your Answer It is used as a starting point

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Your Answer Location of its customers

Multiple Choice Single Answer

Question FEA is a technique to analyze & evaluate :-

Correct Answer Alternative process improvements

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Select The Blank

Question ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

True/False
Question Retained earnings are the most important internal sources of financing the growth
of the firm.
Correct Answer True

Multiple Choice Multiple Answer

Question Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Your Answer , Control over the policies

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-

Correct Answer Cash available

Select The Blank

 Strategic Finance

Question Earning power of the company approach tries to value the ________.

Correct Answer Current value of the assets

Your Answer Income / profit from the assets

Multiple Choice Multiple Answer

Question As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Your Answer Land , Debentures

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer , Financial

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Select The Blank

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

True/False
Question Management of working capital refers to the management of total assets and
liabilities of a company.
Correct Answer False

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount to

be retained in the firm

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-

Correct Answer Brokerage , Fees , Duties

Select The Blank

Question Forfeiting is mostly used for ________.
 Strategic Finance

Correct Answer Big ticket items & durable goods

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Multiple Choice Single Answer

Question Segment information needs to be presented :-

Correct Answer Only on the basis of the consolidated financial statements

Your Answer As separate financial statements

Select The Blank

Question Postage is an example of ________ cost.

Correct Answer Non traceable cost

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed
by the company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Conglomerate mergers

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of
capital and increases the firm's value.
Correct Answer False

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive
activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer , Better facilities and work conditions

Multiple Choice Single Answer

 Strategic Finance

Question Best practices, a tool for review process is similar to :-

Correct Answer Bench marking

Your Answer Value added analysis

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of
the same kind of securities within a period of 1 year.
Correct Answer False

True/False
Question The scope of the data required relates to the scope of the activity model &
processes under review.
Correct Answer True

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and
justify.
Correct Answer Direct

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Select The Blank

Question The resource theory considers that the competitive position of a firm depends on
its ________ Assets.
Correct Answer Specific

Your Answer General

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Product warranty provision

Select The Blank

Question If a segment is not designated as a ________ it should be included as an
unallocated reconciling item.
 Strategic Finance

Correct Answer Reportable segment

Your Answer Business segment

Multiple Choice Single Answer

Question Debt suppliers main concern is :-

Correct Answer Interest & debt repayment

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Working capital cycle

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of
cash distribution to cash holders ?
Correct Answer 0.28

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non -
monetary & monetary.
Correct Answer True

True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-

Correct Answer Logs to record workflow , Specific costs , External and internal audit reports

Your Answer Logs to record workflow , Specific costs , General studies and processes

Select The Blank

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

 Strategic Finance

Your Answer Fringe benefits

Multiple Choice Multiple Answer

Question The existence of significant influence by an investor is usually evidenced in the
following ways :-
Correct Answer Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-

Correct Answer Full time equivalent staff , Revenues , Expenses

Your Answer Full time equivalent staff , Expenses , Good will

True/False
Question The accounting records serve as the major source of cost data.

Correct Answer True

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also
known as :-
Correct Answer Flexible policy

Your Answer Aggressive policy

True/False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-

Correct Answer Accounts payable

Your Answer Accounts receivables

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm
range between ________
Correct Answer 12.1 % & 16.7 %

Your Answer less than 10 %

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of
cash distribution to cash holders ?
 Strategic Finance

Correct Answer 0.28

Multiple Choice Multiple Answer

Question Trade credits are of the following types:-

Correct Answer Notes payable , Trade acceptances , Open accounts

Your Answer Notes payable , Trade acceptances , Commercial paper

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Select The Blank

Question The clean up period is usually ________ months.

Correct Answer 1 to 2 months

Your Answer 3 months

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Your Answer Is depreciated along with the existing asset

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-

Correct Answer Timeliness & turnaround

True/False
Question A long term investment is an investment other than a current investment.

Correct Answer True

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed
by the company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Select The Blank

Question Identify disclosure on human resources as a societal concern & prepare
international regulations comes under ________
Correct Answer The compulsory method

Your Answer The voluntary market based method

 Strategic Finance

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-

Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or
retention
Your Answer , Perfect markets

Multiple Choice Single Answer

Question A manufacturing concern like a machine tool has :-

Correct Answer A long operating cycle

Your Answer Sells largely on cash basis

True/False
Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Select The Blank

Question Depreciation is ________ of an asset.

Correct Answer Loss of value

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment revenue

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-

Correct Answer Payroll , Accounting , Automatic data processing

Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

 Strategic Finance

Your Answer Value added & non value added activities

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-

Correct Answer To the person , To the firm , To the Consultant

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns
________ incremental costs.
Correct Answer Equals

Your Answer Have no correlation with

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

True/False
Question Dividends increase the current returns for shareholders.

Correct Answer True

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its
own worth.
Correct Answer True

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-

Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Accrued liabilities

Select The Blank

Question ________ is never a part of the output.

Correct Answer Mechanisms

True/False
 Strategic Finance

Question It is necessary to identify all costs that may be related to an acquisition.

Correct Answer True

Multiple Choice Single Answer

Question To determine the firm's value, what is difficult to placing a value on?

Correct Answer Quantitative factors

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the
acquiring firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the
time of acquisition

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Select The Blank

Question Total risk reduces if operations of combining firms are ________.

Correct Answer Negatively correlated

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , An Indemnity

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-

Correct Answer Fixed assets , Investments , Current assets

Multiple Choice Single Answer

 Strategic Finance

Question Which of the following is not a characteristic of convertible security?

Correct Answer It does not combine the protection of fixed security with the growth potential of
ordinary shares
Your Answer It appears more attractive to the acquired firm

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Select The Blank

Question Economies of scale arises with increase in volume of production leading
to________.
Correct Answer Reduction in the cost of production

Your Answer Reduction in the cost of production

Multiple Choice Single Answer

Question A single business segment does not include products & services :-

Correct Answer With significantly differing risks & returns

Your Answer With risks & returns which are totally unrelated to each other

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions
Select The Blank
Question To make commercial sense, transaction size in forfeiting process needs to be in
excess of ________.
Correct Answer 250000

Your Answer 250000

Multiple Choice Single Answer

Question The following of the depreciable asset may undergo subsequent changes arising
due to price adjustments :-
Correct Answer Historical cost

Your Answer Estimated residual value

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms
from :-
Correct Answer Investing too much

True/False
Question DCF is not a method used to calculate market value of a firm.
 Strategic Finance

Correct Answer False

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-

Correct Answer More than 50 % of the total assets

True/False
Question Risk appetite decides the rate of capitalization.

Correct Answer True

Your Answer True

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment expense

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question If a company is following multiple accounting system, the activity accountant will have
to match data across :-
Correct Answer Codes , Time periods , Systems

Your Answer Codes , Time periods , Systems

Multiple Choice Single Answer

Question Segment reporting comes under :-

Correct Answer AS 17
 Strategic Finance

Your Answer AS 13

Multiple Choice Single Answer

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Development Rebate Reserve

Select The Blank

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Your Answer 6 months

Multiple Choice Multiple Answer

Question Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

Multiple Choice Multiple Answer

Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :-

Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision
Your Answer Analysis of firm specific information , Determining the firm's value , Financing
techniques in mergers

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Your Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Operating characteristics of acquiring firm , Financial characteristics of acquiring firm ,
Earnings
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
 Strategic Finance

Your Answer True

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include
:-
Correct Answer Quality of management , Production capabilities , Profitability

Your Answer Quality of management , Production capabilities , Profitability

Multiple Choice Single Answer

Question One way to make the firm unattractive to raiders is :-

Correct Answer Sell the crown jewels

Your Answer Show a long list of current assets which cannot be easily liquidated

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer Horizontal , Vertical , Conglomerate

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.

Correct Answer Declaration date

Your Answer Declaration date

Multiple Choice Single Answer

Question A firm should consider acquisition as a :-

Correct Answer Capital budget decision

Your Answer Development decision

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

 Strategic Finance

Multiple Choice Single Answer

Question Segment expenses include :-

Correct Answer Expense relating to transactions with other segments of the enterprise

Your Answer Expense relating to transactions with other segments of the enterprise

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by
the company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as
reportable segments.
Correct Answer 75 percent

Your Answer 75 percent

True/False
Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Your Answer True

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.

Correct Answer True

Your Answer True

Select The Blank

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Your Answer Profitability

Multiple Choice Single Answer

 Strategic Finance

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Your Answer Regenerative natural resources

Select The Blank

Question The final selection of the method of shares valuation depends upon ________.

Correct Answer The purpose for which valuation is being done.

Your Answer The purpose for which valuation is being done.

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Your Answer Mutual Funds

True/False
Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Your Answer True

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Your Answer Payables

Select The Blank

Question traditionally avails are provided by ________.

Correct Answer Banks

Your Answer Banks

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human
resources depends upon :-
Correct Answer Capacity to generate revenue

Your Answer Capacity to generate revenue

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
 Strategic Finance

Correct Answer 0.28

Your Answer 0.39

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question In many companies, there is no formal record of________.

Correct Answer Investment in employees

Your Answer Investment in employees

Multiple Choice Multiple Answer

Question Investment are the assets held for earning income by way of :-

Correct Answer Dividend , Interest , Rentals

Your Answer Dividend , Interest , Rentals

True/False
Question A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-

Correct Answer Investing too much

Your Answer Diversifying into other businesses

Select The Blank

Question Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

 Strategic Finance

Your Answer Traceable cost

Multiple Choice Single Answer

Question Benchmarking is :-

Correct Answer For gathering ideas without the stress of original creative thinking

Your Answer The review of a best process in the industry

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Multiple Choice Single Answer

Question Suppliers of equity are interested in :-

Correct Answer High share prices

Your Answer High share prices

Multiple Choice Single Answer

Question The stock value for a company will be considered to be fair value for ordinary
transactions if the shares are :-
Correct Answer Listed

Your Answer Listed

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-

Correct Answer Full time equivalent staff , Revenues , Expenses

Your Answer Full time equivalent staff , Revenues , Good will

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Amalgamation

 Strategic Finance

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Multiple Choice Single Answer

Question In the book building method, the company makes an offer to buy back :-

Correct Answer Its specified number of shares at a specified offer price range

Your Answer Its specified number of shares at a specified offer price range

Select The Blank

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Your Answer Intangible

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.

Correct Answer Declaration date

Your Answer Declaration date

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of

acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-

Correct Answer Accounts payable

Your Answer Accounts receivables

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

 Strategic Finance

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Current Liabilities

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Your Answer 50

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.

Correct Answer Regular, steady dividend

Your Answer Regular, steady dividend

Multiple Choice Single Answer

Question Internal financing means the firm finances all investments through :-

Correct Answer Retained earnings

Your Answer Retained earnings

Select The Blank

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Equity

Multiple Choice Single Answer

Question The earning power of the company approach includes :-

Correct Answer Mainly discounting of all future earnings

Your Answer Realizable or liquidation value

True/False
Question The accounting records serve as the major source of cost data.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Your Answer Necessary that firms should have less working capital requirement

Multiple Choice Single Answer

Question Value implies that something has :-

Correct Answer Worth

Your Answer Worth

Multiple Choice Single Answer

Question Arbitrage means :-

Correct Answer Securities cannot sell at different prices

Your Answer Selling a security

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Indirectly attributable to the segments

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the selective developments that has taken place in recent times is companies
are going in for :-
Correct Answer Activity based costing and management

Your Answer Activity based costing and management

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-

Correct Answer Right to provide service to customers , Job security for the employees
 Strategic Finance

Your Answer Right to provide service to customers , Crucial project information to customers , Job
security for the employees

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Your Answer 12.1 % & 16.7 %

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Decreases

Multiple Choice Multiple Answer

Question In the disclosures in financial statements, there are significant restrictions on :-

Correct Answer The right of ownership , Realisability of investments , The remittance of income &
proceeds of disposal
Your Answer The right of ownership , Realisability of investments , The remittance of income &
proceeds of disposal

True/False
Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-

Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources
Your Answer Damages the credibility of the process , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

Your Answer True

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True

Your Answer True

 Strategic Finance

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a higher rate

Multiple Choice Multiple Answer

Question Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Your Answer Wages , Income tax , Property tax

True/False
Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-

Correct Answer Fixed assets , Investments , Current assets

Your Answer Fixed assets , Investments , Current assets

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar

Select The Blank

Question Market approach is used for companies whose shares are ________ on the Stock
market.
Correct Answer Listed

Your Answer Issued in odd lots

Multiple Choice Single Answer

Question in case of temporary working capital, the investment in current assets varies with :-

Correct Answer Seasonal requirements

Your Answer Production policy

Multiple Choice Single Answer

 Strategic Finance

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Development Rebate Reserve

True/False
Question The capital Asset pricing model describes the pricing of assets as well as derivatives.

Correct Answer True

Your Answer True

Select The Blank

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting

Your Answer Bill of exchange

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-

Correct Answer Share ownership , Statute , Agreement

Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer

Question Accounts payable is also known as :-
 Strategic Finance

Correct Answer Trade credit from suppliers

Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.

Correct Answer Current value of the assets

Your Answer Current value of the assets

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer General administrative expenses

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-

Correct Answer During more than 1 accounting period

Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
 Strategic Finance

Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger

Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Net working capital

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting

Your Answer Organization element accounting

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

 Strategic Finance

Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue
of the same kind of securities within a period of how many months?
Correct Answer 6 months

Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.

Correct Answer Prestige or power

Your Answer Value

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer Debt and equity are the 2 kinds of funds used by the firm
 Strategic Finance

True/False
Question Assets held as stock - in - trade are also investments.

Correct Answer False

Your Answer True

Select The Blank

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-

Correct Answer The shareholder

Your Answer The shareholder

 Strategic Finance

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-

Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.

Correct Answer True

Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining
a proper strategy for product promotion
 Strategic Finance

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer

Question Accrued expenses represent :-

Correct Answer Costless financing , An interest free source of financing

Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-

Correct Answer Helps to identify potential activities that may be omitted immediately

Your Answer Does not assist the planners & project teams

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Your Answer Prompt & adequate

True/False
Question A transport corporation has a substantial working capital requirement.
 Strategic Finance

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-

Correct Answer Right to provide service to customers , Job security for the employees

Your Answer Right to provide service to customers , Crucial project information to customers , Job
security for the employees

Select The Blank

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Your Answer Constant

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Your Answer Future generation of profits & services

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-

Correct Answer Full time equivalent staff , Revenues , Expenses

Your Answer Full time equivalent staff , Revenues , Expenses

Select The Blank

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as
________.
Correct Answer Process analysis

Your Answer Activity analysis

Multiple Choice Single Answer

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Your Answer Tender offers

Select The Blank

Question ________ is never a part of the output.

Correct Answer Mechanisms

 Strategic Finance

Your Answer Controls

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-

Correct Answer Realizable value

Your Answer Realizable value

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Your Answer Less than 6 months

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis

Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

True/False
Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Your Answer True

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-

Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
 Strategic Finance

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question A quantity discount is offered :-

Correct Answer On large shipments

Your Answer On large shipments

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational resources

Your Answer Measurement & reporting of the cost and value of people as organisational resources

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Interest , Dividend

Multiple Choice Single Answer

Question In value of assets method the following is also to be included as they are also of value
to the company :-
Correct Answer Non trading assets

Your Answer current assets

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

 Strategic Finance

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Marketing capabilities , Degree of regulation

Select The Blank

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Your Answer Profitability

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Select The Blank

Question Long term cash forecasting is generally for a period of ________ years.

Correct Answer 3 to 5 years

Your Answer 5 - 8 years

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Your Answer 50

Multiple Choice Single Answer

Question The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :-
Correct Answer Historical cost

Your Answer Historical cost

Multiple Choice Multiple Answer

 Strategic Finance

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Firm Managers , Government Agencies

Multiple Choice Single Answer

Question A company that comes to the rescue of a firm that is being targeted for a takeover is
called :-
Correct Answer White knight

Your Answer Controlling block

Select The Blank

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Your Answer Customer advances

True/False
Question Risk appetite decides the rate of capitalization.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 10 & 30 percent

True/False
Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Your Answer True

Select The Blank

Question AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002

Your Answer 01.04.2001

Multiple Choice Multiple Answer

Question The direct costs tier normally only includes the following :-
 Strategic Finance

Correct Answer The personnel payroll , Supplies , Individual rental equipment

Your Answer The personnel payroll , Supplies , Individual rental equipment

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Part time personnel , Casual workers

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

True/False
Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Your Answer False

Select The Blank

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting

Your Answer Bill of exchange

Multiple Choice Single Answer

Question A single business segment does not include products & services :-

Correct Answer With significantly differing risks & returns

Your Answer With similar risks & returns

True/False
Question Accounting standards (AS - 13) is now mandatory.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Job vacancy cost during the new search , Termination pay , Recruiting new employee
as a replacement of the left employee

Multiple Choice Multiple Answer

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Your Answer Marketable securities , Receivables , Inventory

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of

acquiring firm
Your Answer Earnings , Manpower of the acquiring firm , Financial characteristics of acquiring firm

Multiple Choice Multiple Answer

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , It is not mandatory to specify the maximum price at
which the buy back will be made

True/False
Question A merger will make sense to the acquiring firm if its shareholders benefit.

Correct Answer True

Your Answer True

Select The Blank

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Your Answer Intangible

Multiple Choice Single Answer

 Strategic Finance

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Your Answer Pre merger price

Select The Blank

Question A shareholder expects a higher rate of return as a firm's compensation for ________.

Correct Answer Increased risk

Your Answer Investment in projects to improve prestige or power

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.

Correct Answer False

Your Answer True

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

Multiple Choice Single Answer

Question Segment assets are determined after :-

Correct Answer Deducting related allowances / provisions reported as direct offsets

Your Answer Deducting income tax assets

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-

Correct Answer Timeliness & turnaround

Your Answer Mergers & acquisitions

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Your Answer Freedom of operation to the management of the newly acquired firm

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
 Strategic Finance

Correct Answer True

Your Answer True

True/False
Question Assets held as stock - in - trade are also investments.

Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Your Answer There is a very large risk of shortage of funds

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer False

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Your Answer Sales per employee , Recovery rate , Utilization %

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.

Correct Answer Regular, steady dividend

Your Answer Regular, steady dividend

Multiple Choice Single Answer

Question A good accounting system does NOT have the characteristics such as :-

Correct Answer Does not cover decisions over the life cycle

Your Answer Takes into account time as an important parameter

Multiple Choice Single Answer

Question Fixed price tender offers are accompanied by an abnormal announcement period return
of :-
Correct Answer 8 - 10 %
 Strategic Finance

Your Answer 6-8%

Multiple Choice Multiple Answer

Question The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Your Answer Compensation per Re. Profit , Personnel services head count , Recovery rate

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Your Answer Internet

Multiple Choice Single Answer

Question Companies often need to value its own :-

Correct Answer Shares

Your Answer Shares

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Select The Blank

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Your Answer 3 years

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers , There is a serious relationship
between economic value and profit
 Strategic Finance

Select The Blank

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies

Your Answer Mutual funds

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question The following is not a factor for reduction in the life of an asset by obsolescence :-

Correct Answer No study of market demand for a product / service

Your Answer Legal restrictions

Multiple Choice Multiple Answer

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Your Answer Job security , Better opportunities within the firm , More perks & benefits , Higher
compensation

Multiple Choice Single Answer

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Your Answer 1994

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Directly attributable to the segment

True/False
Question AS 13 statement does not deal with operating or finance leases.

Correct Answer True

Your Answer True

 Strategic Finance

Select The Blank

Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Your Answer Lowest possible

Multiple Choice Single Answer

Question Value implies that something has :-

Correct Answer Worth

Your Answer Worth

Multiple Choice Multiple Answer

Question Examples of accounting methods used by firm are :-

Correct Answer FIFO , LIFO , Accrual Accounting

Your Answer FIFO , LIFO , Accrual Accounting

Multiple Choice Multiple Answer

Question The main assumptions for stock repurchase models are as follows :-

Correct Answer The market is efficient , There is perfect competition in the securities market

Your Answer The market is efficient , Offers are minimum limit offers. , Investors are not very keen to
maximize the value of their investment

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

True/False
Question It is easy to find a risk free security.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question The earning power of the company approach includes :-

Correct Answer Mainly discounting of all future earnings

Your Answer Mainly discounting of all future earnings

Select The Blank

 Strategic Finance

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Resource consumption

Select The Blank

Question Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Your Answer A high proportion of earnings

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-

Correct Answer Share ownership , Statute , Agreement

Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer

Question Accounts payable is also known as :-

Correct Answer Trade credit from suppliers

Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.

Correct Answer Current value of the assets

Your Answer Current value of the assets

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
 Strategic Finance

Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer General administrative expenses

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-

Correct Answer During more than 1 accounting period

Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
 Strategic Finance

Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Net working capital

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting

Your Answer Organization element accounting

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares
which are sought to be bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-
 Strategic Finance

Correct Answer Current Liabilities

Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue
of the same kind of securities within a period of how many months?
Correct Answer 6 months

Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.

Correct Answer Prestige or power

Your Answer Value

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question Assets held as stock - in - trade are also investments.

Correct Answer False

Your Answer True

Select The Blank

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

 Strategic Finance

Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-

Correct Answer The shareholder

Your Answer The shareholder

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-

Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

 Strategic Finance

Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.

Correct Answer True

Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining
a proper strategy for product promotion

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Temporary staff , Casual workers

 Strategic Finance

Multiple Choice Multiple Answer

Question Accrued expenses represent :-

Correct Answer Costless financing , An interest free source of financing

Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-

Correct Answer Helps to identify potential activities that may be omitted immediately

Your Answer Does not assist the planners & project teams

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Your Answer Prompt & adequate

True/False
Question A transport corporation has a substantial working capital requirement.

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-

Correct Answer Right to provide service to customers , Job security for the employees

Your Answer Right to provide service to customers , Crucial project information to customers , Job
security for the employees

Select The Blank

 Strategic Finance

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Your Answer Constant

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Your Answer Future generation of profits & services

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-

Correct Answer Full time equivalent staff , Revenues , Expenses

Your Answer Full time equivalent staff , Revenues , Expenses

Select The Blank

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as
________.
Correct Answer Process analysis

Your Answer Activity analysis

Multiple Choice Single Answer

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Your Answer Tender offers

Select The Blank

Question ________ is never a part of the output.

Correct Answer Mechanisms

Your Answer Controls

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-
 Strategic Finance

Correct Answer Realizable value

Your Answer Realizable value

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Your Answer Less than 6 months

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis

Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

True/False
Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Your Answer True

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-

Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question A quantity discount is offered :-

Correct Answer On large shipments

 Strategic Finance

Your Answer On large shipments

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational resources

Your Answer Measurement & reporting of the cost and value of people as organisational resources

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Interest , Dividend

Multiple Choice Single Answer

Question In value of assets method the following is also to be included as they are also of value
to the company :-
Correct Answer Non trading assets

Your Answer current assets

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

 Strategic Finance

Your Answer Market growth , Marketing capabilities , Degree of regulation

Select The Blank

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Your Answer Profitability

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Select The Blank

Question Long term cash forecasting is generally for a period of ________ years.

Correct Answer 3 to 5 years

Your Answer 5 - 8 years

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Your Answer 50

Multiple Choice Single Answer

Question The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :-
Correct Answer Historical cost

Your Answer Historical cost

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Firm Managers , Government Agencies

Multiple Choice Single Answer

Question A company that comes to the rescue of a firm that is being targeted for a takeover is
called :-
Correct Answer White knight

Your Answer Controlling block

 Strategic Finance

Select The Blank

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Your Answer Customer advances

True/False
Question Risk appetite decides the rate of capitalization.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 10 & 30 percent

True/False
Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Your Answer True

Select The Blank

Question AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002

Your Answer 01.04.2001

Multiple Choice Multiple Answer

Question The direct costs tier normally only includes the following :-

Correct Answer The personnel payroll , Supplies , Individual rental equipment

Your Answer The personnel payroll , Supplies , Individual rental equipment

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Part time personnel , Casual workers
 Strategic Finance

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

True/False
Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Your Answer False

Select The Blank

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting

Your Answer Bill of exchange

Multiple Choice Single Answer

Question A single business segment does not include products & services :-

Correct Answer With significantly differing risks & returns

Your Answer With similar risks & returns

True/False
Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Job vacancy cost during the new search , Termination pay , Recruiting new employee
as a replacement of the left employee

Multiple Choice Multiple Answer

 Strategic Finance

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Your Answer Marketable securities , Receivables , Inventory

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of

acquiring firm
Your Answer Earnings , Manpower of the acquiring firm , Financial characteristics of acquiring firm

Multiple Choice Multiple Answer

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , It is not mandatory to specify the maximum price at
which the buy back will be made

True/False
Question A merger will make sense to the acquiring firm if its shareholders benefit.

Correct Answer True

Your Answer True

Select The Blank

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Your Answer Intangible

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Your Answer Pre merger price

Select The Blank

Question A shareholder expects a higher rate of return as a firm's compensation for ________.

Correct Answer Increased risk

Your Answer Investment in projects to improve prestige or power

 Strategic Finance

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.

Correct Answer False

Your Answer True

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

Multiple Choice Single Answer

Question Segment assets are determined after :-

Correct Answer Deducting related allowances / provisions reported as direct offsets

Your Answer Deducting income tax assets

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-

Correct Answer Timeliness & turnaround

Your Answer Mergers & acquisitions

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Your Answer Freedom of operation to the management of the newly acquired firm

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Your Answer True

True/False
Question Assets held as stock - in - trade are also investments.

Correct Answer False

Your Answer True

Multiple Choice Single Answer

 Strategic Finance

Question In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Your Answer There is a very large risk of shortage of funds

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer False

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Your Answer Sales per employee , Recovery rate , Utilization %

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.

Correct Answer Regular, steady dividend

Your Answer Regular, steady dividend

Multiple Choice Single Answer

Question A good accounting system does NOT have the characteristics such as :-

Correct Answer Does not cover decisions over the life cycle

Your Answer Takes into account time as an important parameter

Multiple Choice Single Answer

Question Fixed price tender offers are accompanied by an abnormal announcement period return
of :-
Correct Answer 8 - 10 %

Your Answer 6-8%

Multiple Choice Multiple Answer

Question The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Your Answer Compensation per Re. Profit , Personnel services head count , Recovery rate

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
 Strategic Finance

Your Answer Internet

Multiple Choice Single Answer

Question Companies often need to value its own :-

Correct Answer Shares

Your Answer Shares

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Select The Blank

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Your Answer 3 years

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers , There is a serious relationship
between economic value and profit

Select The Blank

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies

Your Answer Mutual funds

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.

Correct Answer True

 Strategic Finance

Your Answer True

Multiple Choice Single Answer

Question The following is not a factor for reduction in the life of an asset by obsolescence :-

Correct Answer No study of market demand for a product / service

Your Answer Legal restrictions

Multiple Choice Multiple Answer

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Your Answer Job security , Better opportunities within the firm , More perks & benefits , Higher
compensation

Multiple Choice Single Answer

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Your Answer 1994

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Directly attributable to the segment

True/False
Question AS 13 statement does not deal with operating or finance leases.

Correct Answer True

Your Answer True

Select The Blank

Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Your Answer Lowest possible

Multiple Choice Single Answer

Question Value implies that something has :-

Correct Answer Worth

Your Answer Worth

 Strategic Finance

Multiple Choice Multiple Answer

Question Examples of accounting methods used by firm are :-

Correct Answer FIFO , LIFO , Accrual Accounting

Your Answer FIFO , LIFO , Accrual Accounting

Multiple Choice Multiple Answer

Question The main assumptions for stock repurchase models are as follows :-

Correct Answer The market is efficient , There is perfect competition in the securities market

Your Answer The market is efficient , Offers are minimum limit offers. , Investors are not very keen to
maximize the value of their investment

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

True/False
Question It is easy to find a risk free security.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question The earning power of the company approach includes :-

Correct Answer Mainly discounting of all future earnings

Your Answer Mainly discounting of all future earnings

Select The Blank

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Resource consumption

Select The Blank

Question Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Your Answer A high proportion of earnings

 Strategic Finance

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Your Answer Utilization % , Sales per employee , Recovery rate

Multiple Choice Single Answer

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational resources

Your Answer Measurement & reporting of the cost and value of people as organisational resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Your Answer True

True/False
Question Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Your Answer There is a very large risk of shortage of funds

True/False
Question Book value is based on the balance sheet value of owner's equity.

Correct Answer True

Your Answer True

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

 Strategic Finance

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Information or signalling hypothesis , Wealth
transfer among employees and managers

True/False
Question The buyback shall be made only on stock exchanges with electronic trading facility.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Marketing capabilities , Degree of regulation

Select The Blank

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Your Answer Constant

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-

Correct Answer To the person , To the firm , To the Consultant

Your Answer To the firm , To the Consultant , To the employees of the company

Select The Blank

Question At times managers invest in projects that improve the company's ________.

Correct Answer Prestige or power

Your Answer Prestige or power

Multiple Choice Single Answer

 Strategic Finance

Question A high payout policy means :-

Correct Answer More current dividends

Your Answer More current dividends

Select The Blank

Question ________ know the best about a firm's performance.

Correct Answer Firm Managers

Your Answer Firm Managers

Multiple Choice Single Answer

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Interest Payable

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Current Liabilities

Multiple Choice Multiple Answer

Question Shortage costs are mainly in the form of :-

Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill

Your Answer Financing a lower level of fixed assets , Disruption in production schedule , Loss of
sales

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Your Answer Internet

Select The Blank

Question Buy back through book building the process should be made through ________.

Correct Answer An electronically linked transparent facility

Your Answer An electronically linked transparent facility

True/False
Question work in progress means the inventories are semi manufactured products.
 Strategic Finance

Correct Answer True

Your Answer True

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.

Correct Answer Bank finance

Your Answer Bank finance

Multiple Choice Single Answer

Question Segment reporting comes under :-

Correct Answer AS 17

Your Answer AS 23

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question The development aspect of training in firms focus on :-

Correct Answer Promotion to higher job levels

Your Answer Acquisition of necessary skills essential for a job

Select The Blank

Question Long term cash forecasting is generally for a period of ________ years.

Correct Answer 3 to 5 years

Your Answer 5 - 8 years

Multiple Choice Single Answer

Question Segment information needs to be presented :-

Correct Answer Only on the basis of the consolidated financial statements

Your Answer As general purpose financial statement

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

 Strategic Finance

Your Answer 118 Bn

Multiple Choice Multiple Answer

Question The budgetary records are useful for:-

Correct Answer Providing a rationale for division of costs , Replacing missing data , Validating
accounting costs
Your Answer Validating accounting costs , Allocating indirect costs into different cost centres ,
Providing a rationale for division of costs

Multiple Choice Multiple Answer

Question Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows from
the investment
Your Answer Reference to its market value , The expected cash flows from the investment , Current
investment valuation

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-

Correct Answer Payroll , Accounting , Automatic data processing

Your Answer Payroll , Accounting , Automatic data processing

Multiple Choice Single Answer

Question Most companies focus only on :-

Correct Answer Return on investment

Your Answer Return on investment

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

Your Answer Ideas to determine which is faster, better or cheaper

Multiple Choice Single Answer

Question Accounts payable is also known as :-

Correct Answer Trade credit from suppliers

Your Answer Trade credit from suppliers

Select The Blank

Question the commercial paper may be issued in the multiples of ________.

Correct Answer 5 lakhs

Your Answer 1 lac

 Strategic Finance

True/False
Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-

Correct Answer Timeliness & turnaround

Your Answer Timeliness & turnaround

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book
value.
Correct Answer True

Your Answer True

Select The Blank

Question ________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)

Your Answer Danish (Denmark)

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Dividend , Capital gains

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-

Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Your Answer Lowest cost of capital , High value of firm , Good market reputation

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer True

True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

 Strategic Finance

Your Answer True

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer False

Select The Blank

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Your Answer Constant

Multiple Choice Single Answer

Question The following method of valuation is used for listed companies that have an active
market for their shares :-
Correct Answer Market value approach

Your Answer Market value approach

Multiple Choice Single Answer

Question The main assumption in comparative analysis is the possibility of :-

Correct Answer Combination or co-location of similar functions

Your Answer Combination or co-location of similar functions

Multiple Choice Multiple Answer

Question The budgetary records are useful for:-

Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data

Select The Blank

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Your Answer 1 year

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-

Correct Answer More than 50 % of the total assets

 Strategic Finance

Your Answer More than 50 % of the total assets

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.

Correct Answer Bank finance

Your Answer Bank finance

Multiple Choice Single Answer

Question in case of temporary working capital, the investment in current assets varies with :-

Correct Answer Seasonal requirements

Your Answer Seasonal requirements

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-

Correct Answer Logs to record workflow , Specific costs , External and internal audit reports

Your Answer Logs to record workflow , Specific costs , External and internal audit reports

True/False
Question The carrying amount for current investments is the lower of cost & fair value.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-

Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon

True/False
Question Explicit cost and implicit cost are the two parts of cost of debt.

Correct Answer True

Your Answer True

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

 Strategic Finance

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-

Correct Answer Investing too much

Your Answer Investing too much

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-

Correct Answer On some reasonable basis

Your Answer On some reasonable basis

True/False
Question In market value approach, interested parties never manipulate the stock markets.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Which of the following company is reaping high market valuation due to showing human
resources as an asset in its balance sheet information?
Correct Answer Infosys

Your Answer BHEL

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Your Answer Overall cost of capital

Multiple Choice Single Answer

Question Suppliers of equity are interested in :-

Correct Answer High share prices

Your Answer High share prices

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.

Correct Answer Declaration date

Your Answer Ex - dividend date

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
 Strategic Finance

Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Multiple Choice Single Answer

Question A single business segment does not include products & services :-

Correct Answer With significantly differing risks & returns

Your Answer With significantly differing risks & returns

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Debt suppliers main concern is :-

Correct Answer Interest & debt repayment

Your Answer Interest & debt repayment

Multiple Choice Single Answer

Question Value added analysis is a method to determine, if elements within a process flow
provide the :-
Correct Answer Values

Your Answer Values

Select The Blank

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies

Your Answer Shares of a large number of companies

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-

Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Multiple Choice Multiple Answer

Question The following disclosures in financial statements in relation to investments are
appropriate :-
Correct Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L
 Strategic Finance

Statement

Your Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L
Statement

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Marketing capabilities , Nature of competition

Multiple Choice Multiple Answer

Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :-

Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision
Your Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Your Answer Increases

True/False
Question A long term investment is an investment other than a current investment.

Correct Answer True

Your Answer True

True/False
Question The capital Asset pricing model describes the pricing of assets as well as derivatives.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-
 Strategic Finance

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Select The Blank

Question the commercial paper may be issued in the multiples of ________.

Correct Answer 5 lakhs

Your Answer 5 lakhs

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Your Answer Perfect Capital Markets

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.

Correct Answer Regular, steady dividend

Your Answer Regular, steady dividend

Multiple Choice Multiple Answer

Question AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

True/False
Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm
 Strategic Finance

Your Answer The payout ratio is never 100 %

Multiple Choice Single Answer

Question Arbitrage means :-

Correct Answer Securities cannot sell at different prices

Your Answer Securities cannot sell at different prices

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Your Answer True

Select The Blank

Question Non value added activities helps ________.

Correct Answer To analyse the activities more carefully

Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
 Strategic Finance

Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-

Correct Answer 7 Days prior to the commencement of buy back

Your Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Accrued liabilities

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
 Strategic Finance

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets

Your Answer Segment assets

Multiple Choice Multiple Answer

Question The overhead expenses include :-

Correct Answer Utilities , Maintenance , Security

Your Answer Utilities , Maintenance , Security

Multiple Choice Multiple Answer

Question Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Your Answer Wages , Income tax , Property tax

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-

Correct Answer Realizable value

Your Answer Realizable value

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
 Strategic Finance

Your Answer 30

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as :-

Correct Answer Flexible policy

Your Answer Flexible policy

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Net working capital

Select The Blank

Question Conglomerate mergers are also called ________.

Correct Answer Concentric mergers

Your Answer Concentric mergers

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

Question In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Your Answer Non trading assets

 Strategic Finance

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Assets

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Reserves

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Earning per share

True/False
Question DCF is not a method used to calculate market value of a firm.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers

Multiple Choice Multiple Answer

 Strategic Finance

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Your Answer True

Select The Blank

Question Non value added activities helps ________.

Correct Answer To analyse the activities more carefully

Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-

Correct Answer 7 Days prior to the commencement of buy back

Your Answer 7 Days prior to the commencement of buy back

Select The Blank

 Strategic Finance

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Accrued liabilities

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

True/False
Question The accounting records serve as the major source of cost data.

Correct Answer True

Your Answer True

Select The Blank

Question AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002

Your Answer 01.04.2002

True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

Your Answer False

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

 Strategic Finance

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Development Rebate Reserve

Select The Blank

Question A geographical segment cannot be ________.

Correct Answer Countries in different zones

Your Answer Countries in different zones

Multiple Choice Single Answer

Question The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield

Your Answer Greenfield

Multiple Choice Single Answer

Question The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Your Answer 5 % of the voting capital of the target company

Multiple Choice Multiple Answer

Question Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Your Answer Participate in the financial decisions , Participate in the operating policy decisions

Multiple Choice Multiple Answer

Question An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same
best way :-
Correct Answer Comparative analysis

Your Answer Comparative analysis

Multiple Choice Multiple Answer

 Strategic Finance

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-

Correct Answer Realizable value

Your Answer Net operational value

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer Other payables

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Secured debt

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.

Correct Answer Bank finance

Your Answer Commercial paper

Multiple Choice Multiple Answer

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Your Answer People , Equipment , Overheads

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
 Strategic Finance

Correct Answer False

Your Answer True

True/False
Question In value of assets approach for computation of valuation of shares, the total value of all
the assets will be divided by the total number of shares.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Term loans

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Assets

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Select The Blank

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Your Answer Fringe benefits

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

 Strategic Finance

Your Answer Bonds , Shares , Debentures

Multiple Choice Multiple Answer

Question An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended
to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended
to be in the operations of the investing enterprise

Multiple Choice Single Answer

Question If a firm opts for restrictive policy then the investments in current assets is :-

Correct Answer Low

Your Answer Moderate

True/False
Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Your Answer True

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Indirectly attributable to the segments

Select The Blank

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as
________.
Correct Answer Process analysis

Your Answer Process analysis

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions
Your Answer Vertical integration has no connection with operating economies , It is achieved through
horizontal, vertical and conglomerate mergers , It occurs due to indivisibilities of
resources

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

 Strategic Finance

Your Answer 10 & 30 percent

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational resources

Your Answer Calculation of wages paid to casual workers

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Debt equity ratio

Select The Blank

Question Horizontal mergers involves firms________.

Correct Answer That operate & compete in a similar kind of business

Your Answer With a new & different entity

Multiple Choice Multiple Answer

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Your Answer Marketable securities , Receivables , Inventory

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment

Your Answer Operating segment

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment liability

 Strategic Finance

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements

Multiple Choice Single Answer

Question Debt is often issued at :-

Correct Answer The head office level

Your Answer The head office level

True/False
Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting

Your Answer Budgetary accounting

Multiple Choice Single Answer

Question Segment result represents :-

Correct Answer Operating profit or loss

Your Answer Net of financing profit or loss

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Your Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition

Select The Blank

 Strategic Finance

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Your Answer Intangible

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer False

True/False
Question Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True

Your Answer False

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book
value.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the selective developments that has taken place in recent times is companies
are going in for :-
Correct Answer Activity based costing and management

Your Answer Activity based costing and management

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining
a proper strategy for product promotion

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as
reportable segments.
Correct Answer 75 percent

Your Answer 50 percent

True/False
 Strategic Finance

Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Your Answer True

True/False
Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question A quantity discount is offered :-

Correct Answer On large shipments

Your Answer On large shipments

Multiple Choice Multiple Answer

Question Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows from
the investment
Your Answer The expected cash flows from the investment , Current investment valuation , The
investee`s assets

Multiple Choice Single Answer

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Your Answer Convertible securities

True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-

Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon

Select The Blank

 Strategic Finance

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Your Answer Related receivables

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Horizontal Mergers

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Your Answer Perfect Capital Markets

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non -
monetary & monetary.
Correct Answer True

Your Answer False

Select The Blank

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Resource consumption

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-

Correct Answer Share ownership , Statute , Agreement

Your Answer Share ownership , Statute , Agreement

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Capitalized expenses

Multiple Choice Single Answer

Question Deferred payment plan is also known as:-
 Strategic Finance

Correct Answer Earn out plan

Your Answer Earn out plan

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.

Correct Answer False

Your Answer True

Select The Blank

Question Market approach is used for companies whose shares are ________ on the Stock
market.
Correct Answer Listed

Your Answer Listed

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer Horizontal , Vertical , Financial

Multiple Choice Single Answer

Question Tender offers can be afforded by firms with :-

Correct Answer A large amount of financial Slack

Your Answer A large amount of financial Slack

Multiple Choice Single Answer

Question The following method of valuation is used for listed companies that have an active
market for their shares :-
Correct Answer Market value approach

Your Answer Market value approach

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Your Answer 12.1 % & 16.7 %

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as
:-
Correct Answer Flexible policy
 Strategic Finance

Your Answer Aggressive policy

Multiple Choice Single Answer

Question Yield or earning approach method of valuation uses :-

Correct Answer Price to earnings ratio

Your Answer Price to earnings ratio

Multiple Choice Multiple Answer

Question The main categories of organisational elements are :-

Correct Answer Managerial , Support , Operational

Your Answer Managerial , Partly functional , Operational

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.

Correct Answer Direct

Your Answer Direct

Multiple Choice Multiple Answer

Question The existence of significant influence by an investor is usually evidenced in the
following ways :-
Correct Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel
Your Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

True/False
Question Only firms with a large amount of financial slack can afford tender offers.

Correct Answer True

Your Answer True

Select The Blank

Question Buy back through book building the process should be made through ________.

Correct Answer An electronically linked transparent facility

Your Answer Through brokers

 Strategic Finance

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Marketing capabilities , Nature of competition

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer False

True/False
Question A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True

Your Answer True

Select The Blank

Question Economies of scale arises with increase in volume of production leading to________.

Correct Answer Reduction in the cost of production

Your Answer Reduction in the cost of production

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer True

Select The Blank

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Your Answer Acquisition price

Multiple Choice Single Answer

Question Net period - no cash discount means :-

Correct Answer The seller only specifies the time period allowed for the payment

Your Answer Cash on delivery of goods

True/False
 Strategic Finance

Question A long term investment is an investment other than a current investment.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Accounting standards (AS - 17) has come into effect in respect of accounting periods
commencing :-
Correct Answer On or after 01.04.2001

Your Answer Prior to 01.04.2001

True/False
Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-

Correct Answer To the person , To the firm , To the Consultant

Your Answer To the person , To the firm , To the Consultant

Select The Blank

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Your Answer Tangible

Multiple Choice Multiple Answer

Question The budgetary records are useful for:-

Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer Validating accounting costs , Allocating indirect costs into different cost centres ,
Providing a rationale for division of costs

Multiple Choice Multiple Answer

Question As per the new sections of the company's act, funds out of which buy back may be
financed include :-
Correct Answer Free reserves of the company , Securities premium account , Proceeds of any shares
or other specified securities
Your Answer Loans taken from banks and financial institutions , Free reserves of the company ,
Securities premium account
Multiple Choice Multiple Answer
Question Due to diversification employees seek:-
 Strategic Finance

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Your Answer Job security , Better opportunities within the firm , More perks & benefits

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Your Answer Internet

Multiple Choice Single Answer

Question It is often not possible to directly attribute, or reasonably allocate :-

Correct Answer The interest bearing liabilities to segments

Your Answer Goodwill

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis

Your Answer It is used as a starting point

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Your Answer Location of its customers

Multiple Choice Single Answer

Question FEA is a technique to analyze & evaluate :-
 Strategic Finance

Correct Answer Alternative process improvements

Your Answer Alternative process improvements

True/False
Question Arbitrage process implies that security cannot sell at different prices.

Correct Answer True

Your Answer False

Select The Blank

Question ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Provide ineffective competitive process

True/False
Question Retained earnings are the most important internal sources of financing the growth of
the firm.
Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Control over the policies

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-

Correct Answer Cash available

Your Answer Cash available

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer The decisions related are one time decisions only , It is continually required for a going
concern , Quantum of working capital fluctuates depending on the level of activity

Select The Blank

Question Earning power of the company approach tries to value the ________.
 Strategic Finance

Correct Answer Current value of the assets

Your Answer Income / profit from the assets

Multiple Choice Multiple Answer

Question As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Your Answer Land , Debentures

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer Vertical , Conglomerate , Financial

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Your Answer Growth

True/False
Question Management of working capital refers to the management of total assets and liabilities
of a company.
Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount to be

retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-

Correct Answer Brokerage , Fees , Duties

 Strategic Finance

Your Answer Brokerage , Fees , Duties

Select The Blank

Question Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods

Your Answer Big ticket items & durable goods

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Segment information needs to be presented :-

Correct Answer Only on the basis of the consolidated financial statements

Your Answer As separate financial statements

Select The Blank

Question Postage is an example of ________ cost.

Correct Answer Non traceable cost

Your Answer Input cost

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by
the company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Conglomerate mergers

 Strategic Finance

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer True

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Growth of the firm , Better facilities and work conditions

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-

Correct Answer Bench marking

Your Answer Value added analysis

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

Your Answer True

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Your Answer True

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.

Correct Answer Direct

Your Answer Direct

Select The Blank

 Strategic Finance

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Decreases

Select The Blank

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Your Answer General

Multiple Choice Single Answer

Question Many companies claim their main assets are their :-

Correct Answer People

Your Answer People

Multiple Choice Multiple Answer

Question The important steps involved in the analysis of mergers & acquisitions are:-

Correct Answer Planning , Searching & screening , Financial evaluation

Your Answer Planning , Searching & screening , Financial evaluation

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Product warranty provision

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment

Your Answer Business segment

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Single Answer

Question Debt suppliers main concern is :-
 Strategic Finance

Correct Answer Interest & debt repayment

Your Answer Interest & debt repayment

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Working capital cycle

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Your Answer The surplus is invested in liquid assets

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28

Your Answer 0.28

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non -
monetary & monetary.
Correct Answer True

Your Answer False

True/False
Question The activity model is normally created by an activity Accountant.
 Strategic Finance

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-

Correct Answer Logs to record workflow , Specific costs , External and internal audit reports

Your Answer Logs to record workflow , Specific costs , General studies and processes

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Your Answer Internet

Select The Blank

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Your Answer Fringe benefits

Multiple Choice Multiple Answer

Question The existence of significant influence by an investor is usually evidenced in the
following ways :-
Correct Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel
Your Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel

Multiple Choice Multiple Answer

Question The direct costs tier normally only includes the following :-

Correct Answer The personnel payroll , Supplies , Individual rental equipment

Your Answer The personnel payroll , Support costs , Supplies

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-

Correct Answer Full time equivalent staff , Revenues , Expenses

Your Answer Full time equivalent staff , Expenses , Good will

Multiple Choice Multiple Answer

Question Accrued expenses represent :-

Correct Answer Costless financing , An interest free source of financing

 Strategic Finance

Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

True/False
Question The accounting records serve as the major source of cost data.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as
:-
Correct Answer Flexible policy

Your Answer Aggressive policy

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Your Answer The surplus is invested in liquid assets

True/False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Your Answer True

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-

Correct Answer Accounts payable

Your Answer Accounts receivables

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Your Answer less than 10 %

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28

Your Answer 0.28

 Strategic Finance

Select The Blank

Question ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Provide ineffective competitive process

Multiple Choice Multiple Answer

Question The important steps involved in the analysis of mergers & acquisitions are:-

Correct Answer Planning , Searching & screening , Financial evaluation

Your Answer Consultation with shareholders , Planning , Searching & screening

Multiple Choice Multiple Answer

Question Trade credits are of the following types:-

Correct Answer Notes payable , Trade acceptances , Open accounts

Your Answer Notes payable , Trade acceptances , Commercial paper

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Your Answer True

Select The Blank

Question The clean up period is usually ________ months.

Correct Answer 1 to 2 months

Your Answer 3 months

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Your Answer Is depreciated along with the existing asset

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-

Correct Answer Timeliness & turnaround

Your Answer Timeliness & turnaround

True/False
 Strategic Finance

Question A long term investment is an investment other than a current investment.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by
the company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Select The Blank

Question Identify disclosure on human resources as a societal concern & prepare international
regulations comes under ________
Correct Answer The compulsory method

Your Answer The voluntary market based method

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-

Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention

Your Answer Internal financing , Constant return and cost of capital , Perfect markets

Multiple Choice Single Answer

Question When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Your Answer Necessary that firms should have less working capital requirement

Multiple Choice Single Answer

Question A manufacturing concern like a machine tool has :-

Correct Answer A long operating cycle

Your Answer Sells largely on cash basis

True/False
Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Your Answer True

Select The Blank

Question In many companies, there is no formal record of________.
 Strategic Finance

Correct Answer Investment in employees

Your Answer Investment in employees

Select The Blank

Question Depreciation is ________ of an asset.

Correct Answer Loss of value

Your Answer Loss of value

Multiple Choice Multiple Answer

Question Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Growth & diversify

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Increases

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate

Your Answer By applying a lower rate

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment revenue

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-

Correct Answer Payroll , Accounting , Automatic data processing

 Strategic Finance

Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

Your Answer Value added & non value added activities

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-

Correct Answer To the person , To the firm , To the Consultant

Your Answer To the person , To the firm , To the Consultant

Multiple Choice Single Answer

Question Arbitrage means :-

Correct Answer Securities cannot sell at different prices

Your Answer Selling a security

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals

Your Answer Have no correlation with

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Your Answer Perfect Capital Markets

True/False
Question Dividends increase the current returns for shareholders.

Correct Answer True

Your Answer False

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True

Your Answer True

 Strategic Finance

Multiple Choice Single Answer

Question The Buy back of shares shall not be made from

Correct Answer The promoters or persons in control of the company

Your Answer The promoters or persons in control of the company

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer Vertical , Conglomerate , Horizontal

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Market Capitalization

Select The Blank

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Your Answer Preferentially lower rate

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

True/False
Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The main categories of organisational elements are :-

Correct Answer Managerial , Support , Operational

Your Answer Managerial , Support , Operational

Multiple Choice Single Answer

 Strategic Finance

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

Multiple Choice Single Answer

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Deferred Payment Liabilities

Select The Blank

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Your Answer Customer advances

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis

Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Multiple Choice Single Answer

Question Many companies claim their main assets are their :-

Correct Answer People

Your Answer People

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
 Strategic Finance

Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

True/False
Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Your Answer True

True/False
Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer Debt and equity are the 2 kinds of funds used by the firm

Select The Blank

Question Liquidation value is also known as ________.

Correct Answer Realizable value

Your Answer Net replacement value of the assets

True/False
Question It is possible to place a single value for the acquired firm.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-

Correct Answer Right to provide service to customers , Job security for the employees

Your Answer Right to provide service to customers , Job security for the employees , Commitment to
pay interest in time for debentures issued

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Your Answer 5 % & 15 %

 Strategic Finance

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-

Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Your Answer Lowest cost of capital , High value of firm , Good market reputation

Select The Blank

Question Implicit & Explicit costs are included in the ________.

Correct Answer Price of a product

Your Answer Price of a product

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same
best way :-
Correct Answer Comparative analysis

Your Answer Comparative analysis

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-

Correct Answer Cash available

Your Answer Cash available

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
 Strategic Finance

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger

Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Your Answer True

True/False
Question The objective of a dividend policy should be to maximize shareholder's return so that
the value of his investment is maximized.
Correct Answer False

Your Answer True

Select The Blank

Question HLL is ________ % of subsidiary of Unilever PLC.

Correct Answer 0.516

Your Answer 0.5

Multiple Choice Single Answer

Question In a matching approach policy, :-

Correct Answer There is a small risk if shortage of funds

Your Answer There is a small risk if shortage of funds

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Your Answer Between 15 days to 1 year

Select The Blank

Question ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Provide ineffective competitive process

Multiple Choice Single Answer

Question Controlling block is usually acquired from:-

Correct Answer A single seller

Your Answer A single seller

 Strategic Finance

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

True/False
Question Only firms with a large amount of financial slack can afford tender offers.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Changes in the investee`s equity includes those :-

Correct Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation
Your Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non -
monetary & monetary.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Depreciation includes amortization of assets whose useful life is :-

Correct Answer Predetermined

Your Answer Predetermined

True/False
Question Human assets accounting is still to become an accepted trend in the industry.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Value implies that something has :-

Correct Answer Worth

Your Answer Worth

Multiple Choice Multiple Answer

 Strategic Finance

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Multiple Choice Single Answer

Question The Buy back of shares shall not be made from

Correct Answer The promoters or persons in control of the company

Your Answer The promoters or persons in control of the company

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-

Correct Answer Horizontal , Vertical , Conglomerate

Your Answer Vertical , Conglomerate , Horizontal

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Market Capitalization

Select The Blank

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Your Answer Preferentially lower rate

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

True/False
Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The main categories of organisational elements are :-
 Strategic Finance

Correct Answer Managerial , Support , Operational

Your Answer Managerial , Support , Operational

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Accounting standard 19 for leases statement is applied in accounting for all leases
other than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

Multiple Choice Single Answer

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Deferred Payment Liabilities

Select The Blank

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Your Answer Customer advances

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis

Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Multiple Choice Single Answer

Question Many companies claim their main assets are their :-

Correct Answer People

Your Answer People

 Strategic Finance

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-

Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

True/False
Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Your Answer True

True/False
Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer Debt and equity are the 2 kinds of funds used by the firm

Select The Blank

Question Liquidation value is also known as ________.

Correct Answer Realizable value

Your Answer Net replacement value of the assets

True/False
Question It is possible to place a single value for the acquired firm.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-

Correct Answer Right to provide service to customers , Job security for the employees

Your Answer Right to provide service to customers , Job security for the employees , Commitment to
pay interest in time for debentures issued

Select The Blank

 Strategic Finance

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Your Answer 5 % & 15 %

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-

Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Your Answer Lowest cost of capital , High value of firm , Good market reputation

Select The Blank

Question Implicit & Explicit costs are included in the ________.

Correct Answer Price of a product

Your Answer Price of a product

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same
best way :-
Correct Answer Comparative analysis

Your Answer Comparative analysis

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-

Correct Answer Cash available

 Strategic Finance

Your Answer Cash available

Multiple Choice Multiple Answer

Question Financial evaluation involves :-

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger

Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Your Answer True

True/False
Question The objective of a dividend policy should be to maximize shareholder's return so that
the value of his investment is maximized.
Correct Answer False

Your Answer True

Select The Blank

Question HLL is ________ % of subsidiary of Unilever PLC.

Correct Answer 0.516

Your Answer 0.5

Multiple Choice Single Answer

Question In a matching approach policy, :-

Correct Answer There is a small risk if shortage of funds

Your Answer There is a small risk if shortage of funds

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Your Answer Between 15 days to 1 year

Select The Blank

Question ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Your Answer Provide ineffective competitive process

Multiple Choice Single Answer

 Strategic Finance

Question Controlling block is usually acquired from:-

Correct Answer A single seller

Your Answer A single seller

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

True/False
Question Only firms with a large amount of financial slack can afford tender offers.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Changes in the investee`s equity includes those :-

Correct Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation
Your Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non -
monetary & monetary.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Depreciation includes amortization of assets whose useful life is :-

Correct Answer Predetermined

Your Answer Predetermined

True/False
Question Human assets accounting is still to become an accepted trend in the industry.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Value implies that something has :-
 Strategic Finance

Correct Answer Worth

Your Answer Worth

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

True/False
Question It is easy to find a risk free security.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-

Correct Answer More than 50 % of the total assets

Your Answer More than 50 % of the total assets

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Temporary staff , Part time personnel

Select The Blank

Question Business risk & financial risk do not have any influence on ________.

Correct Answer Accounting numbers

Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
 Strategic Finance

Correct Answer Cost of capital

Your Answer Cost of capital

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Growth of the firm

Select The Blank

Question Conglomerate mergers are also called ________.

Correct Answer Concentric mergers

Your Answer Concentric mergers

True/False
Question The buyback shall be made only on stock exchanges with electronic trading facility.

Correct Answer True

Your Answer True

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.

Correct Answer True

Your Answer True

True/False
Question firms use credit policy as a marketing tool for expanding sales.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Tender offers are used primarily for :-

Correct Answer Large Equity repurchases

Your Answer Large Equity repurchases

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Your Answer Regenerative natural resources

 Strategic Finance

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-

Correct Answer The optimum payout ratio for a declining firm is not 100 %

Your Answer The optimum payout ratio for a declining firm is not 100 %

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Your Answer Increases

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer Personnel salaries , Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such
as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Select The Blank

Question Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Your Answer A high proportion of earnings

Multiple Choice Single Answer

Question Segment result represents :-

Correct Answer Operating profit or loss

Your Answer Net of financing profit or loss

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-

Correct Answer Bench marking

Your Answer Bench marking

True/False
 Strategic Finance

Question Making decision on dividend is a very crucial area of financial management for a firm.

Correct Answer True

Your Answer True

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Assets

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar

Select The Blank

Question Buy back through book building the process should be made through ________.

Correct Answer An electronically linked transparent facility

Your Answer An electronically linked transparent facility

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Your Answer Sales per employee , Recovery rate , Utilization %

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-

Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment expense

 Strategic Finance

Select The Blank

Question A company shall buyback its shares through the stock exchange by making a public
announcement at least ________ days prior to the commencement of buyback.
Correct Answer Seven

Your Answer Seven

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting

Your Answer Organization element accounting

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Current Liabilities

True/False
Question Tender offers us an alternative approach to acquire another firm.

Correct Answer True

Your Answer True

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Directly attributable to the segment

True/False
Question Management of working capital refers to the management of total assets and liabilities
of a company.
Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question If a company is following multiple accounting system, the activity accountant will have
to match data across :-
Correct Answer Codes , Time periods , Systems

Your Answer Codes , Time periods , Systems

 Strategic Finance

Multiple Choice Single Answer

Question If competition is weak, a firm :-

Correct Answer Can manage with a smaller inventory of finished goods

Your Answer Can manage with a smaller inventory of finished goods

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Your Answer Future generation of profits & services

Select The Blank

Question Horizontal mergers involves firms________.

Correct Answer That operate & compete in a similar kind of business

Your Answer That operate & compete in a similar kind of business

Multiple Choice Single Answer

Question The following of total cost of assets over its useful life is called depreciation :-

Correct Answer Distribution

Your Answer Distribution

Multiple Choice Multiple Answer

Question The different types of floats are :-

Correct Answer Postal float , Deposit float , Bank float

Your Answer Postal float , Deposit float , Bank float

Select The Blank

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment

Multiple Choice Multiple Answer

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Your Answer Job security , Better opportunities within the firm , Higher compensation

True/False
Question Short term financing is meant for funding working capital of a company.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Deferred payment plan is also known as:-

Correct Answer Earn out plan

Your Answer Earn out plan

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-

Correct Answer On some reasonable basis

Your Answer On some reasonable basis

True/False
Question It is easy to find a risk free security.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-

Correct Answer More than 50 % of the total assets

Your Answer More than 50 % of the total assets

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Your Answer Full time equivalents , Temporary staff , Part time personnel

Select The Blank

Question Business risk & financial risk do not have any influence on ________.

Correct Answer Accounting numbers

Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
 Strategic Finance

continuous basis

Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Your Answer Cost of capital

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Growth of the firm

Select The Blank

Question Conglomerate mergers are also called ________.

Correct Answer Concentric mergers

Your Answer Concentric mergers

True/False
Question The buyback shall be made only on stock exchanges with electronic trading facility.

Correct Answer True

Your Answer True

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.

Correct Answer True

Your Answer True

True/False
Question firms use credit policy as a marketing tool for expanding sales.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Tender offers are used primarily for :-

Correct Answer Large Equity repurchases

 Strategic Finance

Your Answer Large Equity repurchases

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Your Answer Regenerative natural resources

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-

Correct Answer The optimum payout ratio for a declining firm is not 100 %

Your Answer The optimum payout ratio for a declining firm is not 100 %

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Your Answer Increases

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer Personnel salaries , Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such
as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Select The Blank

Question Mature companies with stable earnings generally pay out ________.

Correct Answer A high proportion of earnings

Your Answer A high proportion of earnings

Multiple Choice Single Answer

Question Segment result represents :-

Correct Answer Operating profit or loss

Your Answer Net of financing profit or loss

 Strategic Finance

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-

Correct Answer Bench marking

Your Answer Bench marking

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.

Correct Answer True

Your Answer True

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital
and increases the firm's value.
Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Assets

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio
, All dividend policies are similar

Select The Blank

Question Buy back through book building the process should be made through ________.

Correct Answer An electronically linked transparent facility

Your Answer An electronically linked transparent facility

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Your Answer Sales per employee , Recovery rate , Utilization %

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-

Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

 Strategic Finance

Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Your Answer Segment expense

Select The Blank

Question A company shall buyback its shares through the stock exchange by making a public
announcement at least ________ days prior to the commencement of buyback.
Correct Answer Seven

Your Answer Seven

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element
accordingly?
Correct Answer Organization element accounting

Your Answer Organization element accounting

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Current Liabilities

True/False
Question Tender offers us an alternative approach to acquire another firm.

Correct Answer True

Your Answer True

Select The Blank

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Your Answer Directly attributable to the segment

True/False
Question Management of working capital refers to the management of total assets and liabilities
of a company.
Correct Answer False
 Strategic Finance

Your Answer False

Multiple Choice Multiple Answer

Question If a company is following multiple accounting system, the activity accountant will have
to match data across :-
Correct Answer Codes , Time periods , Systems

Your Answer Codes , Time periods , Systems

Multiple Choice Single Answer

Question If competition is weak, a firm :-

Correct Answer Can manage with a smaller inventory of finished goods

Your Answer Can manage with a smaller inventory of finished goods

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Your Answer Future generation of profits & services

Select The Blank

Question Horizontal mergers involves firms________.

Correct Answer That operate & compete in a similar kind of business

Your Answer That operate & compete in a similar kind of business

Multiple Choice Single Answer

Question The following of total cost of assets over its useful life is called depreciation :-

Correct Answer Distribution

Your Answer Distribution

Multiple Choice Multiple Answer

Question The different types of floats are :-

Correct Answer Postal float , Deposit float , Bank float

Your Answer Postal float , Deposit float , Bank float

Select The Blank

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
 Strategic Finance

Multiple Choice Multiple Answer

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Your Answer Job security , Better opportunities within the firm , Higher compensation

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Deferred payment plan is also known as:-

Correct Answer Earn out plan

Your Answer Earn out plan

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-

Correct Answer On some reasonable basis

Your Answer On some reasonable basis

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-

Correct Answer Accounting , Automatic data processing , Payroll

Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question The value of the asset does not include:-

Correct Answer Price per share

Your Answer Price per share

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-

Correct Answer To achieve a better method of doing the right business pf the organisation

Your Answer To achieve a better method of doing the right business pf the organisation

Multiple Choice Single Answer

 Strategic Finance

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Your Answer The surplus is invested in liquid assets

True/False
Question Articles of association should authorise buy back of securities as per the Company's
Act.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Your Answer Capital redemption reserve Account

Multiple Choice Single Answer

Question Comparative analysis is :-

Correct Answer A review to ensure consistency within the activity model & process flow

Your Answer A review to ensure consistency within the activity model & process flow

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Select The Blank

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Resource consumption

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
 Strategic Finance

Correct Answer Equals

Your Answer Equals

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.

Correct Answer False

Your Answer False

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include
:-
Correct Answer Quality of management , Production capabilities , Profitability

Your Answer Production capabilities , Capital & labour intensity , Profitability

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Goodwill

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human
resources depends upon :-
Correct Answer Capacity to generate revenue

Your Answer Opportunity cost

Select The Blank

Question ________ are considered most desirable from shareholders point of view.

Correct Answer Dividends

Your Answer Dividends

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Capital gains , Dividend

 Strategic Finance

Multiple Choice Single Answer

Question In the book building method, the company makes an offer to buy back :-

Correct Answer Its specified number of shares at a specified offer price range

Your Answer Its specified number of shares at a specified offer price range

Multiple Choice Multiple Answer

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility

Multiple Choice Single Answer

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Your Answer 1960`s

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team

Your Answer Latest & updated techniques

True/False
Question It is necessary to identify all costs that may be related to an acquisition.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
 Strategic Finance

Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Increases

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as
reportable segments.
Correct Answer 75 percent

Your Answer 75 percent

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Not similar to current assets

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Your Answer Related receivables

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25

Your Answer 0.25

Select The Blank

Question Economies of scale arises with increase in volume of production leading to________.

Correct Answer Reduction in the cost of production

Your Answer Reduction in the cost of production

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

 Strategic Finance

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount to be

retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Your Answer True

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When the seller asks for the payment before making the delivery in order to avoid all
risks it is known as :-
Correct Answer Cash before delivery

Your Answer Cash before delivery

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-

Correct Answer If they are different from the principle rates specified in the statute

Your Answer If they are different from the principle rates specified in the statute

Select The Blank

Question Depreciation is ________ of an asset.

Correct Answer Loss of value

Your Answer Loss of value

Multiple Choice Single Answer

 Strategic Finance

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

True/False
Question Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True

Your Answer False

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Your Answer Overall cost of capital

Multiple Choice Multiple Answer

Question The limitations of value of assets approach include :-

Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset
Your Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer False

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-

Correct Answer Accounting , Automatic data processing , Payroll

Your Answer Payroll , Co-ordination , Accounting

 Strategic Finance

Multiple Choice Single Answer

Question The value of the asset does not include:-

Correct Answer Price per share

Your Answer Price per share

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-

Correct Answer To achieve a better method of doing the right business pf the organisation

Your Answer To achieve a better method of doing the right business pf the organisation

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Your Answer The surplus is invested in liquid assets

True/False
Question Articles of association should authorise buy back of securities as per the Company's
Act.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Your Answer Capital redemption reserve Account

Multiple Choice Single Answer

Question Comparative analysis is :-

Correct Answer A review to ensure consistency within the activity model & process flow

Your Answer A review to ensure consistency within the activity model & process flow

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-
 Strategic Finance

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Select The Blank

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Resource consumption

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals

Your Answer Equals

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.

Correct Answer False

Your Answer False

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include
:-
Correct Answer Quality of management , Production capabilities , Profitability

Your Answer Production capabilities , Capital & labour intensity , Profitability

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Goodwill

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human
resources depends upon :-
Correct Answer Capacity to generate revenue
 Strategic Finance

Your Answer Opportunity cost

Select The Blank

Question ________ are considered most desirable from shareholders point of view.

Correct Answer Dividends

Your Answer Dividends

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Your Answer Capital gains , Dividend

Multiple Choice Single Answer

Question In the book building method, the company makes an offer to buy back :-

Correct Answer Its specified number of shares at a specified offer price range

Your Answer Its specified number of shares at a specified offer price range

Multiple Choice Multiple Answer

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic
screen when the order is placed , The buy back shall be made only on stock exchanges
with electronic trading facility

Multiple Choice Single Answer

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Your Answer 1960`s

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team

Your Answer Latest & updated techniques

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Your Answer Increases

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as
reportable segments.
Correct Answer 75 percent

Your Answer 75 percent

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Not similar to current assets

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Your Answer Related receivables

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25
 Strategic Finance

Your Answer 0.25

Select The Blank

Question Economies of scale arises with increase in volume of production leading to________.

Correct Answer Reduction in the cost of production

Your Answer Reduction in the cost of production

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount to be

retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Your Answer True

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question When the seller asks for the payment before making the delivery in order to avoid all
risks it is known as :-
Correct Answer Cash before delivery

Your Answer Cash before delivery

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True

Your Answer True

 Strategic Finance

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-

Correct Answer If they are different from the principle rates specified in the statute

Your Answer If they are different from the principle rates specified in the statute

Select The Blank

Question Depreciation is ________ of an asset.

Correct Answer Loss of value

Your Answer Loss of value

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

True/False
Question Money becomes less valuable when received at a latter stage instead of in present
time.
Correct Answer True

Your Answer False

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Your Answer Overall cost of capital

Multiple Choice Multiple Answer

Question The limitations of value of assets approach include :-

Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset
Your Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset
 Strategic Finance

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.

Correct Answer True

Your Answer False

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Multiple Choice Single Answer

Question In respect of depreciable assets, which do not have material value, depreciation is often
allocated :-
Correct Answer Fully in the accounting period for which they are acquired

Your Answer Over the residual value

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25

Your Answer 0.25

True/False
Question Tender offers us an alternative approach to acquire another firm.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

Your Answer Ideas to determine which is faster, better or cheaper

Multiple Choice Multiple Answer

 Strategic Finance

Question For ABC Analysis the available cost data :-

Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question Today knowledge has become a key determinant for :-

Correct Answer Economic & business success

Your Answer For determining a firm's value

Select The Blank

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Your Answer Expenses

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Your Answer People , Equipment , Overheads

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team

Your Answer Solid human resource team

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.
 Strategic Finance

Correct Answer False

Your Answer True

True/False
Question Cash dividends are taxable at ordinary tax rates.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-

Correct Answer Fixed assets , Investments , Current assets

Your Answer Fixed assets , Current assets

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-

Correct Answer Brokerage , Fees , Duties

Your Answer Brokerage , Advertisements , Fees , Duties

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Current Liabilities

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.

Correct Answer 118 Bn

Your Answer 118 Bn

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

 Strategic Finance

Your Answer True

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

Your Answer True

Select The Blank

Question The clean up period is usually ________ months.

Correct Answer 1 to 2 months

Your Answer 1 to 2 months

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-

Correct Answer To achieve a better method of doing the right business pf the organisation

Your Answer To achieve a better method of doing the right business pf the organisation

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment

Your Answer Operating segment

Multiple Choice Single Answer

Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
Correct Answer Segment assets

Your Answer Segment assets

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book
value.
Correct Answer True

Your Answer True

True/False
Question Segment result is segment revenue less segment expenses.

Correct Answer True

Your Answer True

 Strategic Finance

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Your Answer Improved profitability , Continuity , Growth of the firm

True/False
Question Book value is based on the balance sheet value of owner's equity.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The overhead expenses include :-

Correct Answer Utilities , Maintenance , Security

Your Answer Daily wages , Maintenance , Security

True/False
Question It is necessary to identify all costs that may be related to an acquisition.

Correct Answer True

Your Answer True

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.

Correct Answer True

Your Answer True

Select The Blank

Question ________ know the best about a firm's performance.

Correct Answer Firm Managers

Your Answer Firm Managers

Multiple Choice Single Answer

Question The FEA Tools encompass a vast array of information & policy into :-

Correct Answer One evaluation

Your Answer Many evaluations

Multiple Choice Multiple Answer

 Strategic Finance

Question The employer in offering the job contract assumes a range of legal obligations such
as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Select The Blank

Question Business risk & financial risk do not have any influence on ________.

Correct Answer Accounting numbers

Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Can be held for more than 1 year

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-

Correct Answer If they are different from the principle rates specified in the statute

Your Answer If they are different from the principle rates specified in the statute

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-

Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Your Answer Between 15 days to 1 year

Select The Blank

Question Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods

Your Answer Big ticket items & durable goods

Select The Blank

 Strategic Finance

Question ________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)

Your Answer Japanese

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets

Your Answer Current assets

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-

Correct Answer The surplus is invested in liquid assets

Your Answer The surplus is invested in liquid assets

True/False
Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Your Answer False

Select The Blank

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Your Answer Constant

Multiple Choice Single Answer

Question The following method of valuation is used for listed companies that have an active
market for their shares :-
Correct Answer Market value approach

Your Answer Market value approach

Multiple Choice Single Answer

Question The main assumption in comparative analysis is the possibility of :-

Correct Answer Combination or co-location of similar functions

Your Answer Combination or co-location of similar functions

Multiple Choice Multiple Answer

 Strategic Finance

Question The budgetary records are useful for:-

Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data
Your Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data

Select The Blank

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Your Answer 1 year

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-

Correct Answer More than 50 % of the total assets

Your Answer More than 50 % of the total assets

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.

Correct Answer Bank finance

Your Answer Bank finance

Multiple Choice Single Answer

Question in case of temporary working capital, the investment in current assets varies with :-

Correct Answer Seasonal requirements

Your Answer Seasonal requirements

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-

Correct Answer Logs to record workflow , Specific costs , External and internal audit reports

Your Answer Logs to record workflow , Specific costs , External and internal audit reports

True/False
Question The carrying amount for current investments is the lower of cost & fair value.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-
 Strategic Finance

Correct Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon

True/False
Question Explicit cost and implicit cost are the two parts of cost of debt.

Correct Answer True

Your Answer True

Select The Blank

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Your Answer Vertical Mergers

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-

Correct Answer Investing too much

Your Answer Investing too much

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-

Correct Answer On some reasonable basis

Your Answer On some reasonable basis

True/False
Question In market value approach, interested parties never manipulate the stock markets.

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Which of the following company is reaping high market valuation due to showing human
resources as an asset in its balance sheet information?
Correct Answer Infosys

Your Answer BHEL

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

 Strategic Finance

Your Answer Overall cost of capital

Multiple Choice Single Answer

Question Suppliers of equity are interested in :-

Correct Answer High share prices

Your Answer High share prices

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.

Correct Answer Declaration date

Your Answer Ex - dividend date

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-

Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Multiple Choice Single Answer

Question A single business segment does not include products & services :-

Correct Answer With significantly differing risks & returns

Your Answer With significantly differing risks & returns

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Debt suppliers main concern is :-

Correct Answer Interest & debt repayment

Your Answer Interest & debt repayment

Multiple Choice Single Answer

Question Value added analysis is a method to determine, if elements within a process flow
provide the :-
Correct Answer Values

Your Answer Values

 Strategic Finance

Select The Blank

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies

Your Answer Shares of a large number of companies

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-

Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Multiple Choice Multiple Answer

Question The following disclosures in financial statements in relation to investments are
appropriate :-
Correct Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L
Statement
Your Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L
Statement

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-

Correct Answer Market growth , Nature of competition , Degree of regulation

Your Answer Market growth , Marketing capabilities , Nature of competition

Multiple Choice Multiple Answer

Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :-

Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision
Your Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as
a capital budgeting decision

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Your Answer Increases

 Strategic Finance

True/False
Question A long term investment is an investment other than a current investment.

Correct Answer True

Your Answer True

True/False
Question The capital Asset pricing model describes the pricing of assets as well as derivatives.

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Your Answer Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Select The Blank

Question the commercial paper may be issued in the multiples of ________.

Correct Answer 5 lakhs

Your Answer 5 lakhs

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Your Answer Perfect Capital Markets

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.

Correct Answer Regular, steady dividend

Your Answer Regular, steady dividend

 Strategic Finance

Multiple Choice Multiple Answer

Question AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

True/False
Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Your Answer False

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Your Answer The payout ratio is never 100 %

Multiple Choice Single Answer

Question Arbitrage means :-

Correct Answer Securities cannot sell at different prices

Your Answer Securities cannot sell at different prices

True/False
Question Short term financing is meant for funding working capital of a company.

Correct Answer True

Your Answer True

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Your Answer True

Select The Blank

 Strategic Finance

Question Non value added activities helps ________.

Correct Answer To analyse the activities more carefully

Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt to
total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-

Correct Answer 7 Days prior to the commencement of buy back

Your Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Accrued liabilities

 Strategic Finance

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Your Answer Equity Shares

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Your Answer Equity

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets

Your Answer Segment assets

Multiple Choice Multiple Answer

Question The overhead expenses include :-

Correct Answer Utilities , Maintenance , Security

Your Answer Utilities , Maintenance , Security

Multiple Choice Multiple Answer

 Strategic Finance

Question Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Your Answer Wages , Income tax , Property tax

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-

Correct Answer Realizable value

Your Answer Realizable value

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Your Answer 30

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as :-

Correct Answer Flexible policy

Your Answer Flexible policy

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Your Answer 20 & 40 percent

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-

Correct Answer Net working capital

Your Answer Net working capital

Select The Blank

Question Conglomerate mergers are also called ________.
 Strategic Finance

Correct Answer Concentric mergers

Your Answer Concentric mergers

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

Question In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Your Answer Non trading assets

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-

Correct Answer Purchase of raw material , Manufacturing costs , Administration

Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Your Answer Assets

Multiple Choice Single Answer

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Your Answer Reserves

Multiple Choice Single Answer

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

 Strategic Finance

Your Answer Earning per share

True/False
Question DCF is not a method used to calculate market value of a firm.

Correct Answer False

Your Answer False

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers

Multiple Choice Multiple Answer

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Your Answer True

Select The Blank

Question Non value added activities helps ________.

Correct Answer To analyse the activities more carefully

Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.

Correct Answer False

Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

Your Answer Replacement cost

 Strategic Finance

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total
capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-

Correct Answer 7 Days prior to the commencement of buy back

Your Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.

Correct Answer Goodwill

Your Answer Accrued liabilities

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a
continuous basis

True/False
Question The accounting records serve as the major source of cost data.

Correct Answer True

Your Answer True

Select The Blank

Question AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
 Strategic Finance

Correct Answer 01.04.2002

Your Answer 01.04.2002

True/False
Question The activity model is normally created by an activity Accountant.

Correct Answer False

Your Answer False

True/False
Question Organisational changes are similar to mission changes.

Correct Answer True

Your Answer True

Multiple Choice Single Answer

Question Equity includes :-

Correct Answer Development Rebate Reserve

Your Answer Development Rebate Reserve

Select The Blank

Question A geographical segment cannot be ________.

Correct Answer Countries in different zones

Your Answer Countries in different zones

Multiple Choice Single Answer

Question The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield

Your Answer Greenfield

Multiple Choice Single Answer

Question The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Your Answer 5 % of the voting capital of the target company

Multiple Choice Multiple Answer

Question Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
 Strategic Finance

Your Answer Participate in the financial decisions , Participate in the operating policy decisions

Multiple Choice Multiple Answer

Question An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same
best way :-
Correct Answer Comparative analysis

Your Answer Comparative analysis

Exit cost Lost efficiency prior to separation, Job vacancy cost

during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting &
training of the replacement
Opportunity cost An asset value when they are the target of an
alternative use.

Information or signalling hypothesis Management believes that the common stock of the
company is undervalued
Dividend or Personal Taxation Hypothesis Cash dividends are taxable at ordinary tax rates
Leverage hypothesis Stock repurchases increases the debt / equity ratio
Wealth transfer among shareholders The largest portion of wealth effect goes to the non
- tendering shareholders

Diversification Growth through the combination of firms in

unrelated fields of business
Horizontal mergers 2 Firms operate & compete in a similar kind of
business
Vertical mergers Firms in different stages of production
Conglomerate mergers Different or unrelated business activity

Segment liabilities Enterprise liabilities

Segment revenue Enterprise revenue
Segment result Enterprise net profit or loss
Segment assets Enterprise assets

Mechanisms Performs or provides energy to an activity

Inputs Information or material used to produce the output
of an activity
Controls Information or material that constrains an activity
Outputs Information or material produced by an activity
 Strategic Finance

Availability of funds in the market Cost of funds depends on this factor

Flexibility The extent & the ease with which the funds can be
raised & paid back are very important
Time Takes less time to take an overdraft from the bank

Creditworthiness of the issuer If a company has a good creditworthiness it is not

difficult to raise short term funds

Segment liabilities Do not include borrowings that are incurred for financing purposes Does not include
extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise balances
are eliminated
Segment assets Do not include income tax assets Do not include income tax assets

AS 4 Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements

Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit costs of
the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when they
are the target of an alternative use.
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
have preferences by choosing a way to finance their projects

Net income approach Cost of debt & equity do not change with a change in leverage ratio
weighted average cost of capital does not change with a change in the proportion of debt to
equity in the capital structure
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Earning per share Acquisition is considered to be a function of the impact of the merger on the EPS
Divide net worth by the number of equity shares outstanding
Book value Divide net worth by the number of equity shares outstanding Evaluate the impact of
the merger on EPS & price - earning ratio
Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the
going concern concept Indicate the consensus of the investors
 Strategic Finance

Market value Indicate the consensus of the investors Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept

Amount involved in buy back Not to exceed 25 % of the total paid up capital Not to exceed 25 % of
the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares
Board of Directors Resolution permitting the buy back of shares Authorize buy back of securities
Shares to be bought back Fully paid up Fully paid up

Trust receipt Specifically identified by serial number or other means Specifically identified by serial
number or other means
Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company
Inventory is stored with a public or terminal warehousing company
Floating lien Loose arrangement as the lender may find it difficult to police Well suited for financial
good inventories of capital goods
Chattel mortgage Well suited for financial good inventories of capital goodsAffords a higher degree
of control over the collateral

PpH = P/H (C+B)/P

SPE = R / H (C + B ) / R
RR = (C + B ) / R P/H
U%= R/(C+B) R/(C+B)

Question 1 If a company is following multiple accounting system, the activity accountant will have to
match data across
Correct Answer Codes , Time periods , Systems

Question 2 Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Question 5 A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn

Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer The cost of the output

Question 9 The voluntary market based method means :-

Correct Answer Develop a consistent framework which can be operational across sectors and
countries

Question 10 Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :-
 Strategic Finance

Correct Answer The last 26 months

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule

Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Question 15 What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question 19 Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question 22 Suppliers of equity are interested in :-

Correct Answer High share prices

Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land

Question 25 Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Question 26 Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Question 27 Economic analysis usually covers :-

Correct Answer A small number of improvement alternatives

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales

Question 29 Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods
 Strategic Finance

Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False

Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True

Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings

Question 33 As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Question 34 Accounting numbers are not influenced by :-

Correct Answer Dividend policy , Time span of money , Financial and business risk

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question 36 The development aspect of training in firms focus on :-

Correct Answer Promotion to higher job levels

Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question 41 Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment

Question 43 The HHI index reflects :-

Correct Answer Inequality & degree of concentration

Question 44 ________ is never a part of the output.

Correct Answer Mechanisms

Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Question 46 In a matching approach policy, :-

Correct Answer There is a small risk if shortage of funds
 Strategic Finance

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Question 1 Decrease in leverage results in increasing the :-

Correct Answer Overall cost of capital

Question 2 Value implies that something has :-

Correct Answer Worth

Question 3 Organisational changes are similar to mission changes.

Correct Answer True

Question 4 In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

Question 6 Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Question 7 Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Question 8 Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question 9 The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle

Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment

Question 13 ________ are not diversible.

Correct Answer Market related risks

Question 14 The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm

Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question 16 The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Question 17 A change in the method of depreciation is treated as a change in an accounting policy

and is disclosed accordingly.
Correct Answer True

Question 18 The main characteristics of CAPM are :-

 Strategic Finance

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)

Question 19 Segment result is segment revenue less segment expenses.

Correct Answer True

Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Question 22 Segment revenue includes ________.

Correct Answer Revenue from transactions with other segments of the enterprise

Question 23 Deferred payment plan is also known as:-

Correct Answer Earn out plan

Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.

Question 26 In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Question 27 In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Question 29 Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question 32 During the costing process, we look at ________.

Correct Answer Resource consumption

Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True

Question 34 The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
 Strategic Finance

Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management

Question 37 ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Question 38 An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise

Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market

Question 43 Cash dividends are taxable at ordinary tax rates.

Correct Answer True

Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer 25 lacs

Question 46 Tender offers are used primarily for :-

Correct Answer Large Equity repurchases

Question 47 Many companies claim their main assets are their :-

Correct Answer People

Question 1 The accounting records serve as the major source of cost data.
Correct Answer True

Question 2 ________ know the best about a firm's performance.

Correct Answer Firm Managers

Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation

Question 5 Developing a consistent framework supported by rewarding mechanisms once it is

introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom

Question 6 Dividends increase the current returns for shareholders.

Correct Answer True
 Strategic Finance

Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
Correct Answer Management & board

Question 10 Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Question 12 AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital

Question 14 A long term investment is an investment other than a current investment.

Correct Answer True

Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True

Question 16 Share repurchase a form of restructuring comes under :-

Correct Answer Changes in ownership structure

Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True

Question 18 Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals

Question 20 Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Question 21 In many companies, there is no formal record of________.

Correct Answer Investment in employees

Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values

Question 24 The Buy back of shares shall not be made from

Correct Answer The promoters or persons in control of the company

Question 25 traditionally avails are provided by ________.

Correct Answer Banks

Question 26 ________ is not a example of segment liability.

Correct Answer Goodwill
 Strategic Finance

Question 27 Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Question 28 Liquidation value is also known as ________.

Correct Answer Realizable value

Question 29 Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1

Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Question 32 Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question 34 The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares

Question 36 usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Question 37 When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Question 38 Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment

Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals

Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings
 Strategic Finance

Question 43 When a change in the method of depreciation is made :-

Correct Answer Depreciation is recalculated in accordance with the new method

Question 44 Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers

Question 45 Profitability of a company depends upon :-

Correct Answer Cost of capital

Question 46 A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Question 47 As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Inventory valuation , Booking depreciation , Methods of provisions

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years

Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Question Share repurchase a form of restructuring comes under :-

Correct Answer Changes in ownership structure

Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Question The limitations of value of assets approach include :-

Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Question In many companies, there is no formal record of________.

Correct Answer Investment in employees

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Question Cost of ________ is more than other sources for raising short - term finance.
 Strategic Finance

Correct Answer Bank finance

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate

Question The main assumption in comparative analysis is the possibility of :-

Correct Answer Combination or co-location of similar functions

Question If the segment result of a segment includes interest or dividend income its segment assets
will not include ________.
Correct Answer Payables

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Question Equity includes :-

Correct Answer Development Rebate Reserve

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Segment liabilities Enterprise liabilities Enterprise liabilities

Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets

Question Organisational changes are similar to mission changes.

Correct Answer True

Question The number of bidding centers shall not be less than ________ for buy back through book
building.
Correct Answer 30

Segment liabilities Do not include borrowings that are incurred for financing purposes Does not include
extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise balances
are eliminated
Segment assets Do not include income tax assets Do not include income tax assets

Question Total risk reduces if operations of combining firms are ________.

Correct Answer Negatively correlated

Question In the reproduction value method of valuation, the value of assets is taken to be on the basis
of ________
Correct Answer Replacement cost

Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
 Strategic Finance

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True

Question Management of working capital refers to the management of total assets and liabilities of a
company.
Correct Answer False

Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Correct Answer False

Question A company under siege may look for support & help from its :-
Correct Answer Friends

Question If the segment result of a segment includes interest expense its segment liabilities include :-
Correct Answer The related interest bearing liabilities

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Question The following Act contains the provisions permitting the companies to buy back their shares :-
Correct Answer Companies (Amendment) Act, 1999

Question Shortage costs are mainly in the form of :-

Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill

Question open account credit appears on the buyer's balance sheet as :-

Correct Answer Accounts payable

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers

Question When a company is able to assess an individual's worth, it helps in increasing its own worth.
Correct Answer True

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares

Question A long term investment is an investment other than a current investment.

Correct Answer True

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True
 Strategic Finance

Question If a particular item of depreciation or amortisation is included in segment expense, the related
asset is included in :-
Correct Answer Segment assets

Question Segment result is segment revenue less segment expenses.

Correct Answer True

Question Walter's model on dividend relevance is based on the following assumptions :-

Correct Answer 100 Per cent payout or retention , Internal financing , Constant return and cost of
capital

Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Question Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals

Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question In the past, costing mainly focused on :-

Correct Answer Manufacturing costs

Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True

Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question A high payout policy means :-

Correct Answer More current dividends

Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question Investment decisions are mainly concerned with :-

Correct Answer Assets
 Strategic Finance

Question current liabilities arise in the context of :-

Correct Answer Current assets

Question A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Question In the stock repurchase model one of the main assumption is that ________.
Correct Answer The market is efficient

Question Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities to
productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question AS 13 Accounting for investments - Accounting standard comes into effect for financial
statements covering periods commencing on or after ________.
Correct Answer `April 1, 1995

Question Comparative analysis is :-

Correct Answer A review to ensure consistency within the activity model & process flow

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute

Question When a firm invests in human resources by acquisition & training, it anticipates a ________
Correct Answer Future generation of profits & services

Question ________ is never a part of the output.

Correct Answer Mechanisms

Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question Postage is an example of ________ cost.

Correct Answer Non traceable cost

AS 4 Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
 Strategic Finance

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers

Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit costs of
the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when they
are the target of an alternative use.

Question It is necessary to identify all costs that may be related to an acquisition.

Correct Answer True

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question The scope of the data required relates to the scope of the activity model & processes under
review.
Correct Answer True

Question Trade credits are of the following types:-

Correct Answer Notes payable , Trade acceptances , Open accounts

Question In case of direct placement of commercial papers it may be issued for maturities ________
from the date of issue.
Correct Answer Between 15 days to 1 year

Question AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Question It is the activity accountant's job to do the following for the existing organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Question A transport corporation has a substantial working capital requirement.

Correct Answer False
 Strategic Finance

Question Implicit claims are non written promises and rights such as :-
Correct Answer Right to provide service to customers , Job security for the employees

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Question While accounting for human assets, the following data is to be considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
have preferences by choosing a way to finance their projects

Net income approach Cost of debt & equity do not change with a change in leverage ratio
weighted average cost of capital does not change with a change in the proportion of debt to
equity in the capital structure

Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________.
Correct Answer Process analysis

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Question ________ is never a part of the output.

Correct Answer Mechanisms

Question Short term financing is meant for funding working capital of a company.
Correct Answer True

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Earning per share Acquisition is considered to be a function of the impact of the merger on the EPS
Divide net worth by the number of equity shares outstanding

Book value Divide net worth by the number of equity shares outstanding Evaluate the impact of
the merger on EPS & price - earning ratio

Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the
going concern concept Indicate the consensus of the investors
 Strategic Finance

Market value Indicate the consensus of the investors Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis

Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Question A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True

Question A quantity discount is offered :-

Correct Answer On large shipments

Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational
resources

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains

Question In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Question Usually only a single method is used for valuation of shares.

Correct Answer False

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years
 Strategic Finance

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Question The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :-
Correct Answer Historical cost

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question A company that comes to the rescue of a firm that is being targeted for a takeover is
called :-
Correct Answer White knight

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Question Risk appetite decides the rate of capitalization.

Correct Answer True

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Question AS 23 - Accounting for investments in associates in consolidated financial statements

comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002

Question The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting

Question A single business segment does not include products & services :-
Correct Answer With significantly differing risks & returns

Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True
 Strategic Finance

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

Question A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer Increased risk

Question Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer False

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Question Segment assets are determined after :-

Correct Answer Deducting related allowances / provisions reported as direct offsets

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer Timeliness & turnaround

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition

Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Question Organisational changes are similar to mission changes.

 Strategic Finance

Correct Answer True

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend

Amount involved in buy back Not to exceed 25 % of the total paid up capital Not to exceed 25 % of
the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares
Board of Directors Resolution permitting the buy back of shares Authorize buy back of securities
Shares to be bought back Fully paid up Fully paid up

Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle

Question Fixed price tender offers are accompanied by an abnormal announcement period return
of :-
Correct Answer 8 - 10 %

Question The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Trust receipt Specifically identified by serial number or other means Specifically identified by serial
number or other means
Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company
Inventory is stored with a public or terminal warehousing company
Floating lien Loose arrangement as the lender may find it difficult to police Well suited for financial
good inventories of capital goods
Chattel mortgage Well suited for financial good inventories of capital goodsAffords a higher degree
of control over the collateral

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question Companies often need to value its own :-

Correct Answer Shares

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers

Question Investors can reduce the company related risk by diversification of their investments in
________.
 Strategic Finance

Correct Answer Shares of a large number of companies

Question Making decision on dividend is a very crucial area of financial management for a firm.

Question The following is not a factor for reduction in the life of an asset by obsolescence :-
Correct Answer No study of market demand for a product / service

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Question AS 13 statement does not deal with operating or finance leases.

Correct Answer True

Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Question Value implies that something has :-

Correct Answer Worth

Question Examples of accounting methods used by firm are :-

Correct Answer FIFO , LIFO , Accrual Accounting

Question The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses

Question It is easy to find a risk free security.

Correct Answer False

Question The earning power of the company approach includes :-

Correct Answer Mainly discounting of all future earnings

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question Accounts payable is also known as :-

 Strategic Finance

Correct Answer Trade credit from suppliers

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders
Enormous conflicts of interest between Stakeholders and shareholders
Net income approach Cost of debt & equity do not change with a change in leverage ratio Cost of
debt & equity do not change with a change in leverage ratio
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure weighted average cost of capital does not
change with a change in the proportion of debt to equity in the capital structure

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period

Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Question Financial evaluation involves :-

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
 Strategic Finance

Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question Free Reserves is a component of :-

Correct Answer Equity

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Question In the tender offer, the purchaser approaches :-

Correct Answer The shareholder

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
 Strategic Finance

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made

Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True

Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables

Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question Accrued expenses represent :-

Correct Answer Costless financing , An interest free source of financing

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Mechanisms Performs or provides energy to an activity Performs or provides energy to an

activity
Inputs Information or material used to produce the output of an activity Information or material used to
produce the output of an activity
Controls Information or material that constrains an activity Information or material that constrains
an activity
Outputs Information or material produced by an activity Information or material produced by an activity

Question Value added analysis :-

Correct Answer Helps to identify potential activities that may be omitted immediately

Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
 Strategic Finance

Correct Answer Improved profitability , Continuity , Growth of the firm

Question Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

Question In value of assets approach for computation of valuation of shares, the total value of all
the assets will be divided by the total number of shares.
Correct Answer True

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions

Question The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise

Question If a firm opts for restrictive policy then the investments in current assets is :-
Correct Answer Low

Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Many
groups of non - investor stakeholders have an interest in the firm
 Strategic Finance

Net income approach Cost of debt & equity do not change with a change in leverage ratio
Enormous conflicts of interest between Stakeholders and shareholders
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages Firms have preferences by choosing a way to finance their projects
Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________.
Correct Answer Process analysis

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management functions

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational
resources

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Question Horizontal mergers involves firms________.

Correct Answer That operate & compete in a similar kind of business

Availability of funds in the market Cost of funds depends on this factor Different costs are
involved
Flexibility The extent & the ease with which the funds can be raised & paid back are very important
The extent & the ease with which the funds can be raised & paid back are very important
Time Takes less time to take an overdraft from the bank Takes less time to take an overdraft
from the bank
Creditworthiness of the issuer If a company has a good creditworthiness it is not difficult to raise short
term funds If a company has a good creditworthiness it is not difficult to raise short term funds

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Question If a segment is not designated as a ________ it should be included as an unallocated

reconciling item.
Correct Answer Reportable segment

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
 Strategic Finance

Question Debt is often issued at :-

Correct Answer The head office level

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting

Question Segment result represents :-

Correct Answer Operating profit or loss

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Question Short term financing is meant for funding working capital of a company.
Correct Answer True

Question Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True

Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer True

Question One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as reportable
segments.
Correct Answer 75 percent

Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Question A quantity discount is offered :-

Correct Answer On large shipments

Question Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
 Strategic Finance

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Question The activity model is normally created by an activity Accountant.

Correct Answer False

Question A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Question Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer True

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses

Question Deferred payment plan is also known as:-

Correct Answer Earn out plan

Question There are few methods of allocating depreciation over the useful life of an assets.
Correct Answer False

Question Market approach is used for companies whose shares are ________ on the Stock
market.
Correct Answer Listed

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate

Question Tender offers can be afforded by firms with :-

Correct Answer A large amount of financial Slack

Question The following method of valuation is used for listed companies that have an active market
for their shares :-
Correct Answer Market value approach

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %
 Strategic Finance

Question Conservative policy for determining the requirements of current assets is also known as :-
Correct Answer Flexible policy

Question Yield or earning approach method of valuation uses :-

Correct Answer Price to earnings ratio

Question The main categories of organisational elements are :-

Correct Answer Managerial , Support , Operational

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question The existence of significant influence by an investor is usually evidenced in the following
ways :-
Correct Answer Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel

Question Free Reserves is a component of :-

Correct Answer Equity

Sentiments and rumours No fundamental basis. No effect on valuation

Unlisted shares on stock exchange Difficult to estimate the price Invalid valuation of shares
Manipulation of stock markets Invalid valuation of shares Easy to estimate the price
Selective information Valuation by various people on information available Valuation by various
people on information available

Question Only firms with a large amount of financial slack can afford tender offers.
Correct Answer True

Question Buy back through book building the process should be made through ________.
Correct Answer An electronically linked transparent facility

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True

Question A change in the method of depreciation is treated as a change in an accounting policy

and is disclosed accordingly.
Correct Answer True

Question Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production

Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question Net period - no cash discount means :-

Correct Answer The seller only specifies the time period allowed for the payment

Question A long term investment is an investment other than a current investment.

Correct Answer True
 Strategic Finance

Question Accounting standards (AS - 17) has come into effect in respect of accounting periods
commencing :-
Correct Answer On or after 01.04.2001

Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Question Valuation methods are highly specific to the following for doing the valuation :-
Correct Answer To the person , To the firm , To the Consultant

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question The budgetary records are useful for:-

Correct Answer Validating accounting costs , Providing a rationale for division of costs ,
Replacing missing data

Question As per the new sections of the company's act, funds out of which buy back may be
financed include :-
Correct Answer Free reserves of the company , Securities premium account , Proceeds of any
shares or other specified securities

PpH = P/H (C+B)/P

SPE = R / H (C + B ) / R
RR = (C + B ) / R P/H
U%= R/(C+B) R/(C+B)

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question It is often not possible to directly attribute, or reasonably allocate :-

Correct Answer The interest bearing liabilities to segments

Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer It is used as a starting point

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer Location of its customers
 Strategic Finance

Multiple Choice Single Answer

Question FEA is a technique to analyze & evaluate :-
Correct Answer Alternative process improvements
Your Answer Alternative process improvements

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer False

Select The Blank

Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Provide ineffective competitive process

True/False
Question Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Control over the policies

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-
Correct Answer Cash available
Your Answer Cash available

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer The decisions related are one time decisions only , It is continually required for a going
concern , Quantum of working capital fluctuates depending on the level of activity

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Income / profit from the assets

Multiple Choice Multiple Answer

Question As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Land , Debentures
 Strategic Finance

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Vertical , Conglomerate , Financial

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Select The Blank

Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Growth

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Your Answer Brokerage , Fees , Duties

Select The Blank

Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Big ticket items & durable goods

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Segment information needs to be presented :-
Correct Answer Only on the basis of the consolidated financial statements
Your Answer As separate financial statements
 Strategic Finance

Select The Blank

Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
Your Answer Input cost

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation
Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

Select The Blank

Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Your Answer Conglomerate mergers

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Growth of the firm , Better facilities and work conditions

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking
Your Answer Value added analysis

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False
Your Answer True

True/False
 Strategic Finance

Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer Direct

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Decreases

Select The Blank

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Your Answer General

Multiple Choice Single Answer

Question Many companies claim their main assets are their :-
Correct Answer People
Your Answer People

Multiple Choice Multiple Answer

Question The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer Planning , Searching & screening , Financial evaluation

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Product warranty provision

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment
Your Answer Business segment

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Single Answer

 Strategic Finance

Question Debt suppliers main concern is :-

Correct Answer Interest & debt repayment
Your Answer Interest & debt repayment

True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Your Answer False

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Working capital cycle

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28
Your Answer 0.28

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer True
Your Answer False

True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal audit reports
Your Answer Logs to record workflow , Specific costs , General studies and processes

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Your Answer Internet
 Strategic Finance

Select The Blank

Question The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Your Answer Fringe benefits

Multiple Choice Multiple Answer

Question The existence of significant influence by an investor is usually evidenced in the following
ways :-
Correct Answer Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel
Your Answer Participation in policy making processes , Material transactions between the investor &
the investee , Interchange of managerial personnel

Multiple Choice Multiple Answer

Question The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer The personnel payroll , Support costs , Supplies

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses
Your Answer Full time equivalent staff , Expenses , Good will

Multiple Choice Multiple Answer

Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as :-
Correct Answer Flexible policy
Your Answer Aggressive policy

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

True/False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False
Your Answer True
 Strategic Finance

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Your Answer Accounts receivables

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %
Your Answer less than 10 %

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28
Your Answer 0.28

Select The Blank

Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Provide ineffective competitive process

Multiple Choice Multiple Answer

Question The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer Consultation with shareholders , Planning , Searching & screening

Multiple Choice Multiple Answer

Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
Your Answer Notes payable , Trade acceptances , Commercial paper

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Your Answer True

Select The Blank

Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Your Answer 3 months

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset
 Strategic Finance

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer Timeliness & turnaround
Your Answer Timeliness & turnaround

True/False
Question A long term investment is an investment other than a current investment.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation
Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Select The Blank

Question Identify disclosure on human resources as a societal concern & prepare international
regulations comes under ________
Correct Answer The compulsory method
Your Answer The voluntary market based method

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-
Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or
retention
Your Answer Internal financing , Constant return and cost of capital , Perfect markets

Multiple Choice Single Answer

Question When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer Necessary that firms should have less working capital requirement

Multiple Choice Single Answer

Question A manufacturing concern like a machine tool has :-
Correct Answer A long operating cycle
Your Answer Sells largely on cash basis

True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Your Answer True

Select The Blank

Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer Investment in employees

Select The Blank

Question Depreciation is ________ of an asset.
 Strategic Finance

Correct Answer Loss of value

Your Answer Loss of value

Multiple Choice Multiple Answer

Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Growth & diversify

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer Segment revenue

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-
Correct Answer Payroll , Accounting , Automatic data processing
Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Value added & non value added activities

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-
Correct Answer To the person , To the firm , To the Consultant
Your Answer To the person , To the firm , To the Consultant

Multiple Choice Single Answer

Question Arbitrage means :-
Correct Answer Securities cannot sell at different prices
 Strategic Finance

Your Answer Selling a security

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Have no correlation with

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
Your Answer Perfect Capital Markets

True/False
Question Dividends increase the current returns for shareholders.
Correct Answer True
Your Answer False

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

Question In respect of depreciable assets, which do not have material value, depreciation is often
allocated :-
Correct Answer Fully in the accounting period for which they are acquired
Your Answer Over the residual value

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25
Your Answer 0.25
 Strategic Finance

True/False
Question Tender offers us an alternative approach to acquire another firm.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Ideas to determine which is faster, better or cheaper

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-
Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question Today knowledge has become a key determinant for :-
Correct Answer Economic & business success
Your Answer For determining a firm's value

Select The Blank

Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-
Correct Answer Prompt & adequate
Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer People , Equipment , Overheads

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team
Your Answer Solid human resource team

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

True/False
 Strategic Finance

Question There are few methods of allocating depreciation over the useful life of an assets.
Correct Answer False
Your Answer True

True/False
Question Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-
Correct Answer Fixed assets , Investments , Current assets
Your Answer Fixed assets , Current assets

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Your Answer Brokerage , Advertisements , Fees , Duties

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Current Liabilities

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 118 Bn

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False
Your Answer True

Select The Blank

Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Your Answer 1 to 2 months
 Strategic Finance

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business pf the organisation
Your Answer To achieve a better method of doing the right business pf the organisation

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment
Your Answer Operating segment

Multiple Choice Single Answer

Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
Correct Answer Segment assets
Your Answer Segment assets

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer True
Your Answer True

True/False
Question Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

True/False
Question Book value is based on the balance sheet value of owner's equity.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Daily wages , Maintenance , Security

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Your Answer True

True/False
 Strategic Finance

Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Select The Blank

Question ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Firm Managers

Multiple Choice Single Answer

Question The FEA Tools encompass a vast array of information & policy into :-
Correct Answer One evaluation
Your Answer Many evaluations

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions & contributions
to social security payments

Select The Blank

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Can be held for more than 1 year

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute
Your Answer If they are different from the principle rates specified in the statute

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of
debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year
 Strategic Finance

Select The Blank

Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Big ticket items & durable goods

Select The Blank

Question ________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)
Your Answer Japanese

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets
Your Answer Current assets

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

Sf-saroj-2

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-
Correct Answer 100 Per cent payout or retention , Internal financing , Constant return and cost of
capital
Your Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer Lowest cost of capital , High value of firm , Very high rate of interest

Multiple Choice Multiple Answer

Question Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Your Answer Dividend , Interest , Rentals

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True
Your Answer True

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Your Answer Regular, steady dividend
 Strategic Finance

True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

Multiple Choice Single Answer

Question In the past, costing mainly focused on :-
Correct Answer Manufacturing costs
Your Answer Manufacturing costs

True/False
Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
Your Answer True

True/False
Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True
Your Answer False

Select The Blank

Question Increase in cost of capital means decrease in ________.
Correct Answer Profitability
Your Answer Profitability

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False
Your Answer True

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Term loans

Multiple Choice Single Answer

Question A high payout policy means :-
Correct Answer More current dividends
Your Answer Higher market price per share

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value
Your Answer Operational value

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-
 Strategic Finance

Correct Answer Assets

Your Answer Leverage

Multiple Choice Single Answer

Question current liabilities arise in the context of :-
Correct Answer Current assets
Your Answer Overheads

Multiple Choice Multiple Answer

Question A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Your Answer High market price per share , Quick growth of the firm , More current dividends

Select The Blank

Question In the stock repurchase model one of the main assumption is that ________.
Correct Answer The market is efficient
Your Answer Offers are minimum limited offers

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer External financial reporting system

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities to
productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

Select The Blank

Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Preferentially lower rate

Select The Blank

Question AS 13 Accounting for investments - Accounting standard comes into effect for financial
statements covering periods commencing on or after ________.
Correct Answer `April 1, 1995
Your Answer `April 1, 1995

Multiple Choice Single Answer

Question Comparative analysis is :-
Correct Answer A review to ensure consistency within the activity model & process flow
Your Answer A review to ensure consistency within the activity model & process flow

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute
Your Answer If they are different from the principle rates specified in the statute

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a ________
Correct Answer Future generation of profits & services
Your Answer Faster M & As

Select The Blank

Question ________ is never a part of the output.
Correct Answer Mechanisms
Your Answer Mechanisms
 Strategic Finance

True/False
Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement

Select The Blank

Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
Your Answer Input cost

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
Your Answer Historical cost

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers
Your Answer Firms use different kind of accounting methods , Dividend policy has lot of influence on
accounting numbers , Business risk and financial risk do not have any influence on accounting numbers

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Ideas to determine which is faster, better or cheaper

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
Your Answer Perfect Capital Markets

Select The Blank

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Your Answer Internet

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True
 Strategic Finance

True/False
Question The scope of the data required relates to the scope of the activity model & processes under
review.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
Your Answer Notes payable , Trade acceptances , Open accounts

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities ________
from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year

Multiple Choice Multiple Answer

Question AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

Multiple Choice Multiple Answer

Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To refine the costs , To document the costs

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Inventory valuation , Booking depreciation , Methods of provisions
Your Answer Inventory valuation , Booking depreciation , Methods of provisions

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment

Select The Blank

Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Benefits

Select The Blank

Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years
Your Answer More than 8 years
 Strategic Finance

True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Your Answer Changes in ownership structure

True/False
Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset
Your Answer Book value of the assets is directly dependent on the accounting policies followed by the
company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments , An
Indemnity

Select The Blank

Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer Office equipment

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer Earnings , Manpower of the acquiring firm , Operating characteristics of acquiring firm

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Your Answer Miscellaneous reports accounting , Budgetary accounting , Cost accounting

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance
Your Answer Commercial paper

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Horizontal , Vertical , Conglomerate

Multiple Choice Single Answer

 Strategic Finance

Question The main assumption in comparative analysis is the possibility of :-

Correct Answer Combination or co-location of similar functions
Your Answer Combination or co-location of similar functions

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment assets
will not include ________.
Correct Answer Payables
Your Answer Related receivables

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases
Your Answer Increases

Multiple Choice Single Answer

Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Deferred Payment Liabilities

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Investment in current assets , Permanent working capital
requirements

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions & contributions
to social security payments

True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Your Answer True

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through book
building.
Correct Answer 30
Your Answer 30

Select The Blank

Question Total risk reduces if operations of combining firms are ________.
Correct Answer Negatively correlated
Your Answer Interrelated

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the basis
of ________
Correct Answer Replacement cost
Your Answer Market value

Multiple Choice Single Answer

Question A good accounting system does NOT have the characteristics such as :-
 Strategic Finance

Correct Answer Does not cover decisions over the life cycle
Your Answer Does not cover decisions over the life cycle

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer General overheads

True/False
Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True
Your Answer True

True/False
Question Management of working capital refers to the management of total assets and liabilities of a
company.
Correct Answer False
Your Answer True

True/False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Correct Answer False
Your Answer True

Multiple Choice Single Answer

Question A company under siege may look for support & help from its :-
Correct Answer Friends
Your Answer Suppliers

Multiple Choice Single Answer

Question If the segment result of a segment includes interest expense its segment liabilities include :-
Correct Answer The related interest bearing liabilities
Your Answer Liabilities indirectly attributable to the segment

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Multiple Choice Single Answer

Question The following Act contains the provisions permitting the companies to buy back their shares :-
Correct Answer Companies (Amendment) Act, 1999
Your Answer The Companies Act, 1956

Multiple Choice Multiple Answer

Question Shortage costs are mainly in the form of :-
Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill
Your Answer Financing a lower level of fixed assets , Disruption in production schedule , Loss of sales
 Strategic Finance

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Your Answer Liabilities

Select The Blank

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Government Agencies sanctioning loans

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own worth.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition
Your Answer Freedom of operation to the management of the newly acquired firm

Multiple Choice Multiple Answer

Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer Equipment , Overheads , Printing & stationary

Multiple Choice Single Answer

Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares
Your Answer Debentures

True/False
Question A long term investment is an investment other than a current investment.
Correct Answer True
Your Answer True

True/False
Question Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question If a particular item of depreciation or amortisation is included in segment expense, the related
asset is included in :-
Correct Answer Segment assets
Your Answer Segment assets

True/False
Question Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True

Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search &
termination pay.
Historical costs Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the
replacement
 Strategic Finance

Opportunity cost An asset value when they are the target of an alternative use.

Information or signalling hypothesis Management believes that the common stock of the
company is undervalued
Dividend or Personal Taxation Hypothesis Cash dividends are taxable at ordinary tax rates
Leverage hypothesis Stock repurchases increases the debt / equity ratio
Wealth transfer among shareholders The largest portion of wealth effect goes to the non -
tendering shareholders

Diversification Growth through the combination of firms in unrelated fields of business

Horizontal mergers 2 Firms operate & compete in a similar kind of business
Vertical mergers Firms in different stages of production
Conglomerate mergers Different or unrelated business activity

Segment liabilities Enterprise liabilities

Segment revenue Enterprise revenue
Segment result Enterprise net profit or loss
Segment assets Enterprise assets

Mechanisms Performs or provides energy to an activity

Inputs Information or material used to produce the output of an activity
Controls Information or material that constrains an activity
Outputs Information or material produced by an activity

Availability of funds in the market Cost of funds depends on this factor

Flexibility The extent & the ease with which the funds can be raised & paid back are very
important
Time Takes less time to take an overdraft from the bank
Creditworthiness of the issuer If a company has a good creditworthiness it is not difficult to
raise short term funds

Segment liabilities Do not include borrowings that are incurred for financing purposes Does not include
extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise balances
are eliminated
Segment assets Do not include income tax assets Do not include income tax assets

AS 4 Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements

Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
 Strategic Finance

Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit costs of
the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when they
are the target of an alternative use.
Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
have preferences by choosing a way to finance their projects

Net income approach Cost of debt & equity do not change with a change in leverage ratio
weighted average cost of capital does not change with a change in the proportion of debt to
equity in the capital structure
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages
Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Earning per share Acquisition is considered to be a function of the impact of the merger on the EPS
Divide net worth by the number of equity shares outstanding
Book value Divide net worth by the number of equity shares outstanding Evaluate the impact of
the merger on EPS & price - earning ratio
Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the
going concern concept Indicate the consensus of the investors
Market value Indicate the consensus of the investors Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept

Amount involved in buy back Not to exceed 25 % of the total paid up capital Not to exceed 25 % of
the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares
Board of Directors Resolution permitting the buy back of shares Authorize buy back of securities
Shares to be bought back Fully paid up Fully paid up

Trust receipt Specifically identified by serial number or other means Specifically identified by serial
number or other means
Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company
Inventory is stored with a public or terminal warehousing company
Floating lien Loose arrangement as the lender may find it difficult to police Well suited for financial
good inventories of capital goods
Chattel mortgage Well suited for financial good inventories of capital goodsAffords a higher degree
of control over the collateral

PpH = P/H (C+B)/P

SPE = R / H (C + B ) / R
RR = (C + B ) / R P/H
U%= R/(C+B) R/(C+B)

Question 1 If a company is following multiple accounting system, the activity accountant will have to
match data across
Correct Answer Codes , Time periods , Systems

Question 2 Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Question 4 For M & As, the acquiring firm needs industry data on :-
 Strategic Finance

Correct Answer Market growth , Nature of competition , Degree of regulation

Question 5 A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn

Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer The cost of the output

Question 9 The voluntary market based method means :-

Correct Answer Develop a consistent framework which can be operational across sectors and
countries

Question 10 Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :-
Correct Answer The last 26 months

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule

Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Question 15 What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question 19 Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question 22 Suppliers of equity are interested in :-

Correct Answer High share prices
 Strategic Finance

Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land

Question 25 Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Question 26 Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Question 27 Economic analysis usually covers :-

Correct Answer A small number of improvement alternatives

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales

Question 29 Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods

Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False

Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True

Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings

Question 33 As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade

Question 34 Accounting numbers are not influenced by :-

Correct Answer Dividend policy , Time span of money , Financial and business risk

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question 36 The development aspect of training in firms focus on :-

Correct Answer Promotion to higher job levels

Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility
 Strategic Finance

Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question 41 Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment

Question 43 The HHI index reflects :-

Correct Answer Inequality & degree of concentration

Question 44 ________ is never a part of the output.

Correct Answer Mechanisms

Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Question 46 In a matching approach policy, :-

Correct Answer There is a small risk if shortage of funds

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital

Question 2 Value implies that something has :-

Correct Answer Worth

Question 3 Organisational changes are similar to mission changes.

Correct Answer True

Question 4 In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

Question 6 Diversification helps in preserving a firm's reputation & goodwill.

Correct Answer True

Question 7 Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Question 8 Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question 9 The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question 11 A good accounting system does NOT have the characteristics such as :-
 Strategic Finance

Correct Answer Does not cover decisions over the life cycle

Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment

Question 13 ________ are not diversible.

Correct Answer Market related risks

Question 14 The important aspect of dividend policy is :-

Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm

Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question 16 The main theories behind share repurchases are :-

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis

Question 17 A change in the method of depreciation is treated as a change in an accounting policy

and is disclosed accordingly.
Correct Answer True

Question 18 The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)

Question 19 Segment result is segment revenue less segment expenses.

Correct Answer True

Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Question 22 Segment revenue includes ________.

Correct Answer Revenue from transactions with other segments of the enterprise

Question 23 Deferred payment plan is also known as:-

Correct Answer Earn out plan

Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.

Question 26 In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Question 27 In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds
 Strategic Finance

Question 29 Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question 32 During the costing process, we look at ________.

Correct Answer Resource consumption

Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True

Question 34 The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield

Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management

Question 37 ________ is not a characteristic of financial conglomerates.

Correct Answer Provide ineffective competitive process

Question 38 An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise

Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-

Correct Answer Capital redemption reserve Account

Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market

Question 43 Cash dividends are taxable at ordinary tax rates.

Correct Answer True

Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer 25 lacs

Question 46 Tender offers are used primarily for :-

 Strategic Finance

Correct Answer Large Equity repurchases

Question 47 Many companies claim their main assets are their :-

Correct Answer People

Question 1 The accounting records serve as the major source of cost data.
Correct Answer True

Question 2 ________ know the best about a firm's performance.

Correct Answer Firm Managers

Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation

Question 5 Developing a consistent framework supported by rewarding mechanisms once it is

introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom

Question 6 Dividends increase the current returns for shareholders.

Correct Answer True

Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
Correct Answer Management & board

Question 10 Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Question 12 AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital

Question 14 A long term investment is an investment other than a current investment.

Correct Answer True

Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True

Question 16 Share repurchase a form of restructuring comes under :-

Correct Answer Changes in ownership structure

Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True

Question 18 Receivables constitutes a substantial portion of current assets of several firms.

 Strategic Finance

Correct Answer True

Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals

Question 20 Personnel services expenses is made up of:-

Correct Answer Personnel salaries , Cost of facilities , Training & development budgets

Question 21 In many companies, there is no formal record of________.

Correct Answer Investment in employees

Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values

Question 24 The Buy back of shares shall not be made from

Correct Answer The promoters or persons in control of the company

Question 25 traditionally avails are provided by ________.

Correct Answer Banks

Question 26 ________ is not a example of segment liability.

Correct Answer Goodwill

Question 27 Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

Question 28 Liquidation value is also known as ________.

Correct Answer Realizable value

Question 29 Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1

Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Question 32 Cost accounted for per activity is classified under ________.

Correct Answer Traceable cost

Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question 34 The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares

Question 36 usually the `controlling block' tends to be between :-

 Strategic Finance

Correct Answer 20 & 40 percent

Question 37 When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods

Question 38 Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment

Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals

Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Question 41 The employer in offering the job contract assumes a range of legal obligations such as
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings

Question 43 When a change in the method of depreciation is made :-

Correct Answer Depreciation is recalculated in accordance with the new method

Question 44 Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers

Question 45 Profitability of a company depends upon :-

Correct Answer Cost of capital

Question 46 A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Question 47 As per residual theory of dividends the focus is on ________.

Correct Answer Growth

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Inventory valuation , Booking depreciation , Methods of provisions

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis
to a segment

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years

Question Decisions related to working capital are repetitive & frequent.

Correct Answer True

Question Share repurchase a form of restructuring comes under :-

 Strategic Finance

Correct Answer Changes in ownership structure

Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Question The limitations of value of assets approach include :-

Correct Answer Book value of the assets is directly dependent on the accounting policies followed by
the company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Question In many companies, there is no formal record of________.

Correct Answer Investment in employees

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate

Question The main assumption in comparative analysis is the possibility of :-

Correct Answer Combination or co-location of similar functions

Question If the segment result of a segment includes interest or dividend income its segment assets
will not include ________.
Correct Answer Payables

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases

Question Equity includes :-

Correct Answer Development Rebate Reserve

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments

Segment liabilities Enterprise liabilities Enterprise liabilities

Segment revenue Enterprise revenue Enterprise revenue
Segment result Enterprise net profit or loss Enterprise net profit or loss
Segment assets Enterprise assets Enterprise assets

Question Organisational changes are similar to mission changes.

Correct Answer True
 Strategic Finance

Question The number of bidding centers shall not be less than ________ for buy back through book
building.
Correct Answer 30

Segment liabilities Do not include borrowings that are incurred for financing purposes Does not include
extra ordinary items
Segment revenue Does not include extra ordinary items The qualitative characteristics include the
relevance
Segment expenses Does not include income tax expenses Determined after intra - enterprise balances
are eliminated
Segment assets Do not include income tax assets Do not include income tax assets

Question Total risk reduces if operations of combining firms are ________.

Correct Answer Negatively correlated

Question In the reproduction value method of valuation, the value of assets is taken to be on the basis
of ________
Correct Answer Replacement cost

Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True

Question Management of working capital refers to the management of total assets and liabilities of a
company.
Correct Answer False

Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.
Correct Answer False

Question A company under siege may look for support & help from its :-
Correct Answer Friends

Question If the segment result of a segment includes interest expense its segment liabilities include :-
Correct Answer The related interest bearing liabilities

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Question The following Act contains the provisions permitting the companies to buy back their shares :-
Correct Answer Companies (Amendment) Act, 1999

Question Shortage costs are mainly in the form of :-

Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill

Question open account credit appears on the buyer's balance sheet as :-

 Strategic Finance

Correct Answer Accounts payable

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers

Question When a company is able to assess an individual's worth, it helps in increasing its own worth.
Correct Answer True

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time
of acquisition

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares

Question A long term investment is an investment other than a current investment.

Correct Answer True

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Question If a particular item of depreciation or amortisation is included in segment expense, the related
asset is included in :-
Correct Answer Segment assets

Question Segment result is segment revenue less segment expenses.

Correct Answer True

Question Walter's model on dividend relevance is based on the following assumptions :-

Correct Answer 100 Per cent payout or retention , Internal financing , Constant return and cost of
capital

Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Question Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals

Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question In the past, costing mainly focused on :-

Correct Answer Manufacturing costs

Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
 Strategic Finance

Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question A high payout policy means :-

Correct Answer More current dividends

Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Question current liabilities arise in the context of :-

Correct Answer Current assets

Question A high payout policy on dividends implies :-

Correct Answer More current dividends , Less retained earnings

Question In the stock repurchase model one of the main assumption is that ________.
Correct Answer The market is efficient

Question Normally the basis for identifying an enterprise segments are :-

Correct Answer The organizational structure of an enterprise

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities to
productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question AS 13 Accounting for investments - Accounting standard comes into effect for financial
statements covering periods commencing on or after ________.
Correct Answer `April 1, 1995

Question Comparative analysis is :-

Correct Answer A review to ensure consistency within the activity model & process flow

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute

Question When a firm invests in human resources by acquisition & training, it anticipates a ________
Correct Answer Future generation of profits & services

Question ________ is never a part of the output.

 Strategic Finance

Correct Answer Mechanisms

Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question Postage is an example of ________ cost.

Correct Answer Non traceable cost

AS 4 Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments
AS 23 Accounting for investments in associates in consolidated financial statements Accounting for
investments in associates in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not
have any influence on accounting numbers

Exit cost Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs Sacrifice necessary to hire & train people Sacrifice necessary to hire & train people
Substitution cost Exit costs of the leaving employee & recruiting & training of the replacement Exit costs of
the leaving employee & recruiting & training of the replacement
Opportunity cost An asset value when they are the target of an alternative use. An asset value when they
are the target of an alternative use.

Question It is necessary to identify all costs that may be related to an acquisition.

Correct Answer True

Question Cost benefit analysis is the simplest form of comparison between :-

Correct Answer Ideas to determine which is faster, better or cheaper

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question The scope of the data required relates to the scope of the activity model & processes under
review.
Correct Answer True
 Strategic Finance

Question Trade credits are of the following types:-

Correct Answer Notes payable , Trade acceptances , Open accounts

Question In case of direct placement of commercial papers it may be issued for maturities ________
from the date of issue.
Correct Answer Between 15 days to 1 year

Question AS 13 Does not deal with :-

Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Question It is the activity accountant's job to do the following for the existing organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Question A firm can manage with small inventory if the supply is :-

Correct Answer Prompt & adequate

Question A transport corporation has a substantial working capital requirement.

Correct Answer False

Question Implicit claims are non written promises and rights such as :-
Correct Answer Right to provide service to customers , Job security for the employees

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Question While accounting for human assets, the following data is to be considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms
have preferences by choosing a way to finance their projects

Net income approach Cost of debt & equity do not change with a change in leverage ratio
weighted average cost of capital does not change with a change in the proportion of debt to
equity in the capital structure

Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________.
Correct Answer Process analysis

Question The following is not a method of payment to the acquired firm:-

 Strategic Finance

Correct Answer Fixed deposits of the acquiring firm

Question ________ is never a part of the output.

Correct Answer Mechanisms

Question Short term financing is meant for funding working capital of a company.
Correct Answer True

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year

Earning per share Acquisition is considered to be a function of the impact of the merger on the EPS
Divide net worth by the number of equity shares outstanding

Book value Divide net worth by the number of equity shares outstanding Evaluate the impact of
the merger on EPS & price - earning ratio

Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the
going concern concept Indicate the consensus of the investors

Market value Indicate the consensus of the investors Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis

Question Receivables constitutes a substantial portion of current assets of several firms.

Correct Answer True

Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Question A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True

Question A quantity discount is offered :-

Correct Answer On large shipments

Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational
resources

Question Shareholders returns consists of 2 components :-

Correct Answer Dividend , Capital gains
 Strategic Finance

Question In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets

Question Usually only a single method is used for valuation of shares.

Correct Answer False

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Question Increase in cost of capital means decrease in ________.

Correct Answer Profitability

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question Long term cash forecasting is generally for a period of ________ years.
Correct Answer 3 to 5 years

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30

Question The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :-
Correct Answer Historical cost

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question A company that comes to the rescue of a firm that is being targeted for a takeover is
called :-
Correct Answer White knight

Question ________ is not a example of segment asset.

Correct Answer Customer advances

Question Risk appetite decides the rate of capitalization.

Correct Answer True

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True

Question AS 23 - Accounting for investments in associates in consolidated financial statements

comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002

Question The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
 Strategic Finance

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting

Question A single business segment does not include products & services :-
Correct Answer With significantly differing risks & returns

Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Question Exit costs are classified into 3 categories namely :-

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Question In a merger decision, the value of a firm depends upon:-

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

Question A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer Increased risk

Question Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer False

Question Forward or backward integration is a characteristic of ________.

 Strategic Finance

Correct Answer Vertical Mergers

Question Segment assets are determined after :-

Correct Answer Deducting related allowances / provisions reported as direct offsets

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer Timeliness & turnaround

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition

Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question In an aggressive approach :-

Correct Answer There is a very large risk of shortage of funds

Question Organisational changes are similar to mission changes.

Correct Answer True

Question The internal staffing performance indicators are :-

Correct Answer Sales per employee , Recovery rate , Utilization %

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend

Amount involved in buy back Not to exceed 25 % of the total paid up capital Not to exceed 25 % of
the total paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares
Board of Directors Resolution permitting the buy back of shares Authorize buy back of securities
Shares to be bought back Fully paid up Fully paid up

Question A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle

Question Fixed price tender offers are accompanied by an abnormal announcement period return
of :-
Correct Answer 8 - 10 %

Question The external staffing performance indicators include :-

Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Trust receipt Specifically identified by serial number or other means Specifically identified by serial
number or other means
Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company
Inventory is stored with a public or terminal warehousing company
Floating lien Loose arrangement as the lender may find it difficult to police Well suited for financial
good inventories of capital goods
Chattel mortgage Well suited for financial good inventories of capital goodsAffords a higher degree
of control over the collateral
 Strategic Finance

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question Companies often need to value its own :-

Correct Answer Shares

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Question usually credit lines are established for a period of ________.

Correct Answer 1 year

Question Shortcomings of accounting numbers consist of the following :-

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies

Question Making decision on dividend is a very crucial area of financial management for a firm.

Question The following is not a factor for reduction in the life of an asset by obsolescence :-
Correct Answer No study of market demand for a product / service

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Question Research into true human resources accounting began in :-

Correct Answer 1960`s

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Question AS 13 statement does not deal with operating or finance leases.

Correct Answer True

Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible

Question Value implies that something has :-

Correct Answer Worth

Question Examples of accounting methods used by firm are :-

Correct Answer FIFO , LIFO , Accrual Accounting

Question The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
 Strategic Finance

Question It is easy to find a risk free security.

Correct Answer False

Question The earning power of the company approach includes :-

Correct Answer Mainly discounting of all future earnings

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently

Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question Accounts payable is also known as :-

Correct Answer Trade credit from suppliers

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders
Enormous conflicts of interest between Stakeholders and shareholders
Net income approach Cost of debt & equity do not change with a change in leverage ratio Cost of
debt & equity do not change with a change in leverage ratio
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure weighted average cost of capital does not
change with a change in the proportion of debt to equity in the capital structure

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate

Question What is a very important factor in any kind of merger?

Correct Answer Exchange ratio

Question Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period

Question Arbitrage process implies that security cannot sell at different prices.
 Strategic Finance

Correct Answer True

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Question Baumul`s Model is similar to EOQ model in inventory management.

Correct Answer True

Question Financial evaluation involves :-

Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question Free Reserves is a component of :-

Correct Answer Equity

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs

Question One of the important assumptions for capital structure theories is :-

Correct Answer Debt and equity are the 2 kinds of funds used by the firm

Question Assets held as stock - in - trade are also investments.

Correct Answer False

Question As per residual theory of dividends the focus is on ________.

 Strategic Finance

Correct Answer Growth

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn

Question The characteristics of working capital are :-

Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Question In the tender offer, the purchaser approaches :-

Correct Answer The shareholder

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail

Question In the shareholding pattern of a company, the promoter's holding includes________.

Correct Answer Foreign Promoters

Question A current investment is an investment that is by nature :-

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made

Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True

Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables

Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel

Question Accrued expenses represent :-

Correct Answer Costless financing , An interest free source of financing

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
 Strategic Finance

Mechanisms Performs or provides energy to an activity Performs or provides energy to an

activity
Inputs Information or material used to produce the output of an activity Information or material used to
produce the output of an activity
Controls Information or material that constrains an activity Information or material that constrains
an activity
Outputs Information or material produced by an activity Information or material produced by an activity

Question Value added analysis :-

Correct Answer Helps to identify potential activities that may be omitted immediately

Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Question A normal firm shows the following characteristics :-

Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm

Question Segment liabilities do not include :-

Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance

Question Operating economies occur due to indivisibilities of resources like :-

Correct Answer People , Equipment , Overheads

Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

Question In value of assets approach for computation of valuation of shares, the total value of all
the assets will be divided by the total number of shares.
Correct Answer True

Question Short term sources of funds include :-

Correct Answer Current Liabilities

Question Investment decisions are mainly concerned with :-

Correct Answer Assets

Question Debt reduces :-

Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions

Question The main theories behind share repurchases are :-

 Strategic Finance

Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or

signalling hypothesis

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation

Question Investments having no physical existence includes :-

Correct Answer Shares , Debentures , Bonds

Question An investment property is an investment in land or buildings :-

Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise

Question If a firm opts for restrictive policy then the investments in current assets is :-
Correct Answer Low

Question According to NOI Approach, any capital structure is optimum.

Correct Answer True

Question Segment assets are ________.

Correct Answer Directly attributable to the segment

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Many
groups of non - investor stakeholders have an interest in the firm
Net income approach Cost of debt & equity do not change with a change in leverage ratio
Enormous conflicts of interest between Stakeholders and shareholders
Net operating income approach The overall capitalization rate remains constant for all levels of financial
leverages Firms have preferences by choosing a way to finance their projects
Modigliani - Miller Theory weighted average cost of capital does not change with a change in the
proportion of debt to equity in the capital structure Cost of debt & equity do not change with a
change in leverage ratio

Question The processes to be identified & focused should to be on the basis of not adhering to
benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________.
Correct Answer Process analysis

Question The main characteristics of operating economies are :-

Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management functions

Question usually the `controlling block' tends to be between :-

Correct Answer 20 & 40 percent

Question The 3 groups of participants in a firm are :-

Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Question Human Assets accounting stands for :-

Correct Answer Measurement & reporting of the cost and value of people as organisational
resources

Question Profitability of a company depends upon :-

Correct Answer Cost of capital

Question Horizontal mergers involves firms________.

Correct Answer That operate & compete in a similar kind of business

Availability of funds in the market Cost of funds depends on this factor Different costs are
involved
 Strategic Finance

Flexibility The extent & the ease with which the funds can be raised & paid back are very important
The extent & the ease with which the funds can be raised & paid back are very important
Time Takes less time to take an overdraft from the bank Takes less time to take an overdraft
from the bank
Creditworthiness of the issuer If a company has a good creditworthiness it is not difficult to raise short
term funds If a company has a good creditworthiness it is not difficult to raise short term funds

Question A firm's current assets include :-

Correct Answer Marketable securities , Receivables , Inventory

Question If a segment is not designated as a ________ it should be included as an unallocated

reconciling item.
Correct Answer Reportable segment

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense

Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True

Question Long term financing strategy is used by a firm to meet :-

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Question Debt is often issued at :-

Correct Answer The head office level

Question Determination of residual value of an asset is normally a difficult matter.

Correct Answer True

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting

Question Segment result represents :-

Correct Answer Operating profit or loss

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Question Short term financing is meant for funding working capital of a company.
Correct Answer True

Question Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True

Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer True

Question One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management
 Strategic Finance

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as reportable
segments.
Correct Answer 75 percent

Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Question Valuation of current investments on overall basis is not considered appropriate.

Correct Answer True

Question A quantity discount is offered :-

Correct Answer On large shipments

Question Indicators of the value of an investment are obtained by :-

Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment

Question The following is not a method of payment to the acquired firm:-

Correct Answer Fixed deposits of the acquiring firm

Question The activity model is normally created by an activity Accountant.

Correct Answer False

Question A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers

Question Modigliani - Miller Theoram is based on :-

Correct Answer Perfect Capital Markets

Question Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer True

Question During the costing process, we look at ________.

Correct Answer Resource consumption

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement

Question As a general rule, an asset is :-

Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
 Strategic Finance

Question Deferred payment plan is also known as:-

Correct Answer Earn out plan

Question There are few methods of allocating depreciation over the useful life of an assets.
Correct Answer False

Question Market approach is used for companies whose shares are ________ on the Stock
market.
Correct Answer Listed

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate

Question Tender offers can be afforded by firms with :-

Correct Answer A large amount of financial Slack

Question The following method of valuation is used for listed companies that have an active market
for their shares :-
Correct Answer Market value approach

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %

Question Conservative policy for determining the requirements of current assets is also known as :-
Correct Answer Flexible policy

Question Yield or earning approach method of valuation uses :-

Correct Answer Price to earnings ratio

Question The main categories of organisational elements are :-

Correct Answer Managerial , Support , Operational

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Question The existence of significant influence by an investor is usually evidenced in the following
ways :-
Correct Answer Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel

Question Free Reserves is a component of :-

Correct Answer Equity

Sentiments and rumours No fundamental basis. No effect on valuation

Unlisted shares on stock exchange Difficult to estimate the price Invalid valuation of shares
Manipulation of stock markets Invalid valuation of shares Easy to estimate the price
Selective information Valuation by various people on information available Valuation by various
people on information available

Question Only firms with a large amount of financial slack can afford tender offers.
Correct Answer True

Question Buy back through book building the process should be made through ________.
Correct Answer An electronically linked transparent facility

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
 Strategic Finance

Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True

Question A change in the method of depreciation is treated as a change in an accounting policy

and is disclosed accordingly.
Correct Answer True

Question Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production

Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True

Question Capital gains are taxed at ________.

Correct Answer Preferentially lower rate

Question Net period - no cash discount means :-

Correct Answer The seller only specifies the time period allowed for the payment

Question A long term investment is an investment other than a current investment.

Correct Answer True

Question Accounting standards (AS - 17) has come into effect in respect of accounting periods
commencing :-
Correct Answer On or after 01.04.2001

Question Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Question Valuation methods are highly specific to the following for doing the valuation :-
Correct Answer To the person , To the firm , To the Consultant

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Question The budgetary records are useful for:-

Correct Answer Validating accounting costs , Providing a rationale for division of costs ,
Replacing missing data

Question As per the new sections of the company's act, funds out of which buy back may be
financed include :-
Correct Answer Free reserves of the company , Securities premium account , Proceeds of any
shares or other specified securities

PpH = P/H (C+B)/P

SPE = R / H (C + B ) / R
RR = (C + B ) / R P/H
U%= R/(C+B) R/(C+B)

Question Due to diversification employees seek:-

Correct Answer Job security , Better opportunities within the firm , Higher compensation

Question In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Question It is often not possible to directly attribute, or reasonably allocate :-

 Strategic Finance

Correct Answer The interest bearing liabilities to segments

Question Odd lots purchase is not a method of buy back of shares.

Correct Answer False

Multiple Choice Multiple Answer

Question 1 If a company is following multiple accounting system, the activity accountant will have to
match data across :-
Correct Answer Codes , Time periods , Systems
Your Answer Codes , Time periods , Systems

Select The Blank

Question 2 Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Multiple Choice Multiple Answer

Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Your Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Multiple Answer

Question 5 A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Your Answer More current dividends , Less retained earnings

Select The Blank

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 118 Bn

True/False
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

Select The Blank

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer The cost of the output
Your Answer Total cost of activity

Multiple Choice Single Answer

Question 9 The voluntary market based method means :-
Correct Answer Develop a consistent framework which can be operational across sectors and
countries
Your Answer Develop a consistent framework which can be operational across sectors and countries

Multiple Choice Multiple Answer

Question 10 Exit costs are classified into 3 categories namely :-
 Strategic Finance

Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
new employee as a replacement of the left employee

Multiple Choice Single Answer

Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :-
Correct Answer The last 26 months
Your Answer Last 180 days

Multiple Choice Multiple Answer

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Your Answer Negotiate formally , Have to sign a note , Adhere to strict payment schedule

Multiple Choice Multiple Answer

Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer Good market reputation , Lowest cost of capital , High value of firm

Multiple Choice Single Answer

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Your Answer 35 % of the voting capital of the target company

Multiple Choice Single Answer

Question 15 What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Exchange ratio

True/False
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Secured debt

Select The Blank

Question 19 Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Transaction costs

True/False
Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
 Strategic Finance

Your Answer True

Select The Blank

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Your Answer Internet

Multiple Choice Single Answer

Question 22 Suppliers of equity are interested in :-
Correct Answer High share prices
Your Answer High share prices

True/False
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

True/False
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Your Answer True

Multiple Choice Single Answer

Question 26 Segment liabilities do not include :-
Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer Borrowings & other liabilities that are incurred for financing rather than operating purpose

Multiple Choice Single Answer

Question 27 Economic analysis usually covers :-
Correct Answer A small number of improvement alternatives
Your Answer Different projected costs of the suggested process

Multiple Choice Multiple Answer

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Select The Blank

 Strategic Finance

Question 29 Forfeiting is mostly used for ________.

Correct Answer Big ticket items & durable goods
Your Answer Industrial products

True/False
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False
Your Answer True

True/False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Your Answer True

Select The Blank

Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Your Answer Conservative policy regarding payouts

Multiple Choice Multiple Answer

Question 33 As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Shares , Debentures , Other securities held as stock in trade

Multiple Choice Multiple Answer

Question 34 Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and business risk
Your Answer Dividend policy , Time span of money , Firm's solvency

Select The Blank

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
Your Answer Intangible

Multiple Choice Single Answer

Question 36 The development aspect of training in firms focus on :-
Correct Answer Promotion to higher job levels
Your Answer Acquisition of necessary skills essential for a job

True/False
Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
 Strategic Finance

Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

True/False
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False
Your Answer False

Select The Blank

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer General overheads

Multiple Choice Multiple Answer

Question 41 Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer Equipment , Overheads , Printing & stationary

Select The Blank

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment
Your Answer Facilities

Multiple Choice Single Answer

Question 43 The HHI index reflects :-
Correct Answer Inequality & degree of concentration
Your Answer Inequality & degree of concentration

Select The Blank

Question 44 ________ is never a part of the output.
Correct Answer Mechanisms
Your Answer Activity

True/False
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 46 In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Your Answer Financing is totally independent of long term sources

Multiple Choice Single Answer

 Strategic Finance

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

Multiple Choice Single Answer

Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Market value of debt

Multiple Choice Single Answer

Question 2 Value implies that something has :-
Correct Answer Worth
Your Answer Appreciation

True/False
Question 3 Organisational changes are similar to mission changes.
Correct Answer True
Your Answer False

Multiple Choice Single Answer

Question 4 In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets
Your Answer Trading assets

Select The Blank

Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

True/False
Question 6 Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 7 Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question 8 Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds
Your Answer Shares , Debentures , Bonds

Multiple Choice Multiple Answer

Question 9 The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers
 Strategic Finance

Multiple Choice Single Answer

Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Your Answer Have a multi dimensional focus

Multiple Choice Multiple Answer

Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer Support costs , Supplies

Select The Blank

Question 13 ________ are not diversible.
Correct Answer Market related risks
Your Answer Total risks of a company

Multiple Choice Multiple Answer

Question 14 The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm , To dispatch the dividend warrants in time

Multiple Choice Multiple Answer

Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , Suppliers dues
are pending for a very long time

Multiple Choice Multiple Answer

Question 16 The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth transfer among
employees and managers

True/False
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 18 The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , Expected security return = Riskless return + beta x (expected
market risk premium) , It is easy to implement in practice
 Strategic Finance

True/False
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True

True/False
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Select The Blank

Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Your Answer Specific

Select The Blank

Question 22 Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise
Your Answer Revenue from transactions with other segments of the enterprise

Multiple Choice Single Answer

Question 23 Deferred payment plan is also known as:-
Correct Answer Earn out plan
Your Answer Cash payment plan

True/False
Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Your Answer True

Select The Blank

Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Your Answer The resolutions passed in the board of directors meeting

Multiple Choice Multiple Answer

Question 26 In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Multiple Choice Single Answer

Question 27 In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Your Answer Financing is independent of short term sources
 Strategic Finance

Multiple Choice Multiple Answer

Question 29 Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Control over the policies

Select The Blank

Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Your Answer Middle

True/False
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True
Your Answer True

Select The Blank

Question 32 During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses

True/False
Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 34 The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Your Answer Personnel services head count , Profit per head , Recovery rate

Multiple Choice Single Answer

Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Your Answer Forward Contracts

Multiple Choice Single Answer

Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management
Your Answer Activity based costing and management

Select The Blank

Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Improve risk return ration
 Strategic Finance

Multiple Choice Multiple Answer

Question 38 An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise , Intended to be occupied immediately

True/False
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Select The Blank

Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers

Multiple Choice Single Answer

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account
Your Answer Company's cash credit Account

Multiple Choice Multiple Answer

Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Your Answer The market is efficient , There is perfect competition in the securities market , Investors
are not very keen to maximize the value of their investment

True/False
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Your Answer False

Select The Blank

Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Your Answer Future generation of profits & services

Select The Blank

Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer 25 lacs
Your Answer 25 lacs

Multiple Choice Single Answer

Question 46 Tender offers are used primarily for :-
Correct Answer Large Equity repurchases
Your Answer Large Equity repurchases
 Strategic Finance

Multiple Choice Single Answer

Question 47 Many companies claim their main assets are their :-
Correct Answer People
Your Answer People

True/False
Question 1 The accounting records serve as the major source of cost data.
Correct Answer True
Your Answer True

Select The Blank

Question 2 ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Debt financiers

True/False
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer Consultation with shareholders , Planning , Financial evaluation

Multiple Choice Single Answer

Question 5 Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom
Your Answer The green accounting method in Denmark

True/False
Question 6 Dividends increase the current returns for shareholders.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings
Your Answer Retained earnings

Select The Blank

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
Correct Answer Management & board
Your Answer Management & board

Multiple Choice Multiple Answer

Question 10 Long term financing strategy is used by a firm to meet :-
 Strategic Finance

Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Investment in current assets , Portion of fluctuating working
capital requirement

True/False
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 12 AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Accounting for investments in the financial statements of an enterprise , Operating or finance leases

Multiple Choice Single Answer

Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital
Your Answer Permanent working capital

True/False
Question 14 A long term investment is an investment other than a current investment.
Correct Answer True
Your Answer True

True/False
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 16 Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Your Answer Corporate Control

True/False
Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True
Your Answer True

True/False
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 19 Investment are the assets held for earning income by way of :-
 Strategic Finance

Correct Answer Dividend , Interest , Rentals

Your Answer Dividend , Interest , Rentals

Multiple Choice Multiple Answer

Question 20 Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer Cost of facilities , Training & development budgets , Organization size

Select The Blank

Question 21 In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer Investment in employees

Multiple Choice Single Answer

Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values
Your Answer Accurate costs

Multiple Choice Single Answer

Question 24 The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Your Answer From financial Institutions

Select The Blank

Question 25 traditionally avails are provided by ________.
Correct Answer Banks
Your Answer Financial institutions

Select The Blank

Question 26 ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Goodwill

Multiple Choice Multiple Answer

Question 27 Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Your Answer Income tax , Property tax , Investments

Select The Blank

Question 28 Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer Net replacement value of the assets

Multiple Choice Multiple Answer

Question 29 Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Your Answer Reference to its market value , The expected cash flows from the investment , Current
investment valuation
 Strategic Finance

Multiple Choice Multiple Answer

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , After the buy back the ratio of
debt to total capital and free reserves should not be more than 2 : 1 , The amount involved in the buyback
should not exceed 50 % of the total paid up capital & free reserves of the company

True/False
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False
Your Answer True

Select The Blank

Question 32 Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer Non traceable cost

Multiple Choice Multiple Answer

Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Temporary staff , Part time personnel , Casual workers

Select The Blank

Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Your Answer Overheads

Multiple Choice Single Answer

Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares
Your Answer Outstanding preference shares

Multiple Choice Single Answer

Question 36 usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

Multiple Choice Single Answer

Question 37 When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer Necessary that firms should have less working capital requirement

Select The Blank

 Strategic Finance

Question 38 Segment expense includes ________.

Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment

Select The Blank

Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Is more than

True/False
Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question 41 The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Health & safety policies , Pensions & contributions to social security payments , Issue
shares necessarily to employees on joining an organisation

Multiple Choice Single Answer

Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings
Your Answer Retained earnings

Multiple Choice Single Answer

Question 43 When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method
Your Answer Surplus is debited to the P & L Account

Multiple Choice Multiple Answer

Question 44 Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Your Answer Firms use different kind of accounting methods , Dividend policy has lot of influence on
accounting numbers , Business risk and financial risk do not have any influence on accounting numbers

Multiple Choice Single Answer

Question 45 Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Multiple Choice Multiple Answer

Question 46 A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
 Strategic Finance

Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio ,
All dividend policies are similar

Select The Blank

Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

There is a relationship between the number of employees & the use of operating supplies.

Debt suppliers main concern is :-

a)

b)

c)

d)

Interest & debt repayment

Remuneration

High dividend ratio

Higher share prices

In presenting the reconciliation segment result should be reconciled to . Enterprise revenue

1. SPE =
1. R / H

2. RR =
2. (C + B ) / R

3. U % =
3. ( C + B ) / P

4. PpH =
4. PSE / E

5. R / ( C + B )
 Strategic Finance

6. P / H

. Net income approach

1. The overall capitalization rate remains constant for all levels of financial leverages

2. Net operating income approach

2. Many groups of non - investor stakeholders have an interest in the firm

3. Modigliani - Miller Theory

3. Enormous conflicts of interest between Stakeholders and shareholders

4. Free cash flow theory

4. weighted average cost of capital does not change with a change in the proportion of debt to equity in
the capital structure

5. Cost of debt & equity do not change with a change in leverage ratio

6. Firms have preferences by choosing a way to finance their projects

1. Fiscal advantage, the interest of financing with debt

1. Is deductible from the profit

2. Financing with a high percentage of debt

2. Shows the illusion of financial problems

3. Firms must repay debts

3. Not necessary to have discussions regarding the sell out of assets

4. A highly leveraged firm

4. Prevents firms from investing too much

5. Discussions about the sell out of assets must be made

6. Employees & trade unions increase their demands

1. Date of announcement of new dividend

1. Transfer date

2. Dividend payment made to members on a particular date

2. Registration date

3. Date from which stocks begin to trade without the right to receive the dividend declared
3. Record date

4. Date company mails the dividend warrants

4. Ex - dividend date

5. Payment date

6. Declaration date
 Strategic Finance

1. Dividend or Personal Taxation Hypothesis

1. Cash dividends are taxable at ordinary tax rates

2. Leverage hypothesis
2. The largest portion of wealth effect goes to the non - tendering shareholders

3. Wealth transfer among shareholders

3. Management believes that the common stock of the company is undervalued

4. Information or signalling hypothesis

4. Stock repurchases increases the debt / equity ratio

5. Capital gains are taxed at same rate as cash dividend

6. Puts the market on notice to make a takeover bid a success

1. Articles of Association
1. Fully paid up

2. Board of Directors
2. Shares should not be fully paid up

3. Shares to be bought back

3. Not to exceed 25 % of the total paid up capital

4. Amount involved in buy back

4. Resolution permitting the buy back of shares

5. Authorize buy back of securities

6. The ratio of debt to total capital & free reserves should be 1 : 1

1. Transparency
1. Take over code to ensure that shareholders do not suffer disadvantage

2. Interest of small shareholders

2. Detriment of customers & others

3. Realization of economic gains

3. Do not prevent concentration of market power

4. No undue concentration of market powers

4. Constituents regard take over as a legitimate device

5. Improve efficiency of operations

6. Enable competent persons to participate in financial exercise

Multiple Choice Single Answer

Question The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Your Answer The promoters or persons in control of the company

Multiple Choice Multiple Answer

 Strategic Finance

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Vertical , Conglomerate , Horizontal

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Market Capitalization

Select The Blank

Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Preferentially lower rate

Select The Blank

Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Your Answer Vertical Mergers

True/False
Question Valuation of current investments on overall basis is not considered appropriate.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The main categories of organisational elements are :-
Correct Answer Managerial , Support , Operational
Your Answer Managerial , Support , Operational

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-
Correct Answer Prompt & adequate
Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

Multiple Choice Single Answer

Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Deferred Payment Liabilities

Select The Blank

Question ________ is not a example of segment asset.
Correct Answer Customer advances
 Strategic Finance

Your Answer Customer advances

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

Multiple Choice Single Answer

Question Many companies claim their main assets are their :-
Correct Answer People
Your Answer People

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of
debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

True/False
Question Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True
Your Answer True

True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

Select The Blank

Question Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer Net replacement value of the assets

True/False
Question It is possible to place a single value for the acquired firm.
Correct Answer False
Your Answer False
 Strategic Finance

Multiple Choice Multiple Answer

Question Implicit claims are non written promises and rights such as :-
Correct Answer Right to provide service to customers , Job security for the employees
Your Answer Right to provide service to customers , Job security for the employees , Commitment to
pay interest in time for debentures issued

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %
Your Answer 5 % & 15 %

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer Lowest cost of capital , High value of firm , Good market reputation

Select The Blank

Question Implicit & Explicit costs are included in the ________.
Correct Answer Price of a product
Your Answer Price of a product

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-
Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same best way :-
Correct Answer Comparative analysis
Your Answer Comparative analysis

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-
Correct Answer Cash available
Your Answer Cash available
 Strategic Finance

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True
Your Answer True

True/False
Question The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False
Your Answer True

Select The Blank

Question HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer 0.516
Your Answer 0.5

Multiple Choice Single Answer

Question In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Your Answer There is a small risk if shortage of funds

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year

Select The Blank

Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Provide ineffective competitive process

Multiple Choice Single Answer

Question Controlling block is usually acquired from:-
Correct Answer A single seller
Your Answer A single seller

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales
 Strategic Finance

True/False
Question Only firms with a large amount of financial slack can afford tender offers.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Changes in the investee`s equity includes those :-
Correct Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation
Your Answer Arising from the revaluation of fixed assets , From foreign exchange translation
differences , From the adjustment of differences arising on amalgamation

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Depreciation includes amortization of assets whose useful life is :-
Correct Answer Predetermined
Your Answer Predetermined

True/False
Question Human assets accounting is still to become an accepted trend in the industry.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Value implies that something has :-
Correct Answer Worth
Your Answer Worth

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

Organisations have various records and reports from past actions such as :-

a)
 Strategic Finance

b)

c)

d)

Logs to record workflow

Specific costs
General studies and processes
External and internal audit reports

which cannot be changed by minor organisational changes may not have a significant role in the activity
model.(cost)

Risk appetite decides the rate of capitalization.

True

False

The processes to be identified & focused should to be on the basis of not adhering to benchmarks,
bottlenecks, quality not met, time problems etc. This is called as .

According to Merton Miller & Franco Modigliani, the only important determinant of a company's market
value is :-

a)

b)

c)

d)

Decision regarding firm's payout of dividend

Retention of dividend for internal financing
Its investment policy

Investment opportunities available

1. Organisational accounting
1. Indirect costs cannot be identified separately

2. Budgetary accounting
 Strategic Finance

2. Direct costs associated with organisational elements

3. Cost accounting
3. Yields an abundance of usable data

4. Budgetary records
4. Does not ensure that costs are not lost or over allocated

5. Useful to validate accounting costs

6. Have obligations similar to direct costs

. Book value
1. Evaluate the impact of the merger on EPS & price - earning ratio

2. Appraisal value
2. Provides a list of the reasonableness of results obtained through methods base upon the going
concern concept

3. Market value
3. Divide net worth by the number of equity shares outstanding

4. Earning per share

4. Acquisition is considered to be a function of the impact of the merger on the EPS

5. Decide if the acquisition is attractive on the basis if NPV

6. Indicate the consensus of the investors

1. Performance measures
1. Highlights the cost structure & gives better clarity

2. Output measures
2. Need for proper management and control

3. Cost objects
3. Do not add anything to a customer

4. Bill of activities
4. Have both qualitative and quantitative measures

5. Does not help to analyse the activities more carefully

6. Mostly product, but at times, services or customers

1. Analyze activity output performance

1. Define activity output & time to produce the output

2. Select the output measures

2. Uneconomical and unpragmatic

3. Determine the activity output costs per unit of output

3. Inconsistent behavior not to be considered at all

4. Document the output measures

 Strategic Finance

4. Consistent behavior to be included in each step of the functional reengineering project

5. Easy to understand relatively simple to objectively measure

6. A mathematical calculation

1. Floating lien
1. Loose arrangement as the lender may find it difficult to police

2. Chattel mortgage
2. Affords a higher degree of control over the collateral

3. Trust receipt
3. Specifically identified by serial number or other means

4. Terminal warehouse receipt

4. Inventory is stored with a public or terminal warehousing company

5. Well suited for financial good inventories of capital goods

6. Inventory is located in borrower's premises

True/False
Question It is easy to find a risk free security.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-
Correct Answer More than 50 % of the total assets
Your Answer More than 50 % of the total assets

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Part time personnel

Select The Blank

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Single Answer

 Strategic Finance

Question Profitability of a company depends upon :-

Correct Answer Cost of capital
Your Answer Cost of capital

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Growth of the firm

Select The Blank

Question Conglomerate mergers are also called ________.
Correct Answer Concentric mergers
Your Answer Concentric mergers

True/False
Question The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
Your Answer True

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

True/False
Question firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Tender offers are used primarily for :-
Correct Answer Large Equity repurchases
Your Answer Large Equity repurchases

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-
Correct Answer The optimum payout ratio for a declining firm is not 100 %
Your Answer The optimum payout ratio for a declining firm is not 100 %

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases
 Strategic Finance

Your Answer Increases

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer Personnel salaries , Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions & contributions
to social security payments

Select The Blank

Question Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Your Answer A high proportion of earnings

Multiple Choice Single Answer

Question Segment result represents :-
Correct Answer Operating profit or loss
Your Answer Net of financing profit or loss

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking
Your Answer Bench marking

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.
Correct Answer True
Your Answer True

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-
Correct Answer Assets
Your Answer Assets

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
 Strategic Finance

Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio ,
All dividend policies are similar

Select The Blank

Question Buy back through book building the process should be made through ________.
Correct Answer An electronically linked transparent facility
Your Answer An electronically linked transparent facility

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-
Correct Answer Sales per employee , Recovery rate , Utilization %
Your Answer Sales per employee , Recovery rate , Utilization %

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer Segment expense

Select The Blank

Question A company shall buyback its shares through the stock exchange by making a public
announcement at least ________ days prior to the commencement of buyback.
Correct Answer Seven
Your Answer Seven

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Current Liabilities

True/False
Question Tender offers us an alternative approach to acquire another firm.
Correct Answer True
Your Answer True

Select The Blank

Question Segment assets are ________.
Correct Answer Directly attributable to the segment
Your Answer Directly attributable to the segment
 Strategic Finance

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question If a company is following multiple accounting system, the activity accountant will have to
match data across :-
Correct Answer Codes , Time periods , Systems
Your Answer Codes , Time periods , Systems

Multiple Choice Single Answer

Question If competition is weak, a firm :-
Correct Answer Can manage with a smaller inventory of finished goods
Your Answer Can manage with a smaller inventory of finished goods

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Your Answer Future generation of profits & services

Select The Blank

Question Horizontal mergers involves firms________.
Correct Answer That operate & compete in a similar kind of business
Your Answer That operate & compete in a similar kind of business

Multiple Choice Single Answer

Question The following of total cost of assets over its useful life is called depreciation :-
Correct Answer Distribution
Your Answer Distribution

Multiple Choice Multiple Answer

Question The different types of floats are :-
Correct Answer Postal float , Deposit float , Bank float
Your Answer Postal float , Deposit float , Bank float

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment

Multiple Choice Multiple Answer

Question Due to diversification employees seek:-
Correct Answer Job security , Better opportunities within the firm , Higher compensation
Your Answer Job security , Better opportunities within the firm , Higher compensation
 Strategic Finance

True/False
Question Short term financing is meant for funding working capital of a company.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Deferred payment plan is also known as:-
Correct Answer Earn out plan
Your Answer Earn out plan

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-
Correct Answer On some reasonable basis
Your Answer On some reasonable basis

1. Line of credit
1. Form of debt not backed by the pledge of specific assets

2. Revolving credit agreements

2. Does not constitute any legal commitments on the part of the bank

3. Transaction loan
3. The cash flow ability of the borrower to pay the loan is usually of paramount importance

4. Unsecured loans
4. While the commitment is in force the bank must extend credit whenever the borrower wishes to
borrow

5. Borrower does not have to pay a commitment fees

6. The clean up period is more than 6 months

1. AS 19
1. Accounting for fixed assets

2. AS 6
2. Extra ordinary items

3. AS 10
3. Revenue recognition

4. AS 17
4. Leases

5. Depreciation accounting

6. Segment reporting
 Strategic Finance

In the shareholding pattern of a company, the promoter's holding includes .

1. AS 13
1. Accounting for investments in associates in consolidated financial statements

2. AS 23
2. Accounting for investments

3. AS 21
3. Consolidated financial statements

4. AS 4
4. Lease accounting

5. Contingencies & events occurring after the balance sheet date

6. Depreciation accounting

1. Segment revenue
1. Do not include borrowings that are incurred for financing purposes

2. Segment expenses
2. Does not include extra ordinary items

3. Segment assets
3. Do not include income tax assets

4. Segment liabilities
4. Does not include income tax expenses

5. The qualitative characteristics include the relevance

6. Determined after intra - enterprise balances are eliminated

1. Historical costs
1. An asset value when they are the target of an alternative use.

2. Substitution cost
2. Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.

3. Opportunity cost
3. Increase, if employees get to know their job better

4. Exit cost
4. Easy to determine this cost

5. Sacrifice necessary to hire & train people

6. Exit costs of the leaving employee & recruiting & training of the replacement

1. Unlisted shares on stock exchange

1. No fundamental basis.

2. Manipulation of stock markets

2. Easy to estimate the price
 Strategic Finance

3. Selective information
3. Valuation by various people on information available

4. Sentiments and rumours

4. Invalid valuation of shares

5. No effect on valuation

6. Difficult to estimate the price

1. Segment revenue
1. Enterprise assets

2. Segment result
2. Enterprise net profit or loss

3. Segment assets
3. Liquidity

4. Segment liabilities
4. Cash flows

5. Enterprise revenue

6. Enterprise liabilities

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-
Correct Answer Accounting , Automatic data processing , Payroll
Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question The value of the asset does not include:-
Correct Answer Price per share
Your Answer Price per share

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business pf the organisation
Your Answer To achieve a better method of doing the right business pf the organisation

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

True/False
Question Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account
 Strategic Finance

Your Answer Capital redemption reserve Account

Multiple Choice Single Answer

Question Comparative analysis is :-
Correct Answer A review to ensure consistency within the activity model & process flow
Your Answer A review to ensure consistency within the activity model & process flow

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination
pay

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
Capitalized expenses

Select The Blank

Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Resource consumption

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Equals

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer False
Your Answer False

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include :-
Correct Answer Quality of management , Production capabilities , Profitability
Your Answer Production capabilities , Capital & labour intensity , Profitability

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
 Strategic Finance

Your Answer Goodwill

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
Your Answer Opportunity cost

Select The Blank

Question ________ are considered most desirable from shareholders point of view.
Correct Answer Dividends
Your Answer Dividends

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-
Correct Answer Dividend , Capital gains
Your Answer Capital gains , Dividend

Multiple Choice Single Answer

Question In the book building method, the company makes an offer to buy back :-
Correct Answer Its specified number of shares at a specified offer price range
Your Answer Its specified number of shares at a specified offer price range

Multiple Choice Multiple Answer

Question A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

Multiple Choice Single Answer

Question Research into true human resources accounting began in :-
Correct Answer 1960`s
Your Answer 1960`s

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team
Your Answer Latest & updated techniques

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

 Strategic Finance

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Multiple Answer

Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as reportable
segments.
Correct Answer 75 percent
Your Answer 75 percent

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Not similar to current assets

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Your Answer Related receivables

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25
Your Answer 0.25

Select The Blank

Question Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production
Your Answer Reduction in the cost of production

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
 Strategic Finance

Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When the seller asks for the payment before making the delivery in order to avoid all risks
it is known as :-
Correct Answer Cash before delivery
Your Answer Cash before delivery

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute
Your Answer If they are different from the principle rates specified in the statute

Select The Blank

Question Depreciation is ________ of an asset.
Correct Answer Loss of value
Your Answer Loss of value

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

True/False
Question Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True
 Strategic Finance

Your Answer False

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Overall cost of capital

Multiple Choice Multiple Answer

Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the accounting policies
followed by the company , There are no standard procedures for valuation of intangible assets , No
importance to the market value of the asset
Your Answer Book value of the assets is directly dependent on the accounting policies followed by the
company , There are no standard procedures for valuation of intangible assets , No importance to the
market value of the asset

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer False

True/False
Question It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months

Multiple Choice Single Answer

Question Debt suppliers main concern is :-
Correct Answer Interest & debt repayment
Your Answer Interest & debt repayment

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Your Answer Payables

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-
 Strategic Finance

Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

Multiple Choice Multiple Answer

Question Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Horizontal , Vertical , Conglomerate

Select The Blank

Question ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
Your Answer Intangible

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses
Your Answer Full time equivalent staff , Revenues , Expenses

Multiple Choice Single Answer

Question Segment result represents :-
Correct Answer Operating profit or loss
Your Answer Operating profit or loss

Multiple Choice Multiple Answer

 Strategic Finance

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To refine the costs , To document the costs , To define the costs

Multiple Choice Single Answer

Question Depreciation includes amortization of assets whose useful life is :-
Correct Answer Predetermined
Your Answer Predetermined

True/False
Question Only firms with a large amount of financial slack can afford tender offers.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question AS 17 is mandatory for all commercial, industrial & business reporting enterprises whose
turnover for the accounting period :-
Correct Answer Exceeds 50 crores
Your Answer Exceeds 50 crores

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free
reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Current Liabilities

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-
Correct Answer Payroll , Accounting , Automatic data processing
Your Answer Payroll , Accounting , Automatic data processing

Multiple Choice Single Answer

Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Development Rebate Reserve
 Strategic Finance

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-
Correct Answer The optimum payout ratio for a declining firm is not 100 %
Your Answer The optimum payout ratio for a declining firm is not 100 %

Select The Blank

Question The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Your Answer Lowest possible

True/False
Question The object of every business is to earn profits.
Correct Answer True
Your Answer True

Select The Blank

Question A company shall buyback its shares through the stock exchange by making a public
announcement at least ________ days prior to the commencement of buyback.
Correct Answer Seven
Your Answer Seven

Multiple Choice Multiple Answer

Question The internal staffing performance indicators are :-
Correct Answer Sales per employee , Recovery rate , Utilization %
Your Answer Sales per employee , Recovery rate , Utilization %

True/False
Question Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False
Your Answer False

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.
Correct Answer True
Your Answer True

Select The Blank

Question When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Your Answer Future generation of profits & services

Select The Blank

Question ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment
Your Answer Rental equipment
 Strategic Finance

Multiple Choice Single Answer

Question The main assumption in comparative analysis is the possibility of :-
Correct Answer Combination or co-location of similar functions
Your Answer Combination or co-location of similar functions

Multiple Choice Single Answer

Question Firms which have marked seasonality in their operations usually have :-
Correct Answer Highly fluctuating working capital requirement
Your Answer Highly fluctuating working capital requirement

True/False
Question Dividends increase the current returns for shareholders.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-
Correct Answer Dividend , Capital gains
Your Answer Dividend , Capital gains

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28
Your Answer 0.28

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question According to Merton Miller & Franco Modigliani, the only important determinant of a
company's market value is :-
Correct Answer Its investment policy
Your Answer Its investment policy

Select The Blank

Question A shareholder expects a higher rate of return as a firm's compensation for ________.
Correct Answer Increased risk
Your Answer Increased risk

Select The Blank

 Strategic Finance

Question The cost of facilities is usually included & distributed as ________.

Correct Answer Depreciation
Your Answer Depreciation

Select The Blank

Question In presenting the reconciliation segment result should be reconciled to ________.
Correct Answer Enterprise net profit or loss
Your Answer Enterprise net profit or loss

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Single Answer

Question The following method of valuation is used for listed companies that have an active market
for their shares :-
Correct Answer Market value approach
Your Answer Market value approach

True/False
Question Usually cost data is perfect for ABC Analysis & distribution.
Correct Answer False
Your Answer False

Fiscal advantage, the interest of financing with debt

1. Discussions about the sell out of assets must be made

2. Financing with a high percentage of debt

2. Not necessary to have discussions regarding the sell out of assets

3. Firms must repay debts

3. Employees & trade unions increase their demands

4. A highly leveraged firm

4. Is deductible from the profit

5. Shows the illusion of financial problems

6. Prevents firms from investing too much

In the disclosures in financial statements, there are significant restrictions on :-

a)

b)

c)

d)
 Strategic Finance

The right of ownership

Realisability of investments
The remittance of income & proceeds of disposal
Other disclosures

True/False
Question A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-
Correct Answer To the person , To the firm , To the Consultant
Your Answer To the person , To the firm , To the Consultant

True/False
Question A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Your Answer True

Select The Blank

Question traditionally avails are provided by ________.
Correct Answer Banks
Your Answer Banks

True/False
Question A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-
Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or
retention
Your Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or retention

Select The Blank

Question HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer 0.516
Your Answer 0.516

True/False
 Strategic Finance

Question Human assets accounting is still to become an accepted trend in the industry.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation
Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Overall cost of capital

Multiple Choice Single Answer

Question The traditional balance sheet of a company does not show the valuation of:-
Correct Answer Human Capital
Your Answer Human Capital

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Cost of capital

True/False
Question In value of assets approach for computation of valuation of shares, the total value of all
the assets will be divided by the total number of shares.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Segment information needs to be presented :-
Correct Answer Only on the basis of the consolidated financial statements
Your Answer Only on the basis of the consolidated financial statements

Multiple Choice Multiple Answer

Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
Your Answer Notes payable , Trade acceptances , Open accounts

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
 Strategic Finance

Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables

Select The Blank

Question ________ are not diversible.
Correct Answer Market related risks
Your Answer Market related risks

True/False
Question It is possible to place a single value for the acquired firm.
Correct Answer False
Your Answer False

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Exchange ratio

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

Multiple Choice Single Answer

Question Segment reporting comes under :-
Correct Answer AS 17
Your Answer AS 17

Multiple Choice Single Answer

Question The following is not a factor for reduction in the life of an asset by obsolescence :-
Correct Answer No study of market demand for a product / service
Your Answer No study of market demand for a product / service

Multiple Choice Single Answer

Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
 Strategic Finance

Correct Answer Segment assets

Your Answer Segment assets

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-
Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions

Select The Blank

Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Provide ineffective competitive process

Multiple Choice Multiple Answer

Question As per the new sections of the company's act, funds out of which buy back may be
financed include :-
Correct Answer Free reserves of the company , Securities premium account , Proceeds of any
shares or other specified securities
Your Answer Free reserves of the company , Securities premium account , Proceeds of any shares or
other specified securities

Multiple Choice Multiple Answer

Question Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and business risk
Your Answer Dividend policy , Time span of money , Financial and business risk

Multiple Choice Single Answer

Question Activity cost analysis plays a major role :-
Correct Answer In prioritizing the application of reduced resources
Your Answer To array activities or elements of costs in various displays

True/False
Question firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Your Answer True

Select The Blank

Question ________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)
Your Answer Danish (Denmark)

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer True
Your Answer True

Select The Blank

 Strategic Finance

Question Forward or backward integration is a characteristic of ________.

Correct Answer Vertical Mergers
Your Answer Vertical Mergers

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-
Correct Answer Assets
Your Answer Assets

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
Your Answer Capacity to generate revenue

True/False
Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question To calculate depreciable amount the following is subtracted from its historical cost :-
Correct Answer Estimated residual value
Your Answer Estimated residual value

Select The Blank

Question Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production
Your Answer Reduction in the cost of production

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Your Answer Regular, steady dividend

Multiple Choice Single Answer

Question Often a company borrows loans / debts by giving the following as a security :-
Correct Answer Shares
Your Answer Shares

Multiple Choice Single Answer

Question In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares
Your Answer Outstanding preference shares

Multiple Choice Multiple Answer

Question A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer Lowest cost of capital , High value of firm , Good market reputation
 Strategic Finance

Multiple Choice Multiple Answer

Question 1 If a company is following multiple accounting system, the activity accountant will have to
match data across :-
Correct Answer Codes , Time periods , Systems

Select The Blank

Question 2 Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption

Multiple Choice Multiple Answer

Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Multiple Answer

Question 5 A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings

Select The Blank

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn

True/False
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Select The Blank

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer The cost of the output
Your Answer Total cost of activity

Multiple Choice Single Answer

Question 9 The voluntary market based method means :-
Correct Answer Develop a consistent framework which can be operational across sectors and
countries

Multiple Choice Multiple Answer

Question 10 Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay

Multiple Choice Single Answer

Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :-
Correct Answer The last 26 months
Your Answer Last 180 days
 Strategic Finance

Multiple Choice Multiple Answer

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Your Answer Negotiate formally ,

Multiple Choice Multiple Answer

Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation

Multiple Choice Single Answer

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company

Multiple Choice Single Answer

Question 15 What is a very important factor in any kind of merger?
Correct Answer Exchange ratio

True/False
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Multiple Choice Single Answer

Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares

Select The Blank

Question 19 Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Transaction costs

True/False
Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True

Select The Blank

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet

Multiple Choice Single Answer

Question 22 Suppliers of equity are interested in :-
Correct Answer High share prices

True/False
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
 Strategic Finance

Multiple Choice Multiple Answer

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land

True/False
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer False

Multiple Choice Single Answer

Question 26 Segment liabilities do not include :-
Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose

Multiple Choice Single Answer

Question 27 Economic analysis usually covers :-
Correct Answer A small number of improvement alternatives
Your Answer Different projected costs of the suggested process

Multiple Choice Multiple Answer

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer , Increases the ROI

Select The Blank

Question 29 Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Industrial products

True/False
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False

True/False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True

Select The Blank

Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings

Multiple Choice Multiple Answer

Question 33 As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade

Multiple Choice Multiple Answer

 Strategic Finance

Question 34 Accounting numbers are not influenced by :-

Correct Answer Dividend policy , Time span of money , Financial and business risk
Your Answer , Firm's solvency

Select The Blank

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible

Multiple Choice Single Answer

Question 36 The development aspect of training in firms focus on :-
Correct Answer Promotion to higher job levels
Your Answer Acquisition of necessary skills essential for a job

True/False
Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True

Multiple Choice Multiple Answer

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

True/False
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False

Select The Blank

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer General overheads

Multiple Choice Multiple Answer

Question 41 Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads

Select The Blank

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment
Your Answer Facilities

Multiple Choice Single Answer

Question 43 The HHI index reflects :-
Correct Answer Inequality & degree of concentration
 Strategic Finance

Select The Blank

Question 44 ________ is never a part of the output.
Correct Answer Mechanisms
Your Answer Activity

True/False
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True

Multiple Choice Single Answer

Question 46 In a matching approach policy, :-
Correct Answer There is a small risk of shortage of funds
Your Answer Financing is totally independent of long term sources

Multiple Choice Single Answer

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources

Multiple Choice Single Answer

Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Market value of debt

Multiple Choice Single Answer

Question 2 Value implies that something has :-
Correct Answer Worth
Your Answer Appreciation

True/False
Question 3 Organisational changes are similar to mission changes.
Correct Answer True

Multiple Choice Single Answer

Question 4 In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets
Your Answer Trading assets

Select The Blank

Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost

True/False
Question 6 Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True

Multiple Choice Single Answer

Question 7 Normally the basis for identifying an enterprise segments are :-
 Strategic Finance

Correct Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question 8 Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds

Multiple Choice Multiple Answer

Question 9 The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Your Answer Have a multi dimensional focus

Multiple Choice Multiple Answer

Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer Support costs , Supplies

Select The Blank

Question 13 ________ are not diversible.
Correct Answer Market related risks
Your Answer Total risks of a company

Multiple Choice Multiple Answer

Question 14 The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer , To dispatch the dividend warrants in time

Multiple Choice Multiple Answer

Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer , Suppliers dues are pending for a very long time

Multiple Choice Multiple Answer

Question 16 The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Wealth transfer among employees and managers

True/False
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True

Multiple Choice Multiple Answer

 Strategic Finance

Question 18 The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer , It is easy to implement in practice

True/False
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer True

True/False
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True

Select The Blank

Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific

Select The Blank

Question 22 Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise

Multiple Choice Single Answer

Question 23 Deferred payment plan is also known as:-
Correct Answer Earn out plan
Your Answer Cash payment plan

True/False
Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Select The Blank

Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Your Answer The resolutions passed in the board of directors meeting

Multiple Choice Multiple Answer

Question 26 In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

Multiple Choice Single Answer

Question 27 In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Your Answer Financing is independent of short term sources

Multiple Choice Multiple Answer

 Strategic Finance

Question 29 Significant influence is the power to :-

Correct Answer Participate in the financial decisions , Participate in the operating policy decisions

Select The Blank

Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Your Answer Middle

True/False
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True

Select The Blank

Question 32 During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses

True/False
Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True

Multiple Choice Multiple Answer

Question 34 The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Your Answer , Recovery rate

Multiple Choice Single Answer

Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Your Answer Forward Contracts

Multiple Choice Single Answer

Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management

Select The Blank

Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Improve risk return ration

Multiple Choice Multiple Answer

Question 38 An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise , Intended to be occupied immediately
 Strategic Finance

True/False
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True

Select The Blank

Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers

Multiple Choice Single Answer

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account

Multiple Choice Multiple Answer

Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Your Answer , Investors are not very keen to maximize the value of their investment

True/False
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer True

Select The Blank

Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services

Select The Blank

Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer 25 lacs

Multiple Choice Single Answer

Question 46 Tender offers are used primarily for :-
Correct Answer Large Equity repurchases

Multiple Choice Single Answer

Question 47 Many companies claim their main assets are their :-
Correct Answer People

True/False
Question 1 The accounting records serve as the major source of cost data.
Correct Answer True

Select The Blank

Question 2 ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Debt financiers
 Strategic Finance

True/False
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True

Multiple Choice Multiple Answer

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer Consultation with shareholders ,

Multiple Choice Single Answer

Question 5 Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom
Your Answer The green accounting method in Denmark

True/False
Question 6 Dividends increase the current returns for shareholders.
Correct Answer True

Multiple Choice Single Answer

Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings

Select The Blank

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
Correct Answer Management & board

Multiple Choice Multiple Answer

Question 10 Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer , Investment in current assets ,

True/False
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True

Multiple Choice Multiple Answer

Question 12 AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer , Accounting for investments in the financial statements of an enterprise ,

Multiple Choice Single Answer

Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital
 Strategic Finance

True/False
Question 14 A long term investment is an investment other than a current investment.
Correct Answer True

True/False
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True

Multiple Choice Single Answer

Question 16 Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Your Answer Corporate Control

True/False
Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True

True/False
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
Correct Answer True

Multiple Choice Multiple Answer

Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals

Multiple Choice Multiple Answer

Question 20 Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer , Organization size

Select The Blank

Question 21 In many companies, there is no formal record of________.
Correct Answer Investment in employees

Multiple Choice Single Answer

Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values
Your Answer Accurate costs

Multiple Choice Single Answer

Question 24 The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Your Answer From financial Institutions

Select The Blank

Question 25 traditionally avails are provided by ________.
Correct Answer Banks
 Strategic Finance

Your Answer Financial institutions

Select The Blank

Question 26 ________ is not a example of segment liability.
Correct Answer Goodwill

Multiple Choice Multiple Answer

Question 27 Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Your Answer Income tax , Property tax , Investments

Select The Blank

Question 28 Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer Net replacement value of the assets

Multiple Choice Multiple Answer

Question 29 Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Your Answer , Current investment valuation

Multiple Choice Multiple Answer

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer , The amount involved in the buyback should not exceed 50 % of the total paid up
capital & free reserves of the company

True/False
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Select The Blank

Question 32 Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer Non traceable cost

Multiple Choice Multiple Answer

Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer , Casual workers

Select The Blank

Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
 Strategic Finance

Your Answer Overheads

Multiple Choice Single Answer

Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares

Multiple Choice Single Answer

Question 36 usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent

Multiple Choice Single Answer

Question 37 When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer Necessary that firms should have less working capital requirement

Select The Blank

Question 38 Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment

Select The Blank

Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Is more than

True/False
Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Multiple Choice Multiple Answer

Question 41 The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer , Issue shares necessarily to employees on joining an organisation

Multiple Choice Single Answer

Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings

Multiple Choice Single Answer

Question 43 When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method

Multiple Choice Multiple Answer

Question 44 Shortcomings of accounting numbers consist of the following :-
 Strategic Finance

Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers

Multiple Choice Single Answer

Question 45 Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Multiple Choice Multiple Answer

Question 46 A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar

Select The Blank

Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

Kk sf-1

Kk sf-1

Unsolved

1. Fiscal advantage, the interest of financing with debt 1. Discussions about the sell out of assets
must be made
2. Financing with a high percentage of debt 2. Prevents firms from investing too much
3. Firms must repay debts 3. Is deductible from the profit
4. A highly leveraged firm 4. Not necessary to have discussions regarding the sell out of assets
5. Shows the illusion of financial problems
6. Employees & trade unions increase their demands

Select The Blank

Question The advantage of ________ is that the company is not required to wait for the payment
by the bill issuer.
Correct Answer Bill discounting
Your Answer Letter of credits

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer Segment expense

Multiple Choice Multiple Answer

Question The main characteristics of operating economies are :-
Correct Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs
due to indivisibilities of resources , It is possible in generic management functions
Your Answer It is achieved through horizontal, vertical and conglomerate mergers , It occurs due to
indivisibilities of resources , It is possible in generic management functions
 Strategic Finance

True/False
Question In today's world, knowledge has become the key determinant for economic & business
success.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method
Your Answer Depreciation is recalculated in accordance with the new method

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal audit reports
Your Answer Logs to record workflow , General studies and processes , External and internal audit
reports

Multiple Choice Single Answer

Question The FEA Tools encompass a vast array of information & policy into :-
Correct Answer One evaluation
Your Answer One evaluation

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question If the residual value of an asset is likely to be significant :-
Correct Answer It is estimated at the time of acquisition / installation
Your Answer It cannot be subsequently revalued

Multiple Choice Multiple Answer

Question Shareholders returns consists of 2 components :-
Correct Answer Dividend , Capital gains
Your Answer Interest , Dividend

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

Question 80 % of the total cost is normally generated by 20 % of the activity is a characteristic of :-
Correct Answer Pareto analysis
Your Answer Pareto analysis
 Strategic Finance

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer Direct

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is impacted by numerous transactions on a continuous basis , It is continually required
for a going concern , Quantum of working capital fluctuates depending on the level of activity

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Your Answer Payables

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment
Your Answer Reportable segment

True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination
pay

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Is more than

Multiple Choice Single Answer

Question The traditional balance sheet of a company does not show the valuation of:-
Correct Answer Human Capital
Your Answer Human Capital

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-
 Strategic Finance

Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question Companies often need to value its own :-
Correct Answer Shares
Your Answer Shares

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

True/False
Question Human assets accounting is still to become an accepted trend in the industry.
Correct Answer True
Your Answer True

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Utilities , Maintenance , Security

Multiple Choice Single Answer

Question The following Act contains the provisions permitting the companies to buy back their
shares :-
Correct Answer Companies (Amendment) Act, 1999
Your Answer Companies (Amendment) Act, 1999

Multiple Choice Single Answer

Question When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer Essential to maintain a larger inventory of finished goods

True/False
Question Opportunity costs and real costs decrease the market value of a firm.
Correct Answer True
Your Answer True

True/False
 Strategic Finance

Question Segment result is segment revenue less segment expenses.

Correct Answer True
Your Answer True

Select The Blank

Question Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer Direct traceable cost

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Your Answer False

Select The Blank

Question The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Your Answer The purpose for which valuation is being done.

Multiple Choice Multiple Answer

Question Generally `Employees as balance sheet assets', show the following characteristics:-
Correct Answer Take work home , Strive to generate high quality , Come to work when they are
unwell and stressed
Your Answer Take work home , Strive to generate high quality , Come to work when they are unwell
and stressed

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer True

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

Multiple Choice Single Answer

 Strategic Finance

Question In the past, costing mainly focused on :-

Correct Answer Manufacturing costs
Your Answer Manufacturing costs

Multiple Choice Multiple Answer

Question A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Your Answer Less retained earnings

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include :-
Correct Answer Quality of management , Production capabilities , Profitability
Your Answer Production capabilities , Capital & labour intensity , Profitability

Multiple Choice Single Answer

Question Which of the following is NOT A Characteristic of declining firm :-
Correct Answer The optimum payout ratio for a declining firm is not 100 %
Your Answer The optimum payout ratio for a declining firm is not 100 %

Multiple Choice Single Answer

Question If the segment result of a segment includes interest expense its segment liabilities include
:-
Correct Answer The related interest bearing liabilities
Your Answer The related interest bearing liabilities

Select The Blank

Question Buy back through book building the process should be made through ________.
Correct Answer An electronically linked transparent facility
Your Answer An electronically linked transparent facility

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement
 Strategic Finance

Multiple Choice Single Answer

Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Current value of the assets

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer General administrative expenses

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital
 Strategic Finance

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be
bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power
Your Answer Value

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of the activities
 Strategic Finance

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True

Select The Blank

Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Your Answer The shareholder

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
 Strategic Finance

Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True
Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a
proper strategy for product promotion

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer

Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer Does not assist the planners & project teams

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True
 Strategic Finance

Multiple Choice Single Answer

Question Book value is relevant to determine the firm's value because of the following reasons
except:-
Correct Answer It cannot be used as a starting point to be compared & complimented by other
analysis
Your Answer It is used as a starting point

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer Location of its customers

Multiple Choice Single Answer

Question FEA is a technique to analyze & evaluate :-
Correct Answer Alternative process improvements

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True

Select The Blank

Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process

True/False
Question Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True

Multiple Choice Multiple Answer

Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer , Control over the policies

Multiple Choice Single Answer

Question For paying dividends, firms will have a given amount of :-
Correct Answer Cash available

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Income / profit from the assets

Multiple Choice Multiple Answer

 Strategic Finance

Question As per AS 13 Statement, the following are not considered as investments:-

Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Land , Debentures

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer , Financial

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False

Select The Blank

Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False

Multiple Choice Multiple Answer

Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties

Select The Blank

Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer True

Multiple Choice Single Answer

Question Segment information needs to be presented :-
Correct Answer Only on the basis of the consolidated financial statements
Your Answer As separate financial statements

Select The Blank

Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
 Strategic Finance

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration

Select The Blank

Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Your Answer Conglomerate mergers

True/False
Question According to NI Approach, decrease in leverage decreases the overall cost of capital and
increases the firm's value.
Correct Answer False

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer , Better facilities and work conditions

Multiple Choice Single Answer

Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking
Your Answer Value added analysis

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True

Select The Blank

Question The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct

Select The Blank

 Strategic Finance

Question Stock repurchases ________ the debt / equity ratio.

Correct Answer Increases

Select The Blank

Question The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Your Answer General

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Product warranty provision

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment
Your Answer Business segment

Multiple Choice Single Answer

Question Debt suppliers main concern is :-
Correct Answer Interest & debt repayment

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Working capital cycle

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28

True/False
Question Value based approach of HRA tracking can be divided into 2 categories - Non - monetary
& monetary.
Correct Answer True

True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal audit reports
 Strategic Finance

Your Answer Logs to record workflow , Specific costs , General studies and processes

Select The Blank

Question The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Your Answer Fringe benefits

Multiple Choice Multiple Answer

Question The existence of significant influence by an investor is usually evidenced in the following
ways :-
Correct Answer Participation in policy making processes , Material transactions between the
investor & the investee , Interchange of managerial personnel

Multiple Choice Multiple Answer

Question While accounting for human assets, the following data is to be considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses
Your Answer Full time equivalent staff , Expenses , Good will

True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as :-
Correct Answer Flexible policy
Your Answer Aggressive policy

True/False
Question optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False

Multiple Choice Single Answer

Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Your Answer Accounts receivables

Select The Blank

Question According to Altman (1984) total costs in percentage of the market value of a firm range
between ________
Correct Answer 12.1 % & 16.7 %
Your Answer less than 10 %

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28

Multiple Choice Multiple Answer

 Strategic Finance

Question Trade credits are of the following types:-

Correct Answer Notes payable , Trade acceptances , Open accounts
Your Answer Notes payable , Trade acceptances , Commercial paper

True/False
Question The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True

Select The Blank

Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Your Answer 3 months

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset

Multiple Choice Single Answer

Question Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer Timeliness & turnaround

True/False
Question A long term investment is an investment other than a current investment.
Correct Answer True

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation

Select The Blank

Question Identify disclosure on human resources as a societal concern & prepare international
regulations comes under ________
Correct Answer The compulsory method
Your Answer The voluntary market based method

Multiple Choice Multiple Answer

Question Walter's model on dividend relevance is based on the following assumptions :-
Correct Answer Internal financing , Constant return and cost of capital , 100 Per cent payout or
retention
Your Answer , Perfect markets

Multiple Choice Single Answer

Question A manufacturing concern like a machine tool has :-
Correct Answer A long operating cycle
Your Answer Sells largely on cash basis
 Strategic Finance

True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True

Select The Blank

Question Depreciation is ________ of an asset.
Correct Answer Loss of value

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer Segment revenue

Multiple Choice Multiple Answer

Question The support elements consists of important functions such as :-
Correct Answer Payroll , Accounting , Automatic data processing
Your Answer Payroll , Co-ordination , Accounting

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Value added & non value added activities

Multiple Choice Multiple Answer

Question Valuation methods are highly specific to the following for doing the valuation :-
Correct Answer To the person , To the firm , To the Consultant

Select The Blank

Question Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Have no correlation with

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets

True/False
Question Dividends increase the current returns for shareholders.
Correct Answer True
 Strategic Finance

True/False
Question When a company is able to assess an individual's worth, it helps in increasing its own
worth.
Correct Answer True

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Accrued liabilities

Select The Blank

Question ________ is never a part of the output.
Correct Answer Mechanisms

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True

Multiple Choice Single Answer

Question To determine the firm's value, what is difficult to placing a value on?
Correct Answer Quantitative factors

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Single Answer

Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring
firm?
Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at
the time of acquisition

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets

Select The Blank

Question Total risk reduces if operations of combining firms are ________.
Correct Answer Negatively correlated
 Strategic Finance

Multiple Choice Multiple Answer

Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment , Prepayment
adjustments , Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments ,
An Indemnity

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-
Correct Answer Fixed assets , Investments , Current assets

Multiple Choice Single Answer

Question Which of the following is not a characteristic of convertible security?
Correct Answer It does not combine the protection of fixed security with the growth potential of
ordinary shares
Your Answer It appears more attractive to the acquired firm

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Select The Blank
Question Economies of scale arises with increase in volume of production leading to________.
Correct Answer Reduction in the cost of production
Your Answer Reduction in the cost of production

Multiple Choice Single Answer

Question A single business segment does not include products & services :-
Correct Answer With significantly differing risks & returns
Your Answer With risks & returns which are totally unrelated to each other

Multiple Choice Multiple Answer

Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions

Select The Blank

Question To make commercial sense, transaction size in forfeiting process needs to be in excess
of ________.
Correct Answer 250000
Your Answer 250000

Multiple Choice Single Answer

Question The following of the depreciable asset may undergo subsequent changes arising due to
price adjustments :-
Correct Answer Historical cost
Your Answer Estimated residual value

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-
 Strategic Finance

Correct Answer Investing too much

True/False
Question DCF is not a method used to calculate market value of a firm.
Correct Answer False

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-
Correct Answer More than 50 % of the total assets

Multiple Choice Multiple Answer

Question 1 If a company is following multiple accounting system, the activity accountant will have to
match data across :-
Correct Answer Codes , Time periods , Systems
Your Answer Codes , Time periods , Systems

Select The Blank

Question 2 Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Multiple Choice Multiple Answer

Question 4 For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Your Answer Market growth , Nature of competition , Degree of regulation

Multiple Choice Multiple Answer

Question 5 A high payout policy on dividends implies :-
Correct Answer More current dividends , Less retained earnings
Your Answer More current dividends , Less retained earnings

Select The Blank

Question 6 HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 118 Bn

True/False
Question 7 The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

Select The Blank

Question 8 The total cost of the activity model allocated by the applied activity drivers to the output of
the activity model is called________.
Correct Answer The cost of the output
Your Answer Total cost of activity
 Strategic Finance

Multiple Choice Single Answer

Question 9 The voluntary market based method means :-
Correct Answer Develop a consistent framework which can be operational across sectors and
countries
Your Answer Develop a consistent framework which can be operational across sectors and countries

Multiple Choice Multiple Answer

Question 10 Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search ,
Termination pay
Your Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Recruiting
new employee as a replacement of the left employee

Multiple Choice Single Answer

Question 11 The offer price by the acquiring company should be an average of the weekly high & low
for :-
Correct Answer The last 26 months
Your Answer Last 180 days

Multiple Choice Multiple Answer

Question 12 One of the advantages of trade credit is its flexibility i.e. the firm does not :-
Correct Answer Have to sign a note , Pledge collateral , Adhere to strict payment schedule
Your Answer Negotiate formally , Have to sign a note , Adhere to strict payment schedule

Multiple Choice Multiple Answer

Question 13 A firm with a judicious mixture of debt and equity will have :-
Correct Answer Lowest cost of capital , High value of firm , Good market reputation
Your Answer Good market reputation , Lowest cost of capital , High value of firm

Multiple Choice Single Answer

Question 14 The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Your Answer 35 % of the voting capital of the target company

Multiple Choice Single Answer

Question 15 What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Exchange ratio

True/False
Question 16 For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 17 As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Secured debt
 Strategic Finance

Select The Blank

Question 19 Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Transaction costs

True/False
Question 20 Articles of association should authorise buy back of securities as per the Company's Act.
Correct Answer True
Your Answer True

Select The Blank

Question 21 In today's fast moving world, the quickest way to get information on a firm is through
________.
Correct Answer Internet
Your Answer Internet

Multiple Choice Single Answer

Question 22 Suppliers of equity are interested in :-
Correct Answer High share prices
Your Answer High share prices

True/False
Question 23 The buyback shall be made only on stock exchanges with electronic trading facility.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 24 Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

True/False
Question 25 Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Your Answer True

Multiple Choice Single Answer

Question 26 Segment liabilities do not include :-
Correct Answer Borrowings & other liabilities that are incurred for financing rather than operating
purpose
Your Answer Borrowings & other liabilities that are incurred for financing rather than operating purpose

Multiple Choice Single Answer

Question 27 Economic analysis usually covers :-
Correct Answer A small number of improvement alternatives
Your Answer Different projected costs of the suggested process
 Strategic Finance

Multiple Choice Multiple Answer

Question 28 A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Select The Blank

Question 29 Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Industrial products

True/False
Question 30 The objective of a dividend policy should be to maximize shareholder's return so that the
value of his investment is maximized.
Correct Answer False
Your Answer True

True/False
Question 31 firms use credit policy as a marketing tool for expanding sales.
Correct Answer True
Your Answer True

Select The Blank

Question 32 Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
Your Answer Conservative policy regarding payouts

Multiple Choice Multiple Answer

Question 33 As per AS 13 Statement, the following are not considered as investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Your Answer Shares , Debentures , Other securities held as stock in trade

Multiple Choice Multiple Answer

Question 34 Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and business risk
Your Answer Dividend policy , Time span of money , Firm's solvency

Select The Blank

Question 35 ________ Assets in the balance sheet are normally excluded from the value of total
assets.
Correct Answer Intangible
Your Answer Intangible

Multiple Choice Single Answer

Question 36 The development aspect of training in firms focus on :-
Correct Answer Promotion to higher job levels
Your Answer Acquisition of necessary skills essential for a job

True/False
 Strategic Finance

Question 37 work in progress means the inventories are semi manufactured products.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 38 A company is permitted to buy back its shares through stock exchange in the following
situations :-
Correct Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility
Your Answer The company shall complete the verification of acceptances within 15 days of the
payout , The identity of the company as a purchaser shall appear on the electronic screen when the order
is placed , The buy back shall be made only on stock exchanges with electronic trading facility

True/False
Question 39 Current accounting system is able to provide actual value of employee capabilities &
knowledge.
Correct Answer False
Your Answer False

Select The Blank

Question 40 The ________ cost tier has the advantage of being the simplest to calculate and justify.
Correct Answer Direct
Your Answer General overheads

Multiple Choice Multiple Answer

Question 41 Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer Equipment , Overheads , Printing & stationary

Select The Blank

Question 42 ________ is a variable expense that can be readily eliminated with organisational
changes.
Correct Answer Rental equipment
Your Answer Facilities

Multiple Choice Single Answer

Question 43 The HHI index reflects :-
Correct Answer Inequality & degree of concentration
Your Answer Inequality & degree of concentration

Select The Blank

Question 44 ________ is never a part of the output.
Correct Answer Mechanisms
Your Answer Activity

True/False
Question 45 It is essential that ABC must fit into the strategy of the company.
Correct Answer True
Your Answer True
 Strategic Finance

Multiple Choice Single Answer

Question 46 In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Your Answer Financing is totally independent of long term sources

Multiple Choice Single Answer

Question 47 Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

Multiple Choice Single Answer

Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Market value of debt

Multiple Choice Single Answer

Question 2 Value implies that something has :-
Correct Answer Worth
Your Answer Appreciation

True/False
Question 3 Organisational changes are similar to mission changes.
Correct Answer True
Your Answer False

Multiple Choice Single Answer

Question 4 In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets
Your Answer Trading assets

Select The Blank

Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

True/False
Question 6 Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 7 Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question 8 Investments having no physical existence includes :-
 Strategic Finance

Correct Answer Shares , Debentures , Bonds

Your Answer Shares , Debentures , Bonds

Multiple Choice Multiple Answer

Question 9 The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer

Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Your Answer Have a multi dimensional focus

Multiple Choice Multiple Answer

Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Your Answer Support costs , Supplies

Select The Blank

Question 13 ________ are not diversible.
Correct Answer Market related risks
Your Answer Total risks of a company

Multiple Choice Multiple Answer

Question 14 The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders , Amount
to be retained in the firm
Your Answer To determine the amount of earnings to be distributed to shareholders , Amount to be
retained in the firm , To dispatch the dividend warrants in time

Multiple Choice Multiple Answer

Question 15 A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , Suppliers dues
are pending for a very long time

Multiple Choice Multiple Answer

Question 16 The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Wealth transfer among
employees and managers

True/False
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Your Answer True
 Strategic Finance

Multiple Choice Multiple Answer

Question 18 The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , Expected security return = Riskless return + beta x (expected
market risk premium) , It is easy to implement in practice

True/False
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True

True/False
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Select The Blank

Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Your Answer Specific

Select The Blank

Question 22 Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise
Your Answer Revenue from transactions with other segments of the enterprise

Multiple Choice Single Answer

Question 23 Deferred payment plan is also known as:-
Correct Answer Earn out plan
Your Answer Cash payment plan

True/False
Question 24 The statute governing an enterprise may provide the basis for computation of the
depreciation.
Correct Answer True
Your Answer True

Select The Blank

Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Your Answer The resolutions passed in the board of directors meeting

Multiple Choice Multiple Answer

Question 26 In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm
 Strategic Finance

Multiple Choice Single Answer

Question 27 In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Your Answer Financing is independent of short term sources

Multiple Choice Multiple Answer

Question 29 Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions ,
Control over the policies

Select The Blank

Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Your Answer Middle

True/False
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into a
co-ordinated plan.
Correct Answer True
Your Answer True

Select The Blank

Question 32 During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses

True/False
Question 33 Money becomes less valuable when received at a latter stage instead of in present time.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 34 The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Your Answer Personnel services head count , Profit per head , Recovery rate

Multiple Choice Single Answer

Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Your Answer Forward Contracts

Multiple Choice Single Answer

Question 36 One of the selective developments that has taken place in recent times is companies are
going in for :-
Correct Answer Activity based costing and management
Your Answer Activity based costing and management
 Strategic Finance

Select The Blank

Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Improve risk return ration

Multiple Choice Multiple Answer

Question 38 An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise , Intended to be occupied immediately

True/False
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Select The Blank

Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers

Multiple Choice Single Answer

Question 41 During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account
Your Answer Company's cash credit Account

Multiple Choice Multiple Answer

Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Your Answer The market is efficient , There is perfect competition in the securities market , Investors
are not very keen to maximize the value of their investment

True/False
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Your Answer False

Select The Blank

Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
________
Correct Answer Future generation of profits & services
Your Answer Future generation of profits & services

Select The Blank

Question 45 The amount to be invested by any single investor in a commercial paper shall not be less
than Rs. ________.
Correct Answer 25 lacs
Your Answer 25 lacs
 Strategic Finance

Multiple Choice Single Answer

Question 46 Tender offers are used primarily for :-
Correct Answer Large Equity repurchases
Your Answer Large Equity repurchases

Multiple Choice Single Answer

Question 47 Many companies claim their main assets are their :-
Correct Answer People
Your Answer People

True/False
Question 1 The accounting records serve as the major source of cost data.
Correct Answer True
Your Answer True

Select The Blank

Question 2 ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Debt financiers

True/False
Question 3 A merger will make sense to the acquiring firm if its shareholders benefit.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 4 The important steps involved in the analysis of mergers & acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Your Answer Consultation with shareholders , Planning , Financial evaluation

Multiple Choice Single Answer

Question 5 Developing a consistent framework supported by rewarding mechanisms once it is
introduced & approved at enterprise level is a characteristic of :-
Correct Answer The investing in people method in the united kingdom
Your Answer The green accounting method in Denmark

True/False
Question 6 Dividends increase the current returns for shareholders.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 7 Internal financing means the firm finances all investments through :-
Correct Answer Retained earnings
Your Answer Retained earnings

Select The Blank

Question 8 In a friendly takeover, the acquiring firm makes a financial proposal to the largest firm's
________.
 Strategic Finance

Correct Answer Management & board

Your Answer Management & board

Multiple Choice Multiple Answer

Question 10 Long term financing strategy is used by a firm to meet :-
Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of
fluctuating working capital requirement
Your Answer Fixed assets requirements , Investment in current assets , Portion of fluctuating working
capital requirement

True/False
Question 11 Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question 12 AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Accounting for investments in the financial statements of an enterprise , Operating or finance leases

Multiple Choice Single Answer

Question 13 the amount of working capital required to meet long term, minimum needs is called :-
Correct Answer Permanent working capital
Your Answer Permanent working capital

True/False
Question 14 A long term investment is an investment other than a current investment.
Correct Answer True
Your Answer True

True/False
Question 15 Short term financing is meant for funding working capital of a company.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question 16 Share repurchase a form of restructuring comes under :-
Correct Answer Changes in ownership structure
Your Answer Corporate Control

True/False
Question 17 Retained earnings are the most important internal sources of financing the growth of the
firm.
Correct Answer True
Your Answer True

True/False
Question 18 Receivables constitutes a substantial portion of current assets of several firms.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question 19 Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Your Answer Dividend , Interest , Rentals

Multiple Choice Multiple Answer

Question 20 Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer Cost of facilities , Training & development budgets , Organization size

Select The Blank

Question 21 In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer Investment in employees

Multiple Choice Single Answer

Question 22 Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values
Your Answer Accurate costs

Multiple Choice Single Answer

Question 24 The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Your Answer From financial Institutions

Select The Blank

Question 25 traditionally avails are provided by ________.
Correct Answer Banks
Your Answer Financial institutions

Select The Blank

Question 26 ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Goodwill

Multiple Choice Multiple Answer

Question 27 Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Your Answer Income tax , Property tax , Investments

Select The Blank

Question 28 Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer Net replacement value of the assets
 Strategic Finance

Multiple Choice Multiple Answer

Question 29 Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The expected cash flows
from the investment
Your Answer Reference to its market value , The expected cash flows from the investment , Current
investment valuation

Multiple Choice Multiple Answer

Question 30 The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , After the buy back the ratio of
debt to total capital and free reserves should not be more than 2 : 1 , The amount involved in the buyback
should not exceed 50 % of the total paid up capital & free reserves of the company

True/False
Question 31 optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to
fluctuate.
Correct Answer False
Your Answer True

Select The Blank

Question 32 Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer Non traceable cost

Multiple Choice Multiple Answer

Question 33 The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Temporary staff , Part time personnel , Casual workers

Select The Blank

Question 34 The cost of facilities is usually included & distributed as ________.
Correct Answer Depreciation
Your Answer Overheads

Multiple Choice Single Answer

Question 35 In value of assets approach the value of which of the following should be deducted to
calculate the net assets available to the equity shareholders :-
Correct Answer Outstanding preference shares
Your Answer Outstanding preference shares

Multiple Choice Single Answer

Question 36 usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

Multiple Choice Single Answer

 Strategic Finance

Question 37 When competition is high in the market, it is :-

Correct Answer Essential to maintain a larger inventory of finished goods
Your Answer Necessary that firms should have less working capital requirement

Select The Blank

Question 38 Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to
a segment

Select The Blank

Question 39 Credit standards should be relaxed upon the point where incremental returns ________
incremental costs.
Correct Answer Equals
Your Answer Is more than

True/False
Question 40 Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question 41 The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Health & safety policies , Pensions & contributions to social security payments , Issue
shares necessarily to employees on joining an organisation

Multiple Choice Single Answer

Question 42 The most important internal sources of financing the growth of the firm is through :-
Correct Answer Retained earnings
Your Answer Retained earnings

Multiple Choice Single Answer

Question 43 When a change in the method of depreciation is made :-
Correct Answer Depreciation is recalculated in accordance with the new method
Your Answer Surplus is debited to the P & L Account

Multiple Choice Multiple Answer

Question 44 Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Your Answer Firms use different kind of accounting methods , Dividend policy has lot of influence on
accounting numbers , Business risk and financial risk do not have any influence on accounting numbers

Multiple Choice Single Answer

Question 45 Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share
 Strategic Finance

Multiple Choice Multiple Answer

Question 46 A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio ,
All dividend policies are similar

Select The Blank

Question 47 As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

True/False
Question Risk appetite decides the rate of capitalization.
Correct Answer True
Your Answer True

True/False
Question An activity model is a tool to assist in understanding & defining the organisation.
Correct Answer True
Your Answer True

Select The Blank

Question An asset is included in segment assets, if and only if the related depreciation or
amortisation is included in ________.
Correct Answer Segment expense
Your Answer Segment expense

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question If a company is following multiple accounting system, the activity accountant will have to
match data across :-
Correct Answer Codes , Time periods , Systems
Your Answer Codes , Time periods , Systems

Multiple Choice Single Answer

Question Segment reporting comes under :-
Correct Answer AS 17
Your Answer AS 13

Multiple Choice Single Answer

Question Equity includes :-
 Strategic Finance

Correct Answer Development Rebate Reserve

Your Answer Development Rebate Reserve

Select The Blank

Question usually credit lines are established for a period of ________.
Correct Answer 1 year
Your Answer 6 months

Multiple Choice Multiple Answer

Question Accounting standard 19 for leases statement is applied in accounting for all leases other
than :-
Correct Answer Lease agreements to explore for or use natural resources , Licensing
agreements for items such as motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural resources , Licensing agreements for
items such as motion picture films , Lease agreements to use land

Multiple Choice Multiple Answer

Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :-
Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of
merger as a capital budgeting decision
Your Answer Analysis of firm specific information , Determining the firm's value , Financing techniques
in mergers

Multiple Choice Single Answer

Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Your Answer The organizational structure of an enterprise

Multiple Choice Multiple Answer

Question In a merger decision, the value of a firm depends upon:-
Correct Answer Operating characteristics of acquiring firm , Financial characteristics of acquiring
firm , Earnings
Your Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of
acquiring firm

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

True/False
Question Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question The acquiring firm for any M & A will require data about the target firm which will include :-
Correct Answer Quality of management , Production capabilities , Profitability
Your Answer Quality of management , Production capabilities , Profitability
 Strategic Finance

Multiple Choice Single Answer

Question One way to make the firm unattractive to raiders is :-
Correct Answer Sell the crown jewels
Your Answer Show a long list of current assets which cannot be easily liquidated

Multiple Choice Multiple Answer

Question Operating economies of scale are achieved through the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Horizontal , Vertical , Conglomerate

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.
Correct Answer Declaration date
Your Answer Declaration date

Multiple Choice Single Answer

Question A firm should consider acquisition as a :-
Correct Answer Capital budget decision
Your Answer Development decision

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds
Your Answer Shares , Debentures , Bonds

Multiple Choice Single Answer

Question Segment expenses include :-
Correct Answer Expense relating to transactions with other segments of the enterprise
Your Answer Expense relating to transactions with other segments of the enterprise

Multiple Choice Multiple Answer

Question Book value of the assets is directly dependent on the accounting policies followed by the
company which is used in the following areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory valuation
Your Answer Booking depreciation , Methods of provisions , Inventory valuation

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

Select The Blank

Question If total external revenue attributable to reportable segments constitutes less than
________ of the total enterprise revenue additional segments should be identified as reportable
segments.
Correct Answer 75 percent
Your Answer 75 percent

True/False
 Strategic Finance

Question Sometimes the mechanisms may appear to be inputs for an activity.

Correct Answer True
Your Answer True

True/False
Question Making decision on dividend is a very crucial area of financial management for a firm.
Correct Answer True
Your Answer True

Select The Blank

Question Increase in cost of capital means decrease in ________.
Correct Answer Profitability
Your Answer Profitability

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

Select The Blank

Question The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Your Answer The purpose for which valuation is being done.

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer Mutual Funds

True/False
Question Accounting standards (AS - 13) is now mandatory.
Correct Answer True
Your Answer True

Select The Blank

Question If the segment result of a segment includes interest or dividend income its segment
assets will not include ________.
Correct Answer Payables
Your Answer Payables

Select The Blank

Question traditionally avails are provided by ________.
Correct Answer Banks
Your Answer Banks

Multiple Choice Single Answer

Question The value based approach of HRA Tracking suggests that the value of human resources
depends upon :-
Correct Answer Capacity to generate revenue
 Strategic Finance

Your Answer Capacity to generate revenue

Multiple Choice Single Answer

Question According to a survey for reasons for share purchase, what is the percentage of cash
distribution to cash holders ?
Correct Answer 0.28
Your Answer 0.39

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Select The Blank

Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Your Answer Investment in employees

Multiple Choice Multiple Answer

Question Investment are the assets held for earning income by way of :-
Correct Answer Dividend , Interest , Rentals
Your Answer Dividend , Interest , Rentals

True/False
Question A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question A normal firm shows the following characteristics :-
Correct Answer No unique optimum payout ratio , Market value per share unaffected by the
payout ratio , All dividend policies are similar
Your Answer No unique optimum payout ratio , Market value per share unaffected by the payout ratio ,
All dividend policies are similar

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-
Correct Answer Investing too much
Your Answer Diversifying into other businesses

Select The Blank

Question Cost accounted for per activity is classified under ________.
Correct Answer Traceable cost
Your Answer Traceable cost

Multiple Choice Single Answer

Question Benchmarking is :-
Correct Answer For gathering ideas without the stress of original creative thinking
Your Answer The review of a best process in the industry
 Strategic Finance

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

True/False
Question Change in company's strategy gives rise to problems necessitating a new structure to be
made
Correct Answer True
Your Answer True

Select The Blank

Question In a ________ a decentralized structure is achieved & harmonized at the plant & area levels.
Correct Answer Delegation
Your Answer Delegation

Select The Blank

Question ________ identifies the impact of any change on performance
Correct Answer Statistical quality control
Your Answer Statistical quality control

True/False
Question Companies have strenghts in a number of areas but their key strength are few in number
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question The decisions which are applied to structured or routine problems are
Correct Answer programmed decisions
Your Answer programmed decisions

Multiple Choice Multiple Answer

Question Three important managerial qualities required for the effective strategic management
Correct Answer Conceptual, human & intellectual skills , Decision making ability , Vision
Your Answer Conceptual, human & intellectual skills , Decision making ability , Vision , communication
skills

True/False
Question The environment of any organization is "the aggregate of all conditions, events and influences
that surround and affect it."
Correct Answer True
Your Answer True

Select The Blank

Question ________ support managers by keeping track of the elementary activities & transactions of
the organization such as sales, receipts, raw materials etc.
Correct Answer Operational level systems
Your Answer Operational level systems

Multiple Choice Single Answer

Question Mass media includes
Correct Answer radio, TV, internet etc.
Your Answer radio, TV, internet etc.

Select The Blank

Question Value chain analysis is an effective tool for ________.
Correct Answer internal analysis
 Strategic Finance

Your Answer internal analysis

Multiple Choice Single Answer

Question Magnitude of the decision outcome and scope of their impact on the decision maker's domain
of activity is
Correct Answer significance
Your Answer rationality

Multiple Choice Multiple Answer

Question supplier & technological environment is concerned with
Correct Answer quality & no. of suppliers , logistics , raw material , trends and rate of change of
technology
Your Answer quality & no. of suppliers , logistics , raw material , trends and rate of change of
technology

Multiple Choice Single Answer

Question Strategic management deals with
Correct Answer Business process
Your Answer Business process

Multiple Choice Multiple Answer

Question The reasons for acquisition are
Correct Answer Increased market power , Increased diversification , Increased speed to market
Your Answer Increased market power , Increased diversification , Increased speed to market

True/False
Question The actual performance matches the budgeted performance. This is a realistic situation.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question Strategic management is concerned with
Correct Answer long- range planning
Your Answer long- range planning

True/False
Question Macro environment has got immediate impact on business.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question The various models of social responsibility are
Correct Answer Austere Model , Vendors Model , Civic Model
Your Answer Austere Model , Vendors Model , Civic Model

True/False
Question Budgets are plans expressed in numerical terms usually in financial terms
Correct Answer True
Your Answer True

Select The Blank

Question ETOP stands for ________.
Correct Answer environmental threat & opportunity profile
Your Answer environmental threat & opportunity profile

Select The Blank

Question Japan's major productivity gains are the results of social changes brought about by ________
Correct Answer Statistical quality control
Your Answer Michael Porter's model for Industry Analysis
 Strategic Finance

Multiple Choice Multiple Answer

Question Factors to be considered in political- legal environmental scanning are
Correct Answer govt. policies, stability, philosophy of govt. , legal system, implementation,
infrastructure , import-export
Your Answer govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure

Multiple Choice Single Answer

Question The traditional approach towards uncertainity is
Correct Answer Binary
Your Answer Tertiary

Multiple Choice Multiple Answer

Question Merger takes place
Correct Answer between a buyer and a seller , to avail tax concessions , to increase growth rates
Your Answer between a buyer and a seller , to avail tax concessions , to increase growth rates

Multiple Choice Multiple Answer

Question Measures to take corrective action
Correct Answer Checking performance , Reformulate strategies , Standard check
Your Answer Checking performance , Reformulate strategies , Standard check

Multiple Choice Single Answer

Question The cornerstone of financial planning process of all organizations because of the cost, control
and risk considerations which influence overall value of the firm is
Correct Answer Capital structure planning
Your Answer Capital structure planning

Multiple Choice Single Answer

Question It concentrates on organisation design and work flow
Correct Answer Flotilla
Your Answer Flotilla

Multiple Choice Multiple Answer

Question Factors determining HRP (Human Resource Planning )
Correct Answer Type & Strategy of organisation , Environmental uncertainties , Type & quality of
information
Your Answer Type & Strategy of organisation , Environmental uncertainties , Type & quality of
information

Select The Blank

Question ________ and greater accountability replace formal control.
Correct Answer Self-discipline
Your Answer Self-discipline

Select The Blank

Question A cycling accessory firm strive to become 'the nike of the cycling industry' is
________category of goal.
Correct Answer role model
Your Answer role model

Select The Blank

Question Strategic evaluation determines the effectiveness of ________
Correct Answer Strategy
Your Answer Strategy

True/False
Question The key principle of moral management is "Can we make money with this action decision or
behaviour"?
 Strategic Finance

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Question Mass media includes
Correct Answer radio, TV, internet etc.
Your Answer radio, TV, internet etc.

Multiple Choice Multiple Answer

Question The culture of a company is conveyed through
Correct Answer Rites , Myths , Rituals
Your Answer Rites , Rituals , Style

True/False
Question Timing of measurement before hand serves the purpose of evaluation.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question Expansion strategy means
Correct Answer growth
Your Answer growth

Multiple Choice Single Answer

Question General Electric Matrix is divided into how many cells
Correct Answer 9
Your Answer 9

True/False
Question Macro environment has got immediate impact on business.
Correct Answer False
Your Answer False

True/False
Question Numerator may bring short-term results, but there may be serious long-term sacrifices.
Correct Answer False
Your Answer True

Select The Blank

Question ________ should have the ability to develop a visionto see patterns into the future.
Correct Answer Leaders
Your Answer Leaders

Multiple Choice Multiple Answer

Question The various areas covered by social responsibility are
Correct Answer Inner Circle , Intermediate circle , Outer Circle
Your Answer Inner Circle , Intermediate circle , Outer Circle

Select The Blank

Question Economics of scale requires ________.
Correct Answer high market share
Your Answer focus

Multiple Choice Single Answer

Question The decisions which are relate to daily decisions like leave records etc. which are mundane in
nature & highly routined & can be done at a junior level are
Correct Answer operational decisions
Your Answer operational decisions
 Strategic Finance

Multiple Choice Multiple Answer

Question Different kinds of information systems are
Correct Answer Operational level system , Knowledge level system , Management level system
Your Answer Operational level system , Knowledge level system , Management level system

Multiple Choice Multiple Answer

Question A Company's strategy
Correct Answer Vital ingredient in determinig it's future , Yields growth, profits etc , may result in
disaster if inappropriate
Your Answer Vital ingredient in determinig it's future , Yields growth, profits etc , may result in disaster if
inappropriate

Multiple Choice Multiple Answer

Question

What is Statistical Quality Control(SQC)

Correct Answer

Identifies quality and productivity from a production process , Identifies impact of any change on
performance , Instantly spots malfunctions and show where they occur

Your Answer

Identifies quality and productivity from a production process , Identifies impact of any change on
performance , Instantly spots malfunctions and show where they occur

Multiple Choice Multiple Answer

Question

Criteria for making an evaluation are

Correct Answer

Consistency with goals , Consistency with environment , Money

Your Answer

Consistency with goals , Consistency with environment , Money

Multiple Choice Multiple Answer

Question
 Strategic Finance

Money is invested by way of

Correct Answer

Debt , Equity

Your Answer

Debt , Risk , Equity

Multiple Choice Single Answer

Question

Strategic management is mainly the responsibility of

Correct Answer

Top Management

Your Answer

Top Management

Multiple Choice Single Answer

Question

Mission

Correct Answer

philosophy, public image

Your Answer

philosophy, public image

 Strategic Finance

Multiple Choice Multiple Answer

Question

Factors to be considered in political- legal environmental scanning are

Correct Answer

govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure , import-export

Your Answer

govt. policies, stability, philosophy of govt. , legal system, implementation, infrastructure , import-export

Multiple Choice Multiple Answer

Question

The reasons for acquisition are

Correct Answer

Increased market power , Increased diversification , Increased speed to market

Your Answer

Increased market power , Increased diversification , Increased speed to market

Select The Blank

Question

________ is the company's most critical and scarest resource.

Correct Answer

Capital

Your Answer

Capital
 Strategic Finance

True/False

Question

The environment of any organization is "the aggregate of all conditions, events and influences that
surround and affect it."

Correct Answer

True

Your Answer

True

Select The Blank

Question

Strategic evaluation determines the effectiveness of ________

Correct Answer

Strategy

Your Answer

Strategy

Multiple Choice Single Answer

Question

Strategic management deals with

Correct Answer

Business process
 Strategic Finance

Your Answer

Business process

Multiple Choice Multiple Answer

Question

Measures to take corrective action

Correct Answer

Checking performance , Reformulate strategies , Standard check

Your Answer

Checking performance , Reformulate strategies , Standard check

Select The Blank

Question

ETOP stands for ________.

Correct Answer

environmental threat & opportunity profile

Your Answer

environmental threat & opportunity profile

Multiple Choice Multiple Answer

Question

market research is conducted by

 Strategic Finance

Correct Answer

by employees , by research agencies , by consultants

Your Answer

by research agencies , by rivals , by consultants

Multiple Choice Single Answer

Question

General Electric Matrix is divided into how many cells

Correct Answer

Your Answer

Multiple Choice Single Answer

Question

Strategic management is concerned with

Correct Answer

long- range planning

Your Answer

long- range planning

True/False

Question
 Strategic Finance

The environment of any organization is "the aggregate of all conditions, events and influences that
surround and affect it."

Correct Answer

True

Your Answer

True

Multiple Choice Single Answer

Question

At this strategic level, the effort is directed at assessing how well the organisation is pursuing a given
strategy

Correct Answer

Operational evaluation

Your Answer

Operational evaluation

Multiple Choice Single Answer

Question

Core purpose

Correct Answer

mission

Your Answer

mission
 Strategic Finance

Multiple Choice Single Answer

Question

It is the process of selecting people for company positions and developing skills and abilities for
assignments in the company

Correct Answer

Staffing

Your Answer

Staffing

Multiple Choice Multiple Answer

Question

Three important managerial qualities required for the effective strategic management

Correct Answer

Conceptual, human & intellectual skills , Decision making ability , Vision

Your Answer

Conceptual, human & intellectual skills , Decision making ability , Vision

True/False

Question

Arranging training program on productivity is a strategic decision.

Correct Answer

False

Your Answer
 Strategic Finance

False

True/False

Question

Environmental competitiveness tends to encourage ethical behaviour.

Correct Answer

False

Your Answer

True

Multiple Choice Single Answer

Question

Associated external agencies means

Correct Answer

channel members, customers, suppliers etc.

Your Answer

channel members, customers, suppliers etc.

True/False

Question

Focused company is generally protected from competition.

Correct Answer
 Strategic Finance

True

Your Answer

False

True/False

Question

The super structure indicates ways in which company's tasks are integrated or coordinated

Correct Answer

True

Your Answer

True

Multiple Choice Multiple Answer

Question

Techniques used in environmental appraisal are

Correct Answer

single-variable extrapolation/multivariable interaction analysis , structured/ unstructured expert/inexpert

opinion , Dynamic modes and mapping

Your Answer

single-variable extrapolation/multivariable interaction analysis , structured/ unstructured expert/inexpert

opinion , Dynamic modes and mapping

Multiple Choice Multiple Answer

Question
 Strategic Finance

How does 'structure' reduce internal uncertainity arising out of human behaviour

Correct Answer

Control mechanism , Departmentalisation

Your Answer

Control mechanism , Departmentalisation , Specialisation

Multiple Choice Single Answer

Question

The tool used for decision making in 'A range of futures' scenario is

Correct Answer

Technology forecasting

Your Answer

Latent demand research

True/False

Question

Counterfeiter copy but with a difference that can be seen.

Correct Answer

False

Your Answer

False
 Strategic Finance

Multiple Choice Single Answer

Question

Expansion strategy means

Correct Answer

growth

Your Answer

growth

True/False

Question

Scheduling is a part of strategic management.

Correct Answer

False

Your Answer

True

Select The Blank

Question

________ is a modern plant consisting of modules centered around a stage in the production process

Correct Answer

Flotilla concept

Your Answer

Flotilla concept
 Strategic Finance

Select The Blank

Question

Module of Flotilla strikes an optimum balance of ________ and flexibility

Correct Answer

Standardisation

Your Answer

Standardisation

True/False

Question

Business ethics is how personal norms do not apply to activities & goals of a commercial firm.

Correct Answer

False

Your Answer

False

True/False

Question

Acquisitions which are friendly are termed as "take-overs".

Correct Answer

False
 Strategic Finance

Your Answer

False

Multiple Choice Multiple Answer

Question

Harveststrategy is used for

Correct Answer

Dogs , Question marks

Your Answer

Cash cowsCash cowsc

Multiple Choice Single Answer

Question

The tool used for future decision making in 'True Ambiguity' scenario is

Correct Answer

Non-linear dynamic model

Your Answer

Non-linear dynamic model

Multiple Choice Single Answer

Question

It enables the strategists to take corrective action at the right time

Correct Answer

Premise control
 Strategic Finance

Your Answer

Premise control

Select The Blank

Question

GATT stands for ________.

Correct Answer

general agreement on trade & tariff

Your Answer

general agreement on trade & tariff

True/False

Question

Standards of performance act as the benchmark against which the actual performance is compared.

Correct Answer

True

Your Answer

True

Multiple Choice Single Answer

Question

The aim in stability strategies is-

Correct Answer
 Strategic Finance

move slowly & surely

Your Answer

no change

Select The Blank

Question

In a ________ a decentralized structure is achieved & harmonized at the plant & area levels.

Correct Answer

Delegation

Your Answer

Delegation

Multiple Choice Single Answer

Question

At this level , the effort is directed at assessing the consistency of strategy with the environment

Correct Answer

Strategic evaluation

Your Answer

Premise evaluation

Select The Blank

Question
 Strategic Finance

A cycling accessory firm strive to become 'the nike of the cycling industry' is ________category of goal.

Correct Answer

role model

Your Answer

role model

6. The FEA Tools encompass a vast array of information & policy into :-

a)

b)

c)

d)

Many evaluations

One evaluation

One procedure

Many procedures

7. optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.

True

False

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural
 Strategic Finance

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer True
Your Answer True

Select The Blank

Question Non value added activities helps ________.
Correct Answer To analyse the activities more carefully
Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free
reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-
Correct Answer 7 Days prior to the commencement of buy back
Your Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Accrued liabilities

17. According to Merton Miller & Franco Modigliani, the only important determinant of a company's
market value is :-

a)
 Strategic Finance

b)

c)

d)

Decision regarding firm's payout of dividend

Retention of dividend for internal financing

Its investment policy

Investment opportunities available

24. Fixed price tender offers are accompanied by an abnormal announcement period return of :-

a)

b)

c)

d)

2-3%

6-8%

8 - 10 %

10 - 15 %

30. Opportunity costs and real costs decrease the market value of a firm.

True

False

43. HLL is % of subsidiary of Unilever PLC.

.75,0.5,0.25,0.516

47. The statute governing an enterprise may provide the basis for computation of the depreciation.

True
 Strategic Finance

False

51. A single organisation model serves to keep all individual initiatives to be targeted into a co-
ordinated plan.

True

False

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives
, Expected security return = Riskless return + beta x (expected market risk premium)
Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets
Your Answer Segment assets

Multiple Choice Multiple Answer

Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Utilities , Maintenance , Security
 Strategic Finance

Multiple Choice Multiple Answer

Question Examples of accrued expenses are :-
Correct Answer Wages , Income tax , Property tax
Your Answer Wages , Income tax , Property tax

Multiple Choice Single Answer

Question One of the bases for determining the residual value of similar assets is :-
Correct Answer Realizable value
Your Answer Realizable value

Select The Blank

Question The number of bidding centers shall not be less than ________ for buy back through
book building.
Correct Answer 30
Your Answer 30

Multiple Choice Single Answer

Question Conservative policy for determining the requirements of current assets is also known as :-
Correct Answer Flexible policy
Your Answer Flexible policy

True/False
Question Management of working capital refers to the management of total assets and liabilities of
a company.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question usually the `controlling block' tends to be between :-
Correct Answer 20 & 40 percent
Your Answer 20 & 40 percent

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital

Select The Blank

Question Conglomerate mergers are also called ________.
Correct Answer Concentric mergers
Your Answer Concentric mergers

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

 Strategic Finance

Question In value of assets method the following is also to be included as they are also of value to
the company :-
Correct Answer Non trading assets
Your Answer Non trading assets

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False
Question The scope of the data required relates to the scope of the activity model & processes
under review.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Investment decisions are mainly concerned with :-
Correct Answer Assets
Your Answer Assets

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Reserves

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

True/False
Question DCF is not a method used to calculate market value of a firm.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer

Question Shortcomings of accounting numbers consist of the following :-
Correct Answer Firms use different kind of accounting methods , Business risk and financial risk
do not have any influence on accounting numbers
Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial
risk do not have any influence on accounting numbers

Multiple Choice Multiple Answer

Question Debt reduces :-
Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders ,
Freedom of decisions
Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of
decisions
 Strategic Finance

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.
Correct Answer True
Your Answer True

Select The Blank

Question Non value added activities helps ________.
Correct Answer To analyse the activities more carefully
Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Your Answer False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Your Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer Articles of association should authorize buyback of shares , The shares which are sought
to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free
reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-
Correct Answer 7 Days prior to the commencement of buy back
Your Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.
Correct Answer Absorption
Your Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.
Correct Answer Goodwill
Your Answer Accrued liabilities

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
 Strategic Finance

Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True
Your Answer True

Select The Blank

Question AS 23 - Accounting for investments in associates in consolidated financial statements
comes into effect in respect of accounting periods commencing on or after ________.
Correct Answer 01.04.2002
Your Answer 01.04.2002

True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Your Answer False

True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Development Rebate Reserve

Select The Blank

Question A geographical segment cannot be ________.
Correct Answer Countries in different zones
Your Answer Countries in different zones

Multiple Choice Single Answer

Question The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Your Answer Greenfield

Multiple Choice Single Answer

Question The acquirer should intimate to the target company & the concerned stock exchanges as
soon as its holding touches :-
Correct Answer 5 % of the voting capital of the target company
Your Answer 5 % of the voting capital of the target company

Multiple Choice Multiple Answer

Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy decisions
Your Answer Participate in the financial decisions , Participate in the operating policy decisions
 Strategic Finance

Multiple Choice Multiple Answer

Question An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not
intended to be in the operations of the investing enterprise
Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to
be in the operations of the investing enterprise

Multiple Choice Single Answer

Question The following analysis is more targeted on similar activities or firms that exist in parallel
within the activity model or process flow to ensure that they are being done the same best way :-
Correct Answer Comparative analysis
Your Answer Comparative analysis
 Strategic Finance

10. The HHI index reflects :-

a)

b)
 Strategic Finance

c)

d)

Inequality & degree of concentration

Transparency

Disclosure through public announcement

Interest of small shareholders

11. In case of direct placement of commercial papers it may be issued for maturities from the date of
issue.

Bw one to two yrs,More than 2 yrs,less than 6 months,bw 15 days to one year.

18.
Changes in the investee`s equity includes those :-

Arising from the a) revaluation of fixed assets

b) From foreign exchange translation differences

c) From the adjustment of differences arising on amalgamation

d) Investor's proportionate interest

24.
Only firms with a large amount of financial slack can afford tender offers.

True

False

40.
In the disclosures in financial statements, there are significant restrictions on :-
 Strategic Finance

The right of ownership

Realisability of investments

The remittance of income & proceeds of disposal

Other disclosures

44.
To determine the firm's value, what is difficult to placing a value on?

Quantitative variables

Qualitative factors

Quantitative factors

Qualitative variables

1. Segment revenue
1. Enterprise assets

2. Segment result
2. Enterprise revenue

3. Segment assets
3. Enterprise liabilities

4. Segment liabilities
4. Cash flows

5. Enterprise net profit or loss

6. Liquidity

50.
When the working capital is less than its peak level :-
 Strategic Finance

52.
Liquidation value is also known as

True/False
Question Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Your Answer False

Select The Blank

Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of
financial leverage.
Correct Answer Constant
Your Answer Constant

Multiple Choice Single Answer

Question The following method of valuation is used for listed companies that have an active market
for their shares :-
Correct Answer Market value approach
Your Answer Market value approach

Multiple Choice Single Answer

Question The main assumption in comparative analysis is the possibility of :-
Correct Answer Combination or co-location of similar functions
Your Answer Combination or co-location of similar functions

Multiple Choice Multiple Answer

Question The budgetary records are useful for:-
Correct Answer Validating accounting costs , Providing a rationale for division of costs ,
Replacing missing data
Your Answer Validating accounting costs , Providing a rationale for division of costs , Replacing
missing data

Select The Blank

Question usually credit lines are established for a period of ________.
Correct Answer 1 year
Your Answer 1 year

Multiple Choice Single Answer

Question As per the study conducted by RBI, Current assets constitute :-
Correct Answer More than 50 % of the total assets
Your Answer More than 50 % of the total assets

Select The Blank

Question Cost of ________ is more than other sources for raising short - term finance.
Correct Answer Bank finance
Your Answer Bank finance

Multiple Choice Single Answer

Question in case of temporary working capital, the investment in current assets varies with :-
Correct Answer Seasonal requirements
 Strategic Finance

Your Answer Seasonal requirements

Multiple Choice Multiple Answer

Question Organisations have various records and reports from past actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal audit reports
Your Answer Logs to record workflow , Specific costs , External and internal audit reports

True/False
Question The carrying amount for current investments is the lower of cost & fair value.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question A company is prohibited to buy back its own shares in the following circumstances :-
Correct Answer Through any subsidiary company , Through any investment company , If a
company defaults in repayment of deposits or interest due thereon
Your Answer Through any subsidiary company , Through any investment company , If a company
defaults in repayment of deposits or interest due thereon

True/False
Question Explicit cost and implicit cost are the two parts of cost of debt.
Correct Answer True
Your Answer True

Select The Blank

Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Your Answer Vertical Mergers

Multiple Choice Single Answer

Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :-
Correct Answer Investing too much
Your Answer Investing too much

Multiple Choice Single Answer

Question Estimation for determining the useful life of an asset is required :-
Correct Answer On some reasonable basis
Your Answer On some reasonable basis

True/False
Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False
Your Answer False

Multiple Choice Single Answer

Question Which of the following company is reaping high market valuation due to showing human
resources as an asset in its balance sheet information?
Correct Answer Infosys
Your Answer BHEL
 Strategic Finance

Multiple Choice Single Answer

Question Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Your Answer Overall cost of capital

Multiple Choice Single Answer

Question Suppliers of equity are interested in :-
Correct Answer High share prices
Your Answer High share prices

Select The Blank

Question The date on which the announcement is made of new dividend is called ________.
Correct Answer Declaration date
Your Answer Ex - dividend date

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of
debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Multiple Choice Single Answer

Question A single business segment does not include products & services :-
Correct Answer With significantly differing risks & returns
Your Answer With significantly differing risks & returns

True/False
Question For determining exchange ratio, the model developed by Conn & Nielson is used.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Debt suppliers main concern is :-
Correct Answer Interest & debt repayment
Your Answer Interest & debt repayment

Multiple Choice Single Answer

Question Value added analysis is a method to determine, if elements within a process flow provide
the :-
Correct Answer Values
Your Answer Values

Select The Blank

Question Investors can reduce the company related risk by diversification of their investments in
________.
Correct Answer Shares of a large number of companies
Your Answer Shares of a large number of companies
 Strategic Finance

Multiple Choice Multiple Answer

Question The 3 main types of accounting records followed by an organisation are :-
Correct Answer Organisational accounting , Budgetary accounting , Cost accounting
Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Multiple Choice Multiple Answer

Question The following disclosures in financial statements in relation to investments are
appropriate :-
Correct Answer The accounting policies for the determination of carrying amount of investments ,
Profits & losses on disposal of current investments , The amounts included in P & L Statement
Your Answer The accounting policies for the determination of carrying amount of investments , Profits
& losses on disposal of current investments , The amounts included in P & L Statement

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Your Answer Market growth , Marketing capabilities , Nature of competition

Multiple Choice Multiple Answer

Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :-
Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of
merger as a capital budgeting decision
Your Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as a
capital budgeting decision

Multiple Choice Single Answer

Question According to Net Income Approach, the average cost of capital declines as the leverage
ratio :-
Correct Answer Increases
Your Answer Increases

True/False
Question A long term investment is an investment other than a current investment.
Correct Answer True
Your Answer True

True/False
Question The capital Asset pricing model describes the pricing of assets as well as derivatives.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training & development budgets
Your Answer Cost of facilities , Training & development budgets
 Strategic Finance

Multiple Choice Multiple Answer

Question Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds
Your Answer Shares , Debentures , Bonds

Select The Blank

Question the commercial paper may be issued in the multiples of ________.
Correct Answer 5 lakhs
Your Answer 5 lakhs

Multiple Choice Single Answer

Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
Your Answer Perfect Capital Markets

Select The Blank

Question The most popular kind of dividend policy is one that pays a ________.
Correct Answer Regular, steady dividend
Your Answer Regular, steady dividend

Multiple Choice Multiple Answer

Question AS 13 Does not deal with :-
Correct Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds
Your Answer The bases for recognition of interest, dividends & rentals earned on investments ,
Operating or finance leases , Investment in mutual funds

True/False
Question According to NOI Approach, any capital structure is optimum.
Correct Answer True
Your Answer False

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer The payout ratio is never 100 %

Multiple Choice Single Answer

Question Arbitrage means :-
Correct Answer Securities cannot sell at different prices
Your Answer Securities cannot sell at different prices

True/False
Question Short term financing is meant for funding working capital of a company.
Correct Answer True
Your Answer True
 Strategic Finance

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers ,
Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Increases the
ROI

Multiple Choice Multiple Answer

Question The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or
signalling hypothesis
Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling
hypothesis

Multiple Choice Single Answer

Question In respect of depreciable assets, which do not have material value, depreciation is often
allocated :-
Correct Answer Fully in the accounting period for which they are acquired
Your Answer Over the residual value

Multiple Choice Single Answer

Question What is the maximum amount involved in the buy back of the total paid up capital & free
reserves of the company?
Correct Answer 0.25
Your Answer 0.25

True/False
Question Tender offers us an alternative approach to acquire another firm.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Cost benefit analysis is the simplest form of comparison between :-
Correct Answer Ideas to determine which is faster, better or cheaper
Your Answer Ideas to determine which is faster, better or cheaper
 Strategic Finance

Multiple Choice Multiple Answer

Question For ABC Analysis the available cost data :-
Correct Answer Has to be adjusted for change , Has to be corrected for undocumented element
costs , Has to be combined with different types of data from alternate sources
Your Answer Has to be adjusted for change , Has to be corrected for undocumented element costs ,
Has to be combined with different types of data from alternate sources

Multiple Choice Single Answer

Question Today knowledge has become a key determinant for :-
Correct Answer Economic & business success
Your Answer For determining a firm's value

Select The Blank

Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Expenses

Multiple Choice Single Answer

Question A firm can manage with small inventory if the supply is :-
Correct Answer Prompt & adequate
Your Answer Prompt & adequate

Multiple Choice Multiple Answer

Question Operating economies occur due to indivisibilities of resources like :-
Correct Answer People , Equipment , Overheads
Your Answer People , Equipment , Overheads

Select The Blank

Question If firms have same technology ________ makes the difference i.e. firms become more
productive .
Correct Answer Solid human resource team
Your Answer Solid human resource team

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

True/False
Question There are few methods of allocating depreciation over the useful life of an assets.
Correct Answer False
Your Answer True

True/False
Question Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial statements classify the following into separate categories :-
 Strategic Finance

Correct Answer Fixed assets , Investments , Current assets

Your Answer Fixed assets , Current assets

Multiple Choice Multiple Answer

Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Your Answer Brokerage , Advertisements , Fees , Duties

Multiple Choice Multiple Answer

Question Every business requires funds on a continual basis for expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Your Answer Purchase of raw material , Manufacturing costs , Administration

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Current Liabilities

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 118 Bn

True/False
Question Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Your Answer True

True/False
Question If a company has resorted to buyback its shares, it cannot make a further issue of the
same kind of securities within a period of 1 year.
Correct Answer False
Your Answer True

Select The Blank

Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Your Answer 1 to 2 months

Multiple Choice Single Answer

Question The bottom line of ABC Process is :-
Correct Answer To achieve a better method of doing the right business pf the organisation
Your Answer To achieve a better method of doing the right business pf the organisation

Select The Blank

Question If a segment is not designated as a ________ it should be included as an unallocated
reconciling item.
Correct Answer Reportable segment
Your Answer Operating segment
 Strategic Finance

Multiple Choice Single Answer

Question If a particular item of depreciation or amortisation is included in segment expense, the
related asset is included in :-
Correct Answer Segment assets
Your Answer Segment assets

True/False
Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value.
Correct Answer True
Your Answer True

True/False
Question Segment result is segment revenue less segment expenses.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

True/False
Question Book value is based on the balance sheet value of owner's equity.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The overhead expenses include :-
Correct Answer Utilities , Maintenance , Security
Your Answer Daily wages , Maintenance , Security

True/False
Question It is necessary to identify all costs that may be related to an acquisition.
Correct Answer True
Your Answer True

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Select The Blank

Question ________ know the best about a firm's performance.
Correct Answer Firm Managers
Your Answer Firm Managers

Multiple Choice Single Answer

Question The FEA Tools encompass a vast array of information & policy into :-
 Strategic Finance

Correct Answer One evaluation

Your Answer Many evaluations

Multiple Choice Multiple Answer

Question The employer in offering the job contract assumes a range of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies , Pensions &
contributions to social security payments
Your Answer Rewards - cash like & non cash like , Health & safety policies , Pensions & contributions
to social security payments

Select The Blank

Question Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Your Answer Accounting numbers

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made , Can be held for more than 1 year

Multiple Choice Single Answer

Question The depreciation rates or the useful lives of the assets are disclosed only :-
Correct Answer If they are different from the principle rates specified in the statute
Your Answer If they are different from the principle rates specified in the statute

Multiple Choice Multiple Answer

Question The net income approach is based on following 3 assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of
debt doesn't change the risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt
doesn't change the risk perception of investors

Select The Blank

Question In case of direct placement of commercial papers it may be issued for maturities
________ from the date of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year

Select The Blank

Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
Your Answer Big ticket items & durable goods

Select The Blank

Question ________ government has made it mandatory to include in their annual reports
information on customers, processes & human capital.
Correct Answer Danish (Denmark)
Your Answer Japanese
 Strategic Finance

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets
Your Answer Current assets

Multiple Choice Single Answer

Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Your Answer The surplus is invested in liquid assets

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer

Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Current value of the assets

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer General administrative expenses
 Strategic Finance

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be
bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-
 Strategic Finance

Correct Answer Equity

Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power
Your Answer Value

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True

Select The Blank

Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
 Strategic Finance

Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Your Answer The shareholder

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True
Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a
proper strategy for product promotion
 Strategic Finance

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer

Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer Does not assist the planners & project teams

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer

Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Current value of the assets

Multiple Choice Single Answer

 Strategic Finance

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer General administrative expenses

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting
 Strategic Finance

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be
bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power
Your Answer Value

Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True

Select The Blank

 Strategic Finance

Question As per residual theory of dividends the focus is on ________.

Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Your Answer The shareholder

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
Correct Answer Foreign Promoters
Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True
Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
 Strategic Finance

Correct Answer True

Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a
proper strategy for product promotion

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer

Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer Does not assist the planners & project teams

True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Any addition or extension to an existing asset which retains a separate identify & is
capable of being used after the existing asset is disposed of :-
Correct Answer Is depreciated independently
Your Answer Is depreciated along with the existing asset

True/False
Question In market value approach, interested parties never manipulate the stock markets.
Correct Answer False
Your Answer True
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Multiple Choice Multiple Answer

Question For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer

Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Your Answer Trade credit from suppliers

Select The Blank

Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Your Answer Current value of the assets

Multiple Choice Single Answer

Question Where the management's estimate of the useful life of an asset of the enterprise is
shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Your Answer By applying a lower rate

Multiple Choice Single Answer

Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Your Answer Post merger price

Select The Blank

Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable
basis to a segment
Your Answer General administrative expenses

Multiple Choice Single Answer

Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
Your Answer During more than 1 accounting period

True/False
Question Arbitrage process implies that security cannot sell at different prices.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Which is an example out of the following to which special consideration apply for
depreciation :-
Correct Answer Regenerative natural resources
Your Answer Regenerative natural resources

True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to finance a merger
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Multiple Choice Single Answer

Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Your Answer Net working capital

Select The Blank

Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Your Answer Increases

Multiple Choice Single Answer

Question Which of the following systems identifies each of the organizational elements of the
traditional bureaucratic structure and applies the identifiable costs of that element accordingly?
Correct Answer Organization element accounting
Your Answer Organization element accounting

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which
are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital
and free reserves should not be more than 2 : 1
Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more
than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be
bought back should be fully paid up

True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity

Multiple Choice Single Answer

Question Short term sources of funds include :-
Correct Answer Current Liabilities
Your Answer Capital

True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Your Answer True

Multiple Choice Single Answer

Question When a company has resorted to buyback of its shares it cannot make a further issue of
the same kind of securities within a period of how many months?
Correct Answer 6 months
Your Answer 6 months

Select The Blank

Question At times managers invest in projects that improve the company's ________.
Correct Answer Prestige or power
Your Answer Value
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Multiple Choice Multiple Answer

Question It is the activity accountant's job to do the following for the existing organisational
structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer

Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
Your Answer Debt and equity are the 2 kinds of funds used by the firm

True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Your Answer True

Select The Blank

Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer

Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Your Answer Earning per share

Select The Blank

Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Your Answer 1000 crores

Multiple Choice Multiple Answer

Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of working capital
fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous
basis
Your Answer It is continually required for a going concern , Quantum of working capital fluctuates
depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Multiple Answer

Question If a firm diversifies managerial teams formed can be shifted from unproductive activities
to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer

Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Your Answer The shareholder

Multiple Choice Multiple Answer

Question To overcome the problems of matching data the actions can be taken as follows :-
Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep
records of assumptions as an audit trail
Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of
assumptions as an audit trail

Select The Blank

Question In the shareholding pattern of a company, the promoter's holding includes________.
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Correct Answer Foreign Promoters

Your Answer Foreign Promoters

Multiple Choice Multiple Answer

Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on
which investment is made
Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which
investment is made

True/False
Question Trade credit creates book debts which the firm is expected to collect in the near future.
Correct Answer True
Your Answer True

True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer

Question The financial managers of a company consume a great deal of their time in activities
like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms ,
Administrating Accounts receivables
Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a
proper strategy for product promotion

True/False
Question Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer

Question The following categories of personnel are taken into account to calculate the actual
manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer

Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural
Your Answer Natural

Multiple Choice Single Answer

Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted immediately
Your Answer Does not assist the planners & project teams
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True/False
Question Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Your Answer True
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Q.3 With the help of models explain inventory control for working capital
management.
Ans INVENTORY MANAGEMENT
Introduction: Inventories are stock of the product a company is manufacturing for sale and
components that make up the product.

Nature of Inventories: The various forms in which inventories exists in manufacturing company
are
 Raw Materials: are basic inputs that are converted into finished product through the
manufacturing process.
 Work-in-Progress: inventories are semi-manufactured products.
 Finished Goods: inventories are those completely manufactured products, which are
ready for sale.

Need to hold Inventories:

 Transactions motive: emphasizes the need to maintain inventories to facilitate smooth
production & sales operation.
 Precautionary motive: necessitates holding of inventories to guard against the risk of
unpredictable changes in demand & supply forces & other factors.
 Speculative motive; influences the decision to increase or reduce inventory levels to take
advantage of price fluctuations.
Objective of Inventory Management
 To maintain a large size of inventory for efficient and smooth production & sales
operations.
 To maintain a minimum investment in inventories to maximise profitability.

The firm should always avoid a situation of over investment or under investment in inventories.
The major dangers of over investment are:
a) Unnecessary tie up of the firm’s funds and loss of profit,
b) Excessive carrying costs,
c) Risk of liquidity.

The major dangers of under investments are:

a) Production hold-ups.
b) Failure to meet delivery commitments.
An effective inventory management should:
 Ensure a continuous supply of raw materials to facilitate uninterrupted
production.
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 Maintain sufficient stocks of raw materials in periods of short supply and

anticipate price changes,
 Maintain sufficient finished goods inventory for smooth sales operation, and
efficient customer service,
 Minimize the carrying cost and time, and
 Control investment in inventories and keep it at an optimum level.

Q.4. With the help of models explain cash control for working capital management.
Ans CASH MANGEMENT
Cash is the most important current asset in any business operations. The term cash includes
coins, currency and cheques held by the firm, and balances in its bank account.

Cash management is concerned with managing of

1. cash flow into and out of the firm
2. cash flows within the firm
3. cash balances held by the firm by financing deficit or investments of surplus cash

All these activities are to be done at minimum cost.

Facets of Cash management:

Cash planning:
Cash inflows and outflows should be planned to project cash surplus or deficit for each period of
planning period. Cash budget is prepared for this purpose.

Managing cash flows:

Cash flow should be properly managed. Inflow of cash should accelerate while outflow should
decelerate as far as possible.

Optimum cash level:

The firm should determine optimum cash level considering the cost of excess cash and danger
of cash deficiency.

Investing surplus cash:

Surplus cash should be properly invested in short term opportunities like deposits, corporate
lending, marketable securities to earn profits.

Motives of Holding Cash

Transaction motive
The transaction motive requires a firm to hold cash to conduct its business in ordinary course to
make payments for purchases, wages, other operating expenses, taxes etc. Transaction motive
mainly refers to holding cash to meet anticipated payments whose timing is not perfectly
matched with cash receipts.
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Precautionary motive
It is needed to hold cash for contingencies in future. It gives cushion to withstand the
unexpected emergency. Less cash is required to be maintained for emergency if cash flows are
fairly accurate. The precautionary balance is kept in cash form or marketable securities.

Speculative motive
It is holding cash for investing it in profit making opportunities as and when they arise.
Cash forecasting.
Short-term forecasting.
Short-term forecasting is done for the following reasons.
To determine operating cash requirements.
To anticipate short-term financing: which is generally obtained from bank.
To manage investment of surplus cash : which help managers to study the market and invest in
better yield investments.
Short-term forecasting methods
1. Receipts and disbursement method
This sources of cash inflow like operating, non operating and
financial inflows etc. are considered on receipt side. Whereas on
disbursement side cash outflows like operating expenses, capital
expenditure, contractual payments, taxes and likes are considered to
come to work out cash requirements.

Receipt and disbursement method is sound tool as it gives clear picture of all items.

2. Adjusted net income method

This method involves tracing of working capital flows. Its objectives are to project company’s
need for cash at a future date and to show whether the company can generate it internally or
borrow from market.

Long term cash forecasting:

It is generally for the period of 3 to 5 years. It is not as detail as short term forecast.
It helps company to find future financial needs and improves corporate planning.

Determining the optimum cash balance:

Organisation should keep enough liquidity so that operations do not suffer and should not loose
profit due to high liquidity. Then how one should decide on optimum cash balance? There are
two situations, which are explained below.

Optimum Cash balance

Graphical approach :

Holding Cost

Cost
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Transaction Cost

Cash Balance

Q.7 What are the reasons for restructuring through share buybacks? Explain Indian
context and regulations.
Ans. The provisions regulating buy back of shares are contained in Section 77A, 77AA
and 77B of the Companies Act,1956. These were inserted by the Companies (Amendment)
Act,1999. The Securities and Exchange Board of India (SEBI) framed the SEBI(Buy Back of
Securities) Regulations,1998 and the Department of Company Affairs framed the Private Limited
Company and Unlisted Public company (Buy Back of Securities) Regulations,1998 pursuant to
Section 77A(2)(f) and (g) respectively.

Objectives of Buy Back:

Shares may be bought back by the company on account of one or more of the following reasons

i. To increase promoters holding

ii. Increase earning per share
iii. Rationalize the capital structure by writing off capital not represented by available
assets.
iv. Support share value
v. To thwart takeover bid
vi. To pay surplus cash not required by business

Infact the best strategy to maintain the share price in a bear run is to buy back the shares from
the open market at a premium over the prevailing market price.

Resources of Buy Back

A Company can purchase its own shares from

(i) free reserves; Where a company purchases its own shares out of free reserves, then a sum
equal to the nominal value of the share so purchased shall be transferred to the capital
redemption reserve and details of such transfer shall be disclosed in the balance-sheet or

(ii) securities premium account; or

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(iii) proceeds of any shares or other specified securities. A Company cannot buyback its shares
or other specified securities out of the proceeds of an earlier issue of the same kind of shares or
specified securities.

Conditions of Buy Back

(a) The buy-back is authorised by the Articles of association of the Company;

(b) A special resolution has been passed in the general meeting of the company authorising the
buy-back. In the case of a listed company, this approval is required by means of a postal ballot.
Also, the shares for buy back should be free from lock in period/non [Link] buy back
can be made by a Board resolution If the quantity of buyback is or less than ten percent of the
paid up capital and free reserves;

(c) The buy-back is of less than twenty-five per cent of the total paid-up capital and fee reserves
of the company and that the buy-back of equity shares in any financial year shall not exceed
twenty-five per cent of its total paid-up equity capital in that financial year;

(d) The ratio of the debt owed by the company is not more than twice the capital and its free
reserves after such buy-back;

(e) There has been no default in any of the following

i. in repayment of deposit or interest payable thereon,
ii. redemption of debentures, or preference shares or
iii. payment of dividend, if declared, to all shareholders within the stipulated time of 30
days from the date of declaration of dividend or
iv. repayment of any term loan or interest payable thereon to any financial institution or
bank;

(f) There has been no default in complying with the provisions of filing of Annual Return,
Payment of Dividend, and form and contents of Annual Accounts;

(g) All the shares or other specified securities for buy-back are fully paid-up;

(h) The buy-back of the shares or other specified securities listed on any recognised stock
exchange shall be in accordance with the regulations made by the Securities and Exchange
Board of India in this behalf; and

(i) The buy-back in respect of shares or other specified securities of private and closely held
companies is in accordance with the guidelines as may be prescribed.

Disclosures in the explanatory statement

The notice of the meeting at which special resolution is proposed to be passed shall be
accompanied by an explanatory statement stating -
(a) a full and complete disclosure of all material facts;
(b) the necessity for the buy-back;
(c) the class of security intended to be purchased under the buy-back;
(d) the amount to be invested under the buy-back; and
(e) the time-limit for completion of buy-back

Sources from where the shares will be purchased

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The securities can be bought back from

(a) existing security-holders on a proportionate basis;

Buyback of shares may be made by a tender offer through a letter of offer from the holders of
shares of the company or

(b) the open market through

(i). book building process;
(ii) stock exchanges or

(c) odd lots, that is to say, where the lot of securities of a public company, whose shares are
listed on a recognized stock exchange, is smaller than such marketable lot, as may be specified
by the stock exchange; or

(d) purchasing the securities issued to employees of the company pursuant to a scheme of
stock option or sweat equity.

Filing of Declaration of solvency

After the passing of resolution but before making buy-back, file with the Registrar and the
Securities and Exchange Board of India a declaration of solvency in form 4A. The declaration
must be verified by an affidavit to the effect that the Board has made a full inquiry into the affairs
of the company as a result of which they have formed an opinion that it is capable of meeting its
liabilities and will not be rendered insolvent within a period of one year of the date of declaration
adopted by the Board, and signed by at least two directors of the company, one of whom shall
be the managing director, if any:
No declaration of solvency shall be filed with the Securities and Exchange Board of India by a
company whose shares are not listed on any recognized stock exchange.

Register of securities bought back

After completion of buyback, a company shall maintain a register of the securities/shares so

bought and enter therein the following particulars
a. the consideration paid for the securities bought-back,
b. the date of cancellation of securities,
c. the date of extinguishing and physically destroying of securities and
d. such other particulars as may be prescribed

Where a company buys-back its own securities, it shall extinguish and physically destroy the
securities so bought-back within seven days of the last date of completion of buy-back.

Issue of further shares after Buy back

Every buy-back shall be completed within twelve months from the date of passing the special
resolution or Board resolution as the case may be.

A company which has bought back any security cannot make any issue of the same kind of
securities in any manner whether by way of public issue, rights issue up to six months from the
date of completion of buy back.

Filing of return with the Regulator

A Company shall, after the completion of the buy-back file with the Registrar and the Securities
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and Exchange Board of India, a return in form 4 C containing such particulars relating to the
buy-back within thirty days of such completion. No return shall be filed with the Securities and
Exchange Board of India by an unlisted company.

Prohibition of Buy Back

A company shall not directly or indirectly purchase its own shares or other specified securities -
(a) through any subsidiary company including its own subsidiary companies; or
(b) through any investment company or group of investment companies; or

Procedure for buy back

a) Where a company proposes to buy back its shares, it shall, after passing of the
special/Board resolution make a public announcement at least one English National Daily,
one Hindi National daily and Regional Language Daily at the place where the registered
office of the company is situated.
b) The public announcement shall specify a date, which shall be "specified date" for the
purpose of determining the names of shareholders to whom the letter of offer has to be sent.
c) A public notice shall be given containing disclosures as specified in Schedule I of the SEBI
regulations.
d) A draft letter of offer shall be filed with SEBI through a merchant Banker. The letter of offer
shall then be dispatched to the members of the company.
e) A copy of the Board resolution authorising the buy back shall be filed with the SEBI and
stock exchanges.
f) The date of opening of the offer shall not be earlier than seven days or later than 30 days
after the specified date
g) The buy back offer shall remain open for a period of not less than 15 days and not more
than 30 days.
h) A company opting for buy back through the public offer or tender offer shall open an escrow
Account.

Penalty

If a company makes default in complying with the provisions the company or any officer of the
company who is in default shall be punishable with imprisonment for a term which may extend
to two years, or with fine which may extend to fifty thousand rupees, or with both. The offences
are, of course compoundable under Section 621A of the Companies Act,1956.
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Q.8. How is CAPM model helpful? Detail out the model and its theory.
Ans Capital Asset Pricing Model (CAPM)

Introduction: The capital Asset Pricing Model (CAPM) is an equilibrium model, which
describes the pricing of assets, as well as derivatives. The model concludes that the expected
return of an asset(or derivative) equals the riskless return plus a measure of the assets non-
diversifiable risk (“beta”) times the market-wide risk premium (excess expected return of the
market portfolio over the riskless return). That is:

Expected security return = Riskless return + beta x (expected market risk premium)
It concludes that only the risk, which cannot be diversified away by holding a well-diversified
portfolio (e.g. the market portfolio) will affect the market price of the asset. This risk is called
systematic risk, while risk that can be diversified away is called diversifiable risk.

The CAPM asks what is the value of an asset (or derivative) relative to the return of the market
portfolio. Because of this, the option models are often referred to as “relative” valuation models,
while the CAPM is considered an “absolute” valuation model. However the model is only valid
within a special set of assumptions.

Assumptions of CAPM
Investors are risk averse individuals who maximize the expected utility of their end of period
wealth.

Implication: The model is a one period model.

 Investors have homogenous expectations (belief) about asset returns. Implication : all
investors perceive identical opportunity sets. This is, everyone have the same information at
the same time.
 Asset returns are distributed by the normal distribution.
 There exists a risk free asset and investors may borrow or lend unlimited amounts of the
asset at a constant rate: the risk free rate (k).
 There is a definite number of assets and their quantities are fixed within the one period
world.
 All assets are perfectly divisible and priced in a perfectly competitive marked.
Implication: e.g. human capital is non-existing.
 Asset markets are frictionless and information is costless and simultaneously available
to all investors.
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 There are no market imperfections such as taxes, regulations or restrictions on short

selling.

Rationale of CAPM:
This method of valuing assets and calculating the cost of capital for an alternative i.e. the capital
asset price model (CAPM) has come to dominate modern finance. The rationale of the CAPM
can be simplified as follows.

Investors can eliminate some sorts of risk known as Residual risk or alpha, by holding a
diversified portfolio of assets. These alpha risks are specific to an individual asset, for example,
the risk that a company’s managers will turn out to be no good. Some risks, such as that of a
global recession cannot be eliminated through diversification.

So even a basket of all the shares in a stock market will still be risky. People must be rewarded
for investing in such a risky basket by earning returns on average above those that they can get
on safer assets, such as treasury bills. Assuming investors diversify away alpha risks, how an
investor values any particular asset should depend crucially on how much the asset’s price is
affected by the risk of the market as a whole.
The market’s risk contribution is captured by a measure of relative volatility. BETA, which
indicates how much an asset’s price is expected to change when the overall market changes.
Safe investments have a beta close to zero: economists call these assets risk free. Riskier
investments, such as a share, should earn a premium over the risk free rate. How much is
calculated by the average premium for all assets of that type, multiplied by the particular asset’s
beta.

Pronounced as though it were spelled cap-m, this model was originally developed in 1952 by
Harry markowitz and fine tuned over a decade later by others, including William Sharpe. CAPM
describes the relationship between risk and expected return, and it serves as a model for the
pricing of risky securities. CAPM says that the expected return of a security or a portfolio equals
the rate on a risk free security plus a risk premium. If this expected return does not meet or beat
our required return, the investment should not be undertaken.

The commonly used formula to describe CAPM relationship is as follows:

Required (expected return)= RF rate + (Market return – RF rate)* Beta

Implications of CAPM
 Investors will always combine a risk free asset with a market portfolio of risky assets.
They will invest in risky assets in proportion to their market value.
 Investors will be compensated only for that risk which they can’t diversify. This is the
market related risk.
 Investor can expect returns from their investment according to the risk.

The concept of risk and return as developed under CAPM have intuitive appeal and they are
quite simple to understand. Financial managers use these concepts in a number of financial
decision making such as valuation of securities, cost of capital measurement, investment risk
analysis etc.

Limitations of CAPM:
 Unrealistic assumptions: CAPM is based on a number of assumptions that are far
from the reality. For e.g. its very difficult to find a risk free security.
A short term, highly liquid govt. security is considered as a risk free security. Its unlikely that
govt. will default but inflation causes uncertainty about the real rate of return.
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The assumption of the equality of the lending and borrowings is also not correct. In practice
these rates differ. Further, investors may not hold highly diversified portfolios or the market
indices may not be well diversified. Under these circumstances, CAPM may not accurately
explain the investment behavior of investors and beta may fail to capture the risk of
investment.
 Testing CAPM Most of the assumptions of CAPM may not be very critical for its
practical validity. What we need to know therefore, is the empirical validity of CAPM. We
need to establish that beta is able to measure the risk of security and that there is a
significant correlation between beta and the expected return.
 Stability of BETA : Beta is a measure of a security’s future risk. But investors don’t have
the future data to estimate beta. What they have are past data about the share prices and
the market portfolio. Thus, they can only estimate beta based on historical data. Investors
can use historical beta as the measure of future risk only if its stable over time. This implies
that historical betas are poor indicators of the future risk of securities.

CAPM is a useful device for understanding the risk return relationship inspite of its limitations. It
provides a logical and quantitative approach for estimating risk. Its better than many alternative
subjective methods of determining risk and risk premium. One major problem in the use of
CAPM is that many times the risk of an asset is not captured by beta alone.

Q.9 What are the different dividend theories? Explain their application with the Indian
context.
Ans Different Dividend theories:

 Bird in Hand Theory:

The conclusions of Miller and Modigliani- that, dividend policy does

not matter – presented a strong challenge to the conventional wisdom

of that time. Finance theorists and corporate mangers believed that

investors preferred dividends to capital gains and that a firm could

increase (or at least support) the market value of its shares by

choosing a generous dividend policy.

At that time, the most popular argument for dividend was the “Bird in the hand”- Theory. It
holds that dividends (a bird in the hand) are preferred to retained earnings (a bird in the
bush) because the latter never materialize as future dividends (it can fly away). This is
obvious as the risk of having money today is definitely less than risking your money for
returns in the future.
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At first glance, this theory seems to be reasonable, especially in the light of the fact that a
higher dividend stocks tend to be lower on the risk spectrum of common stocks. And other
things being equal, less risky stocks are more expensive than higher risk stocks with the
same expected future cash flow.
This theory from Myron Gordon is rather an argument about investment policy than about
dividends.

 Smoothing Theory

One of the first papers on the subject dividend policy, was published by John Lintner in
1956. He conducted a series of interviews with mangers about their thinking on the
determination of dividend policy. His results can be summarized in four stylized facts:

1. Firms have long-run target dividend payout ratios. Mature companies with stable
earnings generally pay out a high proportion of earnings; growth companies have low
payouts.
2. Managers focus more on dividend changes than on absolute levels. Thus, paying a Rs.
2.0 dividends is an important financial decision if last year’s dividend was Re. 1.00, but
no big deal if last year’s dividend was Rs. 2.00.
3. Dividend changes follow shifts in long run, sustainable earnings. Managers “smooth”
dividends. Transitory earnings changes are unlikely to affect dividend payouts. This
also helps to keep investors happy.
4. Managers are reluctant to make dividend changes that might have to be reversed. They
are particularly worried about having to rescind a dividend increase.

 Tax Differential Theory

According to this theory, since dividends are effectively taxed at higher rates than capital
gains in most countries, investors require higher rates of return on stocks with high
dividend yields.

The theory says, a firm should pay a low (or zero) dividend in order to minimize its cost of
capital and maximise its value. The tax system may tend to favour retention of profit and
limit dividend. Thus low dividend yield shares have been likely to be in great demand by
high rate taxpayers, who prefer a low dividend payout and a high rate of earnings retention
in the hope of an appreciation in the capital value of the company.

Small shareholders may prefer relatively high dividend pay out rate. The dividend policy of
such a firm may be a compromise between a low and a high payout.

 Residual Theory

According to residual theory of dividends, the firm should follow its investment policy of
accepting all positive NPV projects and paying out dividends if and only if funds are
available. The focus is on growth. The discounting factor in the calculation of NPV would
be equal to greater than the cost of capital K.

If the firm treats dividend as a residual, then the dividend can vary highly from period to
period depending upon the opportunities available and the investment plan and operating
results of the firm. If a firm attracts investors falling into a particular dividend clientele, it
suggests that the firm should maintain fairly stable dividend policy. The residual dividend
policy is used by most firms to set a long run target payout.
 Strategic Finance

 Span of Control Theory:

Managers in an organization look at the cash flows generated from the operations as an
important and convenient source of new capital. The professional managers prefer to have a
large span of control as measured by the number of employees, sales, market value, total
assets or total expenditure. In pursuit of managerial objective of increasing the span of
control, directors are expected to prefer retention of profits to distributions.

Retention increases status, remuneration and security of mangers. Also increases in the
firm’s investment schedule should result in growth in the value of shares to the extent that
retained cash flows are reinvested in profitable projects.

 Investor Rationality Theory

Shefrin and Statman (1984) supported their argument based on the psychological
preferences of individual investor. Their argument is that an investor who wishes to
conserve his/her long run wealth could stipulate that portfolio capital should not be
consumed, only dividends.

The investor can select dividend payout ratio that conforms to his/her desired consumption
level. Thus even though taxes and transaction costs may favor capital gains, an investor
may find cash dividends attractive and hence be willing to pay the appropriate premium.
The investor then would invest in a portfolio of shares to meet h\this need. Some of the
investments would be in shares with high payout ration for consumption needs and others
with low payout ratio for capital appreciation.

Q.10 Explain the importance of working capital management and the different
approaches/strategies.
Ans. Working capital management is management for the short-term. This is of critical
importance to a firm. As pointed out in the text, managers spend about 70% managing for the
short-term. This makes sense. Every day companies take in money, write receipts, balance
checkbooks, record receivable records, manage inventory and the like. Also, short-term
management should not be discounted. As the old saying goes, "If you can make it in the short-
term long enough, you don't need to worry about the long-term.”Cash Budgets” may be utilized
in managing working capital.

Working capital has to do with the short-term accounts of a firm — current assets and current
liabilities. Net Working capital is defined as current assets less current liabilities. The secret to
good working capital management is simple — "use someone else's money every chance you get
 Strategic Finance

and don't let anyone else use yours." Within reason, of course. To do that, the following strategies
might be employed; again within reason. A company wouldn't want to stretch out its payables for
so long a period that it's forced out of business.
 Stretch out accounts payable as long as possible. If a bill is due on the 13th, don't pay it
on the 10th. If a company has enough clout, they can negotiate longer terms with
vendors.
 Turn receivables as quickly as possible. Make it easy for customers to pay. Lockboxes,
prepaid envelopes, discounts, etc. may be utilized.

Turn inventories as quickly as possible. Inventories may be a big investment for a firm and they
earn no interest. Just-in-time inventory methods and some other strategies are used to hold
down a firm's investment in inventories.

Factors Influencing Working Capital Requirements:

 Nature of Business: A service firm, like an electrical undertaking or a transport
corporation, which has a short operating cycle and sells predominantly on cash basis,
has a modest working capital requirement. On the other hand, a manufacturing concern
like a machine tools unit which has a long operating cycle and which sells largely on
credit, has a very substantial working capital requirement.
 Seasonality of Operations: Firms which have marked Seasonality in their operations
usually have highly fluctuating working capital requirements. For example, the sale of
ceiling fans reaches a peak during the summer months and decrease significantly during
the winter period. Therefore, working capital needs of such a firm are likely to increase
considerably during the summer months and decrease significantly during the winter
period.
 Production policy: A firm marked by pronounced seasonal fluctuation in its sales may
pursue a production policy, which may reduce the sharp variations in the working capital
requirements.
 Market Conditions: The degree of competition prevailing in the market place has an
important bearing on the working capital needs. When competition is high, a larger
inventory of finished goods may be required to be maintained to serve the customers
promptly and for extending the generous credit terms.
 Conditions of Supply: The stock of inventory of raw materials, spares and store which
is required to be maintained depends on their conditions of supply. If the supply is
prompt and adequate, the firm can manage with small inventory.

Importance Of Working Capital Management

The management of working capital is very important. Excessive levels of current assets can
easily result in a firm realizing a substandard return on investment. However, firms with too few
current assets may incur shortages and difficulties in maintaining smooth operations. Thus, it is
important to ensure proper management of working capital because of the following reasons:

 Investment in current assets represents a substantial portion of total investment.

 Investment in current assets and the level of current liabilities have to be quickly
adjusted to changes in sales.
 Fixed assets cannot generate income unless they are used with the help of working
capital. Therefore, working capital is considered as lifeblood of an enterprise.
 Strategic Finance

The following are the different approaches:

1. CONSERVATIVE APPROACH
Short-term Funds

Permanent current assets

Long -
Term
Fixed assets Funds

Financing is more dependent on long term sources in financing short assets. There is less risk of
shortage of funds. As the addition to the current assets in the form of extra cash, stock,
receivables will raise the denominator and there will not be any significant rise in the numerator
the ROI will be low in this case.

2. AGGRESSIVE APPROACH
Short
Term
Funds

Permanent current assets

Long -
Term
Fixed assets Funds

Financing is more dependent on short-term sources for some long-term needs and short-term
financing is dominant. There is a very large risk of shortage of funds, leading to liquidity
problems.
 Strategic Finance

3. Restrictive or Aggressive Policy: Investments in current assets is low in this case. This
may cause frequent production stoppages, delayed deliveries to customers, and loss of sales.
But ROI will be relatively high in this case.

The optimal level of current assets involves a trade off between costs that rise with
current assets and the costs that fall with current assets. The former is referred to as carrying
costs and the latter as shortage costs. The carrying costs are mainly in nature of the cost of
financing a higher level of current assets. Shortage costs are mainly in the form of disruption
in production schedule, loss of sales, and loss of customer goodwill.

The minimum cost points towards the optimum level of current assets.

Minimum cost

Cost Cost of Liquidity

Cost of Liquidity

Level of current assets

Optimum level of current assets

The Figure shows the behaviour of the two costs in relation to the level of current assets. CA
denotes the optimal level of current assets as the total costs of carrying and shortage are
minimized at that level. Often the total cost curve is flat around the optimal level.

4. MATCHING APPROACH
Short
Term
Funds

Permanent current assets

Long -
Term
Fixed assets Funds
 Strategic Finance

Financing is more dependent on long term sources for long term needs and short term for
financing short term needs. There is a small risk of shortage of funds, as exact matching is
difficult in practice.

STRATERGIES:
Several Strategies are available to a firm for financing its capital requirements.

Strategy A: Long term financing is used to meet fixed asset requirement as well as peak working
capital requirement. When the working capital is less than its peak level, the surplus is invested
in liquid assets like cash and marketable securities.

Strategy B: Long term financing is used to meet fixed asset requirements, permanent working
capital requirement, and a portion of fluctuating working capital requirement. During seasonal
upswings, short-term financing is used: during seasonal downswings, surplus is invested in liquid
assets.

Strategy C: Long term financing is used to meet fixed asset requirement and permanent working
capital requirement. Short-term financing is used to meet fluctuating working capital
requirement.
 Strategic Finance

Q.12 Explain the accounting standards for investments in brief.

Ans
Introduction:
1. This Statement deals with accounting for investments in the financial statements of
enterprises and related disclosure requirements.

Shares, debentures and other securities held as stock-in-trade (i.e., for sale in the ordinary
course of business) are not ‘investments’ as defined in this Statement. However, the manner
in which they are accounted for and disclosed in the financial statements is quite similar to
that applicable in respect of current investments. Accordingly, the provisions of this
Statement, to the extent that they relate to current investments, are also applicable to
shares, debentures and other securities held as stock-in-trade, with suitable modifications
as specified in this Statement.
2. This Statement does not deal with:
a) the bases for recognition of interest, dividends and rentals earned on
investments which are covered by Accounting Standard 9 on Revenue Recognition;
b) operating or finance leases;
c) investments of retirement benefit plans and life insurance enterprises; and
d) mutual funds and/or the related asset management companies, banks and public
financial institutions formed under a Central or State Government Act or so declared
under the Companies Act, 1956.

Definitions
The following terms are used in this Statement with the meanings assigned:

Investments are assets held by an enterprise for earning income by way of dividends, interest,
and rentals, for capital appreciation, or for other benefits to the investing enterprise. Assets held
as stock-in-trade are not ‘investments’.

A current investment is an investment that is by its nature readily realisable and is intended to
be held for not more than one year from the date on which such investment is made.

A long-term investment is an investment other than a current investment.

An investment property is an investment in land or buildings that are not intended to be

occupied substantially for use by, or in the operations of, the investing enterprise.

Fair value is the amount for which an asset could be exchanged between a knowledgeable,
willing buyer and a knowledgeable, willing seller in an arm’s length transaction. Under
appropriate circumstances, market value or net realisable value provides an evidence of fair
value.

Market value is the amount obtainable from the sale of an investment in an open market, net of
expenses necessarily to be incurred on or before disposal.

Explanation
Forms of Investments
3. Enterprises hold investments for diverse reasons. For some enterprises, investment
activity is a significant element of operations, and assessment of the performance of the
enterprise may largely, or solely, depend on the reported results of this activity.
 Strategic Finance

4. Some investments have no physical existence and are represented merely by

certificates or similar documents (e.g., shares) while others exist in a physical form (e.g.,
buildings). The nature of an investment may be that of a debt, other than a short or long
term loan or a trade debt, representing a monetary amount owing to the holder and usually
bearing interest; alternatively, it may be a stake in the results and net assets of an enterprise
such as an equity share. Most investments represent financial rights, but some are tangible,
such as certain investments in land or buildings.
5. For some investments, an active market exists from which a market value can be
established. For such investments, market value generally provides the best evidence of fair
value. For other investments, an active market does not exist and other means are used to
determine fair value.
Explanation
Classification of Investments
6. Enterprises present financial statements that classify fixed assets, investments and
current assets into separate categories. Investments are classified as long term investments
and current investments. Current investments are in the nature of current assets, although
the common practice may be to include them in investments.
7. Investments other than current investments are classified as long term investments,
even though they may be readily marketable.
Explanation
Cost of Investments
8. The cost of an investment includes acquisition charges such as brokerage, fees and
duties.
9. If an investment is acquired, or partly acquired, by the issue of shares or other securities,
the acquisition cost is the fair value of the securities issued (which, in appropriate cases,
may be indicated by the issue price as determined by statutory authorities). The fair value
may not necessarily be equal to the nominal or par value of the securities issued.
10. If an investment is acquired in exchange, or part exchange, for another asset, the
acquisition cost of the investment is determined by reference to the fair value of the asset
given up. It may be appropriate to consider the fair value of the investment acquired if it is
more clearly evident.
11. Interest, dividends and rentals receivables in connection with an investment are
generally regarded as income, being the return on the investment. However, in some
circumstances, such inflows represent a recovery of cost and do not form part of income.
For example, when unpaid interest has accrued before the acquisition of an interest-bearing
investment and is therefore included in the price paid for the investment, the subsequent
receipt of interest is allocated between pre-acquisition and post-acquisition periods; the pre-
acquisition portion is deducted from cost. When dividends on equity are declared from pre-
acquisition profits, a similar treatment may apply. If it is difficult to make such an allocation
except on an arbitrary basis, the cost of investment is normally reduced by dividends
receivable only if they clearly represent a recovery of a part of the cost.
12. When right shares offered are subscribed for, the cost of the right shares is added to the
carrying amount of the original holding. If rights are not subscribed for but are sold in the
market, the sale proceeds are taken to the profit and loss statement. However, where the
investments are acquired on cum-right basis and the market value of investments
immediately after their becoming ex-right is lower than the cost for which they were
acquired, it may be appropriate to apply the sale proceeds of rights to reduce the carrying
amount of such investments to the market value.
Carrying Amount of Investments
Current Investments
13. The carrying amount for current investments is the lower of cost and fair value. In
respect of investments for which an active market exists, market value generally provides
the best evidence of fair value. The valuation of current investments at lower of cost and fair
 Strategic Finance

value provides a prudent method of determining the carrying amount to be stated in the
balance sheet.
14. Valuation of current investments on overall (or global) basis is not considered
appropriate. Sometimes, the concern of an enterprise may be with the value of a category of
related current investments and not with each individual investment, and accordingly the
investments may be carried at the lower of cost and fair value computed categorywise (i.e.
equity shares, preference shares, convertible debentures, etc.). However, the more prudent
and appropriate method is to carry investments individually at the lower of cost and fair
value.
15. For current investments, any reduction to fair value and any reversals of such reductions
are included in the profit and loss statement.
Carrying Amount of Investments
Long-term Investments
16. Long-term investments are usually carried at cost. However, when there is a decline,
other than temporary, in the value of a long term investment, the carrying amount is reduced
to recognise the decline. Indicators of the value of an investment are obtained by reference
to its market value, the investee’s assets and results and the expected cash flows from the
investment. The type and extent of the investor’s stake in the investee are also taken into
account. Restrictions on distributions by the investee or on disposal by the investor may
affect the value attributed to the investment.
17. Long-term investments are usually of individual importance to the investing enterprise.
The carrying amount of long-term investments is therefore determined on an individual
investment basis.
18. Where there is a decline, other than temporary, in the carrying amounts of long term
investments, the resultant reduction in the carrying amount is charged to the profit and loss
statement. The reduction in carrying amount is reversed when there is a rise in the value of
the investment, or if the reasons for the reduction no longer exist.
Investment Properties
19. The cost of any shares in a co-operative society or a company, the holding of which is
directly related to the right to hold the investment property, is added to the carrying amount
of the investment property.
Disposal of Investments
20. On disposal of an investment, the difference between the carrying amount and the
disposal proceeds, net of expenses, is recognised in the profit and loss statement.
21. When disposing of a part of the holding of an individual investment, the carrying amount
to be allocated to that part is to be determined on the basis of the average carrying amount
of the total holding of the investment.
Reclassification of Investments
22. Where long-term investments are reclassified as current investments, transfers are
made at the lower of cost and carrying amount at the date of transfer.
23. Where investments are reclassified from current to long-term, transfers are made at the
lower of cost and fair value at the date of transfer.
Disclosure
24. The following disclosures in financial statements in relation to investments are appropriate:
—
a) the accounting policies for the determination of carrying amount of investments;
b) the amounts included in profit and loss statement for:
i) interest, dividends (showing separately dividends from subsidiary
companies), and rentals on investments showing separately such income from long term
and current investments. Gross income should be stated, the amount of income tax
deducted at source being included under Advance Taxes Paid;
ii) profits and losses on disposal of current investments and changes in carrying
amount of such investments;
 Strategic Finance

iii) profits and losses on disposal of long term investments and changes in the
carrying amount of such investments;
c) significant restrictions on the right of ownership, realisability of investments or the remittance
of income and proceeds of disposal;
d) the aggregate amount of quoted and unquoted investments, giving the aggregate market
value of quoted investments;
e) other disclosures as specifically required by the relevant statute governing the enterprise .

Q.13 Explain the accounting standards for inventories in brief.

Ans Objective
A primary issue in accounting for inventories is the determination of the

value at which inventories are carried in the financial statements until

the related revenues are recognised. This Statement deals with the

determination of such value, including the ascertainment of cost of

inventories and any write-down thereof to net realisable value.

Scope
1. This Statement should be applied in accounting for inventories other than:
a) work in progress arising under construction contracts, including directly related
service contracts (see Accounting Standard (AS) 7, Accounting for Construction Contracts);
b) work in progress arising in the ordinary course of business of service providers;
c) shares, debentures and other financial instruments held as stock-in-trade; and
d) producers’ inventories of livestock, agricultural and forest products, and mineral
oils, ores and gases to the extent that they are measured at net realisable value in
accordance with well established practices in those industries.

2. The inventories referred to in paragraph 1 (d) are measured at net realisable value at certain
stages of production. This occurs, for example, when agricultural crops have been harvested or
mineral oils, ores and gases have been extracted and sale is assured under a forward contract
or a government guarantee, or when a homogenous market exists and there is a negligible risk
of failure to sell. These inventories are excluded from the scope of this Statement.

Definitions
3. The following terms are used in this Statement with the meanings specified:
Inventories are assets:
a. held for sale in the ordinary course of business;
b. in the process of production for such sale; or
c. in the form of materials or supplies to be consumed in the production process or in the
rendering of services.
 Strategic Finance

Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.

4. Inventories encompass goods purchased and held for resale, for example, merchandise
purchased by a retailer and held for resale, computer software held for resale, or land and
other property held for resale. Inventories also encompass finished goods produced, or work
in progress being produced, by the enterprise and include materials, maintenance supplies,
consumables and loose tools awaiting use in the production process. Inventories do not
include machinery spares which can be used only in connection with an item of fixed asset
and whose use is expected to be irregular; such machinery spares are accounted for in
accordance with Accounting Standard (AS) 10, Accounting for Fixed Assets.

Measurement of Inventories
5. Inventories should be valued at the lower of cost and net realisable value.

Cost of Inventories
6. The cost of inventories should comprise all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present location and condition.

Costs of Purchase
7. The costs of purchase consist of the purchase price including duties and taxes (other than
those subsequently recoverable by the enterprise from the taxing authorities), freight
inwards and other expenditure directly attributable to the acquisition. Trade discounts,
rebates, duty drawbacks and other similar items are deducted in determining the costs of
purchase.

Costs of Conversion
8. The costs of conversion of inventories include costs directly related to the units of
production, such as direct labour. They also include a systematic allocation of fixed and
variable production overheads that are incurred in converting materials into finished goods.
Fixed production overheads are those indirect costs of production that remain relatively
constant regardless of the volume of production, such as depreciation and maintenance of
factory buildings and the cost of factory management and administration. Variable
production overheads are those indirect costs of production that vary directly, or nearly
directly, with the volume of production, such as indirect materials and indirect labour.
9. The allocation of fixed production overheads for the purpose of their inclusion in the costs of
conversion is based on the normal capacity of the production facilities. Normal capacity is
the production expected to be achieved on an average over a number of periods or seasons
under normal circumstances, taking into account the loss of capacity resulting from planned
maintenance. The actual level of production may be used if it approximates normal capacity.
The amount of fixed production overheads allocated to each unit of production is not
increased as a consequence of low production or idle plant. Unallocated overheads are
recognised as an expense in the period in which they are incurred. In periods of abnormally
high production, the amount of fixed production overheads allocated to each unit of
production is decreased so that inventories are not measured above cost. Variable
production overheads are assigned to each unit of production on the basis of the actual use
of the production facilities.

10. A production process may result in more than one product being produced simultaneously.
This is the case, for example, when joint products are produced or when there is a main
product and a by-product. When the costs of conversion of each product are not separately
 Strategic Finance

identifiable, they are allocated between the products on a rational and consistent basis. The
allocation may be based, for example, on the relative sales value of each product either at
the stage in the production process when the products become separately identifiable, or at
the completion of production. Most by-products as well as scrap or waste materials, by their
nature, are immaterial. When this is the case, they are often measured at net realisable
value and this value is deducted from the cost of the main product. As a result, the carrying
amount of the main product is not materially different from its cost.

Other Costs
11. Other costs are included in the cost of inventories only to the extent that they are incurred in
bringing the inventories to their present location and condition. For example, it may be
appropriate to include overheads other than production overheads or the costs of designing
products for specific customers in the cost of inventories.
12. Interest and other borrowing costs are usually considered as not relating to bringing the
inventories to their present location and condition and are, therefore, usually not included in
the cost of inventories.

Exclusions from the Cost of Inventories

13. In determining the cost of inventories in accordance with paragraph 6, it is appropriate to
exclude certain costs and recognise them as expenses in the period in which they are
incurred. Examples of such costs are:
a. abnormal amounts of wasted materials, labour, or other production costs;
b. storage costs, unless those costs are necessary in the production process prior to a
further production stage;
c. administrative overheads that do not contribute to bringing the inventories to their
present location and condition; and
d. selling and distribution costs.

Cost Formulas
14. The cost of inventories of items that are not ordinarily interchangeable and goods
or services produced and segregated for specific projects should be assigned by specific
identification of their individual costs.
15. Specific identification of cost means that specific costs are attributed to identified
items of inventory. This is an appropriate treatment for items that are segregated for a
specific project, regardless of whether they have been purchased or produced. However,
when there are large numbers of items of inventory which are ordinarily interchangeable,
specific identification of costs is inappropriate since, in such circumstances, an enterprise
could obtain predetermined effects on the net profit or loss for the period by selecting a
particular method of ascertaining the items that remain in inventories.
16. The cost of inventories, other than those dealt with in paragraph 14, should be
assigned by using the first-in, first-out (FIFO), or weighted average cost formula. The
formula used should reflect the fairest possible approximation to the cost incurred in bringing
the items of inventory to their present location and condition.
17. A variety of cost formulas is used to determine the cost of inventories other than
those for which specific identification of individual costs is appropriate. The formula used in
determining the cost of an item of inventory needs to be selected with a view to providing
the fairest possible approximation to the cost incurred in bringing the item to its present
location and condition. The FIFO formula assumes that the items of inventory which were
purchased or produced first are consumed or sold first, and consequently the items
remaining in inventory at the end of the period are those most recently purchased or
produced. Under the weighted average cost formula, the cost of each item is determined
 Strategic Finance

from the weighted average of the cost of similar items at the beginning of a period and the
cost of similar items purchased or produced during the period. The average may be
calculated on a periodic basis, or as each additional shipment is received, depending upon
the circumstances of the enterprise.

Techniques for the Measurement of Cost

18. Techniques for the measurement of the cost of inventories, such as the standard
cost method or the retail method, may be used for convenience if the results approximate
the actual cost. Standard costs take into account normal levels of consumption of materials
and supplies, labour, efficiency and capacity utilisation. They are regularly reviewed and, if
necessary, revised in the light of current conditions.
19. The retail method is often used in the retail trade for measuring inventories of
large numbers of rapidly changing items that have similar margins and for which it is
impracticable to use other costing methods. The cost of the inventory is determined by
reducing from the sales value of the inventory the appropriate percentage gross margin. The
percentage used takes into consideration inventory which has been marked down to below
its original selling price. An average percentage for each retail department is often used.

Net Realisable Value

20. The cost of inventories may not be recoverable if those inventories are damaged,
if they have become wholly or partially obsolete, or if their selling prices have declined. The
cost of inventories may also not be recoverable if the estimated costs of completion or the
estimated costs necessary to make the sale have increased. The practice of writing down
inventories below cost to net realisable value is consistent with the view that assets should
not be carried in excess of amounts expected to be realised from their sale or use.
21. Inventories are usually written down to net realisable value on an item-by-item
basis. In some circumstances, however, it may be appropriate to group similar or related
items. This may be the case with items of inventory relating to the same product line that
have similar purposes or end uses and are produced and marketed in the same
geographical area and cannot be practicably evaluated separately from other items in that
product line. It is not appropriate to write down inventories based on a classification of
inventory, for example, finished goods, or all the inventories in a particular business
segment.
22. Estimates of net realisable value are based on the most reliable evidence
available at the time the estimates are made as to the amount the inventories are expected
to realise. These estimates take into consideration fluctuations of price or cost directly
relating to events occurring after the balance sheet date to the extent that such events
confirm the conditions existing at the balance sheet date.
23. Estimates of net realisable value also take into consideration the purpose for
which the inventory is held. For example, the net realisable value of the quantity of inventory
held to satisfy firm sales or service contracts is based on the contract price. If the sales
contracts are for less than the inventory quantities held, the net realisable value of the
excess inventory is based on general selling prices. Contingent losses on firm sales
contracts in excess of inventory quantities held and contingent losses on firm purchase
contracts are dealt with in accordance with the principles enunciated in Accounting Standard
(AS) 4, Contingencies and Events Occurring After the Balance Sheet Date.
24. Materials and other supplies held for use in the production of inventories are not
written down below cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. However, when there has been a decline in the price
of materials and it is estimated that the cost of the finished products will exceed net
realisable value, the materials are written down to net realisable value. In such
 Strategic Finance

circumstances, the replacement cost of the materials may be the best available measure of
their net realisable value.
25. An assessment is made of net realisable value as at each balance sheet date.

Disclosure
26. The financial statements should disclose:
a. the accounting policies adopted in measuring inventories, including the cost formula
used; and
b. he total carrying amount of inventories and its classification appropriate to the enterprise.

27. Information about the carrying amounts held in different classifications of

inventories and the extent of the changes in these assets is useful to financial statement
users. Common classifications of inventories are raw materials and components , work in
progress, finished goods, stores and spares, and loose tools.

Q.14 Explain the concept of Human Resources Accounting.

Ans Human Resource Accounting (HRA):
HRA as an approach was originally defined as the process of identifying, measuring and
communicating information about human resources in order to facilitate effective management
within an organisation. It is an extension of the accounting principles of matching costs and
revenues and of organizing data to communicate relevant information in financial terms.

The accounting of human resources can be seen as just as much a question of philosophy as of
technique. This is one of the reasons behind the variety of approaches. It is further underlined
by the broad range of purposes for which accounting human resources can be used. For
example, it can be used as an information tool for internal and/or external use (employees,
customers, investors, etc.) and as a decision-making tool for human resource management.

The reasons for developing HRA methods can be summarized in the following six points:
 Inadequacy of traditional balance sheets in providing sufficient information on
enterprise performance,
 Measuring problems deriving from the valuation of human resources,
 Redistribution of social responsibilities between the public and private sectors,
 Security versus flexibility in employment,
 Improved human resource management,
 Formal learning versus in-firm competency acquirement.
 Strategic Finance

The Policy Dimension

The focus on HRA in enterprises has lead to a growing interest by stakeholders who have started
to identify and formulate their positions. The main stakeholders, such as the enterprises,
investors, employees, trade unions and governments, are therefore gradually becoming aware of
the potential of HRA, albeit from different perspectives.

The basic questions in this perspective are:

 Should HRA be mandatory for enterprises alongside financial statements, i.e. should law
and/or social partner agreements regulate HRA?
 If mandatory, what kind of information should be included in such statements?
 If voluntary, how to secure the interests of, say the employees, at enterprise level?

If, and this is still a big if, the public sector, nationally or internationally, decides to promote HRA,
three ways forward can be identified:
 The voluntary market-based method i.e. develop a consistent framework which can be
operational across sectors and countries and promote this through a rewarding and image
campaign,
 The voluntary rewarding method, i.e. develop a consistent framework supported by
rewarding mechanisms once it is introduced and approved at enterprise level,
 The compulsory method i.e. identify disclosure of human resources as a societal
concern and prepare international regulations.

HRA is not a new issue in economics. Economists consider human capital as a production
factor, and they explore different ways of measuring its investment in education, health and
other areas. Accountants have recognized the value of human assets for at least 70 years.
Research into true human resource accounting began in the 1960s.

Performance Ratios/Indicators for HRM

What data might we use when accounting for human assets?
 FTEs – Full time equivalent staff
 Headcount (H) e.g. total FTEs at month end
 Revenues(R) – total operating income (total sales)
 Expenses (E)- Operating expenditure exac. Tax, interest and extraordinary items
 Profit-R Less E
 Cash Like rewards (C)- emoluments: salaries, wages, overtime, bonuses, commissions,
including NI contributions.
 Benefits (B) –other rewards which may or may not be taxed as “benefit in kind” – cars,
pensions, company loans etc.

Staffing Performance Indicators

Internal:
1. Sales per employee – indicates general employee productivity. Compare SPE this year
over last year and with SPEs of rival organisations. Their turnover may be smaller but they
may have a better SPE.
SPE = R/H
H may increase if the business expands. Was the growth was worth it
(SPE)?
2. Recover Rate Aggregate compensation and benefits then divide by revenue. LRR
compares staffing costs with revenues delivered. Are we obtaining better or worse returns
on each RR of staff expenditure? A decreasing RR is desirable.
 Strategic Finance

RR = (C+B)/R
Unravelling influences on RR can be difficult e.g. is it the staff
turnover or a new marketing approach or manufacturing plant? The
impact on additional investment should show through in RR later –
revenue increases whilst staffing costs fall.
3. Utilisation % - can be applied e.g. to a consultancy company or school whose main
business is allocating or selling the time of its staff. We assume that an increase in U% is
desirable – is this always the case?
U%= R/(C+B)
R (revenue) can be substituted by another measurable output e.g. wagons delivered, dustbins
emptied, examination results (points). Calculation must include staff costs of the whole
business unit – direct and support staff.
External:
4. Profit per Head like RoCE, shareholders and business analysts may use profit per head
or profit before tax per head to focus on employee related costs and returns.
PpH= P/H
A firm’s PpH rating may highlight under-achievement and profit
potential when compared to industry competitors. Corporate preditors
may be attracted.
5. Compensation per Re. Profit. This evaluates profit against cost/employee rather than
headcount. Interpretation can be difficult. CpP can swing with profits e.g. where there are
close links between profits and staff compensation (profit related bonuses).
CpP= (C+B)/P
CpP is negative where a firm is making a loss. What if CpP is a small positive number and
CpP a small negative number? CpP may indicate that better management could improve
cost-effectiveness or controls.
6. Personnel services expenses (PSE). What are the total operating expenses of the
personnel/HRM section.
7. Personal Services Headcount (PSH) – total FTE for the personal/HR section in the
calculation period.
8. Personal Service Cost %. (PSC) Divide PSE by total operating expenses (E) to identify
rends and to influence budgeting processes.
PSC =PSE/E

Q.15 What are the various models and theories for valuation of shares and goodwill?
Ans Theories for valuation of Shares:
a) Value of assets: In this approach the focus for the valuation of the shares will be on the
assets. The net value of the assets, i.e. the value of the assets less the liabilities will be
used. For computation of valuation of shares, the total value of all the assets will be divided
by the total number of shares.

But in this approach,

i) Non trading assets should be included
ii) If the company is having outstanding preference shares, their value should be
deducted to calculate the net asset available to the equity shareholders.
iii) There may a lot of intangible assets in the balance sheet like preliminary
expenses, deferred revenue expenditure, discount on issue of shares/debenture etc.
These should normally be excluded from the value of total assets.
 Strategic Finance

This approach has certain limitations.

Firstly the book value of the assets is directly dependent on the accounting policies followed by
the company. This is more so in the area of booking depreciation, methods of provisioning
adopted by the company, and valuation of inventory.

Second, in the valuation of intangible assets, there are no standard procedures. This is for
intangible assets like goodwill, patents etc.

b) Realizable or liquidation of value:

To overcome some of the limitations in the book value approach, here
the value of assets is taken to be the market value. Thus the value
chosen is the one which can be had by selling the assets. It is also
known as the liquidation value. This may be estimated for the
company as whole, as it would be misleading or even irrelevant to
look at individual assets. The value would be equivalent to estimated
net amount that will be received by sale of assets less liabilities.
The method is as follows
Net Estimated value of assets = Estimated market value of assets – Liabilities
Value of the share = Net Estimated value of assets/ Number of Equity shares

c) Replacement or reproduction value:

In this approach, we move away from both the book value as well as
the market value. Instead, we focus on the assumption that if the
assets were to be replaced or reproduced all over again, what will be
the value required. Thus the value of assets is taken to be on the basis
of replacement cost rather than historical cost and market value. This
replacement cost is estimated by competent authorities, like chartered
engineers, other competent authorities. Again, there is and most likely
a possibility that the replacement value may differ from authority to
authority depending on the process, competency in valuing all the
assets, person related factors and the assumptions that they make.
The method is as follows
Net Replacement value of assets = Estimated replacement value of assets – Liabilities
Value of the share = Net replacement value of assets/Number of equity shares
Some of the limitations:
First- replacement value of certain assets that are no longer available, or of an older
technology may not be possible.
Second- estimating impact of depreciation on the replacement cost is difficult.

d) Yield/Earnings Approach: This approach assumes that the investors are interested in the
income an investment would generate in the future. Often past earnings and income also
have a bearing on the expected income in the future. Then the priced- i.e. the valuation of
the share that they are prepared to pay depends upon the dividends, which they are
expected to earn.
 Strategic Finance

As such the value of share is calculated as:

Price = Rate of dividend x paid up value of share/ Normal rate of return

VALUATION OF GOODWILL
Goodwill is the value or the amount of reputation/standing/credibility of the business in respect
of additional profit expected in future over and above the normal level of profit earned by a
company – normally in the same class of business.

i) Super Profit Approach: In this approach, the future expected profits of the
company are compared with normal profits, had their not been goodwill. There would some
adjustments to be made for known factors affecting the profitability. Normal profit indicates
the profit, which would have been earned by an average firm without goodwill. Normal
profits can be calculated by multiplying the average capital employed by the average rate of
return. The difference between future expected profit and normal profit is in the form of
super profits, which is the measure of extra profits earned by the firm due to goodwill.
Goodwill is calculated by multiplying the super profit by the certain number of years. The
number of years to be taken into account would differ from investor to investor, from
company to company and also would differ from industry to industry. It is a highly
judgmental. Normally 3 to 5 years are considered.
ii) Capitalisation Method: Total value of the business is calculated using the actual
average profits after taking into account all factors based on normal expectation. The value
of the goodwill is the difference between capitalized value and the net assets of the
business.
 Strategic Finance

Match The Following

Question 3 Correct Answer Your Answer

Exit cost Lost efficiency prior to separation, Sacrifice necessary to hire & train
Job vacancy cost during the new people
search & termination pay.
Historical costs Sacrifice necessary to hire & train Easy to determine this cost
people
Substitution cost Exit costs of the leaving employee Exit costs of the leaving employee
& recruiting & training of the & recruiting & training of the
replacement replacement
Opportunity cost An asset value when they are the An asset value when they are the
target of an alternative use. target of an alternative use.

Match The Following

Question 18 Correct Answer Your Answer

Information or signalling Management believes that the Puts the market on notice to make
hypothesis common stock of the company is a takeover bid a success
undervalued
Dividend or Personal Taxation Cash dividends are taxable at The largest portion of wealth effect
Hypothesis ordinary tax rates goes to the non - tendering
shareholders
Leverage hypothesis Stock repurchases increases the Capital gains are taxed at same
debt / equity ratio rate as cash dividend
Wealth transfer among The largest portion of wealth Stock repurchases increases the
shareholders effect goes to the non - tendering debt / equity ratio
shareholders

Match The Following

Question 10 Correct Answer Your Answer

Diversification Growth through the Growth through the combination

combination of firms in of firms in unrelated fields of
unrelated fields of business business
Horizontal mergers 2 Firms operate & compete in a 2 Firms operate & compete in a
similar kind of business similar kind of business
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Different or unrelated business
activity activity

Match The Following

Question 28 Correct Answer Your Answer

Segment liabilities Enterprise liabilities Enterprise liabilities

Segment revenue Enterprise revenue Cash flows

Segment result Enterprise net profit or loss Liquidity

Segment assets Enterprise assets Enterprise assets

 Strategic Finance

Match The Following

Question 9 Correct Answer Your Answer

Mechanisms Performs or provides energy to Performs or provides energy to

an activity an activity
Inputs Information or material used to Information or material that
produce the output of an constrains an activity
activity
Controls Information or material that Cannot be acted upon or altered
constrains an activity to produce the output
Outputs Information or material Information or material used to
produced by an activity produce the output of an activity

Match The Following

Question 23 Correct Answer Your Answer

Availability of funds in the Cost of funds depends on this Takes less time to take an
market factor overdraft from the bank
Flexibility The extent & the ease with Raise the funds through the
which the funds can be raised source available at a particular
& paid back are very important time
Time Takes less time to take an The extent & the ease with
overdraft from the bank which the funds can be raised &
paid back are very important
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult creditworthiness it is not difficult
to raise short term funds to raise short term funds

Match The Following

Question 3 Correct Answer Your Answer

Exit cost Lost efficiency prior to Sacrifice necessary to hire &

separation, Job vacancy cost train people
during the new search &
termination pay.
Historical costs Sacrifice necessary to hire & Easy to determine this cost
train people
Substitution cost Exit costs of the leaving Exit costs of the leaving
employee & recruiting & employee & recruiting & training
training of the replacement of the replacement
Opportunity cost An asset value when they are An asset value when they are
the target of an alternative use. the target of an alternative use.

Match The Following

Question 18 Correct Answer Your Answer

Information or signalling Management believes that the Puts the market on notice to
hypothesis common stock of the company make a takeover bid a success
is undervalued
Dividend or Personal Taxation Cash dividends are taxable at The largest portion of wealth
Hypothesis ordinary tax rates effect goes to the non -
tendering shareholders
Leverage hypothesis Stock repurchases increases Capital gains are taxed at same
the debt / equity ratio rate as cash dividend
 Strategic Finance

Wealth transfer among The largest portion of wealth Stock repurchases increases the
shareholders effect goes to the non - debt / equity ratio
tendering shareholders

Match The Following

Question 10 Correct Answer Your Answer

Diversification Growth through the Growth through the combination

combination of firms in of firms in unrelated fields of
unrelated fields of business business
Horizontal mergers 2 Firms operate & compete in a 2 Firms operate & compete in a
similar kind of business similar kind of business
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Different or unrelated business
activity activity

Match The Following

Question 28 Correct Answer Your Answer

Segment liabilities Enterprise liabilities Enterprise liabilities

Segment revenue Enterprise revenue Cash flows

Segment result Enterprise net profit or loss Liquidity

Segment assets Enterprise assets Enterprise assets

Match The Following

Question 9 Correct Answer Your Answer

Mechanisms Performs or provides energy to Performs or provides energy to

an activity an activity
Inputs Information or material used to Information or material that
produce the output of an constrains an activity
activity
Controls Information or material that Cannot be acted upon or altered
constrains an activity to produce the output
Outputs Information or material Information or material used to
produced by an activity produce the output of an activity

Match The Following

Question 23 Correct Answer Your Answer

Availability of funds in the Cost of funds depends on this Takes less time to take an
market factor overdraft from the bank
Flexibility The extent & the ease with Raise the funds through the
which the funds can be raised source available at a particular
& paid back are very important time
Time Takes less time to take an The extent & the ease with
overdraft from the bank which the funds can be raised &
paid back are very important
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult creditworthiness it is not difficult
 Strategic Finance

to raise short term funds to raise short term funds

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Enormous conflicts of interest
between Stakeholders and between Stakeholders and
shareholders shareholders
Net income approach Cost of debt & equity do not Cost of debt & equity do not
change with a change in change with a change in
leverage ratio leverage ratio
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels remains constant for all levels of
of financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of weighted average cost of capital
capital does not change with a does not change with a change
change in the proportion of in the proportion of debt to
debt to equity in the capital equity in the capital structure
structure

Match The Following

Question Correct Answer Your Answer

Unsecured loans Form of debt not backed by the Form of debt not backed by the
pledge of specific assets pledge of specific assets
Line of credit Does not constitute any legal Does not constitute any legal
commitments on the part of the commitments on the part of the
bank bank
Revolving credit agreements While the commitment is in While the commitment is in force
force the bank must extend the bank must extend credit
credit whenever the borrower whenever the borrower wishes
wishes to borrow to borrow
Transaction loan The cash flow ability of the The cash flow ability of the
borrower to pay the loan is borrower to pay the loan is
usually of paramount usually of paramount importance
importance

Match The Following

Question Correct Answer Your Answer

Opportunity cost An asset value when they are the Lost efficiency prior to separation,
target of an alternative use. Job vacancy cost during the new
search & termination pay.
Exit cost Lost efficiency prior to separation, Exit costs of the leaving employee
Job vacancy cost during the new & recruiting & training of the
search & termination pay. replacement
Historical costs Sacrifice necessary to hire & train An asset value when they are the
people target of an alternative use.
Substitution cost Exit costs of the leaving employee Sacrifice necessary to hire & train
& recruiting & training of the people
replacement

Match The Following

 Strategic Finance

Question Correct Answer Your Answer

Earning per share Acquisition is considered to be a Divide net worth by the number of
function of the impact of the equity shares outstanding
merger on the EPS
Book value Divide net worth by the number of Acquisition is considered to be a
equity shares outstanding function of the impact of the merger
on the EPS
Appraisal value Provides a list of the Evaluate the impact of the merger
reasonableness of results on EPS & price - earning ratio
obtained through methods base
upon the going concern concept
Market value Indicate the consensus of the Decide if the acquisition is
investors attractive on the basis if NPV

Match The Following

Question Correct Answer Your Answer

Amount involved in buy back Not to exceed 25 % of the total Authorize buy back of securities
paid up capital
Articles of Association Authorize buy back of securities Not to exceed 25 % of the total
paid up capital
Board of Directors Resolution permitting the buy The ratio of debt to total capital &
back of shares free reserves should be 1 : 1
Shares to be bought back Fully paid up Resolution permitting the buy back
of shares

Match The Following

Question Correct Answer Your Answer

Mortgage Pertains to immovable properties Duty of the bank to take care of

movable goods
Lien The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid paid
Hypothecation A charge against property for an A lender does not keep track of
amount of debt individual accounts
Pledge Duty of the bank to take care of Have high costs of processing the
movable goods collateral & risk of fraud

Match The Following

Question Correct Answer Your Answer

Date company mails the dividend Payment date Payment date

warrants
Date of announcement of new Declaration date Declaration date
dividend
Dividend payment made to Record date Record date
members on a particular date
Date from which stocks begin to Ex - dividend date Ex - dividend date
trade without the right to receive
the dividend declared

Match The Following

 Strategic Finance

Question Correct Answer Your Answer

Date company mails the dividend Payment date Record date

warrants
Date of announcement of new Declaration date Declaration date
dividend
Dividend payment made to Record date Payment date
members on a particular date
Date from which stocks begin to Ex - dividend date Ex - dividend date
trade without the right to receive
the dividend declared

Match The Following

Question Correct Answer Your Answer

Availability of funds in the market Cost of funds depends on this Cost of funds depends on this
factor factor
Flexibility The extent & the ease with which The extent & the ease with which
the funds can be raised & paid the funds can be raised & paid
back are very important back are very important
Time Takes less time to take an Takes less time to take an overdraft
overdraft from the bank from the bank
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult to creditworthiness it is not difficult to
raise short term funds raise short term funds

Match The Following

Question Correct Answer Your Answer

Availability of funds in the market Cost of funds depends on this Raise the funds through the source
factor available at a particular time
Flexibility The extent & the ease with which The extent & the ease with which
the funds can be raised & paid the funds can be raised & paid
back are very important back are very important
Time Takes less time to take an Takes less time to take an overdraft
overdraft from the bank from the bank
Creditworthiness of the issuer If a company has a good Cost of funds depends on this
creditworthiness it is not difficult to factor
raise short term funds

Match The Following

Question Correct Answer Your Answer

Bill of activities Highlights the cost structure & Highlights the cost structure &
gives better clarity gives better clarity
Performance measures Have both qualitative and Have both qualitative and
quantitative measures quantitative measures
Output measures Need for proper management and Mostly product, but at times,
control services or customers
Cost objects Mostly product, but at times, Need for proper management and
services or customers control

Match The Following

Question Correct Answer Your Answer
 Strategic Finance

Free cash flow theory Enormous conflicts of interest Enormous conflicts of interest
between Stakeholders and between Stakeholders and
shareholders shareholders
Net income approach Cost of debt & equity do not Cost of debt & equity do not
change with a change in leverage change with a change in leverage
ratio ratio
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital weighted average cost of capital
does not change with a change in does not change with a change in
the proportion of debt to equity in the proportion of debt to equity in
the capital structure the capital structure

Match The Following

Question Correct Answer Your Answer

Mechanisms Performs or provides energy to an Performs or provides energy to an

activity activity
Inputs Information or material used to Information or material used to
produce the output of an activity produce the output of an activity
Controls Information or material that Information or material that
constrains an activity constrains an activity
Outputs Information or material produced Information or material produced by
by an activity an activity

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Firms have preferences by
between Stakeholders and choosing a way to finance their
shareholders projects
Net income approach Cost of debt & equity do not weighted average cost of capital
change with a change in leverage does not change with a change in
ratio the proportion of debt to equity in
the capital structure
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital Cost of debt & equity do not
does not change with a change in change with a change in leverage
the proportion of debt to equity in ratio
the capital structure

Match The Following

Question Correct Answer Your Answer

Earning per share Acquisition is considered to be a Divide net worth by the number of
function of the impact of the equity shares outstanding
merger on the EPS
Book value Divide net worth by the number of Evaluate the impact of the merger
equity shares outstanding on EPS & price - earning ratio
Appraisal value Provides a list of the Indicate the consensus of the
reasonableness of results investors
obtained through methods base
 Strategic Finance

upon the going concern concept

Market value Indicate the consensus of the Provides a list of the

investors reasonableness of results obtained
through methods base upon the
going concern concept

Match The Following

Question Correct Answer Your Answer

Amount involved in buy back Not to exceed 25 % of the total Not to exceed 25 % of the total
paid up capital paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back
of shares
Board of Directors Resolution permitting the buy Authorize buy back of securities
back of shares
Shares to be bought back Fully paid up Fully paid up

Match The Following

Question Correct Answer Your Answer

Trust receipt Specifically identified by serial Specifically identified by serial

number or other means number or other means
Terminal warehouse receipt Inventory is stored with a public or Inventory is stored with a public or
terminal warehousing company terminal warehousing company
Floating lien Loose arrangement as the lender Well suited for financial good
may find it difficult to police inventories of capital goods
Chattel mortgage Well suited for financial good Affords a higher degree of control
inventories of capital goods over the collateral

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Enormous conflicts of interest
between Stakeholders and between Stakeholders and
shareholders shareholders
Net income approach Cost of debt & equity do not Cost of debt & equity do not
change with a change in leverage change with a change in leverage
ratio ratio
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital weighted average cost of capital
does not change with a change in does not change with a change in
the proportion of debt to equity in the proportion of debt to equity in
the capital structure the capital structure

Match The Following

Question Correct Answer Your Answer

Mechanisms Performs or provides energy to an Performs or provides energy to an

activity activity
Inputs Information or material used to Information or material used to
produce the output of an activity produce the output of an activity
 Strategic Finance

Controls Information or material that Information or material that

constrains an activity constrains an activity
Outputs Information or material produced Information or material produced by
by an activity an activity

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Firms have preferences by
between Stakeholders and choosing a way to finance their
shareholders projects
Net income approach Cost of debt & equity do not weighted average cost of capital
change with a change in leverage does not change with a change in
ratio the proportion of debt to equity in
the capital structure
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital Cost of debt & equity do not
does not change with a change in change with a change in leverage
the proportion of debt to equity in ratio
the capital structure

Match The Following

Question Correct Answer Your Answer

Earning per share Acquisition is considered to be a Divide net worth by the number of
function of the impact of the equity shares outstanding
merger on the EPS
Book value Divide net worth by the number of Evaluate the impact of the merger
equity shares outstanding on EPS & price - earning ratio
Appraisal value Provides a list of the Indicate the consensus of the
reasonableness of results investors
obtained through methods base
upon the going concern concept
Market value Indicate the consensus of the Provides a list of the
investors reasonableness of results obtained
through methods base upon the
going concern concept

Match The Following

Question Correct Answer Your Answer

Amount involved in buy back Not to exceed 25 % of the total Not to exceed 25 % of the total
paid up capital paid up capital
Articles of Association Authorize buy back of securities Resolution permitting the buy back
of shares
Board of Directors Resolution permitting the buy Authorize buy back of securities
back of shares
Shares to be bought back Fully paid up Fully paid up

Match The Following

Question Correct Answer Your Answer
 Strategic Finance

Trust receipt Specifically identified by serial Specifically identified by serial

number or other means number or other means
Terminal warehouse receipt Inventory is stored with a public or Inventory is stored with a public or
terminal warehousing company terminal warehousing company
Floating lien Loose arrangement as the lender Well suited for financial good
may find it difficult to police inventories of capital goods
Chattel mortgage Well suited for financial good Affords a higher degree of control
inventories of capital goods over the collateral

Match The Following

Question Correct Answer Your Answer

Terminal warehouse receipt Inventory is stored with a public or Inventory is stored with a public or
terminal warehousing company terminal warehousing company
Floating lien Loose arrangement as the lender Loose arrangement as the lender
may find it difficult to police may find it difficult to police
Chattel mortgage Well suited for financial good Well suited for financial good
inventories of capital goods inventories of capital goods
Trust receipt Specifically identified by serial Specifically identified by serial
number or other means number or other means

Match The Following

Question Correct Answer Your Answer

Amount involved in buy back Not to exceed 25 % of the total Fully paid up
paid up capital
Articles of Association Authorize buy back of securities Authorize buy back of securities

Board of Directors Resolution permitting the buy Resolution permitting the buy back
back of shares of shares
Shares to be bought back Fully paid up Not to exceed 25 % of the total
paid up capital

Match The Following

Question Correct Answer Your Answer

Diversification Growth through the combination Different or unrelated business

of firms in unrelated fields of activity
business
Horizontal mergers 2 Firms operate & compete in a 2 Firms operate & compete in a
similar kind of business similar kind of business
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Growth through the combination of
activity firms in unrelated fields of business

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Enormous conflicts of interest
between Stakeholders and between Stakeholders and
shareholders shareholders
Net income approach Cost of debt & equity do not Cost of debt & equity do not
change with a change in leverage change with a change in leverage
 Strategic Finance

ratio ratio

Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital weighted average cost of capital
does not change with a change in does not change with a change in
the proportion of debt to equity in the proportion of debt to equity in
the capital structure the capital structure

Match The Following

Question Correct Answer Your Answer

AS 4 Contingencies & events occurring Contingencies & events occurring

after the balance sheet date after the balance sheet date
AS 13 Accounting for investments Accounting for investments

AS 23 Accounting for investments in Accounting for investments in

associates in consolidated associates in consolidated financial
financial statements statements
AS 21 Consolidated financial Consolidated financial statements
statements

Match The Following

Question Correct Answer Your Answer

Unsecured loans Form of debt not backed by the Form of debt not backed by the
pledge of specific assets pledge of specific assets
Line of credit Does not constitute any legal Does not constitute any legal
commitments on the part of the commitments on the part of the
bank bank
Revolving credit agreements While the commitment is in force While the commitment is in force
the bank must extend credit the bank must extend credit
whenever the borrower wishes to whenever the borrower wishes to
borrow borrow
Transaction loan The cash flow ability of the The cash flow ability of the borrower
borrower to pay the loan is usually to pay the loan is usually of
of paramount importance paramount importance

Match The Following

Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest Many groups of non - investor
between Stakeholders and stakeholders have an interest in the
shareholders firm
Net income approach Cost of debt & equity do not Enormous conflicts of interest
change with a change in leverage between Stakeholders and
ratio shareholders
Net operating income approach The overall capitalization rate Firms have preferences by
remains constant for all levels of choosing a way to finance their
financial leverages projects
Modigliani - Miller Theory weighted average cost of capital Cost of debt & equity do not
does not change with a change in change with a change in leverage
the proportion of debt to equity in ratio
the capital structure
 Strategic Finance

Match The Following

Question Correct Answer Your Answer

Availability of funds in the market Cost of funds depends on this Different costs are involved
factor
Flexibility The extent & the ease with which The extent & the ease with which
the funds can be raised & paid the funds can be raised & paid
back are very important back are very important
Time Takes less time to take an Takes less time to take an overdraft
overdraft from the bank from the bank
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult to creditworthiness it is not difficult to
raise short term funds raise short term funds

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Question Correct Answer Your Answer

Sentiments and rumours No fundamental basis. No effect on valuation

Unlisted shares on stock Difficult to estimate the price Invalid valuation of shares
exchange
Manipulation of stock markets Invalid valuation of shares Easy to estimate the price

Selective information Valuation by various people on Valuation by various people on

information available information available

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PpH = P/H (C+B)/P

SPE = R/H (C + B ) / R

RR = (C + B ) / R P/H

U%= R/(C+B) R/(C+B)

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Opportunity cost An asset value when they are the Lost efficiency prior to separation,
target of an alternative use. Job vacancy cost during the new
search & termination pay.
Exit cost Lost efficiency prior to separation, Exit costs of the leaving employee
Job vacancy cost during the new & recruiting & training of the
search & termination pay. replacement
Historical costs Sacrifice necessary to hire & train An asset value when they are the
people target of an alternative use.
Substitution cost Exit costs of the leaving employee Sacrifice necessary to hire & train
& recruiting & training of the people
replacement

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 Strategic Finance

Question Correct Answer Your Answer

Earning per share Acquisition is considered to be a Divide net worth by the number of
function of the impact of the equity shares outstanding
merger on the EPS
Book value Divide net worth by the number of Acquisition is considered to be a
equity shares outstanding function of the impact of the merger
on the EPS
Appraisal value Provides a list of the Evaluate the impact of the merger
reasonableness of results on EPS & price - earning ratio
obtained through methods base
upon the going concern concept
Market value Indicate the consensus of the Decide if the acquisition is
investors attractive on the basis if NPV

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Amount involved in buy back Not to exceed 25 % of the total Authorize buy back of securities
paid up capital
Articles of Association Authorize buy back of securities Not to exceed 25 % of the total
paid up capital
Board of Directors Resolution permitting the buy The ratio of debt to total capital &
back of shares free reserves should be 1 : 1
Shares to be bought back Fully paid up Resolution permitting the buy back
of shares

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Mortgage Pertains to immovable properties Duty of the bank to take care of

movable goods
Lien The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid paid
Hypothecation A charge against property for an A lender does not keep track of
amount of debt individual accounts
Pledge Duty of the bank to take care of Have high costs of processing the
movable goods collateral & risk of fraud

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Availability of funds in the market Cost of funds depends on this Cost of funds depends on this
factor factor
Flexibility The extent & the ease with which The extent & the ease with which
the funds can be raised & paid the funds can be raised & paid
back are very important back are very important
Time Takes less time to take an Takes less time to take an overdraft
overdraft from the bank from the bank
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult to creditworthiness it is not difficult to
raise short term funds raise short term funds
 Strategic Finance

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Diversification Growth through the combination Growth through the combination of

of firms in unrelated fields of firms in unrelated fields of business
business
Horizontal mergers 2 Firms operate & compete in a Combined firm is more valuable
similar kind of business than the sum of individual firms
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Different or unrelated business
activity activity

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Question Correct Answer Your Answer

Availability of funds in the market Cost of funds depends on this Cost of funds depends on this
factor factor
Flexibility The extent & the ease with which The extent & the ease with which
the funds can be raised & paid the funds can be raised & paid
back are very important back are very important
Time Takes less time to take an Takes less time to take an overdraft
overdraft from the bank from the bank
Creditworthiness of the issuer If a company has a good If a company has a good
creditworthiness it is not difficult to creditworthiness it is not difficult to
raise short term funds raise short term funds

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Question Correct Answer Your Answer

Diversification Growth through the combination Growth through the combination of

of firms in unrelated fields of firms in unrelated fields of business
business
Horizontal mergers 2 Firms operate & compete in a Combined firm is more valuable
similar kind of business than the sum of individual firms
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Different or unrelated business
activity activity

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Question Correct Answer Your Answer

Mechanisms Performs or provides energy to an Performs or provides energy to an

activity activity
Inputs Information or material used to Information or material used to
produce the output of an activity produce the output of an activity
Controls Information or material that Information or material that
constrains an activity constrains an activity
Outputs Information or material produced Information or material produced by
by an activity an activity

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Question Correct Answer Your Answer
 Strategic Finance

Lien The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid paid
Hypothecation A charge against property for an A charge against property for an
amount of debt amount of debt
Pledge Duty of the bank to take care of Duty of the bank to take care of
movable goods movable goods
Mortgage Pertains to immovable properties Pertains to immovable properties

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Mechanisms Performs or provides energy to an Performs or provides energy to an

activity activity
Inputs Information or material used to Information or material used to
produce the output of an activity produce the output of an activity
Controls Information or material that Information or material that
constrains an activity constrains an activity
Outputs Information or material produced Information or material produced by
by an activity an activity

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Question Correct Answer Your Answer

Lien The bank has a right to retain the The bank has a right to retain the
goods belonging to the company goods belonging to the company
until the debts due to the bank are until the debts due to the bank are
paid paid
Hypothecation A charge against property for an A charge against property for an
amount of debt amount of debt
Pledge Duty of the bank to take care of Duty of the bank to take care of
movable goods movable goods
Mortgage Pertains to immovable properties Pertains to immovable properties

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Information or signalling Management believes that the Management believes that the
hypothesis common stock of the company is common stock of the company is
undervalued undervalued
Dividend or Personal Taxation Cash dividends are taxable at Cash dividends are taxable at
Hypothesis ordinary tax rates ordinary tax rates
Leverage hypothesis Stock repurchases increases the Stock repurchases increases the
debt / equity ratio debt / equity ratio
Wealth transfer among The largest portion of wealth The largest portion of wealth effect
shareholders effect goes to the non - tendering goes to the non - tendering
shareholders shareholders

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Question Correct Answer Your Answer
 Strategic Finance

Amount involved in buy back Not to exceed 25 % of the total Not to exceed 25 % of the total
paid up capital paid up capital
Articles of Association Authorize buy back of securities The ratio of debt to total capital &
free reserves should be 1 : 1
Board of Directors Resolution permitting the buy Authorize buy back of securities
back of shares
Shares to be bought back Fully paid up Resolution permitting the buy back
of shares

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Question Correct Answer Your Answer

Diversification Growth through the combination Different or unrelated business

of firms in unrelated fields of activity
business
Horizontal mergers 2 Firms operate & compete in a 2 Firms operate & compete in a
similar kind of business similar kind of business
Vertical mergers Firms in different stages of Firms in different stages of
production production
Conglomerate mergers Different or unrelated business Growth through the combination of
activity firms in unrelated fields of business

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Free cash flow theory Enormous conflicts of interest Enormous conflicts of interest
between Stakeholders and between Stakeholders and
shareholders shareholders
Net income approach Cost of debt & equity do not Cost of debt & equity do not
change with a change in leverage change with a change in leverage
ratio ratio
Net operating income approach The overall capitalization rate The overall capitalization rate
remains constant for all levels of remains constant for all levels of
financial leverages financial leverages
Modigliani - Miller Theory weighted average cost of capital weighted average cost of capital
does not change with a change in does not change with a change in
the proportion of debt to equity in the proportion of debt to equity in
the capital structure the capital structure

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Comparative analysis is historical analysis historical analysis

Benchmarking is competitive analysis competitive analysis

Michael Hammer & James Chapy Reengineering Reengineering

GDP stands for gross domestic product gross domestic progress

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Ansoff S.M. is the systematic approach to position and relate firm to its environment. S.M. is the
systematic approach to position and relate firm to its environment.
 Strategic Finance

Sharplin S.M. is the formulation & implementation of plans related to total organization. S.M. is the
formulation & implementation of plans related to total organization.

Glueck S.M. is a stream of decisions & actions S.M. is a stream of decisions & actions

Hofer S.M. is the process, which deals with organizational renewal & growth. S.M. is the process, which
deals with organizational renewal & growth.

Match The Following

Question

Correct Answer
Your Answer
Marketing a product
Mass segmentation
Mass segmentation
Environmental Analysis
Social, Political, legal & technology
Social, Political, legal & technology
Swot Analysis
Matching, converting, minimizing & avoiding strategies
Matching, converting, minimizing & avoiding strategies
Marketing strategy
Life cycle considerations
Product formulated

Match The Following

Question Correct Answer

Sharplin
S.M. is the formulation & implementation of plans related to total organization.
Glueck
S.M. is a stream of decisions & actions
Hofer
S.M. is the process, which deals with organizational renewal & growth.
Ansoff
S.M. is the systematic approach to position and relate firm to its environment.
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