This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 2 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Dividend policy must be formulated considering two basic objectives namely A) Delaying the tax liability of the stockholders and information content. B) Maximizing shareholders wealth and delaying the tax liability of the stockholders. C) Maximizing shareholders wealth and providing for sufficient financing. D) Maintaining liquidity and minimising the weighted average cost of capital. Show Answer Correct Answer: C) Maximizing shareholders wealth and providing for sufficient financing. 2. ..... is the satisfaction that results from the ownership and utilization of goods and services. A) Fringe benefits. B) Barter system. C) Psychic income. D) Money income. Show Answer Correct Answer: A) Fringe benefits. 3. A company issued 10, 000, 10% Debentures of Rs. 100 each on 1.4.2020 to be matured on 1.4.2025. The company wants to know the current cost of its existing debt and the market price of the debenture is Rs. 80. Compute the cost of existing debenture assuming 35 % tax rate using NPV Method or IRR Method A) Around 12.21 %. B) Around 14.21 %. C) Around 9.21 %. D) None of these. Show Answer Correct Answer: A) Around 12.21 %. 4. Current assets are assets that are except: A) Expected to be realised in the entity's normal operating cycle. B) Held primarily for the purpose of trading. C) Expected to be realised within 12 months after the reporting period. D) Cash and cash equivalents (restricted). Show Answer Correct Answer: D) Cash and cash equivalents (restricted). 5. According to the traditional approach cost of capital affected by A) Debt-equity mix. B) Debt-interest mix. C) Equity expenses mix. D) Debt-capital mix. Show Answer Correct Answer: A) Debt-equity mix. 6. A result in the reduction in value or loss of any of the organization's financial assets. A) Risk. B) Investment Proposal. C) Returns. D) None of the above. Show Answer Correct Answer: A) Risk. 7. X ltd issues Rs. 50, 000 8% debentures at a discount of 5%. The tax rate is 50% the cost of debt capital is ..... A) 4.2%. B) 4.6%. C) 5%. D) 4%. Show Answer Correct Answer: A) 4.2%. 8. The use of budgets to control a firm's activities is called: A) Budget planning. B) Budgetary control. C) Master budget allocation. D) Budget costing. Show Answer Correct Answer: B) Budgetary control. 9. Kelayakan suatu proyek investasi dapat dikaji dengan mempergunakan A) Pendekatan Penganggaran Modal (Capital Budgeting). B) Jawaban a dan b benar. C) Pendekatan Nilai Waktu dari Uang. D) Besarnya Depresiasi. Show Answer Correct Answer: B) Jawaban a dan b benar. 10. Which one of the following is a primary market transaction? A) Sale of existing outstanding stock by a dealer to an individual investor. B) Sale of a new share of stock to an individual investor. C) Stock ownership is transferred from one shareholder to another shareholder. D) Gift of stock from one shareholder to another shareholder. E) Gift of stock by a shareholder to a family member. Show Answer Correct Answer: B) Sale of a new share of stock to an individual investor. 11. Financial statement analysis is the process of analyzing a company's financial statements for decision-making purposes. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 12. Which of the following statements about NPV and IRR is accurate? A) Two NPV calculations are needed to estimate the IRR using linear interpolation. B) The graphical approach to IRR is only an estimate; linear interpolation using the formula is required for a precise answer. C) The IRR is unique. D) An IRR graph with NPV on the 'Y' axis and discount rate on the 'X' axis will have a negative slope. Show Answer Correct Answer: A) Two NPV calculations are needed to estimate the IRR using linear interpolation. 13. When is a private investor considered an angel investor? A) When the investor provides equity finance to a charity. B) When the investor lends money at a lower interest than the banks. C) When a private investor provides equity finance to a private company in the start up stage. D) None of the above. Show Answer Correct Answer: C) When a private investor provides equity finance to a private company in the start up stage. 14. Wealth maximization aims at A) Short-term profits. B) Increasing the value of the firm. C) Increasing sales volume. D) Minimizing employee wages. Show Answer Correct Answer: B) Increasing the value of the firm. 15. Cash discount terms offered by trade creditors never be accepted because A) Benefit in very small. B) Cost is very high. C) No sense to pay earlier. D) None of the above. Show Answer Correct Answer: D) None of the above. 16. The primary purpose of fuel hedging for an airline is to: A) Speculate on rising fuel prices for profit. B) Increase the airline's total available cash flow. C) Stabilize and control future fuel costs to reduce earnings volatility. D) Reduce the overall quantity of fuel consumed. Show Answer Correct Answer: C) Stabilize and control future fuel costs to reduce earnings volatility. 17. Accounts Payable A) Debit. B) Credit. C) All the above. D) None of the above. Show Answer Correct Answer: B) Credit. 18. What will happen to your credit rating if you don't pay your loan? A) Poor. B) Good. C) Outstanding. D) Needs improvement. Show Answer Correct Answer: A) Poor. 19. E-filers are issued a Personal Identification Number or ..... allows the taxpayer to "sign" the return electronically. A) 1040EZ. B) PIN. C) D-400. D) None of the above. Show Answer Correct Answer: B) PIN. 20. A ..... is a set of documents that outline the essential financial facts about the new venture. A) Income statement. B) Financial plan. C) Budget. D) Financial forecast. Show Answer Correct Answer: B) Financial plan. 21. Individuals or companies that make a profit investing in startup companies A) Entrepreneurs. B) Venture Capitalist. C) Bill Gates. D) Silent Partner. Show Answer Correct Answer: B) Venture Capitalist. 22. Earnings to sales, assets, or equity A) Ordinary Corporate Income. B) Market Ratios. C) Corporate Taxes. D) Profitability Ratios. Show Answer Correct Answer: D) Profitability Ratios. 23. What can consistent and substantial distributions signal to the market? A) Financial instability. B) High debt ratio. C) Lack of cash flow. D) Financial health. Show Answer Correct Answer: D) Financial health. 24. Which of the following is/are feature of corporate governance? A) Non-universality. B) Accountability. C) Ambiguity. D) None of the above. Show Answer Correct Answer: B) Accountability. 25. Inverter model formula D stands for A) Dividend per share. B) Direct-dividend. C) Direct earnings. D) None of above. Show Answer Correct Answer: A) Dividend per share. 26. Which of the following is used as Working Capital? A) Furniture. B) Stock. C) Factory. D) Machinery. Show Answer Correct Answer: B) Stock. 27. What are Fixed Expenses? A) Unexpected costs. B) One-time costs. C) Costs that vary from month to month. D) Costs that do not change from month to month (e.g., rent, car payments). Show Answer Correct Answer: D) Costs that do not change from month to month (e.g., rent, car payments). 28. Cost of Capital refers to ..... A) Flotation Cost. B) Dividend. C) Required rate of return. D) None of the above. Show Answer Correct Answer: C) Required rate of return. 29. Logan plans to buy a motorcycle with a 6% annual interest rate. Which of the following should he consider most to ensure effective financial management? A) The colour of the car. B) The car's brand. C) The car's fuel efficiency. D) The duration of the loan. Show Answer Correct Answer: D) The duration of the loan. 30. If you earns RM3, 000 per month and want to allocate 40% for essential expenses, how much will you spend on those expenses? A) RM1, 200. B) RM1, 000. C) RM2, 000. D) RM1, 500. Show Answer Correct Answer: A) RM1, 200. 31. Encik Lim's income and expenses:Salary:RM3750Comission:RM1000Housing loan:RM1100Utilities:RM300Groceries:RM900Mr Lim kept 10% of the total income and a sum of RM200 for the emergency fund. Calculate the surplus of income of Mr Lim. A) RM1400. B) RM1775. C) RM1200. D) RM1350. Show Answer Correct Answer: B) RM1775. 32. A company selling a bond is ..... money. A) Borrowing. B) Lending. C) Reinvesting. D) Taking. Show Answer Correct Answer: A) Borrowing. 33. Most unsafe mode by which firms perform worldwide business is A) International trade. B) Establishment of new subsidiaries. C) Franchising. D) Licencing. Show Answer Correct Answer: B) Establishment of new subsidiaries. 34. Which of the following is the correct order of financial management process?I) Carrying out financial planII) Setting goalsIII) Reviewing and revising the progressIV) Evaluating financial statusV) Creating financial plan A) II, IV, V, I, III. B) IV, I, II, V, III. C) IV, II, V, I, III. D) II, V, IV, III, I. Show Answer Correct Answer: A) II, IV, V, I, III. 35. Taxpayers may prepare and file their tax returns electronically from all of the following except A) Home. B) Post-office. C) Authorized e-file provider. D) None of the above. Show Answer Correct Answer: B) Post-office. 36. IF THE SALES ARE RS 50, 00, 000 AND VARIABLE COSTS ARE 30, 00, 000 A) CONTRIBUTION RS 80, 00, 000. B) CONTRIBUTION RS 150, 00, 000. C) CONTRIBUTION RS 15, 00, 000. D) NONE OF THE ABOVE. Show Answer Correct Answer: D) NONE OF THE ABOVE. 37. Cash dividends payments A) Operating Activities. B) Financing Activities. C) Investing Activities. D) None of the above. Show Answer Correct Answer: A) Operating Activities. 38. Basic objective of Financial Management is A) Maximisation of profits. B) Allocate resources. C) Ensuring financial discipline in the organisation. D) None of the above. Show Answer Correct Answer: A) Maximisation of profits. 39. Debt Ratio can be computed by dividing the? A) Total Liabilities/Total Shareholder's Equity. B) Total Liabilities/Total Assets. C) Total Liabilities/Average Total Assets. D) Total Assets/Total Liabilities. Show Answer Correct Answer: B) Total Liabilities/Total Assets. 40. In the present days, corporation finance is also referred to as business finance and financial management A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 41. . When a company uses increased fixed cost for production, this is an example of what type of leverage A) Variable cost leverage. B) Operating leverage. C) Financial leverage. D) Combined leverage. Show Answer Correct Answer: B) Operating leverage. 42. What is zero-based budgeting? A) A system that requires a fixed percentage of income to be saved each month. B) Zero-based budgeting is a budgeting method that allocates every dollar of income to expenses, savings, or investments, ensuring total income minus total expenses equals zero. C) A budgeting approach that focuses solely on long-term investments. D) A method that only tracks expenses without considering income. Show Answer Correct Answer: B) Zero-based budgeting is a budgeting method that allocates every dollar of income to expenses, savings, or investments, ensuring total income minus total expenses equals zero. 43. What does the debt-to-equity ratio indicate? A) The debt-to-equity ratio indicates the relative proportion of shareholders' equity and debt used to finance a company's assets. B) It reflects the company's cash flow from operations. C) It indicates the total revenue generated by a company. D) It measures the company's market share in its industry. Show Answer Correct Answer: A) The debt-to-equity ratio indicates the relative proportion of shareholders' equity and debt used to finance a company's assets. 44. Offering cash discounts to customer results in ..... ? A) A. Reducing the average collection period. B) B. increasing sales. C) C. Increasing the average collection period. D) None of the above. Show Answer Correct Answer: A) A. Reducing the average collection period. 45. A ..... is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. A) Bipartitle lease. B) Open ended lease. C) Finance lease. D) Operating lease. Show Answer Correct Answer: C) Finance lease. 46. The period between initial outlay and anticipated return is called A) Degree of risk. B) Opportunity cost. C) Long term investment. D) Gestation period. Show Answer Correct Answer: D) Gestation period. 47. Farish is a clerk with a monthly income of RM3500. He earns a passive income of RM550 every month with house rental. He spends RM2200 on fixed expenses and RM700 on variable expenses in a month. Calculate Farish's monthly cash flow. A) RM600. B) RM1150. C) RM50. D) RM1850. Show Answer Correct Answer: B) RM1150. 48. Karen makes $ 1, 000 a month working at Bojangles. She pays $ 450 in rent. How much money does she have per month after paying her rent? A) $ 500. B) $ 450. C) $ 550. D) None of the above. Show Answer Correct Answer: C) $ 550. 49. Cost of the Machinery is Rs 15, 00, 000. 20% down payment is required and balance is payable in 4 annual installments of Rs 4, 20, 000, 3, 90, 000, 3, 60, 000 and 3, 30, 000. Calculate the amount of interest. A) Rs 3, 00, 000. B) Rs 18, 00, 000. C) Rs 60, 000. D) Rs 15, 00, 000. Show Answer Correct Answer: A) Rs 3, 00, 000. 50. How do you Manage School Finances Effectively? A) Monitor data, public policy, and legislation continuously. B) Create a strategic three-to-five-year plan. C) Minimize unnecessary administrative costs. D) All of the above. Show Answer Correct Answer: D) All of the above. 51. Profit maximization focuses on which of the following? A) Reducing expenses without regard to revenue. B) Enhancing product quality at any cost. C) Increasing profit by maximizing revenue and minimizing costs. D) Focusing solely on increasing market share. Show Answer Correct Answer: C) Increasing profit by maximizing revenue and minimizing costs. 52. The appropriate objective of an enterprise is A) Maximization of profits. B) Maximization of owner's wealth. C) Maximization of cash. D) Maximization of sales. Show Answer Correct Answer: B) Maximization of owner's wealth. 53. Average net profit of the company is Rs 75, 000 and Average Capital employed is 9, 32, 500 and the normal rate of return is 8%. Calulate value of Goodwill at 5 year's purchase of super profit. A) Rs 74, 600. B) Rs 2, 000. C) Rs 4, 47, 600. D) Rs 2, 98, 400. Show Answer Correct Answer: B) Rs 2, 000. 54. What are some basic objectives of financial management training? A) To increase profit margins. B) To improve credit management skills. C) To reduce operational costs. D) To develop financial planning skills. Show Answer Correct Answer: D) To develop financial planning skills. 55. When people buy property and agree to pay for it later, they are buying on ..... A) Credit. B) Debit. C) All the above. D) None of the above. Show Answer Correct Answer: A) Credit. 56. The primary goal of a publicly owned firm is ..... A) To maximize the expected net profit. B) To maximize the stock price per share. C) To maximize the dividends per share. D) To maximize the expected total corporate profit. Show Answer Correct Answer: B) To maximize the stock price per share. 57. The most liquid of all assets, cash, appears on the first line of the balance sheet. A) Cash and Equivalents. B) Accounts Receivable. C) Inventory. D) Intangible Assets. Show Answer Correct Answer: A) Cash and Equivalents. 58. Which of the following is NOT a step in the corporate planning process? A) Implementation of tactical plans. B) Employee training. C) Determination of objectives. D) Environmental analysis. Show Answer Correct Answer: B) Employee training. 59. How does a higher times interest earned ratio impact a company's risk of default on its debt obligations? A) Implies higher financial leverage. B) Reduces the risk of default. C) Increases the risk of default. D) Indicates lower profitability. Show Answer Correct Answer: B) Reduces the risk of default. 60. Penjualan dengan credit akan masuk di P/L sebagai 'revenue/pemasukan' dan masuk di Balance Sheet (Neraca) sebagai apa? A) Operating Cash Flow. B) Long-term assets. C) Short-term liability. D) Account receivable profitability. Show Answer Correct Answer: D) Account receivable profitability. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Business Studies Chapter 9 Financial Management Quiz 1Class 12 Business Studies Chapter 9 Financial Management Quiz 3Class 12 Business Studies Chapter 9 Financial Management Quiz 4Class 12 Business Studies Chapter 9 Financial Management Quiz 5Class 12 Business Studies Chapter 9 Financial Management Quiz 6Class 12 Business Studies Chapter 9 Financial Management Quiz 7Class 12 Business Studies Chapter 9 Financial Management Quiz 8Class 12 Business Studies Chapter 9 Financial Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books