This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 20 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Teori mengenai masalah yang timbul dikarenakan perbedaan kepentingan antara pihak pemilik dan manajer adalah? A) Agency Theory. B) Control Hypothesis. C) Behavioral Finance Theory. D) Signaling Theory. Show Answer Correct Answer: A) Agency Theory. 2. What is the weighted average cost of capital (WACC)? A) The weighted average cost of capital (WACC) is the average rate of return a company is expected to pay its security holders to finance its assets. B) The WACC is the total profit a company makes from its investments. C) The weighted average cost of capital is the total revenue generated by a company. D) WACC is the interest rate on a company's loans only. Show Answer Correct Answer: A) The weighted average cost of capital (WACC) is the average rate of return a company is expected to pay its security holders to finance its assets. 3. Debt and equity differ in cost and risk. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 4. Retained earnings falls under ..... A) Liquidity decision. B) Dividend decision. C) Financing decision. D) Investment decision. Show Answer Correct Answer: B) Dividend decision. 5. Which statement is not basic financial report? A) Outcome statement. B) Balance Sheet. C) Cash flow statement. D) Income statement. Show Answer Correct Answer: A) Outcome statement. 6. Which instrument of money market is also called zero coupon bond? A) (a) Call money. B) (b) Commercial Paper. C) C) Certificate of Deposit. D) (d) Treasury Bill. Show Answer Correct Answer: D) (d) Treasury Bill. 7. Which of the following is not an important financial management decision A) Assets Management Decision. B) Investing Decision. C) Dividend Decision. D) Liquidity decision. Show Answer Correct Answer: A) Assets Management Decision. 8. Inventory Management is part of A) Working Capital Management Decisions. B) Dividend Decisions. C) Capital Budgeting Decisions. D) Capital Structure Decisions. Show Answer Correct Answer: A) Working Capital Management Decisions. 9. Financial management aims at A) Ensuring availability of enough funds. B) Reducing the cost of funds procured. C) Effective deployment of funds. D) All of the above. Show Answer Correct Answer: D) All of the above. 10. A company receives a perpetuity of $ 20, 000 per annum in arrears, and pays 30% corporation tax 12 months after the end of the year to which the cash flows relate.At a cost of capital of 10%, what is the after-tax present value of the perpetuity? A) $ 127, 274. B) $ 145, 454. C) $ 140, 000. D) $ 144, 000. Show Answer Correct Answer: B) $ 145, 454. 11. A firm's financing costs include A) Depreciation expense. B) Interest expense. C) Costs of goods sold. D) Both A and B. Show Answer Correct Answer: B) Interest expense. 12. Describe the components of a financial statement. A) Expense statement, asset sheet, cash flow statement, statement of changes in equity. B) Income statement, balance sheet, cash flow statement, statement of changes in equity. C) Profit statement, liability sheet, cash flow statement, statement of changes in equity. D) Revenue statement, equity sheet, cash flow statement, statement of changes in liabilities. Show Answer Correct Answer: B) Income statement, balance sheet, cash flow statement, statement of changes in equity. 13. All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. A) Personal Finance. B) Credit. C) Consumer. D) Loan. Show Answer Correct Answer: A) Personal Finance. 14. What is the significance of agency theory in finance? A) Manages investment portfolios. B) Predicts stock prices. C) Analyzes market trends. D) Explains relationships between principals and agents. Show Answer Correct Answer: D) Explains relationships between principals and agents. 15. Retirement of entity-issued bonds A) Operating Activities. B) Financing Activities. C) Investing Activities. D) None of the above. Show Answer Correct Answer: B) Financing Activities. 16. What is an emergency fund? A) Money set aside for unexpected expenses. B) Extra money for vacations. C) Money saved for entertainment purposes. D) A type of investment account. Show Answer Correct Answer: A) Money set aside for unexpected expenses. 17. The importance of 'Trading on Equity' lies in the fact that if the company is earning more profit, it can make use of borrowed capital and preference share capital and by doing so it can increase the income of ..... A) Government. B) Equity Shareholders. C) Preference Shareholders. D) Lenders. Show Answer Correct Answer: B) Equity Shareholders. 18. Which of the following techniques uses discounted cash flow? A) Accounting profit. B) Payback period. C) NPV. D) ARR. Show Answer Correct Answer: C) NPV. 19. Raju's family wants ₹ 30, 00, 000 in 5 years at 10% annual return. The required monthly SIP is closest to: A) ₹ 18400. B) ₹ 28400. C) ₹ 38400. D) ₹ 48400. Show Answer Correct Answer: C) ₹ 38400. 20. Which technique in financial management enable us to take procurement/sourcing decisions? A) Working Capital Management. B) Ratio Analysis. C) Capital Budgeting. D) Capital Structure. Show Answer Correct Answer: D) Capital Structure. 21. Marketing manager A) Internal User. B) External User. C) All the above. D) None of the above. Show Answer Correct Answer: A) Internal User. 22. Financial management is only important for businesses, not individuals A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 23. Financial Ratios are ..... measure. A) Absolute. B) Relative. C) All the above. D) None of the above. Show Answer Correct Answer: B) Relative. 24. Which method is commonly used for evaluating capital projects? A) Net Present Value (NPV). B) Payback Period. C) Return on Investment (ROI). D) Internal Rate of Return (IRR). Show Answer Correct Answer: A) Net Present Value (NPV). 25. A trend is then determined by comparing percentage relationships. Base on the trends, interpretation, conclusions, and implications are drawn. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 26. What is included in financial management according to the traditional approach? A) Arranging finance. B) Using finance effectively. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: A) Arranging finance. 27. Name the financial decision which relates to disposal of profits. A) Capital budgeting decision. B) Financing decision. C) Investment decision. D) Dividend decision. Show Answer Correct Answer: D) Dividend decision. 28. A belief of idea that you consider important or valuable A) Goal. B) Objective. C) Need. D) Value. Show Answer Correct Answer: D) Value. 29. Financial managers use net present value (NPV) to evaluate long-term investment proposals. A) Only in specific sectors. B) True. C) Only for short-term investments. D) False. Show Answer Correct Answer: B) True. 30. Which of the following best illustrates financial management? A) Hiring workers. B) Buying raw materials. C) Planning funds, raising finance, and controlling usage. D) Advertising products. Show Answer Correct Answer: C) Planning funds, raising finance, and controlling usage. 31. The highest policy making body in a corporation. A) Shareholders. B) President. C) Chief Executive Officer. D) Board of Directors. Show Answer Correct Answer: D) Board of Directors. 32. Financing decisions involve A) Shareholders fund decisions. B) Debt Equity decisions. C) Capital Budgeting decisions. D) Fixed assets decisions. Show Answer Correct Answer: B) Debt Equity decisions. 33. "Financial management is concerned with the acquisition, financing and management of assets with some overall goal in mind" . Whose definition is this? A) Solomon. B) Khan & Jain. C) James C. Van Horne. D) J.F. Bradley. Show Answer Correct Answer: C) James C. Van Horne. 34. What is asset allocation? A) A way to measure the performance of a single asset. B) A technique for predicting stock market trends. C) Asset allocation is the strategy of distributing investments across various asset classes to optimize risk and return. D) A method for calculating taxes on investments. Show Answer Correct Answer: C) Asset allocation is the strategy of distributing investments across various asset classes to optimize risk and return. 35. Which of the following is NOT one of the primary financial statements used in financial reporting? A) Balance sheet. B) Cash flow statement. C) Sales statement. D) Income statement. Show Answer Correct Answer: C) Sales statement. 36. The particular combination of debts & Equity A) Capital structure. B) Capital. C) Capitalization. D) Capitalism. Show Answer Correct Answer: A) Capital structure. 37. The pay that is earned before deductions is taken out an employee's pay is called: A) Gross Pay. B) Overtime. C) Take Home Check. D) Net Pay. Show Answer Correct Answer: A) Gross Pay. 38. The balance sheet statement is correct, if: A) Liabilities = Assets + Stockholder's Equity. B) Assets = Liabilities + Stockholder's Equity. C) Assets + Liabilities = Stockholder's Equity. D) Assets = Liabilities-Stockholder's Equity. Show Answer Correct Answer: B) Assets = Liabilities + Stockholder's Equity. 39. True or False:Expenses are things you spend money on A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 40. The responsibility for the administration of FEMA is vested with ..... A) RBI. B) State government. C) National banks. D) Central government. Show Answer Correct Answer: A) RBI. 41. What does "A" stand for in S.M.A.R.T? A) Achievement. B) Attainable. C) Accomplishable. D) Accessible. Show Answer Correct Answer: B) Attainable. 42. A high operating leverage indicates- A) Highly favourable situation as it consists of higher EPS. B) Highly risky situation as it consists of large interest costs. C) Highly favourable situation as it consists of low fixed costs. D) Highly risky situation as it consists of large fixed costs. Show Answer Correct Answer: D) Highly risky situation as it consists of large fixed costs. 43. Operating leverage = ..... A) Contribution / operating PBT. B) Contribution / total expenses. C) Contribution / EBT. D) Contribution / EBIT. Show Answer Correct Answer: D) Contribution / EBIT. 44. The biggest accounting firms are known as the "Big Four." these include, PricewaterhouseCoopers, Deloitte Touche Tomatsu, Ernst & Young, and KPMG. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 45. The plan for future expenditure is called A) Expenditure. B) Budget. C) Salary. D) Income. Show Answer Correct Answer: B) Budget. 46. In his traditional role the finance manager is responsible for ..... A) Arrangement of financial resources. B) Proper utilisation of funds. C) Acquiring capital assets of the organization. D) Efficient management of capital. Show Answer Correct Answer: A) Arrangement of financial resources. 47. Net Present Value (NPV) is: A) Total discounted free cash flows to all capital providers minus total invested capital. B) Total undiscounted free cash flows to all capital providers minus total invested capital. C) Total discounted net profits minus total invested capital. D) Total discounted free cash flows to all capital providers minus invested equity capital. Show Answer Correct Answer: A) Total discounted free cash flows to all capital providers minus total invested capital. 48. In weighted average cost of capital, rising in interest rate leads to- A) Increase the capital structure. B) Decrease the capital structure. C) Increase in cost of debt. D) Decrease in cost of debt. Show Answer Correct Answer: C) Increase in cost of debt. 49. Education allowance for children is an example of ..... A) Money income. B) Psychic income. C) Fringe benefits. D) Barter system. Show Answer Correct Answer: C) Fringe benefits. 50. Moors established the first paper mill in Europe A) 17th Century. B) 12th Century. C) 1983. D) 1988. Show Answer Correct Answer: B) 12th Century. 51. What is the primary objective of corporate financing? A) Generating long-term value. B) Improving liquidity. C) Reducing market risk. D) Increasing the cost of capital. Show Answer Correct Answer: A) Generating long-term value. 52. A broad, general statement of what you want to achieve, giving direction to you plan of action and based on your values A) Need. B) Goal. C) Value. D) Objective. Show Answer Correct Answer: B) Goal. 53. Which of the following is a method used in analyzing financial statements- A) Break-even analysis. B) Trend analysis. C) Budget analysis. D) Variance analysis. Show Answer Correct Answer: B) Trend analysis. 54. Which of the following is NOT a capital budgeting technique? A) Current Ratio. B) Internal Rate of Return (IRR). C) Net Present Value (NPV). D) Payback Period. Show Answer Correct Answer: A) Current Ratio. 55. What does the accounting equation ensure during transaction analysis? A) That revenue is always greater than expenses. B) That assets always equal liabilities plus equity. C) That only cash transactions are recorded. D) That all transactions are posted to the trial balance first. Show Answer Correct Answer: B) That assets always equal liabilities plus equity. 56. Which are not goal of financial management? A) Maximize share price. B) Minimize firm value. C) Maximize share holder wealth. D) A and b. Show Answer Correct Answer: B) Minimize firm value. 57. What does ATM stand for? A) Automated Teller Machine. B) Automatic Transfer Money. C) Active Transaction Method. D) None. Show Answer Correct Answer: A) Automated Teller Machine. 58. Financial management is strategic planning, organizing, directing, and controlling financial undertakings in an organisation or an institute. True or False? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 59. The market value of a share is responsible for. A) The respective companies. B) The investment market. C) Shareholders. D) The government. Show Answer Correct Answer: B) The investment market. 60. Which of the following is one of the remedies of over capitalization? A) Redemption of preference share capital. B) It can be compensated with the help of fresh issue of shares. C) Splitting up of shares. D) Issuing of bonus shares to the existing shareholders. Show Answer Correct Answer: A) Redemption of preference share capital. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Business Studies Chapter 9 Financial Management Quiz 1Class 12 Business Studies Chapter 9 Financial Management Quiz 2Class 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books