This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 27 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 27 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. For a equipment costing Rs 10, 00, 000 which is to be purchased on hire purchase system, a company charges interest @14% flat. Period of Hire purchase is 36 months. What will be the amount of interest for 3rd year as per "Sum of year's digits" (SOYD) method. A) Rs 1, 40, 000. B) Rs 2, 30, 811. C) Rs 46, 667. D) Rs 49, 189. Show Answer Correct Answer: D) Rs 49, 189. 2. Current assets are those assets which get converted into cash A) Within 6 months. B) Within one year. C) Between one and three years. D) Between three and five years. Show Answer Correct Answer: B) Within one year. 3. What is the first stage of the IS project lifecycle where budgeting occurs? A) Maintenance. B) Implementation. C) Development. D) Initiation. Show Answer Correct Answer: D) Initiation. 4. The Chief Executive Officer approves the company's strategies, goals, and budgets. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 5. Which term describes the money a business earns from selling goods or services? A) Expenses. B) Liabilities. C) Assets. D) Revenue. Show Answer Correct Answer: D) Revenue. 6. Living in New York City is more or less expensive than Lewisburg, PA? A) More. B) Less. C) All the above. D) None of the above. Show Answer Correct Answer: A) More. 7. Agency theory deals with the issue of A) When to hire an agent to represent the firm in negotiations. B) The legal liabilities of a firm if an employee, acting as the firm's agent, injures someone. C) The limitations placed on an employee acting as the firm's agent to obligate or bind the firm. D) The conflicts that can arise between the viewpoints and motivations of a firm's owners and managers. Show Answer Correct Answer: D) The conflicts that can arise between the viewpoints and motivations of a firm's owners and managers. 8. Which of the following is a key component of working capital management? A) Fixed assets. B) Long-term investments. C) Accounts Payable. D) Research and Development. Show Answer Correct Answer: C) Accounts Payable. 9. Investment in Fixed Assets is-of decision- A) Investment. B) Financing. C) Dividend. D) None of these. Show Answer Correct Answer: A) Investment. 10. What is the importance of cash flow management for a new business? A) It has no impact on the success of the business. B) It helps in ensuring the business has enough funds to cover expenses and invest in growth. C) Cash flow management only matters for established businesses. D) It is only important if the business is not planning to grow. Show Answer Correct Answer: B) It helps in ensuring the business has enough funds to cover expenses and invest in growth. 11. Head of finance department A) Finance manager. B) Line manager. C) Top leve manager. D) None of these. Show Answer Correct Answer: A) Finance manager. 12. What is the purpose of conducting a SWOT analysis in financial management? A) To identify internal strengths and weaknesses and external opportunities and threats for strategic planning and risk management. B) To calculate return on investment and profit margins. C) To analyze market trends and consumer behavior. D) To determine employee satisfaction and productivity levels. Show Answer Correct Answer: A) To identify internal strengths and weaknesses and external opportunities and threats for strategic planning and risk management. 13. The capital structure of a company consists of the following securities:Equity share capital of Rs. 10 each Rs. 1, 00, 0008% Debentures RS. 1, 00, 00010% Preference shares Rs. 1, 00, 000The amount of operating profit is Rs. 60, 000. The tax rate applicable to the company is 50%.You are required to calculate the financial leverage of the company A) 1.524. B) 1.352. C) 1.234. D) 1.154. Show Answer Correct Answer: D) 1.154. 14. What does affect the value of company? A) Capital cost. B) Market price of shares. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: C) Both (a) and (b). 15. What is the major advantage corporations have over other business entities? A) It is easier for a corporation to raise capital than other forms of businesses. B) A corporation is treated as a separate legal entity for tax and legal purposes. C) A corporation's shares can be freely traded among its shareholders. D) All of the above are advantages that a corporation has over other business forms. Show Answer Correct Answer: D) All of the above are advantages that a corporation has over other business forms. 16. Which of the following is a financing decision? A) Providing for doubtful debts. B) Issuing a 5-year Bond. C) Depreciating a fixed asset. D) None of the above. Show Answer Correct Answer: B) Issuing a 5-year Bond. 17. Which of the following is a Long Term Sources of Finance? A) Bank over Draft. B) Cash Credit. C) Equity Shares. D) Debentures. Show Answer Correct Answer: C) Equity Shares. 18. What is emergency savings? A) Original amount of money saved or invested. B) Transferring money into your savings before you pay your bills. C) Cash set aside to cover the cost of unexpected events. D) Maximizing your return by selling stocks at a higher price than what you paid for. Show Answer Correct Answer: C) Cash set aside to cover the cost of unexpected events. 19. A project has an initial outflow followed by years of inflows. What would be the effect on NPV and the IRR of an increase in the cost of capital?Described to the expected impact from this increase.Item-1. NPV 2. IRR A) Increase, No Change. B) Decrease, Decrease. C) Decrease, No Change. D) No Change, No Change. Show Answer Correct Answer: C) Decrease, No Change. 20. . In capital budgeting, the Internal Rate of Return (IRR) is: A) The average return over the project's life. B) The maximum possible return. C) The minimum required rate of return. D) The discount rate that makes NPV equal to zero. Show Answer Correct Answer: D) The discount rate that makes NPV equal to zero. 21. "Decide the appropriate mix of debt and equity" . This statement is true for A) Dividend decision. B) Liquidity decision. C) Financing decision. D) Investment decision. Show Answer Correct Answer: C) Financing decision. 22. Emergency funds should ideally cover: A) 10 years of expenses. B) 3-6 months of expenses. C) 1 week of expenses. D) 1 month of expenses. Show Answer Correct Answer: B) 3-6 months of expenses. 23. If taxes are ignored, MM approach is identical to A) NI Approach. B) Traditional Approach. C) NOI Approach. D) Non of the above. Show Answer Correct Answer: A) NI Approach. 24. The present value of $ 115, 000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is: A) $ 100, 500. B) $ 121, 000. C) $ 110, 000. D) $ 104, 545. Show Answer Correct Answer: D) $ 104, 545. 25. 'Pasar yang bergerak cepat dan harga yang tepat' pernyataan tersebut merupakan prinsip keuangan 'capital market efficiency'. A) FALSE. B) TRUE. C) All the above. D) None of the above. Show Answer Correct Answer: B) TRUE. 26. Fixed cost per unit ..... A) Changes according to volume of production. B) Be flexible according to the rate of interest. C) Does not change with volume of production. D) Not remains constant. Show Answer Correct Answer: A) Changes according to volume of production. 27. Although it ignores the time value of money, what is the most common method used in practice for capital budgeting? A) Accounting rate of return. B) Internal rate of return. C) Net present value. D) Payback. Show Answer Correct Answer: D) Payback. 28. The after-tax cost of debt ..... the before-tax cost of debt for a firm that has a positive marginal tax rate. A) Is always equal to. B) Is always greater than. C) May be greater than or less than. D) Is always less than. Show Answer Correct Answer: D) Is always less than. 29. You just rented a new apartment and you pay $ 950.00 every month, this is a A) Variable expense. B) Periodic expense. C) Fixed expense. D) Random expense. Show Answer Correct Answer: C) Fixed expense. 30. Putting Money Away for Later * A) Loan. B) Interest. C) Savings. D) Net Pay. Show Answer Correct Answer: C) Savings. 31. A $ 100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year. A) $ 120. B) $ 122. C) $ 121. D) $ 141. Show Answer Correct Answer: C) $ 121. 32. Financial planning and budgeting: A) Helps businesses set financial goals, allocate resources, and create budgets to guide their operations. B) Ensures that a company has the resources it needs to achieve its goals. C) Both of the above. D) Neither of the above. Show Answer Correct Answer: A) Helps businesses set financial goals, allocate resources, and create budgets to guide their operations. 33. Which of the following statements are correct? (1) Share option schemes always reward good performance by managers (2) Performance-related pay can encourage dysfunctional behaviour (3) Value for money as an objective in not-for-profit organisations requires the pursuit of economy, efficiency and effectiveness. A) 1 and 2 only. B) 1 and 3 only. C) 2 and 3 only. D) 1, 2 and 3. Show Answer Correct Answer: C) 2 and 3 only. 34. The concept which provides a link between investment and financing decision A) Capital structure. B) Financial leverage. C) Financial Planning. D) Trading on equity. Show Answer Correct Answer: C) Financial Planning. 35. A farmer wants to build a permanent building as a storage shed for its half an acre farm. What type of loan should the farmer apply for? A) Short-term loan. B) Medium-term loan. C) Long-term loan. D) None of the above. Show Answer Correct Answer: B) Medium-term loan. 36. Which of the following statements are correct? 1. Maximising market share is an example of a financial objective 2. Shareholder wealth maximisation is the primary financial objective for a company listed on a stock exchange 3. Financial objectives should be quantitative so that their achievement can be measured A) 1 and 2 only. B) 1 and 3 only. C) 2 and 3 only. D) 1, 2 and 3. Show Answer Correct Answer: C) 2 and 3 only. 37. Mm approach is known as theory of irrelevance when it is assume that there is A) Absence of taxes. B) Market all assume to be perfect. C) Investor act rationally. D) All of the above. Show Answer Correct Answer: D) All of the above. 38. Which of the following statements are correct?(1) A certificate of deposit is an example of a money market instrument(2) Money market deposits are short-term loans between organisations such as banks(3) Treasury bills are bought and sold on a discount basis A) 1 and 2 only. B) 1 and 3 only. C) 2 and 3 only. D) 1, 2 and 3. Show Answer Correct Answer: D) 1, 2 and 3. 39. Items you buy:tangible object that satisfies wants A) Goods. B) Wants. C) Service. D) Needs. Show Answer Correct Answer: A) Goods. 40. Which of the following is a disadvantage of profit maximization? A) Encourages ethical practices. B) Considers time value of money. C) Ignores social responsibility. D) Ensures fair distribution of income. Show Answer Correct Answer: C) Ignores social responsibility. 41. Berikut adalah beberapa panduan bagi manajer keuangan internasional untuk meminimalkan risiko mata uang, kecuali A) Memantau perubahan dalam mata uang utama dapat membantu mengurangi kesalahan mahal. B) Carilah saran ahli dari bank atau konsultan untuk mengatur program dan strategi. C) Mengurangi penggunaan mata uang asing dalam transaksi. D) Tentukan tingkat risiko yang dapat ditoleransi perusahaan. Show Answer Correct Answer: C) Mengurangi penggunaan mata uang asing dalam transaksi. 42. A method of inventory recording which produce high inventory in balance sheet is classified as A) Last out receivable. B) Last in first out. C) First out receivable. D) First in first out. Show Answer Correct Answer: D) First in first out. 43. Mega sporting events, such as the Super Bowl and World Cup, have a large economic impact on host cities. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 44. 18-The following cash flow are providedYear 0 = Cash outflow = $ 200, 000Year 1 = Cash Inflow = $ 25, 000, Year 2 = $ 35, 000, Year 3 = $ 70, 000, Year 4 = $ 300, 000 Calculate payback period? A) A = 4 Ys. B) D = 3.15 Ys. C) C = 3.233 Ys. D) B = 3.7 Ys. Show Answer Correct Answer: C) C = 3.233 Ys. 45. If a company offers stock for sale for the first time and the proceeds go to the company, then this is a sale in the primary market. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 46. Short-term cash flow improvement may not be achieved by A) Reducing trade payables. B) Increasing trade payables. C) Reducing trade receivables. D) Reducing inventories. Show Answer Correct Answer: A) Reducing trade payables. 47. Place where metals are made into A) Metals. B) Coinage. C) Coin. D) Mint. Show Answer Correct Answer: D) Mint. 48. In weighted average cost of capital the term "weight" refers to A) Proportion of each source of capital raised. B) Income tax consideration. C) Portion of total capital raised by the firm. D) Rate of interest. Show Answer Correct Answer: A) Proportion of each source of capital raised. 49. ..... means current value of a future amount of money evaluated at a given interest rate? A) Compounding. B) Nominal rate. C) Continuous rate. D) Discounting. Show Answer Correct Answer: D) Discounting. 50. EPS is calculated on the basis of ..... A) NPAT. B) MPS. C) NAPT-Preference dividend. D) NPBT. Show Answer Correct Answer: C) NAPT-Preference dividend. 51. Capital budgeting related to A) Long term assets. B) Short term assets. C) Long term assets and short term assets. D) Fixed assets. Show Answer Correct Answer: A) Long term assets. 52. The concept which makes sure the availability of right amount of finance at the right time is called A) (b) Capital Structure . B) C) Working Capital. C) (a) Financial Planning. D) (d) Fixed Capital. Show Answer Correct Answer: C) (a) Financial Planning. 53. Apakah langkah pertama dalam proses pengurusan kewangan? A) Mencipta pelan kewangan. B) Menilai kedudukan kewangan. C) Menetapkan matlamat kewangan. D) Melaksanakan pelan kewangan. Show Answer Correct Answer: C) Menetapkan matlamat kewangan. 54. What is the role of financial manager in relation to raising funds? A) To ensure enough cash and liquidity to meet business obligations. B) To invest all funds in risky ventures. C) To avoid raising any funds for the business. D) To keep all funds in a savings account. Show Answer Correct Answer: A) To ensure enough cash and liquidity to meet business obligations. 55. Used by financial professionals to focus attention on current and prospective inflows and outflows of cash A) Statement of Retained Earnings. B) Income Statement. C) Cash flow approach. D) Accrual-based Approach. Show Answer Correct Answer: C) Cash flow approach. 56. What is a key characteristic of financial forecasting? A) Assumption-based. B) Short to Long Term. C) Randomized. D) No monitoring required. Show Answer Correct Answer: A) Assumption-based. 57. Which of the following functions is performed by freely fluctuating exchange rates? A) They tend to correct a trade surplus or deficit. B) They make imports cheaper and exports more expensive. C) They eliminate the opportunity for currency speculation. D) They eliminate business' exposure to currency risk. Show Answer Correct Answer: A) They tend to correct a trade surplus or deficit. 58. What is dividend policy? A) A policy that only deals with cash payments to shareholders. B) The decision about retaining earnings for reinvestment. C) The framework for determining how much and when to pay dividends to shareholders. D) A regulatory requirement for public companies. Show Answer Correct Answer: C) The framework for determining how much and when to pay dividends to shareholders. 59. A source of supply of foreign exchange is ..... A) Imports. B) Gifts. C) Donations. D) Exports. Show Answer Correct Answer: D) Exports. 60. Financial leverage refers to: A) Funds provided by owners of a company. B) The degree to which a firm relies on debt financing. C) Short-term financing options for small businesses. D) The calculation of net present value. Show Answer Correct Answer: B) The degree to which a firm relies on debt financing. ← 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