This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 32 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 32 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Higher working capital usually results in A) Higher current ratio, higher risk and higher profits. B) Lower current ratio, higher risk and higher profits. C) Higher equitability, lower risk and lower profits. D) Lower equitability, lower risk and higher profits. Show Answer Correct Answer: A) Higher current ratio, higher risk and higher profits. 2. How does borrowing contribute to a company's capital structure? A) Increases equity. B) Lowers profitability. C) Adds to liabilities. D) Reduces capital. Show Answer Correct Answer: C) Adds to liabilities. 3. Non cash expenses are taken into consideration in A) Sunk cost. B) Accounting profit. C) Working capital. D) Cash flows. Show Answer Correct Answer: D) Cash flows. 4. Usually, the first step in the production of the master budget is the: A) Sales forecast. B) Cash budget. C) Production budget. D) None of the above. Show Answer Correct Answer: A) Sales forecast. 5. Used of fixed interest security in the capital structure is called A) Operating leverage. B) Financial leverage. C) Combined leverage. D) All of the above. Show Answer Correct Answer: B) Financial leverage. 6. Which of the following best describes Journal entries? A) Journal entries are records of financial transactions. B) Journal entries are summaries of annual reports. C) Journal entries are only used for budgeting purposes. D) Journal entries are personal notes about financial goals. Show Answer Correct Answer: A) Journal entries are records of financial transactions. 7. ..... provides services and goods to the family members without utilising the money. A) Budget. B) Direct income. C) Indirect income. D) Mental income. Show Answer Correct Answer: B) Direct income. 8. If existing shareholders want to exercise complete control them they should prefer debt. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 9. A company planning an overseas project must adjust its capital budgeting for which additional factors beyond local cash flows and discount rates? A) Limited access to finance from local investors. B) Uniform tax rules and single legal framework. C) Only domestic inflation and interest rates. D) Currency conversion, exchange forecasts, and political risks. Show Answer Correct Answer: D) Currency conversion, exchange forecasts, and political risks. 10. It is essentially the preparation of a financial blueprint of an organisation's future operations. Identify the related concept. A) Financial management. B) Financial planning. C) Capital budgeting decisions. D) Dividend decision. Show Answer Correct Answer: B) Financial planning. 11. The summary of the operating, investing and financing activities of the firm is presented in the? A) Statement of Cash Flows. B) Statement of Financial Position. C) Statement of Retained Earnings. D) Statement of Comprehensive Income. Show Answer Correct Answer: A) Statement of Cash Flows. 12. A ..... is a financial plan that reflects anticipated revenue and shows how it will be allocated in the operation of the business. A) Financial forecast. B) Accounting equation. C) Budget. D) Financial plan. Show Answer Correct Answer: C) Budget. 13. Under Bretton Woods, how were major currencies anchored to create stability after World War II? A) Allowed to float within wide bands. B) Tied directly to domestic price indices. C) Indexed to a basket of commodities. D) Pegged to the U.S. dollar linked to gold. Show Answer Correct Answer: D) Pegged to the U.S. dollar linked to gold. 14. What is the main purpose of corporate governance? A T B C D t A) To separate ownership and management control of organisations. B) To maximise shareholder value. C) To facilitate effective management of organisations and to make organisations more visibly accountable to a wider range of stakeholders. D) To ensure that regulatory frameworks are adhered to. Show Answer Correct Answer: C) To facilitate effective management of organisations and to make organisations more visibly accountable to a wider range of stakeholders. 15. How could a business improve net profit? A) Reduce sales. B) Increase COGS. C) Reduce expenses. D) Increase expenses. Show Answer Correct Answer: C) Reduce expenses. 16. Receipts from contracts held for dealing and trading purposes A) Operating Activities. B) Financing Activities. C) Investing Activities. D) None of the above. Show Answer Correct Answer: A) Operating Activities. 17. Which of the following is a characteristic of a stable dividend policy? A) Paying a fixed percentage of earnings each period. B) Regular dividend payments with minimal fluctuations. C) No regular pattern of dividend payments. D) Paying all excess cash as dividends. Show Answer Correct Answer: B) Regular dividend payments with minimal fluctuations. 18. Which tool helps track income and expenses in real-time? A) Social Media Platform. B) CRM System. C) Accounting Software. D) ERP System. Show Answer Correct Answer: C) Accounting Software. 19. Another name for long term investment decision is ..... A) Capital budgeting decision. B) Financing decision. C) Working capital decision. D) Dividend decision. Show Answer Correct Answer: A) Capital budgeting decision. 20. Which of the following is not true in case of Hire Purchase. A) The hire purchaser must keep the goods in good condition. B) Posession of goods is transferred to the purchaser on signing of the agreement. C) The seller cannot reposess the goods in case of any default in payment by purchaser. D) The excess of total payment over the cash price is taken as interest. Show Answer Correct Answer: C) The seller cannot reposess the goods in case of any default in payment by purchaser. 21. Which of the following is a loan? A) Fixed Deposit. B) Insurance. C) Bank credit. D) Gold. Show Answer Correct Answer: C) Bank credit. 22. Pilihlah pernyataan yang tepat tentang investasi! A) Investasi pasti menguntungkan dan tidak mungkin rugi. B) A. Investasi merupakan sebuah bentuk gambling/ perjudian. C) Investasi Selalu Memiliki Unsur Keuntungan (return) dan Resiko (risk). D) None of the above. Show Answer Correct Answer: C) Investasi Selalu Memiliki Unsur Keuntungan (return) dan Resiko (risk). 23. Berikutadalah hasil dari aktivitas bisnis. Semuanya adalah penting, tapi yang PALING UTAMA adalah: A) Uang cash. B) Keuntungan/Profit. C) Pendapatan / omset. D) Investasi. Show Answer Correct Answer: A) Uang cash. 24. What does NPV (Net Present Value) prioritize? A) Short-term gains. B) Immediate costs. C) Market trends. D) Long-term benefits. Show Answer Correct Answer: D) Long-term benefits. 25. Purpose of Special Variable Working Capital is A) To pay salaries and wages regularly. B) To handle special operations or unexpected events like marketing campaigns. C) To invest in permanent assets. D) To expand the working area. Show Answer Correct Answer: B) To handle special operations or unexpected events like marketing campaigns. 26. Federal government tax revenues if it exceeds government spending then it is classified as A) Federal reserve. B) Federal budget. C) Budget deficit. D) Budget surplus. Show Answer Correct Answer: D) Budget surplus. 27. What is interest in the context of finance? A) A type of tax. B) The money earned on investments. C) The cost of borrowing money. D) The total revenue of a company. Show Answer Correct Answer: C) The cost of borrowing money. 28. Which of the following is an example of a short-term financial goal? A) Buying a second home. B) Building a corpus of 1 crore. C) Retirement planning. D) Buying a smartphone. Show Answer Correct Answer: D) Buying a smartphone. 29. Which of the following is a long-term financial goal? A) Buy a house. B) Vacation in other country for 10 days. C) Invest shares in Bursa Malaysia. D) Buy the latest model of Apple smart phone. Show Answer Correct Answer: A) Buy a house. 30. Where is the signature on a credit or debit card? A) Front of card. B) Back of card. C) Under the card number. D) No place for a signature on the card. Show Answer Correct Answer: B) Back of card. 31. Short-term financial objectives are: A) Concerned with growing the business. B) Concerned with increasing profitability. C) Concerned with increasing efficiency. D) Concerned with managing cash flow and meeting current debts. Show Answer Correct Answer: D) Concerned with managing cash flow and meeting current debts. 32. Capital budgeting: A) Involves evaluating investment opportunities to determine which projects will generate the highest return on investment. B) Helps businesses make informed financial decisions. C) Both of the above. D) Neither of the above. Show Answer Correct Answer: A) Involves evaluating investment opportunities to determine which projects will generate the highest return on investment. 33. Ram's owner, Stan Kroenke, self-financed the $ 2.9 billion stadium in Los Angeles. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 34. Investment decision in financial management relates to A) Distribution of profits. B) Raising funds. C) Allocation of funds. D) Maintaining records. Show Answer Correct Answer: C) Allocation of funds. 35. Calculate the cash flow for Mr. RabbaniActive Income:RM3, 000Passive Income:RM350Fixed Expenses:RM 2, 300Variable Expenses:RM 250Then, determine whether it is Deficit or Surplus. A) 800 (Surplus). B) -1000 (Deficit). C) -800 (Deficit). D) 1000 (Surplus). Show Answer Correct Answer: A) 800 (Surplus). 36. Venture capital funds provide funding to startup companies in the way of A) Debt + Equity. B) Debt. C) Preference Shares. D) Equity. Show Answer Correct Answer: D) Equity. 37. 19-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 NPV r = 18% A) D = 43, 500. B) B = 34, 500. C) C = 43, 663. D) A = 43, 000. Show Answer Correct Answer: C) C = 43, 663. 38. It pertains to the firm's ability to pay any immediate and incoming cash disbursements A) Profitability. B) Asset Utilization. C) Liquidity. D) Debt-Utilization. Show Answer Correct Answer: C) Liquidity. 39. What is the difference between fixed and variable costs? A) Fixed costs are always higher than variable costs. B) Fixed costs do not change with production levels, while variable costs do. C) Both fixed and variable costs change with production levels. D) Fixed costs vary with production levels, while variable costs remain constant. Show Answer Correct Answer: B) Fixed costs do not change with production levels, while variable costs do. 40. Which is the most important decision? A) Finance decision. B) Investment decision. C) Dividend decision. D) All of these. Show Answer Correct Answer: D) All of these. 41. Financial decisions involve the most appropriate mix of ..... & ..... A) Current assets & Fixed Assets. B) Equity & Debt. C) Profit & Dividend. D) Cash & Bank. Show Answer Correct Answer: B) Equity & Debt. 42. Banks require collateral as security for their loans. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 43. What financial reports are commonly prepared by financial managers? A) Sales reports and customer satisfaction surveys. B) Income statement and cash flow statement. C) Marketing plan and advertising budget. D) Report production planning and inventory. Show Answer Correct Answer: B) Income statement and cash flow statement. 44. Mr Smith earns RM 3 500 a month. Every month, his fixed expenses is RM 1 300 and variable expenses is RM 400. He also rent out his other house for RM 450 a month. Calculate his monthly cash flow. A) RM 2 250. B) RM 1 350. C) RM 4 750. D) RM 5 650. Show Answer Correct Answer: A) RM 2 250. 45. Dhruv Ltd. has Rs.100 preference shares redeemable at a premium of 10% with 15 years to maturity. The preference dividend rate is 12%. The cost of the preference capital, assuming that shares were issued at par with the flotation cost of 5% is ..... A) 13.02%. B) 14.33%. C) 14.25%. D) 12.43%. Show Answer Correct Answer: A) 13.02%. 46. Australia became the first country to have a full set of circulation A) 1996'. B) 1983. C) 1988. D) 2005. Show Answer Correct Answer: C) 1988. 47. Capital budgeting decision has a direct impact on liquidity as well as profitability of a business A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 48. JCW Co is appraising an opportunity to invest in some new machinery that has the following cash flows.Initial investment-$ 40, 000Net cash inflows for 5 years in advance-$ 12, 000 per annumDecommissioning costs after 5 years-$ 15, 000What is the internal rate of return of the project, calculated using discount factors for 10% and 15% (to the nearest whole %)? A) 11%. B) 13%. C) 14. D) 12%. Show Answer Correct Answer: D) 12%. 49. The ..... Is the proportion of earnings that are paid to common stockholders in the form of cash dividend A) Retention rate. B) Growth rate. C) Oneplus the retention date. D) Dividend payout ratio. Show Answer Correct Answer: A) Retention rate. 50. Q8) In the organization structure of the finance department, who typically reports to the Chief Financial Officer (CFO)? A) Marketing managers. B) Sales managers. C) Treasury managers. D) Operations managers. Show Answer Correct Answer: C) Treasury managers. 51. Cash & Cash Equivalent-24, 890Held for Trading-10, 000Trade and Other Receivables-16, 000Inventory-8, 960If total liabilities amounted to 598, 030 and total assets amounted to 1, 014, 082. How much is the Shareholder's Equity? A) 416, 052. B) 390052. C) 356, 202. D) 400, 052. Show Answer Correct Answer: A) 416, 052. 52. Marginal cost of capital refers to: A) Overall cost of capital. B) Cost of new capital raised. C) Average cost. D) Total cost of firm. Show Answer Correct Answer: B) Cost of new capital raised. 53. A ..... is a type of credit score created by the Fair Isaac Corporation. Lenders use borrowers' these scores along with other details on borrowers' credit reports to judge how much the borrower can be trusted to pay back money owed based on their payment history A) Net Income. B) FICO score. C) Debt. D) Loan. Show Answer Correct Answer: B) FICO score. 54. Out of the 122 teams in the 4 major leagues (NFL, NBA, NHL, MLB), how many do not pay property taxes on the facility they occupy? A) 122. B) 110. C) 10. D) 0. Show Answer Correct Answer: B) 110. 55. Why is cash flow analysis important in financial management? A) Cash flow analysis is crucial for understanding a company's ability to meet its financial obligations, invest in growth opportunities, and sustain operations. B) Cash flow analysis is primarily used for marketing purposes. C) Cash flow analysis is only important for small businesses. D) Cash flow analysis has no impact on financial decision-making. Show Answer Correct Answer: A) Cash flow analysis is crucial for understanding a company's ability to meet its financial obligations, invest in growth opportunities, and sustain operations. 56. CW Co is appraising an opportunity to invest in some new machinery that has the following cash flows.Initial investment $ 40, 000Net cash inflows for 5 years in advance $ 12, 000 per annumDecommissioning costs after 5 years $ 15, 000What is the internal rate of return of the project, calculated using discount factors for 10% and 15% (to the nearest whole %)? A) 15%. B) 11.5%. C) 10%. D) 12%. Show Answer Correct Answer: D) 12%. 57. What is the primary purpose of a capital budget? A) Controlling operational costs. B) Planning long-term investments. C) Estimating monthly revenue. D) Managing day-to-day expenses. Show Answer Correct Answer: B) Planning long-term investments. 58. Based on the function of working assets in active capital companies is devided in to ..... A) Working capital and fixed capital. B) Current assets and fixed assets. C) Working capital and current assets. D) Fixed capital and fixed assets. Show Answer Correct Answer: A) Working capital and fixed capital. 59. What is the definition of Financial Management? A) Managing personal savings. B) Managing a company's financial resources and decisions. C) Managing stock market investments. D) Managing real estate assets. E) Public financial management. Show Answer Correct Answer: B) Managing a company's financial resources and decisions. 60. The followings are the five financial management process.I. Evaluating financial statusII. Carrying out financial planIII. Reviewing and revising progressIV. Setting goals V. Create financial planWhich of the followings is the correct order of financial management process? A) IV, I, V, III, II. B) I. IV, V, II, III. C) IV, I, V, II, III. D) I, IV, V, III, II. Show Answer Correct Answer: C) IV, I, V, II, III. ← 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