This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 9 Financial Management – Quiz 40 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 9 Financial Management Quiz 40 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Merchants in the Middle Ages used the Bill of Exchange primarily to achieve which benefit in cross-border trade? A) Eliminate the need for banking families. B) Fix exchange rates between city-states. C) Accumulate gold reserves for lending. D) Reduce theft risk and enable remote payment. Show Answer Correct Answer: D) Reduce theft risk and enable remote payment. 2. Type of income tax that is levied on income of individuals, household's partnership and sole-proprietorship. A) Average Tax Rate. B) Corporation Income Tax. C) Personal Income tax. D) Taxable Income. Show Answer Correct Answer: C) Personal Income tax. 3. If the present value of the cash flow X is $ 200, and the present value cash flow Y is $ 150, then the present value of the combined cash flow is: A) $ 150. B) $ 200. C) $ 350. D) $ 50. Show Answer Correct Answer: C) $ 350. 4. Profit Maximisation does not take into consideration: A) Risk and Cash flow. B) Cash Flow and Stock price. C) Risk and EPS. D) EPS and Stock Price. Show Answer Correct Answer: A) Risk and Cash flow. 5. A liquid asset is one that: A) Requires a long-term investment. B) Can be quickly converted into cash with little risk. C) Is held by the government. D) Cannot be converted into cash. Show Answer Correct Answer: B) Can be quickly converted into cash with little risk. 6. Cheapest source of finance A) Equity. B) Debt. C) All the above. D) None of the above. Show Answer Correct Answer: B) Debt. 7. Mr. Spark spends RM2 500 for household expenses every month. How much is the minimum emergency fund needed by him based on Bank Negara Malaysia suggestion?(Hint:Emergency fund is the amount Mr. Spark should have to spend on household if he suddenly doesn't have any income) A) RM12 000. B) RM15 000. C) RM10 000. D) RM7 500. Show Answer Correct Answer: B) RM15 000. 8. What do you call the cost of issuing equity shares? A) Preliminary cost. B) Floatation Cost. C) All the above. D) None of the above. Show Answer Correct Answer: B) Floatation Cost. 9. Short Term Investment Decisions are known as A) Capital Structure Decisions. B) Working Capital Management Decisions. C) Capital Budgeting Decisions. D) Dividend Decisions. Show Answer Correct Answer: B) Working Capital Management Decisions. 10. Which TWO of the following are examples of financial objectives that a company might choose to pursue? A. Dealing honestly and fairly with customers on all occasions B. Provision of good working conditions and industrial relations C. Earning above a particular level of return on capital employed D. Producing environmentally friendly products E. Restricting the level of gearing to below a specified target level A) B & D. B) C & E. C) A & C. D) A & E. Show Answer Correct Answer: B) C & E. 11. To identify the uses of funds in a firm over a time is by A) Increasing in assets. B) Decreasing in assets. C) Increasing in liabilities. D) Selling the stocks. Show Answer Correct Answer: A) Increasing in assets. 12. The followings are the statements that best described for cash budget, except A) The cash forecast of the firm by planning inflows and outflows. B) Depreciation is excluded from the statement. C) Used to estimate short term cash requirements. D) Positive cashflow indicate the firm has surplus cash. Show Answer Correct Answer: D) Positive cashflow indicate the firm has surplus cash. 13. PBP is calculated when the incomes or return are equal by the formula A) Original outlay/ uncovered amount of project. B) Year before full recovery+(Uncovered amt/ cash flow during the year). C) Original cost/ annual return of the project. D) None of the above. Show Answer Correct Answer: C) Original cost/ annual return of the project. 14. The extent to which an organisation uses fixed cost on its total structure is called A) Overall leverage. B) Financial leverage. C) Fixed Leverage. D) Operating leverage. Show Answer Correct Answer: D) Operating leverage. 15. Explanatory notes that provide detailed information on the accounting policies, calculations and transactions A) Notes to Financial Statements. B) Statement of Retained Earnings. C) Statement of Cash Flows. D) Cash Flow Analysis. Show Answer Correct Answer: A) Notes to Financial Statements. 16. Which of the following best describes a stock? A) A type of loan. B) An ownership share in a company. C) A type of savings account. D) A fixed income security. Show Answer Correct Answer: B) An ownership share in a company. 17. Belle worked a 40 hour work week and makes $ 17.50 an hour, what was her gross pay for the week? A) $ 710.00. B) $ 650.00. C) $ 705.oo. D) $ 700.00. Show Answer Correct Answer: D) $ 700.00. 18. Your company just sold a product with the following payment plan:$ 40, 000 today, $ 35, 000 next year, and $ 30, 000 the following year. If your firm places the payments into an account earning 6% per year, how much money will be in the account after collecting the last payment? A) $ 94, 074. B) $ 112, 044. C) $ 118, 767. D) $ 85, 000. Show Answer Correct Answer: B) $ 112, 044. 19. Short term sources of funds are those that will mature in at most 12 months and the interest is generally lower as compared to that of long term sources. Hence, this would lead to a lower financing cost. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 20. What does a cash budget help financial managers to anticipate? A) Loan needs, debt repayments, operating costs, and short-term investments. B) Report a company's assets, liabilities and shareholders' equity at a specific point in time. C) Profit margin or a company in a specific point in time. D) None of the above. Show Answer Correct Answer: A) Loan needs, debt repayments, operating costs, and short-term investments. 21. What is the formula for calculating the Net Present Value (NPV) of a project or investment? A) NPV = Initial Investment / Annual Cash Flow. B) NPV = Present Value-Initial Investment. C) NPV = Total Revenue-Total Expenses. D) NPV = Future Value / Present Value. Show Answer Correct Answer: B) NPV = Present Value-Initial Investment. 22. ..... include banks, insurance companies, and lending institutions, among others. A) Finance management. B) Financial institutions. C) Financial management. D) Finance. Show Answer Correct Answer: B) Financial institutions. 23. The objectives or goals of financial management are to maximize ..... ? A) Owner's wealth. B) Total assets. C) Sales. D) Profits. Show Answer Correct Answer: A) Owner's wealth. 24. Current assets are the assets that are either used up or converted to cash during the normal cycle of business. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 25. Berikut ini merupakan pendekatan investasi, kecuali: A) Agresif. B) Proaktif. C) Konservatif. D) Moderat. Show Answer Correct Answer: B) Proaktif. 26. Financial planning is a ..... not a product. A) Activity. B) Process. C) Assignment. D) None of the above. Show Answer Correct Answer: B) Process. 27. Financial instruments are: A) Debt securities. B) Equity securities. C) Derivatives. D) All of the above. Show Answer Correct Answer: D) All of the above. 28. Increase in accounts receivable A) Operating Activities. B) Investing Activites. C) Financing Activities. D) None of the above. Show Answer Correct Answer: A) Operating Activities. 29. Budgeting helps you control your spending and avoid getting into debt A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 30. A company with high growth plans must A) Distribute liberal dividend. B) Distribute less dividend. C) Distribute no dividend. D) None of the above. Show Answer Correct Answer: B) Distribute less dividend. 31. ..... refers to a firm holding some cash to meet its routine expenses that are incurred in the ordinary course of business. A) Speculative motive. B) Transaction motive. C) Compensating motive. D) Precautionary motive. Show Answer Correct Answer: B) Transaction motive. 32. What is the purpose of a business plan in corporate management? A) Maximizing customer satisfaction. B) Maximizing market share. C) Guiding business operations. D) Minimizing environmental impact. Show Answer Correct Answer: C) Guiding business operations. 33. Which market directly contributes for capital formation and increase in capital of firms? A) (a) Primary market. B) (b) Secondary market. C) C) Both (a) and (b). D) (d) None of the above. Show Answer Correct Answer: A) (a) Primary market. 34. Supply-side government policy is designed for what purpose? A) To raise the level of aggregate monetary demand in the economy. B) To manage the money supply in the economy. C) To improve the ability of the economy to produce goods and services. D) To reduce unemployment by limiting the supply of labour. Show Answer Correct Answer: C) To improve the ability of the economy to produce goods and services. 35. .... model of cash management attempts to minimization of total cost? A) A. S.F Bradley. B) B. Baumal's. C) C. Miller-orr. D) None of the above. Show Answer Correct Answer: B) B. Baumal's. 36. This means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. A) Investment. B) Financial Decision. C) Capital structure. D) Financial management. Show Answer Correct Answer: D) Financial management. 37. Permanent Working Capital means A) Excess funds available for long-term loans. B) Funds that are temporarily locked in assets. C) Funds permanently locked in current assets to ensure smooth business operations. D) Funds used for investment in fixed assets. Show Answer Correct Answer: C) Funds permanently locked in current assets to ensure smooth business operations. 38. ..... is financial institution. A) LIC. B) RBI. C) Commercial bank. D) SEBI. Show Answer Correct Answer: C) Commercial bank. 39. A cash budget is a plan for the amount expected to be spent and earned over a given period of time. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 40. For airlines, the most volatile and often largest single component of operating expenses is: A) Labor costs (Salaries and wages). B) Aircraft maintenance costs. C) Airport fees and landing charges. D) Fuel costs. Show Answer Correct Answer: D) Fuel costs. 41. What is the relationship between economic growth and standard of living? A) Economic growth decreases standard of living. B) No relationship. C) Economic growth only affects businesses. D) Economic growth improves standard of living. Show Answer Correct Answer: D) Economic growth improves standard of living. 42. Operating leverage helps in the analysis of ..... A) Production Risk. B) Financing Risk. C) Credit Risk. D) Business Risk. Show Answer Correct Answer: D) Business Risk. 43. What are the essential ingredients of sound working capital management? A) Efficient cash, inventory and receivables management. B) Efficient capital contribution and debtors management. C) Efficient creditors and debtors management. D) None of these. Show Answer Correct Answer: A) Efficient cash, inventory and receivables management. 44. Capital Structure is called ..... A) Quantitative aspect. B) Qualitative aspect. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: B) Qualitative aspect. 45. Calculate Weighted Average cost of capital if company uses 40% debt and 60% equity for long term finance and debt is obtained at 15% and cost of equity is 20%. Assume tax rate as 50%. A) 20%. B) 18%. C) 17.5%. D) 15%. Show Answer Correct Answer: D) 15%. 46. Which of the following is considered a saving tool? A) Credit Card. B) Fixed Deposit. C) EMI. D) Loan. Show Answer Correct Answer: B) Fixed Deposit. 47. Dividend policy of a firm is governed by A) Long term financing Decision. B) Profit maximization decision. C) Wealth maximization decision. D) (a) and (c ). Show Answer Correct Answer: D) (a) and (c ). 48. What is the objective of financial planning related to determining capital requirements? A) To consider both short-term and long-term capital requirements. B) To only consider short-term capital requirements. C) To only consider long-term capital requirements. D) To ignore capital requirements. Show Answer Correct Answer: A) To consider both short-term and long-term capital requirements. 49. What is diversification in investment? A) Diversification is investing all funds in a single asset. B) Diversification is a strategy to reduce risk by allocating investments across different assets. C) Diversification is a method to maximize returns by concentrating investments in high-risk assets. D) Diversification means avoiding any investment in stocks. Show Answer Correct Answer: B) Diversification is a strategy to reduce risk by allocating investments across different assets. 50. Factors affecting financing decision is/are A) Cost. B) Risk. C) Cash flow position. D) All of the above. Show Answer Correct Answer: D) All of the above. 51. Decisions relating to purchase of Machinery is part of A) Capital Budgeting Decisions. B) Dividend Decisions. C) Capital Structure Decisions. D) Working Capital Management Decisions. Show Answer Correct Answer: A) Capital Budgeting Decisions. 52. Which of the following can be utilised for the redemption of preference shares of a company out of profit A) Development rebate reserve account. B) Share forfeited account. C) Capital redemption reserve account. D) Dividend equalisation reserve. Show Answer Correct Answer: D) Dividend equalisation reserve. 53. Money that you make is called ..... A) Variable expense. B) Propery taxes. C) Income. D) Fixed expense. Show Answer Correct Answer: C) Income. 54. A prepaid expense is:(Year 2015) A) A liability. B) An asset. C) An income. D) An expense. Show Answer Correct Answer: B) An asset. 55. Sara worked an 8 hour shift and makes .12 per doll, she makes 80 dolls per hour, what was her gross pay for that day? A) $ 80.76. B) $ 60.00. C) $ 75.80. D) $ 76.80. Show Answer Correct Answer: D) $ 76.80. 56. BANK OVERDRAFT IS A FORM OF A) SHORT TERM FUNDS. B) LONG TERM FUNDS. C) BOTH. D) NONE OF THE ABOVE. Show Answer Correct Answer: A) SHORT TERM FUNDS. 57. Of the following, which is NOT one of the four main areas of finance? A) International finance. B) Corporate finance. C) All are considered main areas of finance. D) . Investments. Show Answer Correct Answer: C) All are considered main areas of finance. 58. Which one is not related with a government employee's personal benefit? A) Pension. B) Procurement. C) Salary. D) GPF. Show Answer Correct Answer: B) Procurement. 59. Q1) Basic objective of Financial Management is ..... A) Maximization of profit. B) Maximization of share holder's wealth. C) Ensuring Financial discipline in the firm. D) All of these. Show Answer Correct Answer: B) Maximization of share holder's wealth. 60. ..... are the debts owed to others. A) Equity. B) Liabilities. C) Assets. D) Owner's equity. Show Answer Correct Answer: B) Liabilities. ← 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