Business Finance (ACC501)

1. Decisions about “how to raise money” and “what to do with it” are part of which of the following?

   1. Business Finance
   2. Change management
   3. Costing for accounting
   4. All of the given

2. If a firm’s debt ratio is 45%, this means _______ of the firm’s assets are financed by equity financing.

   1. 50%
   2. 55%
   3. 45%
   4. Cannot be determined without more information

3. XYZ Company has a ROE of 12 percent and a dividend payout ratio of 40 percent. What is the firm’s maximum sustainable rate of growth?

   1. 3.73%
   2. 5.93%
   3. 7.76%
   4. 9.17%

4. Which of the following statement measures performance over a specific period of time?

   1. Income Statement
   2. Balance Sheet
   3. Cash Flow Statement
   4. Retained Earning Statement

5. Business Finance addresses which of the following?

   1. Capital budgeting
   2. Capital structure
   3. Working capital management
   4. All of the given

6. Who of the following make a broader use of accounting information?

   1. Accountants
   2. Financial Analysts
   3. Auditors
   4. Marketers

7. Agency problems can be controlled by which of the way?

   1. Monitor what the agent is doing?
   2. Employ auditors to review company books to make sure funds are used properly
   3. Pay bonus share to manager as compensation plan
   4. All of the given

8. Which of the following measure reveals how much profit a company generates with the money shareholders have invested?

   1. Profit Margin
   2. Return on Assets
   3. Return on Equity
   4. Debt-Equity Ratio

9. A business owned by a single person is known as:

   1. Sole-proprietorship
   2. General partnership
   3. Limited partnership
   4. Corporation

10. In how many years, an amount will be doubled at a discount rate of 8 percent?

    1. 3 years
    2. 6 years
    3. 9 years
    4. Cannot be determined without more information

11. Between the two identical bonds having different coupon, the price of the ________ bond will change less than that of ________ bond.

    1. Higher-coupon; lower-coupon
    2. Lower-coupon; higher-coupon
    3. Long-term; short-term
    4. None of the given

12. Balance sheet for a company reports current assets of Rs. 700,000 and current liabilities of Rs. 460,000. What would be the Current Ratio for the company if there is an inventory level of Rs. 120,000?

    1. 1.01 times
    2. 1.26 times
    3. 1.39 times
    4. 1.52 times

13. Which of the following ratios is NOT from the set of Asset Management Ratios?

    1. Inventory Turnover Ratio
    2. Receiveable Turnover
    3. Capital Intensity Ratio
    4. Return on Assets

14. During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?

    1. Rs. 33,000
    2. Rs. 25,000
    3. Rs. 17,000
    4. Rs. 8,000

15. If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth of your amount after 4 years if bank offers simple interest?

    1. Rs. 5,400
    2. Rs. 5,900
    3. Rs. 6,600
    4. Rs. 6,802

16. Which of the given is (are) major difference(s) between net income and cash flow of the company?

    1. Accounts receivable only
    2. Depreciation only
    3. Accounts payable only
    4. All of the given

17. Which of the following best represents the term "Financing"?

    1. It means raising money to acquire something.
    2. It is an object that provides services.
    3. It is trade license to trade securities on behalf of investors.
    4. It represents an ownership interest.

18. Standard Corporation sold fully depreciated equipment for Rs. 5,000. This transaction will be reported on the cash flow statement as a(n):

    1. Operating activity
    2. Investing activity
    3. Financing activity
    4. None of the given

19. The most important item that can be extracted from financial statements is the actual ________ of the firm.

    1. Net Working Capital
    2. Cash Flow
    3. Net Present Value
    4. None of the given

20. The most common application of term "Finance" involves raising money to acquire _________.

    1. Land & Building
    2. Machinery & Equipment
    3. Inventory
    4. All of the given

21. Which of the following issue is NOT covered by "Investment" area of finance?

    1. Best mixture of financial investment
    2. International aspects of corporate finance
    3. Associated risks and rewards
    4. Pricing financial assets

22. Cash flow to the creditors can be calculated by using which one of the following expressions?

    1. Interest paid - retirement of debt - new borrowings + dividends
    2. Interest paid + retirement of debt + new borrowings - dividends
    3. Interest paid - retirement of debt - proceed from new borrowings
    4. Interest paid + retirement of debt - proceed from new borrowings

23. Mr. A has just recently started a business by investing a capital of Rs. 500,000. He will be the only owner of the business and also enjoy all the profits of the business. Which type of business is being employed by Mr. A?

    1. Sole-proprietorship
    2. Partnership
    3. Corporation
    4. None of the given

24. In which of the following tax system, a tax payer is charged uniformly for all levels of his taxable income?

    1. Progressive Tax Rate
    2. Marginal Tax Rate
    3. Flat Tax Rate
    4. Average Tax Rate

25. All of the followings are tax admissible items EXCEPT:

    1. Interest
    2. Dividend
    3. Salaries payable
    4. Depreciation

26. Which of the following equation best represents Net Working Capital?

    1. Current liabilities - current assets
    2. Current assets - current liabilities
    3. Current assets = current liabilities
    4. None of the given

27. Which of the following is a non-cash item?

    1. Tax
    2. Depreciation
    3. Account Receivables
    4. All of the given

28. Period costs include which of the following?

    1. Selling expense
    2. Raw material
    3. Direct labor
    4. Manufacturing overhead

29. Which of the following has "Limited liability" for business debts?

    1. Sole proprietorship
    2. General partnership
    3. Corporation
    4. All of the givem

30. Net Income after taxation differs from Net Cash Flow from operations because:

    1. Depreciation expense is shown in the Cash Flow Statement and not in the Income Statement
    2. Non-cash items are included in the Income Statement, but not in the Cash Flow Statement
    3. Cash sales are shown in the Cash Flow Statement but not in the Income Statement
    4. Cash expenses are shown in the Cash Flow Statement but not in the Income Statement

31. Mr. Ahmed wants to receive Rs. 1,800 forever at the end of each year. What will be the present value of this series of cash flow if rate of interest is 10%?

    1. Rs. 180
    2. Rs. 1,800
    3. Rs. 1,980
    4. Rs. 18,000

32. Which of the following diffulty(ies) is(are) faced while valuing a common stock?

    1. Unknown future cash flows
    2. Life of investment is limited
    3. Coupon rate is difficult to determine
    4. All of the given

33. Which of the following ratio is a way to measure a company's performance?

    1. Short-term solvency ratio
    2. Turnover ratio
    3. Profitability ratio
    4. Market value ratio

34. Which one of the following formula will be used to calculate profit margin ratio?

    1. Profit Margin Ratio = Sales / Net income
    2. Profit Margin Ratio = Net income / Sales
    3. Profit Margin Ratio = Net income / CGS
    4. Profit Margin Ratio = Net income / Operating profit

35. Time trend analysis of financial statements is used to compare the performance of firm with:

    1. Firm's own previous performance
    2. Performance of similar firms
    3. Performance of the industry
    4. Performance of all firms in country

36. Which of the following set of ratios is used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time?

    1. Liquidity Ratios
    2. Leverage Ratios
    3. Profitability Ratios
    4. Market Value Ratios

37. Mr. Ali has an opprtunity to invest Rs. 45,000 in a local bank at 13% compound interest rate for 6 years. What amount he will receive after 6 years?

    1. Rs. 93,690
    2. Rs. 80,100
    3. Rs. 97,500
    4. Rs. 65,770

38. All of the following are the features of privately placed bonds EXCEPT:

    1. Pay regular interest payments as decided
    2. Pay principle amoumt at the time of maturity
    3. Offered to general public
    4. Cost of bonds considered as cost of doing business

39. The preferred stock of a company currently sells for Rs. 25 per share. The annual dividend of Rs. 2.50 is fixed. Assuming a constant dividend forever, what is the rate of return on this stock?

    1. 5.00 percent
    2. 7.00 percent
    3. 8.45 percent
    4. 10.0 percent

40. Finance is vital for which of the following business activity (activities)?

    1. Marketing Research
    2. Product Pricing
    3. Design of marketing and distribution channels
    4. All of the given

41. Which of the following form of business organization is least regulated?

    1. Sole proprietorship
    2. General Partnership
    3. Limited Partnership
    4. Corporation

42. In which of the following form of business "All business income is not considered as personal income"?

    1. Corporate form
    2. Partnership
    3. Sole proprietorship
    4. None of the given

43. In which form of business organizations, owners have limited liability?

    1. Sole proprietorship
    2. Partnership
    3. Joint stock company
    4. None of the given

44. In which type of business, all owners share in gains and losses and all have unlimited liability for all business debts?

    1. Sole-proprietorship
    2. General Partnership
    3. Limited Partnership
    4. Corporation

45. The conflict of interest between stockholders and management is known as:

    1. Agency problem
    2. Interest conflict
    3. Management conflict
    4. Agency cost

46. Which of the following is the amount of cash we would get if we actually sell an asset?

    1. Market Value
    2. Book Value
    3. Intrinsic Value
    4. None of the given

47. Which of the following item provides the important function of shielding part of income from taxes?

    1. Inventory
    2. Supplies
    3. Machinery
    4. Depreciation

48. If a firm uses cash to purchase inventory, its current ratio will:

    1. Increase
    2. Decrease
    3. Remain unaffected
    4. Become zero

49. JJ Inc. has a 4 percent return on total assets of Rs. 500,000 and a net profit margin of 5 percent. Total sales for JJ Inc. would be :

    1. Rs. 150,000
    2. Rs. 200,000
    3. Rs. 250,000
    4. Rs. 400,000

50. Which of the following terms refers to the use of debt financing?

    1. Operating Leverage
    2. Financial Leverage
    3. Manufacturing Leverage
    4. None of the given

51. Time value of money is an important finance concept because:

    1. It takes risk into account
    2. It takes time into account
    3. It takes compound interest into account
    4. All of the given

52. The process of determining the present value of a payment or a stream of payments that is to be received in the future is known as:

    1. Discounting
    2. Compounding
    3. Factorization
    4. None of the given

Select a course code for Objective Questions:

ACC311 ACC501 BIF101 BIF401 BIF501 BIO101 BIO201 BIO202 BIO203 BIO204 BIO301 BIO302 BIO303 BIO401 BIO503 BNK603 BT101 BT201 BT301 BT302 BT401 BT402 BT403 BT404 BT405 BT406 BT501 BT504 BT505 BT604 CHE201 CHE301 CS001 CS101 CS201 CS202 CS204 CS301 CS302 CS304 CS311 CS401 CS402 CS403 CS408 CS501 CS502 CS504 CS506 CS508 CS601 CS602 CS604 CS605 CS607 CS609 CS610 CS614 CS707 CS710 ECO401 ECO402 ECO403 ECO404 EDU302 EDU401 EDU402 EDU501 EDU601 ENG101 ENG201 ENG301 ENG501 FIN611 FIN624 FIN625 ISL201 IT430 MCM101 MCM301 MGMT623 MGT101 MGT211 MGT301 MGT401 MGT402 MGT501 MGT502 MGT503 MGT510 MGT601 MGT603 MKT501 MKT610 MKT630 MTH101 MTH202 MTH302 MTH501 MTH601 MTH634 PAK301 PHY101 PHY301 PSY101 PSY403 PSY502 PSY512 SOC101 SOC301 SOC401 STA301 STA630 STA641 ZOO102 ZOO401 ZOO501 ZOO502 ZOO503 ZOO504 ZOO505 ZOO506 ZOO510 ZOO630

Select a course code for Subjective Questions:

ACC311 CS001 CS101 CS201 CS301 CS607 CS701 CS702 CS703 CS704 CS707 CS708 CS710 CS711 CS718 CS721 CS724 ECO401 ECO403 ENG101 ENG301 MGT703 MTH501 STA301