Classical

Financial and Management Accounting - Financial and Management Accounting Objective Type Questions

16:  

Which of the following is a capital expenditure?

A.
Compensation paid for breach of a contract to supply goods.
B.
Interest on borrowings during the period of construction of works
C.

Loss of stock by fire

D.

Loss due to embezzlement by the manager.

 
 

Option: B

Explanation :


17:  

Cost of goods sold equals

A.
Opening stock + Purchases + Direct expenses + Manufacturing expenses - Closing stock
B.

Sales - Net Profit

C.

Sales - Gross Profit

D.

Both (A) and (C)

 
 

Option: D

Explanation :


18:  
Match List-I with List-II and select the correct answer using the codes given below the lists:
      List-I                                       List-II
a. Current Ratio                      I. Sufficiency of EBIT to cover interest charges
b. Debt-Equity Ratio              II. Short-term solvency
c. Net Profit Margin Ratio     Ill. Exposure to financial risk
d. Interest Coverage Ratio   IV. Earnings left for shareholders.
 

 

A.

 a    b    c    d

 II    III    I     IV

B.

 a    b    c    d

 III    II    I     IV

C.

 a    b    c    d

 III   II    IV   I

D.

 a    b    c    d

 II    III    IV   I

 
 

Option: D

Explanation :


19:  
Which of the following cash flows is not a cash flow from operating activity?
A.
Cash receipts from royalties, fees, commissions and other revenue.
B.
Cash payments to suppliers for goods and services.
C.

Cash payment to and on behalf of employees.

D.

Payment of dividend.

 
 

Option: D

Explanation :


20:  
Consider the following statement:
A low inventory turnover may be the result of
1. Obsolescence of some of the stock
2. Slow-moving inventory
3. Frequent stock-outs
4. Fast-moving inventory
Which of the above statement(s) is/are correct?

 

A.

1 and 2

B.

1 and 4

C.

2 only

D.

2 and 3

 
 

Option: A

Explanation :




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