Classical

Financial Accounting - Financial Accounting MCQ

16:  
Arrange the following steps involved in capital budgeting in order of their occurrence
(i) Project Selection
(ii) Project appraisal
(iii) Project generation
(iv) Follow up
(v) Project execution
A.

(ii), (iii), (i), (v), (iv)

B.

(iii), (ii), (i), (v), (iv)

C.

(i), (iii), (ii), (v), (iv)

D.

(i), (ii), (iii), (v), (iv)

 
 

Option: B

Explanation :


17:  
Depreciation is incorporated in cash flows because it
A.

Is unavoidable cost

B.

Is a cash flow

C.

Involves an outflow

D.

Reduces tax liability

 
 

Option: D

Explanation :


18:  
Which one is more appropriate for cost of retained earning?
A.

Weighted Average cost of capital

B.

Opportunity cost to the firm

C.

Expected rate of return by the investor

D.

None of the above

 
 

Option: B

Explanation :


19:  
Debt financing is a cheaper source of finance because of
A.

Time value of Money

B.

Rate of Interest

C.

Tax deductibility of Interest

D.

Dividends not payable to lenders.

 
 

Option: C

Explanation :


20:  
Which of the following steps of purchase decision process is in sequence?
(i) Problem recognition
(ii) Search for alternative
(iii) Evaluation of alternative
(iv) Purchase action
(v) Post purchase action
A.

1,3,2,4,5

B.

1,2,4,3,5

C.

2,1,3,5,4

D.

1,2,3,4,5

 
 

Option: D

Explanation :




Suggest an improvement