Classical

Financial Accounting - Financial Accounting MCQ

21:  
Which one of the following is correct
(i) A ratio is an arithmetical relationship of one number to another number.
(ii) Liquid ratio is also known as acid test ratio.
(iii) Role of thumb for current ratio is 2: 1
(iv) Debt equity ratio is the relationship between outsiders fund and shareholders fund
A.

Only (i), (ii) and (iii) are correct.

B.

Only (ii), (iii) and (iv) are correct.

C.

Only (ii) and (iii) are correct.

D.

All of the above.

 
 

Option: D

Explanation :


22:  
If compounding is done quarterly in year, the effective rate of interest is equal to
A.

4 x nominal rate of interest

B.

(1 + nominal rate of interest / 4)4

C.

(1 + nominal rate of interest)/ 4

D.

All of the above

 
 

Option: B

Explanation :


23:  
The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of
A.

Size disparity

B.

Time disparity

C.

Life disparity

D.

All of the above

 
 

Option: D

Explanation :


24:  
Capital gearing ratio indicates the relationship between
A.

assets and capital

B.

loans and capital

C.
equity shareholders fund and long term borrowed funds
D.

debentures and share capital

 
 

Option: C

Explanation :


25:  
A newly established company cannot be successful in obtaining finance by way of
A.

issue of equity capital

B.

issue of preference share

C.

issue of debenture

D.

None of the above

 
 

Option: C

Explanation :




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