Financial Awareness Questions and Answers

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Financial Awareness Questions and Answers

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Financial Awareness MCQ Objective

1. Ownership expressed in terms of money is called
A) Property Account
B) Capital Account
C) Real Account
D) Asset Account

2. Capital profit is transferred to
A) Capital Reserve
B) Reserve Capital
C) General Reserve
D) Specific Reserve

3. Depreciation on fixed asset is provided in compliance with the accounting concept of
A) Consistency
B) Accrual
C) Cost
D) Going concern concept

4. Which of the following items is recorded in the sales journal?
A) Only cash sales
B) Only credit sales
C) Both cash and credit sales
D) None of these

5. Capital A/c is a
A) Personal Account
B) Real Account
C) Nominal Account
D) None of these

6. Quick ratio is also called
A) Acid test ratio
B) Near money ratio
C) Liquid ratio
D) All of these

7. A method of costing in which the fixed costs are added for inventory valuation
A) Absorption costing
B) Marginal costing
C) Direct costing
D) Deferred costing

8. Indirect material cost is a part of
A) Prime cost
B) Product cost
C) Variable cost
D) Factory cost

9. BEP is worked at
A) Fixed cost + P/V ratio
B) Fixed cost + Selling price
C) Fixed cost / Contribution per unit
D) Fixed cost/Variable cost per unit

10. Research and Development cost is
A) Production cost
B) Pre-production cost
C) Variable cost
D) Works cost

11. Cost reduction is achieved through
A) Value analysis
B) Inventory control
C) Production, planning and control
D) All of these

12. Margin of safety x PN ratio =
A) Sales
B) Variable cost
C) Fixed cost
D) Profit

13. The auditor of a public limited company is appointed by the
A) Government
B) Board of Directors
C) Shareholders

14. Duties of a company auditor are defined by
A) The Articles of Association
B) The Memorandum of Association
C) The Companies‘ Act, 1956
D) The agreement of the company with the auditor

15. The second important function of management is
A) Organising
B) Staffing
C) Directing
D) Controlling

16. The book ‘The Practice of Management‘ was authored by
A) P.F. Drucker
B) F.W. Taylor
C) Oliver Sheldon
D) Douglas McGregor

17. Strategic Planning means
A) Short term planning
B) Corporate planning
C) Decision making
D) None of these

18. Which of the followings is imaginary?
A) Mission
B) Vision
C) Goal
D) Objective

19. ‘POSDCORB’ was coined by
A) F.W. Taylor
B) Prahlad
C) Maslow
D) Gullick

20. The Consumer Protection Act was passed in
A) 1956
B) 1964
C) 1986
D) 1992

21. Which are synonymous?
A) Market mix and marketing mix
B) Marketing mix and product mix
C) Product mix and market mix
D) None of these

22. The term product concept was developed by
A) Theodore Levit
B) Kotler
C) Peter Drucker
D) None oi these

23. Which of the following is not included in the function of physical supply?
A) Standardisation
B) Transportation
C) Storage
D) Packaging

24. Atter sales service is a part of
A) Core product
B) Augmented product
C) Tangible product
D) Fundamental product

25. The word ‘positioning’ was coined by
A) Kotler
B) Peter Drucker
C) Al Reis and Jack Trout
D) Rosser Reeves

26. Products that consumers buy regularly with little effort are called
A) Shopping products
B) Convenience products
C) Impulse products
D) Consumer products

27. Income Tax Act was passed in
A) 1956
B) 1961
C) 1966
D) 1968

28. Remuneration paid to an MLA is taxed under the head
A) Income from salary
B) Capital gains
C) Income from profession
D) Income from other sources

29. PAYE in income tax stands for
A) Advance payment of tax
B) Payment of tax by the employer
C) Exemption from payment of tax
D) None of these

30. Which of the followings is not an indirect tax?
A) Sales tax
B) Estate duty
C) Customs duty
D) Entry tax

31. Burden of tax can be reduced by
A) Tax avoidance
B) Tax evasion
C) Tax planning
D) None of these

32. For income tax purpose, an Indian company is always
A) Resident
C) Not ordinarily resident
D) None of these

33. The method where data are collected for each item in the population is known as
A) Census method
B) Sampling method
C) Survey method
D) Observation method

34. Data taken from the ‘visitors list’ is
A) Cluster sampling
B) Quota sampling
C) Random sampling
D) Judgment sampling

35. The concept of regression was developed by
A) King
B) Jacques
C) Galton
D) Pearson

36. Which oi the followings is a positional average?
A) Mean
B) Mode
C) Median
D) Standard Deviation

37. In a sample based research work, the data collected for analysis are called
A) Primary data
B) Research data
C) Secondary data
D) Field data

38. In pie diagram. 1% =?
A) 1.8 degrees
B) 0.9 degrees
C) 3.6 degrees
D) 1.1 degrees

39. Mode is
A) 3 median + 2 mean
B) 3 median – 1
C) 3 median – 2
D) 3 median + 3

40. The degree oi relationship between two variables is called
A) Correlation
B) Regression
C) Variance
D) Probability

41. IDBI Bank Ltd. Is
A) Development bank
B) Commercial bank
D) None of these

42. NABARD was established in
A) 1972
B) 1982
C) 1964
D) 1986

43. India has the system of
A) Branch banking
B) Unit banking
C) Chain banking
D) None of these

44. One who deposits money in a bank becomes of the bank.
A) Agent
B) Debtor
C) Creditor
D) None of these

45. Barter system means
A) Goods sold on credit
B) Goods sold on cash
C) Goods sold for no consideration
D) Exchange oi goods for goods

46. The largest commercial bank in India is

47. A cheque becomes ‘stale’ after a period of
A) Two years
B) One year
C) Six months
D) Three months

48. The modem quantity theory of money was developed by
A) Friedman
B) Keynes
C) Fisher
D) Malthus

49. Who does issue the Rupee One Note/Coin in India?
C) Finance Commission
D) Secretary of Finance Affairs

50. The RBI is not concerned with
A) Framing the Fiscal Policy
B) Framing the Monitory Policy
C) Note issue
D) Control of credit

51. The Central Bank keeps 100% gold reserves against the notes is called
A) Special paper money
B) Managed paper money
C) Fiduciary paper money
D) Representative paper money

52. It’s best to float the equity shares in the market during
A) Boom
B) Recession
C) Recovery
D) Depression

53. Capital loss arises due to
A) Sale of current assets at a price lesser than book value
B) Sale oi capital assets at a price lesser than book value
C) Depreciation
D) All of the above

54. Who is the father of Financial Management?
A) Harold Koontz
B) Ezra Solomon
C) Peter F. Drucker
D) Joseph and Mazzie

55. Watered stock leads to
A) Over capitalisation
B) Under capitalisation
C) Fair capitalisation
D) None of the above

56. The capital structure which maximises the value of the firm is called capital structure.
A) Maximum
B) Minimum
C) Optimum
D) None of these

57. When equity is more than long term debt, the firm is said to be geared.
A) High
B) Low
C) Even
D) Moderate

58. Find the odd one out.
A) Investment decision
B) finance decision
C) Profitability decision
D) Dividend decision

59. approach is also known as matching approach.
A) Hedging
B) Conservative
C) Trade off
D) None of these

60. The main objective of a firm is
A) Sales management
B) Inventory management
C) Profit maximisation
D) Wealth maximisation

61. Agreement is
A) Consideration
B) Offer
C) Acceptance
D) Both (B) and (C)

62. An agreement to buy stolen goods is
A) Void
B) Voidable
C) Valid
D) Illegal

63. Stepping into a line bus creates
A) Valid contract
B) Voidable contract
C) Void contract
D) Unenforceable contract

64. Pledge is a part of
A) Consignment
B) Partnership
C) Bailment
D) Lease

65. General lien is available for
A) Banker
B) Bailor
C) Tailor
D) None of these

66. A minor cannot be al an
A) Agent
B) Partner
C) Payee
D) None of these

67. An agreement in restraint of the marriage of a minor is
A) Void
B) Voidable
C) Valid
D) Illegal

68. Indian Partnership Act was enacted in
A) 1932
B) 1948
C) 1956
D) 1964

69. Principle of indemnity is not applicable to
A) Lite insurance
B) Marine insurance
C) Fire insurance
D) All oi these

70. On payment of insurance policy. the insurer is put into the shoes of the insured.
This principle is called
A) Mitigation of loss
B) Causa proxima
C) Subrogation
D) Contribution

71. Bancassurance is the insurance product of
B) Private insurance companies
C) Banks
D) None of these

72. In India, the whole life insurance business is administered by
D) None of these

73. The law of diminishing marginal utility was first stated by
A) H.H.Gossen
B) J.R. Hicks
C) J.B. Say
D) Marshall

74. Under perfect competition, short run equilibrium of a firm will be
C) MC > MR
D) None of these

75. The shape of demand curve is
A) Upper sloping curve from right to left
B) Down sloping curve from right to left
C) Down sloping curve from left to right
D) Upper sloping curve from left to right

76. The salient features of Indian Economy are
A) Predominance of agriculture
B) Rapid growth of population and unemployment
C) Low per capita income and capital scarcity
D) All of these

77. Which industry is the second largest provider of employment in India after agriculture?
A) Textiles
B) Chemicals
C) Transports
D) Iron and steel

78. Who is the Chairman of ‘NITY AYOG’?
A) Minister for Finance
B) Minister for Planning
C) Chairman of Finance Commission
D) Prime Minister

79. The best method of keeping petty cash is known as
A) Imprest system
B) Cash system
C) Mercantile system
D) Accrual system

80. Goods taken by the proprietor for his personal use should be credited to which account?
A) Drawings Account
B) Advertisement Account
C) Cash Account
D) Purchases Account

81. The surplus which is not shown in the Balance Sheet is known as
A) Provision
B) Reserve Fund
C) Secret Reserves
D) General Reserve

82. When the drawee on accepting a bill, marks on it the place of payment, it is called
A) Acceptance of bill
B) Domicile of bill
C) Conditional acceptance
D) Local acceptance

83. Voyage Accounts include
A) Only income earned
B) Only the expenditure incurred
C) Both income earned and expenditure incurred
D) None of these

84. “Pay Mr. Kumar or order‘, this is an example of which type of endorsement?
A) Special endorsement
B) Restrictive endorsement
C) San Recourse endorsement
D) Facultative endorsement

85. The system where control accounts are kept as memorandum accounts and do not form part oi double entry is known as
A) Mercantile system
B) Sectional balancing
C) Self-balancing
D) Single entry system

86. Renewal fee tor patents is an example of which type of expenditure?
A) Capital Expenditure
B) Deferred Revenue Expenditure
C) Miscellaneous Expenditure
D) Revenue Expenditure

87. “Sola of Exchange” appearing on a Bill of Exchange means that
A) Bill drawn in a set
B) Foreign bills having no documents attached
C) Bills have not been drawn in a set
D) Bills having certain documents attached

88. In which method oi pricing, stock is valued at current selling price less estimated profit margin and less the estimated cost of disposal?
A) Specific price method
B) Average price method
C) Standard price method
D) Adjusted selling price method

89. The total sales of a trader during a given period is known as
A) Turnover
B) Output
C) Revenue
D) Income

90. Excess of purchase price over selling price is
A) Gross profit
B) Net profit
C) Gross loss
D) Net loss

91. Preliminary expense is an example of which type of assets?
A) Current assets
B) Fixed assets
C) Intangible assets
D) Fictitious assets

92. Income tax paid by a sole proprietor on his business income should be
A) Debited to Trading Account
B) Debited to Profit and Loss Account
C) Deducted from capital in Balance Sheet
D) Deducted from Cash Account in Balance Sheet

93. When goods are returned to the supplier, which document is sent to him?
A) Debit note
B) Credit note
C) Columnar journals
D) Both debit note and credit note

94. Depletion method of depreciation is used in
A) Loose tools
B) Mines
C) Machinery
D) Patent rights

95. Legacies are generally
A) Capitalised and taken in Balance Sheet
B) Treated as income and credited to Income and Expenditure Account
C) Treated as expense and debited to Income and Expenditure Account
D) Treated as revenue expenditure

96. Outstanding salaries comes under
A) Real Account
B) Nominal Account
C) Personal Account
D) Expense Account

97. In the case of a Retiring of a bill, which account is debited in the accounts of a drawer?
A) Interest Account
B) Discount Account
C) Deficiency Account
D) Rebate Account

98. Fixed cost per unit increases when
A) Production volume decreases
B) Production volume increases
C) Production volume remains constant
D) Variable cost per unit decreases

99. Purchase of office furniture was debited to Purchase Account. This is an example of which type of error?
A) Error of Omission
B) Error of Commission
C) Error of Principle
D) Compensating errors

100. Reserves which are not available for distribution as dividend are known as
A) Revenue Reserves
B) Capital Reserves
C) Dividend Equalisation Reserves
D) General Reserves

101. A Promissory Note is drawn by
A) Debtor
B) Creditor
C) Both Debtor and Creditor
D) Bank

102. An account opened at the back of the ledger to make it self-balancing is known as
A) Suspense Account
B) Adjustment Account
C) Cash Account
D) Trial Balance

103. The ledger which contains an account for each class of material and show receipts, issues and stock-in hand is known as
A) Cost Ledger Proper
B) Job Ledger
C) Stock Ledger
D) Stores Ledger

104. A Stale cheque means
A) Cheque payable to bearer
B) Cheque that has not been crossed
C) A cheque that is some months old
D) Cheque bears a date later than the current date on which they are drawn

105. Which system of wage payment consider the ratio that “work done bears to time taken“?
A) Time Rate System
B) Piece Rate System
C) Efficiency Pay System
D) Bonus System

106. A statement prepared to test the arithmetical accuracy of books of accounts is known as
A) Trial Balance
B) Balance Sheet
C) Bank Reconciliation Statement
D) Trading and Profit and Loss Account