2012 The Global Open University, Nagaland Management M.B.A Global open University MBA 1st year Paper of Accounting and Financial Administration Question paper
jan, 2012
Duration: 2 Hours
Course: MBA
Year: First Year
Paper Name: Accounting and Financial
Administration
ATTEMPT ALL THE BELOW MENTIONED QUESTIONS:
1. Which of the following is likely to
be correct for a company, which
invests in projects with Positive
NPV?
a. Company's EVA (Economic Value
Added) rises by the same value
b. Company's MVA (Market Value Added)
or market value rises
c. Company Shareholders' Wealth rises
d. All of the given options
2. If the marginal reduction in order
costs exceeds the marginal carrying
cost of inventory, then what should
be done by the firm?
a. The firm has minimized its total
carrying costs.
b. The firm should increase its order size
c. The firm should decrease its order
size
d. The firm has maximized its order
costs
3. Which of the following is as EBIT?
a. Funds provided by operations
b. Earnings before taxes
c. Net income
d. Operating profit
4. Which of the following is the
general assumption of Percent of
Sales Forecasting?
a. Current Assets usually grow in
proportion to Revenues
b. Current Assets usually grow in
proportion to Expenses
c. Current Assets usually grow in
proportion to Liabilities
d. Current Assets usually grow in
proportion to Sales
5. In 2 years you are to receive
Rs.10,000. If the interest rate were to
suddenly decrease, the present value
of that future amount to you would
__________.
a. Fall
b. Rise
c. Remain unchanged
d. Incomplete information
6. Effective interest rate is different
from nominal rate of interest because
a. Nominal interest rate ignores
compounding
b. Nominal interest rate includes
frequency of compounding
c. Periodic interest rate ignores the
effect of inflation
d. d All of the given options
7. What is a legal agreement, also
called the deed of trust, between the
corporation issuing bonds and the
bondholders that establish the terms
of the bond issue?
a. Indenture
b. Debenture
c. Bond
d. Bond trustee
8. Which of the following would
generally have unlimited liability?
a. A limited partner in a partnership
b. A shareholder in a corporation
c. The owner of a sole proprietorship
d. A member in a limited liability
company (LLC)
9. Why we need Capital rationing?
a. Because, there are not enough
positive NPV projects
b. Because, companies do not always
have access to all of the funds they
could make use of
c. Because, managers find it difficult
to decide how to fund projects
d. Because, banks require very high
returns on projects
10. What is the present value of Rs.
3,500,000 to be paid at the end of 50
years if the correct risk adjusted
interest rate is 18%?
a. Rs.105,000
b. .1,500,000
c. Rs.3975,000
d. Rs. 350,000
11. When the zero coupon bond
approaches to its maturity, the
market value of the bond approaches
to which of the following?
a. Intrinsic value
b. Book value
c. Par value
d. Historic cost
12. Which of the following would be
considered a cash-flow item from an
"operating" activity?
a. Cash outflow to the government for
taxes
b. Cash outflow to shareholders as
dividends
c. Cash inflow to the firm from selling
new common equity shares
d. Cash outflow to purchase bonds
issued by another company
13. Which of the following refers to a
highly competitive market where
good business ideas are taken up
immediately?
a. Capital market
b. Efficient market
c. Money market
d. Real asset market
14. What is the most important
criteria in capital budgeting?
a. Return on investment
b. Profitability index
c. Net present value
d. Pay back period
15. Which of the following statements
(in general) is correct?
a. A low receivables turnover is
desirable
b. The lower the total debt-to-equity
ratio, the lower the financial risk for
a firm
c. An increase in net profit margin
with no change in sales or assets
means a weaker ROI
d. The higher the tax rate for a firm,
the lower the interest coverage
ratio
16. What should be the focal point of
financial management in a firm?
a. The number and types of products
or services provided by the firm
b. The minimization of the amount of
taxes paid by the firm
c. The creation of value for
shareholders
d. The dollars profits earned by the
firm
17. Which of the following is (are)
item (s) of cost of goods sold
statement?
a. Purchase of raw material
b. Any tax/freight paid on purchases
c. Any expense incurred on
carriage/transportation of raw
material purchased items
d. All of the given options
18. Which of the following refers to
the risk associated with interest rate
uncertainty?
a. Default risk premium
b. Sovereign Risk Premium
c. Market risk premium
d. Maturity risk premium
19. Which of the following voucher is
used to record transactions that do
not affect bank & cash?
a. Journal Voucher
b. Receipt Voucher
c. Payment Voucher
d. Nominal Voucher
20. If salaries are Rs. 2500,
purchases Rs. 18,000 and rent Rs.
400; what will be administrative
expenses? Select correct option
a. 400
b. 2,500
c. 2,900
d. 20,900
21. What would conversion costs if
costs of raw materials, direct labor
costs, and manufacturing overhead
costs Rs.80,000, Rs.50,000, and
Rs.60,000, respectively?
a. 130, 000
b. 110,000
c. 140,000
d. 190,000
22. A form that allows individuals to
compare their personal bank account
records to the bank's records of the
individual's account balance in order
to uncover any possible discrepancies
is known as
a. Bank statement
b. Income statement
c. Financial statement
d. Bank reconciliation statement
23. Cash and other resources that are
expected to turn to cash or to be used
up within one year of the balance
sheet date are called
a. Current liability
b. Current assets
c. Fixed assets
d. Long-term assets
24. An accounting system is used by a
business to
a. Analyze transactions
b. Handle routine bookkeeping tasks
c. Structure information
d. All of the given options
25. Particulars Rs. Opening written
down value of machine 3,75,000 Cost
of machine 50,000 Depreciation
during the year 11,500 Closing
written down value (WDV) of the
Machines ?
a. 4,13,500
b. 4,25,000
c. 3,36,500
d. 61,500
26. What will be debited, if business
purchased Furniture on cash?
a. Furniture account
b. Cash account
c. Business account
d. Bank account
27. Expenditure incurred in acquiring
the patent right for the business is an
example of
a. Revenue Expenditure
b. Capital expenditure
c. Deferred revenue expenditure
d. Administrative expenditure
28. Total assets - Total liabilities =?
a. Owner's equity
b. Expenses
c. Retained earnings
d. Net profit
29. What will be debited, if business
bought goods on credit from Mr. Ali?
a. Purchases account
b. Mr. Ali account
c. Cash account
d. Sales account
30. Prepaid rent given in the Trial
Balance will be treated as a (an)
a. Asset
b. Liability
c. Revenue
d. Deferred expense
31. A business event which can be
measured in terms of money and
must be recorded in books of
accounts is called
a. Condition
b. Transaction
c. Information
d. Record
32. Which one of the following is NOT
a feature of sole proprietorship
business
a. Easy Formation
b. Easy Dissolution
c. Unlimited Liability
d. Separate legal entity
33. In which of the following
statement opening stock is shown?
Select correct option
a. Profit and loss account
b. Balance Sheet
c. Cash flow statement
d. Owner's equity
34. The primary purpose of preparing
a cash flow statement for an entity is
to provide information about: Select
correct option
a. The profitability of its business
operations for a period of time
b. Its financial position at the end of
an accounting period
c. Its cash receipt and payments
during an accounting period
d. None of the given options
35. Which of the following is (are)
example(s) of non distributable
profit?
a. General reserve
b. Accumulated profit and loss
c. Revaluation reserves
d. None of given options
36. Which of the following
Organization converts raw material
into finished goods?
a. Trading concern
b. Manufacturing concern
c. Merchandising concern
d. Service concern
37. What will be debited, if business
bought goods on credit from Mr. Ali?
a. Purchases account
b. Mr Ali account
c. Cash account
d. Sales account
38. Total assets - Total liabilities =?
a. Owner's Equity
b. Expenses
c. Retained earnings
d. Net Profit
39. Any expense that gives benefit for
a period of less than twelve months is
called ________.
a. Capital Expense
b. Revenue Expense
c. Revenue Receipt
d. Deferred Expense
40. What should be credited, if salary
is paid to Sohail?
Select correct option
a. Sohail account
b. Salaries account
c. cash account
d. Drawing account
41. Net Profit = Income –
a. Liabilities
b. Assets
c. Expenses
d. Capital
42. An accounting system is used by a
business to
a. Analyze transactions
b. Handle routine bookkeeping tasks
c. Structure information
d. All of given options
43. Find out the missing value of an
Accounting Equation with the help of
given data: Owner's equity Rs. 22,500
Total Liabilities Rs. 80, 385 Cash Rs.
1,000 Bank Rs. 2,000 Debtors Rs. 500
a. Rs. 102,885 other assets
b. 102,885 current liabilities
c. 99,885 current liabilities
d. 99,385 other assets
44. Which of the following account
summarizes the profitability of
business for a specific accounting
period?
a. Profit and loss account
b. Cash flow statement
c. Receipt & Payment account
d. Balance Sheet
45. What will be debited, if Mohsin
commenced business with cash?
Select correct option
a. Cash account
b. Capital account
c. Drawings account
d. Proprietor account
46. When total liabilities are subtracted
from total assets the remaining amount is
known as
a. Equity or net assets
b. Net income or net loss
c. Total expenses
d. Total revenue
47. While making Profit & Loss
account, Excess of expenses over
income in a specified accounting
period is called
a. Profit
b. Loss
c. Surplus
d. Deficit
48. In which of the following all
vouchers are first
recorded___________.
a. General journal
b. General Ledger
c. Balance Sheet
d. Trial Balance
49. What should be credited, if rent
paid in cash?
a. Landlord's account
b. Rent account
c. Cash account
d. Accounts receivable account
50. What will be debited, If Mr. "A"
started business with Rs. 2, 00,000
a. Capital account
b. Cash account
c. Mr. A's account
d. Business account
51. The term "Debit" is derived from
language Select correct option
a. Latin
b. English
c. French
d. Chinese
52. A business event, which can be
measured in terms of money and
must be recorded in books of
accounts is called
a. Condition
b. Transaction
c. Information
d. Record
53. Which of the following entry will
be recorded, when land is purchased
for cash?
a. Cash a/c debit, and Land a/c credit
b. Owner's Equity a/c debit, and Cash
a/c credit
c. Land and cash a/c debit
d. Land a/c debit, and Accounts
Payables a/c credit
54. Which of the following expenses are called
financial expenses?
a. Payment of rent & Salary expense
b. Markup on loan and bank charges
c. Interest & advertisement expense
d. Wages and Depreciation expense
55. A Balance Sheet discloses the
financial position of a firm
a. For certain given period
b. At a particular point of time
c. After the fixed date
d. None of the given options
56. What is the next step to
Journalizing in Accounting cycle?
a. Recording
b. Posting
c. Balancing
d. Analyzing
57. Find out the missing value of an
Accounting Equation with the help of
given data: Total Assets Rs. 34,500
Accounts payable Rs. 1, 000 Other
liabilities Rs. 11,500 Owner's equity ?
a. 24,000
b. 45,000
c. 46,000
d. a and b
58. Consider the following data:
Particulars Rs. Assets
1,05,000 Owner's equity 70,000
Liabilities ?
a. Rs. 35,000
b. 1,75,000
c. 7, 35,000
d. 1, 05,000
59. Which of the following is NOT
correct?
a. Decrease in assets will be debt
b. Decrease in Liabilities will be debit
c. Decrease in Expenses will be credit
d. Decrease in Revenue will be debit
60. Which of the following is NOT
considered a part of financial
statements?
a. General Journal
b. Balance Sheet
c. Profit and Loss account
d. None of given options
61. Which one of the following will
result in increase in revenues?
a. Purchased fixed asset
b. Received discount
c. Payment to creditors
d. Return of goods, sold on credit
62. The basic accounting
principle/concept according to which
business record must be kept
separate from the personal records of
the owner is known as
a. Going-concern concept
b. Separate entity principle
c. Realization principle
d. Objectivity principle
63. In an account if debit side >
credit side, the balance is known as
the
a. Negative Balance
b. Debit balance
c. Positive Balance
d. Credit balance
64. Find out the missing value of an
Accounting Equation with the help of
given data: Cash Rs.100, 000 Debtors
Rs.10, 000 Other Assets Rs. 1,000
Owner's equity Rs. 1, 000 Liabilities ?
a. Rs. 12,000
b. Rs. 11,000
c. Rs. 110,000
d. Rs. 111,000
65. Find out the missing value of an
Accounting Equation with the help of
given data: Owner's equity Rs. 22,500
Total Liabilities Rs. 80, 385 Cash Rs.
1,000 Bank Rs. 2,000 Debtors Rs. 500
a. Rs. 102,885 other assets
b. Rs. 102,885 current liabilities
c. Rs. 99,885 current liabilities
d. Rs. 99,385 other assets
66. If Gross profit Rs.16,500 and Cost
of goods sold Rs.183,500, what will
be the amount of Net Sales?
a. 183,500
b. 200,000
c. 230,000
d. 167,000
67. Which of the following is NOT
correct?
a. Decrease in Assets will be credit
b. Decrease in liabilities will be credit
c. Decrease in Expenses will be credit
d. Decrease in Revenue will be debit
68. Debit signifies
a. Increase in Asset account
b. Decrease in liability account
c. Decrease in capital account
d. All of given options
69. When total liabilities are
subtracted from total assets the
remaining amount is known as
a. Equity or net assets
b. Net income or net loss
c. Total expenses
d. Total revenue
70. Find out the missing value of an
Accounting Equation with the help of
given data: Cash Rs. 22,500 Debtors
Rs. 500 Total Assets Rs. 80, 385
Accounts payable Rs. 1,000 Total
liabilities Rs. 20,000
a. Rs 60.385 owner's equity
b. Rs. 61,385 owner's equity
c. Rs. 99,885 owner's equity
d. Rs. 99,385 owner's equity
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