Strategic Finance - 10
True/False
Question Value based approach of HRA tracking can be divided into 2
categories - Non - monetary & monetary.
Correct Answer True
True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Multiple Choice Multiple Answer
Question Organisations have various records and reports from past
actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal
audit reports
Select The Blank
Question In today's fast moving world, the quickest way to get information
on a firm is through ________.
Correct Answer Internet
Select The Blank
Question The cost of facilities is usually included & distributed as
________.
Correct Answer Depreciation
Multiple Choice Multiple Answer
Question The existence of significant influence by an investor is usually
evidenced in the following ways :-
Correct Answer Participation in policy making processes , Material transactions
between the investor & the investee , Interchange of managerial
personnel
Multiple Choice Multiple Answer
Question The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Multiple Choice Multiple Answer
Question While accounting for human assets, the following data is to be
considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses
Multiple Choice Multiple Answer
Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True
Multiple Choice Single Answer
Question Conservative policy for determining the requirements of current
assets is also known as :-
Correct Answer Flexible policy
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
True/False
Question optimum cash balance under certainty i.e. Baumul`s model
allows the cash flow to fluctuate.
Correct Answer False
Multiple Choice Single Answer
Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Select The Blank
Question According to Altman (1984) total costs in percentage of the
market value of a firm range between ________
Correct Answer 12.1 % & 16.7 %
Multiple Choice Single Answer
Question According to a survey for reasons for share purchase, what is
the percentage of cash distribution to cash holders ?
Correct Answer 0.28
Select The Blank
Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Multiple Choice Multiple Answer
Question The important steps involved in the analysis of mergers &
acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Multiple Choice Multiple Answer
Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
True/False
Question The statute governing an enterprise may provide the basis for
computation of the depreciation.
Correct Answer True
Select The Blank
Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Multiple Choice Single Answer
Question Any addition or extension to an existing asset which retains a
separate identify & is capable of being used after the existing
asset is disposed of :-
Correct Answer Is depreciated independently
Match The Following
Question- Correct Answer
Amount involved in buy back- Not to exceed 25 % of the total paid up capital Authorize buy back of
securities
Board of Directors- Resolution permitting the buy back of shares
The ratio of debt to total capital & free reserves
should be 1 : 1
Multiple Choice Single Answer
Question Acceptable audit requirements cannot be overlooked even under
the pressure of :-
Correct Answer Timeliness & turnaround
True/False
Question A long term investment is an investment other than a current
investment.
Correct Answer True
Multiple Choice Multiple Answer
Question Book value of the assets is directly dependent on the accounting
policies followed by the company which is used in the following
areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory
valuation
Select The Blank
Question Identify disclosure on human resources as a societal concern &
prepare international regulations comes under ________
Correct Answer The compulsory method
Multiple Choice Multiple Answer
Question Walter's model on dividend relevance is based on the following
assumptions :-
Correct Answer Internal financing , Constant return and cost of capital , 100 Per
cent payout or retention
Multiple Choice Single Answer
Question When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Multiple Choice Single Answer
Question A manufacturing concern like a machine tool has :-
Correct Answer A long operating cycle
True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Select The Blank
Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Select The Blank
Question Depreciation is ________ of an asset.
Correct Answer Loss of value
Match The Following
Question- Correct Answer
Mortgage -Pertains to immovable properties
Lien- The bank has a right to retain the goods belonging to the company until the
debts due to the bank are paid
Hypothecation -A charge against property for an amount of debt
Pledge- Duty of the bank to take care of movable goods
Multiple Choice Multiple Answer
Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating
policy decisions
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Multiple Choice Single Answer
Question Where the management's estimate of the useful life of an asset
of the enterprise is shorter than that envisaged under the
provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Select The Blank
Question An asset is included in segment assets, if and only if the related
depreciation or amortisation is included in ________.
Correct Answer Segment expense
Multiple Choice Multiple Answer
Question The support elements consists of important functions such as :-
Correct Answer Payroll , Accounting , Automatic data processing
Multiple Choice Single Answer
Question Cost benefit analysis is the simplest form of comparison between
Correct Answer Ideas to determine which is faster, better or cheaper
Multiple Choice Multiple Answer
Question Valuation methods are highly specific to the following for doing
the valuation :-
Correct Answer To the person , To the firm , To the Consultant
Multiple Choice Single Answer
Question Arbitrage means :-
Correct Answer Securities cannot sell at different prices
Select The Blank
Question Credit standards should be relaxed upon the point where
incremental returns ________ incremental costs.
Correct Answer Equals
Multiple Choice Single Answer
Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
True/False
Question Dividends increase the current returns for shareholders.
Correct Answer True
True/False
Question When a company is able to assess an individual's worth, it helps
in increasing its own worth.
Correct Answer True
Strategic Finance - 9
Match The Following
Question -Correct Answer
Opportunity cost An asset value when they are the target of an
alternative use.
Exit cost- Lost efficiency prior to separation, Job vacancy cost during the new
search & termination pay.
Historical costs- Sacrifice necessary to hire & train people
Substitution cost- Exit costs of the leaving employee & recruiting &
training of the replacement
Multiple Choice Single Answer
Question Book value is relevant to determine the firm's value because of
the following reasons except:-
Correct Answer It cannot be used as a starting point to be compared &
complimented by other analysis
True/False
Question For determining exchange ratio, the model developed by Conn &
Nielson is used.
Correct Answer True
Multiple Choice Single Answer
Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Multiple Choice Single Answer
Question FEA is a technique to analyze & evaluate :-
Correct Answer Alternative process improvements
True/False
Question Arbitrage process implies that security cannot sell at different
prices.
Correct Answer True
Select The Blank
Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
True/False
Question Retained earnings are the most important internal sources of
financing the growth of the firm.
Correct Answer True
Multiple Choice Multiple Answer
Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating
policy decisions
Multiple Choice Single Answer
Question For paying dividends, firms will have a given amount of :-
Correct Answer Cash available
Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is
impacted by numerous transactions on a continuous basis
Select The Blank
Question Earning power of the company approach tries to value the
________.
Correct Answer Current value of the assets
Multiple Choice Multiple Answer
Question As per AS 13 Statement, the following are not considered as
investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Multiple Choice Multiple Answer
Question Operating economies of scale are achieved through the following
mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Select The Blank
Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
True/False
Question Management of working capital refers to the management of
total assets and liabilities of a company.
Correct Answer False
Multiple Choice Multiple Answer
Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to
shareholders , Amount to be retained in the firm
Multiple Choice Multiple Answer
Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Select The Blank
Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
True/False
Question Planning helps an acquiring firm to identify the units it should
drop & it should add.
Correct Answer True
Multiple Choice Single Answer
Question Segment information needs to be presented :-
Correct Answer Only on the basis of the consolidated financial statements
Select The Blank
Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
Match The Following
Question- Correct Answer
Earning per share- Acquisition is considered to be a function of the
impact of the merger on
Book value- Divide net worth by the number of equity shares
outstanding
Appraisal value- Provides a list of the reasonableness of results
obtained through methods base upon the going concern concept
Market value -Indicate the consensus of the investors
Multiple Choice Multiple Answer
Question Book value of the assets is directly dependent on the accounting
policies followed by the company which is used in the following
areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory
valuation
Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for expenses
incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Select The Blank
Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
True/False
Question According to NI Approach, decrease in leverage decreases the
overall cost of capital and increases the firm's value.
Correct Answer False
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Multiple Choice Single Answer
Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking
Multiple Choice Single Answer
Question One of the important assumptions for capital structure theories is
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question If a company has resorted to buyback its shares, it cannot make
a further issue of the same kind of securities within a period of 1
year.
Correct Answer False
True/False
Question The scope of the data required relates to the scope of the activity
model & processes under review.
Correct Answer True
Select The Blank
Question The ________ cost tier has the advantage of being the simplest
to calculate and justify.
Correct Answer Direct
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Select The Blank
Question The resource theory considers that the competitive position of a
firm depends on its ________ Assets.
Correct Answer Specific
Multiple Choice Single Answer
Question Many companies claim their main assets are their :-
Correct Answer People
Multiple Choice Multiple Answer
Question The important steps involved in the analysis of mergers &
acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Select The Blank
Question ________ is not a example of segment liability.
Correct Answer Goodwill
Select The Blank
Question If a segment is not designated as a ________ it should be
included as an unallocated reconciling item.
Correct Answer Reportable segment
Multiple Choice Multiple Answer
Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as
well as derivatives , Expected security return = Riskless return +
beta x (expected market risk premium)
Multiple Choice Single Answer
Question Debt suppliers main concern is :-
Correct Answer Interest & debt repayment
True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Multiple Choice Single Answer
Question The difference between current assets & current liabilities is
known as :-
Correct Answer Net working capital
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Multiple Choice Single Answer
Question According to a survey for reasons for share purchase, what is
the percentage of cash distribution to cash holders ?
Correct Answer 0.28
Strategic Finance - 8
Multiple Choice Single Answer
Question Any addition or extension to an existing asset which retains a separate
identify & is capable of being used after the existing asset is disposed of :-
CorrectAnswer Is depreciated independently
True/False
Question In market value approach, interested parties never manipulate the stock
markets.
Correct Answer False
Multiple Choice Multiple Answer
Question For accounting standard (AS) 27, Significant influence may be gained by
Correct Answer Share ownership , Statute , Agreement
Multiple Choice Single Answer
Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Select The Blank
Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Match The Following
Question -Correct Answer
Free cash flow theory -Enormous conflicts of interest between Stakeholders and
shareholders.
Net income approach -Cost of debt & equity do not change with a change in leverage
ratio.
Net operating income approach- The overall capitalization rate remains constant for
all levels of financial leverages.
Modigliani - Miller -Theory weighted average cost of capital does not change with a
change in the proportion of debt to equity in the capital structure.
Multiple Choice Single Answer
Question Where the management's estimate of the useful life of an asset of the
enterprise is shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate
Multiple Choice Single Answer
Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Select The Blank
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on
a reasonable basis to a segment
Multiple Choice Single Answer
Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
True/False
Question Arbitrage process implies that security cannot sell at different prices.
CorrectAnswer True
Multiple Choice Single Answer
Question Which is an example out of the following to which special consideration
apply for depreciation :-
Correct Answer Regenerative natural resources
True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Multiple Choice Multiple Answer
Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a
merger
Multiple Choice Single Answer
Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Multiple Choice Single Answer
Question Which of the following systems identifies each of the organizational
elements of the traditional bureaucratic structure and applies the identifiable costs of that
element accordingly?
Correct Answer Organization element accounting
Multiple Choice Multiple Answer
Question The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer Articles of association should authorize buyback of shares , The
shares which are sought to be bought back should be fully paid up , After the buy back
the ratio of debt to total capital and free reserves should not be more than 2 : 1
True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities
True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True
Multiple Choice Single Answer
Question When a company has resorted to buyback of its shares it cannot make a
further issue of the same kind of securities within a period of how many months?
Correct Answer 6 months
Select The Blank
Question At times managers invest in projects that improve the company's
________.
Correct Answer Prestige or power
Multiple Choice Multiple Answer
Question It is the activity accountant's job to do the following for the existing
organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Multiple Choice Single Answer
Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Select The Blank
Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Multiple Choice Single Answer
Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Select The Blank
Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Multiple Choice Single Answer
Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Multiple Choice Multiple Answer
Question To overcome the problems of matching data the actions can be taken as
follows :-
Correct Answer Keep extensive records of the process , Maintain detailed
procedures , Keep records of assumptions as an audit trail
Select The Blank
Question In the shareholding pattern of a company, the promoter's holding
includes________.
Correct Answer Foreign Promoters
Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year
from the date on which investment is made
True/False
Question Trade credit creates book debts which the firm is expected to collect in the
near future.
Correct Answer True
True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Multiple Answer
Question The financial managers of a company consume a great deal of their time in
activities like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable
credit terms , Administrating Accounts receivables
True/False
Question Appraisal value of a firm can be acquired from an independent appraisal
agency.
Correct Answer True
Multiple Choice Multiple Answer
Question The following categories of personnel are taken into account to calculate
the actual manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Multiple Choice Multiple Answer
Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
discretionary financing
Select The Blank
Question There is a ________ relationship between the number of employees & the
use of operating supplies.
Correct Answer Natural
Match The Following
Question -Correct Answer
Mechanisms- Performs or provides energy to an activity.
Inputs -Information or material used to produce the output of an activity
Controls -Information or material that constrains an activity.
Outputs- Information or material produced by an activity.
Multiple Choice Single Answer
Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted
immediately
True/False
Question Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True
Strategic Finance - 10
True/False
Question Value based approach of HRA tracking can be divided into 2
categories - Non - monetary & monetary.
Correct Answer True
True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Multiple Choice Multiple Answer
Question Organisations have various records and reports from past
actions such as :-
Correct Answer Logs to record workflow , Specific costs , External and internal
audit reports
Select The Blank
Question In today's fast moving world, the quickest way to get information
on a firm is through ________.
Correct Answer Internet
Select The Blank
Question The cost of facilities is usually included & distributed as
________.
Correct Answer Depreciation
Multiple Choice Multiple Answer
Question The existence of significant influence by an investor is usually
evidenced in the following ways :-
Correct Answer Participation in policy making processes , Material transactions
between the investor & the investee , Interchange of managerial
personnel
Multiple Choice Multiple Answer
Question The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Multiple Choice Multiple Answer
Question While accounting for human assets, the following data is to be
considered :-
Correct Answer Full time equivalent staff , Revenues , Expenses
Multiple Choice Multiple Answer
Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
True/False
Question The accounting records serve as the major source of cost data.
Correct Answer True
Multiple Choice Single Answer
Question Conservative policy for determining the requirements of current
assets is also known as :-
Correct Answer Flexible policy
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
True/False
Question optimum cash balance under certainty i.e. Baumul`s model
allows the cash flow to fluctuate.
Correct Answer False
Multiple Choice Single Answer
Question open account credit appears on the buyer's balance sheet as :-
Correct Answer Accounts payable
Select The Blank
Question According to Altman (1984) total costs in percentage of the
market value of a firm range between ________
Correct Answer 12.1 % & 16.7 %
Multiple Choice Single Answer
Question According to a survey for reasons for share purchase, what is
the percentage of cash distribution to cash holders ?
Correct Answer 0.28
Select The Blank
Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Multiple Choice Multiple Answer
Question The important steps involved in the analysis of mergers &
acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Multiple Choice Multiple Answer
Question Trade credits are of the following types:-
Correct Answer Notes payable , Trade acceptances , Open accounts
True/False
Question The statute governing an enterprise may provide the basis for
computation of the depreciation.
Correct Answer True
Select The Blank
Question The clean up period is usually ________ months.
Correct Answer 1 to 2 months
Multiple Choice Single Answer
Question Any addition or extension to an existing asset which retains a
separate identify & is capable of being used after the existing
asset is disposed of :-
Correct Answer Is depreciated independently
Match The Following
Question -Correct Answer
Amount involved in buy back
Not to exceed 25 % of the total paid up capital Authorize buy back of securities
Articles of Association Authorize buy back of securities
The ratio of debt to total capital & free reserves should be 1 : 1
Shares to be bought back Fully paid up
Multiple Choice Single Answer
Question Acceptable audit requirements cannot be overlooked even under
the pressure of :-
Correct Answer Timeliness & turnaround
True/False
Question A long term investment is an investment other than a current
investment.
Correct Answer True
Multiple Choice Multiple Answer
Question Book value of the assets is directly dependent on the accounting
policies followed by the company which is used in the following
areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory
valuation
Select The Blank
Question Identify disclosure on human resources as a societal concern &
prepare international regulations comes under ________
Correct Answer The compulsory method
Multiple Choice Multiple Answer
Question Walter's model on dividend relevance is based on the following
assumptions :-
Correct Answer Internal financing , Constant return and cost of capital , 100 Per
cent payout or retention
Multiple Choice Single Answer
Question When competition is high in the market, it is :-
Correct Answer Essential to maintain a larger inventory of finished goods
Multiple Choice Single Answer
Question A manufacturing concern like a machine tool has :-
Correct Answer A long operating cycle
True/False
Question Decisions related to working capital are repetitive & frequent.
Correct Answer True
Select The Blank
Question In many companies, there is no formal record of________.
Correct Answer Investment in employees
Select The Blank
Question Depreciation is ________ of an asset.
Correct Answer Loss of value
Match The Following
Question- Correct Answer
Mortgage -Pertains to immovable properties
Lien -The bank has a right to retain the goods belonging to the company until the
debts due to the bank are paid
Hypothecation- A charge against property for an amount of debt
Pledge- Duty of the bank to take care of movable goods
Multiple Choice Multiple Answer
Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating
policy decisions
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Multiple Choice Single Answer
Question Where the management's estimate of the useful life of an asset
of the enterprise is shorter than that envisaged under the
provisions of the relevant statute, the depreciation provision is
approximately computed :-
Correct Answer By applying a higher rate
Select The Blank
Question An asset is included in segment assets, if and only if the related
depreciation or amortisation is included in ________.
Correct Answer Segment expense
Multiple Choice Multiple Answer
Question The support elements consists of important functions such as :-
Correct Answer Payroll , Accounting , Automatic data processing
Multiple Choice Single Answer
Question Cost benefit analysis is the simplest form of comparison between
Correct Answer Ideas to determine which is faster, better or cheaper
Multiple Choice Multiple Answer
Question Valuation methods are highly specific to the following for doing
the valuation :-
Correct Answer To the person , To the firm , To the Consultant
Multiple Choice Single Answer
Question Arbitrage means :-
Correct Answer Securities cannot sell at different prices
Select The Blank
Question Credit standards should be relaxed upon the point where
incremental returns ________ incremental costs.
Correct Answer Equals
Multiple Choice Single Answer
Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
True/False
Question Dividends increase the current returns for shareholders.
Correct Answer True
True/False
Question When a company is able to assess an individual's worth, it helps
in increasing its own worth.
Correct Answer True
Strategic Finance - 9
Match The Following
Question- Correct Answer
Opportunity cost- An asset value when they are the target of an alternative use.
Exit cost- Lost efficiency prior to separation, Job vacancy cost during the new search & termination pay.
Historical costs- Sacrifice necessary to hire & train people
Substitution cost -Exit costs of the leaving employee & recruiting &training of the replacement
Multiple Choice Single Answer
Question Book value is relevant to determine the firm's value because of
the following reasons except:-
Correct Answer It cannot be used as a starting point to be compared &
complimented by other analysis
True/False
Question For determining exchange ratio, the model developed by Conn &
Nielson is used.
Correct Answer True
Multiple Choice Single Answer
Question Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Multiple Choice Single Answer
Question FEA is a technique to analyze & evaluate :-
Correct Answer Alternative process improvements
True/False
Question Arbitrage process implies that security cannot sell at different
prices.
Correct Answer True
Select The Blank
Question ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
True/False
Question Retained earnings are the most important internal sources of
financing the growth of the firm.
Correct Answer True
Multiple Choice Multiple Answer
Question Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating
policy decisions
Multiple Choice Single Answer
Question For paying dividends, firms will have a given amount of :-
Correct Answer Cash available
Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is
impacted by numerous transactions on a continuous basis
Select The Blank
Question Earning power of the company approach tries to value the
________.
Correct Answer Current value of the assets
Multiple Choice Multiple Answer
Question As per AS 13 Statement, the following are not considered as
investments:-
Correct Answer Shares , Debentures , Other securities held as stock in trade
Multiple Choice Multiple Answer
Question Operating economies of scale are achieved through the following
mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
True/False
Question Usually only a single method is used for valuation of shares.
Correct Answer False
Select The Blank
Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
True/False
Question Management of working capital refers to the management of
total assets and liabilities of a company.
Correct Answer False
Multiple Choice Multiple Answer
Question The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to
shareholders , Amount to be retained in the firm
Multiple Choice Multiple Answer
Question The cost of an investment includes charges such as :-
Correct Answer Brokerage , Fees , Duties
Select The Blank
Question Forfeiting is mostly used for ________.
Correct Answer Big ticket items & durable goods
True/False
Question Planning helps an acquiring firm to identify the units it should
drop & it should add.
Correct Answer True
Multiple Choice Single Answer
Question Segment information needs to be presented :-
Correct Answer Only on the basis of the consolidated financial statements
Select The Blank
Question Postage is an example of ________ cost.
Correct Answer Non traceable cost
Match The Following
Question- Correct Answer
Earning per share -Acquisition is considered to be a function of the impact of the merger on
Book value- Divide net worth by the number of equity shares outstanding
Appraisal value -Provides a list of the reasonableness of results obtained through methods
base upon the going concern concept
Market value- Indicate the consensus of the investors
Multiple Choice Multiple Answer
Question Book value of the assets is directly dependent on the accounting
policies followed by the company which is used in the following
areas :-
Correct Answer Booking depreciation , Methods of provisions , Inventory
valuation
Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for expenses
incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs , Administration
Select The Blank
Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
True/False
Question According to NI Approach, decrease in leverage decreases the
overall cost of capital and increases the firm's value.
Correct Answer False
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Multiple Choice Single Answer
Question Best practices, a tool for review process is similar to :-
Correct Answer Bench marking
Multiple Choice Single Answer
Question One of the important assumptions for capital structure theories is
:-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question If a company has resorted to buyback its shares, it cannot make
a further issue of the same kind of securities within a period of 1
year.
Correct Answer False
True/False
Question The scope of the data required relates to the scope of the activity
model & processes under review.
Correct Answer True
Select The Blank
Question The ________ cost tier has the advantage of being the simplest
to calculate and justify.
Correct Answer Direct
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Select The Blank
Question The resource theory considers that the competitive position of a
firm depends on its ________ Assets.
Correct Answer Specific
Multiple Choice Single Answer
Question Many companies claim their main assets are their :-
Correct Answer People
Multiple Choice Multiple Answer
Question The important steps involved in the analysis of mergers &
acquisitions are:-
Correct Answer Planning , Searching & screening , Financial evaluation
Select The Blank
Question ________ is not a example of segment liability.
Correct Answer Goodwill
Select The Blank
Question If a segment is not designated as a ________ it should be
included as an unallocated reconciling item.
Correct Answer Reportable segment
Multiple Choice Multiple Answer
Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets as
well as derivatives , Expected security return = Riskless return +
beta x (expected market risk premium)
Multiple Choice Single Answer
Question Debt suppliers main concern is :-
Correct Answer Interest & debt repayment
True/False
Question Organisational changes are similar to mission changes.
Correct Answer True
Multiple Choice Single Answer
Question The difference between current assets & current liabilities is
known as :-
Correct Answer Net working capital
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Single Answer
Question When the working capital is less than its peak level :-
Correct Answer The surplus is invested in liquid assets
Multiple Choice Single Answer
Question According to a survey for reasons for share purchase, what is
the percentage of cash distribution to cash holders ?
Correct Answer 0.28
Strategic Finance - 8
Multiple Choice Single Answer
Question Any addition or extension to an existing asset which retains a separate
identify & is capable of being used after the existing asset is disposed of :-
CorrectAnswer Is depreciated independently
True/False
Question In market value approach, interested parties never manipulate the stock
markets.
Correct Answer False
Multiple Choice Multiple Answer
Question For accounting standard (AS) 27, Significant influence may be gained by
Correct Answer Share ownership , Statute , Agreement
Multiple Choice Single Answer
Question Accounts payable is also known as :-
Correct Answer Trade credit from suppliers
Select The Blank
Question Earning power of the company approach tries to value the ________.
Correct Answer Current value of the assets
Match The Following
Question -Correct Answer
Free cash flow theory- Enormous conflicts of interest between Stakeholders and
shareholders .
Net income approach- Cost of debt & equity do not change with a change in leverage
ratio
Net operating income approach -The overall capitalization rate remains constant for
all levels of financial leverages
Modigliani - Miller -Theory weighted average cost of capital does not change with a
-change in the proportion of debt to equity in the capital structure
Multiple Choice Single Answer
Question Where the management's estimate of the useful life of an asset of the
enterprise is shorter than that envisaged under the provisions of the relevant statute, the
depreciation provision is approximately computed :-
Correct Answer By applying a higher rate
Multiple Choice Single Answer
Question What is a very important factor in any kind of merger?
Correct Answer Exchange ratio
Select The Blank
Question Segment expense includes ________.
Correct Answer The relevant portion of enterprise revenue that can be allocated on
a reasonable basis to a segment
Multiple Choice Single Answer
Question The depreciable assets are assets which are expected to be used :-
Correct Answer During more than 1 accounting period
True/False
Question Arbitrage process implies that security cannot sell at different prices.
CorrectAnswer True
Multiple Choice Single Answer
Question Which is an example out of the following to which special consideration
apply for depreciation :-
Correct Answer Regenerative natural resources
True/False
Question Baumul`s Model is similar to EOQ model in inventory management.
Correct Answer True
Multiple Choice Multiple Answer
Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to finance a
merger
Multiple Choice Single Answer
Question The difference between current assets & current liabilities is known as :-
Correct Answer Net working capital
Select The Blank
Question Stock repurchases ________ the debt / equity ratio.
Correct Answer Increases
Multiple Choice Single Answer
Question Which of the following systems identifies each of the organizational
elements of the traditional bureaucratic structure and applies the identifiable costs of that
element accordingly?
Correct Answer Organization element accounting
Multiple Choice Multiple Answer
Question The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer Articles of association should authorize buyback of shares , The
shares which are sought to be bought back should be fully paid up , After the buy back
the ratio of debt to total capital and free reserves should not be more than 2 : 1
True/False
Question Determination of residual value of an asset is normally a difficult matter.
Correct Answer True
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Multiple Choice Single Answer
Question Short term sources of funds include :-
Correct Answer Current Liabilities
True/False
Question To `gather costs', means capturing all relevant expenses that pertain to the
selected model and processes.
Correct Answer True
Multiple Choice Single Answer
Question When a company has resorted to buyback of its shares it cannot make a
further issue of the same kind of securities within a period of how many months?
Correct Answer 6 months
Select The Blank
Question At times managers invest in projects that improve the company's
________.
Correct Answer Prestige or power
Multiple Choice Multiple Answer
Question It is the activity accountant's job to do the following for the existing
organisational structure :-
Correct Answer To define the costs , To refine the costs , To document the costs
Multiple Choice Single Answer
Question One of the important assumptions for capital structure theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the firm
True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer False
Select The Blank
Question As per residual theory of dividends the focus is on ________.
Correct Answer Growth
Multiple Choice Single Answer
Question Profitability of a company depends upon :-
Correct Answer Cost of capital
Select The Blank
Question HLL the largest FMCG company has a turnover of Rs. ________.
Correct Answer 118 Bn
Multiple Choice Multiple Answer
Question The characteristics of working capital are :-
Correct Answer It is continually required for a going concern , Quantum of
working capital fluctuates depending on the level of activity , It is impacted by numerous
transactions on a continuous basis
Multiple Choice Multiple Answer
Question If a firm diversifies managerial teams formed can be shifted from
unproductive activities to productive ones which leads to :-
Correct Answer Improved profitability , Continuity , Growth of the firm
Multiple Choice Single Answer
Question In the tender offer, the purchaser approaches :-
Correct Answer The shareholder
Multiple Choice Multiple Answer
Question To overcome the problems of matching data the actions can be taken as
follows :-
Correct Answer Keep extensive records of the process , Maintain detailed
procedures , Keep records of assumptions as an audit trail
Select The Blank
Question In the shareholding pattern of a company, the promoter's holding
includes________.
Correct Answer Foreign Promoters
Multiple Choice Multiple Answer
Question A current investment is an investment that is by nature :-
Correct Answer Readily realisable , Intended to be held for not more than 1year
from the date on which investment is made
True/False
Question Trade credit creates book debts which the firm is expected to collect in the
near future.
Correct Answer True
True/False
Question The chance of bankruptcy is small when the leverage of a firm is small.
Correct Answer True
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Multiple Choice Multiple Answer
Question The financial managers of a company consume a great deal of their time in
activities like :-
Correct Answer Monitoring the investment in inventories , Negotiating favourable
credit terms , Administrating Accounts receivables
True/False
Question Appraisal value of a firm can be acquired from an independent appraisal
agency.
Correct Answer True
Multiple Choice Multiple Answer
Question The following categories of personnel are taken into account to calculate
the actual manpower strength :-
Correct Answer Full time equivalents , Temporary staff , Part time personnel
Multiple Choice Multiple Answer
Question Accrued expenses represent :-
Correct Answer Costless financing , An interest free source of financing
Select The Blank
Question There is a ________ relationship between the number of employees & the
use of operating supplies.
Correct Answer Natural
Match The Following
Question- Correct Answer
Mechanisms- Performs or provides energy to an activity
Inputs- Information or material used to produce the output of an activity
Controls -Information or material that constrains an activity
Outputs- Information or material produced by an activity
Multiple Choice Single Answer
Question Value added analysis :-
Correct Answer Helps to identify potential activities that may be omitted
immediately
True/False
Question Notes payable means the buyer signs a note that evidences a debt to the
seller.
Correct Answer True
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