Accounting Quiz 8 (20 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. An expenditure in the nature of revenue enhancing activity is normally regarded as a

Correct Answer: A) Capital expenditure.

2. The arrangement of working capital and current assets can be done only by

Correct Answer: C) Short-term sources.

3. Public limited companies cannot issue

Correct Answer: B) Deferred shares.

4. Which accounting standard deals with accounting for amalgamations?

Correct Answer: B) AS-14.

5. Which is the type of leverage?

Correct Answer: C) Both (a) and (b).

6. Working capital can be used for the purchase of

Correct Answer: C) Raw material.

7. Adjustment in Exchange Rates due to different inflation rates in two countries is known as

Correct Answer: D) Purchasing Power Parity.

8. Debt financing is a cheaper source of finance because of

Correct Answer: C) Tax deductibility of Interest.

9. Any amount to be written off after the admission of a partner is transferred to the capital accounts of all partners in

Correct Answer: D) New profit sharing ratio.

10. If the intrinsic value of a share is less than the market price, which of the most reasonable?

Correct Answer: C) That market is over valuing the shares.

11. The relationship between the cost of equity and financial leverage in accordance with MM proposition II can be expressed by

Correct Answer: C) R = (Equity / Debt) x 100.

12. In the debt equity ratio, equity refers to

Correct Answer: D) Both preference and equity capitals plus all reserves.

13. Which factor determines dividend policy?

Correct Answer: D) All of the above.

14. According to guidelines issued by SEBI, a new company set up by entrepreneurs without a track record can issue capital to public only

Correct Answer: A) At par.

15. Financial Management is the

Correct Answer: D) Application of Planning and Control Function to the Finance Function.

16. Capital budgeting is

Correct Answer: D) All of the above.

17. Income and Expenditure Account is prepared on the basis of

Correct Answer: C) Mercantile system of accountancy.

18. The major sources where from debentures can be redeemed are

Correct Answer: D) All of the above.

19. YTM of a Bond is not affected by

Correct Answer: A) Issue Price.

20. Which accounting standard deals with Interim Financial Reporting?

Correct Answer: D) AS-25.