WorksheetsAccounting and Finance Multiple Choice Questions
Total questions: 30
Worksheet time: 15mins
Cash paid for purchase of investments is reported under:
Operating Activities
Financing Activities
Investing Activities
Non-cash Activities
Under the indirect method, increase in prepaid expenses is:
Added to net income
Deducted from net income
Ignored
Shown under financing
Cash flow from investing activities includes all except:
Sale of machinery
Purchase of investments
Dividend received
Payment of interest
Cash paid for income tax is classified as:
Investing
Operating
Financing
Non-cash disclosure
If depreciation increases, its impact on indirect method cash flow is:
Added
Deducted
Shown under financing
Not recorded
A company issues shares worth ₹10,00,000 and uses ₹8,00,000 to buy machinery. Net effect on total cash flow is:
+₹10,00,000
-₹8,00,000
+₹2,00,000
No change
A low current ratio with a high quick ratio implies:
High stock holding
Low inventory levels
High receivables
A high Debt Service Coverage Ratio indicates:
Lower profitability
Better debt-paying capacity
High solvency risk
Excess dividend payouts
A company with fast-moving inventory will show:
High Inventory Turnover
Low Inventory Turnover
No impact
Declining profitability
Given: Net Sales = ₹8,50,000 COGS = ₹5,10,000 Opening Stock = ₹1,00,000 Closing Stock = ₹90,000 Inventory Turnover Ratio = ?
4.5 times
5 times
5.67 times
6.21 times
Given: Credit Sales = ₹12,00,000 Debtors Opening = ₹1,80,000 Debtors Closing = ₹2,20,000 Average Collection Period (365 days basis) = ?
45 days
55 days
60 days
67 days
Given: EBIT = ₹6,00,000 Interest = ₹1,20,000 Interest Coverage Ratio =
4
5
6
3
Given: PAT = ₹5,00,000 Pref. Dividend = ₹50,000 Equity Share Capital = ₹10,00,000 Reserves = ₹5,00,000 Return on Equity = ?
3.3%
30%
12%
20%
A negative working capital turnover indicates:
Overtrading
Underutilized resources
Insolvency
Excellent liquidity
Market value per share ₹240, Book value ₹80. Market-to-book ratio =
1
2
3
Goodwill valuation using the Excess Earnings method falls under:
Asset approach
Income approach
Market approach
Cost approach
Replacement cost valuation is preferred in:
Startup valuation
Insurance of machinery
Bond valuation
Working capital management
A machine cost ₹12,00,000; Replacement cost today ₹18,00,000; useful life 10 years, used for 6 years. DRC = ?
₹6,00,000
₹8,00,000
₹10,80,000
₹12,00,000
Assets = ₹80,00,000
Liabilities = ₹30,00,000
Shares = 10,000
NAV/share = ?
₹300
₹400
₹500
₹800
A firm has EPS = ₹12; P/E Ratio = 15. Value per share =
₹100
₹120
₹150
₹180
A redeemable preference share pays ₹10 annual dividend for 3 years and repayment of ₹100; discount rate 10%. Value =?
₹100
₹120.60
₹90
₹75.13
A project gives annual cash flows: 1st yr ₹1,00,000; 2nd yr ₹1,20,000; 3rd yr ₹1,50,000; discount rate 10%. Present value =
₹3,50,000
₹3,00,000
₹3,27,000
₹2,97,000
Window dressing by inflating closing stock will:
Reduce profit
Increase profit
No impact
Decrease assets
Economic Value Added (EVA) is positive when:
NOPAT < Cost of Capital
NOPAT = Cost of Capital
NOPAT > Cost of Capital
The method ensuring adjustment for purchasing power changes is:
Historical accounting
Realization method
Inflation accounting
Fund flow accounting
A company has total assets of ₹50,00,000 and total liabilities of ₹20,00,000. What is the equity of the company?
₹20,00,000
₹10,00,000
₹30,00,000
₹50,00,000
In a cash flow statement, which of the following is classified as a financing activity?
Purchase of equipment
Issuance of shares
Sale of investments
Payment of salaries
Given: Net Income = ₹4,00,000; Depreciation = ₹1,00,000; Change in Working Capital = -₹50,000. What is the cash flow from operating activities?
₹3,50,000
₹6,00,000
₹4,50,000
₹5,50,000
Given: Net Income = ₹3,00,000 Interest Expense = ₹50,000 Tax Rate = 30% Net Profit Margin = ?
20%
15%
25%
10%
Given: Total Revenue = ₹10,00,000 Total Expenses = ₹7,50,000 What is the Operating Profit Margin?
30%
25%
35%
40%
