Managerial Accounting MCQ Set-17

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-17

236. Financial account state the ______________ position of a concern.

1. Financial
2. Economic
3. Non financial
4. None of these

Correct answer: (A)
Financial

237. Which group of ratios relates profits to sales and investment?

1. Liquidity ratios
2. Debt ratios
3. Coverage ratios
4. Profitability ratios

Correct answer: (D)
Profitability ratios

238. Process that involves decision making with respect to investment in fixed asset

1. Valuation
2. Breakeven analysis
3. Capital budgeting
4. Material management decision

Correct answer: (C)
Capital budgeting

239. When a Bond’s Yield to Maturity is greater than the Bond’s Coupon Rate, the Bond

1. Is selling at a Premium
2. Has reached its Maturity Date
3. Is priced at Par
4. Is selling at a Discount

Correct answer: (D)
Is selling at a Discount

240. The ______________ is a common term for the market consensus value of the required return on a stock.

1. Dividend payout ratio
2. Intrinsic value
3. Market capitalization rate
4. Plowback rate

Correct answer: (C)
Market capitalization rate

241. Current ratio is 2:5.Current Liability is Rs.30,000.The Net working Capital is

1. Rs. 18,000
2. Rs. 45,000
3. Rs. (45,000)
4. Rs. (18000)

Correct answer: (D)
Rs. (18000)

242. ______________ means expanding the number of investments which cover different kinds of stocks.

1. Diversification
2. Standard deviation
3. Variance
4. Covariance

Correct answer: (A)
Diversification

243. What is the value of a $1,000 Face Value Bond that has twenty years remaining to Maturity, 10 % Coupon (paid annually), and is priced to yield 6%?

1. $ 980
2. $ 1,000
3. 1,263
4. None

Correct answer: (D)
None

244. One of the problems with attempting to forecast stock market values is that

1. There are no variables that seem to predict market return
2. The earnings multiplier approach can only be used at the firm level
3. The level of uncertainty surrounding the forecast will always be quite high
4. Dividend payout ratios are highly variable

Correct answer: (C)
The level of uncertainty surrounding the forecast will always be quite high

245. Which of the following is a characteristic of a coupon bond?

1. Pays interest on a regular basis (typically every six months)
2. Does not pay interest on a regular basis but pays a lump sum at maturity
3. Total payment must be made at the end of period
4. All of above statement are correct

Correct answer: (A)
Pays interest on a regular basis (typically every six months)

246. When the market’s Required Rate of Return for a particular Bond is much less than its Coupon Rate, the Bond is selling at

1. Premium
2. Discount
3. Par
4. Face

Correct answer: (A)
Premium

247. ______________ is responsible for financial inventory, management, financial planning etc.

1. Shareholders
2. Treasurer
3. Controller
4. Board of Directors

Correct answer: (B)
Treasurer

248. Which group of ratios measures a firm’s ability to meet short-term obligations?

1. Liquidity ratios
2. Debt ratios
3. Coverage ratios
4. Profitability ratios

Correct answer: (A)
Liquidity ratios

249. Which one of following is not Direct Claim Security?

1. Bonds
2. Option
3. Shares
4. Stock

Correct answer: (B)
Option

250. ABC’s and XYZ’s debt-to-total assets ratio is 0.4. What is its debt-to-equity ratio?

1. 0 .2
2. 0 .77
3. 0.667
4. 0.333

Correct answer: (C)
0.667

KEY TAKEAWAYS Managerial Accounting MCQ set-17