Managerial Accounting MCQ Set-18

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-18

251. The Future Value (FV) of $1000 in 5 years at 5% interest rate will be:

1. $1,000.00
2. $1,276.28
3. $999.99
4. $1,500.52

Correct answer: (B)
$1,276.28

252. Which of the following is an advantage of a corporation that is NOT an advantage as in a partnership?

1. Limited liability
2. Capital shortage
3. Single taxation
4. All of the above

Correct answer: (A)
Limited liability

253. You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:

1. Will be greater than the intrinsic value of stock Y
2. Will be the same as the intrinsic value of stock Y
3. Will be less than the intrinsic value of stock Y
4. Cannot be calculated without knowing the market rate of return

Correct answer: (C)
Will be less than the intrinsic value of stock Y

254. Financial leverage means

1. Use of more debt capital to increase profit
2. High degree of solvency
3. Low bank finance
4. None of the above

Correct answer: (A)
Use of more debt capital to increase profit

255. A capital budgeting technique that is NOT considered as discounted cash flow method is:

1. Payback period
2. Internal rate of return
3. Net present value
4. Profitability index

Correct answer: (A)
Payback period

256. The coupon is the

1. Amount of discount received when a Bond is purchased
2. Amount paid to a Bond dealer when a Bond is purchased
3. Difference between the Bid and Ask Price
4. Stated Interest Payment on a Bond

Correct answer: (D)
Stated Interest Payment on a Bond

257. You wish to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of Rs2 in the upcoming year. The expected growth rate of dividends is 9% for stock C and nine percent for stock D. The intrinsic value of stock C ______________.

1. Will be the same as the intrinsic value of stock D
2. Will be less than the intrinsic value of stock D
3. Cannot be calculated without knowing the rate of return on the market portfolio
4. None of the above is a correct statement

Correct answer: (A)
Will be the same as the intrinsic value of stock D

258. Which of following is (are) Direct Claim Security?

1. Bonds
2. Option
3. Shares
4. a and c

Correct answer: (D)
a and c

259. The ______________ is defined as the present value of all cash proceeds to the investor in the stock.

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

Correct answer: (B)
Intrinsic value

260. Break even analysis is also called

1. Contribution Margin
2. Unit sales
3. Cost-Volume-Profit analysis
4. None of the above

Correct answer: (C)
Cost-Volume-Profit analysis