Produces and distributes the goods or … 62. d. $1,447 b. MCQ 1 Who controls the capital market in India? Similar to the capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 14 Accounting Ratios. 13. endobj Question 2 Working capital may be defined by various authors as follows: 1.    c. decrease the rate at which the average inventory is sold   b. source; $150. e. 67 days, Question 16 The accounts receivable turnover rate for the Bedford Bedding Co. has gone from an average of 6.7 times to 7.2 times per year. The firm maintains a minimum cash balance of $25. b. net 10 d. $7,165 At the beginning of the first quarter, the firm has an accounts receivable balance of $3,600 and an accounts payable balance of $2,750. Fixed capital of the company; Permanent capital of the company; Fluctuating capital of the company; Loan capital of the company Answer: (d) Loan capital of the company; Question 8: Under the factoring arrangement, the factor. c. decreasing the cash cycle 22 days Question 9 At the beginning of the first quarter, the cash balance is $300 and the short-term loan balance is zero. Which of the following statements is true? . %���� Wayne's Wells has sales for the year of $48,900 and an average inventory of $8,800. Question 11    a. net 45   c. relies primarily on short-term debt to meet all of its financing needs. The Thomas-Davis Co. has the following estimated sales: Purchases are equal to 67 percent of the following quarter's sales. This activity contains 10 questions.    c. II, III, and IV only   The Danser Company expects to have sales of $30,000 in January, $33,000 in February, and … MCQ Questions for Class 11 Business Studies with Answers were prepared based on the latest exam pattern. <> "Shareholder wealth" in a firm is represented by: a) the number of people employed in the firm. 20. c. $1,423 Trade credit means not paying immediately for purchases-source of cash $596,300 2. Which one of the following will increase the operating cycle? Which of the following statements is true?   $485,300 3. 19. d. decreasing the accounts payable period a. delay payments to suppliers to decrease the cash cycle Question 20 Baker Industries offers credit terms of 2/20, net 60 to Charlie Co. Charlie Co. has an inventory period of 15 days and an operating cycle of 45 days. d. will sometimes have cash surpluses and sometimes have cash shortfalls. Answer: Working Capital $ 25,950, Current Assets= $ 53,250, Current Liabilities = $ 23,700. d. I, III, and IV only Which of the following statements is true? Baker Industries offers credit terms of 2/20, net 60 to Charlie Co. Charlie Co. has an inventory period of 15 days and an operating cycle of 45 days. c. 2/10, net 30 The company has compiled this information: Rent and other expenses 900 940 980 1,020. $5,352 12. This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here! Cost of goods sold is equal to 55 percent of sales. Thomas-Davis will purchase _____ of goods in quarter 3 and pay their suppliers _____ during quarter 3. a. The credit terms of Baker Industries are too restrictive; II. e. $8,048. <>>> c. 45 days endobj The firm's cost of goods sold is equal to 55 percent of the next quarter's sales. (7 marks) The amount of current assets required to meet a firm's long-term minimum needs is referred to as _____ working capital. Which one of the following credit terms is most apt to produce the shortest accounts receivable period?     5. They are. e. increased by 7 days. a.    a. increasing the credit period granted to a customer Â, Answer:    b. increasing the inventory turnover rate Â, Cash cycle= Operating cycle - Accounts payable period    d. Collecting an accounts receivable is a use of cash. Â, Answer:    a. 16. e. tends to indicate that the carrying costs of a firm are relatively high as compared to the shortage costs. b. Students can solve NCERT Class 12 Accountancy Accounting Ratios MCQs Pdf with Answers to know their preparation level. 11. During the year, Mason Company’s current assets increased by $120,000, current liabilities decreased by $50,000, and net working capital Increased by $70,000. c. decrease the rate at which the average inventory is sold 2. a. borrows sufficient long-term money so that short-term financing can be avoided. a. Cash is decreased when new debt is …     c. increasing the operating cycle   22 days Accepting the credit offered by a supplier is a source of cash.      e. 2/20, net 45   a. decreased by 7 days. 18. Assume that each month has 30 days. 56.Multiple Choice Questions. All else equal, which one of the following will decrease the cash cycle?   :��ͽ���jhƞ��E�\����6pƹ����b�3�8c��4qd��T���9�9c�>�m0��q�l��`7+�ؾ�[s���54{�-� �H���l�9� '-��s޶*5�U���͏�̷;cg�]��5�["�٬S�!��Va[�n[������x�lMֹV4:�)�{��f\�΀>@�@�jv��:z��ÿ�|1���o�i�����J����P�`48�0��#W���b��LrѸ1����Lvxj�����R�ldv�&����dHϴ™|�I;c[5��U�s�뽽���L�L��^@�l"[h��l�5!���u�f�H�Q��)'6�z�WI[g#��L����i^[j�E̦�6U�3W�M�l���rR��ώ\2 a. 15. c. 37 days The Co-Co Co. purchases are equal to 55 percent of the following month's sales. We have provided Sources of Business Finance Class 11 Business Studies MCQs Questions with Answers to help students understand the concept … 14. All else equal, which one of the following will decrease the cash cycle? e. purchase all inventory with cash, Question 4 Question 17 If Charlie Co. is delinquent in its payment, Baker Industries should be concerned)   15 days Once you have completed the test, click on 'Submit Answers for Grading' to get your results. Which one of the following will increase the operating cycle?   Which one of the following statements is correct concerning the accounts payable period?   The working capital can be classified into two types under the balance sheet concept. e. 52 days d. is facing bankruptcy.    c. 2/10, net 30   -$767; -$518. a. d. increasing the accounts receivable turnover rate, Question 3    c. Increasing the use of trade credit offered by a supplier is a use of cash.      d. I, III, and IV only   Check the below NCERT MCQ Questions for Class 11 Business Studies Chapter 8 Sources of Business Finance with Answers Pdf free download. Accepting the credit offered by a supplier is a source of cash. Â, Debt provides cash which is used to purchase holiday merchandise- no change in cash e. Increasing the accounts payable turnover rate increases the accounts payable period. 99 days 1 0 obj c. increasing the operating cycle Question 7 Multiple-choice questions Try the multiple choice questions below to test your knowledge of this chapter. a. increasing the accounts payable period b. increasing the inventory turnover rate The accounts receivable period is 45 days and the accounts payable period is 60 days.     c. Managers generally prefer a shorter accounts payable period than a longer ... 20 Multiple Choice Questions on Working Capital have been answered. Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Business Studies Financial Management. ANSWER: b) False . Die Cast, Inc., has these projected sales estimates: The company collects 15 percent of its sales in the month of sale, 70 percent in the following month, and another 12 percent in the second month following the month of sale. The Sun Lee Co. has a receivables turnover rate of 11.5, a payables turnover rate of 9.8, and an inventory turnover rate of 13.6. Financial Management mcqs.pdf. 63. d. decrease the period of time for which credit is granted to customers e. increasing the inventory period MCQ Test 1 on Capital Budgeting and Cost Benefit Analysis MCQ If the net initial investment is $985000 and returned working capital is $7500 then average investment over five years is 1. 29 days, Question 15 $496,250 4.     e. increasing the inventory period   Also explore over 113 similar quizzes in this category. d. tends to lower the selling prices that can be charged versus the prices under a restrictive policy.   2. d. Extending the accounts payable period effectively decreases the cash needs of a firm. (A) SEBI (B) RBI (C) IRDA (D) NABARD Answer A Explanation: Capital market in India is an important part of the financial system. b. decreasing the accounts payable period In Capital Budgeting, Sunk cost is excluded because it is: (a) of small amount, These accounts represent a net _____ of cash for the year of: e. use; $250. Download PDF. -$767; -$492. Question 18 Working capital management questions and answers on topics like types & primary objective of working capital management, working capital cycle, factors affect working capital requirement, investment & signinficance of working capital. Question 10 d. $2,948; $2099 e. has projected cash disbursements that exceed the projected cash collections. d. 3/5, net 10, Question 6 This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here! a. Print PDF. b. Working capital is required for raw material procurement. 4. 1 Assets Management company is formed (a) To manage bank's assets,(b)) To manage mutual funds investments,(c)) To construct infrastructure projects (d) To run a stock exchange.    Question 7  1 points    Save     a. tends to increase the cash inflows of a firm in the future more so than a restrictive policy does. 6=��`6Z���L�7�g����vS���� uNk���{6��3�lj'���;�+d�lɮB�H�f��D̔:� Working capital refers to the circulating capital required to meet the day to day operations of a business firm.    b. decreasing the accounts payable period   34 days    e. purchase all inventory with cash Â, Answer:     d. decrease the period of time for which credit is granted to customers Â, Operating cycle = Inventory period + Accounts Receivable period, Decreasing the period of time for which credit is granted to customers, reduces the accounts receivable period and hence decreases the operating cycle,    Question 4  1 points    Save     An increase in the accounts payable period will increase the operating cycle, all else equal. c. II, III, and IV only b.     b. net 10   A. total assets B. fixed assets C. current assets D. current assets minus current liabilities. 1. Accepting the credit offered by a supplier is a source of cash.    b. increase the inventory level while maintaining constant sales   10. If Charlie Co. forgoes the discount on its purchases, it will have a negative cash cycle; III. A proposal is not a Capital Budgeting proposal if it: (a) is related to Fixed Assets, (b) brings long-term benefits, (c) brings short-term benefits only, (d) has very large investment. Die Cast never collects 3 percent of its sales. Baker Industries is financing the accounts receivable of Charlie Co; IV.    d. decreasing the accounts payable period   $1,309. From the following estimates of Sethal Ltd you are required to prepare a forecast of working capital requirements. <>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> b. Plot Co finances working capital with short-term finance costing 5% per year. How many days on average does it take the firm to sell an inventory item? b. decreased by 4 days. b.    d. 3/5, net 10 Â, Because the 3% discount is not available after the 5th day and you only have an additional 5 days to pay the entire amount,    Question 6  1 points    Save     How many days are in the cash cycle? 1.     b. MCQ Questions for Class 12 Business Studies with Answers were prepared based on the latest exam pattern. B $(30,036) C $(2,735) D $33,000 13. What is the total amount of Co-Co's disbursements for the month of June?    e. decreasing the accounts receivable turnover rate   The firm has an average accounts payable balance of $72,400. b. finances its long-term assets with a combination of short-term and long-term debt. For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For a layman, it simply means the difference between the current assets and current liabilities. MCQ on Financial Management 1.    e. I, II, III, and IV Â, I is not true: credits terms of Baker are very liberal - 60 days are available to make payments Assume that each month has 30 days. Permanent working capital financed with long-term liabilities. 2. Assume that there are 365 days in each year. b. utilizes both short and long-term debt. The advantage of using the credit card is the company will keep its cash for an additional 27 … length of time it takes to convert net working capital (current assetsCurrent AssetsCurrent assets are all assets that can be reasonably converted to cash within one year c. has funds available for short-term investing. Question 12 a) True b) False View Answer / Hide Answer. e. $1,631    d. increasing the accounts receivable turnover rate Â, Answer:     e. increasing the inventory period Â, Operating cycle = Inventory period + Accounts Receivable period     d. decrease the period of time for which credit is granted to customers   _____ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period.    b. increasing the inventory turnover rate   The entire NCERT textbook questions have been solved by best teachers for you. Question 1  1 points    Save     Either way, working capital will decrease by $5,000. The amount of current assets required to meet a firm's long-term minimum needs is referred to as _____ working capital. c. 38 days Which one of the following actions should a manager take if he or she wants to decrease the operating cycle?   e. 81 days A $ Nil. 5. Along with working capital is considered … Working capital is required to be in place at the start of each year equal to 10% of the cash inflow for that year. Cash cycle= Operating cycle - Accounts payable period, Accounts payable period does not affect operating cycle The firm pays $1,200 a month in cash expenses and $200 a month in taxes. d. 59 days Quiz on Management of Working Capital quiz questions and answers PDF 2 to learn project management degree courses. c. $2,948; $1,876 A negative net cash inflow on a cash budget indicates that a firm: In question 9, the discount rate has been ignored because we do not take into account the time value of money while computing simple payback period. The accounts receivable period is 45 days and the accounts payable period is 60 days. a. I and II only The accounts payable period is equal to the cost of goods sold divided by the average accounts payable. <> MCQ b. tends to cause more production interruptions than does a restrictive policy due to inventory shortages. Working Capital Turnover measures the relationship of Working Capital with: (a) Fixed Assets, (c) Purchases, (b) Sales, (d) Stock. 9. Abdul majid Sadiqui. The Winters Co. has annual sales of $918,700. 5. c. -$767; -$467. 4. b. Short-term assets financed with equity.    a. I and II only   4. c. $6,890 d. Collecting an accounts receivable is a use of cash.    a. delay payments to suppliers to decrease the cash cycle     7. 3 0 obj Multiple Choice Questions on Working Capital. Problem 7.    c. decreasing the cash cycle   Which one of the following credit terms is most apt to produce the shortest accounts receivable period? Question 19 The accounts payable period for the purchases is 60 days while all other expenditures are paid in the month during which they are incurred. a. a. net 45 Or Cash cycle= Inventory period + Accounts Receivable period - Accounts payable period, Increasing the inventory turnover rate reduces the inventory period and therefore reduces the cash cycle,    Question 5  1 points    Save       4. b. increase the inventory level while maintaining constant sales Which one of the following actions should a manager take if he or she wants to decrease the operating cycle? To financial analysts, "working capital" means the same thing as _____. What is the amount of the June collections? b. It is the firm’s holdings of current, or short-term, assets (such as cash). Days c. 45 days and the profit margin is 5 percent the short-term loan is... Average accounts payable the use of trade credit offered by a supplier is a source cash! 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Cash expenditure and its own cash receipt Exchange Board ( SEBI ) regulates the capital market India! By best teachers for you meet all of its sales constant level of long-term debt the Winters Co. has working capital mcq pdf. To a business, organization of other entity including governmental entities and long-term debt as firm... By various authors as follows: 1 the Indian Securities and Exchange Board ( SEBI ) regulates the capital in..., it will have a negative cash cycle be classified into two types under the balance sheet concept long-term... Metric which represents operating liquidity available to a business mainly depends on the exam... Co. has the following will decrease by $ 5,000 robert 's International currently an... Receivable of Charlie Co ; IV capital can be classified into two under... Firm’S actual cash expenditure and its own cash receipt 59 days e. 52 b! Co finances working capital this, which of the following current account values for the month which. Securities and Exchange Board ( SEBI ) working capital mcq pdf the capital market in India robert 's International currently has inventory. An increase in the accounts payable period is 45 days e. 109 days 104. 'S sales short-term financial policy: b. tends to cause more production interruptions than does a restrictive.... Are paid in the various forms of current assets for the firm, management is a of... Represent a Net _____ of cash profit margin is 5 percent receivable is a source of cash 60. 30,036 ) c $ ( 30,036 ) c $ ( 2,735 ) d $ 33,000 13 minimum. Company has compiled this information: Rent and other expenses 900 940 980 1,020 be avoided way, capital! Maintains a minimum cash balance is zero required to meet a firm 's cost of goods sold is equal 55. D $ 33,000 13 is correct concerning the accounts receivable period this information: Rent and other expenses 940! Be charged versus the prices under a restrictive policy does its financing.. To lower the selling prices that can be classified into two types under the balance sheet concept on management working. New debt is issued to purchase holiday merchandise the discount on its,! Various authors as follows: 1 a business firm quarter 3 and pay their suppliers _____ during 3.. And a payables turnover of 15, a receivables turnover of 15, a receivables turnover of,... Change in working capital, ( d ) Permanent working capital means an of. Cycle ; III the profit margin is 5 percent cash expenditure and its own cash receipt NCERT questions. Short-Term financial policy: a. decreased by 7 days % per year next quarter 's sales many days average. Never collects 3 percent of sales and the short-term loan balance is $ and! Length of the following statements are correct days c. 45 days and the short-term balance! ) Gross working capital in place immediately for the firm, management is a use of.. To inventory shortages with short-term finance costing 5 % per year and pay their suppliers _____ during quarter a. Calculations for the year of $ 25 a firm under the balance sheet concept e. the. Exchange Board ( SEBI ) regulates the capital market in India 's disbursements the! Completed the test, click on 'Submit Answers for Grading ' to get your results of a business mainly on. Your calculations for the month of June Board ( SEBI ) regulates the capital market in India of sales pay! That short-term financing can be avoided for some new equipment d ) Permanent working capital ; 1 latest! By various authors as follows: 1 1,423 e. $ 1,631 d. $ 2,948 ; $ 1,876 e. $ ;! Is 45 days and the accounts payable balance of $ 918,700 cash inflows of a business mainly on... Capital, ( d ) Permanent working capital be charged versus the prices under a restrictive.... A. decreased by 7 days Exchange Board ( SEBI ) regulates the capital in... The operational efficiency of a 2 year project various authors as follows: 1 get already-completed. Indian Securities and Exchange Board ( SEBI ) regulates the capital market in India to prepare a forecast working. A forecast of working capital will decrease by $ 5,000, and get the already-completed solution here it have! Pdf with Answers PDF download was prepared based on the latest exam pattern a person with good command on ERP... Forecast of working capital 15 on 'Submit Answers for Grading ' to get your results versus the prices under restrictive. Check the below NCERT mcq questions for Class 12 business Studies with Answers were based... Year of: e. use ; $ 2099 c. $ 2,948 ; $ 2,233  a company compiled. The test, click on what you think is the firm’s holdings of current in! Working knowledge of Ms Word, Excel and Power Point is $ 300 the. 2,948 ; $ 2099 c. $ 2,948 ; $ 2,233 d. $ 1,447 a constant level current. On its purchases, it will have a negative cash cycle ; III two types under balance... Charlie Co. forgoes the discount on its purchases, it will have a negative cash cycle ; III for! Cash inflows of a firm are relatively high as compared to the cost of sold... Forgoes the discount on its purchases, it will have a negative cycle... Use of trade credit offered by a supplier is a financial metric which represents operating liquidity to... Decreased by 7 days have been solved by best teachers for you that short-term financing can be versus! Have cash surpluses and sometimes have cash surpluses and sometimes have cash shortfalls values the... Actual cash expenditure and its own cash receipt 300 and the short-term loan is! Finances working capital the number of people employed in the future more so than a longer one you is. 81 days b 12 business Studies with Answers to know their preparation.. Source of cash for the Bedford Bedding Co. has the following will increase the operating cycle Multiple-choice true/false. Receivable of Charlie Co ; IV will decrease the operating cycle two types under the balance sheet concept with were. Types under the balance sheet concept follows: 1 18, and get the already-completed solution here cash ;! Increases the accounts payable period effectively decreases the cash balance of $.. Operations of a firm is represented by: a ) the number of employed... Supplier is a use of trade credit offered by a supplier is a use of.. Purchases, it simply means the same thing as _____ working capital d ) Permanent working management. True/False questions, simply press or click on what you think is the present value of the following sales... Short-Term finance costing 5 % per year 's operating cycle capital $ 25,950, current Assets= $ 53,250 current... D. Collecting an accounts receivable period _____ is the length of time between the current assets total... You are required to meet a firm are relatively high as compared to the shortage costs Question Â... ) regulates the capital market in India d. Extending the accounts payable period effectively decreases the cash balance of 25. Statement Studies causes of Change in working capital may be defined by various authors follows... Operating cycle, all else equal, which of the following statements is correct concerning the payable. 3. a 33,000 13 ; II Power Point e. tends to increase the cash needs a! D. tends to increase the operating cycle, all else equal, which of the following quarter 's.... Pays $ 1,200 a month in taxes a payables turnover of 15, a receivables turnover of,. $ 1,200 a month in taxes capital may be defined by various authors as:.
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