Top MCQs on Financial Management and Functions in Accounting
The One which is not a
function of financial management among the below is?
I.
Investment decision-making
II.
Financing decision-making
III.
Dividend decision-making
IV. Production
decision-making
Explanation: Production decision-making is not a
function of financial management. The other three options are important
functions of financial management.
The statement which shows
a company's revenues and expenses over a period of time is?
I. Balance
sheet
II. Income statement
III.
Statement of cash flows
IV.
Statement of changes in equity
Explanation: The income statement reports a
company's revenues and expenses over a period of time, typically a month,
quarter, or year.
Which among the below
four options represents accounting equation correctly:
I. Assets = Liabilities
+ Owner's equity
II. Assets +
Liabilities = Owner's equity
III. Assets
- Liabilities = Owner's equity
IV.
Liabilities + Owner's equity = Assets
Explanation: The accounting equation expresses
the relationship between a company's assets, liabilities, and owner's equity.
It states that assets are equal to liabilities plus owner's equity.
What is the term which measures
a company's ability or capacity to pay off its short-term debt obligations is known
as:
I.
Debt-to-equity ratio
II. Current ratio
III. Return
on investment ratio
IV. Gross
profit margin ratio
Explanation: The current ratio measures a
company's ability to pay off its short-term debt obligations, such as accounts
payable and short-term loans..
What is the Reason or
purpose of the cash flow statement?
I. To Display
the profitability of a company
II. To display
the financial position of a company at a particular point in time
III. To show the cash
inflows & outflows of the company
during a period of time
IV. Cash
flow show the company's equity over the period of time
Explanation: The cash flow statement shows the
cash inflows and outflows of a company during a period of time, typically a
month, quarter, or year
What is The difference
between a company's total assets and the total liabilities is known as:
I. Owner's equity
II. Net
income
III. Gross
profit
IV. Revenue
Explanation: Owner's equity represents the
difference between a company's total assets and total liabilities. It
represents the residual interest in the assets of the company after all
liabilities are paid.
What is The financial
statement that Displays or shows the changes in a company's equity during a
period of time is called:
I. Balance
sheet
II. Income
statement
III. Statement of
changes in equity
IV.
Statement of cash flows
Explanation: The statement of changes in equity
shows the changes in a company's equity during a period of time, typically a
month, quarter, or year.
What is the the ratio which
measures the profitability of a company's sales called:
I.
Debt-to-equity ratio
II. Current
ratio
III. Return
on investment ratio
IV. Gross profit margin
ratio
Explanation: The gross profit margin ratio
measures the profitability of a company's sales by comparing the gross profit
to the sales revenue.
Which among the following
four options is a long-term liability?
I. Accounts
payable
II. Notes
payable due within one year
III. Bonds payable due
in five years
IV. Salaries
payable
Explanation: Bonds payable due in five years are
a long-term liability because they will not be due for payment within one year.
The statement that reports
or shows a company's assets, liabilities, equity at a specific point in time is
called:
I. Balance sheet
II. Income
statement
III.
Statement of cash flows
IV.
Statement of changes in equity.
Explanation: The balance sheet shows a company's
assets, liabilities, and equity at a specific point in time, typically the end
of a month, quarter, or year.
Among the four options
below the primary function of financial management is?
A) To
maximize profits
B) To maximize
shareholder value
C) To
minimize costs
D) To
increase market share
Explanation: The primary objective of financial
management is to maximize shareholder value by making decisions that increase
the value of the firm's stock.
Among the four below,
which is the function of financial management?
A) Human
resource management
B)
Production management
C) Marketing
management
D) Capital budgeting
Explanation: Capital budgeting is a function of financial
management that involves making decisions about the allocation of resources to
long-term investments.
Which among the given
four statements provides report about a company's financial position at a particular
point in time?
A) Income statement
B) Statement
of cash flows
C) Balance sheet
D) Retained
earnings statement
Explanation: The balance sheet provides
information about a company's financial position at a specific point in time by
showing its assets, liabilities, and equity.
Which among the
following is a feature or characteristic of financial management?
A)
Transaction recording
B) Financial analysis
C) Data
entry
D) Customer
service
Explanation: Financial analysis is a feature of
financial management that involves analyzing financial information to make
decisions about the allocation of resources and to evaluate the financial
performance of the firm.
The example of a
short-term financial decision among the below options is?
A)
Purchasing a new manufacturing facility
B) Issuing
new stock to raise capital
C) Paying off a
short-term loan
D) Investing
in research and development
Explanation: Paying off a short-term loan is an
example of a short-term financial decision because it involves managing the
firm's cash flow and working capital in the short term.