Competitive Exams: Commerce MCQs (Practice-Test 45 of 99)

  1. A company wishes to redeem its preference shares amounting to Rs. 1, 00, 000 at a premium of 5% and for this purpose issues 5, 000 equity shares of Rs. 10 each at a premium of 5%. The company also has a balance of Rs. 1, 00, 000 as General Reserves and Rs. 50, 000 in profit and loose account. The amount to be transferred to Capital Redemption Reserve account for the purpose of redemption is

    1. Rs. 47, 500

    2. Rs. 50, 000

    3. Rs. 52, 500

    4. Rs. 1, 05, 000

  2. An asset is purchased for Rs. 50, 000 on which depreciation is to be provided annually according to the straight line method. The useful life of the asset is 10 years and the residual value is Rs. 10, 000. The rate of depreciation is

    1. 20%

    2. 18%

    3. 10%

    4. 8%

  3. An asset is NEVER reduced to zero in the

    1. fixed installment method

    2. reducing balance method

    3. annuity method

    4. sum of years method

  4. The main objective of providing depreciation is to

    1. create secret Reserves

    2. reduce the book value of assets

    3. value the assets properly

    4. allocate cost of the assets

  5. Bonus shares can be issued by a company

    1. out of the Reserves created by revaluation of fixed assets

    2. out of share premium not collected in cash

    3. without any provision for it in the Articles of Association of the company

    4. out of free Reserves built out of genuine profits

  6. Revaluation method of depreciation is generally used in the case of

    1. plant

    2. land and building

    3. stock

    4. loose tools

  7. The Balance Sheet of a limited company as on 31.12. 1992 is as under: Rs. Rs. Share Capital: 5, 000 equity shares of Rs. 10 each 2, 000 equity shares of Rs. 10 each, Rs. 8 Per share paid up General Reserve 50, 000 16, 000 50, 000 Sundry Assets 1, 16, 000 1, 16, 000 1, 16, 000 The company decided to capitalize the necessary part of the General Reserve by issuing.

    1. a bonus share per share on the partly paid up shares in order to make them fully paid

    2. fully paid bonus shares at a premium of 5% per share amongst the existing shareholders to be distributed in the ratio of one share for every five shares held.

    The amount to be transferred from the

    General Reserve account is

    1. Rs. 14, 700

    2. Rs. 15, 000

    3. Rs. 18, 000

    4. Rs. 21, 000

  8. Rate of consumption of materials is one of the most important factors while fixing

    1. maximum level

    2. maximum level and reorder level

    3. maximum level and reorder level

    4. maximum level, minimum level and reorder level

  9. During a period of declining prices, which one of the following inventory pricing methods will result in lower cost of goods sold?

    1. FIFO

    2. LIFO

    3. Simple average method

    4. Inflated price method

  10. Match List I with List II and select the correct answer using the codes given below the lists:

    LIST I LIST II
    1. ABC Analysis

    2. Fund Flow Analysis

    3. ROI

    4. MM Theory

    1. Capital Structure

    2. Inventory Control

    3. Working Capital Management

    4. Overall Profitability

    • A
    • B
    • C
    • D
      • 2
      • 3
      • 4
      • 1
      • 1
      • 2
      • 4
      • 3
      • 4
      • 3
      • 1
      • 2
      • 1
      • 3
      • 2
      • 4
  11. Match List I (Objectives of Analysis) with List II (Regions to be Computed) and select the correct answer using the codes given below the lists:

    LIST I LIST II
    1. Trading on Equity

    2. Efficiency of Inventory Control

    3. Overall Efficiency

    4. Immediate Solvency

    1. Earnings Per Share

    2. Liquidity Ratio

    3. Capital Gearing

    4. Stock Turnover Ratio

    • A
    • B
    • C
    • D
      • 2
      • 1
      • 4
      • 3
      • 3
      • 4
      • 1
      • 2
      • 3
      • 1
      • 4
      • 2
      • 2
      • 4
      • 1
      • 3
  12. A particular firm provided the following data for 1994: Current Ratio: 2.5: 1 Liquid Ratio: 1.5: 1 Net Working Capital: Rs. 3, 00, 000 Current Assets and Current Liabilities of this firm are respectively

    1. Rs. 3, 00, 000 and Rs. 1, 50, 000

    2. Rs. 5, 00, 000 and Rs. 2, 00.000

    3. Rs. 5, 00, 000 and Rs. 1, 00, 000

    4. Rs. 3, 00, 000 and Rs. 1, 00, 000

  13. Match List I with List II and select the correct answer using the codes given below the lists:

    LIST I LIST II
    1. Leverage Ratio

    2. Acid Test

    3. Turn-over Ratio

    4. Current Ratio

    1. Liquidity position

    2. Efficiency of assets management

    3. Management of working capital

    4. Debt and Equity relationship

    • A
    • B
    • C
    • D
      • 4
      • 1
      • 3
      • 2
      • 2
      • 4
      • 1
      • 3
      • 2
      • 3
      • 1
      • 4
      • 4
      • 1
      • 2
      • 3
  14. Match List I with List II and select the correct answer using the codes given below the lists:

    LIST I LIST II
    1. Debt Service Coverage Ratio

    2. Turn-over of Receivable

    3. Proprietary Ratio

    4. Capital Turn-over Ratio

    1. Solvency Ratio

    2. Structural Ratio

    3. Activity Ratio

    4. Efficiency of Credit and Collection Policy

    • A
    • B
    • C
    • D
      • 1
      • 4
      • 3
      • 2
      • 4
      • 1
      • 3
      • 2
      • 1
      • 4
      • 2
      • 3
      • 4
      • 1
      • 2
      • 3
  15. Which one of the following ratios is most important for judging the long-term solvency of a firm?

    1. Debt-Equity Ratio

    2. Stock-Turn over ratio

    3. Return on Investments

    4. Fixed Assets Turn-over Ratio