CBSE Questions for Class 12 Commerce Business Studies Financial Management Quiz 1 - MCQExams.com

The cost of funds raised through debt in the form of_____________.
  • Debentures
  • Loans from financial institurions
  • Debentures or loan from financial institutions
  • All of the above. 
Working capital is _______________.
  • net current assets
  • net working capital
  • gross cash inflow
  • Either (a) or (b)
Permanent working capital is the ________________.
  • difference between current assets and current liabilities
  • amount of funds invested in the various components of current assets
  • minimum amount of current assets which is needed to conduct a business even during the dullest season
  • additional assets which are required at different times during the operating year
If on account of inadequacy of profits, a company wants to pay dividends out of previous year's reserves, it has to follow the rules made by
  • Central Government
  • State Government
  • Articles of Association
  • Memorandum of Association
'Dividend' is defined under the fol1lowing section if Income Tax Act, 196
  • Section 2(20)
  • Section 2(22)
  • Section 5(22)
  • Section 5(33)
More working capital is required during the period of _______.
  • depression
  • recession
  • recovery
  • prosperity
Dividend warrants must be posted within ______ days from the date of declaration of dividend.
  • 24
  • 34
  • 30
  • 45
Factors determining working capital:
  • Nature of Industry and the nature of business
  • Demand of creditors and volume of sales
  • Cash requirements and inventory turnover
  • All the above
The dividend policy of a company is evolved within the framework of ___________.
  • corporate law
  • taxation
  • managerial considerations
  • All the above
Which of the following is not a principle of working capital management?
  • Principle of risk variation
  • Principle of equity position
  • Principle of cost of capital
  • Principle of liquidity
Choose the correct answer:
(a) Working capital management is an integral part of overall corporate management
(b) There are four tests of working capital policy
  • Both (a) and (b) are true
  • (a) is true, (b) is false
  • (a) is false, (b) is true
  • Both (a) and (b) are false
The primary sources of financing working capital in India is/are ____________.
  • trade credit
  • cash credit
  • Both (a) and (b)
  • Bank Credit
The word 'dividend' includes the following besides cash
  • Distribution of rights to acquire shares in another company is distribution of dividend
  • Where dividend is paid in the form of shares in another company, the dividend must be values at the market value of shares
  • Bonus shares issued by capitalising profits are not dividend
  • All the above
Dividend policy is a ________.
  • Managerial decision
  • Financing decision
  • Dividend decision
  • Subjective value
Accumulated profits
  • Are the profits possessed by the company on the date of liquidation
  • Include the amounts of Development Rebate
  • Are the profits in the hands of the company at the time of distribution of payment
  • All the above
Which of the following is known as the melon?
  • Cash dividend
  • Stock dividend
  • Scrip dividend
  • Property dividend
When dividend out of stock premiums is to be declared __________.
  • stockholders need not be informed
  • stockholders need not be consulted about them
  • stockholders must be informed and consulted about them
  • Both (a) and (b)
The note on dividend policy develops an investment approach which involves ______ steps
  • 3
  • 4
  • 5
  • 6
The following are the managerial considerations influencing dividend policy
(1) Availability of cash
(2) Restrictions by the Financial Institutions
(3) Management Control
(4) Dividend policy as a financing decision
Of these
  • 1 and 3 are correct
  • 2 and 4 are correct
  • 1, 2 and 4 are correct
  • All are correct
Cash dividends are ordinarily paid from _______.
  • current earnings
  • retained earnings
  • paid-in-surplus
  • capital surplus
The characteristics of a scrip dividend is/are ______.
  • it is in a form of a promissory note
  • it bears interest and is accepted as a collateral security
  • Both (a) and (b)
  • None of these
Dividends paid in the ordinary course of business are known as __________.
  • cash dividends
  • profit dividends
  • stock dividends
  • property dividends
Dividends paid from capital are known as ___________.
  • profit dividends
  • cash dividends
  • liquidation dividends
  • property dividends
Which of the following factors dominate the dividend policy?
  • Ownership considerations
  • Firm-oriented considerations
  • Both (a) and (b)
  • Legal considerations
The dividend policy directly affect its _________.
  • wealth
  • cost of capital
  • profit
  • output
Which of the following dividend payments lead to a transfer of stock from a speculative class into an investment category?
  • Regular dividend payments
  • Stable dividend payments
  • Irregular dividends
  • Extra dividends
Most common approach for analyzing the capital structure of a firm is ________.
  • ratio analysis
  • cash flow analysis
  • comparative analysis
  • leverage analysis
Mutually exclusive projects can be more accurately ranked as per:
  • Internal rate of return method
  • Net Present Value Method
  • Modified Internal Rate of Returns Method
  • Accounting or Average Rate of Return Method
Advantages of Regular dividend payments:
I. It establishes a healthy record for corporation
II. It aids in long-run financing and makes financing easier 
III. It improves the credit base of a corporation
IV. It stabilises the market value of securities
Of these
  • I and II are correct
  • II and III are correct
  • I, II and IV are correct
  • All are correct
Corporations encourage irregular dividend payments due to
  • Unsuccessful operations
  • Earnings are fluctuating
  • Impossibility to pay dividend regularly
  • All of the above
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