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Financial Management MCQ Questions and Solutions with Explanations | Commerce

Financial Management MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Financial Management MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-1 section-4

Each section contains 100 MCQs on Financial Management .
1
Process of comparing company results with other leading firms is considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
Process of comparing company results with other leading firms is considered as benchmarking. Benchmarking is a process of measuring the performance of a company's products, services, or processes against those of another business considered to be the best in the industry, aka “best in class.”
2
An equity multiplier is multiplied to return on assets to calculate
Discuss
Answer & Solution
Answer: Option A
Solution:
An equity multiplier is multiplied to return on assets to calculate return on assets. Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
3
An annual estimated costs of assets uses up every year are included
Discuss
Answer & Solution
Answer: Option A
Solution:
An annual estimated costs of assets uses up every year are included depreciation and amortization. Depreciation represents the cost of capital assets on the balance sheet being used over time, and amortization is the similar cost of using intangible assets like goodwill over time.
4
Proceeds of company shares of sold stock is recorded in
Discuss
Answer & Solution
Answer: Option B
Solution:
Proceeds of company shares of sold stock is recorded in common stock account. The common stock account is a general ledger account in which is recorded the par value of all common stock issued by a corporation.
5
Statement of cash flows are included
Discuss
Answer & Solution
Answer: Option D
Solution:
Statement of cash flows includes cash flows from operating, financing and investing activities. Financing activities include the inflow of cash from investors, such as banks and shareholders and the outflow of cash to shareholders as dividends as the company generates income.
6
A company purchases goods but does not pay payments to suppliers immediately and record them as
Discuss
Answer & Solution
Answer: Option A
Solution:
A company purchases goods but does not pay payments to suppliers immediately and record them as account payable. Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents.
7
In calculation of net cash flow, depreciation and amortization are treated as
Discuss
Answer & Solution
Answer: Option D
Solution:
In calculation of net cash flow, depreciation and amortization are treated as non-cash charges. A non-cash charge is a write-down or accounting expense that does not involve a cash payment.
8
Payments if it is made at end of each period such as an end of year is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Payments if it is made at end of each period such as an end of year is classified as ordinary annuity and deferred annuity.
9
In time value of money, nominal rate is
Discuss
Answer & Solution
Answer: Option A
Solution:
In time value of money, nominal rate is not shown on timeline. The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.
10
Value of net income is Rs 124,500,000 and common shares outstanding are Rs 60,000,000 then earning per share will be
Discuss
Answer & Solution
Answer: Option C
Solution:
EPS = net income / average outstanding common shares.
= 124500000 / 60000000
= 2.08