This document contains 20 multiple choice questions from an accounting and auditing exam covering various topics related to accounting principles, cost accounting, financial ratios, auditing procedures, and Islamic banking and finance. The questions test knowledge of concepts like prime cost, process costing, variance analysis, sampling methods, tax treatment of expenditures, and terms used in mergers and acquisitions. There are also some basic questions about the Islamic calendar and details from the life of Prophet Muhammad.

1. Accounting& Auditing Paper MCQs-II (2000)
1. Fixed Cost:
a. Changes with production
b. Never changes even ifproduction capacity is doubled
c. None of the above
2. Conversion cost is:
a. Material Cost + Overhead Cost
b. Direct Labour + Material Cost
c. Labour Cost +Overhead Cost
3. Process Costing is relevant to:
a. Cement industry
b. Job Order cost oriented Projects
c. None of the above
4. Operating Profit is:
a. Profit after deducting financial costs
b. Profit after deducting taxes
c. Profit after deducting normal operating expenses including depreciation
5. A good Cost Accounting Systemis:
a. Ifit computes estimatedcost only
b. If it cannot be reconciled with financial accounts
c. Ifit enables management to increase productivity and rationalize coststructure
6. Verification includes:

2. a. Checking Vouchers
b. Examining audit report
c. None of the above
7 . Stratified audit sample means:
a. Randomly selected items for audit
b. Purposively selected items for audit
c. Items carefully selectedfrom each group
8. Internal Control is totally synonymous with:
a. Internal check
b. Internal audit
c. None of above
9. Audit ofa bank is generally conducted through:
a. Routine checking
b. Couching
c. Balance sheet audit
10. An auditoris liable for his annual audit ofaccounts o:
a. Creditors
b. Bankers
c. Owners
11. Income Tax is levied on:
a. Agricultural Income
b. Presumptive Income
c. None of above

3. 12. Ifa firm has paid super-tax, its partnersmay follow any oneofthe following behaviours:
a. No need to pay incometax, even ifthe income exceeds the taxablelimit.
b. Pay income tax, even ifthe income does not exceed the taxable income.
c. Pay income tax as required under the law.
13. A residentmultinational company need not:
a. Pay income tax, ifit s caused under DoubleTaxation agreement.
b. If it is not enjoying tax exemption under the Income Tax Ordinance, 1979 (Second Schedule).
c. None of above
14. Income Tax rates are the same for:
a. Limited Companies
b. Banking Companies
c. None of above
15. Super Tax on companies is:
a. In vogue in Pakistan
b. Not in vogue in Pakistan
c. None of above
16. Current Ratio is calculated as:
a. Fixed Assets/CurrentLiabilities
b. Current Liabilities/Current Assets
c. Current Assets/Current Liabilities
17. Short-term loan can be described as:
a. Ifthe period is three years
b. If the period is less than one year

4. c. If the period is over one year
18. A partnership, in today’s Pakistan, under the currentlaw can have the following number ofpartners:
a. 50
b. 20
c. 100
19. Combination can be best described as:
a. Restructuring ofCapital ofa Company
b. Reduction ofCapital ofa Company
c. Amalgamation oftwo different types ofbusinesses
20. Sources offunds can be increased by:
a. Describing selling prices
b. Increasing expenditure
c. None of above
Accounting & Audting Paper-II (2001)
Write only the correct answerin the Answer Book. Do not reproducethe questions.
(1) The measureable value ofan alternative use ofresources is referred to as:
(a) An opportunity cost
(b) An imputed cost
(c) A different cost
(d) A sunk cost
(e) None ofthese
(2) A quantitativeexpression ofmanagement objectives is an:
(a) Organizational chart
(b)Management chart
(c) Budget
(d) Procedural chart
(e) None ofthese
(3) A cost center is:
(a) A unit of production in relation to which costs are ascertained
(b) A location which is responsible for controlling direct costs
(c) Part of the factory overhead system by which costs are gathered
(d) Any location or department which incurs cost
(e) None ofthese

5. (4) At break-even point of400 units soldthe variable costs were Rs. 400 and the fixed costs were Rs.200.
What will be the 401 units sold contributing to profit before income tax?
(a) Rs. 0.00
(b) Rs. 0.50
(c) Rs. 1.00
(d) Rs. 1.50
(e) None ofthese
(5) In considering a special order situation that will enable a company to make use ofcurrently idle
capacity, which ofthe following cost will be irrelevant:
(a) Materials
(b) Depreciation
(c) Direct labour
(d) Variable factory overhead
(e) None ofthese
(6) A fixed cost:
(a) May change in total when such changeis not related to changes in production
(b) Will not change in total because it is not related to changes in production
(c) Is constant per unit for each unit ofchange in production
(d) May change in total, depending on production with the relevant range
(e) None ofthese
(7 ) Completion ofa job is result in:
(a) DR finished goods …….. CR WIP
(b) DR Cost ofgoods ……... CR finished goods
(c) DR WIP ……………..….….. CRFOH control
(d) DR FOH control …….….. CRFOH applied
(e) None ofthese
(8) Operating cost in often named as:
(a) Manufacturing cost plus commercial expenses
(b) Prime cost plus factory overheads
(c) Direct material plus direct labour
(d) Selling plus administrative expenses
(e) None ofthese
(9) Expenses such as rent and depreciation ofa building are shared by several departments these are:
(a) Indirectexpenses
(b) Direct expenses
(c) Joint expenses
(d) All ofthe above
(e) None ofthese
(10) Ifunder applied FOH is closed to cost ofgoods sold, the journal entry is:
(a) DR Cost of goods sold …….. CR FOH control
(b) DR FOH control ……..……….. CR Cost ofgoods sold
(c) DR FOH control ……..……….. CRProfit % loss account
(d) None of these
(11) Re-order quantity …… 3600 units
Maximum consumption ...… 900 units per week
Minimum comsumption …....300 units per week
Re-order period …………….….5 weeks
Based on this data Re-order level is:
(a) 4500 units

6. (b) 3900 units
(c) 1200 units
(d) 400 units
(e) None ofthese
(12) The time lag between indenting and receiving material is called:
(a) Lead time
(b) Idle time
(c) Stock out time
(d) None of these
(13) A credit balanceremaining in FOH Control account is called:
(a) Over-applied overhead
(b) Under-applied overhead
(c) Actual overhead
(d) None of these
(14) Direct material cost plus direct labour cost is called:
(a) Prime cost
(b) Conversion cost
(c) Product cost
(d) All ofthese
(e) None ofthese
(15) Productivity means:
(a) T he ability to produce
(b) All units produced
(c) Good units produced
(d) None of these
(16) A segment ofthe business that generates both revenueand cost is called:
(a) Profit Center
(b) Cost Center
(c) Cost driver
(d) All ofthese
(e) None ofthese
(17) Verification includes:
(a) Checking vouchers
(b) Examining audit report
(c) None of these
(18) Audit ofa bank is generally conducted through:
(a) Routine checking
(b) Vouching
(c) Balance sheet audit
(d) None of these
(19) Economics resources ofa business that are expected to be ofbenefit in the future are referred to as:
(a) Liabilities
(b) Owner’s equity
(c) Withdrawals
(d) Assets
(e) None ofthese
(20) Short term Loan can be best described as:
(a) If the period is three years

7. (b) Ifthe period is less than one year
(c) If the period is overone year
(d) None of these
Accounting & Audting Paper-II (2001)
Write only the correct answerin the Answer Book. Do not reproducethe questions.
(1) The measureable value ofan alternative use ofresources is referred to as:
(a) An opportunity cost
(b) An imputed cost
(c) A different cost
(d) A sunk cost
(e) None ofthese
(2) A quantitativeexpression ofmanagement objectives is an:
(a) Organizational chart
(b)Management chart
(c) Budget
(d) Procedural chart
(e) None ofthese
(3) A cost center is:
(a) A unit of production in relation to which costs are ascertained
(b) A location which is responsible for controlling direct costs
(c) Part of the factory overhead system by which costs are gathered
(d) Any location or department which incurs cost
(e) None ofthese
(4) At break-even point of400 units soldthe variable costs were Rs. 400 and the fixed costs were Rs.200.
What will be the 401 units sold contributing to profit before income tax?
(a) Rs. 0.00
(b) Rs. 0.50
(c) Rs. 1.00
(d) Rs. 1.50
(e) None ofthese
(5) In considering a special order situation that will enable a company to make use ofcurrently idle
capacity, which ofthe following cost will be irrelevant:
(a) Materials
(b) Depreciation
(c) Direct labour
(d) Variable factory overhead
(e) None ofthese
(6) A fixed cost:
(a) May change in total when such changeis not related to changes in production
(b) Will not change in total because it is not related to changes in production
(c) Is constant per unit for each unit ofchange in production
(d) May change in total, depending on production with the relevant range
(e) None ofthese
(7 ) Completion ofa job is result in:
(a) DR finished goods …….. CR WIP
(b) DR Cost ofgoods ……... CR finished goods
(c) DR WIP ……………..….….. CRFOH control

8. (d) DR FOH control …….….. CRFOH applied
(e) None ofthese
(8) Operating cost in often named as:
(a) Manufacturing cost plus commercial expenses
(b) Prime cost plus factory overheads
(c) Direct material plus direct labour
(d) Selling plus administrative expenses
(e) None ofthese
(9) Expenses such as rent and depreciation ofa building are shared by several departments these are:
(a) Indirectexpenses
(b) Direct expenses
(c) Joint expenses
(d) All ofthe above
(e) None ofthese
(10) Ifunder applied FOH is closed to cost ofgoods sold, the journal entry is:
(a) DR Cost of goods sold …….. CR FOH control
(b) DR FOH control ……..……….. CRCost ofgoods sold
(c) DR FOH control ……..……….. CRProfit % loss account
(d) None of these
(11) Re-order quantity …… 3600 units
Maximum consumption ...… 900 units per week
Minimum comsumption …....300 units per week
Re-order period …………….….5 weeks
Based on this data Re-order level is:
(a) 4500 units
(b) 3900 units
(c) 1200 units
(d) 400 units
(e) None ofthese
(12) The time lag between indenting and receiving material is called:
(a) Lead time
(b) Idle time
(c) Stock out time
(d) None of these
(13) A credit balanceremaining in FOH Control account is called:
(a) Over-applied overhead
(b) Under-applied overhead
(c) Actual overhead
(d) None of these
(14) Direct material cost plus direct labour cost is called:
(a) Prime cost
(b) Conversion cost
(c) Product cost
(d) All ofthese
(e) None ofthese
(15) Productivity means:
(a) T he ability to produce
(b) All units produced
(c) Good units produced

9. (d) None of these
(16) A segment ofthe business that generates both revenueand cost is called:
(a) Profit Center
(b) Cost Center
(c) Cost driver
(d) All ofthese
(e) None ofthese
(17) Verification includes:
(a) Checking vouchers
(b) Examining audit report
(c) None of these
(18) Audit ofa bank is generally conducted through:
(a) Routine checking
(b) Vouching
(c) Balance sheet audit
(d) None of these
(19) Economics resources ofa business that are expected to be ofbenefit in the future are referred to as:
(a) Liabilities
(b) Owner’s equity
(c) Withdrawals
(d) Assets
(e) None ofthese
(20) Short term Loan can be best described as:
(a) If the period is three years
(b) Ifthe period is less than one year
(c) If the period is overone year
(d) None of these
Accounting & Auditing Paper-I (2002)
(1) Maximum number ofpartners in a partnershipfirm set up in Pakistan under Partnership Act,1932 is:
(a) 5
(b) 25
(c) 20
(d) None of these
(2) Preparation offinal financial reports is governed in Pakistan under:
(a) No law
(b) Companies Ordinance 1984
(c) None of these
(3) Depreciation is based on:
(a) Economic life ofasset
(b) Declared life ofasset by supplier
(c) Normal life of asset
(d) None of these
(4) Inventory turnoveris calculated as under:
(a) Cost of Goods sold/Closing Inventory
(b) Gross profit/Closing Inventory

10. (c) Sales/Opening Inventory
(d) None of these
(5) There is a difference between:
(a) Worksheet and Balance Sheet
(b) Worksheet and profit and loss account
(c) Worksheet as combination ofresults ofprofits and financial positions
(d) None of these
(6) Deferred Revenueis:
(a) Liability
(b) Asset
(c) None of these
(7 ) Preparation ofannual report ofa firm is governed under:
(a) Partnership Act 1932
(b) Under partnership Deed
(c) None of these
(8) Deferred Taxation amount be treated as:
(a) Foot note
(b) An item in the Balance Sheeton asset side
(c) None of these
(9) Return ofEquity will be calculated as under:
(a) Operating Profit x 100/Equity
(b) Net profit x 100/Paid up Capital only
(c) None of these
(10) Current maturity oflong term loan is:
(a) Current Liability
(b) Long Term Liability
(c) None of these
Accounting & Auditing Paper-II (2002)
Write only the correct answerin the Answer Book. Do not reproducethe questions.
(1) Prime cost is calculatedas under:
(a) Manufacturing Cost/Cost ofGoods Sold
(b) Direct Method plus factory overheads
(c) Direct labour +Direct Material
(d) None of these
(2) Process Cost is very much applicable in:
(a) Construction Industry
(b) Pharmaceutical Industry

11. (c) Air line company
(d) None of these
(3) The latest computation ofvariances ofmanufacturing overheads is in one the following ways:
(a) Two varianceapproaches
(b) Three varianceapproaches
(c) Four variance approaches
(d) None of these
(4) Random sampling in auditing means:
(a) Selection through convenience sampling
(b) Selection through scientific sampling approach
(c) None of these
(5) Expenditure incurredin procuring machinery is:
(a) An admissible expenditure for tax purposes
(b) No admissible for tax purposes
(c) None of these
(6) Increase in incomeconstitutes:
(a) Inflows
(b) Outflows
(c) None of these
(7 ) M & A stands for:
(a) Mergers & Analysis
(b) Mergers & Acquisitions
(c) Mergers & Allocation
(d) None of these
(8) An endowment insurance policy can be taken in respect of:
(a) Fire insurance
(b) Accidentinsurance
(c) Life insurance
(d) None of these
(9) Audit and special audit arethe same:
(a) In Insurance Company

12. (b) In Banking Company
(c) None of these
(10) Acid test is the same as:
(a) Quick test
(b) Liquid test
(c) None of these
1.What is the Current Islamicyear:—–1433
2.How manyhaj performed byHazrat Mohammad pbuh—1
3. Where was last revelation revealed——-DURING HIJATUL WIDA
4.What is the shortest surah: KAUSAR
5.Which surah is the heart of Quran: YASEEN
6.Who was given the title of Ghaseel ul malaika: HANZILLA(R A)
7.What is the no. of total *surah: 114 (NON OF THESE)
8.What is the first month of Islamiccalendar: MOHARRAM
9. Hazrat Mohammad PBUH called himself
10.last revelation at ?:HIJJA TUL WIDAH.
11. What was arfa karims age is the time of death:16
12. Who is usambassador to Pakistan:CAMERON MENTOR
13. Who is Pakistan ambassador to united nations: ABDULLAH HAROON
14. Where does business train go to and from: LAHORE-KARACHI
15. What is the name of Oscar winning documentary of shirmeen:SAVING FACE
16. What drug was reported to be the cause of death in the Punjab institute of cardiology: ISOTAB
17. What is the cost of stamp of arfa karim released on her birthday:RS:8.

13. 18. Who is Pakistan ambassador to US: Sherryrehman19. Who is the first female foreign affairs minister
of Pakistan: HINA RABBANI
20. What is the cause of mehran bankscandal:ILLEGAL FUNDTOPOLITICIANS
21. Which English crickerter was jailed for spot fixing:
22. Where were academyawards,2012 held: LOS ANGELES
23. Christain wulff who resigned as head of state belonged to which country:GERMANY
24. Who is the secretaryof state of US: HILLARY
25. What is the total no. of ammendements in 1973 constitution:20
26. Where are Olympic 2012 going to be held: LONDON
27. Pakistan beat England in test series in what ratio: 3
28. Who is the secretarygeneral of united nations: BAN KI MOON
29. WHO recentlydeclared which country aspolio free:INDIA
30. Which is the largest seaport of Pakistan: KARACHI(NOT100%)
31. Where is arfa karim software park located:LAHORE(FEROZPUR RD)
32. Where is Benazir shaheed international airport: Islam Abad33. Whois the current cricket
chief selector of Pakistan:IQBAL QASIM
34. On which river has mangla dam been built:JEHLUM
35. What is the boundarybetween Afghanistan and Pakistan:DURANDLINE
36. Where is siachin glacier:BALTISTAN
37. Pakistan derbyhorse race,2012 was won bywhich horse:ASSASIN
38. Who is the current chairman of senate:NAYYER BUKHARI(OPTION WAS MISSING)
39. What does light year measure?: DISTANCE(B/W) STARS*
40. Which is the hardest substance on earth:DIAMOND
41. What happens to temperature ofboiling water on a higher elevation:DECREASES
42. Which disease is caused by dogs:RABIES
43. What is the temperature of human bodyin farhenheits:98* OPTION WAS NONE OF THESE
44. Swimming pool water is disinfected by which chemical: CHLORINE

14. 45. Blindness is caused bydeficiency of which vitamin…VIT—A
46. Vitamin c is richest in which fruit:GUAVA
47. Soda water is carbonated byadding what:CO2
48. One mile hashow many kilometres:1.60934
49. What is the unit of energy:JOULE
50. What is the filament of electricbulb made of:TUNGSTON
51. What is added in lead pencils:GRAPHITE
52. How does sunlight enter the rooms?:IRREGULAR REFLECTION(NOT100%SURE)
53. How many colors are visible in the sunlight spectrum:7
54. Which substance is liquid at room temperature? MERCURY
55. Which of these is negatively charged? ELECTRONS
56. What happens to volume of water when it freezes:INCREASES BY1/10
57. Which partyhas the highest no. of seats in senate after 2012 electionsp
58.Amir khan is ?:BRITISH NATIONAL
59.10#10*=10
60.age of son was 1/3 of his father 5 years back if current age is 30 then father’s age?:80(NOW)
61.x:3=4:6 then x=2
62.no of student in a class is 30 3/5 are girls boys will be?:12
63.A student gets 68 marks and therefore gets85% total marks are?:80
64.diamond is a: MATERIAL NOUN
65.police?: diverted the route
66.mean of 10, 30, y, and 50 is * *50 then y=110.
67.smallest natural no:1
68.smallest prime no: 2
69.30%of total amount is left after spending 280 rupees , total amount is:4000.
70.perimeter ofa square is 20cm length of one side shall be?:5 CM

15. 71.in absence of facts we can ?: INFER
72) 10×10 (that star is actuallypower of 10 as zero,i dont know how to insert zero)= right option was 0
73) 2,6,18,54,_____ answer was 162 in next
74)A man has 180 pens and 9 of them are blue ,how much % has he blue pens.correct answer was 5%
but there was 6% so non of these was right.
75) a boy has 68 marks that is 85% ,what were total marks??
88) 85) 80) non of these??
76) a man bought a thing on 120 rupeesand he has25% discount.what is actual price he paid?
77) 95) 120) non of these)90wascorrect answer
78). Smallest Natural Number? 1
79) Smallest Prime Number? 2
80) Five years ago, age of father was thrice the age of son. If son is 30 yearsold now, whats the current
age of father? 80
81) 30% amount of total is left after spending 280 rupees. what was the amount before spending? 400
82). Mean of 10, 30, Y, and 50 is 50. Y is? 110
83). Boy can type 1350 words in 30 minutes, how manyhe could type in 5 minutes? 225
84). Perimeter of Square is 20, Length of one side is? 5CM
85)number of student in a class is 30. 3/5 are girls. then how manyboys are there in class ? GIRLS ARE
18 THEN BOYS ARE12.
86)X:3=4:6 then x = ? 2.
87)32-15*2+3= ?5.
88)Afridi is one of those who never submits to the miseries of hislife.( something like thiswas given=
submit
89)- Shrimps are available in the market,…… theyare good source of earning foreign exchange.
90) In absence of facts we can—–about the real reason.
1) Conclude 2) deduce 3) deduct 4) infer ——————-conclude correct
91) He set two alarmsso as to—–that he woke up on time?
a) Assure b) reassure c)ensure D)confim —————confirm is correct

16. 92) The word round in “He took round in” is—-partsof speech?
a) verb b) noun c) adjective————- round is a adjective
93 where is the siachin glacier a)boltistan
94. what is the clinical use for temperature A)foreign height
___________ is concerned with the acquisition, financing, and management of assets with
some overall goal in mind.
0
A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility
Having some overall goal in mind, financial management is concerned with:
0
A. Acquisition of assets
B. Financing of assets
C. Management of assets
D. All of them
The investment decision is the most important of the firm’s three major decisions, when it
comes to:
0
A. Value creation
B. Value addition
C. Value proposition
D. Value deletion
Annual cash dividends divided by annual earnings; or alternatively, dividends per share
divided by earning per share is termed as:
0
A. Earning per share ratio
B. Proposed dividend ratio
C. Dividend payout ratio
D. Expected dividend ratio
Profit maximization is the maximizing a firm’s Earning:
0

17. A. Before Tax
B. After Tax
C. Both A and B
D. None of Them
An individual authorized by another person, called the principle, to act on the latter’s on
behalf is known as an/a:
0
A. Agent
B. Servant
C. Subordinate
D. Assistant
Stakeholders include:
0
A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them
All the constituencies with a stake in the fortunes of the company are termed as:
0
A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates
The systemby which companies are managed and controlled is known as:
0
A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System
Corporate governance encompasses the relationship among a company’s:
0
A. Shareholders and board of director
B. Board of directors and senior management
C. Shareholders and senior management
D. Shareholders, board of directors and senior manageme

18. The Board of Directors sets company-wide policy and advices the CEO and other senior
executies, who manage the company’s:
0
A. Managerial activities
B. Year-to-Year activities
C. Day-to-Day activities
D. Financial activities
A major facet of financial management involves providing the financing necessary to
support:
0
A. Liabilities
B. Debts
C. Loans
D. Assets
The market price of a firm’s stock represents the focal judgment of all market participants
as to the value of the:
0
A. Particular market
B. Particular firm
C. Particular creditor
D. Particular debtor
Agency theory suggests that managers(the agents), particularly those of large , publically-
owned firms, may have different objectives from those of the:
0
A. Workers
B. Subordinates
C. Shareholders
D. Employees
Maximizing Shareholder wealth:
0
A. Relieves the firms responsibility towards society
B. Does not relieve the firm’s responsibility towards society
C. Partially relives the firm’s responsibility towards society
D. None of Them
Earning per share is computed as:
0

19. A. ____________Earning After Tax_____________
No of common shares outstanding
B. ____No of common shares outstanding___
Earning after Tax
C. ____Earning before Tax____
Common shares
D. None of Them
Period costs include which of the following?
0
A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead
Product costs include which of the following?
0
A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses
Financial policy is evaluated by which of the following?
0
A. Profit Margin
B. Total Assets Turnover
C. Debt-equity ratio
D. None of the given options
Cash flow from assets involves which of the following component(s)?
0
A. Operating cash flow
B. Capital spending
C. Change in net working capital
D. All of the given options
Which of the following refers to the cash flows that result from the firm‟s day-to-day
activities of producing and selling?
0

20. A. Operating Cash Flows
B. Investing Cash Flows
C. Financing Cash Flows
D. All of the given options
Finance is vital for which of the following business activity (activities)?
0
A. Marketing Research
B. Product Pricing
C. Design of marketing and distribution channels
D. All of the given options
Which of the following costs are reported on the income statement as the cost of goods
sold?
5
A. Product cost
B. Period cost
C. Both product cost and period cost
D. Neither product cost nor period cost
Standard Company had net sales of Rs. 750,000 over the past year. During that time,
average receivables were Rs. 150,000. Assuming a 365-day year, what was the average
collection period?
15
A. 5 days
B. 36 days
C. 48 days
D. 73 days
Read More Details about this Mcq
Which of the following terms refers to the use of debt financing?
0
A. Operating Leverage
B. Financial Leverage
C. Manufacturing Leverage
D. None of the given options
In which type of market, new securities are traded?
0
A. Primary market
B. Secondary market

21. C. Tertiary market
D. None of the given options
Which of the following ratios are particularly interesting to short-term creditors?
0
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
Quick Ratio is also known as_______________?
0
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio
A portion of profits, which a company retains itself for further expansion, is known as:
0
A. Dividends
B. Retained Earnings
C. Capital Gain
D. None of the given options
Which of the following is measured by profit margin?
0
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
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Which of the following set of ratios is used to assess a business’s ability to generate
earnings as compared to its expenses and other relevant costs incurred during a specific
period of time?
11
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

22. Updated by: Anwar Ishfaq
A company having a current ratio of 1 will have __________ net working capital.
3
A. Positive
B. Negative
C. zero
D. None of the given options
Which of the following equation is known as Cash Flow (CF) identity?
0
A. CF from Assets = CF to Creditors – CF to Stockholder
B. CF from Assets = CF to Stockholders – CF to Creditors
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder
The difference between current assets and current liabilities is known as____________?
0
A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio
The principal amount of a bond at issue is called____________?
0
A. Par value
B. Coupon value
C. Present value of an annuity
D. Present value of a lump sum
Which of the following is the process of planning and managing a firm‟s long-term
investments?
0
A. Capital Structuring
B. Capital Rationing
C. Capital Budgeting
D. Working Capital Management
A standardized financial statement presenting all items of the statement as a percentage of
total is:
0

23. A. a common-size statement
B. an income statemen
C. a cash flow statement
D. a balance sheet
The DuPont Identity tells us that Return on Equity is affected by:
1
A. The DuPont Identity tells us that Return on Equity is affected by:
B. asset use efficiency (as measured by total assets turnover)
C. financial Leverage (as measured by equity multiplier)
D. all of the given options (a, b and c)
A series of constant cash flows that occur at the end of each period for some fixed number
of periods is ____________ .
0
A. an ordinary annuity
B. annuity due
C. multiple cash flows
D. perpetuity
Which of the following is the overall return the firm must earn on its existing assets to
maintain the value of the stock?
0
A. IRR (Internal Rate of Return)
B. MIRR (Modified Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)
Which of the following is known as the group of assets suchas stocks and bonds held by an
investor ?
2
A. Stock Bundle
B. Portfolio
C. Capital Structure
D.. None of the given options
Which of the following relationships holds TRUE if a bond sells at a discount?
0
A. Bond Price < Par Value and YTM > coupon rate
B. Bond Price > Par Value and YTM > coupon rate

24. C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM <
coupon rate
Which of the following strategy belongs to restrictive policy regarding size of investments
in current assets?
0
A. To maintain a high ratio of current assets to sales
B. To maintain a low ratio of current assets to sales
C. To less short-term debt and more long-term debt
D. To more short-term debt and less long-term debt
Which of the following statement is CORRECT regarding compound interest?
8
A. It is the most basic form of calculating interest.
B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.
When real rate is high, all the interest rates tend to be ___________?
0
A) Higher
B) Lower
C) Constant
D) None of the given options
Profitability index (PI) rule is to take an investment, if the index exceeds___________?
0
A. -1
B. 0
C. 1
D. 2
Average Accounting Return is a measure of accounting profit relative to:
0
A. Book value
B. Intrinsic value
C. Cost
D. Market value
Which of the following is the cheapest source of financing available to a firm?
0

25. A. Bank loan
B. Commercial papers
C. Trade credit
D. None of the given options.
_______________refers to the extent to which fixed-income securities (debt and preferred
stock) are used in a firm’s capital structure?
0
A. Financial risk
B. Portfolio risk
C. Operating risk
D. Market risk
The use of Personal borrowing to alter the degree of financial leverage is
called__________?
0
A. Homemade leverage
B. Financial leverage
C. Operating leverage
D. None of the given option
_________ refers to the most valuable alternative that is given up if a particular investment
is undertaken?
0
A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options
A model which makes an assumption about the future growth of dividends is known as:
0
A. Dividend Price Model
B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options
Which of the following is not a quality of IRR ?
0
A. Most widely used
B. Ideal to rank the mutually exclusive investments

26. C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate
Which of the following is a series of constant cash flows that occur at the end of each period
for some fixed number of periods?
0
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options
During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases
by Rs. 8,000. What will be the amount of cash received from customers for the period?
0
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000
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The conflict of interest between stockholders and management is known as:
0
A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost
Which of the following form of business organization is least regulated?
0
A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation
Which of the following ratios are intended to address the firm’s financial leverage?
0
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios

27. Read More about this Mcq
Balance Sheet is based upon which of the following formula?
0
A. Assets = Liabilities – Stockholder’s equity
B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity
Quick Ratio is also known as_________?
0
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options