Accounting for Managerial Decisions

Model Questions

Balkrishna Parab
ACMA, FCS, PhD

1. Accounting is a system of analysing, recording, summarising, and ... financial transactions

and reporting the results.
a. Verifying
b. Authenticating
c. Substantiating
d. Endorsing

Answer: A

2. Financial accounting is oriented towards providing information to ….

a. Internal users
b. Managers
c. External users
d. Board of Directors

Answer: C

3. An income statement, or profit and loss account is also known as:

a. Statement of Financial Position
b. Statement of Financial Flows
c. Statement of Financial Performance
d. Statement of Financial Strength

Answer: C

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4. Ichalakaranji Ice-cream Company's EBITDA is Rs. 1360000, and its depreciation and
amortisation are Rs. 340000. The non-operating income of the company is Rs. 80000, and it
non-operating expenses is Rs. 20000. The tax rate applicable to the company is 30 per cent.
What is the company’s-tax profit (EBT)?
a. 1080000
b. 756000
c. 1120000
d. 952000

Answer: A

5. Jalgaon Juniper Company's sales is Rs. 2000000. Its operating expenses (except depreciation
and amortisation) is Rs. 640000, and its depreciation and amortisation are Rs. 340000. The
tax rate applicable to the company is 30 per cent. What is the company's operating profit
(EBIT)?
a. 714000
b. 1020000
c. 1360000
d. 952000

Answer: B

6. Zanzibar Zoological Company has non-current assets of Rs. 3500000; non-current liabilities
of Rs. 2100000; current liabilities of Rs. 1500000; and the total of share capital and reserves
and surplus of Rs. 5600000. What is the company's current assets?
a. 5700000
b. 1500000
c. 5600000
d. 2100000

Answer: A

7. Churchgate Cistern Company has non-current assets of Rs. 3300000; non-current liabilities
of Rs. 2700000; current liabilities of Rs. 1000000; and the total of share capital and reserves
and surplus of Rs. 5500000. What is the company's current assets?
a. 5900000
b. 1000000
c. 5500000
d. 2200000

Answer: A

8. Nerul Naturopathy Company's equity share capital was Rs. 1000000 as on March 31, 2020,
and Rs. 1500000 as on March 31, 2021. Which of the following statements is true?
a. The company made a further issue of share capital of Rs. 500000
b. The company bought back equity share capital of Rs. 500000
c. The company bought back equity share capital of Rs. 1500000
d. The company bought back equity share capital of Rs. 1000000

Answer: A

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9. Bandra Binocular Company's long-term borrowing was Rs. 2600000 as on March 31, 2020,
and Rs. 2300000 as on March 31, 2021. Which of the following statements is true?
a. The company made a further long-term borrowing of Rs. 300000
b. The company redeemed long term borrowings of Rs. 2600000
c. The company redeemed long term borrowings of Rs. 300000
d. The company made a further long-term borrowing of Rs. 2600000

Answer: C

10. The primary purpose of the balance sheet is to:

a. Measure the net income of a business up to a particular point in time.
b. Report the difference between cash inflows and cash outflows for the period.
c. Reports the financial position of the reporting entity at a particular point in time.
d. Reports the current value of the business.

Answer: C

11. Horizontal analysis looks at:

a. Selected ratios of the company over a period of time.
b. Two years of information for comparison.
c. Two or more peer group companies for comparison.
d. Profitability by industry.

Answer: A

12. Last year, Dabhol Energy Company had cost of goods sold (COGS) of Rs. 200 million, and its
inventory turnover ratio was 5.0. The company’s current assets totalled Rs. 100 million, and
its current ratio was 1.2. What was the company’s quick ratio?
a. 1.20
b. 1.39
c. 0.72
d. 0.55

Answer: C

13. Determine a firm's sales to total asset ratio if its return on investments (ROI) is 9%, net profit
margin (NPM) is 7%, total assets are Rs. 90,00,000.
a. 0.29
b. 1.29
c. 2.29
d. 3.29

Answer: B

14. When managers transactions are recognized in the most advantageous period, it is referred
to as:
a. Deceptive Accounting
b. Strategic Matching
c. Aggressive Accounting
d. Fraudulent Accounting

Answer: B

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