ACC501 mid-term Quiz 1

Horizon Corporation paid Rs. 5.0 Million as dividend to its shareholders in the previous financial year.
This transaction will be reported on the cash flow statement as a (an):

1. Investing activity 2. None of the given options 3. Financing activity 4. Operating activity

Which of the following set of ratios measure the firm’s intensity and efficiency of asset use?

1. Turnover ratios 2. Profitability ratios 3. Liquidity ratios 4. Financial leverage ratios

If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth of your
amount after 4 years if interest is compounded annually?

The accounting definition of income is:

1. Income = Fixed Assets – Current Assets 2. Income = Fixed Assets – Current Assets

3. Income = Revenues – Expenses 4. Income = Current Assets – Current Liabilities

The difference between current assets and current liabilities is known as:
1. Net Working Capital 2. Surplus Asset 3. Current Ratio 4. Short-term Ratio

Cash flows from activities is drive from the items of:

1. All of the given options 2. Balance Sheet 3. Income Statement 4. Statement of Affairs

Which of the following is the process of planning and managing a firm’s long-term
investments?

1. Working Capital Management 2. Capital Structuring 3. Capital Budgeting 4. Capital

Rationing

Which of the following is NOT a form of business organization?

1. Partnership 2. Sole proprietorship 3. Joint stock company 4. Cooperative Society

What happens to current ratio if ABC Company Ltd. purchases inventory on credit for Rs.
10,000. Existing current ratio is 3:1.

1. Increases 2. Decreases 3. None of the given options 4. No effect

External financing deals with the funds increased by either selling stock or ____________:

1. Selling long-term assets 2. Sales revenues 3. Borrowing money 4. Paying dividends