Tuesday, November 20, 2012



01. Tangible net worth is calculated by the formula:  Share capital + General Reserves – intangibles and fictitious assets
02. Miscellaneous expenditure and preliminary expenses are called  - fictitious assets
03. Goodwill, patents, copyrights etc which have no physical form are called – intangible assets
04. Net working capital means: Total current assets less total current liabilities
05. Net working capital is also called: Long term sources less long term assets
06. Long term liabilities are also called  - long term sources
07. Long term assets are also called – long term applications or long term uses
08. Balance sheet -  is a statement showing the business details called assets and liabilities of a firm as on a particular date
09. Working capital gap means – total currents less current liabilities other than bank borrowings
10. The operating profit  is called  - gross  profit
11. Net profit means – operating profit plus other income minus other expenses and provisions for taxes
12. Net sales means – Gross sales minus excise duty and sales returns
13. Contingent liabilities like guarantees, letter of credits etc - will not appear in a balance sheet
14. Profit and loss account is -  a statement showing the income earned and expenditure incurred by a firm during a specific period
15. The process of reducing a large amount of historical financial data to a similar set of more useful information for decision-making purposes is called – financial analysis
16. Profits made in the normal course of a business and retained in the business is called – general reserves
17. Current assets are those which are – forming part of the operation cycle or realizable within twelve months
18. Current liabilities are those which are – forming part of the operation cycle or payable within twelve months
19. Margin money for issue of any letter of credit or a guarantee can be considered as – part of current asset
20. The ratio which indicates the ability of quick assets in meeting the current liability or quick liability is called – quick ratio
21. Quick assets are nothing but – current assets less inventory
22. Quick liabilities are nothing but – current liabilities less bank borrowings
23. When operations of a business result in losses, it would reduce – shareholders funds
24. Bills purchased by the bank will be reflected as under in the analysis of the balance sheet – bills purchased is shown under current liability and bills under sundry debtors in current assets
25. Advance payment from customers will be treated as – current liabilities
26. Advance payment paid to suppliers will be treated as – current assets
27. The positive current ratio of a firm will indicate – the presence of net working capital
28. The negative current ratio of a firm will indicate – the absence of any net working capital
29. Current liabilities more than current assets – denotes the absence of net working capital
30. Similarly long term assets more than long term sources (liabilities) – denotes the absence of net working capital
31. Absence of net working capital is also called – negative current ratio
32. The ratio which could give an idea of the availability of net working capital is called – current ratio
33. Margin on working capital is brought by a unit from – long term sources
34. Current assets less inventory or stock is also called – liquid assets(quick assets)
35. Guarantees, letter of credits are called – off balance sheet items
36. Undervaluation of closing stock in the balance sheet will result in – decreasing the gross profit of the firm
37. Investments made in government securities – are not part of shareholders’ funds
38. Debtors velocity ratio indicates – the credit period allowed on sales
39.  Temporary investments of a borrower (for the purpose of investing short term surplus) in money market instruments like Commercial Paper, Money Markets Mutual Funds, Certificate of deposits etc can be classified as – current assets
40. Investments in shares/debentures of subsidiaries and associates are to be classified as – non current assets
41. The statement which shows where the money has come from and where money has gone is called – funds flow statement
42. Sale of goods will result - in sources of funds
43. Increase in liabilities(capital, reserves, term loan, bank overdraft, sundry creditors, provision for taxes, advance payment received from customers etc) – are sources of funds
44. Decrease in liabilities(capital, reserves, term loan, bank overdraft, sundry creditors, provision for taxes, advance payment received from customers etc) – are uses  of funds
45.  Increase in assets(land, building, machinery, noncurrent assets, intangible assets, fictitious assets, cash balance, bank balance, sundry debtors, stock, advance paid to suppliers etc) – are uses of funds
46.  Decrease  in assets(land, building, machinery, noncurrent assets, intangible assets, fictitious assets, cash balance, bank balance, sundry debtors, stock, advance paid to suppliers etc) – are sources of funds
47.  Rent paid in advance is called – current asset
48.  Prapaid insurance is called – current asset
49.  Provisions kept for payment towards taxes and any other liabilities are called – current liabilities  
50. A low current ratio will indicate – the shortage of working capital
51. Stock turnover ratio denotes – operational efficiency
52. Current ratio denotes – the liquidity position of the firm
53. Breakeven point means – the point where the unit meets total cost by total sales revenues
54. Contribution in break even analysis is – surplus available in sales revenue after meeting all the variable costs
55. Holding level of raw materials is related to – consumption of raw materials
56. Holding level of stock in process is calculated in relation to – cost of production
57. Level of finished goods is in relation to – cost of goods sold
58. Level of sundry debtors is in direct relation -  to gross sales
59. In funds flow analysis, any increase in sundry creditors for goods is treated as – sources of short term funds
60. Increase in gross block of fixed assets is – uses of long term funds
61. In funds flow analysis, diversion of fund means – long term deficit funded by short term surplus
62. In case of subordination of unsecured loans is available, then such unsecured loans shall be treated as – long term funds
63. Chargeable current assets are – inventories and receivables
64. The ratio of long term loans to networth of the company is called – debt equity ratio
65. Term loans are considered as long term liabilities whereas instalments in term loan which are payable within a period of twelve months are called – current liabilities
66. The liquidity of the bank is determined by – converting its assets to cash quickly and at good costs
67. A bank’s own premises, investments in subsidiaries represent- fixed assets
68. Price of liquidity is determined by – nature of convertible assets on hand
69. Advance payment to suppliers should be treated as – current assets
70. Claims against the bank not acknowledged as debts called the contingent liabilities are – off balance sheet items
71. Authorised capital, issued capital and subscribed capital  - will not appear in a balance sheet
72. Preference share capital is the contribution of -  preference shareholders
73. Dividends to shareholders are payable from general reserve and – not from capital reserve
74. Shareholders of equity capital are having voting rights whereas – the shareholders of preference shareholders are not having any voting rights
75. Reserves are classified into  - general reserve and revenue reserve
76. Capital reserves are classified into -  fixed assets revaluation reserve and share premium reserve
77. Revenue reserves are – the accumulated earnings from the profits of normal business operations
78. Funds are made available for distribution of profits amongst the shareholders from – revenue reserve
79. Borrowings made by the company by creating a specific charge on assets of the company are called – secured loans
80. Borrowings made by the company for which no specific security is offered are called – unsecured loans
81. In the case of a company, fixed deposits(by the public), inter corporate deposits(by other companies) and loans availed from the promoters and directors are – unsecured loans
82. In the balance sheet of a partnership firm, original cost of fixed asset less depreciation is called – net block
83. The working capital cycle of any manufacturing organization consists of five stages of conversion called – raw materials to work-in-progress; work-in-progress to finished goods; finished goods to bills; bills to cash and cash to raw materials
84. The quantum of working capital requirements depends on two factors – level of activity and delay in the working cycle
85. The components of working capital requirements are – raw materials and consumables; work-in-progress; finished goods; bills receivables and expenses
86. Cost of production consists of – consumption of raw materials(including stores) and spares; power and fuel; direct labour; repair and maintenance; other manufacturing expenses plus opening balance of stock-in-process and minus closing balance of stock-in-process
87. Cost of sales consists of – cost of production plus opening stock of finished goods minus closing stock of finished goods
88. Net profit minus dividend paid/declared is called – retained profit
89. Break-even-point – is the point in terms of rupees, at which total costs equal total revenue, and profit equals zero
90. Contribution margin is – total revenue less total variable costs
91. Contribution margin per unit or unit contribution is – selling price per unit minus variable cost per unit
92. Contribution margin ratio is – contribution margin per unit as a percentage of the selling price
93. Costs which are not directly associated with production and which remain constant for a relevant range of productive activity is called – fixed cost
94. The maximum percentage by which expected sales can decline and a profit can still be realized is called – margin of safety
95. Costs that are fixed up to a certain level of output but will vary within certain ranges of output is called – mixed cost
96. The range of output over which the amount of total fixed costs and unit variable costs remains constant is called – relevant range
97. Costs which are directly associated with producing a product and which vary with this level of output is called – variable cost
98. Average business per employee in a branch  is calculated by the ratio- (average deposits +average advances) divided by number of staff in a branch
99. Number of accounts per employee in a branch is calculated by the formula: (Total deposit accounts + total borrowal accounts) divided by the number of staff in the branch
100.The notional price at which inter-departmental exchange of goods/services takes
      place within the company is called – transfer price


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