RAPID READING EXERCISE – PART:: 10
(RELATED TO
BALANCE SHEET)
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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