IC89 - Management Accounting

IC89 Mock Test Sample 12

Management Accounting helps organizations in planning, budgeting, controlling, and decision-making by using financial data and analytical tools. It supports business growth through budgeting, ratio analysis, variance analysis, forecasting, and cost control. Financial markets provide liquidity and investment opportunities through shares, bonds, debentures, mutual funds, and derivatives. Risk management helps reduce uncertainties caused by market changes and financial fluctuations. Regulatory authorities like SEBI and IRDAI ensure investor protection and market transparency. Financial statement analysis, capital budgeting, and working capital management are essential for evaluating performance and efficient fund utilization. These practices help organizations achieve profitability, stability, and long-term wealth maximization.

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Q1. What is the primary objective of Management Accounting?
a) Entertainment
b) Decision-making
c) Advertising
d) Production

Q2. Which ratio measures the ability to pay current liabilities?
a) Profitability ratio
b) Liquidity ratio
c) Activity ratio
d) Market ratio

Q3. Which instrument represents ownership in a company?
a) Bonds
b) Debentures
c) Equity shares
d) Fixed deposits

Q4. Which authority regulates the securities market in India?
a) RBI
b) LIC
c) SEBI
d) NABARD

Q5. Which type of risk affects the whole market?
a) Business risk
b) Financial risk
c) Systematic risk
d) Default risk

Q6. Which derivative contract is standardized and exchange traded?
a) Forward contract
b) Futures contract
c) Swap contract
d) Informal contract

Q7. What does FDI stand for?
a) Financial Debt Instrument
b) Fixed Deposit Investment
c) Foreign Direct Investment
d) Fund Deposit Insurance

Q8. Which type of fund mainly invests in equity shares?
a) Debt fund
b) Hedge fund
c) Equity fund
d) Infrastructure fund

Q9. Which analysis is used to compare company performance?
a) Demand analysis
b) Technical analysis
c) Ratio analysis
d) Market analysis

Q10. Which insurance policy provides only risk cover?
a) Whole life policy
b) Endowment policy
c) Pension policy
d) Term insurance

Q11. What is the face value of a bond called?
a) Coupon rate
b) Market value
c) Par value
d) Maturity value

Q12. Which market function determines security prices?
a) Liquidity
b) Financing
c) Price discovery
d) Hedging

Q13. Which ratio is also called Expense Ratio?
a) Operating ratio
b) Solvency ratio
c) Liquidity ratio
d) Activity ratio

Q14. Which activities generate the principal revenue of a business?
a) Investing activities
b) Financing activities
c) Operating activities
d) Administrative activities

Q15. What is the mean of squared deviations from average return called?
a) Alpha
b) Beta
c) Variance
d) Standard cost

Q16. Investors in mutual funds are known as:
a) Creditors
b) Debtors
c) Unit holders
d) Shareholders

Q17. Which system sets standards and targets for performance?
a) Inventory control system
b) Budgetary control system
c) Payroll system
d) Costing system

Q18. Which derivative helps protect against commodity price fluctuations?
a) Commodity derivative
b) Equity derivative
c) Currency derivative
d) Embedded derivative

Q19. Which financial statement shows assets and liabilities?
a) Income statement
b) Cash flow statement
c) Balance sheet
d) Fund flow statement

Q20. Which budgeting method starts every expense estimate from zero?
a) Flexible budgeting
b) Cash budgeting
c) Master budgeting
d) Zero-based budgeting

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