IC89 - Management Accounting

IC89 Mock Test Sample 13

Management Accounting is a process of analyzing financial information to assist management in planning, controlling, and decision-making. It includes budgeting, forecasting, ratio analysis, variance analysis, and cost control techniques. Financial markets provide investment opportunities through shares, bonds, debentures, mutual funds, and derivatives. Risk management helps businesses reduce losses caused by economic and market uncertainties. Regulatory bodies such as SEBI and IRDAI ensure transparency and investor protection. Financial statement analysis and capital budgeting help organizations evaluate performance and investment opportunities. Working capital management and liquidity analysis are important for maintaining financial stability, improving profitability, and achieving long-term organizational growth and wealth maximization.

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Q1. What is the main purpose of Management Accounting?
a) Entertainment
b) Decision-making
c) Advertising
d) Manufacturing

Q2. Which ratio measures the firm's ability to pay short-term liabilities?
a) Profitability ratio
b) Activity ratio
c) Liquidity ratio
d) Market ratio

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

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

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

Q6. Which contract is standardized and traded on stock exchanges?
a) Forward contract
b) Futures contract
c) Swap contract
d) Informal contract

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

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

Q9. Which analysis compares financial performance of companies?
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) Pension policy
c) Endowment policy
d) Term insurance

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

Q12. Which market function helps determine prices of securities?
a) Liquidity
b) Financing
c) Price discovery
d) Hedging

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

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

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

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

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

Q18. Which derivative protects 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) Zero-based budgeting
d) Master budgeting

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