IC89 Mock Test Sample 14
Management Accounting helps managers in planning, budgeting, controlling, and decision-making using financial information and analytical techniques. It includes budgeting, ratio analysis, variance analysis, forecasting, and cost control for improving business efficiency and profitability. Financial markets provide investment opportunities through shares, bonds, debentures, derivatives, and mutual funds. Risk management helps reduce uncertainty caused by market fluctuations and economic changes. Regulatory bodies like SEBI and IRDAI ensure transparency and investor protection. Financial statement analysis, working capital management, and capital budgeting assist organizations in evaluating financial performance and investment decisions. These tools support financial stability, operational efficiency, and long-term wealth maximization.
Q1. What is the main objective of Management Accounting?
a) Advertising
b) Decision-making
c) Manufacturing
d) Entertainment
Q2. Which ratio measures short-term financial strength?
a) Profitability ratio
b) Market ratio
c) Liquidity ratio
d) Activity ratio
Q3. Which instrument represents ownership in a company?
a) Debentures
b) Bonds
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 type of risk affects the entire market?
a) Business risk
b) Financial risk
c) Systematic risk
d) Default risk
Q6. Which contract is standardized and traded on an exchange?
a) Forward contract
b) Futures contract
c) Swap contract
d) Open 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 shares of companies?
a) Debt fund
b) Infrastructure fund
c) Hedge fund
d) Equity fund
Q9. Which analysis compares financial performance?
a) Market analysis
b) Demand analysis
c) Ratio analysis
d) Technical analysis
Q10. Which insurance policy provides only risk coverage?
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 determines security prices?
a) Financing
b) Hedging
c) Price discovery
d) Liquidity
Q13. Which ratio is also known as Expense Ratio?
a) Operating ratio
b) Solvency ratio
c) Liquidity 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 mean of squared deviations from average return called?
a) Alpha
b) Beta
c) Variance
d) Standard cost
Q16. Investors in mutual funds are called:
a) Debtors
b) Creditors
c) Shareholders
d) Unit holders
Q17. Which system establishes standards and targets for performance?
a) Inventory control system
b) Budgetary control system
c) Costing system
d) Payroll system
Q18. Which derivative protects against commodity price fluctuations?
a) Equity derivative
b) Currency derivative
c) Commodity derivative
d) Embedded derivative
Q19. Which financial statement shows company 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
