IC89 Mock Test Sample 16
Management Accounting helps organizations in planning, controlling, budgeting, and decision-making through analysis of financial information. It uses tools like ratio analysis, budgeting, variance analysis, and forecasting to improve efficiency and profitability. Financial markets provide investment opportunities through instruments such as shares, bonds, debentures, derivatives, and mutual funds. Risk management reduces uncertainty arising from market fluctuations and economic conditions. Regulatory bodies like SEBI and IRDAI ensure transparency and investor protection. Financial statement analysis, capital budgeting, and working capital management help evaluate business performance and investment opportunities. These practices support operational efficiency, financial stability, and long-term wealth maximization for organizations.
Q1. What is the primary purpose of Management Accounting?
a) Entertainment
b) Decision-making
c) Advertising
d) Manufacturing
Q2. Which ratio measures a company’s short-term solvency?
a) Profitability ratio
b) Liquidity ratio
c) Activity ratio
d) Market ratio
Q3. Which financial 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) NABARD
d) SEBI
Q5. Which type of risk affects the overall 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) Foreign Direct Investment
c) Fund Deposit Insurance
d) Fixed Deposit Investment
Q8. Which type of fund mainly invests in shares of companies?
a) Debt fund
b) Hedge fund
c) Infrastructure fund
d) Equity fund
Q9. Which analysis compares financial performance of companies?
a) Technical analysis
b) Ratio analysis
c) Demand 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 helps determine 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) 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 known as:
a) Debtors
b) Creditors
c) Unit holders
d) Shareholders
Q17. Which system establishes standards and performance targets?
a) Inventory control system
b) Budgetary control system
c) Payroll system
d) Costing 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 of a company?
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
