IC89 Mock Test Sample 18
Management Accounting provides useful financial information for planning, controlling, budgeting, and decision-making in organizations. It uses tools like ratio analysis, variance analysis, budgeting, forecasting, and cost control to improve efficiency and profitability. Financial markets offer investment opportunities through shares, bonds, debentures, derivatives, and mutual funds. Risk management helps businesses reduce losses arising from market fluctuations and financial uncertainties. Regulatory bodies such as SEBI and IRDAI maintain transparency and investor protection. Financial statement analysis, capital budgeting, and working capital management assist organizations in evaluating performance and investment decisions. These practices help achieve operational efficiency, financial stability, and long-term wealth maximization.
Q1. What is the main objective of Management Accounting?
a) Entertainment
b) Decision-making
c) Advertising
d) Manufacturing
Q2. Which ratio measures a firm's ability to pay current liabilities?
a) Profitability ratio
b) Activity ratio
c) Liquidity 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 organization regulates the securities market in India?
a) RBI
b) LIC
c) NABARD
d) SEBI
Q5. Which risk affects the entire market?
a) Business risk
b) Financial risk
c) Default risk
d) Systematic 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) Fixed Deposit Investment
b) Foreign Direct Investment
c) Financial Debt Instrument
d) Fund Deposit Insurance
Q8. Which type of fund mainly invests in company shares?
a) Debt fund
b) Hedge fund
c) Infrastructure fund
d) Equity fund
Q9. Which analysis compares financial performance of companies?
a) Technical analysis
b) Demand 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 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) Activity ratio
d) Liquidity 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 targets for performance?
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 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) Zero-based budgeting
d) Master budgeting
