IC89 Mock Test Sample 19
Management Accounting helps organizations in planning, controlling, budgeting, and decision-making by analyzing financial information. It uses techniques such as ratio analysis, variance analysis, budgeting, forecasting, and cost control to improve efficiency and profitability. Financial markets provide investment opportunities through shares, bonds, debentures, derivatives, and mutual funds. Risk management minimizes losses arising from market fluctuations and economic uncertainties. Regulatory bodies like SEBI and IRDAI ensure transparency and investor protection. Financial statement analysis, working capital management, and capital budgeting help businesses evaluate performance and investment opportunities. These practices improve operational efficiency, financial stability, and support long-term wealth maximization and business growth.
Q1. What is the primary objective of Management Accounting?
a) Advertising
b) Decision-making
c) Manufacturing
d) Entertainment
Q2. Which ratio measures the ability to pay short-term liabilities?
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) SEBI
d) NABARD
Q5. Which risk affects the entire market?
a) Business risk
b) Default risk
c) Systematic risk
d) Financial 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) Fund Deposit Insurance
c) Foreign Direct Investment
d) Financial Debt Instrument
Q8. Which type of fund mainly invests in company shares?
a) Debt fund
b) Infrastructure fund
c) Hedge fund
d) Equity fund
Q9. Which analysis compares company financial performance?
a) Technical analysis
b) Demand analysis
c) Ratio analysis
d) Market analysis
Q10. Which insurance policy provides only risk protection?
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) 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 known as 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 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) Zero-based budgeting
d) Master budgeting
