IC89 - Management Accounting

IC89 Mock Test Sample 7

Management Accounting helps organizations in planning, controlling, budgeting, and decision-making by analyzing financial information. Financial markets support investment, liquidity, and price discovery through instruments like bonds, debentures, derivatives, and mutual funds. Ratios such as liquidity ratio, profitability ratio, and solvency ratio help evaluate business performance and financial health. Risk management includes understanding systematic and unsystematic risks affecting investments. Regulatory authorities like SEBI and IRDAI ensure transparency and investor protection. Capital budgeting, financial statement analysis, and forecasting are important tools for business growth. Insurance policies, equity funds, and financial derivatives also play a major role in wealth creation and risk management.

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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 ability to pay short-term liabilities?
a) Profitability ratio
b) Activity ratio
c) Liquidity ratio
d) Solvency ratio

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

Q4. Which organization regulates the Indian securities market?
a) RBI
b) NABARD
c) SEBI
d) IRDAI

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

Q6. Which derivative contract is standardized and exchange traded?
a) Forward contract
b) Futures contract
c) Swap contract
d) Open contract

Q7. What does FDI mean?
a) Financial Direct Insurance
b) Foreign Direct Investment
c) Fixed Deposit Investment
d) Fund Distribution Investment

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

Q9. Which analysis is used to compare financial performance?
a) Technical analysis
b) Ratio analysis
c) Demand analysis
d) Cost analysis

Q10. Which insurance policy has no savings component?
a) Whole life policy
b) Endowment policy
c) Pension plan
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 the price of securities?
a) Liquidity
b) Price discovery
c) Financing
d) Budgeting

Q13. Which ratio is also known as Expense Ratio?
a) Operating ratio
b) Solvency ratio
c) Liquidity ratio
d) Market 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 returns called?
a) Alpha
b) Beta
c) Variance
d) Standard cost

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

Q17. Which system sets targets and standards for performance?
a) Cash management
b) Budgetary control system
c) Fund management
d) Inventory control system

Q18. Which derivative is commonly used by farmers for price protection?
a) Commodity derivative
b) Currency derivative
c) Equity derivative
d) Embedded derivative

Q19. Which statement shows assets and liabilities of a company?
a) Cash flow statement
b) Income statement
c) Balance sheet
d) Fund flow statement

Q20. Which budgeting method starts from zero for every expense?
a) Flexible budgeting
b) Cash budgeting
c) Zero-based budgeting
d) Master budgeting

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