IC89 Mock Test Sample 9
Management Accounting helps businesses in planning, controlling, budgeting, and decision-making through financial analysis and reporting. It supports efficient use of funds, profitability improvement, and risk management. Financial markets provide liquidity and investment opportunities through shares, bonds, debentures, mutual funds, and derivatives. Ratio analysis, variance analysis, and financial statement analysis help evaluate company performance and financial health. Risks such as systematic risk and market risk influence investment returns. Regulatory authorities like SEBI and IRDAI ensure transparency and investor protection. Capital budgeting, working capital management, and forecasting are essential tools for business growth, financial stability, and long-term wealth maximization.
Q1. What is the primary purpose of Management Accounting?
a) Entertainment
b) Decision-making
c) Manufacturing
d) Advertising
Q2. Which ratio measures a company’s short-term financial strength?
a) Profitability ratio
b) Liquidity ratio
c) Solvency ratio
d) Activity 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) IRDAI
c) NABARD
d) SEBI
Q5. Which risk affects the entire market or economy?
a) Business risk
b) Systematic risk
c) Default risk
d) Financial risk
Q6. Which contract is standardized and traded on an exchange?
a) Forward contract
b) Futures contract
c) Open contract
d) Swap contract
Q7. What does FDI stand for?
a) Financial Direct Insurance
b) Fixed Deposit Investment
c) Foreign Direct Investment
d) Fund Development Initiative
Q8. Which type of fund mainly invests in shares of companies?
a) Debt fund
b) Hedge fund
c) Equity fund
d) Infrastructure fund
Q9. Which analysis compares company financial performance?
a) Technical analysis
b) Market analysis
c) Ratio analysis
d) Demand analysis
Q10. Which insurance policy provides only risk cover without savings?
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) Maturity value
c) Par value
d) Market 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) Liquidity ratio
c) Market ratio
d) Solvency 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 targets and performance standards?
a) Cost system
b) Budgetary control system
c) Inventory control system
d) Cash management system
Q18. Which derivative helps protect against commodity price fluctuations?
a) Commodity derivative
b) Equity derivative
c) Currency derivative
d) Embedded derivative
Q19. Which financial statement shows assets and liabilities?
a) Income statement
b) Cash flow statement
c) Balance sheet
d) Fund flow statement
Q20. Which budgeting method begins with zero allocation for expenses?
a) Flexible budgeting
b) Cash budgeting
c) Master budgeting
d) Zero-based budgeting
