Accounting for Managers

261. ______________ are analysts who use information concerning current and prospective profitability of firms to assess the firm's fair market value.

  1. Credit analysts
  2. Fundamental analysts
  3. Systems analysts
  4. Technical analysts
Correct answer: (B)
Fundamental analysts

262. Those liabilities which arise only on the happening of some event are called

  1. Current liabilities
  2. Outstanding liabilities
  3. Deferred liabilities
  4. Contingent liabilities
Correct answer: (D)
Contingent liabilities

263. There are ______________ types of financial statements analysis

  1. 1
  2. 2
  3. 3
  4. 4
Correct answer: (C)
3

264. ______________ tells us after how much time period the amount of money will become double.

  1. Real interest rate
  2. Nominal interest rate
  3. Rule of 72
  4. Time value of money
Correct answer: (C)
Rule of 72

265. Horizontal analysis is also called

  1. Ratio change analysis
  2. Common size analysis
  3. Trend analysis
  4. Ratio analysis
Correct answer: (C)
Trend analysis

266. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as ______________.

  1. Compound interest
  2. Simple interest
  3. Present value
  4. Future value
Correct answer: (B)
Simple interest

267. If gross profit is Rs 5,000 and the net profit is 25% of the gross profit the expenses must be

  1. Rs 3,750
  2. Rs 1,250
  3. Rs 4,150
  4. Rs 6,250
Correct answer: (A)
Rs 3,750

268. What are the earnings per share (EPS) for a company that earned Rs.100, 000 last year in after-tax profits, has 200,000 common shares outstanding and Rs.1.2 million in retained earning at the year end?

  1. Rs.1.00
  2. Rs. 6.00
  3. Rs. 0.50
  4. Rs. 6.50
Correct answer: (C)
Rs. 0.50

269. Which of the following affects the price of the bond?

  1. Market interest rate
  2. Required rate of return
  3. Interest rate risk
  4. All of the given options
Correct answer: (D)
All of the given options

270. Which of the following statements is most correct?

  1. One of the ways in which firms can mitigate or reduce agency problems between bondholders and stockholders is by increasing the amount of debt in the capital structure.
  2. Managerial compensation can be structured to reduce agency problems between stockholders and managers.
  3. All of above statements are incorrect
  4. All of the statements above are correct
Correct answer: (B)
Managerial compensation can be structured to reduce agency problems between stockholders and managers.
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