STUDY MATERIAL ON PAPER II FOR THE PROMOTION

TEST

AS
MANAGER GR IV IN KSFE

COMPILED BY

SUJITH MULLOLI,
MANAGER, PANUR BRANCH

Principles of Fundamental Accounting

SHORT ANSWER MODEL:
1.What do you mean by accounting concepts?
Accounting is the language of business and affairs of
business unit, these are to be communicated to others as well
as to the owner of business, through accounting information,
which has to be suitably recorded, summarized and presented,
so as to enable all people to understand easily and practically
the full meaning of fundamental accounting, the accountant
have to agreed on certain concepts which they are to follow.
2. Brief (1) Business Entity Concept, (2) Money Measurement
Concept
Going Concern Concept (4) Dual Aspect Concept
Entity Concept: It is very important to note that for accounting
purpose the business is treated as a UNIT or ENTITY apart
from its owners, creditors and all others. That is to say, the
proprietor of an enterprise is always considered separate and
distinct form the business which he controls. This concept is
popularly known as Entity.
The amount invested by the proprietor is the liability of the
business to its proprietor termed as 'CAPITAL' (the more
investment the more CAPITAL boosting). The withdrawal of
money value from business is adversely affecting the CAPITAL
(The more withdrawal the lesser CAPITAL)
Money Measurement: The Money Measurement concept
underlines, to record all transactions in monitory terms only.
In other words, a fact or happening which cannot be
expressed in terms of Money is not recorded in the accounting
books. General health of MD of an enterprise cannot be
recorded, while salary paid to a worker can be recored in
Money value.
Going Concept: It is assumed that the business will exist for a
long time and transactions are recorded from the point of
Going Concept, until it has entered into liquidation.
Dual Concept: As far as concerned to Accountant each
transaction has two aspects, that is something attained and
something is given up at any given point of time of a

transaction. According to this concept the Capital of the

business is equal to the Assets of the business. Mr.X starts
business with cash Rs. 20000, Building Rs.50000. The
expression can be shown in the form of equation as follows:
Capital (Mr.X 70000) = Assets(Building 50000+Cash 20000)
3. What are Special Journal and General Journals?
The books or journals can be classified into two types. One is
General journal and Special Journals. General Journal is a
simple book of chronological record in order to facilitate the
recording transactions which occur so infrequently. Opening
entries, adjusting, closing and post closing entries, correcting
entries and compound entries which cannot be shown in the
Special Journals.
The transactions occur very frequently, are chronologically
recorded in the Special Journals. Sales book, Purchase book,
Returns books, Bills books and cash book are the books
coming under category of Special Journals.
Ledger: Ledger is a book in which various accounts in nature
of Real, Personal and Nominal accounts opened. The final
financial position of the business emerges from the accounts
contained in Ledger. The ledger is also called the Principal
book. Ledger is also treated as books of Secondary entries and
king of accounts.
The Accounting Cycle: The Accounting cycle is a complete
sequence of accounting procedures which are repeated in the
same order during each accounting period. The cycle includes
recording transaction in Subsidiary books, classifying the
subsidiary books and data to be posted to Ledgers, closing the
books and preparation of final accounts.
Tips:A. The Journal is the book of first entry (original entry)
the Ledger is the book of second entry.
B. The Journal is the book of chronological record, the Ledger
is the book of analytical record.
C.
CI.

The Journal as a book of source entry, has

greater weight as legal evidence than the
ledger.
The Ledger contained accounts while in the
Journal contained transactions.

CII.

The precess of recording in the Journal is

called journalizing but posting in the Ledger
for the same.

The Petty Cash: Whatever the size of a business there are

many payments for small amount, such as Stationery,
Cleaning, Traveling and Postage, and these are not easy to
record in the main cash book due overburden to the cashier. In
order to avoid this, small expenses are met from the Petty
cashier, by supporting vouchers and at the end of the month
the petty cashier submits accounts to the main cashier and
again on the first day of next month the petty cashier is found
with the same cash balance which he had had on the first day
of the previous month.
Capital Expenditure: All expenses incurred to acquire fixed
assets for continuing usage of the business for the purpose of
earning revenue, are capital expenditure. Generally this
expenditure yields monitory benefit for a long period.
Purchase of building, land , machinery, furniture and fixtures
are the examples of capital expenditure, because all of them
are to be the ways and means to fetch monitory benefit to the
enterprises. The expenses incurred to acquire asset by way of
freight, duty, fees paid and installation charges are also to
cpitalised. Likewise the expenses incurred on the existing
assets so as to increase the earning capacity should also be
capitalised.
Revenue Expenditure : All expenses incurred for establishment
and day to day administration of the business are called as
Revenue Expenditure. These expense include all expenditure
incurred to maintain the fixed assets efficiency such as
repairs, renewals, replace ment and depreciation. It also
includes the current expenses of goods purchased, salary,
rent, taxes and wages etc. Revenue expenditures are shown
on the debit side of the Trading and Profit&Loss account.
Deferred Revenue Expenditure: This is a class of revenue
expenditure the benefit of which is expected to be applied for
more than the particular year in which it is incurred. According
to accounting principles, it is not fair to charge such whole
expenses to the P&L account because of the benefit of such
expenses are being shared for some coming years too. So only
a portion of such expenditure in proportionate with benefit
derived from that expenses should be charged to P&L account
of the year. The excluding portion ofo expenses should be
shown in the asset side of the balance sheet. Eg: Cost of

removal of business to a particular convenient place,

indispensable repair of a non recurring nature, advertisement
expenses made under a contract for a term of years,
unavoidable heavy amount spent on advertisement to launch a
new product.
Bank Reconciliation statement: It is customary for a bank, to
send to its customer a statement showing how his account
stands. When money is deposited into bank, the customer,
enters it on the debit side of the bank account maintained by
himself. At the same time the Bank also enters it on the credit
side of the customer's account, maintained by the Bank. Thus
accordingly, the customer debits the Bank account, and bank
credits the customer's account. Hence debit balance of the
customer and credit balance of bank should be equal.
Unfortunately, transactions with cheque and other negotiable
instruments, may cause to differentiate the balance of
customer's account with bank passbook. The cause of
differences is to be rectified preparing a Bank Reconciliation
Statement.
A. Cheques deposited but not collected, B. Cheque issued but
not cleared, C. Bank charges levied and Direct payment in the
bank are the prime causes to show differences in Cash book
with Bank Pass Book.
Short One Word:
Expenses are the outflow of assets or increase in liabilities
necessary to produce and distribute goods and services.
Loss is an expenditure which does not bring any benefit to the
concern.
Expenditure: Purchase of an asset is called Expenditure.
Acquisition of an assets is not an expense because it does does
not result in the outflow of assets.
Balance Sheet: Balance Sheet is a statement prepared with an
aim to know the exact financial position of the concern of the
last day of financial year.
Equity: A claim which can be enforced against the assets of the
firms in the courts
called Equity. Since the claim against the assets of the firm is
held by both owners and creditors therefore both are called
Equities.

Liabilities: Claims of creditors against assets of the firm may

be defined as Liabilities. The liabilities which can be disbursed
within one year and which are paid out of current assets is
called Current Liabilities.
Long Term Liabilities/Fixed Liabilities: All liabilities which
cannot be due for payment in one year and which do not
require current assets for their payment are classified as long
term liabilities or fixed liabilities.
Assets: Asset may be defined as any owned physical object
(tangible) or right(intangible) having a money value The term
Current Assets is used to discharge cash and other assets,
which are reasonably expected to be realized in cash or
consumed during the normal operating period of the business.
The operating cycle of a business is normally 12 months'
Current Assets are normally arranged in the balance sheet in a
liquidity order as follows: 1 Cash 2 Bank Balance 3 Temporary
Investment 4 Bills Receivable 5 Sundry Debtors 6 Stock In
Trade 7 Payments in Advance
Fixed Assets: Any Assets used for the services it yields in the
production of other goods and services may be defined as
Fixed Assets. Fixed Assets are not meant for resale. Fixed
Assets helps in the production of goods and services.
The purpose preparing Trading Account is to calculate the
Gross Profit/Loss of the Business. Thus Gross Profit = Sales
Cost of Goods Sold or Gross profit + Cost of Goods sold = Sales
[Gross Profit + Opening Stock + Purchases + Direct Expenses]
[Closing Stock] = Sales.
Closing Entries: As far as concerned to an Accountant, all
accounts relating to expenses and gains must be closed at the
end of the year. In order to close such accounts they are
transferred either to Trading Account or Profit and Loss
Account
Journal entries required to transfer the accounts to Trading
and Profit & Loss Account is called 'Closing Entries'
Principle of Closing Entries: The principle of framing a closing
entry is very easy. If an account having a debit balance, to

close, then it is credited, and either Trading and Profit&Loss

Accounting is debited.
Closing Entries in respect of Trading Account: 1 Opening Stock
2 Sales Return
3 Purchase Returns 4. Purchase Account 5. Direct Expense
incurred 6. Sales
7 Closing Stock
Closing entries have the effect of closing all revenue accounts
in the Ledger including the Trading and Profit&Loss Account
and the ultimate result (Net profit or Net Loss) is transferred
to Capital Account.
The Final Account consists of the Trading and Profit&Loss
Account and the Balance Sheet. While Profit and Loss account
reveals the net profit/loss of the institution, but the Balance
sheet shows the financial position of the Business as on a
particular date. The financial position is indicated by Assets
and Liabilities. Therefore, Balance Sheet is defined, as a
statement of Assets and Liabilities of a business, prepared
with a view to ascertain the financial position of the business
as on a particular date.
Excess of Assets of over Liabilities represent Capital of the
Business.
The debit balance of personal or real accounts represent an
Assets while the credit balance denote Liabilities.
The final closing entries are affected to Capital Account.
After closure of all Nominal Accounts, the balance of all the
Real and Personal Accounts are written on a sheet of paper
with a prescribed format, is termed as Balance Sheet
Objects of Balance Sheet: 1 The exhibits the nature and value
of Assets owned by the Business. 2 It reveals the Capital
owing by the business to the owner and other Liabilities owing
to outsiders. 3 It gives information regarding the Solvency of
the Business. 4 It helps to asses the Business progress.
Assets and Liabilities are arranged in the order of Liquidity.
Rectification and Errors

Q A credit sale of Rs. 100 to Ramesh has been entered in the

sales book as a sale of Rs. 1000/= pass rectifying entries
Actual sale is Rs. 100/= but recorded as
Ramesh A/c Dr 1000
Sales A/c 1000
Since not effected the Trial Balance, excess amount given to
particular account may be rectified giving opposite entries as
Sales A/c Dr 900
Ramesh 900
Q The sales book over cast by Rs. 50/=
Since sale account has been credited more Rs.50/= We can
reduce it by giving opposite entry to Sales A/c, thus
Sales A/c Dr 50
To Suspense A/c 50
Q A sale of Rs. 50 to Suresh was posted to his account as a
sale of Rs.5
Suresh is a debtor to the firm, so we already debited him only
Rs. 5
The actual amount to be debited to Rs. 50 therefore Rs. 45 is
yet to be debited as
Suresh A/c Dr 45
To Suspense A/c 45
Q A sale of Rs. 50 to Kamalesh was entered in the Sales Book
as Rs 500, from where, he was debited by Rs. 5000
1 Actual Sales is 50, wrongly entered in Sales Book is 500
therefore Rs. 450 must be debited to Sales A/c.
2 Actual credit Sales is 50, wrongly debited in Kamalesh A/c is
Rs. 5000, therefore, Rs. 4950 must be credited to Kamalesh A/
c. Therefore, we may enter due debit and credit accordingly,

and the suspense account may be treated as balancing figure,

thus:
Sales A/c Dr 450
Suspense(balancing)A/c Dr 4500
To Kamalesh A/c 4950
Q A sale of Rs. 1000 to Suresh, was entered in Purchase book
from where, the account of Suresh was debited by Rs.100
1 Actual sale is Rs. 1000, wrongly entered in Purchase book,
so wrongly entered in Purchases account also, thus purchase
account is wrongly debited to Rs. 1000. Therefore, Purchase
account must be credited to
Rs. 1000, at the same time Sales account must be credited, Rs.
1000 also.
2 Instead of Rs. 1000 Suresh is debited only Rs. 100 so Rs.
900 must also be debited to suresh account, and balancing
figure may be treated as
Suspense account, thus:
Suresh A/c Dr 900
Suspense (Balancing) A/c Dr 1100
To Purchases A/c 1000
To Sales A/c 1000

Objective Questions:
1 Those assets which are acquired and used for earning
revenue are called:
(Fixed Assets)
2 Those assets are acquired by a trader to realise or convert
into cash are:
(Current assets)
3 Those assets are acquired having physical existence and can
be seen are:
(Tangible Assets)
4 Those assets are acquired but cannot be seen or touched and
have no volume:
(Intangible Assets)
5 Goodwill, Patent and Trademark are the examples of
---------- Assets
(Intangible Assets)
6 Those Assets which cannot be realized into Money value are:
(Fictitious Assets)
7 Those Assets which can be easily converted into cash is
termed as:
(Liquid Assets)
8 Liabilities that can be settled within one year or in short
period are:
(Current Liabilities)
9 Liabilities those are to be settled after one year:
(Fixed Liabilities)
10 Expenses due but not paid or unpaid expenses or expenses
accrued is:
(Outstanding Expenses)

11 The Expenses paid in advance or unexpired expenses are:

(Prepaid Expanses)
12 Income earned but not received or outstanding income or
income receivable :
(Accrued Income)
13 Unearned Income or income received but not earned or
prepaid is:
(Income received in Advance)
14 The permanent and gradual diminution in the value of
assets due to wear and tear is
(Depreciation)
15 If adjusted purchases appear in the Trial Balance, closing
stock will not be taken into:
(Trading Account)
16 Closing Stock is transferred to :
(Trading Account)

17 Accuracy of Books of Account is tested by:

(Trial Balance)
18 On returning the goods to the seller the buyer sends:
(Debit Note)
19 When receiving the returned goods the seller sends to
buyer a:
(Credit Note)
20 The Financial position of the business is determined by
drafting:
(Balance Sheet)

21 Gross Profit is transferred to:

(Capital Account)
22 Drawings are transferred to:
(Capital Account)
23 Profit on sale of Fixed Assets is -------- profit.
(Capital)
24 If Revenue Expenditure is treated as Capital Expenditure
the profit will :
(Increase)
25 The unwritten portion of the deferred revenue expenditure
is shown on the----- side of Balance Sheet
(Asset)
26 If Asset costing Rs.50000/-, (written down value is
Rs.30000/-) was sold for 60000/- the capital profit would be:
(Rs.10000/-)
27 The replacement cost of a worn-out part of Machinery is
revenue expenditure because it ------- its income earning
capacity.
(only maintains )
28 An amount treated as Capital Expenditure, if it ---- income
earning capacity.
(Increases)
29 State whether the following statements are True/False
29 Provision for discount on debtors has a debit balance:
(False-- Credit Balance)
30 Interest on drawings is added to drawings account.
(True)
31 Carriage outwards is credited to Profit&Loss account.

(False-- debited to)

32 Income Tax account is debited to Profit&Loss account.
(FalseDrawings account)
33 Reserve for discount on creditors shows always credit
balance.
(FalseDebit balance)
34 Debt-equity ratio measures ------ of the business
(Long term financial business)
35 Liquid assets = (Current Assets-(stock+prepaid expenses)
36 Liquid ratio is also known as = Acid Test and Quick Assets
ratio.
37 The -------- ratios are primarily measures of return.
(Profitability)
38 ------- ratios are a measure of the speed with which various
accounts are converted into Cash or sales.
(Activity Ratio)
39 The -------- of a business firm is measured by its ability to
satisfy its short term obligation as they become due
(Liquidity)
40 Ideal proprietary ratio should be = 50%
41 Higher the ratio, lower is the profitability, is applicable to =
Operating Ratio
42 The Satisfactory ratio between internal and external equity
is = 1 : 1
43 Amount from current assets is realized within = One year
44 ----- analysis involves the comparison of different firm's
financial ratios at the
same point of time.

(Cross Sectional)
45 Ratios provide a ----- measure of company's performance
and condition
(Qualitative)
46 The primary concern of a creditor when assessing the
strength of a firm is the
firm's --------(Profitability ratio)
47 Adjusted Purchases: Generally Closing Stock is adjusted
after the preparation of Trial Balance, and the same is credited
to Trading Account. Sometimes, the adjustment is made prior
to preparation of the Trial Balance. In such a case, the closing
stock account adjusted against Purchases Account ie; net
purchases is shown in the Trading Account. Thus Closing Stock
is shown in the Trial Balance, while Purchases Account in the
Trial Balance will be styled as Adjusted Purchases
Provision and Reserves: These two terms are generally being
used one for other, but this is not true. A Provision is an
amount set apart for meeting possible losses and it is charged
against profit, thus Provision should be debited to P&L
account. The two factors determining the provision are: the
amount is set apart to meet a possible loss and the actual
amount of loss is uncertain at the time of provision is made.
Reserve on the other hand, is an appropriation of profit, ie;
once the profit ascertained from the P&L account some
amount is kept as reserve. So, if there is no profit, there is no
reserve can be made. The more reserves are accumulated, the
stronger the financial position of the business is. If the reserve
is utilized for meeting the special purposes, such as dividend
equalization reserve and reserve for replacement of assets are
Special Reserves while if it is not meant for special purposes
are called as General Reserves.
Revenue Expenditure becomes Capital Expenditure:

There are certain expenses usually treated as Revenue

Expenditure but become Capital Expenditure. The following are
some of the examples:

Wages, they are revenue items, but wages paid to the

workmen employed to erect or construct a Fixed Asset, are
Capital Expenditure, and must be treated as part of the Cost of
the Assets. Though the wages paid to company's own
workmen, relating to above case, should be treated as Capital
Expenditure.
Repairs, are also generally, of revenue nature, but if we
purchase a second hand machinery and a sum is spent towards
repairs to put it on running condition, must be treated as
Capital Expenditure.
Legal Expenses, incurred in connection with the purchase of
fixed assets, must be treated as Capital Expenditure.
Carriage and Freight, in connection with the purchase of fixed
assets are Capital Expenditure.
Advertising, spent for a huge amount, with a view to introduce
a New Product, are Capital Expenditure, as the benefit of such
advertising, will be available in future years also.
Developmental Expenditure: Some concerns, like Collieries,
Mines, Tea, Rubber and other plantations require a very long
period of development, before they can begin to earn any
income. So these expenditure, is treated as Capital
Expenditure.
Preliminary Expenses, prior to incorporation of a Company, are
called Preliminary or Formation Expenses, and these expenses
although revenue in nature, are treated as Capital
Expenditure, because the benefit of such expenditure, will be
available in future years also.
Accounting Ratio and Ratio Analysis:
Accounting Ratio: The term accounting ratios is used to
describe significant relationships between figures shown on a
Balance Sheet or in a Profit&Loss Account A ratio is one
number expressed in terms of another.
Ratio can be expressed as in:
A Percentage: In this way, the relation between two figures is
expressed in 100th. Eg: Sales is Rs.80000 and Gross Profit is
Rs.20000. GP ratio is (80000/20000)X100=25%

B Proportion: Here, the relation between two accounting

figures is expressed in terms of proportion. If the current
assets of a business are Rs. 400000, and current liabilities are
Rs. 200000, the proportion of current assets and liabilities is
400000:200000 that is
2:1 C Fraction : It is expressed as a fraction by the simple
division of one number by the other. Sales is Rs. 400000, and
Net profit is
Rs. 40000, net profit fraction is 1/10th of Sales.
D Rate or so many times : It is calculated how many times a
figure is, in comparison to another figure. If cost of goods sold
is Rs. 200000, and average stock is Rs. 40000, then the Stock
Turnover Ratio will be : (200000/40000) = 5 times.
The all above types ratios are calculated for knowing two
types of comparisons, 1 Present ratio with future/past ratio
for the same firm. 2 Ratio of one firm with that of similar one/
others.
Objectives of Accounting Ratio and Ratio Analysis:
Financial ratio analysis is used to develop meaningful
relationship, between individual items in the Balance Sheet
and Profit&Loss Account. A practical Financial analysis is
helpful to the management of the Business, in order to
identifying, the risk factors and introduce remedial course of
action against the risk.
Main Objectives:
1 Helps in analysis of Financial Statements: It is a useful
device for analyzing financial statements, helping Bankers,
Creditors,Investors, Shareholders etc, getting sufficient
information about the financial soundness of the business.
2 Helps in fixation of ideal standards: Ratio analysis helps the
management, in fixing ideal standard, for various accounting
items. By comparing actual ratio, with various items, the
efficiency of the business can be measured.
3 Facilitates location of weak spots of Business: Current year
ratios are compared with those of previous year or years to
locate the weak spots. Remedial measures can thus be taken
to correct them.

4 Removes complexity of financial information: The data

provided in the financial statement is not as easy as it is
thought to be because of confusing complexity in nature, and
is not useful either to the management, or to the outsiders,
unless the data given to be simplified and summarized. The
summarization and simplification is enable by ratio analysis.
Types of Ratios: 1 Liquidity Ratios 2 Solvency Ratios 3 Activity
Ratios
4 Profitability Ratios
A Liquidity Ratios refers to the ability of the firm to meet its
current obligations. This is also called Short Term Solvency
Ratios. These ratios measures the short term solvency of the
business.
Current Ratio or Working Capital Ratio and Quick Ratio or Acid
Test Ratio or Liquid Ratio are two ratios to be used to know
liquidity position of the firm.
A Current Ratio, by comparing the current assets and current
liabilities, short term solvency of the firm can be ascertained.
That is, Current Ratio = Current Assets/Current Liabilities
Current Assets = Debtors, Bill Receivable, Stock in Trade,
Advances, Cash in Hand and at Bank, Prepaid Expenses and
Short Term Investments, etc.
Current Liabilities = Creditors, Bills Payable, Receipts in
Advance, Bank Overdraft, Creditors for Expenses, Provisions
for Taxation and Proposed Dividend etc.
B Quick Ratio or Acid test Ratio, supplements the use of
current ratio. Quick Assets include only, those items which can
be converted into cash quickly.
Quick Ratio = Quick or Liquid Assets/Current Liabilities
(general case)
Quick Ratio = Cur Assets-(Stock+Prepaid Exp)/Cur Liab-Bank
OD)
B Solvency Ratio, refers to the ability of a concern to honor its
long term obligations. Solvency Ratios indicate the stability
and financial position of an enterprise.

A Interest Coverage Ratio, shows the relation between

interest and Profit, before interest and tax. The ratio is
calculated as:
Interest Coverage Ratio= Profit before interest & tax /Interest
Net Profit of a Company after Tax and Interest is Rs. 300000.
Interest on long term borrowings Rs. 50000 and Income Tax is
Rs. 50000. Calculate Interest Coverage Ratio.
Profit before interest and tax =
300000+50000+50000=4000000
Interest Coverage Ratio = 400000/50000 = 8 Times
B Debt Equity Ratio, is the ratio between borrowed fund and
owners fund, that is Debt and Equity. Debt refers to long term
Liabilities. (Long Term Loan and Debentures. Equity includes,
share capital (both ordinary and preference) General Reserves
and other reserves.
Debt Equity Ratio = Debt/Equity
C Total Assets to Debt Ratio, tries to measure the proportion of
total Assets funded by long term debt.
Total Assets to Debt Ratio = Debt/Total Assets
This ratio expresses the relationship between long term loans
and Total Assets of the business.
D Proprietary Ratio, shows the
proprietors funds and total assets.

relationship,

between

Proprietary Ratio = Shareholders' Funds/Total Assets

The shareholders' fund is Rs. 500000, Total assets are
Rs.600000. Find out proprietary ratio:
500000/600000X100 = 83.33%. The ratio reflects general
financial strength of the company. A high ratio would mean
less danger to creditors during winding up.
Calculate Earning per share.
NP before tax Rs. 500000
Tax rate 50%

10% Preference Share Capital ( Rs.10 each ) 500000

Equity Share Capital (Rs. 10 each) 500000
Solution:
EBIT Rs. 500000
Less Tax 250000
----------PAT 250000
Less Pref dividend 50000
----------200000(Profit available for equity shareholders)
EPS = PAT+Preference Dividend = 200000/50000= Rs.4/=
No. of Equity shares
C Activity Ratios or Turnover Ratios, indicate the efficiency
with which the affairs of the business. The affair is related to
Sales. Hence these ratios are called as Turnover Ratios or
Efficiency Ratios. Thus the Sales or Cost of goods sold, is
compared with various assets.
The major Activity Ratios are, 1 Inventory Ratios or Turnover
Ratio
2Debtors Turnover Ratio or Receivables Turnover Ratio, 3 Debt
Collection Period, 4 Creditors' Turnover Ratio or Payable
Turnover Ratio and
5 Working Capital Turnover Ratio
1 Inventory Turnover Ratio or Stock Turnover Ratio, shows
whether investment in stock is efficiently used or not.
Stock Turnover Ratio = Cost of goods sold/Average Stock
Cost of goods sold = (Opening Stock + Purchases and
Expenses)-Closing Stock
Or Cost of goods sold = Sales-Gross Profit

2 Debtors Turnover Ratio or Receivable Turnover Ratio, is

related to Sales to Outstanding amount due from Debtors.
Debtors includes, Bills receivables also. Sales means Credit
Sales only. Since the ratio measures the promptness in
collecting debts, a high ratio reflects efficient collection of
Debts.
Debtors Turnover Ratio = Credit Sales/Average Debtors
3 Debt Collection Period, ratio indicates the volume of debts
collected in stipulated period. The longer period of collection is
the higher risk of blocking funds.
Debts collection period = Months in a year/Debtors Turnover
4 Creditors Turnover Ratio or Payable Turnover Ratio: In the
course of business, a firm has to make purchase on credit.
Thus the creditors will be interested to know, how much time
the firm takes in repaying the trade creditors.
Creditors Turnover Ratio =Credit Purchases/ Average Trade
Creditors
5 Working Capital Turnover Ratio, indicates, the velocity of
Utilization of networking capital. This ratio stands for the
number of times the working capital is turned over in the
course of year.
Working Capital Turnover Ratio =Cost of Sales/Networking
Capital
D Profitability Ratios: Since every business's motto is to earn
profit, it should be very interesting to know whether a
business is running with high rate of profit. In order to
measure and monitor the profitability nature, we have to
check the real profitability ratios of the firm. Profitability ratio
is based on total sales.
1 Gross Profit Ratio, measures the relationship between Gross
Profit and Net Sales.
Gross Profit Ratio = Gross Profit/Net Sales X 100
Here, GP = Sales+Closing Stock-Purchases-Direct Expenses
Or GP = Sales Cost of Goods Sold

Therefore,
Cost
of
Goods
Sold
=
Stock+Purchases+Direct Expenses-Closing Stock

Opening

2 Net Profit Ratio, measures the relationship between Net

Profit on Net Sales. It helps us to determine the overall
profitability due to various factors, such as operational
efficiency, trading of equity etc. Since NP Ratio, shows the
operational efficiency of the business, higher the ratio, better
it is.
Net Profit Ratio = (Net Profit/Net Sales) X 100
NP = GP+Operating&Non Operating Incomes-Operating&Non
Operating Expenses
3 Operating Ratio, measures the relationship between
operating cost and net sales. Operating cost comprises, Cost of
Goods Sold and Operating Expenses.
Operating
Ratio
=
Cost
Expenses/Net SalesX100

of

Goods

Sold+Operating

NB : Non operating expenses and non operating incomes will

not be counted for knowing Operating Ratio.

4 Return on Investment ratio, measures the relationship

between Net Profit(before interest & tax) and Capital
Employed. Thus efficiency of the long term funds supplied by
the investors and shareholders can be measured.
Return on Investment = NP before Tax, Interest and Dividend
X 100
Capital Employed
A Capital Employed = Equity+Preference+ Reserves &
Surplus+Long Term
Liabilities-(Fictitious Assets+Non Operating Assets)
Capital Employed = (Fixed Assets after depreciation + Current
Assets)Current Liabilities.
Capital Employed = Fixed Assets+Net Working Capital

E Earning per Share ratio, shows the relationship between Net

Profit (After Interest, Tax and Preference Dividend) and
Number of Equity Shares. This ratio is used to measure the
profitability of the company on per Equity Shares.
Earning per Share = NP after Interest, Tax&Dividend
Number of Equity Shares
D Dividend per Share: The profit after payment of Tax and
Preference dividend are available for equity shareholders.
Dividend per Share = Dividend paid to Equity shareholders
Number of Equity shares
E Price Earning Ratio, measures the relationship between
market price of the Share and earning per share.
Price Earning Ratio = Market Price of the Share
Earning per Share
One word questions from Accounting Ratios:
Marginal Costing
Contribution = Sales Price-Marginal Cost
Contribution = Fixed Cost+Profit
Profit = Contribution-Fixed Cost
Break Even Point(in units) = Fixed Costs/SP per unit-MC per
Unit
Break Even Sales = Fixed Costs/PVR
Sales-Variable Cost = Fixed Cost +or-Profit
Break Even Sales = FCXSales/Sales-VC
PV Ratio = Contribution/SalesX100
Sales required to earn a
Particular Profit = [FC+Desired Profit]/PV Ratio
Margin of Safety is the difference between the Actual Sales
and the Sales at BEP (Break Even Point). Therefore, Sales or
Output beyond BEP is known as Margin of Safety
1 Relationship between two related or interdependent items,
expressed in arithmetical terms is called A Ratio
2 Ratios expressed in relating to Financial statement are called

Accounting Ratios
3 The prominent factor derived from Ratio Analysis is
Efficiency of Firm
4 Balance Sheet Ratios are also known as
Financial Ratios
5 Give an example of Balance Sheet Ratio:
Current Ratios
6 Profit and Loss Ratios are also called
Operating Ratio
7 Give an example of Profit and Loss ratio
Gross Profit Ratio
8 The item taken from Profit&Loss account and Balance Sheet
to find ratios is called
Combined Ratio
9 Give an example of Combined Ratio
Rate of return on Capital Employed
10 Liquidity in a business is the potential ability to meet its:
Current Obligations
11The failure of a company to meet its obligations due to lack
of adequate liquidity will result in:
Bad Credit Rating.
12 The ratio used to measure the short term financial analysis
is
Current Ratio or Working Capital Ratio
13 Current Ratio matches the:
Current Assets to Current Liabilities
14 The short term solvency of a firm can be measured by :

Current Ratio
15 The difference between Current Ratio and Quick Ratio is
Stock
16 Which ratio shows the ability of a business to meet its
immediate commitment
Quick Ratio
17 Quick Assets included cash, debtors and securities which
can be realized without difficulty but not
Stock and Prepaid Expenses
18 Quick Liabilities refer to all current liabilities except
Bank Overdraft
19 The ratio which can be a very realistic guide to solvency.
Quick Ratio
20 Quick Ratio should be used in conjunction with the
Current Ratio
21 The ratio which measures how many times the average
stock is sold during the period.
Inventory Turnover Ratio
22 Average age of inventory is also known as :
Inventory Holding Period
23 The ratio establishes relationship between credit sales and
average debtors:
Debtors Turnover Ratio
24 The ratio which enables a company to meet its long term
obligations:
Solvency Ratio

25 Debt-Equity Ratio, Total Assets

Proprietary Ratio are come under

to

Debt

Ratio

and

Solvency Ratios
26 The Ratio which measures the relationship between debt
capital and equity capital
Debt-Equity Ratio
27 The ratio measures the relative claims of creditors and
owners on the assets of the firm
Debt-Equity Ratio
28 The average acceptable Debt-Equity Ratio is 1:1
29 Capital Employed to Total Assets Ratio is also called.
Proprietary Ratio
30 The ratio which reveals the relationship with owned capital
funds and total assets
Proprietary Ratio( Capital Employed to Total Assets Ratio)
31 Equity Share Capital+Preference Share Capital+ Reserves +
Undistributed Profits and Surplus-Accumulated LossesFictitious Assets
Shareholders Funds
32 The ratio studies the firms debt-servicing capacity
Interest Coverage Ratio
33 A systematic use of Columns in the ledger and the books of
original entry called:
Columnar Book Keeping
34 Profitability Ratios pertains to the relationship with
Sales and Investment
35 The ratio expresses the relationship between gross profit
and sales:

Gross Profit Ratio

36 The overall profitability of a company is measured by the
ratio of
Net Profit Ratio
37 The ratio compares the Cost of Goods Sold and the
Operating Expenses on Net Sales is
Operating Ratio
38 The broadest measure of overall profitability of a business
is calculated by the ratio of
Return on Investment Ratio
39 The real owners of the company is
Equity Shareholders
40 The Permanent funds of the company include shareholders
equity +
Non current Liabilities
42 The Ratio of Net Profit to Shareholders Fund:
Return on Shareholders Fund

43 The sum of Equity Capital, Preference Capital, General

Reserve, Capital Reserve and Profit and Loss Account is
Shareholders Funds
44 The Combined effect on Net Profit Ratio and the Capital
Turnover Ratio
Return on Capital Employed
45 A statement prepared to indicate the increase in the cash
resources to utilize the same for business
Fund Flow Statement
46 Statement of changes in financial position is an analysis of
movement of funds between

Two Balance Sheet

47 In the narrow sense, 'Funds' has been equated to cash
while in the wider sense it refers
Working Capital
48 Analysis used to determine
performance of a business

financial

conditions

and

Ratio Analysis
49 The Ratio shows the relationship between Assets and
Liabilities
Solvency Ratio
50 The Ratios those are worked out to evaluate
performance of the business in utilizing the resources

the

Turnover Ratios
51 To workout the short-term financial
company with the help of

position of the

Liquidity Ratio
52 Operating ratio, Return on Investment ratio, Return on
Capital Employed Ratio, Return on Equity and Earnings per
Share ratio are classes of
Profitability Ratio
53 Profit earned by the concern from its business operation
and not from the other sources is
Operating Profit Ratio
54 Operating Profit Ratio shows the relationship between
Operating Profit and
Net Sales
55 A Plan prepared in systematic for the utilisation of
manpower and material resources
The Budget

56 In a business organization a Budget represents an estimate

of future
Cost and Revenue
57 The Budget may be classified mainly into two types which
are
Capital Budget and Operating Budget
58 Capital Budgets are pertaining to the proposed expenditure
for
New Projects to be implemented
59 All sectional budgets are integrated into a
A Master Budget
60 Changes in working capital between the opening and
closing balance sheet dates will be ascertained by preparing
Fund Flow Statement
61 There are two types of Fund Flow Statement one is based
on cash and other is on
Working Capital
62 Pertaining to preparation of Fund Flow Statement theitems
in the Balance Sheet are classified
Current and Non current categories
63 The liabilities payable over a period longer than one year
are called as
Non current liabilities
64 A transaction results increase of funds and decrease of
funds is known as
Source of funds and application of funds respectively
65 Schedule of Changes in Working Capital is prepared with
the help of
Current assets and current liabilities only

66 The items which are debited to Profit and Loss account but
do not related to general business activities
Non Trading Items
67 The items which are added back to Net Profit, during the
presentation of Fund from Operation.
Non Trading items and Non Fund items
68 The Capital of a company which is divided into number of
units is called
Share
69 The capital raised by issue of shares is
Share Capital
70 The amount stated in the capital
memorandum of association of the Company

clause

of

the

Authorized Capital
71 The process of accepting the offer of the applicant for the
purchase of Shares
Allotment of Shares
72 The unpaid amount on the application and allotment of
shares can be demanded by the company in installments is
called
Calls on Shares
73 The issue of shares to a selected group of persons is called
Private Placement of Shares
74 As per the Company Act certain portion of the uncalled
capital to be kept as reserve is called
Reserve Capital
75 The reserve which is created out of capital profits
Capital Reserve

76 The number of shares applied is less than number of shares

offered for issue, is called
Under Subscription
77 The number of shares applied for more than the number of
shares offered for issue
Over Subscription
78 The share alloted to subscribers less than number of shares
they have applied for is called
Pro-rata allotment
79 Expenses incurred on the formation of a Company are
known as
Preliminary Expenses
80 The shares which are issued by the company to its
employees or directors at a discount rate is
Sweat Equity Shares
81 The documents acknowledging indebtedness for the money
lent, by a company from persons or organizations offering
repayment with interest is called
Debentures
82 The debentures on which option is given to covert them
into shares at stated rate of exchange after a certain period
Convertible Debentures
83 Debentures are repayable by a company on the expiry date
in lump sum or in an annual installments.
Redeemable Debentures
84 A debenture like instrument, issued acknowledged debt
where the rate of interest is generally predetermined
The Bonds
85 Repayment of amount to the Debenture holders is

Redemption of Debentures
86 What is the minimum requirement
Redemption Reserve of a company

of

Debenture

50% of value of debenture issued

87 The statement of assets and liabilities stating the financial
position of an enterprise is
Position Statement
88 The statement which shows the net result of business
operations during an accounting period
Income Statement
89 In which order a Company's balance sheet is prepared?
Order of Permanency
90 Preliminary Expenses, Discount on issue of shares, Share
issue expenses and Development Expenditure are shown
under the heading of
Miscellaneous Expenditures
91 What is the last heading on the assets side of the balance
sheet of a Co.
Profit and Loss Account(debit balance)
92 What is the main heading of a company against Authorized
Capital, Issued Capital, Subscribed Capital, Called up Capital
and Paid up Capital
Share Capital
93 Which part and schedule of Company's Act, 1956 prescribes
the form of Balance Sheet?
Part I Schedule IV
94 Balance Sheet, P&L account, Cash Flow Statement,
Directors Report and Auditors Report are included --- of a
company
Final Accounts of a Company

95 The liabilities those are come into existence on the

happening of some uncertain events
Contingent Liabilities
96 A dividend paid by the company between two annual
general meetings is
Interim Dividend
97
Report
on
Corporate
Governance
Responsibility statement are also part of the

and

Directors

Financial Statement
98 A statement of
appropriation account

'Retained

Earnings'

is

called

P&L

99 The report in which the state of affairs, such as PBT, PAT,

creation of reserves and provisions and proposed dividend are
shown is
Directors Report
100 The statement indicates inflow and outflow of cash during
an accounting period is (AS 3)
Cash Flow Statement
101 Comparative statements, Common Size Statement, Trend
Analysis, Ratio Analysis, Cash Flow Statement and Funds Flow
Statement are the techniques used for the analysis
Financial Statements
102 When the Financial statements of a firm for two or more
years are compared, it is called:
Intra-firm comparison
103 When the Financial Statements of different firms for the
same period are compared, it is called:
Inter-firm comparison
104 A ratio which is expressed in mathematical relationship
between two items or group of items shown in the financial
statements

Accounting Ratio
105 The ratios which measure the effectiveness with which
assets are used for generating sales.
Activity Ratios
106 If you are a creditor of a company, mention any two ratios
that you would like to calculate:
Current and Quick ratios
107 If you are a Debenture holder of a company, mention any
two ratios that you would like to calculate:
Debt-equity ratio and Interest Coverage ratio
108 If you are a shareholder of a company, mention any two
ratios that you would like to calculate:
Net Profit and Return on Capital Employed Ratio
109 A statement that shows inflows and outflows of cash
funds from operating, financing and investing activities during
a year.
Cash Flow Statements
110 The short term highly liquid investments, that are readily
convertible into cash without any risk of change in value are:
Cash Equivalents
111 Cash sales, cash received from debtors, payment of wages
and Income Tax are examples of
Cash flows from operating activities
112 Transaction of a general nature which occur frequently are
first recorded in the
Special Journal
113 Prepaid expenses are --- accounts
Personal account without name
114 Trial balance made after the adjusting and closing entries
have been posted is called

Post closing TB
115 Assets which reduce its value, by usage but are not
replaced is called as
Wasting Assets
116 Fixed Capital is also called:
Block Assets
117 Cost of goods sold + selling expenses is equal to
Cost of sales
118 Cost of goods sold + Gross profit is equal to
Sales
119 A Trial balance lists the balances, of all ledger accounts
and
Cash Book
120 The process by which the legality of dishonored bill is
ensured
Noting and Protesting
121 Overdraft for a business means credit balance as per
Cash Book
122 Debit note is prepared in connection with
Purchases
123 Sales return account is a
Nominal Account
124 Credit note is sent by
Seller/Service Provider

125 Allowance made for the prompt payment is called

Cash Discount
126 Written evidence for a payment of cash is called
Voucher
127 A liability or income may be a ------ balance
Credit balance
128 ---- serves as cross-reference between the Journal and
Ledger
Folio Number
129 Assets or expenses may be a ----- balances
Debit Balances
130 Transfer of money or money's worth from one party to
another is termed as
Transaction
131 Class of accounts comprising both debtors and creditors
are called
Personal Accounts
132 When reserve is invested in outside securities, it is called
Reserve Fund
133 Liability for bills discounting is
Contingent Liability
134 Special Journal is also called
Subsidiary books
135 Petty cash book is maintained under --- system
Imprest

136 Source document for sales returns

Credit Note
137 Collection of all accounts is called
Ledger
138 Balance of purchase returns book always shows --balance
Credit
139 AGM is the short from of the
Annual general meeting
140 Assets from revenues earned but not yet received
Accrued assets
141 Fundamental accounting assumption include
Going concern, consistency and accrual
142 Under which concept of accounting, the prepaid expenses
are shown in the assets side of the Balance Sheet
Going Concern concept
143 The principle applied, for the
expenditure as revenue expenditure.
Error of Principles
144 Working capital is also called
Revolving Capital

treatment

of

capital

145 Double entry system was propounded by

Luca Paciaoli
146 The balance of all assets shown in the Trail balance will be
taken to
Balance Sheet
147 Cash discount is allowed by
Creditors
148 The main distinction
expenditure is based upon

between

capital

and

revenue

Period of benefit derived

149 Renewal fee for a patent is a
Revenue Expenditure
150 The reserve derived, from charging of capital expenditure
to revenue
Secret Reserve
151 Cost of Air conditioning the office of MD is a ---expenditure
Capital Expenditure
152 Journal entries that begins or opens a new set of books by
debiting assets and crediting liabilities and capital
Opening entry
153 Debit balance of all personal accounts are collectively
called
Sundry debtors
154 The accounting conventions pertains
liabilities shown in the books of account is
Convention of Materiality

to

contingent

155 The concept pertains to the accounting equation Assets =

Liabilities is
Dual aspect concept
156 According to which concept, proprietor of a business is
treated a creditor
Business Entity Concept
157 The concept
accounting

based

upon

the

mercantile

system

of

Accrual Concept
158 The nature of expenditure, that would have been zero
balance after the closing entries passed
Revenue Expenditure
159 Life membership fees received by a club is treated as
Capital Receipt
160 Profit on the sale of furniture in a non profit making
organization is shown on the
Credit side of the Income&Expenditure AC
161 The term used to describe the process of writing down the
long term investments and intangible assets
Amortization
162 Obsolescence means decline in the value due to
Innovations and Inventions
163 The asset which generally assumed not to be depreciated
Land
164 The lands of which value is diminishing by frequent usage
Wasted Lands (Quarry and Mine)
165 The three way of expression of ratios are Percentage,
Rates and Proportion of pure Ratio

166 Three classification of ratios are

Traditional, functional and according to nature
167 The ratio which measures the contribution of finance by
owners compared with the finance provided by the outsiders
168 The excess of current assets over current liabilities is
Net working capital
169 A company which has any of it is securities listed in any
recognized stock exchange is
Listed Company
170 A company, must be registered, its an artificial legal
person, has legal entity, voluntary association of persons for
profit and members have limited liabilities are the main
characteristics of a
Company
171 Shares of a company, divided into number of equal units,
having property rights, treated as goods, hypothecated, can be
bought , sold so these are
Movable Properties
172 Shareholders those are entitled, to a share in the in the
surplus profit of the company, after payment of profit to equity
shareholders
Preference shareholders
173 The reserve originates form the source other than regular
activities of the business is
Capital Reserve
174 Profit on [sale of fixed assets, revaluation of assets and
liabilities, forfeiture and reissue of shares and prior to
incorporation] are sources of
Capital Reserve
175 Making an offer, inviting the public to subscribe the shares
is generally known as

Initial Public Offer[IPO]

176 The notice or circular inviting public to subscribe to its
shares and debentures or to make deposits with it
Prospectus
177 The amount
determined by

of

Minimum

Subscription

of

shares

is

Directors of Company
178 To meet expenses for [ purchase fixed assets, preliminary
expenses, working capital requirements and usual conduct of
business] by a company derived from
Minimum Subscription
179 Share issue expenses are shown in the Balance Sheet as
asset under the heading of
Miscellaneous Expenditure
180 A company is authorized to issue its share at a price which
is more than its face value, it is said to be
Issue at premium
181 A company is authorized to issue its share at a price which
is less than the face value, is said to be
Issue at discount
182 The subscribers fail to pay
application, the dues is called as

allotment

money

after

Calls in arrears
183 When the public has subscribed equal to the shares
offered by the company, is said to be
Full Subscription
184 According to SEBI guidelines the minimum subscription
has been fixed at
90% of entire issue

185 According to SEBI guidelines, the subscription money

must be received within --- months from the date of allotment
186 The directors and employees are given a right to subscribe
or purchase at a future date the securities of the company at
predetermined price, this scheme is said to be
Employees stock option plan
187 The amount of called up capital which has been actually
paid by the shareholders, is called
Paid up capital
188 The rate of discount on shares must not exceed 10% until
otherwise, permission is granted by
Company Law Board
189 The preferential allottees will not sell their shares in the
open market for a minimum period of ---- years from the date
of allotment 3 years
190 The Promoters, venture capitalist, financial institutions
and buyers and suppliers of the company's products are
generally eligible of ---- allotment
Preferential Allotment
191 The term 'Book Building' is referred with
Preferential Allotment
192 When a company accepts money, paid by some its
allottees, for the calls not yet due, such amount is known as
Calls in advance
193 If articles of association silent about interest on calls in
arrears, the interest will be charged
@ 5% PA
194 AT what rate of interest will be paid against calls in
advance to shareholders
6% PA

195 If a company buy its own shares from the market, the
process is known as
Buy back of shares
196 General reserves, reserve funds, credit balance of P&L
account, from proceeds of any shares or securities and
securities premium account are sources to buy
Shares at buy back system
197 The buy back of shares should not exceed, ---- % of total
paid up capital and free reserve of the company
25%
198 General reserves, reserve funds, credit balance of P&L
account, of a company are popularly known as
Free Reserves
199 A bank account opened by a company, with a banker, to
perform its obligations, under the scheme of buy back of
securities
'Escrow Account'
200 An issue of shares, in which existing shareholders, have
an option to subscribe, to new shares below the market price
is called
Right Issue of Shares
201 The debentures those are secured either or particular
assets of the company is called as
Secured Debentures
202 The debentures do not have security, and holders of such
debentures are treated as unsecured creditors is called as
Simple/Naked Debentures
203 Debentures are those debentures,
transferable by mere delivery is called as
Registered Debentures

which

are

not

204 Debentures are those debentures, which are transferable

by mere delivery is called as
Bearer Debentures
205 The debentures which have to be repaid, before other
debentures are known as
First Debentures
206 Availability of necessary funds, no interference in the
Management, Fixed rate of Interest and Return of Funds are
the significance of
Issuing Debentures
207 The debentures which are issued without declaring
predetermined rate of interest, and issue price is heavily
discounted, such debentures are known as
Deep Discount Bonds/Zero Coupon Bond
208 Debentures are generally issued with a specified rate of
interest, and this specified rate is called
Coupon Rate Bond
209 Redemption of debentures is not possible out of Capital
only, but
Debenture Redemption reserves
210 The debenture redemption reserve is not required in case
of redemption by
Conversion
211 Generally a company can purchase its own debentures, in
the open market, at a point of time, when its debentures are
quoted
Below Par
212 In a vertical form of Balance Sheet, liabilities are shown
under the heading 'Sources of Funds' but Assets are shown as
Application of Funds

213 Who will sign the Final Accounts of a Company?

Secretary or Manager and one Director with MD
214 All Companies are adopted --- account system
Accrual System
215 At the end of the financial statements, a narration is
noted, pertaining to the contingent liabilities, Depreciation
policies and Valuation of stock
Explanatory Notes
216 A summarized records of transactions affecting one
person, one kind of property, or one class of gains or losses
Accounts
217 Impersonal accounts may be either, ----Real or Nominal account
218 Accounts of properties or possessions are come under
Real Accounts
219 When a businessman's Assets exceeds over his Liabilities,
he is said to be
Solvent
220 Another name of nominal account
Fictitious Account
221 The traders own account in the Business, would be
His Capital account
222 Name the sub division ledger, containing Capital Account,
Drawing Account, and all other transactions in private natures
Private Ledger
223 The main object of ---- is to clearly, indicate the position
of each account in relation to a trader

Ledger Accounts
224 ---- Accounts serve to indicate whether the person is a
debtor or creditor of a trader
Personal Account
225 --- Accounts serve to show the incomings and outgoings of
the several Assets, dealt in by the Trader
Real Accounts
226 --- Accounts serve to show under what headings
expenses, were incurred, in carrying on the business, and
what were the sources of Income
Nominal Account
227 Personal and Real Accounts are closed by 'balancing', and
Nominal Accounts are closed by transferring to
Profit and Loss Account
228 Goods Account should not be closed until the value of --is shown on the credit side of that Account
Unsold Goods
229 Personal Accounts should only be debited or credited
when there is a ---Credit Transactions
230 The Books of Purchases, Sales, Returns Inward, Returns
Outward, Cash, Bills Receivables and Bills Payable are
commonly called as
Subsidiary Journals
231 Original Journals has been superseded by---Subsidiary Journals
232 The transactions pertaining to extra ordinary nature,
which do not fall within any of the Subsidiary Journals is called
Original Journal

233 The Invoice Book, Bought Book and Purchases Journals

are popularly known as
The Purchases Book
234 When goods are bought on credit, we receive a statement,
(particulars of goods) along with the goods themselves or by
post is called
The Invoice
235 The entries in the Purchases Journal, originate from
Invoices Inward
236 The ---- will contain, an exact copy of each invoice, sent
out to the customer, when credit sales are taken place
Outward Invoice Book
237 The credit notes generally are printed in --- ink, to
distinguish them from invoices
Red
238 When the goods may not be up to the samples or
according to the order, or they may have been sent in error, or
may be subject to some other defects ----- incurred
Returns of goods
239 When 'Returns' are being accepted the receiver of the
goods usually, sends a
Credit Note
240 The periodical total of the Purchases Book, is debited to
Purchases/Goods Account
241 The sub divisions of the Journals are devised with a view
to save
Clerical Labor
242 After the Bills of Exchange is accepted, and returned to
the drawer, it is known as--Acceptance

243 When a Bill, accepted by a drawee gives his assent,

without any condition to the order of the drawer is known as
General Acceptance
244 When the Bills of Exchanges, endorsed putting signature
of the endorser only, the way of endorsement is called
Endorsement in Blank
245 When the Bills of Exchanges, endorsed putting signature
of the endorser mentioning his right, on the bills are
transferred, is called
Special Endorsement
246 When the Bills of Exchange is endorsed, in favour of a
definite person only. The way of endorsement is called
Restrictive Endorsement
247 When endorsement is taking place, the endorser relieves
himself, from liability to all subsequent endorsees, the way of
endorsement is called
Endorsement Sans Recourse
248 When endorsement is taking place, the endorser waives,
some right to which he is entitled, the way of endorsement is
called
Facultative Endorsement
249 If a purchaser of a bill, deducts some amount from the
face value, and pays the amount to the holder after deduction,
the way is said to be
Discounting Bills

250 If the acceptor of a bill, is ready to pay the amount, of his

acceptance, before the due date, provided his allowed some
rebate and the process is said to be
Retiring a bill under Discount
251 The Bills of Exchange, for which no consideration has been
passed by the drawer to acceptor, such bills are called
Accommodation Bills

252 Opening Entries, Transfer from one account to another,

adjusting and closing entries and rectification entries are first
recording in
Journal Proper
253 Theoretically any business transaction can be recorded in
the
Journal
254 Errors of Omission, wrong entries in any original records,
Errors of principles, compensating errors and posting to wrong
head of accounts are errors those are not affected to the
Trial Balance
255 Omission to post an entry from subsidiary books, posting
a wrong amount to a ledger A/c, posting wrong side of a
ledger A/c, Errors in casting ledger or subsidiary book, wrong
balancing in ledger A/c and Omission of a balance in ledger A/
c are disclosed by
Trial Balance
256 The number of Personal A/cs which will have to be
opened, in a traders ledger depends upon the number of --and number of with him
Creditors and Debtors
257 The larger the number of Real and Nominal A/cs opened,
the more ---would be derived from books of accounts.
Detailed and Analytical information
258 The book value of the assets would be increased, by
debiting --- expenditure on it
Capital Expenditure
259 The expenses incurred for the up keeping and
maintenance of permanent properties, of the business is called
Revenue Expenditure
260 At the end of the financial period, all revenue expenditures
would be transferred to ---

Revenue A/c or Profit and Loss A/c

261 The trading account is the result of buying and selling of
Goods
263 The great importance of proper valuation of Closing Stock,
lies in the fact that, this item directly affects,
The Gross Profit
264 Freight, Carriage and Cartages are ---- cost of goods
purchased, therefore, seen in the Trading Account
Additional
265 Three charges which are incurred on Purchases as well as
on Sales
Dock Dues, Clearing Charges and Customs Duty
266 Premium paid in respect of the Life Insurance Policy of the
proprietor is treated as
Drawing Account
267 Comparative statements, Ratio Analysis, Cash Flow
Statement, Break Even Point Analysis, Trend Analysis and BEP
analysis are various tools for
Financial Statements Analysis
268 --- compares, financial data at two point of time and helps
in deriving, the changes in Financial Position, and operating
results
Comparative Financial Position
269 Comparative Balance Sheet, Income Statement, Common
Size Statements and Trend Analysis are the tools for
Comparison of Financial Statements
270 Past Ratios, Ratio of Ratio of Similar Firms, Industry
Average and Rule of Thumb may be the benchmark in the
Financial Analysis
271 Liquidity, Solvency, Activity and Profitability ratios are
group of
Financial Ratios

272 On sale of old equipment, owner's equity will ---Remain Unchanged

273 Withdrawal by the proprietor would reduce both ---Assets and Owners Equity
274 Purchases of the Government Securities for cash would
keep the Assets --Unchanged
275 Both Assets and owners equity would be increased by Retained Earnings
276 Under the convention of Conservatism,
anticipated and all --- are provided for

profits

are

Possible Loss
273 The contingent Liabilities shown in the Balance Sheet
arising out of accounting convention of ---Disclosure
274 The concept pertaining to classification of Assets as
Current and Fixed
Going Concern
275 The concept pertaining to the Financial Statements
Full Disclosure Principle
276 The concept pertaining to follow the WDV method of
depreciation on a particular Assets year after year
Consistency Principle
277 The concept pertaining to make provision for bad and
doubtful debt
Conservatism Principle
278 Valuation of Crops at Market Value, the principle adopted
is

Industry Practice

279 Conservatism Principle is an exception to the

Consistency Principle
280 Accounting practices, should be followed on horizontal
basis from one accounting period to another in accordance
with the
Consistency Principle
281 An increase in owners equity at the end of a period is the
result of--- made by the business
Net Profit
282 A credit to Equity account ---- the Account itself
Increases
283 Income increases the ---- of the business
Net worth
284 Income can be manipulated by over valuation or ---- of
Assets
Undervaluation
285 Trade discount is allowed by --- and cash discount is
allowed by --Wholesaler, Creditor
286 The object of cash discount is to induce debtors, to make
----- payment
Prompt
287 Debit note is prepared on the basis of --- books
Purchase Returns
288 Real account can be of two types ---- and ---Tangible, Intangible

289 A Balance Sheet is a statement of what an organization --and what it --Owns and Owes
290 Expenditure incurred in acquiring non visible Assets, are
classified as--- Assets
Intangible
291 Shareholders Funds comprises of ---- and ---Capital, Retained Earnings
292 One way to value Assets is to compute the present value
of ---- such
Assets
Future Earnings
293 Liquidity is the ability of an organization to meet---liabilities out oof its Assets
Current
294 The Net Worth of a Limited Company is equal to---Shareholders Funds
295 If a Company's tangible Net Worth is a Positive amount, it
indicates --The solvency of the Company
296 Journal is the book of --- entry, and the Ledger is the book
of --- entry
Original, Secondary
297 A debit balance is either an ---- or --Assets, Expenses
298 A purchase of Fixed Asset, 'on account' is first recorded in
the ---Journal Proper

299 ---- is the basis for all accounting records

Source Document

300 When sales of goods is not recorded, it is an error of --Omission

301 When net results of all errors is nil, it is called
Compensating Errors
302 Classification of Assets, as current and fixed is based on
--- concept
Going Concern
303 If follow the written down value method of depreciation,
for a particular Asset year after year, will be based on---Convention of Consistency
304 Shareholders Funds comprise
Capital and Profit
305 Networth less intangible assets is
Tangible Networth
306 Final Account of a company is prepared, according to the
--- of Companies Act.
Schedule VI, Part I
307 If a company's Tangible networth is positive figure, it
indicates---- of the Company
Solvency
308 Entries in the Sales Returns Books, are usually on the
basis of --- issued to the Customers
Credit Notes

309 The entry passed in a journal, for bringing the balances of

various Assets, Liabilities and Capital which already appeared
in the Balance Sheet of previous year, to the books of current
accounting period is
Opening Entry
310 Entries passed to bring, into account certain unrecorded
items like Closing Stock, Depreciation, Outstanding Items and
Prepaid Items etc.
311 Credit side of the personal account shows,
Amount Payable
312 The Excess of Sales over the Cost of Goods Sold is
Gross Profit
313 All expenses which are not pertaining to business are
debited to --Drawing Account
314 Closing Stock appeared int the Trial Balance will be taken
in ---Balance Sheet
315 Assets appearing in the books having no value are known
as--Fictitious Assets
316 For how many preceding years should Account Books
preserved in Good Conditions
8 Years
317 Summarized statement of transaction relating
particular item or person for a particular period is

to

Account
318 Things tangible or intangible, having value expressed in
terms of money, owned by the business
Assets

319 An accounting statements which provides, information

about the financial position of the business firm on a particular
date is
Balance Sheet
320 The process which is concerned with technique of
recording,
summarizing
and
preparation
of
Financial
Statement is
Book Keeping
321 Any exchange of money or money's worth as goods and
services between persons is
Business Transaction
322 Cost of acquisition of Assets and Services is
Expenditure
323 An expenditure, the benefit of which is finished or enjoyed
with immediate effect is
Expense
324 An Asset held for the services, it yields in the production
of other goods or services
Fixed Asset
325 The branch of accounting prepared, mainly for providing
information, to decision makers outside the business is
Financial Accounting

326 Claims of everyone other than the owners against to its

Assets
Liabilities
327 System of accounting that gives complete picture of the
financial transactions, of a business relating to an accounting
period
Accrual Accounting

328 The branch of accounting, which provides information, to

management for decision
Management Accounting
329 Recognize all unfavourable events at the earliest, and
favourable events on the actual occurrence and recognize all
loses and anticipate no gains
Conservatism
330 In an accounting procedure, the method of treating an
item, should be consistently followed is
Consistency
331 Accounting statement must provide complete and fair
disclosure of all relevant information in an understandable
manner is the convention of
Full Disclosure
332 Accounting assumptions upon which accounting is based
on
Concept
333 Customs or traditions used as guide to prepare Accounting
Statements
Convention
334 The principles pertains to that the cost should be
recognized as expenses in the period in which revenue is
realized
Matching Principle
335 The principle deals with disclosing only items having
material importance in accounts
Materiality
336 The revenue is deemed to have realized, when the goods
or services provided, to a customer and not on mere receipt of
cash
Realization Concept

337 A document by reference to which a transaction is

recorded in the books of account, is called as
Source Document
338 Accounts of Properties and Assets
Real Account
339 A journal entry with one credit and one debit
Simple Journal Entry
340 A ledger is used to records accounts of persons and
institutions
Personal Ledger
341 Personal and Permanent account which are not closed
during the course of business
Permanent Account
342 Recording of transactions in the books incorrectly
Errors of Commission
343 Not recording of transactions in the books of original
entry, or not posting from the book of original entry to the
ledger
Errors of Commission
344 The statements prepared to present, periodic reports of
results achieved and financial position of a business concern
Financial Statements
345 The order in which Assets and Liabilities, are depicted in
the Balance Sheet, is known as
Marshelling
346 A situation in which an existing asset model, becoming out
of date on account of invention of a better model
347 Profit earned on sale of a fixed Asset or redemption of a
fixed liability

Capital Reserve
348 A reserve the existence of which, cannot be ascertained,
from the face of the Balance Sheet
Secret Reserve
349 Writing off the value of intangible Assets is
Amortization
350 The term in which the allocation of cost of Fixed Asset,
over its useful life is
Depreciation
351 Under annuity method, the amount of depreciation is
Fixed for all years

352 The term 'depletion' is pertaining to the Assets

Wasting Assets
353 Revaluation method of depreciation is generally used in
the case of
Loose Tools
354 Obsolescence means decline in the value due to
Innovations and Inventions
355 When depreciation fund method is used, any profit or loss
on the sale of investments is transferred to
Depreciation Fund Account
356 Under annuity method the amount of depreciation is
determined by
Asset Account is debited with interest
357 The method of depreciation adopted to a Coal Mine and Oil
Field

Depletion Method
358 In sinking fund method of depreciation, which account is
debited for providing depreciation
Profit and Loss A/c
359 The method specially designed, to provide funds for
replacement of Assets
Depreciation Fund Method
360 Under methods of Annuity, Insurance Policy, Sinking Fund
and Fixed Installment the absolute amount of depreciation
remains---- throughout
Fixed
361 Intangible Assets having limited term of existence
(Patent, Copyright) will be affected depreciation termed by---Amortization
362 The term used, when expired utility of a physical Asset to
be recorded
Depreciation
363 The term used, when disappearing an Asset due to
invention and change of life
Obsolescence
364 Two Assets those which are not generally affected
depreciation
Land and Antique
365 ---- is not the process of valuation of Assets, it is the
process of allocation of cost of Assets, to the periods of those
life
366 Two financial procedures, for ensuring the replacement of
Assets those are affected depreciation, due to usefulness of
the same for several years
By Depreciation Fund Method and Insurance Policy Method

367 Maintenance of an Asset in state of efficiency, is not a

substitute ---Depreciation Provision
368 Two internal causes for depreciation
Wear & Tear and Depletion
369 Two external causes for depreciation
Obsolescence and Effluxion of time
370 The journal entries recorded for
depreciation account Depreciation A/C Dr
To Asset A/C

not

providing

371 The journal entries recorded for providing depreciation

account Depreciation A/C Dr
To Provision for Depreciation A/C
372 When adopting Sinking Fund method of depreciation, the
depreciation amount is generally invested into
Securities outside the business
373 Under---- method of depreciation the charges are not set
aside and the amount remains in the business itself
Annuity Method
374 Under ---- method of depreciation the charges are
invested outside the business
Depreciation Fund Method
375 The basis (Concept) for recording Assets at the original
cost of acquisition is
Historical Cost
376 The portion of the economic life of the business, for which
accounting reports are prepared, usually in 12 months
Periodicity
377 ---- principles of accounting recognizes, the double aspect
of a business transactions

Dual Aspect Concept

378 Stock in trade is valued at cost price or market price
whichever is less as per the convention of
Conservatism
379 Under estimate of Profit and Assets will be the effect by
Convention of Conservatism
PRINCIPLES OF MANAGEMENT
380 An art of getting things done through others is called --Management
381 Decision making, Planning, Organizing, Staffing, Directing
and Controlling for the achievement of organizational
objectives are main objectives of
Management
382 Management is the fundamental integrating and operating
mechanism underlying organized efforts said by
Dalton E McFarland
383 Management is the art of getting things done through and
with people in formally organized groups, propounded by
arold Koontz
384 Who was considered to be the father of Management
Process School?
Henri Fayol
385 'To manage is to forecast and plan, to organize, to
command, to coordinate and to control', propounded by
Henri Fayol
386 Administration is a determinative
Management is an --- function
Executive

function

while

387 Administrative management is concerned with laying

down policies and determining goals, while management is to
Implement the policies to achieve goals
388 The Managers who are higher up in hierarchy will devote
more time on
Administrative Functions
389 As a science, Management should have a systematic body
of knowledge including -----Concepts, Principles and Theories
390 Budgeting, Cost accounting, Planning and control through
Program Evaluation and Review Technique (PERT) or Critical
Path Method (CPM), Rate of return on investment control and
managing by objectives are
Techniques of Management
391 Management cannot be called an exact science because it
deals with people and their behavior is -------Unpredictable
392 Management is a ----- science
Behavioral Science

393 Who called the Management is a 'Soft' science?

Ernest Dale
394 A manager should have kept thorough knowledge over
mode of operation and use the knowledge to solve the ---Organizational Problems
395 Specialized body of knowledge, formal education and
training, representative organization or professional body,
code of conduct and social obligations are
Essential requirements of Profession
396 The duty of manager to protect the interests of various
groups of the society like Owners, Workers, Suppliers and
Customers and Government, is based upon --Ethical Standard
397 Planning, organizing, directing, staffing, coordinating,
reporting and budgeting (PODSCORB) are the main functions
of
Management
398 Planning is the systematic thinking about the ways and
means for the accomplishment of ---- objectives
Predetermined
399 Determination of objectives, Forecasting, Alternative
course of action, Drawing policies, programs, schedules and
procedures and budgeting are main processes of ---Planning
400 The planning in the business are classified in two groups
which are
Standing use plans and Single use plans
401 The class of planning, which pertains to Objectives,
Policies, Procedures, Methods and Rules
Standing Use Plans

402 The class of planning, which pertains to Budgeting,

Programing, Projects and Strategies
Single use plans
403 Determination of objectives, Division of activities, Fitting
individuals into jobs and making awareness of authorities and
responsibilities are main process of
Organizing
404 Managing the Organizational structure, Appraisal and
development of personnel are the effective functions of
Staffing
405 Influencing, Guiding, Supervising and Motivating the
Subordinates for the accomplishment of predetermined
objectives are main functions of
Directing
406 What is treated as 'Life Spark' of the enterprises
Directing
407 Communication, Leadership and Motivation are three sub
functions of
Directing
408 ---- may be defined, as the process by which a Manager
guides and influences the work of his subordinates
Leadership
409 Inspiring to the subordinates, with a Zeal to do work, for
the accomplishment of organizational objectives is
Motivation
410 ---- is defined as the measurement and correction of the
performance of activities, of subordinates in order to make
sure that enterprise objectives and the plans devised to attain
them are being accomplished
Controlling

411 Determination of standards, Performance measurement,

Comparing of performance with standards and Correction of
deviations to achieve the goals are the elements of
Controlling
412 The Prime function of Accounting is to
Classifying and recording business transactions
413 The basic function of Financial Accounting is to
Record all business transactions
414 Management Accounting provides, invaluable services to
management in performing:
All management functions
415 The Committee which decides, the standards to be
observed in the presentation of audited financial statements
and to promote their world wide acceptance
International Accounting Standard Committee
416 Going Concern, Consistency and Accrual are
Fundamental Accounting Assumptions
417 The term ---- refers to the manner in which the
transactions are recorded and processed in the books accounts
Design of Accounting
418 The system of recording transactions based on dual aspect
concept is called
Double entry system
419 The convention pertaining to make provision for bad and
doubtful debts
Convention of Conservatism
420 Underestimate of assets, shown in the Balance Sheet, is
resulted with the Convention of
Convention of Conservatism

421 The amount brought in by the proprietor, in the business

should be credited to
Capital Account
422 Transactions relating to persons, properties and assets
and income and expenses are classes of
Business Transactions
423 The terminologies related to the transactions, to persons,
properties and assets and income and expenses are headed by
-- -- -- respectively
Personal, Real and Nominal
424 Journal is the book of --- entry while ledger is the book of
--- entry
First, Second
425 The technique of finding the net balance of an account,
after considering the totals of both debit and credit appearing
in the account is
Balancing of an Account
426 The statement containing various ledger balances on a
particular date is known as
Trial Balance
427 If the two sides of the Trail Balance tallied, it is an
indication of the fact that the books of accounts are ---accurate
Arithmetically
428 The term '-------' means a Journal which is meant for a
special purpose
Special Journal
429 ---- journal is used to record Promissory Notes received or
issued by the business
Bills Journal

430 Adjustment entries, Transfer entries and Rectification

entries are passed in the --- journal
General Journal
431 ---- give item wise information about the
purchased, sold or returned during a particular period

goods

Columnar Journal
432 The person who is entitled to the possession of the
Cheque is called
Holder
433 The process of transferring of ownership of the instrument
is termed as ---Endorsement
434 The holder of bill is asked by the drawer, to present the
bill to a second party, in case the drawee or acceptor dishonor
the bill, such second party is known as
Drawee in case of Need
435 Non payment of the amount of a Promissory note or
Cheque on the date of maturity is called
Dishonour
436 A formal certificate of dishonor of Cheque or Bills issued
by the notary public
Protesting
437 If all parties agree, a bill may be withdrawn before
maturity to avoid dishonor, the bill is said to be
Retiring of a Bill
438 A Bill of Exchange payable after a certain period is known
as---- bill
Time
439 A Bill drawn and accepted for a genuine trade transaction
is termed as

Trade Bill
440 A person named in a negotiable instrument to whom or to
whose,order the money in the instrument is directed to be paid
is called as
Payee
441 ---- days of grace period is allowed in case of Time Bills for
calculating date of maturity
Three
442
Avoidance
of
Risk,
Prevention
of
fraud
and
misappropriation and Reduction in accounting work are the
advantage of keeping
Bank Reconciliation Statement
443 Errors, Direct collections on behalf of customers, Bank
Charges, Sent for Collection cheques not yet cleared and
issued cheques not yet presented are reason for difference
between
Cash Book and Pass Book
444 The term '------' means income of recurring nature, from
any source is
Revenue
445 The term ------- denotes the cost of services and things
used for generating revenue
Expense
446 In case of Gold, revenue is recognized, in the accounting
period in which the Gold is
Mined
447 In case of long term contracts, revenue is generally
recognized,
Even when a part of contract, has been completed
448 In case of 'Traditional Approach' the expense to be
matched with revenue is based on

Original Cost
449 The class of Expenditure, for acquiring copyrights, patent
rights and goodwill
Capital Expenditure
450 Transport charges incurred for new plant and machinery
are taken as
Capital Expenditure
451 Interest on capital paid during the time of construction of
a building or plant are taken as
Capital Expenditure
452 Advertising and Preliminary expenses are usually written
off over a period of ---- years
3-4 years
453 The nature of expenses when cost of goods purchased for
resale
Revenue Expenditure
454 Rs 5000 spent on for the replacement of a worn out part
of a machinery is
Revenue Expenditure
455 Discount allowed on issues of shares is an example of
expenditure
Deferred Revenue
456 The term ---- means goods laying unsold with the
businessman at the beginning of accounting year
Opening Stock
457 Packing expenses incurred for seeing attracted the salable
goods is charged against --Profit and Loss Account
458 Interest on drawing is

Gain for the business

459 Goods given as sample should be credited to
Purchase Account
460 Sales to Ram Rs. 336 posted to his account, as 363 would
effect account.
Ram's Account
461 Sales to Ram Rs. 500 not recorded, in the books would
effect:
Sales and Ram's Account
462 Carriage charges paid for a new plant purchased, if
debited to carriage account, would effect --- accounts
Plant and Carriage account
463 A sale of Rs. 100 to A recorded in the purchases book
would effect --- accounts
Purchases, Sales and A's accounts
464 An amount of Rs. 200 received from P credited to Q would
effect -Accounts of P and Q
465 A sum of Rs. 200 written off as bad debts now received
credited to the account of the debtor. The rectification entry
would effect ----- profit by Rs. 200
Decrease the
466 Goods purchased from A for Rs. 2000 passed through the
Sales Book. The rectification of error will result in --Decrease of Gross Profit
467 Rs. 100 being Purchases Returns, was posted was posted
to the debit of Purchases Account. The rectification entry will
result in--Increase of Profit in Trading Account

468 Discount Rs. 200 received, entered in the cash book, was
not posted to the Ledger. The rectification entry will result
in--Increase of Profit in P&L Account
469 For the purpose of Cost Analysis, we can divide the
business concerns into two categories:
Trading and Manufacturing Concerns
470 The nature of cost pertaining to Interest on Capital, Salary
for the Proprietor and the Rent of the building owned by the
proprietor and used for business purpose is
Imputed Cost
471 The actual income earned by the business can be known
only, when the business is finally----Closed Down
472 In case of inflationary conditions, changing of
depreciation on original cost of the fixed assets will result in
------- of business income
Over-statement
473 ----is generally recognized at the time when the sale of
goods taken place
Revenue
474 Income is the outcome of excess or deficiency of revenue
over related----Expires cost
475 The term Business Income includes ---- net income
Realized
476 The concept of conservatism ensures that the reported
profit is not ---Over stated
477 According to LIFO method, material purchased in the last
are taken to be issued ----

First
478 According to FIFO method, the inventory of raw materials
will consists of ---- purchases
Latest
479 The basic for recognition of revenue, at the time the
production is completed, is generally followed in the case of
---- industries
Extractive Industries
480 The principles recognizing revenue, proportionate on the
basis of work actually done is generally followed in case -----contracts
Long-term
481 The assets( Lease hold properties, patents and copyrights)
get decreased in their value with the passage of time, cause of
such depreciation is
Efflux of time
482 ---- implies removal of an available but irreplaceable
resource such as extracting Coal Mine and Oil well
Depletion
483 ----- is the writing off intangible Assets like patents,
copyrights and leaseholds have a limited useful life
Amortization
484 The term --- refers to damage done to a building or other
property during tenancy
Dilapidation
485 Ascertainment of true profits, Replacement of Assets and
presentation of true financial position are main objectives of
providing--Depreciation
486 Cost of the Assets, Estimated Scrap Value and Estimated
useful life are factors affecting the amount of ----

Depreciation
487 Fixed installment method, Depletion method and Machine
hour rate method are coming under ---- methods for providing
depreciation
Uniform Charge methods
488 Diminishing balance method, Sum of years digit method
and Double declining method are coming ---- methods for
providing depreciation
Declining Charge or Accelerated methods
489 Assets having generally small value such as Loose Tools
and Live Stocks are depreciated under --- system
Inventory/Revaluation system of depreciation
490 Depreciation does not arise in the value of Goodwill of the
business unless the ---- of the firm are declining
Profit
491 No depreciation need be charged in case of Asset such
as---Free-hold Land
492 Excessive depreciation of an Asset or excessive over
valuation of a liability generally creates ---Secret Reserve
493 Dividend received on outside investment is credited to
investment account instead of P&L account creates--Secret Reserve
494 Deliberately withholding sales till succeeding period, or
taking delivery of goods on forward contract in a falling
market leads creation of -Secret Reserve
495 The amount of depreciation is credited,
Depreciation Fund Account, in the ---- method

to

the

Depreciation Fund
496 The Asset always appears at ----- in case of depreciation is
credited to Provision for Depreciation Account
Original Cost
497 ---- is the process of apportionment of the cost, of the
Asset over its useful life
Depreciation
498 ---- method of charging depreciation is useful when use of
the Asset, can be measured in terms of time
Machine Hour Rate
499 Profit or
transferred to

Loss

on

depreciation

fund

investment

is

Depreciation Fund Account

500 The Profit on depreciation policy is transferred to
Depreciation Reserve Account
501 In case of Annuity Method, the amount of depreciation
is--- for all the years
Fixed
502 For providing depreciation on the leasehold property, the
appropriate method of depreciation is
Fixed Installment Method
503 The interest lost on the acquisition of an Asset, is taken
into account in calculating depreciation in
Annuity Method
504 In this method depreciation is charged by allocating
depreciable cost in proportion of the annual output to the
probable life time output
Production Unit Method
505 A Capital Reserve is built up out of

Non recurring profits

506 Income Tax paid in case sole proprietary firm should be
treated as a ---- the proprietor
Personal Expense
507 A commission of 5% of net profit, after charging such
commission will be calculated as ---- of the net profit before
charging such commission
5/105
508 Stock of goods on approval basis, should be credited to
the --- A/c
Trading Account
509 The General Ledger contains, all accounts except the
personal accounts of the --- ---Trade Debtors and Creditors
510 In case of Transfers from one ledger to another, two
entries will have to be made, in case of--Self Balancing System
511 Provision for Doubtful Debts account is opened in
General Ledger
512 General Ledger Adjustment Account(s) is/are opened in
In both Debtors and Creditors ledgers
513 Under Sectional Balancing system, the ledger which
usually made to balance is
The General Ledger
514 ----- a method whereby the cost is determined, so as to
include the appropriate share of both variable and fixed cost
Absorption Costing
515 In case of Bills of Exchange, the drawee's signed assent,
to the order of the drawer, is

Acceptance
516 The specific accounting principles and the methods of
applying, those principles adopted by an enterprise, in the
preparation and presentation of Financial Statements
Accounting Policies
517 Recognition of Revenues and Costs, as they are earned or
incurred is called
Accrual
518 An expense which has been incurred, in an accounting
period but for which, no enforceable claim has become in that
period, against the firm
Accrued Expenses
519 A developing but not yet enforceable, claim by another
person which accumulate with the passage of time or the
receipt of service or otherwise
Accrual Liabilities
520 The total to date of the periodic depletion, charges on
wasting Assets
Accumulated Depletion
521 A method of levying tax, or duty on goods by using their
assessable value, as the Tax Base
Ad-valorem
522 The information provided annually by the management of
an enterprise, to the owners and other interested persons,
concerning its operation and financial position is
Annual Report
523 An account sometimes included as a separate section, of
the profit and loss account showing application of profits,
towards dividends and reserves etc;
Appropriation Account

524 Tangible objects or intangible rights, owned by an

enterprise, and carrying future benefits.
Assets
525 The cost of an item, at a point of time as determined by
applying an average of the cost, of all items of the same nature
over a period.
Average Cost
526 Debts owed to an enterprise, which are considered to be
irrecoverable
Bad Debts
527 Shares alloted by Capitalization of Reserves Surplus, of a
corporate enterprise
Bonus Shares
528 The amount at which an item appears in the books of
account, or financial statement
Book Value
529 Generally refers to the amount invested, in an enterprise
by its owner is
Capital
530 Assets including investments, not held for sale,
conversion or consumption in the ordinary course of business
Capital Assets
531 Future liability for Capital expenditure in respect of which
contracts, have been made
Capital Commitment
532 The finance deployed by an enterprise, in its Net Fixed
Assets, Investments and Working Capital
Capital Employed

533 Excess of the proceeds, realized from the sales, transfer or

exchange of the whole or part of a capital Assets, over its cost
is
Capital Profit
534 A Reserve of a corporate enterprise, which is not available
for distribution as dividends
Capital Reserve
535 Expenditure on Capital Assets, which are in the process of
construction or completion
Capital Work-in-progress
536 The Net Profit is increased by non cash costs, such as
depreciation, amortization etc;
Cash Profit
537 An encumbrance on an Asset to secure an indebtedness or
other obligations by nature of floating or fixed
Charges
538 An Asset the existence or ownership or value of which
may be known or determined only on the occurrence or non
occurrence of one or more uncertain future events
Contingent Asset
539 An obligation relating to an existing condition or situation
which may arise in future, depending on the occurrence or
nonoccurence of one or more uncertain future events
Contingent Liability
540 One or two or more accounts, which partially or wholly
off-set another or other accounts
Contra Account
541 The purchase price, including duties and taxes freight
inwards and other expenditure directly attributable to
purchases
Cost of Purchases

542 The cost incurred to convert raw materials, or components

into semi finished or finished products
Conversion Cost
543 Postponement of recognition of revenues or expenses,
after its related receipt or payment to a subsequent period to
which it applies
Deferral
544 An item of cost that can be reasonably identified with a
specific unit of product, or with a specific operation or other
cost center
Direct Cost
545 A reserve created, to maintain the rate of dividends in
future years
Dividend Equalization Reserve
546 That portion of an expenditure, from which no further
benefit is expected, and also termed expenses
Expired Cost
547 Computation of the cost of items sold or consumed during
a period, as though they were sold, or consumed in order of
their acquisition
FIFO
548 A reserve the utilization of which is not restricted in any
manner
Free Reserve
549 A revenue reserve which is not earmarked for a specific
purpose
General Reserve
550 Charge created by an enterprise, on its Assets in favor of
more than one person on the condition that, each such person
has equal rights of realization from the Asset
Pari-Passu Charge

551 A concept of care and caution, used in accounting

according to which profits are not anticipated, but recognized
only when realized though not necessarily in Cash
Prudence
552 A reserve created on the revaluation of Assets, or net
Assets of an enterprise, represented by the surplus of the
estimated replacement cost, or estimated market values, over
the book values thereof
Reserve
553 The assumption by an enterprise, of a risk which is not
covered by an external Insurance agency, and for which
internal allocations or provisions have been made
Self Insurance
554 When FIFO method is in use, the ending inventory is
valued at
Most recent costs paid for Merchandise
555 When LIFO method is in use, the ending inventory is
valued at
Oldest prices paid for Merchandise
556 The method in which inventory is valued at the latest
prices prevailing in the market
Replacement Price Method
557 During a period of rising prices, which inventory pricing
method tends to produce, a higher cost of goods sold
LIFO
558 During a period of rising prices, which inventory pricing
method will result in lower total current Assets
LIFO
559 The system in which no need of Stock taking
Perpetual Inventory System
560 FIFO is advisable in the case of

Falling Prices
561 The functions are closely related with management
Planning and Control
562 The CMD will normally spend more time on --Planning and Organizing
563 Lower level of management is also known as---Supervisory Management
564 Technical Skill, Human Relation Skill and Conceptual Skill
are essential skills required by a
Manager
565 Conceptual skill is critical in top executive positions
whereas, --- is essential ingredient of lower level management
Technical Skill
566 Increasing efficiency, analyze the nature of management
job, improving research in human and group dynamics and
attaining social goals are deriving from
Principles of Management
567 The book 'General and Industrial Management' was
written
Fayol

568 Division of work leads to

Higher productivity and better performance
569 ---- is the
subordinates

right

or

power

to

give

orders

to

the

Authority
560 ---- means the duty which the subordinate is expected to
perform by virtue of his position in the organization
Responsibility
561 According to Fayol ---- is obedience, application, energy
and outward mark of respect
Discipline
562 Maintenance of discipline in the organization depends
upon the quality of the ---Leadership
563 Principles is violated, authority will be undermined,
discipline will be in jeopardy, order will be disturbed and
stability will be threatened, for want of ---Unity of Command
564 --- is the chain of superiors ranging from the ultimate
authority to the lowest level in the organization
Scalar Chain
565 Unity of command, no confusion of dual order, prevalent
delegation of authority and passing channel of communication
is clearly defined are the advantage of
Scalar Chain

566 Initiative from the part of subordinates, can be a great

source of--Organizational Strength
567 ---- means keeping together and in harmony the different
functions of an enterprise
Co-ordination
568 Co-ordination without co-operation and co-operation
without coordination are ----- to the organization
Detrimental
569 In an enterprise, duplication of efforts can be eliminated,
through --Co-ordination
570 Better results, Economy and Efficiency, HIGH Morale and
Good human relations are the main advantage of
Co-ordination
571 Vertical Co-ordination is secured through ------ and with
the help of directing and controlling
Delegation of Authority
572 Co-ordination is brought about between Production
department, Sales depart and Personal department is said to
be
Horizontal Co-ordination
573 Mutual discussion and Exchange of Ideas are integrating
plans for --Co-ordination
574 In order to obtain Co-ordination
Manager must look at it both ---- and --Vertically Horizontally

while

organizing,

575 Clearly defined goals, Clear lines of authority

responsibility, Co-operation, Effective communication
Effective leadership and supervision are techniques of ---

and
and

Effective Co-ordination
576 ---- is the key to proper Co-ordination
Effective Communication
577 The principle of Continuity of Co-ordination should be
viewed as--Never ending process
578 Net worth of business means
Total Assets Total Liabilities
579 The EBIT level in which EPS remains the same irrespective
of the debt-equity mix is known as
Point of indifference
580 Sales proceeds of an unrecorded Asset will be debited to
--- account
Bank
581 An expenditure incurred to derive long term advantage is
Capital Expenditure
582 In accounting only --- discount is recorded
Cash
583 Balance of Purchase Return book and Sales Return book
are always --- and --- balance respectively
Credit Debit
584 Debit balance of all personal accounts are collectively
called
Sundry Debtors
585 Calls in advance is a ---- to the company

Liability
586 Discount on issue of a share is a
Capital Loss
587 Capital which cannot be called up except at the event of
winding up is called
Reserve capitals
588 Share application account is a --- account
Personal Account
589 Trial Balance will detect
Errors of commission
590 A sum of Rs. 4000 was paid as compensation to two
employees who were retrenched is a
Revenue Expenditure
591 Charging of capitals expenditure to revenue, results in
Secret Reserves
592 Accounting
applicable to a

Standard

on

Inventory

Valuation

is

not

Steel Mill
593 Sales less cost incurred necessarily to make the sale is
Net realizable value
594 Accounting Standard set by Accounting Standard Board in
India
Some are mandatory some are recommendatory
595 The distinction between capitals and revenue expenditure
is based upon
Period of benefit derived
596 Debenture holders are --- of the company

Creditors
597 When debentures are redeemed at a discount, the
company earns
Capital profit
598 Machinery purchased on account is recorded in
Journal
599 Closing stock given in the Trial Balance will be taken to
Balance Sheet only
600 Sale of grass in the case of a sports club is
Revenue Receipt
601 By error, treatment of capitals expenditure as revenue
expenditure is
Error of Principle
602 Prepaid rent is shown on the Asset side of the Balance
Sheet due to
Matching Concept
603 In forfeiture of shares, share forfeited account is charged
with
Amount already paid
604 AGI is
Annual Gross Income
605 Mathematical expression used to describe the relationship
between assets, liabilities and owners equity is called
Accounting Equation
606 Private wealthy individual that has no association with a
venture capitals firm, investment fund etc; is called
Angel Investor

607 Dual aspect concept is also known as

Accounting equivalence concept
608 ----logically precedes the execution of organizing, staffing,
directing and controlling activities
Planning
609 Planning involves --- of events
Forecasting
610 Planning makes work more meaningful and activities
more--Orderly
611 Planning helps in reducing ----- because of getting
information to forecast, conditions in future
Uncertainties of future
612 In the planning activities, decisions are ---Future oriented and anticipatory

613 If plans are not in existence, there is no sound for making

----Future oriented decisions
614 One reason for a Manager to change the direction of his
plans if he faces
Unexpected events
615 The planning that covers in the areas like production,
marketing, finance and purchasing is known as
Functional Planning
616 In ----- planning top managements determine the general
objectives of the enterprises
Strategic planning
617 --- planning sets long term goals for the enterprise and
formulates specific plans for attaining these goals
Long Range
618 --- planning is concerned with the determination of short
term activities to accomplish long term objectives
Short Range
619 --- plans are designed to be used over and over again
Standing Plans
620 --- plans are designed to be used certain specific matters
Adhoc
621 ---- is done by the middle level managers and it provides
the foundation for the operative plans
Administrative planning
622 ---- are made by the lower level managers to put the
administrative planning into practice
Operational Planning

623 Determination of Objectives, Developing planning

premises, Reviewing Limitations or Key factors, Developing
and evaluating alternatives and selecting the course of action
are main features of
Planning process
624 Planning has no meaning unless it is related to certain
well defined --Objectives or goals
625 --- encourage consistency in decision making in the long
run
Clear-cut objectives
626 --- are the expected future setting on which all planning
depends
Assumptions
627 Sales forecasting, existing policies of organization, Capital
investment policies and philosophy of management etc; are
main functional planning of
Internal planning premises
628 Government policy, International trade
Natural calamities and new Innovations are ----

agreements,

Non controllable premises of planning

629 Objectives must be concrete, verifiable, result oriented,
higher performance, balanced and form a network are features
of-Valid Objectives
630 MBO is a systematic technique that allows, management
to attain,
Maximum results from available resource
631 MBO allows the subordinates, plenty of room to take
initials and use creativity in --Decision Making

632 Determination of the overall objectives is the primary

responsibility of the
Top Management
633 Define overall corporate objectives, Setting departmental
goals and Setting targets for individuals are the prime steps in
MBO
634 Effective two way communication in the organization
based on MBO means
Participation of Subordinates with superiors
635 Involvement of Top Management, Participation of
Subordinates and Delegation of Authority are requirements of
effective
MBO
636 Expression of intention of top management, objectives of
enterprises, long lasting, realistic, definite, positive and clear,
active participation of people involved in are characteristics of
a -Policy
637 The policies set up in the areas of Production, Purchase,
Finance, Personal and Marketing are known as
Functional Policies or Personal Policies
638 The policies adopted by middle level managers are known
as
General Policy
639 The Policy pertains to day to day activities is known as
Departmental Policy
640 To meet various pressures from the external factors(Trade
Union, Trade Association and Government policies) the
organization adopts --- policy
External Policies

641 The policies which are formulated, on the basis of the

suggestions and complaints received from the employees
Appealed Policies
642 The policies which are not recorded in writing even though
they are followed at every level
Implied policies
643 Procedures are the outcome of
Policies
644 Policy decisions are taken by top management, while
operating decisions are taken by --Lower Management
645 Give an example an Operating decision pertaining to a n
organization
Bonus Issue
646 Issuing Charge Sheet and Suspension to an employee is
arrived by ---- decisions
Non Programmed decision
647 When an autocratic
---decisions are to be taken
Individual

style

of

management

prevails,

648 The decisions taken by the Board of Directors or a

Committee of Experts are known as
Group Decisions
649 Choosing a course of action, Application of Intellectual
abilities, Going on subjective values, End process preceded by
reasoning, Related to situation and should have Purposeful
objects are characteristics of
Decision Making
649 The decision will have no significance unless it can be-Implemented

650 --- is the ability to follow a systematic, logical and

thorough approach in decision making process
Rationality
651 The 'Job task Pyramid' is also known as
Organization Chart
652 If an undertaking is in production line, the dominant
element in its Organization Chart would be
Manufacturing
653 In an Organization Chart relations between superiors and
subordinates is known as
Line Relation
654 From the CEO, a line of authority may proceed to
departmental managers, to superiors or foremen and finally to
workers, this chain of command is called
Scalar Chain
655 Receiving direction from several superiors may result
in---Confusion, Chaos, Conflict and lack of actions
656 --- may be defined as the number of employees a manager
can directly supervise
Span of Management control
657 Ability of Executive, Availability of Time, Ability of
Subordinates, Monotony of activities, Availability of staff, are
affecting factors of
Span of Management
658 When the span of supervision is wider, the number of
executive needed to supervise the workers will be
Less
659 Formal Organization is created to achieve ---Predetermined Objectives

660 The credit balance in the Bank account is --Liability

661 Account receivable account is likely to have
Both Credit and Debit entries
662 Miscellaneous expense account is likely to have only --entries
Debit
663 Professional fee earned account is likely to have --entries
Credit
664 Omission of an amount from TB, Posting of the wrong
amount and wrong totaling of the book of original entry are
revealed by
Trail Balance
667 Left side of the Asset, Expenses, Purchases accounts is for
Recording increases
668 Debit signifies --Either an increase or decrease
669 When is it necessary to analyze transactions in terms of
debit and credit
When Journalizing
670 The debts written off as bad, if subsequently recovered
are credited to
Bad debts account
671 A business has Assets of Rs. 44,312 and owner's equity
Rs. 13,210. What is the amount of liabilities?
Rs. 31,102

672 Liabilities of a business are Rs. 11,220 and owners equity

is Rs. 15,000 The Assets of the business will be
Rs. 26,220
673 Assets of a business are Rs. 21,315 and Liabilities Rs.
4,120. What is the amount of owner's equity?
Rs. 17,195
674 Purchase of Office equipments results in
Increase in Assets
675 Purchases of raw materials on account results in
Increase in Assets and increase in Liabilities
676 Investment by owner results in
Increase in Capital and Assets
677 On sale of old equipment owner's equity is ---Remain Unchanged
678 Withdrawals by the proprietor would reduce ---Both assets and owners equity
679 Purchase of Govt Securities for cash would--Keep the Assets unchanged
680 Both Assets and Owner's equity would be increased by--Retained earnings
681 Purchase of equipment for cash---Keep the total Assets unchanged
682 If revenue of a business are 1,70000, CGS is Rs. 60,000
and other expenses Rs. 35,000. Calculate net income of the
business
Rs. 75,000

683 To purchase 'on account' is to create a --Liability

684 --- is the interest of the owners in a business
Capital
685 Name the accounting concept, in classification of Assets as
current and fixed
Going Concern concept
686 Name the accounting concept, for Accounting of a small
calculator as an expense, and not an Asset
Materiality Concept
687 All expenses not pertaining to business are debited to
Drawing Account
688 The concept 'Gang Plank' is pertaining to
Scalar Chain
689 'Esprit de Corps' refers to the need of Managers to ensure
and develop ---- in the work place
Morale
690 The activities those are influencing Cash Flow Statement
Operating, Investing and Financing/Collectively
691 Cash in hand, Demand deposit with Banks and Cash
equivalents are known as
Cash Funds
692 Generally the liquidity period of 'Cash Equivalent'/Short
term deposits, goes not exceeding ---- months
Three months
693 Funds flow statement is a tool of managing---Working Capital

694 Funds from operation is a Source, because we ---- from it

Receive Funds from it
695 The subtraction of application of Funds from Sources of
Funds is
Net Increase/Decrease of Working Capital
696 Budgeting is a ---- expression of the intention of the
Managements
Quantified
697 ---- is prepared prior to a definite period of time, of the
policy to be pursued during that period for attaining a given
object
Budget
698 To formulate a plan of action, to provide means of Coordination and to facilitate central control are the main
objectives of ----Budgeting
699 ---- is the technique of formulating budgets, or it is an art
of planning
Budgeting
700 ---- refers to the principles, procedures and practices of
achieving given objectives through budgets
Budgetary Control
701 ---- is the art of executing, the plans envisaged in budgets
Budgetary Control
702 A clear defined Organization, A well defined Policy, Proper
Delegation of Authority and Responsibility and Effective
Communication systems are essential requisites of
Budgetary Control
703 Budgeting requires active participation and involvement of
all employees in the organization, with a view to having---

Practical and useful suggestions

704 In order to make the budgets, more appropriate and
realistic it should be ---Flexible
705 A ---- chart is prepared, for the purpose of effective
implementation of the Budgetary control system
Organization
706 CEO, Budget Officer and Budget Committee are the top
officers, in a --- chart
Organization Chart
707 The Budget committee mainly consists of
All Departmental heads and General Manager as Chairman
708 Who will co-ordinate the departmental budget, and solve
the problems arise on it
Budget Committee
709 The authority who monitors and study variations of actual
performance from budgets and make appropriate suggestions
Budget Committee
710 Who will generally appoints the Budget Officers
CEO
711 ---- is empowered, to scrutinize the Budgets, prepared by
the different functional heads, and make changes in them, if
required
Budget Officer
712 Pertaining to a Budget, the authority to Co-ordinate
activities, to change programs and issue instructions and
prepare summary budgets in consultation with the budget
committee shall be authenticated by
Budget Officer

713 A department or a section, of the organization defined for

the purpose of the budgetary control is termed as
Budget Center
714 ---- is the length of time for which a budget is prepared
and employed
Budget Period
715 A documents which sets out, the responsibilities of the
persons engaged in, the routine of and the forms and records
required for the Budgetary Control
Budget Manual
716 The Budget manual is generally maintained by
The CEO or the Budget Officer
717 Governing Factor or Limiting Factor pertaining to a Budget
are also known as
Budget Key Factor
718 Shortage of Raw Materials, Labor or Limited plant's
capacity, limited sales and Government restrictions are related
to a Budget as
Key Factors
719 Budget pertaining to Sales, Production, Purchases,
Administration Cost Budget, Capital Expenditure Budget and
Cash Budget are coming under
Functional Budget
720 A Summarized Budget or Finalized Budget is also known
as
Master Budget
721 The Projected Balance Sheet of an Organization,
Summarized functional Budget in capsule form and Estimated
profit position are generally known as
Master Budget

722 Expected total receipts and total payment of cash are

available in one Statement is called
Cash Budget
723 --- conveniently adjusts the Functional Budget, arranges
Funds from external source if needed and employs the
Expected surplus fund as and when arises
Cash Budget
724 Receipts and Payment method, Balance Sheet Forecast
method and Profit forecast method are methods for
preparing--Cash Budget
725 A budget designed to remain unchanged irrespective of
the level of activity actually attained
Fixed Budget
726 --- budget is one which is prepared, in such a manner as
to facilitate, determination of the budgeted cost for any level
of activity
Flexible
727 Variable Budget or Sliding Scale Budget are popularly
known as
Flexible Budget
728 ---- budgeting is evaluation of the performance, of the
organization in the context of both specific as well as overall
objectives of the Organization
Performance Budgeting
729 In the case of--- if performance is not according to the
predetermined standard, then the persons who are assigned
this duty will be personally responsible for it.
Responsibility Accounting
730 The Cost which tend to vary with volume of output are
called---Variable Cost
731 Fixed costs are also known as----

Period Costs/Stable Cost

732 --- helps the management in pricing, decision making and
assessment of profitability
Marginal Costing
733 The cost does not vary with the volume of output is ---Fixed Cost
734 Rent of Business Premises, Insurance,
Executives and Depreciation etc; are examples of

Salary

of

Fixed Cost
735 --- is not charged to operations, processes or production
but is written off against the profit of the period in which
operations arrive
Fixed Costs
736 Prices are determined on the basis of ----- by adding
contribution which is the excess of sales over Marginal Cost
Marginal Cost
737 The concept of selling price per unit remains unchanged,
at all levels of activity, Fixed costs remain unchanged, or
constant for the entire volume of production and volume of
production is the only factor which influences the costs is
known as
Assumption of Marginal Costing
738 The common name for full costing, total costing and
conventional or orthodox costing
Absorption Costing
739 --- is a technique of Cost ascertainment under which both
fixed and variable costs are charged to products or cost units
740 The valuation of Closing Stock in Marginal Cost is as low
as compared to Absorption costing, due to -Charging Fixed cost directly to products

741 The difference between Sales and Marginal Cost of Sales

or it is the total of the fixed cost and profit is
Contribution
742 ---- is the ratio of Contribution to sales of a Concern and
usually expressed in percentage
Profit Volume Ratio
753 The amount of sales required to avoid losses, to earn
desired profit, the effect on profit of changes in cost and
volume of output can be ascertained by
Cost Volume Profit Analysis
754 --- may be defined as that point of sales volume, at which
total revenue, is equal to total cost
Break Even Point (BEP) [Sales Revenue at BEP = F + V]
755 ---- is the excess of Sales over Break even sales
Margin of Safety
756 The management strives to widen the gap between sales
and Break Even Sales, in order to maximize the ---Profit
757 Margin of Safety at BEP shows
Nil/Zero
758 ---- can increased, by increasing level of Production and
Selling Price, by reducing VC/FC
Margin of Safety
759 The conditions under which business operations are
carried out is known as Business ----Environment
760 ---- environment consists of factors like Fiscal Policy,
Monitory Policy etc;
Economic

761 Environment ---- is the process by which an organization

monitors its environment
Scanning
762 Business environment is always ---- in its activities
Changing
763 Freedom of an Entrepreneur to enter any industry in India
is through--Liberalization
764 ---- includes all those conditions which influence the
working of a Business
Business Environment
765 Business environment can be classified into --- and --Economic Environment and Non Economic Environment
766 For understanding the Environment ---- is essential
Environmental Scanning
767 Environmental analysis helps the Management to develop
a ---Strategy
768 --- acts as a source of intellectual stimulation
Environmental Studies
769 Capital structure is the ratio of --- and ---- capital
Owed and borrowed
770 ---- is not regarded as a management functions
Marketing
771 Arrangements of Men, Materials and other resources is
called---Organizing

772 Management is a discipline because ---It is a branch of study

773 Management is --Art and Science
774 Management has a Code of Conduct and has Specialized
knowledge therefore, Management is a ---Profession
775 Top Management consists of ---Board of Directors
776 Middle level Management consists of ---Departmental Heads
777 Lower level Management consists of ---Supervisors
778 Policy decisions of the management are taken by---Administration
779 First function of Management is
Planning
780 ---- is regarded as the essence of Management
Co-ordination
781 ---- is said to be Management in action
Directing
782 The arrangement which directs the group efforts of
employee towards the desired goal of the business is termed
as
Co-ordination
783 Administration and Management are --- and ---

Synonymous and Different

784 Direction --- and ---Speeds up the work and Motivates employees
785 Management is used as noun, as process and as a---Discipline
786 --- is a process of working with and through others
Management
787 ---- objectives deals with
organization, towards society

the

commitment

of

an

Social
788 As a ---- Management consists of series of activities
Process
789 As a ---- Management is an organized body, of knowledge
to be taught
Discipline
790 Managers are assigned duties and are given --- to perform
their duties
Authority
791 --- involves practical application of theoretical knowledge
Art
792 --- is based on logically observed finding, facts and events
Science

793 Management is an ---- science

Inexact or Soft Science
794 ---- determinative
Administration
795 Administration involves the formulation of --- and --Policies and Objectives
796 ---- is the initial task of Management
Planning
797 ---- is a process of looking ahead
Planning
798 Delegation of authority is an activity involved ---- function
Organization
799 ----- consists of Manpower planning
Staffing
800
The
main
activities
involved
in
---leadership,motivation, communication and supervision
Directing
801 Nothing happens in Management till ---- takes place
Communication
802 ---- is the act thinking before doing
Planning

803 --- is the harmonious implementation

Co-ordination
804 Management is a ---- function

are

Doing
805 Management is a ----- activity
Continuous
806 Management is a ----- process
Social
807 Management has a ---- application
Universal
808 --- a wider term than Management
Administration
809 ---- is a thinking process
Administration
810 Foremen belong to ---- level of Management
Lower
811 Management is more important at --- level
Lower
812 Planning looks forward, but ---- looks back
Controlling
813 -- level Management plans day to day activities
Lower
814 The change in attitudes of employers and employees
towards each other is referred to as ----Mental Revolution
815 The study of movement of the Materials, Machines and
Workers is called ---Motion Study

816 Activities having one head and one plan is called---Unity of Direction
817 ---- is considered as the father of Scientific Management
FW Taylor
818 Principles are derived on the basis of --- and experimental
studies
Observation
819 ---- means an accepted rule of Action
Principle
820 --- is considered as the father of Management Thought
Henry Foyol
821 ---- means the right of a Superior, to give order to the
subordinates
Authority
822 ---- implies that an employee should receive orders from
one superiors only
Unity of Command
823 --- is the art of observing and recording the time required
to perform each element of an operation
Time Study
824 Goal oriented, Basic function of management, Applicable
to all levels, Forward looking, Continuous and Intellectual
Process and designed for Efficiency and Economy are main
features of --Planning
825 Simplicity, Clarity, Economical, Increase in Efficiency,
Channelized to the desired goal and Regular feedback are
qualities of --Ideal Planning

826 When planning is reduced to black and white or the

objectives and way achieving them is put down writing, it is
known as --Formal Planning
827 Planning Premises refers to the various assumptions upon
which plans are ---Formulated
828 Pertaining to planning: Goals, Objectives, Policies,
Procedure, Rules, Programs, Methods and Budgets are called
as--Courses of future actions
829 --- of an Organization are directed towards the attainment
of Organizational goals
Energies and Activities
830 --- is simply a Statement of an Organization and intention
to act, in a certain way, when specified types of circumstances
arise
Policy
831 --- provides an opportunity to Managers to give
suggestions to improve their performance and achieving
higher targets of Business
Planning
832 Planning is ---Goal Oriented
833 A good planning should be --Flexible
834 Planning is --- of all Managerial Activities
Beginning and End
835 Planning ----

Futuristic and Pervasive

836 Planning means deciding in ---- and the ---- to be achieved
Advance, Objective
837 ---- bridges the gap between where we are and where we
want to go
Planning
838 Planning is basically concerned with looking into----Future
839 Every plan must contribute towards the ---- of the
objectives
Accomplishment
840 Planning is the basic function of ---Management
841 --- is required at all levels of Management
Planning
842 Top Management undertakes, --- plans
Long range plans
843 ---- prepares plans for various departments
Middle Management
844 Short Range Plans are prepared by --Lower Level Management
845 Planning is a ---- exercise
Mental
846 Sound planning must results in --- and --Efficiency and Economy
847 Plans formulated for repeated use are known as ----

Standing Plans
848 --- plan is formulated for the entire organizations under
corporate sector
Corporate Planning
849 ---- are the end towards which activities are directed
Objectives
850 A combination of Goals, Policies, Procedures, Rules,
Assignment etc; is known as
Program
851 A --- is statement of expected results expressed in
Numerical terms
Budget
852 A financial budget is also known as --Profit Plan
853 The group of activities consists of Assigning Duties,
Granting Authority, Fixing Responsibilities and Co-ordinating
Activities
Organization
854 --- is the structural frame work, within which the various
efforts are, Co-ordinated and related to each other's
Organization
855 As a --- Organization is the mean, to achieve the common
objectives of the business
Structure
856 As a --- Organization: functions are divided into
manageable units, Grouping identical functions, Assigning
duties to the right persons and fixing Authority Responsibility
relationship
Process or Function

857 Division of Work and Specialization, Principle of Unity of

Command and Direction, Effective Delegation, Easy Coordination, Principle of Scalar Chain, Continuous group efforts
and Encourages initiative are Significance of
Organization
858 Division of work, Grouping of activities, Assigning duties,
Establishing Authority Responsibility relation and Coordination of Activities are the steps in the process of -Organization
859 In a --- Organization, the entire activities
Organization will be divided into departments

of

the

Functional
860 In ---, the authority flows vertically in a straight line from
top
management,
to
the
lowest
subordinates
and
responsibility flows in an opposite, but equal direct manner
Line Organization
861 In small organization, having few subordinates, running
few business, when automatic machines are used and
production is of continuous nature, --- organization is adopted
Line
862 In the Line and Staff Organization, the Staff can be
considered, as the ---- and the Line as the ---Thinkers, Doers
863 When Staff has to offer sincere advice and service, Line
officers have to respect and follow the staff advice, there is no
difference of opinion between the line and staff, --organization is adopted
Line and Staff
864 The spontaneous relationship developing between people
who work together coming under ---Informal Organization

865 ---- is the simply process of entrusting a part of the work,

by the superior to his subordinates, which the superior does
not have the time to do
Delegation
866 Authority, Responsibility and Accountability are basic
elements of--Delegation
867 --- is the right of a person, to issue orders obeyed by the
subordinates
Authority
868 ---- is reported by subordinate to his superior, derived
from responsibility, moves upward from subordinate to
superior and not delegated
Accountability
869 --- is a Management approach of giving lower level
employees an important role in decision making process
Decentralization
870 Evey one should know his duties and responsibilities
clearly. This principle is called
Principle of definition
871 Determination of objectives is the first step in---Organizing
872 An organization officially created by the Management is
called
Formal organization
873 The 'Staff' considered as ---Thinkers
874 There is no scope for specialization in --Line Organization
875 --- is the obligation of Subordinate to whom a duty has
been assigned to perform the duty

Responsibility
876 A person cannot delegate---Responsibility
877 The number of subordinates that can effectively supervise
is called -Span of Control
878 Organization which is based on Authority-Responsibility
relationship is called
Formal Organization
879 An organization which gives importance to personal
relationship is called --Informal Organization
880 In a line organization authority flows ---Downwards (vertically)
881 Authority is the right to issue orders and get the
orders--Obeyed
882 When a subordinate accepts authority, he becomes --Responsible
883 Responsibility is the --- of a subordinate when a duty has
been assigned
Obligation
884 Everything which goes to increase the role of subordinates
in the process of decision making is called --Decentralization
885 Delegation takes place between---- and --Superior and Subordinate

886 --- type organization has unity of command

Line
887 The purpose of staffing, is the accomplishment of the
organizational goal through ---Team Spirit
888 Right person should be selected, in each right job
supported by ---Staffing
889 As per modern thinking of Management, --- is part of
Human Resource Management.
Staffing
890 Manpower planning, Job Analysis, Recruitment and
Selection, Placement, Orientation, Training and Performance
Appraisal, Compensation and Promotion and Transfer are steps
in process of --Staffing
891 Selection of Candidates begin after the completion of the
--Recruitment Process
892 Proper placement of employees helps to reduce ----Employee Turnover, Absenteeism and Accident 893 --- is a
device for increasing the knowledge, and skill of the people for
a specified job
Training
894 In the process of staffing, --- providing Housing, Medical,
Recreational and Social security and other services are
provided to employees
Maintenance
895 --- aims to develop and maintain adequate manpower
resources upon which an Organization can depend
Recruitment

896 When the ---- source of recruitment adopted, the sources

from Transfer, Promotions and Lay-off can be implemented
Internal
897 If vacancies are created by expansion program, death,
retirement and dismissal of employees the --- recruitment
source can be adopted
External
898 A trained worker, will handle the machines and materials
in the most --Economical Manner
899 Less supervision and wastages, Easy Adaptability,
Reduced Absenteeism, Lesser accidents, Better Use of
resources and Management by Exception are positive results
derived from --Training
900 Learning by doing, or ----- provide training for workers
under the same type of conditions they have to work in future.
On the Job training
901 Conferences, Seminars, Lectures, Group discussions, Case
Studies and Instructions are coming under the method of --Off the Job Training
902 Vertical Job rotation is generally a type of Promotion,
while Horizontal Job rotation is in the nature of ---Transfer
903 In ---- training theory work is taught in the class room and
practical training is given at the actual work place
Internship
904 In a training, ---- aims at enrichment the workers with
advanced knowledge, in selected areas
Special Courses

905 In the --- training, the employees are informed about the
job they have to perform, the rules and policies relating to
their work
Induction or Orientation
906 The Training which helps, the workers to get acquainted
with the latest improvements in their work
Refresher Training
907 Sensitivity training is an ---On the job training
908 Personal Management is concerned with management
of--Men
909 The major element of Staffing function is--Establishing Manpower Recruitment
910 Act or promise which induces an individual to respond in
desired manner is called
Incentive
911 The process of analyzing and establishing the need and
availability of employees is known as
Manpower Planning
912 Recruitment tends to be a --- activity
Positive

913 Stimulation is an extension of ---- training

Vestibule
914 Selection test is conducted depending on --Job Demands

915 --- method

employees

of

wage

payment

is

suitable

for

new

Time Rate
916 Trade Unions always prefer --- method of wage payment
Time Rate
917 Recruitment is a ---- process as it encourages, more
people to apply for a job
Positive
918 Differential piece rate system was proposed by ---FW Taylor
919 Selection for job is a ---- process as it involves rejection of
unsuitable application
Negative
920 Quality of production will increase if ---- method of wage
payment is adopted
Time Rate
921 Staffing is the responsibility of ---- manager
Personnel or Staff
922 Staffing is concerned with matching ---- with ---People, Job
923 Employment exchanges are ---- source of recruitment
External
924 On joining duty, the employee is given ---- training
Orientation
925 The last step in selection procedure is ---Placement and Orientation

926 Manpower planning deals with --Recruitment, Selection and Training

927 ---- is concerned with assigning selected individuals to
different jobs
Placements
928 Estimating manpower recruitment is the ---- step in
staffing process
first
929 ---- is concerned with instructing, Guiding, Inspiring and
supervising the people in an organization to achieve its
objectives
Directing
930 Directing begins at top level in the organization, and flows
to the bottom, through the ----Hierarchy
931 ---- is the key element of Management process
Directing
932 Without directing other managerial functions will be --Ineffective
933 Initiate action, Integrating employees efforts, Provide
Means of Motivation and Stability and Balance in the
organization and Facilitate change are the salient features of
--Direction
934 Direction includes the
Motivation, Leadership and ----

elements

of,

Supervision,

Communication
935 Supervision means keeping an ----- watch over the
subordinates while on work

Authoritative
936 Foreman, Oversear, Superintendent, Gang Chief and
Section Officer are ---Supervisors
937 The connecting link between Management and Workers
Supervisors
938 Planning and organizing the work, Recruit Select and Train
workers, Issuing Orders and Instructions, Motivating Workers,
Enforcing discipline, Ensuring effective communication, Ensure
safety and proper working conditions and to Report and
Handling Complaints are functions of --Supervisors
939 'Will to work' is the mere output of ---Motivation
940 --- bridges the gap between the ability to work, and
willingness to work
Motivation
941 A proper system
confidence and ----

of

motivation,

increases

the

self

Employee's Job Satisfaction

942 Motivation creates confidence in the workers and the work
force will be ---Loyal to the Organization
943 The needs are highly essential for human survival, and
Maintenance of human life, such as Food, Water, Air, Shelter
and Rest etc;
Physiological Needs
944 The needs related to the desire of recognition and respect
from others
Esteem or Ego Needs

945 --- is the ability of the Management, to induce

subordinates to work towards group goal with confidence and
zeal
Leadership
946 Leadership involves, influencing the
subordinates, Use of personal qualities and ----

behavior

of

Stimulate people to work willingly

947 Process of influencing, Existence of followers, Stimulative
functions, Common interest and Creativity are ---- of
leadership
Characteristics
948 Self confidence, Intelligence, Communication and
Listening skills, Vision and foresight and ability to inspire
people are ----- of leadership
Good qualities
950 The ability of a person/leader to look at things from
others point of view is known as ---Empathy
951 Honesty, Integrity, Sincerity, Commitment and Faith are
---- of a leader
Moral Qualities
952 A good leader must be a friend, philosopher, guide of the
followers and at the same time a ---- of them
Representative
953 --- is the process of exchanging
understanding between two or more parties

information

and

Communication
954 In communication process a message sent is followed by
reaction or response from the receiver, this reaction is called
---Feed Back

955 If there is no -- there is no communication

Message
956 Formal communication flows through the --Line of Authority
957
Principle
of:
Clarity,
Objective,
Understanding,
Consistency, Completeness, Feedback, Time, Speed and
Flexibility are principles of
Communication
958 On the basis of direction of messages, communication may
be classified into ---Downward, Upward and Sideward
959 The General Manager's speaking to a an employee of the
firm is ---Informal Communication
960 The speediest communication took places under ---Informal Combination
962 Circulars, Orders, Notices, Memos and Letters in the
organization are pertaining to --- communication
Downward
963 Upward communication may be treated as--- of the
downward communication
Feedback or Response
964 Reports, Complaints, Suggestions, Letters, Attitudes,
Opinions, Feelings, Appeals and Ideas are the forms of --communication
Upward
967 Information which flows between people of --- in the
organization
is
sidewards
or
horizontal
or
lateral
communication

Equal Status
968 The communication took place, between people in the
different departments, one holding a higher position than the
other is called--Diagonal Communication
969 Poor listening skills, Credibility, Status barrier,
Sematological barrier, Organizational barrier and Premature
evaluation are barriers of ---Effective Communication
970 Direction is related to--Low level and Middle level
971 More direction is required at ---- level
Lower
972 Supervisors are links between --- and --Middle level Managers and Workers
973 Superiors are ---- of workers
uide
974 The means of motivation should be determined, on the
basis of ---Jobs
975 According to Maslow ---needs are satisfied at last
Self fulfillment
976 Suggestions
communication
at parallel level
977 Order flows --Downward

flow

----

in

the

case

of

horizontal

978 In an effective communication --- language should not be

used
Clear
979 Classification of formal and informal communication is
based on --Relationship
980 Last step in communication process is --Follow up and feedback
981
---communication
communication

is

also

called

Grape-Wine

Informal
982 Translating messages into words for the purpose of
understanding is known as---Decoding
983 Direction is regarded as the 'heart' of ---Management Process
984 --- is the key element of Management process
Direction
985 Through ---- the employees can be informed, about the
nature of changes in the organization
Communication
986 Leadership and Communication help to maintain a balance
between--- and --Individual goals and Organizational goals
987 Direction is a --- function
Complex or Dynamic
988 Effective supervision increases the --- of a concern

Productivity
989 ---- ensures the achievement of organizational goals
Motivation
990 The systematic arrangement of human needs in order of
their importance is known as--Hierarchy of needs
991 --- is the ability to induce subordinates to work with
confidence
Leadership
992 A good leader is a source of inspiration to --Employees
993 Communication involves at least two persons, those are
--- and --Sender and Receiver
994 --- is the medium through which the message is passed
from the sender to receiver
Channel
995 On the basis of relationship between
concerned, communication may be ---- and ----

the

parties

Formal Informal
996 The downward communication is also known as--Vertical Communication
997 ---- communication
communication

generally,

supplements

verbal

Gestural
998 The network of informal communication is called --Grape-wine
999 ---- function of Management initiates organized action

Supervision
1000 Keeping an authoritative watch, over the subordinates at
work is called --Supervision
1001 Leadership quality can be expressed, only when there
are
Followers
1002 Through the function of ---- Managers' create the 'Will to
Work' on the workers
1003 A word of praise is a ---- form of incentive
Non Monetary
1004 Communication which does not follow, the lines of
authority is ---- communication
normal
1005 Waiving hands is a --- type of communication
Gestural
1006 Controlling is a process, by which Managers assure that
actual activities and results are in conformity with the --Planned activities and results
1007 Control aims at finding out various --- in the working of
an enterprise
Drawbacks
1008 The important step in control is ---Corrective Measures

1009 Control is possible, only if the person controlling has ----for it

Authority

1010 Management process begins with Planing and ends with

---Control
1011 To maintain discipline and morale, to assess the cost of
overheads, to find out and remove of causes of delay, to find
out the progress of the work, are purposes of --Control
1012 If the performance matches, then Management may
assume everything is --Under control
1013 ---- actions are initiated on the basis of factors causing
deviation, between standards and actual results
Corrective
1014 Incentives to workers may be declared, as corrective
measures, under the steps in --Control Process
1015 Only information pertaining to an organization, which are
critical for Managerial control are sent to the --Top Manager 1016 Controlling
Management .Compulsory

is

the

---

function

of

1017 Controlling is the --- aspect of the Management

Practical

1018 Planning and ---- are mutually dependent and related

activities
Controlling
1019 Control is the function of Managers, at --- levels
Lower
1020 --- and --- are inseparable functions of Management

Planning and Controlling

1021 Achieve results economically, Optimum utilization of
resources, Scientific decisions, Changing technology, Effective
administration and Social responsibilities are significance of
---Management Principles
1022 Each employees should be trained,in the Job that he has
to perform, and the process of this training is called --Division of Labor
1023 The principle of division of labor is applicable to both
technical as well as ----- work
Managerial
1024 Authority without fixing responsibility is useless, and
responsibility without adequate authority will make individual
---Ineffective
1025 Good superiors at all levels, Judicious use of penalties,
Clear and fair agreement are requisites of ---Discipline
1026 Profit plan for a budget is a ---Short term financial planing
1027 The sub units of an enterprise for the purpose of control
are called--Responsibility or Decision centers
1028 The overall responsibility for the functions of the budget
committee
lies on the ---Budget Director or Budget Officer

1029 ---- is a budget which specifies the outputs or results to

be achieved along with, the input or expenditure to be incurred
during the budget period Performance Budgeting
1030 ---- the budget designed to change in accordance, with
the level of activity actually attained
Flexible Budget
1031 ---- the budget designed to remain
irrespective the level of activities attained

unchanged

Fixed Budget
1032 ---- is the summary budget, incorporating all component
functional budgets which is finally approved, adopted and
employed
Master Budget
1033 --- is a document which sets out the responsibilities of a
person engaged to prepare a budget
Budget Manual
1034 --- is the act of building budgeting
Budget
1035 --- is extended by a firm to its debtors for payment
Credit Terms
1036 --- is the period between purchase of goods on credit and
payment to creditors
Average Payment period
1037 ---- is the relationship between receivables and average
turnover
Debtors Turnover
1038 --- is the relationship between quick assets and current
liabilities
Quick Ratio

1039 The basic objectives of financial statement is to ---Assist in decision making

1040 Depreciation an asset is a process of --- cost
Allocating
1041 Gross proceeds from the sale of a product of a firm is---Operating Revenue
1042 Dividend and interest income from temporary investment
are --Non Operating revenue
1043 The process of estimating funds requirements of a firm
and determining the source of funds is called
Financial Planning
1044 The basis of Financial Planning is --Financial forecasting
1045 The percentage of dividends to earnings available to
shareholders is
Payment Ratio
1046 Stock dividends means --Bonus shares
1047 In accounting, APB stands for
Accounting Principles Board
1048 Preparation of financial information is the responsibility
of -Top Management
1049 Financial statements are prepared from the --Accounting records maintained by the firm
1050 --- means the number of times the average inventory has
been sold during a period

Inventory Turnover
1051 --- is the relationship between current assets and current
liabilities
Current Ratio
1052 ---- means the aggregate of all current assets less
current laibilities
Net Current Assets
1053 ---- means the aggregate of all current assets including
cash
Gross Assets
1054 --- is the gap between purchase of raw materials and
sale of finished goods
Operating cycle
1055 --- is obtained by dividing average accounts receivables
with net credit sales and multiplied with 365 days
Average Collection Period
1056 ---- are obtained by deducting current liabilities from
total assets
Net total assets
1057 --- is one half of the sum of the opening and closing
capitals, reserves, accumulated depreciation and long term
debt
Gross Capital employed
1058 ---- measures the intensity with which resources of the
firm are being utilized
Activity ratio
1059 ---- shareholders having no voting right
Preference

1060 A shareholder is an owner while a debenture holder is a

--Creditor
1061 Funds used by the firm in fixed assets are called
Capital Expenditure or investment
1062 The method of acquiring funds internally by retaining a
portion of earnings available for shareholder is known as --Earnings retention
1063 Issue of new shares to existing shareholders is
Right Issue
1064 The mix of debts and equity is known as the firm's
Debt Ratio
1065 If the bills receivable are discounted in the bank, the
discount amount is called
Bank's Commission
1066 The assets which the firm requires for carry on its
business are called
Real Assets
1067 ---- share capital is also called 'Venture Capital'
Equity
1068 --- are shares which do not carry any preferential right in
payments of dividend and refund of capital
Equity Shares
1069 The Dividend payable on---- shares goes on accumulating
till it is fully paid off
Cumulative preference
1070 Shares are also called ---- securities
Ownership

1071 ---- required is more if a firm has to meet operating

expenses
Working Capital
1072 If the turnover over is speedier the --- required will be
the smallest
Working Capital
1073 The finance required by a concern to meet the current or
day to day expenses is called ---- financier
Short Term
1074 Marketable securities are ---Short Term investment
1075 Franchise is the contract giving ---- right to perform
certain functions are called
Exclusive
1076 Net block is after
Gross block depreciation
1077 Shareholders equity contains
Retained earnings
1078 The main objective of financial management is
Profit Maximization
1079 A company may increase its profitability by having a high
Debt equity ratio
1080 The optimum capital structure is determined by
Cost of Capital
1081 To increase the return to equity shareholders the
financial managers tool is
Trading on Equity

1082 --- capital is the risk capital of the company

Venture
1083 Reserves are part of the funds
Ownership

1084 Long term finance is required for acquiring

Fixed Assets
1085 ---- finance is often required for modernization of
business for a period of
2 to 5 years
1086 ---- is the life blood of business
Finance
1087 The market value of the shares will be high for
companies having
Under Capitalization
1088 What should occur when earning capacity has fallen due
to internal or external factors
Over Capitalization
1089 Finance lease is also called
Fully payout lease
1090 The first credit rating agency started in 1988 in India is
CRISIL
1091 According to SEBI guidelines, underwriting is----- for the
full issue offered to the Public
Mandatory
1092 A sale and lease back arrangement, is suitable for a
lessee having
Liquidity Crisis

1093 --- is the determining factor, in distinguishing, between

and speculation
Motive
1094 SEBI was given a statutory status, on --- by an ordinance
30th January 1992
1095 --- occurs where a firm has fixed cost that must be met
regardless of volume or value of sales
Operating Leverage
1096 Call money market is a --- adjustment
Inter Bank
1097 Obligation payable by the firm to its employee, is called
Accrued Salary
1098 A --- entitles a purchaser, to buy a fixed number of
ordinary shares at a particular price, during a specific time
period
Warrant
1099 The cost of the borrowed fund is called the effective
Interest rate
1100 A firm has zero debt, in the capital structure is called --firm
Unlevered
1101 Short term asset investment decisions are called--Working Capital decision
1102 Wealth maximization is also called ---- maximization
Net Present value

1103 A major aspect of the dividend policy of the firm is its

Dividend payout ratio

1104 According to Solomon Ezra, the main goal of Financial
management is
Maximization of owners wealth
1105 --- entitles an investor, to by equity shares, after a
specified time period at
Warrants
1106 CRISIL was established in
1988
1107 Leasing provides --- financing
Long term and Short term
1108 Venture capital firms would be eligible, for tax exemption
on --- of capital gains on equity investment
60%
1109 The use of debt in total capital is called
Gearing
1110 The situation where the rate of return is much less than
compared to the capital invested is called
Under Capitalization
1111 Optimum capital structure is a situation, where the rate
of return is --- the cost of capital
Equal to
1112 --- refers to buying securities, in one market at lower
price and selling them in another market at high price
Arbitrage
1113 Return of shareholders capital, consists of dividend and
Capital gain
1114 The payment of dividend to shareholders is

Not a legal obligation

1115 Plant and Machinery, Office and factory furniture are
examples of
Real Assets
1116 --- makes the conversion of receivables into cash cash
possible
Factor
1117 Factoring involves --- allowing full credit protection and
providing financial accommodation against the firm's book
debts
Outright purchase of Debts
1118 Discounting is otherwise called---Invoice Discounting
1119 The full amount of invoices, have to be paid to clients in
the event of becoming bad in --Full service recourse factoring
1120 In USA non recourse factoring is also called
Old line factoring
1121 If the client is not protected, against the risk of Bad
Debts, factoring is called
Full service recourse factoring
1122 In---- factoring advance cash against, book debts due to
the client immediately
Full service recourse
1123 In -- factor advances cash against book debts due to
the client immediately
Advance Factoring
1124 If payment is made to the client on maturity factoring is
called

Maturity factoring
1125 Bulk factoring is also called
Agency Factoring
1126 In case the customers are not informed about, the
factoring agreement, factoring is called
Non Notification factoring
1127 Two types of cost involved in factoring are factoring
commission and
Interest
1128 Factoring commission is expressed as a percentage of
Net face value of receivable factored
1129 Holding of inventories to guard against the risk of
changes in demand and supply forced is called
Precautionary Motive
1130 If part of capital is not represented by any form of asset,
the capital is called
Watered Capital
1131 The minimum rate of return that must be expected, by
the investor is called
Cost of capital
1132 Apportionment of capital among various alternative
investment opportunities is called
Capital rationing
1133 The use of debt capital along with owners equity to
maximise return is called
Financial leverage
1134 Proportion of long term sources of funds such as debt
and equity in total capitalization is called
Capital Structure

1135 The total liability side of a balance sheet is called--Financial Structure

1136 The combination of both long term and short term
sources of funds in capitalization is called the
Financial Structure
1137 The mix of debt and equity is known as firm's
Capital Structure
1138 In the words of --- 'the function of financial management
is to review and control decisions to commit or recommend
funds to new or ongoing uses'
Walter
1139 --- is the compensation for time
Risk free rate
1140 ---- is the compensation for risk
Risk Premium
1141 The classical theory of the firm implies maximization of
Owners interest
1142 Finance function can be divided into three categories ie;
Investment decision, Dividend decision and
Financing decision
1143 The firm must distribute all of its earnings in the form of
dividend is the assumption of
MM approach
1144 The firms and individuals can borrow and lend at the
same rate of interest, is the assumption of
MM Approach
1145 ---- is the likelihood that a customer will fail to repay the
credit obligation

Default risk
1146 To estimate the probability of default, the Financial
Manager should consider, three C's : Character, Capacity and
--Condition
1147 Customers with moderate financial health and risk are
called--Moderately Bad accounts
1148 The length of time for which credit is extended to
customers is called the
Credit Period
1149 ---- refers to the information about
creditors to whom credit will be granted

the potential

Credit information
1150 Detailed investigation conducted on the basis of credit
information is called
Credit Investigation
1152 Maximum amount of credit which a firm will extend at a
point of time
Credit Limit
1153 Extend of risk taken by the firm by supplying goods on
credit to a customer is called
Credit Limit
1154 The Mechanism of managing, financing and collecting
receivables is called
Factoring
1155 The assets which can create claim on the assets of the
company
Financial Assets
1156 Funds applied to assets by a firm are called

Capital Expenditure
1157 Lease obligations are coming under
Financial Assets
1158 Who are known as owners of residue
Ordinary Shareholders
1159 Dividends paid by the company are --- charges while
calculating income tax
Non Deductible
1160 The method of acquiring funds internally is called
Earnings retention
1161 Interest on borrowed funds is a --- charge for computing
corporate income tax
Deductible
1162 Investment in new products or existing products may
also be called
Revenue expansion investment
1163 --- is also known as discounted cost benefit ratio
NPV method
1164 A project is accepted under NPV method, if its NPV is --zero
Greater than
1165 If a project is rejected, as per profitability Index its NPV
is
Negative
1166 If profitability index of a project is one, its NPV will be
Positive
1167 The rate of return which equates the present value of
cash inflows with the present value of cash outflows is called

IRR
1168 The part of Working Capital which remains fixed, every
time is called
Permanent Working Capital
1169 To avoid the loss of control, a company should use
Debt
1170 When Equity share capital is higher than other securities,
the firm is said to be
Low Geared
1171 Generally financing mix affects
Equity shareholders yield per share
1172 The optimum Capital structure means
The mix of debt and equity
1173 When a Capital structure is composed of more than one
source is known as
Complex Capital
1174 When capital structure is composed of Equity Capital only
and/or with retained earnings is called
Simple Capital
1175 When cost of capital is lowest and the value of the firm is
greatest, the market price of the share is
Maximized
1176 Investments which compete with each other is called
Mutually Exclusive investment
1177 If a company can undertake various investments at the
same time, the investments are called
Independent

1178 The establishment of a factory in a remote area is an

example of ---since it requires setting up of roads, schools,
hospitals etc;
Contingent Investment
1179 The formal plan for appropriation of funds to various
investments is called
Capital Budget
1180 Investment decision of a firm is generally called
Capital expenditure decision
1181 ---- is known as expansion of new business
Diversification
1182 A project is accepted if the pay back period is --- the
standard maximum pay back period
Less than
1183 A typical annual report include the financial statement
and
Auditors report
1184 Assets represent stored purchasing power, --- and
Tangible and Intangible items
Money Claims
1185 Gross Block represents original cost of total
Fixed Assets
1186 The dividend policy always affect the value of the
enterprise is the thought of
Walter's approach
1187 Under Walter's dividend approach when r < k means
Declining Firm

1188 Dividend policy depends on the profitable investments

is the thought of
Gordon's Model
1189 The investors prefer,
dividends is described as

near

dividends

than

future

Bird-in-the-Hand
1190 Under net income approach, the lost of debt and cost of
equity are assumed to be
Independent to the capital structure
1191 If the share market is depressed, for collecting the
required fund of a firm, which one of the following is more
suitable
Issue Debt
1192 --- is a way to analyze the changes, in a projects NPV or
IRR
Sensitivity Analysis
1193 Give an example of discounted, cash flow technique
IRR
1194 The number of years required to recover the original
investment is called
Payback Period
1195 Payback period method is also called
Pay off method
1196 ---- is used to make analysis about, future solvency and
profitability of a firm
Proforma Financial Statements
1197 In ratio analysis the standard of comparison does not
include
Activity Ratio

1198 Leverage ratios are also called

Capital Structure ratios
1199 The process of magnifying the shareholder's return
through the use of debt is called financial leverage, financial
gearing and ---Trading on Equity
1200 Debt trap is a situation in which a company, has to
borrow funds to
Pay the interest
1201 --- gives a clear cut idea, about the quality of debtors
Aging Schedule
1202 Tax saved on account of payment of interest is called
Interest Tax shield
1203 --- is the most widely known form of CVP analysis
Break Even Analysis
1204 Excess of actual or budgeted sales, over the Break Even
sales is known as
Margin of Safety
1205 Use of Fixed Cost in the operation of a rim is called
Operating Leverage
1206 Bonus shares can be issued, by a company out of
Free reserves built out of genuine profits
1207 ---- is interest free source of financing
Accrued expenses
1208 The amount approved by the bank for the firm's working
capital is called
Credit limit

1209 The physical possession of the property is transferred to

the bank to obtain credit is needed under
Pledge
1210 The transfer of legal or equitable interest in a specific
immovable property for the payment of a debt, is called
Mortgage
1211 Right to retain of the property until the claim associated,
with the property is fully paid
Particular Lien
1212 Commercial papers are
Unsecured Promissory note
1213 During the period of inflation the Dividend payout ratio
tends to be
Low
1214 A fixed rate of dividend is paid every year, this type of
dividend is called
Constant Dividend
1215 --- is the excess of total dividends over total earnings
Deficit
1216 Net working capital gap is the difference between
current assets and
Spontaneous Current liabilities
1217 Spontaneous current liabilities include,
Accounts payable
1218 Net working capital gap is also called
Operating Capital
1219 Net Fixed Assets plus networking capital gap refers to

Capital Employed
1220 Revenue to be recognized, when the sale is made or
when the service is performed. This method of recognition is
called
Accrual Concept
1221 Cost that have helped to produce revenues are called
Expired cost
1222 Expired cost are also known as ---Revenue Expenditure
1223 Costs that will help to produce revenue in future are
called
Unexpired cost
1224 Unexpired costs are also known as
Capital Expenditure
1225 Capital expenditure are capitalized as
Assets
1226 The Tax saving resulted from depreciation is called
Depreciation tax shield
1227 --- are expected benefits which the company would have
derived from those resources, if they were not committed to
the proposed project
Opportunity Cost
1228 ---- are cash outlays incurred in the past
Sunk Cost
1229 Combined cost of all sources of capital is called, weighted
average cost capital, average cost capital and --Overall cost capital

1230 Cost of equity can also be determined by using the

CAPM
1231 The method of recalculating NPV or IRR by changing
each forecast, is called
Sensitivity Analysis
1232 If the entire capital structure is composed of equity
share capital, it is possible to make the benefit of
Trading on equity
1233 ---- paid on preference share, is not an allowable
deduction, at the time of computing, taxable income
Dividend
1234 Participating preference shares means those share
where the shareholders, get a right to
Share in the surplus of the company
1235 IN the case of bearer debentures, the interest on it is
paid at the end of the period to the person, who is
The holder of the document
1236 The debentures are transferable only if it is executed by
a transfer deed
Registered Debentures
1237 Funds secured form long term sources are called
Capital
1238 The share are non refundable to the holders during the
life time of the firm is known as
Irredeemable Preference shares
1239 Right shares mean the shares which are
First offered to the existing shareholders

1240 Workmen compensation funds, Dividend equalization

funds, General reserves and P&L balance can be utilized to
redeem
Preference shares
1241 After redemption of all debentures, the balance if any in
'Debentures Sinking Fund' account is transferred to
General Reserve
1242 Operating leverage is a double edged --Sword
1243 Profit fluctuation due to high fixed cost are called
Operating Risk
1244 The process of estimating the fund requirements of a
firm and determining the sources of funds is called
Financial Planning
1245 --- is another term of Budget
Profit Plan
1246 Budget preparation is a line --Function
1247 Budget organization and administration are--- functions
Staff
1248 --- theory assumes that, the cost of debt and cost of
equity remains constant with charges in leverage
NI theory
1249 The traditional capital structure, theory was popularized
by
Solomon Ezra
1250 ---- refers to the mix of long term sources of funds
Capital Structure

1251 The situation where value per share is the maximum, and
cost of capital is minimum is called
Optimum Capital Structure
1252 The amount which a firm can service easily even under
adverse conditions is called
Debt Capacity
1253 Ratio of net cash inflows to fixed charges, is called
Debt servicing ratio
1254 Dividend is a policy--Obligation
1255 Cash Inflows/Cash Outflows = 1. This is the result of
Internal rate of return
1256 The return after the pay off period is not considered in
case of
Payback method
1257 The technique of long planning for proposed capital
outlays, and their financing is termed as
Capital Budgeting
1258 Depreciation is included in costs in case of
Accounting rate of return
1259 The minimum rate of return expected of a capital
investment project is termed as ---Cut-off rate
1260 The period needed to recoup in the form of cash inflows
fromo operation the initial money invested is termed as
Payback period
1261 Reserves and surplus are under the category of

Owned Capital
1262 --- deals with medium size investments
Administrative Capital Budgeting
1263 --- include routine minor expenditure
Operating capital expenditure
1264 The percentage change in EPS due to a given percentage
change in EBIT is called as
Degree of Financial Leverage
1265 Net income theory was developed by
David Durand
1266 As the discount rate increases, the NPV of a project
Declines
1267 Tactical decision is generally involves,
Small sum of money
1268 The proposal whose
acceptance of one is called

acceptance

depends

on

the

Independent Proposal
1269 Contingent proposals are otherwise called as
Dependent Proposals
1270 Minimum rate of return is decided on the basis of
Cost of capitals
1271 The difference between the total present value of future
case inflows and the total present value of future cash outflow
is
Net Present value

1272 If shareholder or a group of shareholders can purchase

all or most of the new shares, and control the company, the
company is called
Closely held company
1273 The cost of floating debt is --- cost of floating equity
Less than
1274 100 percent minus payout percentage is called
Retention ratio
1275 --- is obtained by dividing dividend per share, by the
market price per share
Dividend yield
1276 --- firms are able to invest earnings at a rate higher than
the rate expected by the shareholders
Growth
1277 If the rate of return is equal to the cost of capital, then
the firm is said to be
Normal
1278 In --- firms the rate of return is lower than that of cost of
capital
Declining
1279 The gap between information available to Managers and
what is actually shared with shareholders is called
Information Asymmetry
1280 Shareholders earnings are taxed both the corporate level
and in the hands of shareholders under
Double Taxation
1281 Shareholders earnings are taxed only at the corporate
level in
Single Taxation

1282 The ratio of dividend to earnings is called

Pay-out ratio
1283 The policy of paying a fixed percentage of net earnings
as dividend is called
Constant pay-out ratio
1284 Stock dividend is also called
Bonus Shares
1285 Difference between Gross operating cycle and payables
deferal period is called
Net operating cycle
1286 If depreciation is excluded from expenses in computation
of operating cycle, the net operating cycle is referred to as
Cash conversion cycle
1287 Minimum level of current asset is referred to as
Variable Working capital
1288 Extra working capital needed to support the changing
production and sales activities is called
Temporary working capital
1289 If the manufacturing cycle is very long then the working
capital requirement is --High
1290 Higher current assets to fixed assets ratio indicate
Conservative current asset policy
1291 A projected cash flow statement is based on
Proforma financial statement
1292 The amount of cheques sent by a customer which are not
yet collected is called
Deposit float

1293 The time taken for a cheque in transit is called

Mailing time
1294 The time taken for processing cheque for internal
accounting purposes is called
Processing Time
1295 A decentralized collection procedure is called
Concentration banking
1296 The selection of the collection center will depend upon
the
Volume of billing
1297 Treasury Bills are
Short term investments
1298 Commercial papers are
Unsecured securities
1299 A balance which will be sufficient to earn a return equal
to the cost of services are called
Compensating Balance
1300 Which models are used to determine the self imposed
balance
Operating Cycle model, Probability Model, Stochastic Model
1301 Capital budgeting involves decisions to commit the firm's
funds to
Long term assets
1302 In investment analysis more importance is given to
Accounting profits
1303 The ARR method is based on the
Accounting Income

1304 --- refers to payment of dividend in the form of shares

Stock Dividends
1305 Bonus share is --- income
Taxable
1306 Increasing the number of shares by reducing the face
value is called
Stock Split
1307 Reducing the number of shares by increasing the face
value is called
Reverse Split
1308 ---- refers to the firm's investment in current assets
Gross Working Capital
1309 Excessive working capital impairs (harms) the firm's
profitability while redundant working threaten
Solvency
1310 The total inventory conversion period and debtors
conversion period is referred to as
Gross operating cycle
1311 The approach involved, to the policy of financing a part
of permanent current assets with short term funds is called
Aggressive approach
1312 The higher cost of long term financing is justified by ---theory
Liquidity Preference Theory
1313 --- -specify the duration of credit and terms of payment
by customers
Credit Terms
1314 --- determine the actual collection period

Collection Effort
1315 A firm is said to be followed a ---- credit policy if it sells
goods to customers on very liberal terms
Lenient
1316 The policy of selling goods on credit terms only to the
selective customers, those having high creditworthiness
Stringent Policy
1317 Which budget is prepared after the preparation of all
functional budgets
Cash Budget
1318 The method adopted for the preparation of short period
cash budget
Receipts and Payments method
1319 Adjusted profit and loss method is also called
Budgeted cash flow method
1320 In cash budget system if the asset side is greater than
the liabilities side, the difference is called
Bank Overdraft
1321 In a cost centre the Manager is responsible for
Expenses
1322 In a profit center the Manager is responsible for
Cost and Revenue
1323 A budget specifies the operations to be performed during
the next year, is called
Activity Budget
1324 Cash is maintained for investing in profit making
opportunities is
Speculative Motive

1325 The receipts and disbursement method of forecasting is

used for
Up to 1 year
1326 In cash forecasting the adjusted net income method id
called
Liquidity approach
1327 Lower current asset to Fixed asset ratio indicates
Aggressive Current Assets policy
1328 --- increases with the level of current assets
Cost of liquidity
1329 The cost of holding insufficient current assets is called
Cost of liquidity
1330 The term 'funds' as used in 'funds flow statement' means
Current assets-Current liabilities
1331 An example of the flow of funds is said to have taken
place
Machinery purchased for cash
1332 Give an example for source of funds
Cash Sales
1333 Commission paid results into
Application of funds
1334 Conversion of debentures into share capital results into
No flow of funds
1335 The building sold on credit would cause of
Flow of funds
1336 Increase in share premium account results in a

Source of funds
1337 While preparation of Funds flow statement the provision
for taxation should be taken as
Current liability or appropriation of profit
1338 While preparing a statement of funds from operations,
the amount of dividend paid would
Increase the funds from operations
1339 A system by which budgets are used as a means of
planning and controlling all aspects of business --Budgetary Control
1340 --- is a budget designed to furnish budgeted costs for any
level of activity actually attained
Flexible Budget
1341 Budgetary control helps Management to ---Plan and control
1342 --- shows the anticipated sources and utilization of cash
Cash Budget
1343 ---- determine the priorities of functional budget
Principal budget factor
1344 Cash budget is a --- budget
Short term
1345 ---- is a budget which states the additional workers to be
engaged in the factory
Labor procurement budget
1346 Capacity Ratio X Efficiency Rate =
Activity Ratio
1347 In the case of plant the limiting factor may be
Insufficient Capacity

1348 The difference between fixed and variable cost has a

special significance in the preparation of
Flexible Budget
1349 The budget that prepared first of all is
Budget for the Key factor
1350 In the case of materials, the key factor may be
Restriction imposed by quota
1351 The budget which commonly takes the form of Budgeted
profit and Loss Account and Balance Sheet is
Master Budget
1352 Policy making is an important part of the process of
Planning

1353 Planning function of management is performed by

Middle Management
1354 Management by Objectives implies
First of all setting objectives at the top
1355 Policy making is an important part of the process of
Planning
1356 Special kind of plan formulated in order to meet the
challenge of competitors is called
Strategy
1357 A plan when expressed in quantitative terms is known as
Budget
1358 Process of planning must start with clearly laying down
of

Goals and Objectives

1359 According to the 'Scalar principle of Organization'
The line of authority must be clearly defined
1360 A manager can supervise a limited number of executives,
this theory is known
Span of Management
1361 A positive leader is one who motivates people by
Increasing their satisfaction
1362 Staffing function of management comprises the activities
of
Defining the requirements with regard to the people for the
job to be done
1363 Staffing function of management needs to be peroformed
Both in new and going enterprises
1364 Adequate motivation of employees results in
Boosting the morale of the subordinates
1365 Subordinate should be responsible to one superior, the
principle is known as
Unity of Command
1366 Functional type of organization was developed by
Taylor of scientific management
1367 One of the oldest type of organization is
Line Organization
1368 The organization is divided according to the type of work
involved is
Functional Organization
1369 The authority flows from the man at the top to the lowest
man vertically is called

IN line organization
1370 In line and staff organization the authority lies in
Line
1371 The function of staff in line and staff organization is to
Advice the line
1372 Bringing harmony in various activities, is the --- part of
management
Co-ordination function
1373 Control function of management implies
Taking corrective course of action
1374 The main advantage of line organization is
Well defined fixed responsibility
1375 The main advantage of line and staff organization
Availability of expert advice
1376 Line organization is also known as
Military Organization
1377 The term 'Speed Boss' and 'Route Clerk' are used in
relation to
Functional Organization
1378 The main purpose of control function is to
Take remedial action
1379 A subordinate has to work under more than one boss,
comes under --- organization
Functional Organization
1380 GM has delegated authority to production Manager, for
achieving budgeted production. Who is responsible for the low
production to Board of Directors

General Manager
1381 Delegation
organization

of

authority

makes

the

size

of

the

Larger
1382 If GM asks Sales manager, to recruit executives on his
behalf, it is an instance of
Delegating Authority
1383 Delegation can be
Upward, Downward and sideward
1384 Delegation is more often
Upward
1385 The main drawback of function organization developed
by Taylor is that it fails to recognize
Principle of unity of command
1386 Unity of command is violated under
Functional Organization
1387 'Theory X' stands that
Works prefer to be directed
1388 'Theory Y' states that
Workers exercise self direction and self control
1389 Expectancy theory of motivation is given by
Vroom
1390 'Theory X' and 'Theory Y' is given by
MC Gregor
1391 Theory of collective Bargaining was given by
Dunlop

1392 The primary function of an office is

Making, using and preserving records
1393 An open office has the advantage of
Economy
1394 One of the primary functions of an office is to
Provide the requisite information
1395 Office layout aims at
Optimum utilization of space
1396 A good layout results in
Smoother flow of work
1397 Decentralization of authority means
Departmentalizing activities
1398 The main benefit of decentralization is that
Top executive is relieved of much of his burden
1399 Centralization of mailing service means
All mailing operations are handled at one place
1400 Inward mail means
Mail received in the office
1401 Outward mail means
Mail sent out to customers
1402 The written message transmitted within the organization
Internal Mail
1403 The type of office in which advisers are engaged, to
advice the executive
Line and Staff organization

1404 The main advantage of centralized office organization is

The low cost of its organization
1405 The large size of undertaking, the method of filing is to
be recommended
Vertical filing
1406 Which method of filling describes as best
Vertical Filling
1407 Mimeograph is a
Stencil Duplicator
1408 Blue printing is also known as
Diazo
1409 O & M refers to
Efficiency of office and administrative work
1410 Management is a profession because it has specialized
knowledge, code of conduct and --Training facilities
1411 Important decisions are made by the --Administration
1412 The Management which directs, the group of efforts of
employees towards the desired goal of the business is termed
as
Co-ordination
1413 Direction donates, speeding up of the work, Motivates
employees and creates ---Interest towards the work
1414 In --- management human element has been accorded
utmost importance
Administrative
1415 Scientific management eliminates ----

Conservatism
1416 Scientific analysis of work under scientific management
rquires
Motion study
1417 In case of scientific management employees are selected
on the basis of
Needs of the work
1418 There are
reorganization 8

---

foremen

in

case

of

administrative

1419 The purpose of motion study is

To determine best way of doing a job
1420 The purpose of time study is
To remove wastage of time
1421 Congenial business environment provides --- to country
Political Stability
1422 Fast and quick technological changes take place due to--Globalisation
1423 Planning is mental process, global oriented and ----Forward looking
1424 Planning is an important function of Management,
because--Planning is goal oriented
1425 Division of work, Grouping of identical work
assigning work to appropriate persons are features of
Organization
1426 ---- is the business policies
Formal Organization

and

1427 ---- depends upon the sweet will of the employees

Informal Organization
1428 --- follows the unity of command
Formal Organization
1429 There is a strict discipline in ---- organization
Line
1430 In case of line organization authorities are
Centralized
1431 ---- organization suffers from favoritism
Line
1432 --- authorities should not be delegated
Secret
1433 Delegation of authority means delegation of --- to
subordinates
Work and related authority
1434 In the process of delegation, accountability can not be --shared and delegated
1435 --- authorities are delegated
Routine
1436 While delegating authority it should be kept in mind that
there should be --- authorities at top level
Important
1437 Management expands itself through ---Delegation
1438 Staffing is --- function of

Management
1439 Staffing is mainly concerned with ---All employees
1440 Staffing is the responsibility of top level management,
middle level management and ---First line supervisors
1441 Labor cost in case of the manufacturing
generally amounts to ---- of the selling cost

concern

60%
1442 without human factor all the factors of production are
useless. These are the words expressed by --Peter Drucker
1443 Manpower planning is required --- in the life span of the
organization
Continuously
1444 Job analysis is used as a basis for compiling
Job description and job specification
1445 More direction is required at --- level
low
1446 Direction is related to all --Employees
1447 Directors are --- of the company also
Shareholders and paid executive
1448 Supervisor is --- level manager
Low
1449 Supervisor is --- of the workers

Friend, Philosopher and Guide

1450 Supervisor has to plan the work, organize the work and
--Control the work
1451 There is a strict ---- in autocratic supervision
Strict discipline
1452 Suggestion flow --- in case horizontal communication
at parallel level
1453 In an effective communication --- language should not be
used
Ambiguous
1454 Classification of formal and informal communication is
based upon
Relationship
1455 If you want to keep a proof of your communication you
should use ---- communication
Formal
1456 --- is the barrier for an effective communication
Indifferent attitude of employees
1457 Controlling is the --- function of the Management
last
1458 Effective controlling is --Dynamic
1459 Controlling is required at higher, lower and ---- levels
Middle
1460 Controlling is --- aspect of Management
Practical

1461 If there is a fall in the actual performance due to

mechanical defect, there should be improvement in--situations
Physical
1462 Uncontrollable cause for the loss of production may be
--Fire
1463 Fixed capital investments are --Revenue generating and cost reducing
1464 Working capital is affected by nature of business,
Manufacturing cycle and ---Business Cycle
1465 Issue of shares, debentures and Loan from IBRD are the
source of fixed capital but---Bank Overdraft
1466 --- creates liquidity
Secondary Market
1467 New issue of share is made in ---- market
Primary
1468 Money market deals in --Short term funds
1469
Business
enterprises,
Public
enterprises
Governments are the major --- in capital market
Borrowers

and

1470 --- securities are not required to be listed in the stock

exchange
Government
1471 IN case of --- quotation seller is entitled to receive the
dividend declared immediately after sale

Ex-dividend
1472 Return on equity capital ratio is obtained by dividing net
profit (after tax) less preference dividend by
Equity Capital
1473 Dividing net sales by average debtors would yield
Debtors turnover ratio
1474 SA translation has no effect on the current ratio
Bills receivable collected
1475 Total assets minus total outsider liabilities is
Net worth
1476 When the operating ratio is 91.5 the ratio of operating
profit to sale will be
8.5%
1477 The profit figure to be taken into account for calculating
return on shareholder equity is
PAT
1478 In calculating the earning per share the net profit is
divided by
Number of equity shares
1479 In computing the return on capital employed the profit
figure to be taken into account is
Net Profit after tax
1480 The return on capital employed shows how well the
management has used the funds supplied by
Shareholders and creditors
1481 Ownership capital includes
Shares
1482 Wealth maximisation goal is --- to profit maximisation
goal

Superior
1483 Decision about the allocation of business earnings is--dividend decision
1484 Decision involving make up of capital is
Capital Structure
1485 Use of the debt capital in the total capital of a business is
Financial Leverage
1486 If the ratio of the debt capital to the total capitalization
is low, the firm is treated with
Thick equity
1487 A situation where a company is not earning fair return on
its investment is called
Over Capitalization
1488 Under estimation of initial earnings results in ---Under Capitalization
1489 Investment in fixed asset is called
Fixed Capital
1490 In under capitalization real value is --Less than book value
1491 Profit maximization and --- are two conflicting objectives
of financial management
Wealth Maximization
1492 Financial management deals with ---- and utilization of
funds
Acquisition
1493 Decision involving capital budget are called

Capital Budgeting
1494 The total of current asset is called
Gross working capital
1495 Decision involving debt and equity proportion is called
Capital Structure
1496 Capitalization and ---- are the two constituents of
financial planning
Capital Structure
1497
Decision
regarding
calledCapitalization

the

amount

of

capital

is

1498 Financial leverage is also called ---Trading Equity

1499 The fund invested in current asset is called
Working Capital
1500 Fixed capital means investment is ---- assets
Fixed
1501 Working capital needs to meet the seasonal requirement
is called
Seasonal Capitalization
1502 Commercial paper is issued by
Banks
1503 Secondary market deals with ---Second hand securities
1504 Primary market deals with ---New Securities