Professional Knowledge Quiz for BOI Credit officer & PNB Credit Manager 2022- 13th May

Q1. An example of fixed asset is
(a) Live stock
(b) Value stock
(c) Income stock
(d) All of the above
(e) None of these

Q2. A market economy is one in which
(a) Products are sold
(b) Products and factors are bought
(c) Products and factors are bought and sold
(d) All of the above
(e) None of these

Q3. For a profitable firm, total sources of funds will always………total uses of funds.
(a) Be equal to
(b) Be greater than
(c) Be less than
(d) Have no consistent relationship to
(e) None of the above

Q4. An example of a liquidity ratio is _______.
(a) Fixed asset turnover
(b) Current ratio
(c) Acid test or quick ratio
(d) A and C
(e) B and C

Q5. __________ a snapshot of the financial condition of the firm at a particular time.
(a) The balance sheet provides
(b) The income statement provides
(c) The statement of cash flows provides
(d) All of the above provide
(e) None of the above provides

Q6. __________ of the cash flow generated by the firm’s operations, investments and financial activities.
(a) The balance sheet is a report
(b) The income statement is a report
(c) The statement of cash flows is a report
(d) The auditor’s statement of financial condition
(e) None of the above is a report

Q7. A firm has a higher asset turnover ratio than the industry average, which implies
(a) The firm has a higher P/E ratio than other firms in the industry.
(b) The firm is more likely to avoid insolvency in the short run than other firms in the industry.
(c) The firm is more profitable than other firms in the industry.
(d) The firm is utilizing assets more efficiently than other firms in the industry.
(e) The firm has higher spending on new fixed assets than other firms in the industry

Q8. Wages paid for erecting machinery is
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Wages Expenditure
(d) Deferred Revenue Expenditure
(e) None of these

Q9. NNP stands for?
(a) Net national product.
(b) Net nominal product.
(c) Net National price.
(d) Net nominal price.
(e) None of these

Q10. The return which the company pays on borrowed funds is termed as
(a) Dividend
(b) Interest
(c) Bonus
(d) All of the above
(e) None of the above

Solutions

S1. Ans. (a)
Sol. Live stock is an example of fixed asset. Other than live stock in options are variable assets which may vary from time to time.

S2. Ans. (b)
Sol. A market economy is one in which products and factors are bought.

S3. Ans. (a)
Sol. For a profitable firm, total sources of funds will always be equal to total uses of funds.

S4. Ans. (d)
Sol. Both B & C
An example of a liquidity ratio is Current ratio and Acid test or quick ratio.

S5. Ans. (a)
Sol. The balance sheet of a company provides a snapshot of the financial condition of the firm at a particular time.

S6. Ans. (c)
Sol. The statement of cash flows is a report of the cash flow generated by the firm’s operations, investments and financial activities.

S7. Ans. (d)
Sol. A firm has a higher asset turnover ratio than the industry average which indicates clearly that the firm is utilizing assets more efficiently than most of the other firms in the industry.

S8. Ans. (b)
Sol. Wages paid for erecting machinery is Capital expenditure.

S9. Ans. (a)
Sol. NNP stands for Net National Product. NNP refers to gross national product which is the total market value of all final goods and services produced by the factors of production of a country minus depreciation.

S10. Ans. (b)
Sol. The return which the company pays on borrowed funds is termed as Interest.