ACC501 Business Finance Quiz No.1 Solution and Discussion Fall 2014 Last Date is November 13, 2014

Q No 1 Which of the following refers to the cash flows that result from the firm’s day-to-day activities of producing and selling?

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Operating Cash Flows Correct

Investing CAsh Flow

Financing Cash Flow

Q No 2 Double taxation of earning is the major disadvantage of which of the following form of business?

corpration Correct

Q NO 3 The most important item that can be extracted from financial statements is the actual __________ of the firm.

Networking CApital Correct

CAsh Flow

Net Present Value

None is correct

Q No 3 In corporate form of business, which of the following is the primary objective of shareholders?
Maximize current year income
Delay in payment to supplier

Reduce the expenditure on inventory maintenance
Maximization of shareholder wealth Correct

Q No 5 Business Finance addresses which of the following?
Capital budgeting
Capital structure

Working Capital management

All are correct Correct

Q NO 6 Which of the following item(s) is(are) not included while calculating Operating Cash Flows?


all is correct Correct

Q No 7 Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?

Partnership Correct

Q No 8 Which of the following equation is known as Cash Flow (CF) identity?
: CF from Assets = CF to Creditors – CF to Stockholder
CF from Assets = CF to Stockholders – CF to Creditors
: CF to Stockholders = CF to Creditors + CF from Assets
CF from Assets = CF to Creditors + CF to Stockholder Correct

Q No 9 Mr. A has just recently started a business by investing a capital of Rs. 500,000. He will be the only owner of the business and also enjoy all the profits of the business. Which type of business is being employed by Mr. A?

Solo Partnership CorreT

Q No 10 The most common application of term “Finance” involves raising money to acquire_________.

Current Assect

Fix Assect


all are correct Correct