Credit Analysis & Research Ltd (CARE Ratings) is a full-service rating company that offers a wide range of rating and grading services across sectors. The company is recognized by the Securities and Exchange Board of India (Sebi) Government of India (GoI) and Reserve Bank of India (RBI) etc.
32. Which of the following is not a part of the rating methodology?
Business Analysis
Financial Analysis
Management Evaluation
Subscriber Evaluation
Answer.4. Subscriber Evaluation
Explanation:
CRISIL’s analysis of each credit is carried out by a multi-member rating team. The analysis is based on information obtained from the issuer, and on an understanding of the business environment in which the issuer operates. It is conducted within the framework of clearly delineated rating criteria.
The part of CRISIL’s rating methodology is
Business Analysis
Financial Analysis
Management Evaluation
33. ICRA was promoted by ______ jointly with other leading investment institutions, commercial banks, and financial service companies.
ICICI
IFCI
IDBI
LIC
Answer.2. IFCI
Explanation:
TCRA (Information and Credit Rating Services ltd): lCRA is promoted by IFCI and 21 other shareholders comprising foreign and nationalized banks and Indian insurance companies. Established in 1991, ICRA is the second rating agency in India. Services offered by ICRA can be broadly classified as analytical services, advisory services and investment services.
34. CRISIL was set up in which year?
1988
1987
1986
1985
Answer.1. 1988
Explanation:
CRISIL (Credit Rating Information Services of India Ltd): CRISIL was jointly set up in 1988, by India’s leading financial institutions, ICICI and UTI. Its other shareholders include LIC, SBI, HDFC, GIC, etc went public and to date is India’s leading only listed credit rating agency. The services offered are broadly classified as rating information services, infrastructure services, and consultancy.
35. A statement demonstrating the movement of funds into and out of the business during the course of the accounting period is known as ___________
Cash Flow Statement
Fund Flow Statement
Adjusted Profit & Loss Statement
Statement of Changes in Working Capital
Answer.2. Fund Flow Statement
Explanation:
A statement demonstrating the movement of funds into and out of the business during the course of the accounting period is known as Fund Flow Statement.
A fund flow statement reveals the reasons for changes or anomalies in the financial position of a company between two balance sheets. Fund flow statements portray the inflow and outflow of funds – or the sources and applications of funds over a particular period.
36. Analysis of funds is rightly called an Analysis of __________
Working Capital
Current Assets
Current Liabilities
None of the above
Answer.1. Working Capital
Explanation:
Analysis of funds is rightly called an Analysis of Working Capital. The working capital analysis is used to determine the liquidity and sufficiency of current assets in comparison to current liabilities.
37. Which of the following rules stands true while preparation of Schedule of changes in working capital?
An increase in current assets increases working capital.
An increase in current assets decreases working capital.
An increase in current liabilities decreases working capital.
Both 1 and 3
Answer.4. Both 1 and 3
Explanation:
Rules for preparing the statement of changes in working capital:
(i) Increase in a current asset, results in an increase (+) in “working capital”.
(ii) Decrease in a current asset; result in decreases (-) in “working capital”.
(iii) Increase in a current liability, results in a decrease (-) in “working capital”.
(iv) Decrease in a current liability, results in an increase (+) in “working capital”.
38. Among the following items, which represents the source of funds?
Increase in Capital
Borrowing / Loan
Profit from Business Operations
All of the above
Answer.4. All of the above
Explanation:
Companies always seek sources of funding to grow their business. Funding, also called financing, represents an act of contributing resources to finance a program, project, or need. Funding can be initiated for either short-term or long-term purposes. The different sources of funding include:
Profit from Business Operations
Debt capital
Equity capital
Increase in Capital
39. Fund Flow Statement is also known as:
Statement of Funds Flow
Statement of Sources and Application of Funds
Statement of Sources and Uses of Funds
All of the above
Answer.2. Statement of Sources and Application of Funds
Explanation:
Funds flow statement is also known as the statement of sources and application of funds. A fund flow statement reveals the reasons for changes or anomalies in the financial position of a company between two balance sheets. Fund flow statements portray the inflow and outflow of funds – or the sources and applications of funds over a particular period.
40. Which of the following are sources of funds?
Issue of Bonus Shares
Issue of Shares against the purchase of Fixed Assets
Conversion of Debentures into Shares
None of the above
Answer.4. None of the above
Explanation:
Companies always seek sources of funding to grow their business. Funding, also called financing, represents an act of contributing resources to finance a program, project, or need. Funding can be initiated for either short-term or long-term purposes. The different sources of funding include:
Profit from Business Operations
Debt capital
Equity capital
Increase in Capital
41. Which of the following statements is true?
A. If the amount of goodwill increases during the current year, the difference is treated as a purchase of goodwill.
B. If the amount of goodwill decreases during the current year, It will be treated as written off.
Only A
Only B
Both A and B
None of the above
Answer.3. Both A and B
Explanation:
Goodwill is calculated by taking the purchase price of a company and subtracting the difference between the fair market value of the assets and liabilities.
If the amount of goodwill increases during the current year, the difference is treated as a purchase of goodwill.
If the amount of goodwill decreases during the current year, It will be treated as written off.
42. Which of the following are treated as long-term investments?
Non-current Investments
Trade Investments
Sinking Fund Investments
All of the above
Answer.4. All of the above
Explanation:
A long-term investment is an account a company plans to keep for at least a year such as stocks, bonds, real estate, and cash. The account appears on the asset side of a company’s balance sheet. Long-term investors are generally willing to take on more risk for higher rewards.
The example of long term investments are
Non-current Investments
Trade Investments
Sinking Fund Investments
43. The balance of fixed assets of Breej Ltd. at the end of 2018 and 2019 were Rs 5,70,800 and Rs 6,15,300. During the year 2019, machinery costing Rs 60,000 was sold. Determine the purchase of fixed assets.
44. For Ram Industries, the balance of the property has been Rs. 20,000 and Rs 17,000 in 2018 and 2019 respectively. The profit on sale of property of Rs 2000 is credited to Capital Reserves Account. New property costing Rs 5000 was bought in 2019. Determine sale proceeds for the property.
Rs. 3,000
Rs. 10,000
Rs. 7,000
Rs. 15,000
Answer.2. Rs. 10,000
Explanation:
The balance of property at cost for the year 2013 = RS 20,000 (opening balance)
The balance of property at cost for the year 2014 = Rs. 17,000 (closing balance)
profit on sale of property is credited to Capital Reserves Account = Rs 2000 (profit on sale of asset)
New property costing bought in 2014= Rs 5000 (new additions)
The profit on sale proceeds from property for the year 2014 is
= 20,000 + 2,000 + 5,000 – 17,000
= Rs. 10,000
45. For Meghal Industries Lt opening balance for Provision for Taxation is Rs. 18,000 and closing balance is Rs. 15,000. During the year Taxed paid wereRs. 10,000. What is the current year’s Provision for Taxation made from the profit?
Rs. 3,000
Rs. 13,000
Rs. 7,000
Rs. 23,000
Answer.3. Rs. 7,000
Explanation:
Provision for Taxation made from the profit = Closing balance + tax paid – Provision for taxation
