46. Which of the following are Non-current Assets?
Land, Building and Plant
Bills Receivable
Debtors
Pre-paid Expenses
Answer.1. Land, Building and Plant
Explanation:
Noncurrent assets are a company’s long-term investments that are not easily converted to cash or are not expected to become cash within an accounting year. Examples of noncurrent assets include investments, intellectual property, real estate, land, building, and equipment.
47. Which of the following are Current Liabilities?
Sundry Creditors
Bank Overdraft
Outstanding Salaries
All of the Above
Answer.4. All of the Above
Explanation:
Current liabilities are the obligations of the company which are expected to get paid within the period of one year and include liabilities such as Accounts payable, Sundry Creditors, short-term loans, Outstanding Salaries, Interest payable, Bank overdraft, and other such short-term liabilities of the company.
48. When a part of the Fixed Assets is sold during the year, the Profit on sale is shown on the credit side of which Account?
Adjusted Profit and Loss Account
Profit and Loss Account
Fixed Assets Accounts
Liabilities Accounts
Answer.1. Adjusted Profit and Loss Account
Explanation:
When a part of the Fixed Assets is sold during the year, the Profit on sale is shown on the credit side of the Adjusted Profit and Loss Account Account.
Profit and loss adjustment accounts are prepared to record that transactions or omissions and errors that were left while preparing the final accounts and they are found after the final accounts have been prepared and the profits distributed among the partners.
49. The Funds Flow and Cash Flow statements fail to give a clear idea about the profitability of the company.
True
False
Can’t say
None
Answer.1. True
Explanation:
A company’s cash flow and fund flow statements reflect two different variables during a specific period of time. The cash flow will record a company’s inflow and outflow of actual cash (cash and cash equivalents). The fund flow records the movement of cash in and out of the company.
50. Among the following items which item is shown on the debit side of the adjusted Profit and loss account?
Depreciation and other Non-cash Adjustments
Appropriation of Profit
Provision for Taxation
All of the Above
Answer.4. All of the Above
Explanation:
The item is shown on the debit side of the adjusted Profit and loss account are
Depreciation
Fictitious assets written off
Intangible assets written off
Loss on sale of fixed assets
Loss on sale of long-term investments
Appropriation of profits to reserves/funds To Interim dividend
Proposed dividend To Provision for taxation
Balance c/d (closing balance)
51. Among the following items which does NOT represent the Application of Funds?
Fixed Asset
Goodwill
Debentures
Repayment of loan.
Answer.3. Debentures
Explanation:
A debenture is like a debt which is a source of the fund not the application of fund. If debentures are issued, this will increase the sources. When debenture is paid off, it’s an application of fund.
52. Until February 1973, which one of the following was prevalent in the World Monetary System?
Free Floating Exchange Rate System
Adjustable Peg Exchange Rate System
Benchmarking Exchange Rate System
None of the above
Answer.2. Adjustable Peg Exchange Rate System
Explanation:
Until February 1973, Adjustable Peg Exchange Rate System was prevalent in the World Monetary System.
An adjustable peg exchange rate is a system where a currency is fixed to a certain level against another strong currency such as the Dollar or Euro. Usually, the peg involves a degree of flexibility of 2% against a certain level.
53. Which one of the following is NOT referred to as ‘Major’ or ‘Hard’ Currency?
US Dollar
French Frank
Euro
Indian Rupee
Answer.4. Indian Rupee
Explanation:
Indian Rupee is NOT referred to as ‘Major’ or ‘Hard’ Currency.
A hard currency generally originates in a country that has a robust economy and stable political environment. Examples of hard currencies are the U.S. dollar, British pound, European Euro, Swiss Franc, and Japanese yen. Hard currencies are more valuable than the currencies of other countries.
54. Rs. 75.17/USD is which type of quotation?
Indirect Quote
Direct Quote
Bilateral Quote
Cross Quote
Answer.2. Direct Quote
Explanation:
Rs. 75.17/USD is direct Quote. A direct quote is a foreign exchange rate quoted as the domestic currency per unit of the foreign currency.
55. In a two-way foreign exchange quotation, the difference between ask and bid prices is called ______.
Difference
Margin
Spread
None of the above
Answer.3. Spread
Explanation:
In a two-way foreign exchange quotation, the difference between ask and bid prices is called Spread.
The bid price refers to the highest price a buyer will pay for a security. The ask price refers to the lowest price a seller will accept for security. The difference between these two prices is known as the spread; the smaller the spread, the greater the liquidity of the given security.
56. Below data is available: Spot Exchange Rate 6 Month’s Forward Rate Rs./USD 75.17 Rs. 75.00 So, the forward rate is at _____
Premium
Discount
At Par
None of the above
Answer.2. Discount
Explanation:
A forward interest rate acts as a discount rate for a single payment from one future date and discounts it to a closer future date. Theoretically, the forward rate should be equal to the spot rate plus any earnings from the security (and any finance charges).
57. From the data given below which option is true? Spot 1 month’s Forward Rs./GBP 94.85 94.95
1 month’s forward is at 1.27% premium
1 month’s forward is at 0.11% premium
1 month’s forward is at 1.27% discount
1 month’s forward is at 0.11% discount
Answer.1. 1 month’s forward is at 1.27% premium
Explanation:
A spot transaction allows a company to buy or sell currency as needed. The spot market is highly liquid and prices are easily determined.
Spot 1 month’s Forward Rs./GBP 94.85 94.95 is 1 month’s forward is at 1.27% premium.
58. The rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies are derived when a quote of home currency (or desired currency) to any other currency is not available in the Foreign Exchange market is called _____.
Direct Quote
Exchange Rate
Cross Rate
Dependent Rate
Answer.3. Cross Rate
Explanation:
The rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies are derived when a quote of home currency (or desired currency) to any other currency is not available in the Foreign Exchange market is called Cross Rate.
59. Which of the below-mentioned contract is a standardized contract?
Futures Contract
Forward Contract
Both a and b
None of the above
Answer.1. Futures Contract
Explanation:
A futures contract is a standardized contract. Because futures are regulated, they come with less counterparty risk than forward contracts. These contracts are also standardized, which means, they come with set terms and expiry dates.
60. An Option that can be exercised only on the maturity date is known as ______.
Put Option
American Option
European Option
Call Option
Answer.3. European Option
Explanation:
An Option that can be exercised only on the maturity date is known as the European Option.
A European option is a version of an options contract that limits execution to its expiration date. In other words, if the underlying security such as a stock has moved in price, an investor would not be able to exercise the option early and take delivery of or sell the shares.
