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Quiz Test No 1

This document contains a quiz with multiple choice questions testing financial concepts. There are 16 questions covering topics like corporate structure, working capital management, capital structure, business entities, taxation, and financial statements. The questions have multiple choice answers and some include explanations of the answer.

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anthonyyapyap8
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36 views

Quiz Test No 1

This document contains a quiz with multiple choice questions testing financial concepts. There are 16 questions covering topics like corporate structure, working capital management, capital structure, business entities, taxation, and financial statements. The questions have multiple choice answers and some include explanations of the answer.

Uploaded by

anthonyyapyap8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz Test No 1

A232_BWFF_2033

1. In a typical corporate organisational structure, which of the following appropriately


portrays the upward chain of command?
A. The chief operations officer reports to the vice president of production.
B. The vice president of finance reports to the chairman of the board.
C. The chief executive officer reports to the president.
D. The controller reports to the chief financial officer.

2. Which of the following inquiries pertains to the realm of working capital management
decision-making?

A. Should the company issue new shares of stock or borrow money?


B. Should the company update or replace its older equipment?
C. How much inventory should be on hand for immediate sale?
D. Should the company close one of its current stores?

3. Which of the following words is characterized as an amalgam of a company's debt and


equity financing?
A. Working capital management
B. Cash management
C. Capital budgeting.
D. Capital structure.

4. A business that is owned by a single person and that person is responsible for all of the
debts of the business is called a__________.
A. corporation
B. sole proprietorship
C. limited partnership
D. limited liability company

5. The _____ tax rate applies to the next Ringgit of taxable income earned.
A. total
B. average
C. marginal
D. maximum

6. What is the DISADVANTAGE of sole proprietorship when compared to the corporation


(company)?
A. Inadequate profit sharing.
B. Sole proprietorship is subject to double taxation.
C. Ownership of the sole proprietor is easy to transfer.
D. The owner of sole proprietorship has unlimited liability.

7. The problem that results from potential conflicts of interest between the manager of a
company and the shareholders is known as __________.
Quiz Test No 1
A232_BWFF_2033

A. agency problem
B. agency relationship
C. corporation interest
D. shareholders interest

8. Purchasing shares of a company that are issued for the first time publicly would be
considered as __________.
A. a private placement
B. an initial public offering (IPO)
C. a secondary market transaction
D. a commodity market transaction
9. When evaluating the timing of a project's projected cash flows, a financial manager is
analyzing:
A. the amount of each expected cash flow.
B. only the start-up costs that are expected to require cash resources.
C. only the date of the final cash flow related to the project.
D. when each cash flow is expected to occur
10. ___________ on the balance sheet represents the entire book value of the residual
ownership of a corporation.
A. Retained earnings.
B. Total current assets
C. Shareholders’ equity
D. Total long-term liabilities

11. A 30-year bond issued by Duta Mas holding in 1994 would now trade in the
_______market.

A. primary capital
B. primary money
C. secondary money
D. secondary capital

12. A decrease in net working capital occurs when ____________

A. selling inventories at a loss


B. using cash to pay a supplier.
C. collecting accounting receivables
D. purchasing inventory on credit
13. C stock has costs of goods sold of RM11,518, interest expense of 315, dividends of
RM320, depreciation of RM811, and a change in retained earnings of RM116. What is
taxable income given a tax rate of 11 percent?
Quiz Test No 1
A232_BWFF_2033

A. RM955.38
B. RM967.78
C. RM499.33
D. RM489.88

Answer: C
Explanation: Net income = RM116 + 320
Net income = RM436
Taxable income = RM436/ (1 − .11)
Taxable income = RM 489.88

14. lil Sdn Bhd has sales of RM567,000 with costs of RM163,000. Interest expense is
RM16,000 and depreciation is RM12,000. The tax rate is 11 percent. What is net income
(loss)?

A. RM142,750
B. RM323,240
C. RM359,000
D. RM334,640

Answer: B
Explanation: Net income = (RM567,000 − 163,000 − 16,000 − 12,000) (1 − .11)
Net income = RM334640

15. EOE Sdn Bhd.’s income statement shows depreciation of RM2,911, sales of RM1,415,
interest paid of RM1,282, net income of RM1,374, and costs of goods sold of RM16,408.
What is the amount of the noncash expenses?

A. RM1,374
B. RM1,282
C. RM1,415
D. RM2,911

Answer: D
Explanation: Noncash expenses = Depreciation = RM2.911

16. FIN corporation has total sales of RM911,400 and costs of RM787,300. Depreciation is
RM52,600 and the tax rate is 21 percent. The firm is all-equity financed. What is the
operating cash flow of FIN?

A. RM108,410
B. RM108,320
C. RM109,924
D. RM109,085

Explanation: EBIT = RM911,400 − 787,300 − 52,600


EBIT = RM71,500

Tax = RM71,500(.21)
Tax = RM15,015
Quiz Test No 1
A232_BWFF_2033

OCF = RM71,500 + 52,600 − 15,015


OCF = RM109,085

17. MIRI Auto Parts had beginning net fixed assets of RM118,470 and ending net fixed
assets of RM119,411. During the year, assets with a book value of RM6,943 were sold.
Depreciation for the year was RM22,122. What is the amount of net capital spending
(NCS)?

A. RM23,063
B. RM40,706
C. RM58,218
D. RM65,161

Explanation: Net capital spending = RM119,411 − 118,470 + 22,122


Net capital spending = RM23063

18. On Jan 01, 2022, the firm had current assets of RM121,306 and current liabilities of
RM124,509. At the end of the same year, the current assets were RM122,418 and the
current liabilities were RM103,718. What is the change in net working capital?

A. −RM19,679
B. −RM11,503
C. RM19,387
D. RM21,903

Explanation: Change in NWC = (RM122,418 − 103,718) − (RM121,306 − 124,509)


Change in NWC = RM21,903

19. In 2023, the long-term debt of a firm was RM72,918 and total debt was RM138,407. In
2022, long-term debt was RM68,219 and total debt was RM145,838. The interest paid
was RM6,430. What is the amount of the cash flow to creditors?

A. RM1,731
B. −RM1,001
C. RM11,129
D. RM13,861

Answer: C
Explanation: CFC = RM6,430 − (68,219 − 72,918)
CFC = RM11,129

16. Based on the following information, calculate the OPERATING CASH FLOW for this
firm.

Items Amount
(RM)
Revenue
4,116
Depreciation
Quiz Test No 1
A232_BWFF_2033

319
Selling and administrative expenses
554
Interest expense
162
Dividend
75
Cost of goods sold
2,354
Taxes
186

A. RM795
B. RM1,022
C. RM1,118
D. RM1,147

Calculations:
OCF = 4,116 − 2,354 − 554 − 186
OCF = 1,022

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