Quiz no: 06 business finance acc 501-winter 2016


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Business Finance

ACC 501-WINTER 2016

Max Marks: 10

                                                                                                        Marks obtained:





Note: Highlight the correct answer, out of the four choices given for each question.   


1.  The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale is called ————–.

a)            Operating Cycle

b)            Cash Cycle

c)            Receivable period

d)            Inventory period


2.            Which of the following does not affect cash cycle of a company?

a)            Inventory period

b)            Accounts receivable period

c)            Accounts payable turnover

d)            None of the given option


3.            Mr.Munir purchased goods of Rs.100,000 on June01, 2006 from Zeeshan and brothers on credit terms of 3/10, net 30. On June 09 Mr. Munir decided to make payment to Zeeshan and brothers. How much he would pay to Zeeshan and brothers.

a)            100,000

b)            97,000

c)            103,000

d)            50,000


4.            A firm has cash cycle of 100 days. It has an inventory turnover of 5 and receivable turnover of 2. What would be its accounts payable turn over?

a)            3.347 approximately

b)            5.347 approximately

c)            2.347 approximately

d)            6.253 approximately






5.            During the financial year 2005-2006 ended on June 30, the cash cycle of Climax company was 150 days, and its payable turnover was 5. What was the operating cycle of the company during 2005-2006?

a)            234 days

b)            223 days

c)            245 days

d)            230 days


6.            Which of the following is the cheapest source of financing available to a firm?

a)            Bank loan

b)            Commercial papers

c)            Trade credit

d)            None of the given options.


7.            Which of the following illustrates the use of a hedging (or matching) approach to financing?

a)            Short-term assets financed with long-term liabilities.

b)            Permanent working capital financed with long-term liabilities.

c)            Short-term assets financed with equity.

d)            All assets financed with a 50 percent equity, 50 percent long-term debt mixture


8.            ————— is an incentive offered by a seller to encourage a buyer to pay within a stipulated time.

a)            Cash discount

b)            Quantity discount

c)            Float discount

d)            All of the given options