This quiz works best with JavaScript enabled. Home > Finance > Corporate Finance > Working Capital Management – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Working Capital Management Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Long term debt can be classified as ..... A) Temporary source. B) Permanent asset. C) Spontaneous source. D) Temporary asset. E) Permanent source. Show Answer Correct Answer: E) Permanent source. 2. If AA company have Non current asset RM1, 000, Account receivable RM1, 000 and inventories RM500. The company also get source of financing from listed preferred share RM1, 500 and short term debt from bank RM1, 000. What is the approach being used by AA company? A) Hedging approach. B) Conservative approach. C) Aggressive approach. D) None of above. Show Answer Correct Answer: B) Conservative approach. 3. Out of the following, what is not true in respect of factoring A) Continuous arrangement between factor and saller. B) Sales of receivable to the factor. C) Factor provide cost free finance to seller. D) None of the above. Show Answer Correct Answer: C) Factor provide cost free finance to seller. 4. Aggressive funding strategies, apart from producing lower funding costs than conservative funding strategies, also result in lower company risk. The statement: A) Salah. B) Correct. Show Answer Correct Answer: A) Salah. 5. Accrued expenses can be classified as ..... A) Temporary source. B) Spontaneous source. C) Permanent source. D) Temporary asset. E) Permanent asset. Show Answer Correct Answer: B) Spontaneous source. 6. A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days. Which of the following can be concluded on the basis of this information? A) Most customers pay on time. B) The average customer pays two days late. C) All customers have paid within 32 days of purchase. D) All customers pay late. Show Answer Correct Answer: B) The average customer pays two days late. 7. Working capital, sometimes called gross working capital is defined as current assets minus current liabilities. A) False. B) True. Show Answer Correct Answer: B) True. 8. Which of the following is a part of working capital? A) Machinery. B) Inventory. C) Debentures. D) Land and Building. Show Answer Correct Answer: B) Inventory. 9. Which factor is not typically considered when determining level of working capital? A) Long-term capital structure. B) Seasonality. C) Type of business. D) Volume of sales. Show Answer Correct Answer: A) Long-term capital structure. 10. What is cost of stock of Work in progress in Q.1 of test A) 750, 000. B) 570, 000. C) 75000. D) None of these. Show Answer Correct Answer: A) 750, 000. 11. When Core Working Capital plus some part of temporary is financed from long term funds then it is known as A) Aggressive approach. B) Conservative approach. C) Matching approach. D) None of these. Show Answer Correct Answer: B) Conservative approach. 12. What is value of Creditors for expenses in Q.1 of test A) 25, 230. B) 23, 520. C) 23, 250. D) None of these. Show Answer Correct Answer: C) 23, 250. 13. What is value of Debtors in Q.1 of test A) 201, 000. B) 112, 000. C) 102, 000. D) None of these. Show Answer Correct Answer: C) 102, 000. 14. What is the meaning of the term 2/10 net 30? A) If the invoice is paid within 10 days, a 2% discount can be taken. If the invoice is paid between 11 and 29 days, a 1% discount can be taken. After 30 days, the full invoice is due. B) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise the full invoice is due in 30 days. C) If the invoice is paid within 2 days, a 10% discount can be taken; otherwise a 2% discount can be taken if the invoice is paid in 30 days. D) If the invoice is paid within 10 days, a 2% discount can be taken; otherwise the full invoice is due in 30 days. Show Answer Correct Answer: D) If the invoice is paid within 10 days, a 2% discount can be taken; otherwise the full invoice is due in 30 days. 15. ) If a supplier is offering trade credit of 1/10 net 30, and a buyer chooses not to take the discount, when should they pay, assuming that they wish to stay on good terms with the supplier? A) On day 30. B) On day 10. C) Any time after day 30. D) Any time before day 10. Show Answer Correct Answer: A) On day 30. 16. What are the aspect of working capital management? A) Inventory management. B) Cash management. C) Receivable management. D) All of above. Show Answer Correct Answer: D) All of above. 17. Which of the following is related to Receivable management A) Cash Budget. B) EOQ METHOD. C) Ageing schedule. D) All of the above. Show Answer Correct Answer: C) Ageing schedule. 18. Cost of insurance and taxes are included in A) Cost of ordering. B) Carrying cost. C) Setup cost. D) Cost of shortage. Show Answer Correct Answer: B) Carrying cost. 19. Which of the following is not a factor that affects a company's working capital needs? A) Supplier credit terms. B) Economic conditions. C) Management's salary. D) Seasonality of sales. Show Answer Correct Answer: C) Management's salary. 20. Account receivable can be classified as ..... A) Spontaneous source. B) Permanent asset. C) Temporary asset. D) Permanent source. E) Temporary source. Show Answer Correct Answer: C) Temporary asset. 21. The following classes of costs arre usually involved in inventory decision except A) Machining cost. B) Cost of shortages. C) Cost of ordering. D) Carrying cost. Show Answer Correct Answer: A) Machining cost. 22. Debt to total assets of a firm is 0.2. the debt to equity ratio will be A) .75. B) .25. C) .8. D) 1. Show Answer Correct Answer: B) .25. 23. The economic order quantity formula is taken used A) Vector calculus. B) Integral calculus. C) Multivariate analysis. D) Differential calculus. Show Answer Correct Answer: D) Differential calculus. 24. What is Cost of stock Raw Material in Q.1 of test A) 414, 000. B) 144, 000. C) 17, 28000. D) None of these. Show Answer Correct Answer: B) 144, 000. 25. What are people who or sell in market to make profits called? A) Hedgers. B) Speculators. C) Arbitrators. D) None of the above. Show Answer Correct Answer: B) Speculators. 26. The operating cycle will be determined by ..... A) The length of time for collecting trade receivables and the time for paying trade payables. B) The length of payment of accounts payable and the length of inventory life. C) The length of the collection of trade receivables and the length of the inventory life. D) Not the correct answer. Show Answer Correct Answer: C) The length of the collection of trade receivables and the length of the inventory life. 27. Account payable can be classified as ..... A) Spontaneous source. B) Temporary source. C) Permanent source. D) Temporary asset. E) Permanent asset. Show Answer Correct Answer: A) Spontaneous source. 28. System of procuring goods when required, is known as A) Just in time. B) Always better control. C) Free of board. D) Economic order quantity. Show Answer Correct Answer: A) Just in time. 29. Assume a company's current ratio is less than 1. If the company pays current liabilities with cash, the new current ratio will ..... A) Cannot be determined with the information given. B) Remain the same. C) Decrease. D) Increase. Show Answer Correct Answer: C) Decrease. 30. Ageing schedule incorporated the relationship between A) Creditors and days outstanding. B) Debtors and days outstanding. C) Average age of directors. D) Average age of all employees. Show Answer Correct Answer: B) Debtors and days outstanding. ← PreviousNext →Related QuizzesFinance QuizzesWorking Capital Management Quiz 1Working Capital Management Quiz 2Working Capital Management Quiz 3Working Capital Management Quiz 5Working Capital Management Quiz 6Working Capital Management Quiz 7Working Capital Management Quiz 8Working Capital Management Quiz 9Working Capital Management Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books