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Test: Financial Management- Assertion & Reason Type Questions- 2 - Commerce MCQ


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15 Questions MCQ Test Business Studies (BST) Class 12 - Test: Financial Management- Assertion & Reason Type Questions- 2

Test: Financial Management- Assertion & Reason Type Questions- 2 for Commerce 2024 is part of Business Studies (BST) Class 12 preparation. The Test: Financial Management- Assertion & Reason Type Questions- 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Financial Management- Assertion & Reason Type Questions- 2 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Financial Management- Assertion & Reason Type Questions- 2 below.
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Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 1

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial management process begins with the financial planning and decisions.

Reason (R): Financial management process does not need feedback system.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 1
The finance manager begins by reviewing corporate objectives to determine the funds the company needs. The finance manager plans a strategy based on whether the ending cash is positive or negative. If cash inflows exceed cash outflows the company will have cash to invest.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 2

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Debt and equity differ significantly in their cost and riskiness for the firm.

Reason (R): Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 2
The cost of debt is lower than the cost of equity for a firm because the lender’s risk is lower than the equity shareholder’s risk, since the lender earns an assured return and repayment of capital and, therefore, they should require a lower rate of return. There is no such compulsion in case of equity, which is therefore, considered risk less for the business.
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Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 3

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): The value of the concern is determined only by profitability.

Reason (R): Financial decisions which increase the profitability will decrease the value of the firm.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 3
Profits may be the most popular metric of measuring the success of a business venture but it is by no means the only (or the best) method for measuring success. Most start-ups are not profitable at the beginning of operation and many are not profitable for years.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 4

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial planning includes determining the objectives, policies, procedures and programmes to deal with financial activities.

Reason (R): Financial planning facilitates in developing a sound capital structure which gives maximum returns to shareholders.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 4
Financial planning involves estimating the amount of capital to be raised; determining the pattern of financing i.e., deciding on the form and proportion of capital to be raised; and formulating the financial policies and procedures for procurement, allocation and effective utilisation of funds.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 5

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial management provide the base for success of promotion.

Reason (R): Sound financial plan is very necessary for the success of business enterprise.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 5
Financial management is at the heart of running a successful business. It affects every aspect, from managing cash flow and tracking business performance to developing plans that ensure that business owners can make the most of opportunities.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 6

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial planning includes both short-term as well as long-term planning.

Reason (R): Short-term planning focuses on capital expenditure programmes.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 6
Long-term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short Term planning covers short-term financial plan called budget.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 7

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): The need for financial planning in a concern can be over-emphasised.

Reason (R): Financial planning helps to provide ahead for any more funds, if required.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 7
A financial plan acts as a guide as you go through life's journey. Essentially, it helps you be in control of your income, expenses and investments such that you can manage your money and achieve your goals. This is where financial planning becomes essential.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 8

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial planning ensures that the firm does not raise resources unnecessarily.

Reason (R): Excess funding is almost as bad as inadequate funding.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 8

Excess funding is almost as bad as inadequate funding. Even if there is some surplus money, good financial planning would put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.

Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 9

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): A business firm is usually a profit earning concern.

Reason (R): Its earnings depend upon the efficient utilisation of funds.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 9
Profit is the positive financial gain your business makes after you've subtracted all your expenses. It is about more than just making money, it's also about the ability to use surplus funds to invest in and grow your business in the future.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 10

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial planning tries to link the present with the future.

Reason (R): Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 10
Financial planning means deciding in advance how much to spend and on what to spend according to the funds at your disposal. It enables the management to foresee the funds requirements both the quantum as well as the timing.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 11

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Effective and efficient management of finance enables the firm to prosper and grow.

Reason (R): Without adequate finance, business can survive only for a short time.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 11
Through good financial management, you will be able to identify areas which are underperforming and put steps in place for improvement. A good understanding of where your business is making money, or worse haemorrhaging it, will help you to spot new market trends.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 12

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Higher the flotation cost, less attractive the source.

Reason (R): The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 12
If the floatation cost is high, it will be more expensive for the company to raise funds, because the company ends up spending much higher money than it would if floatation cost less.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 13

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Financial management is an imaginative function.

Reason (R: Financial management, is one of the functional areas of management.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 13
Functional Areas of Management: Personnel Management, Financial Management, Marketing Management, Production Management and a Few Others. Functional areas of management mean the sum total of all those activities which are performed in an organisation to achieve the objectives of the organisation.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 14

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Finance fulfills only the beginning requirement of the business.

Reason (R): Finance is needed only to promote business.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 14
Business Finance means the funds and credit employed in the business. Finance is the foundation of a business. Finance requirements are to purchase assets, goods, raw materials and for the other flow of economic activities. Let us understand in-depth the Meaning of Business Finance.
Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 15

Direction: In the questions given below are two statements labelled as Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Finance is the life blood of business.

Reason (R): Finance very essential for the smooth running of the business.

Detailed Solution for Test: Financial Management- Assertion & Reason Type Questions- 2 - Question 15
Money is required to ensure the conduct of the daily business activities. Even individuals spend money daily so that their activities are not hampered. Thus Finance is regarded as the life blood of a business enterprise, the success of an organization largely depends on efficient management of its finances.
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