Tag: public finance, budget and fiscal policy

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Questions Related to public finance, budget and fiscal policy

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

The meaning of 'fund' in funds flow statement is ___________.

  1. Cash

  2. Net working capital

  3. Gross working capital

  4. Profit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Fund flow statement shows that the flow of funds during the year. The meaning of funf in fund flow statement is net working capital.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Which of the following is not a motive for holding cash?

  1. Transaction purposes

  2. Precaution against unexpected expenses

  3. Extending loans to group comanies

  4. Speculation purposes

  5. Mismatch between cash inflows and outflows.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The following points highlight the five main motives for holding cash balances in a firm. The motives are: 1. Transaction Motive 

2. Precautionary Motive 
3. Speculative Motive 
4. Future Requirements 
5. Compensating Balances.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Arrange the following steps involved in capital budgeting in order of their occurrence:
i. Project selection
ii. Project appraisal
iii. Project generation
iv.Follow up
v. Project execution

  1. $ii, iii, i, v, iv$

  2. $iii, ii, i, v, iv$

  3. $i, iii, ii, v, iv$

  4. $i, ii, iii, v, iv$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Steps involved in capital budgeting in order of their occurrence:-

1. Identify and evaluate potential opportunities
2.Project appraisal

3.Project selection
4.Project execution
5.Follow up

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Incremental cash flows in relation to capital budgeting decisions refer to the ____________.

  1. Cash flows which are increasing over a period of time

  2. Incremental change in cash flows if the project is extended one year beyond its life period

  3. Cash flows which are directly attributable to the investment

  4. Difference between cash inflow streams and the initial outflow

  5. Comparision between any two cash outflows in a project's life period
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Incremental cash flows are the net additional cash flows generated by a company by undertaking a project. Capital budgeting decisions are based on comparison of a project's initial investment outlay to the future incremental cash flows of the project and its terminal cash flow.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Which of the following is not considered while preparing cash budget?

  1. Accrual Principle

  2. Difference in Capital and Revenue items

  3. Conservation Principle

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cash budget is an estimation of the cash inflows and outflows for business over a specific period of time. The budget is used to assess whether the entity has sufficient cash to operate. Companies use sales and production forecasts to create a cash budget, along with assumptions about necessary spending and accounts receivable. If a company does not have enough liquidity to operate, it must raise capital by issuing stock or by taking a debt.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

A budget is frequently prepared to combine all other budgets in a summary form. It is known as _____________.

  1. Sales Budget

  2. Purchase Budget

  3. Cash Budget

  4. Master Budget
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The master budget is the sum total of all the divisional budgets that is prepared by all the divisions. Further, it also includes the financial planning, cash-flow forecast and budgeted profit and loss account and balance sheet of the organization. 


Master Budget is the summary of the divisional budget.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Which one of the following statement is false?

  1. IFC was established In July 1956

  2. IFC encourages the growth and development of Public Sector Enterprises in member countries

  3. IFC is an affiliate of the World Bank

  4. IF encourages the growth of productive private enterprises in member countries
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The International Finance Corporation (IFC) is an international financial institution formed on July 20, 1956 and affiliated to world bank, that offers investment, advisory, and asset-management services to encourage private-sector development in developing countries since 2009, the IFC's stated aim is to create opportunities for people to escape poverty and achieve better living standards by mobilizing financial resources for private enterprise, promoting accessible and competitive markets, supporting businesses and other private-sector entities, and creating jobs and delivering necessary services to those who are poverty stricken or otherwise vulnerable

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Which of these agencies regulates Securities Market in India?

  1. RBI

  2. SEBI

  3. Stock Exchange

  4. Finance Ministry
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

SEBI (Securities and Exchange Board of India) is the regulatory body for the securities market in India, established to protect investors and promote the development of the market.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Deficit Balance of trade suggests that __________.

  1. value of exports of goods > value of imports of goods

  2. value of imports of goods > value of exports on goods

  3. value of exports of goods = value of imports of goods

  4. none of above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A deficit in the balance of trade occurs when the value of imports of goods exceeds the value of exports of goods.