Tag: public finance, budget and fiscal policy

Questions Related to public finance, budget and fiscal policy

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

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

  1. Cash

  2. Net working capital

  3. Gross working capital

  4. Profit

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Correct Option: B
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.

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

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

  1. Transaction purposes

  2. Precaution against unexpected expenses

  3. Extending loans to group comanies

  4. Speculation purposes

  5. Mismatch between cash inflows and outflows.

Show answer
Correct Option: C
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.

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

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

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

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

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

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

Show answer
Correct Option: B
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

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

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

  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

Show answer
Correct Option: E
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.

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

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

  1. Accrual Principle

  2. Difference in Capital and Revenue items

  3. Conservation Principle

  4. All of the above

Show answer
Correct Option: D
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.

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

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

  1. Sales Budget

  2. Purchase Budget

  3. Cash Budget

  4. Master Budget

Show answer
Correct Option: D
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.

Which one of the following statement is false?

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

  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

Show answer
Correct Option: B
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

Which of these agencies regulates Securities Market in India?

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

  1. RBI

  2. SEBI

  3. Stock Exchange

  4. Finance Ministry

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Correct Option: B

Who was the Chairman of the 13th Finance Commission of India?

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

  1. Indira Rajaraman

  2. C. Rangarajan

  3. Vijay Kelkar

  4. None of the above

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Correct Option: C

Deficit Balance of trade suggests that __________.

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

  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

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Correct Option: B