Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 8 - FINANCIAL MANAGEMENT & ECONOMICS FOR FINANCE - SECTION A - FINANCIAL MANAGEMENT Chapter 10: MANAGEMENT OF WORKING CAPITAL - For Practice relevant for May/November 23 Examinations


Q1. The credit terms may be expressed as “3/15 net 60”. This means that a 3% discount will be granted if the customer pays within 15 days, if he does not avail the offer, he must make payment within 60 days.

  1. I agree with the statement
  2. I do not agree with the statement
  3. I cannot say.

Answer: 1

Q2. The term ‘net 50’ implies that the customer will make payment: 

  1. Exactly on 50th day
  2. Before 50th day
  3. Not later than 50th day
  4. None of the above.

Answer: 3

Q3. Trade credit is a source of :

  1. Long-term finance
  2. Medium term finance
  3. Spontaneous source of finance
  4. None of the above

Answer: 3

Q4. The term float is used in:

  1. Inventory Management
  2. Receivable Management
  3. Cash Management
  4. Marketable securities.

Answer: 3

Q5. William J Baumol’s model of Cash Management determines optimum cash level where the carrying cost and transaction cost are:

  1. Maximum
  2. Minimum
  3. Medium
  4. None of the above

Answer: 2

Q6. In Miller – ORR Model of Cash Management:

  1. The lower, upper limit, and return point of Cash Balances are set out
  2. Only upper limit and return point are decided
  3. Only lower limit and return point are decided
  4. None of the above are decided.

Answer: 1

Q7. Working Capital is defined as:

  1. Excess of current assets over current liabilities
  2. Excess of current liabilities over current assets
  3. Excess of Fixed Assets over long-term liabilities
  4. None of the above.

Answer: 1

Q8. Working Capital is also known as “Circulating Capital, fluctuating Capital and revolving capital”. The aforesaid statement is; 

  1. Correct
  2. Incorrect
  3. Cannot say

Answer: 1

Q9. The term “Core current assets” was coined by:

  1. Chore Committee
  2. Tandon Committee
  3. Jilani Committee
  4. None of the above

Answer: 2

Q10. The term Working Capital leverage refer to the impact of level of working capital on company’s profitability. This measures the responsiveness of ROCE for changes in current assets.

  1. I agree
  2. Do not agree
  3. The statement is partially true.

Answer: 1


CA Intermediate FMECO - SECTION B - MCQ for Chapter 1 -   

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