Can you answer these questions

I am searching longer for MCQS answers and didn’t got the answers. if you could answer these question with some logic or reference then it would be very helpful to me.

1.The Ratios showing the ability of a firm to pay its bills in short-run are called:
a.Leverage Ratios
b.Liquidity Ratios
c.Profitability Ratios
d.Market Value Ratios

2.A contract between the bond issuer and bond holder is called:
a.Bond Indenture
b.Bond Debenture
c.Bond Value
d.None of the given options

3.Suppose you have a portfolio comprised of two securities X and Y. In the portfolio, 60
shares are of stock X valued at Rs.10 per share and 40 shares are of stock Y valued at
Rs.3 per share. What is the approximate weight of stock X in the portfolio?
a.23 %
b.40 %
c.60 %
d.83 %

4.In which market, previously issued securities are traded among investors?
a.Primary Market
b.Secondary Market
c.Tertiary Market
d.None of the given options

5.Which of the following is the present value of a series of future net cash flows that will
result from an investment, minus the amount of the original investment?
a.Present Value
b.Future Value
c.Net Present Value
d.Terminal Value

6.You earn a 5 percent real return. If the inflation rate is 4 percent, what is your nominal
return?
a.8.96 %
b.9.05 %
c.9.20 %
d.9.92 %

7.Fee paid to the consultant for evaluating the option of launching a new product will be
considered as:
a.Sunk Cost
b.Opportunity Cost
c.Financing Cost
d.Operating Cost

8.A risk that affects a single or at most a small number of assets is called:
a.Unsystematic Risk
b.Unique Risk
c.Diversifiable Risk
d.All of the given options

9.What will be the payback period of a Rs.70,000 investment with the following
cash inflows?
a.Years Cash flows
1 Rs. 15,000
2 Rs. 20,000
3 Rs. 25,000
4 Rs. 15,000
5 Rs. 5,000

a.3.57 years
b.3.67 years
c.4.57 years
d.4.67 years

10.Which of the following is the required return on a firm’s debt by its creditors?
a.Cost of Equity
b.Cost of Debt
c.Cost of Preferred Stock
d.Cost of Capital

11.Which one of the followings is the overall required return the firm must earn on its
existing assets to maintain the value of the stock?
a.AAR (Average Accounting Return)
b.IRR (Internal Rate of Return)
c.MIRR (Modified Internal Rate of Return)
d.WACC (Weighted Average Cost of Capital)

12.The costs to store and finance the assets are known as:
a.Carrying Costs
b.Shortage Costs
c.Manufacturing Costs
d.None of the given options

13.The minimum level of inventory that a firm keeps on hand is called:

a.Common stock
b.Safety Stock
c.Preferred Stock
d.Dangerous Stock

14.Realization Principle is one of the basic principles of GAAP.

True
False

15.A preferred dividend is exactly like interest on bond.
True
False

By IRR rule, take a project when its IRR exceeds the required return.
True
False

Diversification is the group of assets such as stocks and bonds held by investor.
True
False

Which of the following statements best describes the purpose of an internal control
questionnaire (ICQ)?
An internal control questionnaire is a series of questions regarding accounting and control
policies and procedures that the auditor considers necessary to prevent all misstatements
in the financial report.
An internal control questionnaire is a series of questions regarding accounting and control
policies and procedures that the auditor considers necessary to prevent material
misstatements in the financial report.
An internal control questionnaire is a series of questions regarding accounting and control
policies and procedures that the auditor considers necessary to detect material
misstatements in the financial report.
An internal control questionnaire is a series of questions prepared by the entity about the
entity’s accounting and control policies and procedures for which the entity seeks
guidance on from the auditor in order to detect material misstatements in the financial
report.

A Beverages company is being audited by an audit firm. Audit procedures are being
undertaken in all of its departments. During this, the audit team has to spend more
time on physical examination of the company assets to get reliable audit evidence. In
your opinion, auditors are considering which type of audit inquiry in this case?
Recalculations Inspection of tangible assets Analytical procedures Confirmations
Existence of any immaterial mistake in the statements
Existence of any fraud or error in the statements
Company s growth trend in the future in figures Market value of the company s stock

Which one of the following mainly affects the auditors opinion?
Agreement on accounting policies
Limitation on the scope of the auditors work
Dispute among the members of the company
Future prospects of the company s growth

Which one of the following statements is TRUE regarding control procedures?
They are not required if the control environment is strong
They should generally be all manual
They should generally be all automated
They can be either manual or automated

Which one of the following statements does not apply to the Institute of Chartered
Accountants of Pakistan (ICAP) in Pakistan?
An autonomous body incorporated under the Chartered Accountants Ordinance 1961
Regulatory body that formulates auditing standards in Pakistan
Its affairs are run by a council which is elected by its member (Chartered Accountants).
ICAP is a member of the International Federation of Accountants (IFAC)

Which one of the following statements indicates a primary difference between an
operational audit and a compliance audit?
Operational audit focuses on business efficiencies and effectiveness, while compliance
audit focuses on whether laws and other requirements are being followed
Operational audit focuses on reliability of the financial statements, while compliance
audit focuses on whether laws and other requirements are being followed
Operational audit focuses on business growth prospects, while a compliance audit focuses
on reliability of the financial statements
Operational audit focuses on business size and potential to grow, while compliance audit
focuses on reliability of accounting records

Following are the points considered during the verification of bank balances
EXCEPT:
Obtain direct bank confirmation
Obtain direct bank confirmation
Investigate about outstanding stale cheques
Investigate any significant reconciling items of an unusual nature
Ensure that the creditors have been paid for their loan amount

Which statement cannot be highlighted as a merit of audit process?
It settles the dispute between management
It helps the auditor to give more constructive advice top management
Its help to restrict sole proprietor to by changing some fee
It gives strength to the company for acquiring the finance

While considering internal control system of an entity, the auditor is basically concerned that the system provides reasonable assurance about which one of the following?
That the management can not override the system
Operational efficiency has been achieved according to management plans
Errors have been prevented or detected
Controls have not been circumvented by collusion

Which one of the following statements is TRUE regarding control procedures?
They are not required if the control environment is strong
They should generally be all manual
They should generally be all automated
They can be either manual or automated

Which one of the following statements does not apply to the Institute of Chartered
Accountants of Pakistan (ICAP) in Pakistan?
An autonomous body incorporated under the Chartered Accountants Ordinance 1961
Regulatory body that formulates auditing standards in Pakistan
Its affairs are run by a council which is elected by its member (Chartered Accountants).
ICAP is a member of the International Federation of Accountants (IFAC)

Which one of the following statements indicates a primary difference between an
operational audit and a compliance audit?
Operational audit focuses on business efficiencies and effectiveness, while compliance
audit focuses on whether laws and other requirements are being followed
Operational audit focuses on reliability of the financial statements, while compliance
audit focuses on whether laws and other requirements are being followed
Operational audit focuses on business growth prospects, while a compliance audit focuses
on reliability of the financial statements
Operational audit focuses on business size and potential to grow, while compliance audit
focuses on reliability of accounting records

While considering internal control system of an entity, the auditor is
basically concerned that the system provides reasonable assurance about which one of the
following?
That the management can not override the system
Operational efficiency has been achieved according to management plans
Errors have been prevented or detected
Controls have not been circumvented by collusion

Judgmental sampling has the following advantages EXCEPT:
No special knowledge of statistics is required in this type
It tends to cause uniform standards among different audit firms
No time is spent on playing with mathematics
This approach has been well understood and refined by the experience over years

Which statement cannot be highlighted as a merit of audit process?
It settles the dispute between management
It helps the auditor to give more constructive advice top management
Its help to restrict sole proprietor to by changing some fee
It gives strength to the company for acquiring the finance