ACC501 Midterm Past Paper Spring 2007

MIDTERM EXAMINATION

SPRING 2007 ACC501 - BUSINESS FINANCE (Session - 1 ) Marks: 40 Time: 90min

Student Name:

Center Name/Code:

Exam Date: Saturday, May 12, 2007

ƒ All questions are compulsory. ƒ This exam consists of 10 Multiple Choice Questions (MCQs) of 1 mark each, 5 True/False of 1 mark each, 3 Short questions of 5 marks each and 1 comprehensive Numerical of 10 marks. ƒ For each Multiple Choice Question, read the options available and select which you consider is the correct one. ƒ You are required to show all the working of short as well as practical question. ƒ Use of calculator is allowed. ƒ This examination is closed book, closed notes and closed neighbours. ƒ Do not ask question about the contents of this examination from anyone. ƒ You may wish to pace yourself with your own watch, but the Supervisor will be the official timekeeper of the test. ƒ Failure to comply with the Supervisor’s directions will result in your test being cancelled. Please comply with supervisor’s directions to avoid any unpleasant event

Question Question Marks Question Marks

Q1. The Ratios showing the ability of a firm to pay its bills in short-run are called: (1 marks)

Leverage Ratios

Liquidity Ratios

Profitability Ratios

Market Value Ratios

Q2. Evaluating the size, timing and risk of future cash flows is the essence of : (1 marks)

Capital Budgeting

Capital Structure

Inventory Control

Q3. Sumi Corporation is dealing in furniture industry. It has an equity multiplier of 1.78 times. The debt to equity ratio would be: (1 marks)

1. 38 times
2. 58 times
3. 78 times
4. 98 times

Q4. ________________ involves the sale of used securities from one investor to another. (1 marks)

Primary Market

Secondary Market

Tertiary Market

1. None of the given options

Q5. SNT Corporation paid Rs. 28,900 as tax in 2006. If the tax rate was 34%, what was the taxable income of the corporation during 2006? (1 marks)

Rs. 90,000

Rs. 85,000

Rs. 65,000

Rs. 77,000

Q6. ______________ pays no coupon at all and is offered at a price that is much lower than its stated value. (1 marks)

Government Bond

Floating Rate Bond

Zero Growth Bond

Q7. Which of the following statement provides a financial summary of the firm’s operating results during a specified period. (1 marks)

Balance Sheet

Income Statement

Cash Flow Statement

Retained Earning Statement

Q8. Depreciation expense does not reflect a cash outflow but still shown as an expense on the income statement to serve as a: (1 marks)

Cash inflow