Total SET 16

MATCH

1
Project organization Finance manager
General category of Project report Location of factory
Cost aspect of the project report Consultancy fees
Financing plan Unsecured loans

2
Private investment Power generation
Project Time -bound
Programme Not necessarily time bound
Foreign direct investment Machine tools

3
Management problems lack of exposure
Management Quality Initiative
Management Perception Aspiration level/ conservative
Organisational Climate Person oriented

4
Source of funds Depreciation
Fixed assets Building
Current assets Debtors
Current liability Trade credit

5
Project appraisal It is the evaluation of project from technical, market,
financial, economic and social perspective before
committing funds for investment
Program It is large in scope, is activity oriented and is not
necessarily time bound
Project It is one-shot, time-limited, goal oriented, major undertaking
requiring the commitment of varied skills and resources
Pre-feasibility study It is a preliminary assessment of the project idea to
determine whether or not the investment opportunity is
promising

6
Increase in current liabilities Decreases working capital
Increase in liabilities Inflow of funds
Decrease in liabilities Outflow of funds
Increase in current assets Increases working capital

7
Permanent Working Capital finance Shares
Capital budgeting Acquire fixed
Working capital Invest in current asset
Inflationary conditions Working capital requirement high

8
Export market technique of Commercial appraisal
Demand Technique forecasting of Commercial appraisal
Past trend method of Commercial appraisal
End use method of Commercial appraisal
Government provides ample encouragement
Future demand of the product
Adopted as a guide depending on the consumption pattern
of the society as a whole
A list of industries wherein the product is used is made and
quantity and volume is arrived at

9
Organisation and Management Strikes/lay-offs/lockouts etc.
Material inputs and utilities Stock of raw material
Working capital Sanctioned bank limit
Marketing Pricing policy

10
Technical aspect of detailed project report Detailed
Project EngineeringFinancial aspect of Detailed Project Profitability
report
Marketing aspect of Detailed Project report Distribution
Management aspect of detailed project report
;Conservativeness

11
Econometric method Mathematical representation of economic
relationship
Primary source of data Market survey
Secondary source of data Collected in some other context
Leading indicators Variables that change faster than others

12
General functional layout Present the general relationship between equipment
buildings and civil works
Location Broad area such as city, industrial belt etc.
Site Specific piece of land where the project would be set up
Plant layout Physical layout of the factory

13
Moving into new areas/product lines Diversification Projects
Suppliers' credit Short term finance
Deferred credit Long term finance
Setting up new units New Projects

14
Project Financing Help improving Corporate Return on Equity
Finance in international financial markets Issue of Euro
International financial institutions World Bank
Policy of Liberalisation, Privatisation and Globalisation Increasing emphasis on the Private initiative

15
Environmental stability dimension under SPACE Model Demand variability
involves
Company's competitive advantage dimension under Product life cycle
SPACE Model involves
Company's financial strength dimension under SPACE Leverage liquidity
Model involves
Industry strength dimension under SPACE Model involves Profit potential

Match The Following

Question Correct Answer Your Answer

Plant and machinery cost Foundation and erection charges Cost of factory building

Preliminary and capital issue expenses Brokerage and commission Brokerage and commission

Land and site development cost Cost of laying roads Cost of laying roads

Building cost Cost of factory building Foundation and erection charges

SET 1
Question The objectives of the funds flow statement is as follows :-
Correct Answer To help to understand the changes in assets as well as asset sources which are not revealed by the income statement , To find out the uses
of loans raised by the business , To indicate the financial strength and weakness of the business
Your Answer To find out the uses of loans raised by the business , To help to understand the changes in assets as well as asset sources which are not
revealed by the income statement , Helps to prepare financial statements

Question Inflow of funds may not necessarily result in ________.

Correct Answer Inflow of cash
Your Answer Inflow of cash

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question The Detailed Project report spells out the modus operandi for the implementation of the Project and the realization of the Project objectives.
Correct Answer True

Question As the plant capacity increase, the investment cost unit capacity ________.
Correct Answer Decreases
Your Answer Decreases

Question Internal sources of funds are :-

Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off
Your Answer Funds from operation , Loss on sale of fixed assets

Question End use method of Commercial appraisal technique is :-

Correct Answer A list of industries wherein the product is used is made and quantity and volume is arrived at
Your Answer A list of industries wherein the product is used is made and quantity and volume is arrived at

Question The applications of cash are :-

Correct Answer Purchase of fixed assets , Payment of long term loans
Your Answer Purchase of fixed assets , Payment of long term loans

Question In small scale organisation, requirement of working capital is quite high due to high amount of overheads, high buying costs and high selling
cost.
Correct Answer True
Your Answer True

Question Longer the duration of production cycle, higher the requirement of ________.
Correct Answer Working capital
Your Answer Working capital

Question Sanctioned bank limits is categorised under :-

Correct Answer Working capital
Your Answer Production, Sales and Profitability

Question Cost of fencing comes under the ________ category of the Project report.
 Correct Answer Land and site development
Your Answer Land and site development

Question Trend projection method is the important technique for forecasting demand.
Correct Answer True

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial
aspects.
Correct Answer True

Question ________ in assets involves outflow of funds.

Correct Answer Increase
Your Answer Increase

Question The basic difference between the feasibility study report and ________ is the level of accuracy and degree of detail.
Correct Answer Detailed Project report
Your Answer Detailed Project report

Question Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Location of the factory comes under the ________ category of the Project report.
Correct Answer General
Your Answer General

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals
Your Answer Share capital , Term loans , Internal accruals

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution
Your Answer Power Generation and Distribution

Question Market potential should be determined under the Marketing aspect of the Project report.
Correct Answer True

Question ________ tries to have what the customer will want- where, when, in what form and at what price.
Correct Answer Marketing
Your Answer Marketing

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect
Your Answer Strategic perspective

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective
Your Answer Social aspect

Question Nominal maximum capacity is the capacity that is technically attainable and this corresponds to the supplier's guaranteed capacity.
Correct Answer True
Your Answer True

Question In order to meet the cost of large project, the technique of ________ has been developed so that the financial commitment and risks
associated with a project are shared between the project sponsor and the lending institutions.
Correct Answer Limited recourse financing
Your Answer Long term financing

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question Past trend method of Commercial appraisal technique is :-

Correct Answer Adopted as a guide depending on the consumption pattern of the society as a whole
Your Answer Adopted as a guide depending on the consumption pattern of the society as a whole

Question The norms for providing open areas have to be strictly followed for safety of labour and allow sufficient space for outflow of effluents safely in
case of :-
Correct Answer Chemical unit
Your Answer Chemical unit

Question Short supplies of materials may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Investors who invest in the debentures of the company are the ________ of the company.
Correct Answer Creditors
Your Answer Creditors

Question As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness
Your Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative
Your Answer Honesty , Financial resources , Initiative
 Question The industrial concern earned profits by increasing the sales volume under the :-
Correct Answer Sales concept
Your Answer Sales concept

Question The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer False

Question Detailed Project Report is generally prepared from a ________ report with additional information.
Correct Answer Feasibility
Your Answer Feasibility

Question Delay in arrival of domestic/foreign machinery and technicians may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Miscellaneous expenditure is written on the asset side of the Balance sheet.
Correct Answer True

Question General category of the Project report consists of :-

Correct Answer Name of the Industrial concern , Proposed product , Location of the factory
Your Answer Name of the Industrial concern , Proposed product , Location of the factory

Question A Project is a temporary endeavor to achieve some specific objectives within a :-

Correct Answer Predefined time
Your Answer Predefined time

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Question The sources of long term and medium term finance are :-
Correct Answer Equity shares , Public deposit
Your Answer Equity shares , Public deposit

Question The cost which change in the same proportion in which the level of production changes is known as :-
Correct Answer Variable cost
Your Answer Variable cost

Question The second phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems faced during the Construction and Project implementation
Your Answer Problems faced during the Construction and Project implementation

Question The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems pertaining to the period when the project is in operation
Your Answer Problems pertaining to the period when the project is in operation

SET 2

Question ________ is a current liability.

Correct Answer Trade credit
Your Answer Trade credit

Question Marketing category of the Project report consists of :-

Correct Answer Target market , Market potential , Pricing policy
Your Answer Target market , Market potential , Pricing policy

Question Under the SPACE Model, Customer loyalty is determined under the ________ dimension.
Correct Answer Company's competitive advantage
Your Answer Company's competitive advantage

Question Sources of funds include :-

Correct Answer Increase in secured borrowing
Your Answer Increase in secured borrowing

Question It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
Correct Answer True
Your Answer False

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective
Your Answer Strategic perspective

Question ________ tries to have what the customer will want- where, when, in what form and at what price.
Correct Answer Marketing
Your Answer Marketing

Question Debt Service Coverage Ratio is one of the most important ratios calculated by the bankers or financial institutions giving long term finance to the
organisation.
Correct Answer True

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative
Your Answer Honesty , Financial resources , Initiative

Question The second phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems faced during the Construction and Project implementation
Your Answer Problems faced during the Construction and Project implementation
 Question A project is unique and no two projects are similar.
Correct Answer True

Question Land and site development cost includes cost of :-

Correct Answer Gates

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect
Your Answer Finance cost aspect

Question ________ in assets involves outflow of funds.

Correct Answer Increase

Question Disposal of fixed assets is categorised under :-

Correct Answer Miscellaneous
Your Answer Miscellaneous

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial aspects.
Correct Answer True

Question Geographic market appraisal answers to :-

Correct Answer Where do the customers live?
Your Answer Where do the customers live?

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance
Your Answer Project finance

Question ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment
Your Answer Production

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question Pre-operative expenses include :-

Correct Answer Interest on deferred payments
Your Answer Interest on deferred payments

Question Advantages of fund flow statement are :-

Correct Answer It determines financial consequences of the business operations , It enables the firm to plan its financial resources properly , It helps as a
reliable guide for the future requirement of funds
Your Answer It determines financial consequences of the business operations , It considers non-fund transactions , It enables the firm to plan its financial
resources properly

Question Managerial problems in a project are the most pervasive.

Correct Answer True
Your Answer True

Question In the BCG Matrix "DOGS" indicate products which are generally during the stage of Decline of a Product Life Cycle.
Correct Answer True

Question The applications of cash are :-

Correct Answer Purchase of fixed assets , Payment of long term loans
Your Answer Purchase of fixed assets , Payment of long term loans , Issue of new machinery

Question Debt Equity ratio is a 'Solvency ratio'.

Correct Answer True

Question Current assets includes stock-in-process.

Correct Answer True

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect
Your Answer Strategic perspective , Time span , Finance cost aspect

Question Liabilities side of Balance sheet includes :-

Correct Answer Unsecured loans

Question The rate of discount which would equate the present value of investments to the present value of benefits over the life of the project is known as :-
Correct Answer Internal rate of return

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle
Your Answer Life cycle

Question After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer Aggressive Posture , Competitive Posture , Defensive Posture
Your Answer Aggressive Posture , Competitive Posture , Defensive Posture

Question ________ is the summary of cash book or Receipts and Payments statement.
Correct Answer Cash flow statement
Your Answer Cash flow statement

Question The point at which the unit neither earns profit nor incurs loss is known as :-
 Correct Answer Break Even Point
Your Answer Break Even Point

Question In the Detailed Project Report, Marketing aspects includes :-

Correct Answer Demand forecasting , Promotion , Distribution
Your Answer Demand forecasting , Promotion , Distribution

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation
Your Answer Environmental factors , Risk involved , Managerial compensation

Question Casual methods of Demand forecasting consists of

Correct Answer Consumption-level method , Econometric method
Your Answer Consumption-level method , Econometric method

Question Under _______ method, the forecasts are modified in the light of observed errors.
Correct Answer Exponential smoothing
Your Answer Exponential smoothing

Question Provision for tax can be treated as :-

Correct Answer Item of current liabilities , Added back to the profit as per profit and loss account to arrive at operating profits
Your Answer Added back to the profit as per profit and loss account to arrive at operating profits , Item of current assets , Item of working capital

Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use
in future for expansion or other purpose.
Correct Answer Dividend

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution
Your Answer Power Generation and Distribution

Question The ratio that roughly measures the company's potential reserve of cash is termed as :-
Correct Answer Net Working capital to total assets
Your Answer Net Working capital to total assets

Question Name and designation of the chief executive comes under the ________ category.
Correct Answer General
Your Answer General

Question Miscellaneous fixed assets includes :-

Correct Answer Cables
Your Answer Cables

Question In the Cash flow statement, the sources of funds include

Correct Answer Share Issue
Your Answer Share Issue

SET 3

Question Land and site development comes under the cost aspect of the Project report.
Correct Answer True

Question Location of the factory comes under the :-

Correct Answer General category
Your Answer General category

Question The sources of funding have expanded from banks, insurance companies and multilateral agencies to include the :-
Correct Answer Capital market
Your Answer Debt market

Question Cost of overheads include :-

Correct Answer Cost of repairs and maintenance
Your Answer Cost of electricity

Question The Detailed Project report spells out the modus operandi for the implementation of the Project and the realization of the Project objectives.
Correct Answer True
Your Answer True

Question Debt Service means payment of installments and interest against an amount borrowed as per terms of loan.
Correct Answer True
Your Answer True

Question The ratios of one organisation compared with the ratios of the same organisation is termed as inter-firm comparison.
Correct Answer False

Question Depreciation is sometimes treated as ________ funds.

Correct Answer Source

Question Excessive expenditures on foreign technicians leads to ________.

Correct Answer Cost and time overrun
Your Answer Management problems

Question The Key terms used in the BCG Product Portfolio matrix are :-
Correct Answer Stars , Question marks
Your Answer Stars , Question marks , Invest

Question Sensitivity analysis consists of assessing the degree of risk.

 Correct Answer True

Question The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet
Your Answer Profit and Loss Account , Auditors report , Balance Sheet

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship
Your Answer Linear Relationship , Chain ratio Relationship , Exponential Relationship

Question Delay in arrival of domestic/foreign machinery and technicians may lead to :-

Correct Answer Cost and time overrun
Your Answer Profit maximisation

Question Past trend method of Commercial appraisal technique is :-

Correct Answer Adopted as a guide depending on the consumption pattern of the society as a whole
Your Answer Adopted as a guide depending on the consumption pattern of the society as a whole

Question Limitations of fund flow statement are :-

Correct Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions
Your Answer It does not consider non-fund transactions , It does not help in determining future requirement of funds , It does not provide any new information
but only rearranges the various facts

Question As the plant capacity increase, the investment cost unit capacity ________.
Correct Answer Decreases
Your Answer Increases

Question Preoperative expenses includes :-

Correct Answer Bank guarantees
Your Answer Brokerage on capital issue

Question Short supplies of materials may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question In order to meet the cost of large project, the technique of ________ has been developed so that the financial commitment and risks associated with
a project are shared between the project sponsor and the lending institutions.
Correct Answer Limited recourse financing
Your Answer Limited recourse financing

Question For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer False

Question The ratio which covers those assets which can be converted into cash immediately is known as :-
Correct Answer Quick ratio
Your Answer Current ratio

Question Management category of Visit report consists of :-

Correct Answer Managing Director , Institutional nominees , Committees of the board
Your Answer Managing Director , Electrical engineers , Institutional nominees

Question General Electric Stop Light Matrix analyses products in terms of :-

Correct Answer Business strength and Industrial Attractiveness
Your Answer Relative Market share and Industry Growth rate

Question The basic document for facilitating Project financing is the :-

Correct Answer Detailed Project report
Your Answer Detailed Project report

Question The ________ market is longer the order of the day since this is an era of professionalization and specialised services are available at cost.
Correct Answer Monopolistic
Your Answer Monopolistic

Question Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship.
Correct Answer True

Question Demand technique forecasting of Commercial appraisal includes :-

Correct Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product
Your Answer Future demand of the product , Export market , Future availability and supply of the product

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology
Your Answer Manufacturing process and technology

Question Time Series Projection Methods of Demand forecasting consists of :-

Correct Answer Trend Projection method , Moving Averages method
Your Answer Trend Projection method , Moving Averages method

Question More accurate the estimation of the level of current assets and current liabilities, more accurate will be estimation of the requirement of ________.
Correct Answer Working capital
Your Answer Working capital

Question Defaults category of the Project report may be in respect of :-

Correct Answer Term loans , Principal , Interest
Your Answer Term loans , Principal , Interest

Question If the organisation is a trading organisation, the requirement of working capital will be on the lower side.
Correct Answer False
 Question Cost of fencing comes under the ________ category of the Project report.
Correct Answer Land and site development
Your Answer Building cost

Question Disposition of funds includes :-

Correct Answer Increase in working capital , Preliminary expenses , Dividend
Your Answer Increase in working capital , Preliminary expenses , Preliminary expenses written off

Question Sources of funds includes :-

Correct Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing
Your Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing , Preliminary expenses

Question The Projects which are undertaken to manufacture certain products which are being used as raw material by the existing units is known as :-
Correct Answer Backward Integration Projects
Your Answer Backward Integration Projects

Question In the GE's Stop Light Matrix, when ________ situation prevails , Products call for divestment.
Correct Answer Average Business Strength and Low Industry attractiveness
Your Answer Weak Business strength and high Industry attractiveness

Question Investors who invest in the debentures of the company are the ________ of the company.
Correct Answer Creditors
Your Answer Creditors

Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the :-
Correct Answer Bankers , Financial Institutions
Your Answer Shareholders , Bankers , Creditors

Question Dissentions among the promoters is a :-

Correct Answer Management problem
Your Answer Management perception

Question Goods purchased on credit ________ in flow of funds.

Correct Answer Does not result
Your Answer Does not result

Question The secondary data is collected through market survey, specific for the project being appraised.
Correct Answer False
Your Answer False

Question Profit is the result of customer satisfaction, indeed customer delight under the :-
Correct Answer Marketing concept
Your Answer Marketing concept

Question Internal sources of funds are :-

Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off
Your Answer Funds from operation , Goodwill written off , Funds from long term loans

SET 4

Question The permanent requirement of working capital should be financed out of :-

Correct Answer Debentures , Cash Profits , Shares
Your Answer Debentures , Cash Profits , Shares

Question The sources of long term and medium term finance are :-
Correct Answer Equity shares , Public deposit
Your Answer Equity shares , Bridge loan , Public deposit

Question The emphasis of the Banks and Financial institutions particularly in India has shifted from 'Sanctions', 'Disbursements' and 'Security-orientation' to
'Recovery/Recycling' and :-
Correct Answer Activity orientation
Your Answer Activity orientation

Question Technology, design, layout of the plant as well as inputs and infrastructural facilities are to be considered under :-
Correct Answer Technical appraisal
Your Answer Financial appraisal

Question Detailed Project Report is generally prepared from a ________ report with additional information.
Correct Answer Feasibility
Your Answer Feasibility

Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners.
Correct Answer True
Your Answer True

Question The formula for Break Even Point is :-

Correct Answer Fixed cost / ( Sales Price - Variables)
Your Answer (Profit after tax +Depreciation + Interest)/ Interest

Question Receivables is categorised under :-

Correct Answer Current assets and liabilities
Your Answer Material inputs and utilities

Question Ratios relating to working capital are :-

Correct Answer Current ratio , Internal measure , Quick ratio
Your Answer Current ratio , Debt Equity ratio , Internal measure
 Question Longer the duration of production cycle, higher the requirement of ________.
Correct Answer Working capital
Your Answer Fixed assets

Question In the Detailed Project Report, Management aspects includes :-

Correct Answer Determination , Organisation Building , Person / system oriented
Your Answer Organisation Building , Person / system oriented , Promoter's equity / stake

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True

Question In the Detailed Project Report, Technical aspects includes :-

Correct Answer Plant capacity , Quality standards , Raw material requirement
Your Answer Plant capacity , Quality standards , Raw material requirement

Question Inflow of funds may not necessarily result in ________.

Correct Answer Inflow of cash
Your Answer Decrease in funds

Question Building cost consists of :-

Correct Answer Factory building , Auxiliary buildings , Administrative block
Your Answer cost of development , Factory building , Auxiliary buildings

Question Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities.
Correct Answer Fund

Question Name of the finance manager comes under the Project organisation category of the Project report.
Correct Answer True

Question Change in the project concept itself may lead to cost and time overrun.
Correct Answer True

Question The maximum Seed Capital assistance provided by IDBI under the project will be restricted to 50% of the required promoter's contribution or Rs. 50
lakhs whichever is lower.
Correct Answer False

Question Trend projection method is the important technique for forecasting demand.
Correct Answer True

Question Production and sales aspect of Visit report consists of :-

Correct Answer Utilisation of installed capacity , Input availability , Sales trends
Your Answer Utilisation of installed capacity , Input availability

Question The sources of cash are :-

Correct Answer Cash from operations , Sale of machinery , Issue of new shares
Your Answer Purchase of fixed assets , Cash from operations , Sale of machinery

Question External sources of cash are as follows :-

Correct Answer Issue of new shares , Long term loans , Short term borrowings
Your Answer Issue of new shares , Long term loans , Short term borrowings

Question Production line diagrams show the organisation structure of the project along with information on location, personnel required for various
departments, and their inter-relationship.
Correct Answer False

Question ________ is a current asset

Correct Answer Book debts

Question The company having ________, is appropriate for the strategic posture of Defensive under the SPACE approach.
Correct Answer Lacks both competitive advantage as well as financial strength and belongs to a not so attractive industry, operating in an unstable
environment
Your Answer High financial strength, high industrial strength, enjoying a competitive advantage and belonging to an attractive industry, operating in a relatively
stable environmental conditions

Question Management aspect of detailed project report includes

Correct Answer Organisation structure
Your Answer Demand forecasting

Question ________ profitability reduces the strain on working capital.

Correct Answer High

Question The following are the sources of funds :-

Correct Answer Operating Profit , Non operating Income
Your Answer Operating Profit , Operating Loss , Non operating Income

Question The cash flow of all the years during the expected life of the project are discounted at a pre-determined cut off rate and :-
Correct Answer Net Present value is obtained
Your Answer Internal rate of return is obtained

Question The objectives of the funds flow statement is as follows :-

Correct Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand
the changes in assets as well as asset sources which are not revealed by the income statement
Your Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand the
changes in assets as well as asset sources which are not revealed by the income statement

Question Cost of materials include :-

Correct Answer Cost of components and consumable stores
 Your Answer Cost of electricity

Question The Detailed Project report must indicate the gestation period of the project.
Correct Answer True

Question Strategic Position and Action Evaluation Model :-

Correct Answer Is an approach to hammer out an appropriate strategic posture for a firm and its individual business
Your Answer Which is highly respected for the sophistication, maturity and quality in its planning systems

Select The Blank

Question Location of the factory comes under the ________ category of the Project report.
Correct Answer General
Your Answer General

Select The Blank

Question Retained earnings is a source of ________ finance.
Correct Answer Internal
Your Answer Internal

Question General category of the Project report consists of :-

Correct Answer Name of the Industrial concern , Proposed product , Location of the factory
Your Answer Name of the Industrial concern , Proposed product , Location of the factory

Question Short term finance is normally for a period upto ________ year.
Correct Answer One

Question Appointments made at senior level during the half-year is categorised under :-
Correct Answer Organisation and management
Your Answer Current assets and liabilities

Question Commission outstanding is ________ of funds.

Correct Answer Application
Your Answer Application

Question The statement which shows the movement of cash into and out of firm's kittie is known as
Correct Answer Cash flow statement
Your Answer Profit and Loss statement

Question Cost of utilities include :-

Correct Answer Cost of electricity
Your Answer Cost of components and consumable stores

Question Marketing aspect of Detailed Project report includes :-

Correct Answer Demand forecasting
Your Answer Detailed Project Engineering

Question In both the extreme situations of trade cycles i.e. Inflation and depression, requirement of working capital may be high.
Correct Answer True
Your Answer False

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Plant capacity , Availability of infrastructure

SET 5

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True

Question A project can be regarded as the sum of the activities directed towards a :-
Correct Answer Specific result

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question Ratios relating to working capital are :-

Correct Answer Current ratio , Internal measure , Quick ratio

Question There is a need for studying Project finance both for the lenders as well as the borrowers as both of them have equal stake in making the Project a
success.
Correct Answer True

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals
Your Answer Share capital , Term loans

Question The cash flow of all the years during the expected life of the project are discounted at a pre-determined cut off rate and :-
Correct Answer Net Present value is obtained

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology

Question Managerial problems in a project are the most pervasive.

Correct Answer True

Question Past trend method of Commercial appraisal technique is :-

Correct Answer Adopted as a guide depending on the consumption pattern of the society as a whole
Question Demographic market appraisal answers to
Correct Answer Who they are?
Your Answer Where do the customers live?

Question The applications of cash are :-

Correct Answer Purchase of fixed assets , Payment of long term loans
Your Answer Purchase of fixed assets , Payment of long term loans

Question In the Cash flow statement, the sources of funds include :-

Correct Answer Development rebate reserve
Your Answer Development rebate reserve

Question More accurate the estimation of the level of current assets and current liabilities, more accurate will be estimation of the requirement of ________.
Correct Answer Working capital
Your Answer Working capital

Question In the Detailed Project Report, Management aspects includes :-

Correct Answer Determination , Organisation Building , Person / system oriented
Your Answer Determination , Organisation Building , Person / system oriented

Question Short supplies of materials may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative
Your Answer Honesty , Financial resources , Initiative

Question ________ capital represents permanent capital.

Correct Answer Equity
Your Answer Preference

Question Ratio analysis is a widely used tool of :-

Correct Answer Financial analysis
Your Answer Portfolio analysis

Question Production and sales aspect of Visit report consists of :-

Correct Answer Utilisation of installed capacity , Input availability , Sales trends
Your Answer Utilisation of installed capacity , Input availability , Sales trends

Question Provision for tax can be treated as :-

Correct Answer Item of current liabilities , Added back to the profit as per profit and loss account to arrive at operating profits
Your Answer Item of current liabilities , Added back to the profit as per profit and loss account to arrive at operating profits

Question In both the extreme situations of trade cycles i.e. Inflation and depression, requirement of working capital may be high.
Correct Answer True

Question Export Market is a technique used for forecasting under Commercial appraisal technique.
Correct Answer True

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation

Question General Electric Stop Light Matrix analyses products in terms of :-

Correct Answer Business strength and Industrial Attractiveness

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution
Your Answer Power Generation and Distribution

Question Debt Service means payment of installments and interest against an amount borrowed as per terms of loan.
Correct Answer True

Question Short term finance is normally for a period upto ________ year.
Correct Answer One

Question Name of the finance manager comes under the Project organisation category of the Project report.
Correct Answer True
Your Answer True

Question Details regarding Bridge finance comes under the ________ category of Project report.
Correct Answer Financing plan
Your Answer Cost aspect

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance
Your Answer Project finance

Question Net Working Capital means :-

Correct Answer Current assets less Current liabilities
Your Answer Capital Budgeting

Question ________ in liabilities involves inflow of funds.

Correct Answer Increase
Your Answer Decrease

Question The basic characteristic of a project is :-

 Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship
Your Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question Limitations of fund flow statement are :-

Correct Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions
Your Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions

Question Bilateral aid is form of external aid from one government to another government which is usually project specific.
Correct Answer True

Question The statement which shows the movement of cash into and out of firm's kittie is known as
Correct Answer Cash flow statement
Your Answer Cash flow statement

Question Sources of funds includes :-

Correct Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing
Your Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing

Question Position regarding requirement and training of operational staff comes under the ________ category of Project report.
Correct Answer Project organisation
Your Answer Project organisation

Question A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer Share

Question Banks and Financial Institutions, world-wide, are now financing projects with strategies and terms that would have been hard to believe/imagine just
a few years back.
Correct Answer True

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective
Your Answer Strategic perspective

Question For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer False

Question The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet
Your Answer Profit and Loss Account , Balance Sheet

SET 6

Question Trend projection method is the important technique for forecasting demand.
Correct Answer True

Question The BCG Product Portfolio Matrix :-

Correct Answer Is a tool for strategic ( product ) planning and resource allocation
Your Answer Is a tool for strategic ( product ) planning and resource allocation

Question A market survey generally is a ________ survey.

Correct Answer Sample
Your Answer Primary

Question ________ capital represents permanent capital.

Correct Answer Equity

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question Nominal maximum capacity is the capacity that is technically attainable and this corresponds to the supplier's guaranteed capacity.
Correct Answer True

Question Cost of the Project encompasses :-

Correct Answer The total of all items of outlay associated with a project
Your Answer The total of all items of outlay associated with a project

Question There is a need for studying Project finance both for the lenders as well as the borrowers as both of them have equal stake in making the Project a
success.
Correct Answer True
Your Answer True

Question Management category of Visit report consists of :-

Correct Answer Managing Director , Institutional nominees , Committees of the board
Your Answer Managing Director , Institutional nominees , Committees of the board

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance
Your Answer Financial arrangement

Question Debt service coverage ratio indicates whether cash earned is sufficient for debt service.
Correct Answer True
Your Answer False
 Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation
Your Answer Environmental factors , Risk involved , Political issues

Question The following are the sources of funds :-

Correct Answer Operating Profit , Non operating Income
Your Answer Operating Profit , Non operating Income

Question ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment
Your Answer Production

Question In both the extreme situations of trade cycles i.e. Inflation and depression, requirement of working capital may be high.
Correct Answer True
Your Answer True

Question In the Detailed Project Report, Marketing aspects includes :-

Correct Answer Demand forecasting , Promotion , Distribution
Your Answer Demand forecasting , Promotion , Distribution

Question The Projects which are undertaken to manufacture certain products which require the products of existing units as raw material is known as :-
Correct Answer Forward Integration Projects
Your Answer Backward Integration Projects

Question Demand technique forecasting of Commercial appraisal includes :-

Correct Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product
Your Answer Future demand of the product , Proper survey of the product , Export market , Future availability and supply of the product

Question Details regarding Administrative / controlling office comes under the ________ category.
Correct Answer General
Your Answer Cost aspect

Question Sources of funds includes :-

Correct Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing
Your Answer Preliminary expenses written off , Increase in secured borrowing
Multiple Choice Single Answer
Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect
Your Answer Finance cost aspect

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Question The profit earned from operations of the project during life of the project is known as :-
Correct Answer Cash inflow
Your Answer Profit after appropriation

Question Financial and economic aspect of the Visit report consists of :-

Correct Answer Company's financial year , Impact of Government policies on company operations , Comments on the last published accounts
Your Answer Company's financial year , Impact of Government policies on company operations , Sales trends

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question Current assets includes stock-in-process.

Correct Answer True

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective
Your Answer Strategic perspective

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial aspects.
Correct Answer True
Your Answer True

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals
Your Answer Share capital , Term loans , Internal accruals

Question Disposition of funds includes :-

Correct Answer Interest on term loans
Your Answer Increase in secured borrowing

Question Gross Working Capital means :-

Correct Answer Current assets
Your Answer Current assets less Current liabilities

Question ________ in assets involves outflow of funds.

Correct Answer Increase
Your Answer Increase

Question The Project Cycle should be in the ________ order

Correct Answer Identification of Project - Project Appraisal - Negotiations for loans
Your Answer Identification of Project - Project Appraisal - Negotiations for loans
 Question Debt Equity ratio is a 'Solvency ratio'.
Correct Answer True
Your Answer True

Question Investors who invest in the debentures of the company are the ________ of the company.
Correct Answer Creditors
Your Answer Creditors

Question Longer the duration of production cycle, higher the requirement of ________.
Correct Answer Working capital
Your Answer Working capital

Question Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer True
Your Answer True

Question The ratio which indicates the ability of the company to meet current obligations is termed as :-
Correct Answer Current ratio
Your Answer Current ratio

Question The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems pertaining to the period when the project is in operation
Your Answer Problems pertaining to the period when the project is in operation

Question Technical appraisal is basically concerned with :-

Correct Answer Technology , Layout of the plant , Design of the plant
Your Answer Technology , Layout of the plant , Design of the plant

Question Market potential should be determined under the Marketing aspect of the Project report.
Correct Answer True

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology
Your Answer Manufacturing process and technology

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution
Your Answer Power Generation and Distribution

Question BCG Product Portfolio Matrix analyses products on the basis of :-

Correct Answer Relative Market share and Industry Growth rate
Your Answer Relative Market share and Industry Growth rate

Question Preliminary expenses include :-

Correct Answer Drafting of Memorandum expenses
Your Answer Drafting of Memorandum expenses

SET 7

Question A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer Share

Question The formula for Break Even Point is :-

Correct Answer Fixed cost / ( Sales Price - Variables)

Question ________ is a current liability.

Correct Answer Trade credit

Question Cost of fencing comes under the ________ category of the Project report.
Correct Answer Land and site development
Your Answer Financing plan

Question Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer True

Question Land and site development comes under the cost aspect of the Project report.
Correct Answer True

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative
Your Answer Honesty , Financial resources , Initiative

Question In the BCG Matrix, the key term of Cash Cows require further commitment of funds.
Correct Answer False

Question The objectives of the funds flow statement is as follows :-

Correct Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand
the changes in assets as well as asset sources which are not revealed by the income statement
Your Answer To indicate the financial strength and weakness of the business , To help to understand the changes in assets as well as asset sources
which are not revealed by the income statement , Helps to prepare financial statements

Question Depreciation method may be :-

Correct Answer Straight line method

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Finance cost aspect , Strategic perspective , Time span
 Your Answer Strategic perspective , Time span , Finance cost aspect

Question A project can be regarded as the sum of the activities directed towards a :-
Correct Answer Specific result

Question Details regarding Administrative / controlling office comes under the ________ category.
Correct Answer General

Question Retained earnings is a source of ________ finance.

Correct Answer Internal

Question Demand technique forecasting of Commercial appraisal includes :-

Correct Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product
Your Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product

Question The temporary requirement of working capital can be financed out of :-

Correct Answer Inter-corporate Deposits , Commercial Papers
Your Answer Shares , Debentures , Commercial Papers

Question Distribution channels for the product is categorised under :-

Correct Answer Marketing

Question ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment
Your Answer Marketing

Question Disposition of funds includes :-

Correct Answer Increase in working capital , Preliminary expenses , Dividend
Your Answer Increase in working capital , Dividend , Preliminary expenses written off

Question Delay in recruitment of staff may lead to cost and time overrun
Correct Answer True

Question Cost of overheads include :-

Correct Answer Cost of repairs and maintenance

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Availability of infrastructure

Question Financial aspect of Detailed Project report includes :-

Correct Answer Fixation of means of financial structure

Question ________ in assets involves outflow of funds.

Correct Answer Increase

Question The sources of funding have expanded from banks, insurance companies and multilateral agencies to include the :-
Correct Answer Capital market

Question Ratio analysis is a technique of planning and control.

Correct Answer False

Question Debt Equity ratio is a 'Solvency ratio'.

Correct Answer True

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question Interest and Dividend are to be considered while calculating Operating ratio.
Correct Answer False

Question Commission outstanding is ________ of funds.

Correct Answer Application
Your Answer Application

Question Demographic market appraisal answers to

Correct Answer Who they are?

Question For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer False

Question Building cost consists of :-

Correct Answer Factory building , Auxiliary buildings , Administrative block

Question Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun

Question In the Detailed Project Report, Technical aspects includes :-

Correct Answer Plant capacity , Quality standards , Raw material requirement

Question Time Series Projection Methods of Demand forecasting consists of :-

Correct Answer Trend Projection method , Moving Averages method
 Question Name and designation of the chief executive comes under the ________ category.
Correct Answer General

Question Delay in arrival of domestic/foreign machinery and technicians may lead to :-

Correct Answer Cost and time overrun

Question The advantage of secondary sources of data is that it is readily and economically available.
Correct Answer True

Question Goods purchased on credit ________ in flow of funds.

Correct Answer Does not result
Your Answer Decreases

Question Gross Working Capital means :-

Correct Answer Current assets
Your Answer Current assets less Current liabilities

Question Short term finance is normally for a period upto ________ year.
Correct Answer One

Question The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet
Your Answer Balance Sheet

Question In both the extreme situations of trade cycles i.e. Inflation and depression, requirement of working capital may be high.
Correct Answer True

SET 8

Question The Detailed Project report spells out the modus operandi for the implementation of the Project and the realization of the Project objectives.
Correct Answer True

Question Production line diagrams show the organisation structure of the project along with information on location, personnel required for various
departments, and their inter-relationship.
Correct Answer False

Question The second phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems faced during the Construction and Project implementation

Question In BCG Matrix "STARS" indicate :-

Correct Answer Products which enjoy a high market share as well as a high growth rate
Your Answer Products which enjoy a high market share as well as a high growth rate

Question Management category of Visit report consists of :-

Correct Answer Managing Director , Institutional nominees , Committees of the board

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question Casual methods of Demand forecasting consists of :-

Correct Answer Consumption-level method , Econometric method

Question Excessive expenditures on foreign technicians leads to ________.

Correct Answer Cost and time overrun

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question Marketing aspect of Detailed Project report includes :-

Correct Answer Demand forecasting

Question The sources of cash are :-

Correct Answer Sale of machinery , Cash from operations , Issue of new shares
Your Answer Cash from operations , Sale of machinery , Issue of new shares

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question ________ is the summary of cash book or Receipts and Payments statement.
Correct Answer Cash flow statement
Your Answer Trial balance

Question Receivables is categorised under :-

Correct Answer Current assets and liabilities

Question A project is unique and no two projects are similar.

Correct Answer True

Question A Project is a temporary endeavor to achieve some specific objectives within a :-

Correct Answer Predefined time

Question ________ in liabilities involves inflow of funds.

Correct Answer Increase

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial
aspects.
 Correct Answer True

Question Cost of utilities include :-

Correct Answer Cost of electricity

Question Marketing category of the Project report consists of :-

Correct Answer Target market , Market potential , Pricing policy

Question In BCG Matrix "QUESTION MARKS" indicate :-

Correct Answer Products which have high growth potential but low market share

Question Location of the factory comes under the ________ category of the Project report.
Correct Answer General

Question It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
Correct Answer True

Question Disposition of funds includes :-

Correct Answer Interest on term loans

Question Internal sources of funds are :-

Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off
Your Answer Funds from operation

Question Depreciation is sometimes treated as ________ funds.

Correct Answer Source
Your Answer Application

Question As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness
Your Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness , Average Business
Strength and Low Industry attractiveness

Question The sources of long term and medium term finance are :-
Correct Answer Equity shares , Public deposit
Your Answer Equity shares , Bridge loan , Working capital loan

Question The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the
manufacturing.
Correct Answer True

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation

Question Technical aspect of detailed project report includes :-

Correct Answer Detailed Project Engineering

Question Advantages of fund flow statement are :-

Correct Answer It determines financial consequences of the business operations , It enables the firm to plan its financial resources properly , It helps as a
reliable guide for the future requirement of funds
Your Answer It determines financial consequences of the business operations , It enables the firm to plan its financial resources properly , It helps as a
reliable guide for the future requirement of funds

Question After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer Aggressive Posture , Competitive Posture , Defensive Posture
Your Answer Aggressive Posture , Competitive Posture , Defensive Posture

Question Details regarding Internal accruals comes under the ________ category of Project report.
Correct Answer Financing plan
Your Answer General category

Question The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer False

Question The applications of cash are :-

Correct Answer Purchase of fixed assets , Payment of long term loans
Your Answer Purchase of fixed assets , Payment of long term loans , Issue of new machinery

Question The Project Cycle should be in the ________ order

Correct Answer Identification of Project - Project Appraisal - Negotiations for loans
Your Answer Identification of Project - Project Appraisal - Negotiations for loans

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True

Question There is a need for studying Project finance both for the lenders as well as the borrowers as both of them have equal stake in making the
Project a success.
Correct Answer True

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective

Question Current assets includes stock-in-process.

Correct Answer True

Question External sources of cash are as follows :-

Correct Answer Issue of new shares , Long term loans , Short term borrowings
 Question End use method of Commercial appraisal technique is :-
Correct Answer A list of industries wherein the product is used is made and quantity and volume is arrived at
Your Answer A list of industries wherein the product is used is made and quantity and volume is arrived at

Question The Projects which are undertaken for further enhancing/augmenting the existing capacity is known as :-
Correct Answer Expansion Projects

Question Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities.
Correct Answer Fund
Your Answer Investment

SET 9

Question 1 The advantage of secondary sources of data is that it is readily and economically available.
Correct Answer True

Question2 In small scale organisation, requirement of working capital is quite high due to high amount of overheads, high buying costs and high selling cost.
Correct Answer True

Question3 Banks and Financial Institutions, world-wide, are now financing projects with strategies and terms that would have been hard to believe/imagine just
a few years back.
Correct Answer True

Question 4 ________ is a current asset

Correct Answer Book debts
Your Answer Furniture

Question 5 Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship
Your Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question 6 Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun
Your Answer Management problems

Question 7 Technical aspect of detailed project report includes :-

Correct Answer Detailed Project Engineering
Your Answer Detailed Project Engineering

Question 8 Sources of funds includes :-

Correct Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing
Your Answer Preliminary expenses written off , Increase in secured borrowing

Question 9 Delay in arrival of domestic/foreign machinery and technicians may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question 10 A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer Share

Question11 A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective

Question 12 Sewerage and drainage cost of the project is categorised under :-

Correct Answer Building cost

Question13 Internal sources of funds are :-

Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off
Your Answer Funds from operation , Goodwill written off

Question14 In the Detailed Project Report, Management aspects includes :-

Correct Answer Determination , Organisation Building , Person / system oriented
Your Answer Determination , Organisation Building , Person / system oriented

Question15 Short term finance is normally for a period upto ________ year.
Correct Answer One

Question16 Current assets includes stock-in-process.

Correct Answer True

Question17 The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits

Question18 Time Series Projection Methods of Demand forecasting consists of :-

Correct Answer Trend Projection method , Moving Averages method
Your Answer Trend Projection method , Moving Averages method

Question 19 ________ is a current liability.

Correct Answer Trade credit
Your Answer Trade credit

Question20 Managerial problems in a project are the most pervasive.

Correct Answer True

Question21 Longer the duration of production cycle, higher the requirement of ________.
 Correct Answer Working capital

Question22 Retained earnings is a source of ________ finance.

Correct Answer Internal
Your Answer Short term

Question23 ________ is the summary of cash book or Receipts and Payments statement.
Correct Answer Cash flow statement
Your Answer Trial balance

Question24 In the BCG Matrix, the key term of Cash Cows require further commitment of funds.
Correct Answer False

Question25 Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer True

Question26 A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question27 Casual methods of Demand forecasting consists of :-

Correct Answer Consumption-level method , Econometric method
Your Answer Consumption-level method , Econometric method

Question 28 In BCG Matrix "STARS" indicate :-

Correct Answer Products which enjoy a high market share as well as a high growth rate
Your Answer Products which enjoy a high market share as well as a high growth rate

Question 29 Psychographic market appraisal answers to :-

Correct Answer Why they buy?

Question30 Production line diagrams show the organisation structure of the project along with information on location, personnel required for various
departments, and their inter-relationship.
Correct Answer False

Question31 While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Question32 The cost which change in the same proportion in which the level of production changes is known as :-
Correct Answer Variable cost

Question33 Goods purchased on credit ________ in flow of funds.

Correct Answer Does not result
Your Answer Decreases

Question34 Ratios relating to working capital are :-

Correct Answer Current ratio , Internal measure , Quick ratio
Your Answer Current ratio , Debt Equity ratio , Quick ratio

Question35 Appointments made at senior level during the half-year is categorised under :-
Correct Answer Organisation and management

Question36 Cost of the Project encompasses :-

Correct Answer The total of all items of outlay associated with a project
Your Answer The total of all items of outlay associated with a project

Question37 Production and sales aspect of Visit report consists of :-

Correct Answer Utilisation of installed capacity , Input availability , Sales trends

Question39 Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance
Your Answer Project finance

Question 40 General category of the Project report consists of :-

Correct Answer Name of the Industrial concern , Proposed product , Location of the factory
Your Answer Name of the Industrial concern , Proposed product , Location of the factory

Question 41 The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet

Question42 Short supplies of materials may lead to :-

Correct Answer Cost and time overrun

Question43 After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer Aggressive Posture , Competitive Posture , Defensive Posture
Your Answer Aggressive Posture , Competitive Posture , Defensive Posture

Question 44 ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment
Your Answer Marketing

Question45 Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question46 Name and designation of the chief executive comes under the ________ category.
Correct Answer General
SET 10

Question Details regarding Internal accruals comes under the ________ category of Project report.
Correct Answer Financing plan

Question In the Detailed Project Report, Technical aspects includes :-

Correct Answer Plant capacity , Quality standards , Raw material requirement

Question A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer Share

Question In order to meet the cost of large project, the technique of ________ has been developed so that the financial commitment and risks
associated with a project are shared between the project sponsor and the lending institutions.
Correct Answer Limited recourse financing

Question ________ is a current liability.

Correct Answer Trade credit

Question ________ is a current asset

Correct Answer Book debts

Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the :-
Correct Answer Bankers , Financial Institutions

Question Ratios relating to working capital are :-

Correct Answer Current ratio , Internal measure , Quick ratio

Question Cost of laying roads comes under :-

Correct Answer Land and site cost

Question Pre-operative expenses include :-

Correct Answer Interest on deferred payments
Your Answer Market research expenses

Question The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the
manufacturing.
Correct Answer True

Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside
for use in future for expansion or other purpose.
Correct Answer Dividend

Question In the Detailed Project Report, Management aspects includes :-

Correct Answer Determination , Organisation Building , Person / system oriented
Your Answer Organisation Building , Person / system oriented , Promoter's equity / stake

Question The Detailed Project report spells out the modus operandi for the implementation of the Project and the realization of the Project objectives.
Correct Answer True

Question General Electric Stop Light Matrix analyses products in terms of :-

Correct Answer Business strength and Industrial Attractiveness
Your Answer Company's competitive advantage and Company's financial strength

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial
aspects.
Correct Answer True

Question After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer Aggressive Posture , Competitive Posture , Defensive Posture

Question The ratios of one organisation compared with the ratios of the same organisation is termed as inter-firm comparison.
Correct Answer False

Question Detailed Project Report is generally prepared from a ________ report with additional information.
Correct Answer Feasibility

Question Under ________ method, the forecasts are modified in the light of observed errors.
Correct Answer Exponential smoothing
Your Answer Cobb Douglas Relationship

Question The Detailed Project report must indicate the gestation period of the project.
Correct Answer True

Question Delay in recruitment of staff may lead to cost and time overrun
Correct Answer True

Question Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question The method for evaluating the profitability of industrial projects whose object is to ascertain the period required for recovering the entire
investment made in a project is known as :-
Correct Answer Pay back method
Your Answer Pay back method
Select The Blank
Question ________ in assets involves outflow of funds.
Correct Answer Increase

Question The rate of discount which would equate the present value of investments to the present value of benefits over the life of the project is known
as :-
Correct Answer Internal rate of return

Question Cost of fencing comes under the ________ category of the Project report.
Correct Answer Land and site development

Question The ratio that roughly measures the company's potential reserve of cash is termed as :-
Correct Answer Net Working capital to total assets
Your Answer Quick ratio

Question The sources of funding have expanded from banks, insurance companies and multilateral agencies to include the :-
Correct Answer Capital market

Question Sensitivity analysis consists of assessing the degree of risk.

Correct Answer True

Question The permanent requirement of working capital should be financed out of :-

Correct Answer Cash Profits , Shares , Debentures

Question Sources of funds include :-

Correct Answer Increase in secured borrowing

Question Nominal maximum capacity is the capacity that is technically attainable and this corresponds to the supplier's guaranteed capacity.
Correct Answer True

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals

Question Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship.
Correct Answer True

Question In the BCG Matrix "DOGS" indicate products which are generally during the stage of Decline of a Product Life Cycle.
Correct Answer True

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question Technical appraisal is basically concerned with :-

Correct Answer Technology , Layout of the plant , Design of the plant

Question Demographic market appraisal answers to

Correct Answer Who they are?
Your Answer Where do the customers live?

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect

Question Casual methods of Demand forecasting consists of :-

Correct Answer Consumption-level method , Econometric method
Your Answer Trend Projection method , Consumption-level method , Moving Averages method

Question The statement which shows the movement of cash into and out of firm's kittie is known as :-
Correct Answer Cash flow statement

SET 11

Question The sources of long term and medium term finance are :-
Correct Answer Public deposit , Equity shares
Your Answer Equity shares , Bridge loan , Working capital loan

Question Disposition of funds includes :-

Correct Answer Increase in working capital , Preliminary expenses , Dividend
Your Answer Increase in working capital , Dividend , Preliminary expenses written off

Question The company having ________, is appropriate for the strategic posture of Conservative under the SPACE approach.
Correct Answer Limited competitive advantage, belonging to a not so attractive industry but enjoying financial strength and operating in a relatively stable
environment
Your Answer Limited financial strength, enjoying competitive advantage, belonging to attractive industry and operating in a relatively volatile environment

Question A market survey generally is a ________ survey.

Correct Answer Sample
 Question The ratio which covers those assets which can be converted into cash immediately is known as :-
Correct Answer Quick ratio

Question Delay in arrival of domestic/foreign machinery and technicians may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Casual methods of Demand forecasting consists of :-

Correct Answer Consumption-level method , Econometric method
Your Answer Consumption-level method , Econometric method

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology
Your Answer Manufacturing process and technology

Question The objectives of the funds flow statement is as follows :-

Correct Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand
the changes in assets as well as asset sources which are not revealed by the income statement
Your Answer To find out the uses of loans raised by the business , To help to understand the changes in assets as well as asset sources which are not
revealed by the income statement , Helps to prepare financial statements

Question The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet
Your Answer Profit and Loss Account , Balance Sheet , Cash flow statement

Question ________ in assets involves outflow of funds.

Correct Answer Increase

Question Technology, design, layout of the plant as well as inputs and infrastructural facilities are to be considered under :-
Correct Answer Technical appraisal

Question The Detailed Project report must indicate the gestation period of the project.
Correct Answer True

Question Interest and Dividend are to be considered while calculating Operating ratio.
Correct Answer False

Question Short supplies of materials may lead to :-

Correct Answer Cost and time overrun
Your Answer Cost and time overrun

Question Ratio should be computed on the basis of inter-related figures which have a cause and effect relationship.
Correct Answer True

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question More accurate the estimation of the level of current assets and current liabilities, more accurate will be estimation of the requirement of
________.
Correct Answer Working capital

Question The rate of discount which would equate the present value of investments to the present value of benefits over the life of the project is known
as :-
Correct Answer Internal rate of return
Your Answer Net Present value

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation
Your Answer Environmental factors , Risk involved , Political issues

Question The advantage of secondary sources of data is that it is readily and economically available.
Correct Answer True

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect
Your Answer Strategic perspective , Time span , Finance cost aspect

Question A project is unique and no two projects are similar.

Correct Answer True

Question The sources of cash are :-

Correct Answer Cash from operations , Sale of machinery , Issue of new shares
Your Answer Cash from operations , Sale of machinery , Issue of new shares

Question Profit is the result of customer satisfaction, indeed customer delight under the :-
Correct Answer Marketing concept

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative
Your Answer Honesty , Financial resources , Initiative

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits
Your Answer That it involves current outlay of funds in expectation of future benefits
 Question ________ is the summary of cash book or Receipts and Payments statement.
Correct Answer Cash flow statement

Question Under the SPACE Model, Customer loyalty is determined under the ________ dimension.
Correct Answer Company's competitive advantage
Your Answer Company's competitive advantage

Question The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer False

Question A smaller unit into which the overall requirement of capital of a company is sub-divided is termed as ________.
Correct Answer Share

Question As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness
Your Answer Average Business Strength and Medium Industry Attractiveness , Average Business strength and high Industry attractiveness , Average
Business Strength and Low Industry attractiveness

Question The ratio which indicates the ability of the company to meet current obligations is termed as :-
Correct Answer Current ratio

Question The General Electric Company incorporated in the USA, is highly respected for the sophistication, maturity and quality in its planning
systems.
Correct Answer True

Question Inflow of funds may not necessarily result in ________.

Correct Answer Inflow of cash

Question There is a need for studying Project finance both for the lenders as well as the borrowers as both of them have equal stake in making the
Project a success.
Correct Answer True

Question Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities.
Correct Answer Fund
Your Answer Investment

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question In the Detailed Project Report, Management aspects includes :-

Correct Answer Determination , Organisation Building , Person / system oriented
Your Answer Determination , Organisation Building , Person / system oriented

Question Depreciation is sometimes treated as ________ funds.

Correct Answer Source

Question It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
Correct Answer True

Question In BCG Matrix "QUESTION MARKS" indicate :-

Correct Answer Products which have high growth potential but low market share
Your Answer Products which have high growth potential but low market share

Question Production line diagrams show the organisation structure of the project along with information on location, personnel required for various
departments, and their inter-relationship.
Correct Answer False

Set 12

Question Borrower's contribution towards Working capital is known as :-

Correct Answer Margin money

Question Building cost consists of :-

Correct Answer Factory building , Auxiliary buildings , Administrative block
Your Answer Factory building , Auxiliary buildings , Administrative block

Question In BCG Matrix " CASH COWS" indicate :-

Correct Answer Products which have high market share but low growth potential
Your Answer Products which have high market share but low growth potential

Question In the Detailed Project Report, Marketing aspects includes :-

Correct Answer Demand forecasting , Promotion , Distribution
Your Answer Demand forecasting , Promotion , Distribution

Question Cost of the Project encompasses :-

Correct Answer The total of all items of outlay associated with a project

Question In both the extreme situations of trade cycles i.e. Inflation and depression, requirement of working capital may be high.
Correct Answer True

Question Name of the finance manager comes under the Project organisation category of the Project report.
Correct Answer True

Question It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
 Correct Answer True

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question BCG Product Portfolio Matrix analyses products on the basis of :-

Correct Answer Relative Market share and Industry Growth rate

Question ________ profitability reduces the strain on working capital.

Correct Answer High

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation

Question "Fly by night" operator mentality is a :-

Correct Answer Management quality

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question As the plant capacity increase, the investment cost unit capacity ________.
Correct Answer Decreases

Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the :-
Correct Answer Bankers , Financial Institutions
Your Answer Shareholders , Bankers , Financial Institutions

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question A project is unique and no two projects are similar.

Correct Answer True

Question Limitations of fund flow statement are :-

Correct Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions
Your Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions , It does not help in
determining future requirement of funds

Question The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems pertaining to the period when the project is in operation

Question Receivables is categorised under :-

Correct Answer Current assets and liabilities

Question It is said that a second rate project in the hands of first rate management is better than a first rate project in the hands of :-
Correct Answer Second rate management

Question The company having ________, is appropriate for the strategic posture of Defensive under the SPACE approach.
Correct Answer Lacks both competitive advantage as well as financial strength and belongs to a not so attractive industry, operating in an unstable
environment

Question Excessive expenditures on foreign technicians leads to ________.

Correct Answer Cost and time overrun

Question The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer False

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology

Question Financial and economic aspect of the Visit report consists of :-

Correct Answer Company's financial year , Impact of Government policies on company operations , Comments on the last published accounts
Your Answer Company's financial year , Impact of Government policies on company operations , Comments on the last published accounts

Question Sensitivity analysis consists of assessing the degree of risk.

Correct Answer True

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective

Question The permanent requirement of working capital should be financed out of :-

Correct Answer Cash Profits , Shares , Debentures

Question In the BCG Matrix "DOGS" indicate products which are generally during the stage of Decline of a Product Life Cycle.
Correct Answer True

Question The construction of National Golden Quadrilateral can be recognised as Project.

Correct Answer True

Question Under the SPACE Model, Customer loyalty is determined under the ________ dimension.
Correct Answer Company's competitive advantage
 Question The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the
manufacturing.
Correct Answer True

Question The emphasis of a finance manager should be on taking a synergistic view of the project rather than looking at it only from the financial aspects.
Correct Answer True

Question Miscellaneous fixed assets includes :-

Correct Answer Cables

Question In the Detailed Project Report, Technical aspects includes :-

Correct Answer Plant capacity , Quality standards , Raw material requirement
Your Answer Quality standards , Raw material requirement , Power / telecom facilities

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question Market potential should be determined under the Marketing aspect of the Project report.
Correct Answer True

Question Ratio analysis is a widely used tool of :-

Correct Answer Financial analysis

Question Preoperative expenses includes :-

Correct Answer Bank guarantees

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question If the organisation is a trading organisation, the requirement of working capital will be on the lower side.
Correct Answer False

SET 13

Question Cost under-estimation at the project preparation and evaluation stage leads to cost and time over run.
Correct Answer True

Question Short supplies of materials may lead to :-

Correct Answer Cost and time overrun

Question ________ is a current asset

Correct Answer Book debts

Question Disposition of funds includes :-

Correct Answer Interest on term loans
Your Answer Increase in secured borrowing

Question The permanent requirement of working capital should be financed out of :-

Correct Answer Cash Profits , Shares , Debentures

Question Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer True

Question Commission outstanding is ________ of funds.

Correct Answer Application

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question The objectives of the funds flow statement is as follows :-

Correct Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand
the changes in assets as well as asset sources which are not revealed by the income statement
Your Answer To find out the uses of loans raised by the business , To help to understand the changes in assets as well as asset sources which are not
revealed by the income statement , Helps to prepare financial statements

Question The second phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems faced during the Construction and Project implementation

Question The Detailed Project report spells out the modus operandi for the implementation of the Project and the realization of the Project objectives.
Correct Answer True

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors
Your Answer Proximity to raw materials and markets , Plant capacity , Availability of infrastructure

Question Change in the project concept itself may lead to cost and time overrun.
Correct Answer True

Question Name and designation of the chief executive comes under the ________ category.
Correct Answer General
Your Answer Project organisation

Question ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment

Question Internal sources of funds are :-

 Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off
Your Answer Funds from operation , Funds from long term loans

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals

Question Financial aspect of Detailed Project report includes :-

Correct Answer Fixation of means of financial structure

Question ________ is that scarce input which financial resources alone cannot mobilise.
Correct Answer Management

Question A project can be regarded as the sum of the activities directed towards a :-
Correct Answer Specific result

Question A project objective which states "What' is to be viewed" is termed as :-

Correct Answer Strategic perspective

Question Short term finance is normally for a period upto ________ year.
Correct Answer One

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation

Question As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness
Your Answer Strong Business Strength and high Industry attractiveness , Average Business Strength and Medium Industry Attractiveness , Average Business
strength and high Industry attractiveness

Question Longer the duration of production cycle, higher the requirement of ________.
Correct Answer Working capital

Question ________ in assets involves outflow of funds.

Correct Answer Increase

Question For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer False

Question The cash flow of all the years during the expected life of the project are discounted at a pre-determined cut off rate and :-
Correct Answer Net Present value is obtained
Your Answer Average rate of return is obtained

Question The ratio which indicates the ability of the company to meet current obligations is termed as :-
Correct Answer Current ratio

Question Sensitivity analysis consists of assessing the degree of risk.

Correct Answer True

Question In small scale organisation, requirement of working capital is quite high due to high amount of overheads, high buying costs and high selling cost.
Correct Answer True

Question Marketing aspect of Detailed Project report includes :-

Correct Answer Demand forecasting

Question The secondary data is collected through market survey, specific for the project being appraised.
Correct Answer False
Your Answer Net Working capital to total assets

Question General Electric Stop Light Matrix :-

Correct Answer Which is highly respected for the sophistication, maturity and quality in its planning systems
Your Answer Which is highly respected for the sophistication, maturity and quality in its planning systems

Question Geographic market appraisal answers to :-

Correct Answer Where do the customers live?
Your Answer Where do the customers live?

Question Sometimes the term ________ is interpreted as cash equivalent i.e. cash and marketable securities.
Correct Answer Fund

Question The temporary requirement of working capital can be financed out of :-

Correct Answer Inter-corporate Deposits , Commercial Papers
Your Answer Inter-corporate Deposits , Commercial Papers

Question Current assets includes stock-in-process.

Correct Answer True
SET 14

Question The data for ratio analysis is obtained from :-

Correct Answer Profit and Loss Account , Balance Sheet

Question Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun

Question The Project Cycle should be in the ________ order

Correct Answer Identification of Project - Project Appraisal - Negotiations for loans

Question Change in the project concept itself may lead to cost and time overrun.
Correct Answer True

Question The industrial concern earned profits by increasing the sales volume under the Correct Answer Sales concept

Question Cost and time overrun of the project may lead to loss on account of lost market opportunities.
Correct Answer True

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True
Question The objectives of the funds flow statement is as follows :-
Correct Answer To find out the uses of loans raised by the business , To indicate the financial strength and weakness of the business , To help to understand
the changes in assets as well as asset sources which are not revealed by the income statement

Question The maximum Seed Capital assistance provided by IDBI under the project will be restricted to 50% of the required promoter's contribution or Rs. 50
lakhs whichever is lower.
Correct Answer False

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect

Question Strategic Position and Action Evaluation Model :-

Correct Answer Is an approach to hammer out an appropriate strategic posture for a firm and its individual business

Question The Projects which are undertaken to manufacture certain products which are being used as raw material by the existing units is known as :-
Correct Answer Backward Integration Projects

Question Technical appraisal is basically concerned with :-

Correct Answer Technology , Layout of the plant , Design of the plant

Question It is mandatory for each unit to obtain necessary clearance from Pollution Control Authorities before setting up any project.
Correct Answer True

Question While choosing the location for a project, the following factors should be considered :-
Correct Answer Proximity to raw materials and markets , Availability of infrastructure , Government policies and other factors

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits

Question Longer the duration of production cycle, higher the requirement of ________.
Correct Answer Working capital

Question Inflow of funds may not necessarily result in ________.

Correct Answer Inflow of cash

Question Infrastructural projects include:-

Correct Answer Power Generation and Distribution

Question Details regarding Administrative / controlling office comes under the ________ category.
Correct Answer General

Question Ratios relating to working capital are:-

Correct Answer Current ratio, internal measure, Quick ratio

Question Depreciation is sometimes treated as ________ funds.

Correct Answer Source

Question Miscellaneous fixed assets includes :-

Correct Answer Cables

Question In BCG Matrix "STARS" indicate :-

Correct Answer Products which enjoy a high market share as well as a high growth rate

Question ________ is a current liability.

Correct Answer Trade credit

Question Sources of funds includes :-

Correct Answer Depreciation , Preliminary expenses written off , Increase in secured borrowing
Question The construction of National Golden Quadrilateral can be recognised as Project.
Correct Answer True

Question The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the
manufacturing.
Correct Answer True

Question Capital Issue expenses include :-

Correct Answer Brokerage fees to registrars

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology

Question Past trend method of Commercial appraisal technique is :-

Correct Answer Adopted as a guide depending on the consumption pattern of the society as a whole

Question Management category of Visit report consists of :-

Correct Answer Managing Director , Institutional nominees , Committees of the board

Question Sanctioned bank limits is categorised under :-

Correct Answer Working capital

Question General Electric Stop Light Matrix analyses products in terms of :-

Correct Answer Business strength and Industrial Attractiveness

Question Production and sales aspect of Visit report consists of :-

Correct Answer Utilisation of installed capacity , Input availability , Sales trends

Question Cost of overheads include :-

Correct Answer Cost of repairs and maintenance

Question External sources of cash are as follows :-

Correct Answer Issue of new shares , Long term loans , Short term borrowings

Question The company having ________, is appropriate for the strategic posture of Conservative under the SPACE approach.
Correct Answer Limited competitive advantage, belonging to a not so attractive industry but enjoying financial strength and operating in a relatively stable
environment

Question Sensitivity analysis consists of assessing the degree of risk.

Correct Answer True

Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners.
Correct Answer True

Question The cost of Plant and Machinery includes :-

Correct Answer Cost of stores and spares

Question The basic difference between the feasibility study report and ________ is the level of accuracy and degree of detail.
Correct Answer Detailed Project report

Set 15

Question In the BCG Matrix, the key term of Cash Cows require further commitment of funds.
Correct Answer False

Question In the GE's Stop Light Matrix, when ________ situation prevails , Products call for divestment.
Correct Answer Average Business Strength and Low Industry attractiveness

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits

Question ________ tries to have what the customer will want- where, when, in what form and at what price.
Correct Answer Marketing

Question Financial aspect of Detailed Project report includes :-

Correct Answer Fixation of means of financial structure

Question A project can be regarded as the sum of the activities directed towards a :-
Correct Answer Specific result

Question Sewerage and drainage cost of the project is categorised under :-

Correct Answer Building cost

Question The BCG Product Portfolio Matrix :-

Correct Answer Is a tool for strategic ( product ) planning and resource allocation

Question End use method of Commercial appraisal technique is :-

Correct Answer A list of industries wherein the product is used is made and quantity and volume is arrived at

Question ________ capital represents permanent capital.

Correct Answer Equity

Question Trend Projection method of demand forecasting consists of :-

Correct Answer Linear Relationship , Exponential Relationship , Polynomial Relationship

Question After the SPACE chart is constructed, we would normally get any one of the following basic strategic postures :-
Correct Answer Aggressive Posture , Competitive Posture , Defensive Posture
 Question ________ in liabilities involves inflow of funds.
Correct Answer Increase

Question ________ occupies a unique position in the macro economic development which helps in induction of new technology and facilitates, greater
efficiency as well as higher productivity.
Correct Answer Investment

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True

Question Excessive expenditures on foreign technicians leads to ________.

Correct Answer Cost and time overrun

Question Appointments made at senior level during the half-year is categorised under :-
Correct Answer Organisation and management

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question Delays in infrastructure Development by State Agencies may lead to :-

Correct Answer Cost and time overrun

Question As per the GE's Stop Light Matrix, Products may justify substantial commitment of funds where there is :-
Correct Answer Strong Business Strength and high Industry attractiveness , Average Business strength and high Industry attractiveness

Question The cost of Plant and Machinery may be adjusted for a possible increase known as :-
Correct Answer Escalation

Question Demand technique forecasting of Commercial appraisal includes :-

Correct Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product

Question The BCG product Portfolio Matrix, General Electric Stop Light Matrix and Strategic Position and Action Evaluation Model are considered to be highly
relevant as :-
Correct Answer Portfolio Planning Tools

Question As the plant capacity increase, the investment cost unit capacity ________.
Correct Answer Decreases

Question The applications of cash are :-

Correct Answer Purchase of fixed assets , Payment of long term loans

Question A high debt equity ratio may indicate that the financial stake of the creditors is more than that of the owners.
Correct Answer True

Question The permanent requirement of working capital should be financed out of :-

Correct Answer Cash Profits , Shares , Debentures

Question Ratio analysis is a technique of planning and control.

Correct Answer False

Question Miscellaneous expenditure is written on the asset side of the Balance sheet.
Correct Answer True

Question Cost of fencing comes under the ________ category of the Project report.
Correct Answer Land and site development

Question The ratio which covers those assets which can be converted into cash immediately is known as :-
Correct Answer Quick ratio

Question The Projects which are undertaken to manufacture certain products which are being used as raw material by the existing units is known as :-
Correct Answer Backward Integration Projects

Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________ but are kept aside for use
in future for expansion or other purpose.
Correct Answer Dividend

Question Time Series Projection Methods of Demand forecasting consists of :-

Correct Answer Trend Projection method , Moving Averages method

Question Unlike financial projections, there cannot be any fixed, well-recognised or structure formula/steps for management evaluation/appraisal.
Correct Answer True

Question Production line diagrams show the organisation structure of the project along with information on location, personnel required for various
departments, and their inter-relationship.
Correct Answer False

Question ________ is a current asset

Correct Answer Book debts

Question For computing Interest coverage ratio, Profit after Interest and taxes are taken into account.
Correct Answer False

Question Details regarding Internal accruals comes under the ________ category of Project report.
Correct Answer Financing plan
 Question Management category of Visit report consists of :-
Correct Answer Managing Director , Institutional nominees , Committees of the board

Question Nominal maximum capacity is the capacity that is technically attainable and this corresponds to the supplier's guaranteed capacity.
Correct Answer True

Question The ratio that roughly measures the company's potential reserve of cash is termed as :-
Correct Answer Net Working capital to total assets

Question The following are the sources of funds :-

Correct Answer Operating Profit , Non operating Income

Question Change in the project concept itself may lead to cost and time overrun.
Correct Answer True

Set 16

Question ________ is a current asset

Correct Answer Book debts

Question The temporary requirement of working capital can be financed out of :-

Correct Answer Inter-corporate Deposits , Commercial Papers

Question Current assets includes stock-in-process.

Correct Answer True

Question A project objective which states What "achieving it " would cost is known as :-
Correct Answer Finance cost aspect

Question Management qualities includes :-

Correct Answer Honesty , Financial resources , Initiative

Question A Project has a ________ represented by growth, maturity and decay.

Correct Answer Life cycle

Question Demand technique forecasting of Commercial appraisal includes :-

Correct Answer Future demand of the product , Proper survey of the product , Future availability and supply of the product

Question The basic characteristic of a project is :-

Correct Answer That it involves current outlay of funds in expectation of future benefits

Question Limitations of fund flow statement are :-

Correct Answer It does not provide any new information but only rearranges the various facts , It does not consider non-fund transactions

Question Location of the factory comes under the ________ category of the Project report.
Correct Answer General

Question The basic difference between the feasibility study report and ________ is the level of accuracy and degree of detail.
Correct Answer Detailed Project report

Question ________ is the summary of cash book or Receipts and Payments statement.
Correct Answer Cash flow statement

Question The BCG Product Portfolio Matrix :-

Correct Answer Is a tool for strategic ( product ) planning and resource allocation

Question Land and site development comes under the cost aspect of the Project report.
Correct Answer True

Question The sources of cash are :-

Correct Answer Cash from operations , Sale of machinery , Issue of new shares

Question The third phase of the technical appraisal which focuses upon appraising the likely technical gaps consists of :-
Correct Answer Problems pertaining to the period when the project is in operation

Organisation and Management Strikes/lay-offs/lockouts etc. Receivables

Material inputs and utilities Stock of raw material Finished goods
Working capital Sanctioned bank limit Stock of raw material
Marketing Pricing policy Pricing policy

Question In the Detailed Project Report, Marketing aspects includes :-

Correct Answer Demand forecasting , Promotion , Distribution

Question Time Series Projection Methods of Demand forecasting consists of :-

Correct Answer Trend Projection method , Moving Averages method

Question Financial analysis based on accounting ratios will give mis-leading results if the effects of changes in price level are not taken into account.
Correct Answer True

Question Sensitivity analysis consists of assessing the degree of risk.

Correct Answer True

Question The 'BCG Matrix 'analysis various products of the organisation in the terms of Business strength and Industry Attractiveness.
Correct Answer False
 Question The cost factors of the product mixed is also taken into account to arrive at cost at various levels of production and its cost impact of the
manufacturing.
Correct Answer True

Environmental stability dimension under SPACE Model involves Demand variability Demand variability
Company's competitive advantage dimension under SPACE Model involves Product life cycle Product life cycle
Company's financial strength dimension under SPACE Model involves Leverage liquidity Leverage liquidity
Industry strength dimension under SPACE Model involves Profit potential Profit potential

Question The various aspects which need to be considered while assessing Project finance financing are :-
Correct Answer Environmental factors , Risk involved , Managerial compensation

Question A project objective can be said to have the following dimensions viz.:
Correct Answer Strategic perspective , Time span , Finance cost aspect

Question The Key terms used in the BCG Product Portfolio matrix are :-
Correct Answer Stars , Question marks

Question Details regarding Bridge finance comes under the ________ category of Project report.
Correct Answer Financing plan

Question Internal sources of funds are :-

Correct Answer Funds from operation , Loss on sale of fixed assets , Goodwill written off

Question ________ capital represents permanent capital.

Correct Answer Equity

Question If the organisation is a trading organisation, the requirement of working capital will be on the lower side.
Correct Answer False

Question In the Detailed Project Report, Technical aspects includes :-

Correct Answer Plant capacity , Quality standards , Raw material requirement

Question Debt Service means payment of installments and interest against an amount borrowed as per terms of loan.
Correct Answer True

Question Cost of overheads include :-

Correct Answer Cost of repairs and maintenance

Question ________ profitability reduces the strain on working capital.

Correct Answer High

Question The profit earned from operations of the project during life of the project is known as :-
Correct Answer Cash inflow

Question The Cash Flow statement is also referred to as :-

Correct Answer Cash flow budget

Question Disposition of funds includes :-

Correct Answer Interest on term loans

Question Profit is the result of customer satisfaction, indeed customer delight under the :-
Correct Answer Marketing concept

Question Financing plans consists of :-

Correct Answer Share capital , Term loans , Internal accruals

Question Having decided on the location and product, the promoter takes into account the ________ that is to be adopted for producing the product.
Correct Answer Manufacturing process and technology

Question Name and designation of the chief executive comes under the ________ category.
Correct Answer General

Question Infrastructural projects include :-

Correct Answer Power Generation and Distribution

Question Goods purchased on credit ________ in flow of funds.

Correct Answer Does not result

Question Every project involves financial outlay which can be referred to as :-

Correct Answer Project finance

Question A project is unique and no two projects are similar.

Correct Answer True

Question Demographic market appraisal answers to

Correct Answer Who they are?

Question Stock in the beginning results in :-

Correct Answer Application of funds

Question A business enterprise which has adopted the marketing concept as an essential ingredient of its corporate policy, is basically :-

Correct Answer Customer market-oriented

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer
Question Casual methods of Demand forecasting consists of :-

Correct Answer Consumption-level method , Econometric method

Your Answer Consumption-level method , Econometric method

Select The Blank

Question Retained earnings indicates that whatever profits are earned by the company are not distributed by it by way of ________
but are kept aside for use in future for expansion or other purpose.
Correct Answer Dividend

Your Answer Dividend

Multiple Choice Single Answer

Question The statement which shows the movement of cash into and out of firm's kittie is known as :-

Correct Answer Cash flow statement

Your Answer Cash flow statement

Match The Following

Question Correct Answer Your Answer

Moving into new areas/product lines Diversification Projects Diversification Projects

Suppliers' credit Short term finance Short term finance

Deferred credit Long term finance Long term finance

Setting up new units New Projects New Projects

Multiple Choice Single Answer

Question Dissentions among the promoters is a :-

Correct Answer Management problem

Your Answer Management problem

Multiple Choice Multiple Answer

Question The sources of cash are :-

Correct Answer Cash from operations , Sale of machinery , Issue of new shares

Your Answer Cash from operations , Sale of machinery , Issue of new shares

Multiple Choice Single Answer

Question Location of the factory comes under the :-

Correct Answer General category

Your Answer General category

Multiple Choice Multiple Answer

Question General category of the Project report consists of :-

Correct Answer Name of the Industrial concern , Proposed product , Location of the factory

Your Answer Name of the Industrial concern , Proposed product , Location of the factory

Select The Blank

Question Excessive expenditures on foreign technicians leads to ________.

Correct Answer Cost and time overrun

Your Answer Cost and time overrun