Assertion Reason MCQs of Financial Management BST class 12

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Looking for Assertion Reason-based MCQs (Multiple Choice Questions) of Financial Management chapter of Business Studies of Class 12 CBSE Board, ISC and other State Board.

We have compiled very important MCQs of chapter Financial Management of Business Studies Class 12

Multiple Choice Question of Financial Management chapter Business Studies Class 12 CBSE

Let’s Practice

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): Capital budgeting decisions are very crucial and must be taken with utmost care.

Reason (R): Investment decisions affect the earning capacity of the firm over the long run and are irreversible except at a huge cost.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – a)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): A company having easy access to the capital market follows a strict dividend policy.

Reason (R): Such a company can raise capital by approaching the capital market.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – d)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): Debt is more risky as compared to Equity.

Reason (R): Payment of dividend and return of principal amount is obligatory for the business in case of equity.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – c)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): Trading on Equity raises the return of equity shareholders.

Reason (R): Cost of debt is lower than the cost of equity and interest paid on debt is a deductible expense.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – a)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): The primary objective of financial management is to maximise the wealth of equity shareholders.

Reason (R): Investment Decision is concerned with the investment of a firm’s funds in different assets.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – b)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): Higher the lead time, the lower is the amount of working capital requirement.

Reason (R): If the raw material is available freely and continuously, then less working capital is needed as less inventory has to be maintained.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – d)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): A transport service provider needs less working capital.

Reason (R): A service firm sells more on a cash basis and does not have to maintain inventory.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – a)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): More working capital is required in a highly competitive market.

Reason (R): Competition forces a firm to adopt strict credit terms.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – c)

Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:

Assertion (A): Collaboration of an organisation with another organisation reduces the need of fixed capital.

Reason (R): Availability of leasing facilities reduces the fixed capital requirement of a company.

Alternatives:

a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.

Ans – b)

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Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

Articles: 2015

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