art mcqs

A growth industry is defined as ____________.

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an industry with 15% rate of growth per annum
an industry where demand for its product is growing
an industry with high capital investment
an industry with average growth higher than the growth of the economy
✅ The correct answer is D.
A growth industry is defined as an industry with average growth higher than the growth of the economy. A growth industry is that sector of an economy which experiences a higher-than-average growth rate as compared to other sectors. Growth industries are often new or pioneer industries that did not exist in the past. Their growth is a result of demand for new products or services offered by companies in the field.

Which one of the following is INCORRECT about closing stock?

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It is added into current assets
It is deducted from Material available for use
It becomes opening stock of next year
It reduces the resources of business
✅ The correct answer is D.
Closing stock does not reduce the resources of business. Closing stock is the amount of inventory that a business still has on hand at the end of a reporting period.

Using the conversion option present in a term policy you can convert the same to _________.

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Whole life policy
Mortgage policy
Bank FD
Decreasing term policy
✅ The correct answer is A.
Using the conversion option present in a term policy you can convert the same to Whole life policy. Most term life insurance policies sold today come with a conversion feature that allows you to convert some or all of your term life insurance policy to a permanent policy like whole life, universal life or variable life.

Abnormal process loss can be transferred to ________.

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costing profit and loss a/c
financial profit and loss a/c
manufacturing
trading
✅ The correct answer is A.
Abnormal process loss can be transferred to costing profit and loss a/c. Process account is to be credited by abnormal loss account with cost of material, labour and overhead equivalent to good units and the loss due to abnormal is transferred to Costing Profit and Loss Account.

Insurance business is based on ______________.

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Parkinson law
Newton law
The theory of probability and law of large numbers
Boyle law
✅ The correct answer is C.
Insurance business is based on the theory of probability and law of large numbers. As the number of exposure units, or policyholders, increases, the probability is higher that the actual loss per exposure unit will equal the expected loss per exposure unit.

Budgeted sales of X for March are 18000 units. At the end of the production process for X, 10% of production units are scrapped as defective. Opening inventories of X for March are budgeted to be 15000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check. The production budget for X for March, in units is:

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12960
14400
15840
16000
✅ The correct answer is D.
Budgeted sales 18000
Budgeted reduction in finished goods (3600) = 15000-11400
Budgeted production of completed units 14400
Allowance for defective units
(10%of output=1/9 of Input) 1600

Production budget 16000

Net present value, profitability index, payback and discounted payback are methods to

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evaluate cash flow
evaluate projects
evaluate budgeting
evaluate equity
✅ The correct answer is B.
Net present value, profitability index, payback and discounted payback are methods to evaluate projects. The most frequently mentioned and described static methods of investment projects evaluation include: The payback period. Account of comparative costs. Account of comparative profit. Account of comparative profitability. The average rate of return on investment. Test of the first year.