art mcqs

In an ordinary annuity, payments are made or received _________ of each period.

by
A) At the beginning
B) At the end
C) On maturity
D) 6 months before expiry
✅ ANSWER: B
An ordinary annuity is a series of equal payments made at the end of consecutive periods over a fixed length of time. While the payments in an annuity can be made as frequently as every week, in practice, ordinary annuity payments are made monthly, quarterly, semi-annually or annually.

Which of the following options is correct?

by
A) Premium paid by a client for health cover enjoys income tax deduction under section 80C of the Income Tax Act
B) Premium paid towards health cover earns income tax rebate under section 80D of the Income Tax Act
C) Premium paid for a health cover does not qualify for tax benefit under any provision of the Income Tax Act
D) There is no upper limit to sum assured in a health insurance policy
✅ ANSWER: B
Section 80D of the Income Tax Act deals with rebates. Tax Benefits of Health Insurance Under Section 80D. Health insurance premium paid for self, spouse, dependent children or parents qualifies for tax deduction up to Rs.25,000. This limit has been increased from Rs.15,000 from the previous year to Rs.25,000.

Which one of the following inventory costing methods is supposed to issue the most recently purchased goods?

by
A) FIFO
B) LIFO
C) AVCO or averrage cost
D) Moving average
✅ ANSWER: B
LIFO inventory costing methods is supposed to issue the most recently purchased goods. LIFO, which stands for last-in-first-out, is an inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year.

Chance of happening any unfavourable event in near future is classified as

by
A) chance
B) event happening
C) probability
D) risk
✅ ANSWER: D
Chance of happening any unfavourable event in near future is classified as risk. In broad terms, risk involves exposure to some type of danger and the possibility of loss or injury. In general, risks can apply to your physical health or job security. In finance and investing, risk often refers to the chance an outcome or investment’s actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment.

According to Black Scholes model, rate which is constant and known is classified as

by
A) short term return rate
B) long term return rate
C) risk free interest rate
D) risky rate of return
✅ ANSWER: C
According to Black Scholes model, rate which is constant and known is classified as risk free interest rate. The risk-free interest rate is the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time.

An equation in which total assets are multiplied to profit margin is classified as

by
A) du DuPont equation
B) turnover equation
C) preference equation
D) common equation
✅ ANSWER: A
An equation in which total assets are multiplied to profit margin is classified as du DuPont equation. In the DuPont equation, ROE is equal to profit margin multiplied by asset turnover multiplied by financial leverage. Under DuPont analysis, return on equity is equal to the profit margin multiplied by asset turnover multiplied by financial leverage.

American companies prepare their financial statement in Dollars whereas Japanese companies produce financial statement in Yen. This is an example of:

by
A) Stable monetary unit concept
B) Unit of measurement concept
C) Money value concept
D) Current swap concept
✅ ANSWER: B
American companies prepare their financial statement in Dollars whereas Japanese companies produce financial statement in Yen. This is an example of Unit of measurement concept.