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CA Inter Sources of Finance — practice questions — page 2

Explore 83 free Sources of Finance questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Sources of Finance questions and exercises with answers

Showing questions 31–60 of 83.

Which other name is used for the retained earnings of a company?Read the answer and worked solution →Opening retained earnings Rs 120 lakh, profit Rs 45 lakh, dividends Rs 20 lakh. Closing?Read the answer and worked solution →Does a large retained earnings balance mean the company holds surplus cash?Read the answer and worked solution →How can a credit balance in retained earnings be capitalised?Read the answer and worked solution →Where are retained earnings reported in a balance sheet?Read the answer and worked solution →A negative retained earnings balance may be called what?Read the answer and worked solution →What effect does retaining earnings have on shareholder equity?Read the answer and worked solution →How are bonus shares funded from retained earnings treated?Read the answer and worked solution →In a rights issue, to whom are the subscription rights offered?Read the answer and worked solution →If subscription rights are transferable, what can a holder do with them?Read the answer and worked solution →What is the role of an underwriter in a rights issue?Read the answer and worked solution →What does an over-subscription privilege allow an investor to do?Read the answer and worked solution →A share trades at Rs 400. A 1:1 rights issue is made at Rs 200. Theoretical price after the issue?Read the answer and worked solution →A company has 100 million shares and makes a 1:1 rights issue fully taken up. If the cash is idle, EPS will do what?Read the answer and worked solution →Why does a rights issue leave control of the company unchanged?Read the answer and worked solution →What does a business do in factoring?Read the answer and worked solution →Which factoring arrangement is used in international trade by exporters?Read the answer and worked solution →How many parties are directly involved in a factoring transaction?Read the answer and worked solution →What portion of the invoice does a factor typically advance upfront?Read the answer and worked solution →A factor advances 80 percent of a Rs 5,00,000 invoice. What is the advance paid?Read the answer and worked solution →Factoring without recourse is treated as what kind of transaction?Read the answer and worked solution →What is factoring of a single invoice called?Read the answer and worked solution →What does whole ledger factoring involve?Read the answer and worked solution →In factoring, the advance rate is the percentage of an invoice that is what?Read the answer and worked solution →The discount rate in factoring is best described as what?Read the answer and worked solution →What is the purpose of a factor's ongoing reserve account?Read the answer and worked solution →Commercial paper usually has a fixed maturity of how long?Read the answer and worked solution →Commercial paper is backed only by what?Read the answer and worked solution →Which firms can sell commercial paper at a reasonable price?Read the answer and worked solution →How is commercial paper usually sold?Read the answer and worked solution →

Worked practice questions

Which other name is used for the retained earnings of a company?

  1. Share premium
  2. Sinking fund
  3. Plowback account
  4. Capital reserve
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Correct answer: C. Plowback account

Retained earnings are profits ploughed back into the business, hence the alternative name plowback.

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Opening retained earnings Rs 120 lakh, profit Rs 45 lakh, dividends Rs 20 lakh. Closing?

  1. Rs 165 lakh
  2. Rs 185 lakh
  3. Rs 100 lakh
  4. Rs 145 lakh
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Correct answer: D. Rs 145 lakh

Opening balance plus net profit less dividends gives 120 + 45 - 20 = Rs 145 lakh.

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Does a large retained earnings balance mean the company holds surplus cash?

  1. Yes, in a bank deposit
  2. Yes, equal cash is held
  3. No, it may be reinvested
  4. No, it is always paid out
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Correct answer: C. No, it may be reinvested

Retained profits are often reinvested in assets or used to cut liabilities, so the balance is not spare cash.

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More Financial Management topics

Cost of Capital BasicsLeverage (Finance)Working CapitalCapital Structure BasicsDividend BasicsCapital Budgeting BasicsDividend PoliciesFinancial Management