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Business Administration Paper – 2003

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1) Business risk is influenced by the firm‟s decision to use debt in its financial
structure. TRUE

2) The most important function of management is controlling. TRUE

3) A short term creditor would consider liquidity ratios to be more important than efficiency
ratios. TRUE

4) According to Maslow, when a need is satisfied, it tends to lose its ability to motivate.
TRUE

5) The term marketing mix refers to the degree of advertising Vs personal selling used to
market product. FALSE

6) The difference between an agent and a merchant wholesaler is that an agent always takes
title but a merchant wholesaler does not. FALSE

7) The management of working capital is required because of a lack of short term
synchronization between demand and supply. TRUE

8) A manager who believes that people inherently dislike work probably accepts McGregor‟s
Theory X. TRUE

9) Inventory carrying costs can be minimized by carrying fewer units in inventory.
TRUE

10) A balance sheet is an accounting report used solely for the corporate form of business.
FALSE

11) For management, budgeting is perhaps the most powerful .

A. Forecasting tool
B. Control device
C. Hiring tool
D. Accounting measure

12) The income statement is a summary of:

A. Revenue and expenses
B. Assets, liabilities and capital
C. Increases and decreases in capital
D. None of these

13) One benefit of using ratio analysis when interpreting financial statements is that:

A. Ratios facilitate comparisons between different companies.
B. All ratios have exact standard values with which performance can be compared.
C. Ratios take into account all the specific factors affecting particular companies and
industries.
D. None of these

14) Planting and policy making are primarily functions of:

A. Top management
B. Middle management
C. Operating management
D. None of these

15) An informal organization often exists within a business because:

A. Not all relationships can be specifically defined.
B. Small organizations do not necessarily emphasize strict adherence to line authority.
C. Human behavior naturally crosses established authority lines.
D. All of these

16) In marketing, selling and buying would be called the:

A. Primary functions
B. Exchange functions
C. Profit functions
D. Critical functions

17) Institutional advertising is:

A. Aimed only at people in institutions
B. Run only by institutions
C. Designed to promote a type of product rather than a particular brand.
D. Designed simply to show that the firm is a good place to do business.

18) The current ratio of a firm having Rs. 25,000 of current assets, Rs. 30,000 of fixed
assets, Rs. 5000 of current liabilities and Rs. 10,000 of fixed liabilities would be:

A. 5:1
B. 7:1
C. 10:1
D. None of these

19) The organizational form that replaces individual authority at all levels with group
representation is:

A. Line
B. Line and staff
C. Functional
D. Committee

20) Working Capital may be expressed as:

A. Current assets minus current liabilities
B. Current and fixed assets minus current and fixed liabilities
C. Current assets over current liabilities
D. Current and fixed assets over current and fixed liabilities