A higher dividend payout ratio indicates that a firm: MCQ with Answer and Explanation

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A higher dividend payout ratio indicates that a firm:

A. Is facing a liquidity crisis

B. Retains most of its earnings for expansion

C. Has few profitable investment opportunities

D. Distributes a larger portion of earnings to shareholders

Answer: Option D

Solution (By JKSSB Mock Tests)

The dividend payout ratio measures the percentage of net income distributed as dividends; a higher ratio means more cash returned to shareholders.

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Question #1

'Earnings Per Share' is computed under:

A. AS 22

B. AS 19

C. AS 20

D. AS 21

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Correct Answer: Option C

Explanation:
AS 20 prescribes the calculation and presentation of EPS.

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Question #2

The 'Section 80EEB' deduction is for:

A. Education loan

B. Housing loan interest

C. Medical insurance

D. Electric vehicle loan interest

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Correct Answer: Option D

Explanation:
Section 80EEB provides deduction up to ₹1,50,000 on interest paid on loan for purchase of electric vehicle.

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Question #3

The concept of 'Cost Drivers' is fundamental to which costing technique?

A. Activity Based Costing (ABC)

B. Batch Costing

C. Marginal Costing

D. Standard Costing

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Correct Answer: Option A

Explanation:
ABC uses cost drivers (e.g., number of setups, machine hours) to allocate overheads to products based on the activities they consume.

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