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. Distributes a larger portion of earnings to shareholders

B. Has few profitable investment opportunities

C. Retains most of its earnings for expansion

D. Is facing a liquidity crisis

Answer: Option A

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.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The time value of money concept is a core element in which financial management decision?

A. Working Capital Management

B. Ratio Analysis

C. Capital Budgeting

D. Inventory Valuation

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Correct Answer: Option C

Explanation:
Capital budgeting techniques like Net Present Value (NPV) discount future cash flows, fundamentally relying on the time value of money.

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Question #2

The primary objective of cost accounting is:

A. To ascertain selling price

B. To prepare financial accounts

C. To calculate tax

D. To ascertain cost and control cost

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Correct Answer: Option D

Explanation:
Cost accounting focuses on recording, classifying, and controlling costs to aid management decisions.

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Question #3

Interest on a bank loan accrued but not paid at year-end is shown in the final accounts by:

A. Debiting P&L A/c, Adding to Bank Loan in Balance Sheet

B. Ignoring it until paid

C. Debiting Trading A/c, Deducting from Bank Loan

D. Crediting P&L A/c, Showing as an Asset

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Correct Answer: Option A

Explanation:
Accrued interest is an expense for the year (Debit P&L) and an outstanding liability (Added to loan or shown separately in Balance Sheet).

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