Working Capital Management specifically deals with: MCQ with Answer and Explanation

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Working Capital Management specifically deals with:

A. Dividend payouts

B. Issuing new equity shares

C. Current assets and current liabilities

D. Fixed assets and long-term debt

Answer: Option C

Solution (By JKSSB Mock Tests)

It involves managing the relationship between a firm's short-term assets and its short-term liabilities to ensure adequate liquidity.

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

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Question #1

The 'Provision for Bad Debts' is created by:

A. Debiting Sales Account

B. Crediting Cash Account

C. Debiting Profit & Loss Account and crediting Provision for Bad Debts

D. Debiting Debtors Account

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Correct Answer: Option C

Explanation:
The adjusting entry: P&L A/c Dr. To Provision for Bad Debts.

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Question #2

Target Cost is calculated as:

A. Prime Cost + Factory Overheads

B. Variable Cost + Fixed Cost

C. Expected Selling Price - Desired Profit Margin

D. Current Cost - Desired Profit

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Correct Answer: Option C

Explanation:
Target costing starts with market price, subtracts the required profit, to find the maximum allowable cost (Target Cost).

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Question #3

'Calls-in-Arrears' is shown in Balance Sheet by:

A. Adding to share capital

B. Deducting from called-up capital

C. Contingent liability

D. Separate liability

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Correct Answer: Option B

Explanation:
Calls-in-arrears is shown as deduction from called-up capital.

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

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