Account and Finance Practice Question and Answer

Q:

Which of these institutions fixes the Repo Rate and the Reverse Repo Rate in India?

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  • 1
    Reserve Bank of India
    Correct
    Wrong
  • 2
    Comptroller and Auditor General of India
    Correct
    Wrong
  • 3
    Ministry of Finance
    Correct
    Wrong
  • 4
    State Bank of India
    Correct
    Wrong
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Answer : 1. "Reserve Bank of India"

Q:

Which of the following banks has launched a new product to provide a short-term working capital demand loan to its MSME clients?

580 0

  • 1
    SBI
    Correct
    Wrong
  • 2
    ICICI
    Correct
    Wrong
  • 3
    Axis Bank
    Correct
    Wrong
  • 4
    HDFC Bank
    Correct
    Wrong
  • 5
    Yes Bank
    Correct
    Wrong
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Answer : 1. "SBI"
Explanation :

State Bank of India today said it has launched a new product to provide short-term working capital demand loans to its MSME clients.

Q:

While computing National Income estimates, which of the following is required to be observed?

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  • 1
    The value of exports to be added and the value of imports to be subtracted
    Correct
    Wrong
  • 2
    The value of exports to be subtracted and the value of imports to be added
    Correct
    Wrong
  • 3
    The value of both exports and imports to be added
    Correct
    Wrong
  • 4
    Thevalue of both exports and imports to be subtracted
    Correct
    Wrong
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Answer : 1. "The value of exports to be added and the value of imports to be subtracted"
Explanation :

National Income of a country can be defined as the total market value of all final goods and services produced in the economy in a year. In expenditure method, the National Income is measured by adding up the four flows, - namely C, I, G, X and M.

Thus, Y = C+1+G + (X-M) + (X- M) Where,

C = Total consumption expenditure

I = Total investment expenditure

G = Total government expenditure

X = Export,

M = Import

Q:

Which one of the following is not included while estimating National Income through income method?

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  • 1
    Rent
    Correct
    Wrong
  • 2
    Mixed Income
    Correct
    Wrong
  • 3
    Pension
    Correct
    Wrong
  • 4
    Undistributed Profits
    Correct
    Wrong
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Answer : 4. "Undistributed Profits"
Explanation :

Income method measures National Income from the side of payments made to the primary factor of production for their productive services in an accounting year.

The components of factor income are (i) Employee’s Compensation, (ii) Profit, (iii) Rent, (iv) Interest, (v) Mixed income and (vi) Royalty.

Profit, rent, interest and other mixed income are jointly known as operating surplus.

Q:

Which of the following is deducted from NNP to arrive at NI?

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  • 1
    Indirect tax
    Correct
    Wrong
  • 2
    Capital consumption allowance
    Correct
    Wrong
  • 3
    Subsidy
    Correct
    Wrong
  • 4
    Interest
    Correct
    Wrong
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Answer : 1. "Indirect tax"
Explanation :

The difference between Gross National Product and Depreciation is called Net National Product (NNP). NNP at factor cost is the net output evaluated at factor prices. It includes income earned by factor of production through participation in the production process, such as wages and salaries, rents, profits etc.

It is also called National Income. NNPFC = NNPmp – Indirect taxes

+ Subsidies = National Income. But now NNPMP is National Income

Q:

Which one of the following is the most appropriate reason for inequalities in income?

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  • 1
    Racial factors
    Correct
    Wrong
  • 2
    Lack of opportunities
    Correct
    Wrong
  • 3
    Inheritance from family environment
    Correct
    Wrong
  • 4
    Differences in ability
    Correct
    Wrong
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Answer : 2. "Lack of opportunities"
Explanation :

In India, on the one hand, Per Capita Income is low and on the other hand, there is large inequality in the distribution of wealth and income, according to Human Development Reports. Lack of opportunity means that its most valuable assets its people is not being fully used. It is appropriate reason of income gap.

Q:

Per Capita Income is equal to–

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  • 1
    National Income/Total population of the country
    Correct
    Wrong
  • 2
    National Income + Population
    Correct
    Wrong
  • 3
    National Income - Population
    Correct
    Wrong
  • 4
    National Income x Population
    Correct
    Wrong
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Answer : 1. "National Income/Total population of the country "
Explanation :

The average income of the people of a country in a particular year is called Per Capita Income for that year. So, it is National Income divided by population.

Per Capita Income

= National Income/Total population of the country

Though Per Capita Income is more reliable than GNP for many particular purpose.

Q:

National Income is also called as–

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  • 1
    GNP at factor cost
    Correct
    Wrong
  • 2
    GNP at market price
    Correct
    Wrong
  • 3
    NNP at factor cost
    Correct
    Wrong
  • 4
    NNP at market price
    Correct
    Wrong
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Answer : 4. "NNP at market price"
Explanation :

Initially NNPFC was known as National Income but Now NNPMP is known as National Income.

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