Tag: public expenditure and public revenue

Questions Related to public expenditure and public revenue

The meaning of 'fund' in funds flow statement is ___________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Cash

  2. Net working capital

  3. Gross working capital

  4. Profit

Show answer
Correct Option: B
Explanation:

Fund flow statement shows that the flow of funds during the year. The meaning of funf in fund flow statement is net working capital.

Which of the following is not a motive for holding cash?

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Transaction purposes

  2. Precaution against unexpected expenses

  3. Extending loans to group comanies

  4. Speculation purposes

  5. Mismatch between cash inflows and outflows.

Show answer
Correct Option: C
Explanation:

The following points highlight the five main motives for holding cash balances in a firm. The motives are: 1. Transaction Motive 

2. Precautionary Motive 
3. Speculative Motive 
4. Future Requirements 
5. Compensating Balances.

Arrange the following steps involved in capital budgeting in order of their occurrence:
i. Project selection
ii. Project appraisal
iii. Project generation
iv.Follow up
v. Project execution

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. $ii, iii, i, v, iv$

  2. $iii, ii, i, v, iv$

  3. $i, iii, ii, v, iv$

  4. $i, ii, iii, v, iv$

Show answer
Correct Option: B
Explanation:

Steps involved in capital budgeting in order of their occurrence:-

1. Identify and evaluate potential opportunities
2.Project appraisal

3.Project selection
4.Project execution
5.Follow up

Incremental cash flows in relation to capital budgeting decisions refer to the ____________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Cash flows which are increasing over a period of time

  2. Incremental change in cash flows if the project is extended one year beyond its life period

  3. Cash flows which are directly attributable to the investment

  4. Difference between cash inflow streams and the initial outflow

  5. Comparision between any two cash outflows in a project's life period

Show answer
Correct Option: E
Explanation:

Incremental cash flows are the net additional cash flows generated by a company by undertaking a project. Capital budgeting decisions are based on comparison of a project's initial investment outlay to the future incremental cash flows of the project and its terminal cash flow.

Which of the following is not considered while preparing cash budget?

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Accrual Principle

  2. Difference in Capital and Revenue items

  3. Conservation Principle

  4. All of the above

Show answer
Correct Option: D
Explanation:

A cash budget is an estimation of the cash inflows and outflows for business over a specific period of time. The budget is used to assess whether the entity has sufficient cash to operate. Companies use sales and production forecasts to create a cash budget, along with assumptions about necessary spending and accounts receivable. If a company does not have enough liquidity to operate, it must raise capital by issuing stock or by taking a debt.

A budget is frequently prepared to combine all other budgets in a summary form. It is known as _____________.

commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

  1. Sales Budget

  2. Purchase Budget

  3. Cash Budget

  4. Master Budget

Show answer
Correct Option: D
Explanation:

The master budget is the sum total of all the divisional budgets that is prepared by all the divisions. Further, it also includes the financial planning, cash-flow forecast and budgeted profit and loss account and balance sheet of the organization. 


Master Budget is the summary of the divisional budget.

GDP at factor cost is equal to GDP at market price minus indirect taxes plus __________.

civics public expenditure and public revenue black money and tax evasion meaning of tax direct taxes

  1. depreciation

  2. direct taxes

  3. foreign investments

  4. subsidies

Show answer
Correct Option: D
Explanation:

$GDP _{fc} = GDP _{mp} - Indirect\ taxes + Subsidies$.
This is because market prices is reached by adding indirect taxes to the cost of production, i.e., factors of production, and deduction of subsidies provided, if any.

Net national product at market price minus net indirect taxes is equal to _______.

civics public expenditure and public revenue black money and tax evasion meaning of tax direct taxes

  1. net foreign investment

  2. net foreign investment plus net domestic investment

  3. net national product at factor cost

  4. replacement expenditure

Show answer
Correct Option: C
Explanation:

$NNP _{mp} - Net Indirect Taxes = NNP _{fc}$.
This is because the market price is the cost of production, i.e, factor cost, plus the taxes payable on the product.

Which one of the following has NOT been a part of the land reforms programme in India?

civics public expenditure and public revenue black money and tax evasion meaning of tax direct taxes

  1. Ceiling on holding

  2. Consolidation of holdings

  3. Agricultural holding tax

  4. Zamindari abolition

Show answer
Correct Option: C
Explanation:

Agricultural Holding Tax was a recommendation of the Raj Committee. The central government appointed the committee on taxation on agricultural wealth and income under the chairmanship of Dr. K.N. Raj in February 1972 to examine the question of taxation of agricultural wealth and income from all aspects. The Raj committee submitted its report in October 1972.

In NNP figure is available at market prices we will__indirect taxes and
_subsidies to the figure to get National Income of the economy:

civics public expenditure and public revenue black money and tax evasion meaning of tax direct taxes

  1. Add, substract

  2. Add, divide

  3. Substract, add

  4. Substract, divide

Show answer
Correct Option: C
Explanation:
National Income at Factor Cost (NIFC):
• It is the sum of all factors of income earned by the residents of a country (Indian) both from within the country as well as abroad.
• National Income at Factor Cost = NNP at Market Price – Indirect Taxes + Subsidies
 In India, and many developing countries across the world, National Income is measured at factor cost instead of market prices. Some of the reasons for the same are lack of uniformity in taxes, goods not being printed with their prices, etc.