Human Resource Management (HRM) MCQS

What is dividend?

A. Loan amount

B. Profit distributed to shareholders

C. Expense payment

D. Tax amount

Correct answer is: B. Profit distributed to shareholders

Dividend is return to shareholders

What is cost of capital?

A. Total profit

B. Minimum return required on investment

C. Total expense

D. Total revenue

Correct answer is: B. Minimum return required on investment

It is required return for financing sources

What is the primary objective of financial management?

A. Profit maximization

B. Employee satisfaction

C. Social welfare

D. Market monopoly

Correct answer is: A. Profit maximization

Financial management aims to maximize shareholder wealth

Which is a financial risk?

A. Weather change

B. Interest rate fluctuation

C. Employee satisfaction

D. Marketing plan

Correct answer is: B. Interest rate fluctuation

Financial risk affects returns

What does liquidity mean?

A. Ability to earn profit

B. Ability to meet short-term obligations

C. Long-term investment return

D. Tax saving

Correct answer is: B. Ability to meet short-term obligations

Liquidity refers to paying current liabilities on time

What is liquidity ratio used for?

A. Long-term analysis

B. Short-term solvency check

C. Profit calculation

D. Tax calculation

Correct answer is: B. Short-term solvency check

It measures ability to pay short-term debts

Which financial statement shows financial position?

A. Income Statement

B. Balance Sheet

C. Cash Flow Statement

D. Trial Balance

Correct answer is: B. Balance Sheet

Balance sheet shows assets, liabilities and equity

What is retained earnings?

A. Dividends paid

B. Profit kept in business

C. Salaries paid

D. Loans taken

Correct answer is: B. Profit kept in business

Retained earnings are reinvested profits

What is working capital?

A. Fixed assets minus liabilities

B. Current assets minus current liabilities

C. Long-term debt

D. Net profit

Correct answer is: B. Current assets minus current liabilities

Working capital measures short-term financial health

What is an asset?

A. A liability

B. A resource owned by business

C. An expense

D. A tax

Correct answer is: B. A resource owned by business

Assets provide future economic benefit

Which is a source of long-term finance?

A. Bank overdraft

B. Trade credit

C. Equity shares

D. Short-term loan

Correct answer is: C. Equity shares

Equity shares provide permanent capital

Which is an example of fixed asset?

A. Cash

B. Inventory

C. Machinery

D. Receivables

Correct answer is: C. Machinery

Machinery is long-term asset

What is depreciation?

A. Increase in asset value

B. Allocation of asset cost over time

C. Profit earned

D. Tax paid

Correct answer is: B. Allocation of asset cost over time

Depreciation spreads asset cost over useful life

What is inflation?

A. Decrease in prices

B. Increase in prices

C. Stable prices

D. No change

Correct answer is: B. Increase in prices

Inflation reduces purchasing power

What is capital budgeting?

A. Day-to-day expenses management

B. Long-term investment decision process

C. Salary calculation

D. Tax planning

Correct answer is: B. Long-term investment decision process

Capital budgeting evaluates long-term projects

What is capital structure?

A. Composition of assets

B. Combination of debt and equity

C. Income statement

D. Cash balance

Correct answer is: B. Combination of debt and equity

It defines financing mix

Which is a current asset?

A. Machinery

B. Building

C. Inventory

D. Land

Correct answer is: C. Inventory

Inventory is converted into cash within a year

What is ROI?

A. Return on Investment

B. Rate of Inflation

C. Risk of Income

D. Revenue Output Index

Correct answer is: A. Return on Investment

Measures profitability of investment

What is financial leverage?

A. Use of equity only

B. Use of debt in capital structure

C. Use of cash only

D. Use of inventory

Correct answer is: B. Use of debt in capital structure

Leverage refers to borrowing funds

Which cost is a fixed cost?

A. Raw material

B. Rent of building

C. Direct labor

D. Commission

Correct answer is: B. Rent of building

Fixed costs remain constant regardless of output

What is budgeting?

A. Profit calculation

B. Process of planning income and expenses

C. Asset valuation

D. Tax filing

Correct answer is: B. Process of planning income and expenses

Budgeting controls financial planning

What is a cash flow statement?

A. Statement of profit

B. Statement of cash inflows and outflows

C. Statement of assets

D. Statement of tax

Correct answer is: B. Statement of cash inflows and outflows

It shows cash movement during period

What is break-even point?

A. Profit equals zero point

B. Maximum profit point

C. Minimum loss point

D. Investment point

Correct answer is: A. Profit equals zero point

No profit no loss situation

Which is a short-term financial decision?

A. Capital budgeting

B. Dividend policy

C. Working capital management

D. Mergers

Correct answer is: C. Working capital management

Short-term finance manages daily operations

What is the main assumption of MM dividend irrelevance theory?

A. Perfect capital markets

B. No taxes

C. No transaction costs

D. All of the above

Correct answer is: D. All of the above