Types of Financing

30 original test MCQs, 2 marks each. Practice and separate-test stems differ. T001-T010 use one shared case below; T011-T030 stand alone.

Original practice, not official ICAI questions or suggested answers. Scores are temporary and not synced to Study Hub. Contract/current-rule/accounting/tax boundaries are included in the review pack.

Not scored yet.

Veda Engineering: shared case for T001-T010

Shared case: Veda Engineering (T001-T010) All values are Rs lakh unless share counts/prices. The following offered terms are valid and accessible only for this exercise; no universal regulatory eligibility or tax assumption is intended. Veda needs 24 of machine purchase cash and has 4 of usable internal funds. Loan L supplies 20 now at 12% annual simple interest for one year with principal due at year end. Equity E supplies 20 now by issuing 50000 equal-vote shares to outsiders. Existing 100000 equal-vote shares include 60000 held by founder, who takes none of E. Separate short operating bill has face 10; discount 0.25 and fee 0.05; it is discounted with recourse. Revolving facility charges 10% annual only on 6 actually drawn for 30 days using 360 days, ignoring fees. A venture royalty contract charges 3% on eligible annual sales 40; principal settlement is separate. A loan-pool transfer pays 30 cash, costs 1 fee and requires 4 restricted reserve; a separate loss guarantee has not been called. Preference classC is explicitly cumulative:5 capital at 8%, with one unpaid year before current year; legal dividend availability is not given. A depositary programme has 10000 receipts, each representing 5 underlying shares. A crowdfunding donation collects 5 gross and platform fee 2%, with no investor ownership or debt return under supplied terms. Each question uses this case independently; no previous selected answer is needed.

Quarter cash item	Rs lakh
Machine purchase	24
Internal funds	4
Loan / equity proceeds	20
Bill face	10
Pool transfer cash	30
Restricted reserve	4

FM-C02-T001 · 2 marks

Read shared case

Loan L annual interest?

A. Zero because used for machine. B. Rs 0.24 lakh. C. Rs 22.4 lakh interest only. D. Rs 2.4 lakh.

FM-C02-T002 · 2 marks

Read shared case

Loan L year-end principal plus interest?

A. Rs 22.4 lakh. B. Rs 2.4 lakh total. C. Rs 24 lakh initial cost is the loan repayment. D. Rs 20 lakh with no interest.

FM-C02-T003 · 2 marks

Read shared case

Founder percentage afterE?

A. 20%. B. 40%. C. 60%. D. 50%.

FM-C02-T004 · 2 marks

Read shared case

Net cash from bill discount?

A. Rs 10 lakh. B. Rs 10.30 lakh. C. Rs 9.70 lakh. D. Rs 9.75 lakh after ignoring fee.

FM-C02-T005 · 2 marks

Read shared case

Revolving draw interest for stated 30 days?

A. Rs 0.5 lakh. B. Rs 0.6 lakh. C. Rs 0.05 lakh. D. Rs 6 lakh.

FM-C02-T006 · 2 marks

Read shared case

Annual royalty on supplied sales?

A. Rs 40 lakh. B. Rs 0.12 lakh. C. Rs 1.2 lakh. D. Zero since principal terms are separate.

FM-C02-T007 · 2 marks

Read shared case

Unrestricted transfer cash before any uncalled guarantee payment?

A. Rs 30 lakh. B. Rs 35 lakh. C. Rs 29 lakh ignoring restricted reserve. D. Rs 25 lakh.

FM-C02-T008 · 2 marks

Read shared case

C current-plus-one-year-arrears contractual amount before legal conditions?

A. Rs 5 lakh. B. Rs 1.6 lakh. C. Rs 0.4 lakh. D. Rs 0.8 lakh.

FM-C02-T009 · 2 marks

Read shared case

Underlying shares represented by the depositary programme?

A. 10000 necessarily new shares. B. 50000. C. 2000. D. 50000 of debt principal.

FM-C02-T010 · 2 marks

Read shared case

Net donation proceeds after platform fee?

A. Rs 5.1 lakh. B. Rs 4.9 lakh. C. Rs 5 lakh. D. Rs 4 lakh.

FM-C02-T011 · 2 marks

A permanent plant is matched with committed long-duration finance and a temporary peak with appropriate short funds. What remains needed?

A. A universal required ratio. B. Guaranteed renewal of all facilities. C. No more assessment because labels match. D. Review actual cost/risk/terms and cash feasibility.

FM-C02-T012 · 2 marks

An equity issue has no fixed coupon but investor return/control rights. What is false?

A. Control terms matter. B. Cash risk differs from borrowing. C. No coupon establishes zero economic cost. D. Residual return expectations matter.

FM-C02-T013 · 2 marks

Founder takes full proportional entitlement in a fully subscribed equal-vote rights issue. What can follow on stated conditions?

A. No cash is ever paid. B. Percentage must always drop. C. Issue cash is operating profit. D. Percentage can be preserved.

FM-C02-T014 · 2 marks

A non-cumulative class had no declared dividend last year. What must not be assumed?

A. Inspect terms. B. Current dividend conditions still matter. C. Preference differs from debenture debt. D. Last year necessarily carries as cumulative arrears.

FM-C02-T015 · 2 marks

A detachable warrant is exercised for new cash while bond principal expressly remains. Correct treatment concept?

A. Separate subscription right, not cancellation of principal. B. All debt disappears. C. No investor cash is paid. D. Shares are automatically free.

FM-C02-T016 · 2 marks

Expected long-term disbursement is delayed beyond bridge maturity. Main concern?

A. Maturity cannot matter. B. The bridge automatically becomes equity. C. Take-out and repayment liquidity risk. D. Sanction already equals received cash.

FM-C02-T017 · 2 marks

VC mentoring is relevant but quality/terms unknown. Which claim exceeds evidence?

A. Review equity/exit rights. B. Review support commitments. C. Assess founder control. D. Success is guaranteed becauseVC participates.

FM-C02-T018 · 2 marks

Originator services sold receivables and gives support. Which accounting conclusion is premature?

A. Check framework/transfer facts. B. All assets automatically qualify for derecognition. C. Consider retained risk. D. Review servicing terms.

FM-C02-T019 · 2 marks

Lessor holds title, while contract substantially transfers economic risks through long obligatory use. Which is correct?

A. All tax deductions are automatic. B. User cannot face any risks. C. Title alone does not settle the economic pattern or all accounting entries. D. Title proves an operating accounting classification in every framework.

FM-C02-T020 · 2 marks

Sale receipt arrives and rentals continue. Which inference is wrong?

A. Receipt makes future equipment use cost-free. B. Accounting criteria need separate review. C. Cash is released. D. Rental obligations remain.

FM-C02-T021 · 2 marks

A supplier offers an early-payment discount. Which funding assertion should be rejected?

A. Trade credit always has no implicit cost. B. Forgone discounts can create cost. C. Actual terms matter. D. Cash alternatives matter.

FM-C02-T022 · 2 marks

Incurred unpaid wages support temporary liquidity. Which is false?

A. The liability persists. B. Payment date matters. C. Cash timing differs from expense accrual. D. They are permanent funds with no repayment obligation.

FM-C02-T023 · 2 marks

Sanctioned limit is 12 but draw is 4 under case actual-use interest. What interest base follows?

A. Actual 4 for its specified duration, not automatic 12. B. An unspecified perpetual maturity. C. Zero for all draws. D. Always 12 evenifundrawn.

FM-C02-T024 · 2 marks

A discounted bill defaults and the contract has recourse. What follows?

A. Face cash was necessarily received. B. Customer may remain exposed according to recourse terms. C. Discounting eliminated all debtor risk. D. A bill is a sovereign guarantee.

FM-C02-T025 · 2 marks

Goods shipped, eligible export bill awaits collection. Relevant conceptual funding stage?

A. Only pre-production packing credit. B. Post-shipment finance. C. No credit may ever be considered. D. Equitybonus.

FM-C02-T026 · 2 marks

A module states a numerical public-deposit limit without current-law validation. What should the pack do?

A. Turn it into a raising instruction. B. Assume all companies eligible. C. Hold a current statutory permission verdict. D. Apply it universally.

FM-C02-T027 · 2 marks

Rs 8 received and Rs 10 repaid after two years, no periodic interest. Which is correct?

A. Total cash cost is 18. B. It is free. C. Rs 2 nominal difference, not automatic zero cost or 25% annualyield. D. Repayment is 8.

FM-C02-T028 · 2 marks

USD 50000 repayment at Rs 84 instead of Rs 80. Principal rupee increase?

A. Rs 2 lakh. B. Rs 20 lakh. C. Rs 0.2 lakh. D. Zero because nominal USD does not change.

FM-C02-T029 · 2 marks

A KPI-linked general-use instrument misses a target with contractual coupon step-up. What is needed?

A. Universal risk-free compliance. B. Apply actual target/verification/step-up terms; label alone is not success. C. No payment consequence possible. D. All proceeds green by definition.

FM-C02-T030 · 2 marks

An online platform offers equity or loans. Which conclusion is unsupported?

A. Online form automatically permits every issuer/offering under current law. B. Review applicable platform/issuer rules. C. Fees affect usable proceeds. D. Equity and debt obligations differ.