PAST PAPER Assistant Director (Accounts) PPSC [SOLVED]

By: Prof. Dr. Fazal Rehman | Last updated: October 30, 2024

1. What is the primary goal of financial management? A) Maximizing profits B) Maximizing shareholder wealth C) Minimizing costs D) Increasing market share Answer: B) Maximizing shareholder wealth 2. Which of the following is a key financial statement? A) Cash flow statement B) Marketing plan C) Business proposal D) Sales report Answer: A) Cash flow statement 3. What does ROI stand for in finance? A) Rate of Investment B) Return on Investment C) Revenue on Investment D) Rate of Interest Answer: B) Return on Investment 4. Which financial instrument represents ownership in a company? A) Bonds B) Debentures C) Stocks D) Loans Answer: C) Stocks 5. What is the term for the cost of using funds? A) Interest B) Equity C) Dividend D) Return Answer: A) Interest 6. What does the term ‘liquidity’ refer to? A) The ability to pay debts B) The ability to generate profits C) The ability to convert assets into cash D) The ability to maintain market share Answer: C) The ability to convert assets into cash 7. Which of the following ratios measures a company’s ability to meet its short-term obligations? A) Debt-to-equity ratio B) Current ratio C) Return on equity D) Price-to-earnings ratio Answer: B) Current ratio 8. What is a bear market? A) A market that is increasing in value B) A market that is stable C) A market that is declining in value D) A market that is volatile Answer: C) A market that is declining in value 9. Which of the following is a method of evaluating investment projects? A) SWOT analysis B) Market research C) Net present value (NPV) D) Product life cycle Answer: C) Net present value (NPV) 10. What does EBITDA stand for? A) Earnings Before Interest, Taxes, Depreciation, and Amortization B) Earnings Before Investment, Taxes, Depreciation, and Amortization C) Earnings Before Interest, Taxes, Debt, and Amortization D) Earnings Before Interest, Taxes, Dividends, and Amortization Answer: A) Earnings Before Interest, Taxes, Depreciation, and Amortization 11. What is the purpose of diversification in an investment portfolio? A) To reduce risk B) To increase liquidity C) To maximize profits D) To decrease taxes Answer: A) To reduce risk 12. Which of the following describes the time value of money? A) Money has no value over time B) Money today is worth more than the same amount in the future C) Money loses value over time D) Money can only grow in value Answer: B) Money today is worth more than the same amount in the future 13. What is a dividend? A) A type of debt B) A share of profits distributed to shareholders C) A tax on profits D) A financial report Answer: B) A share of profits distributed to shareholders 14. Which of the following is a long-term source of finance? A) Trade credit B) Bank overdraft C) Debentures D) Accounts payable Answer: C) Debentures 15. What is the function of a financial intermediary? A) To act as a middleman between savers and borrowers B) To provide loans to individuals C) To create financial products D) To regulate financial markets Answer: A) To act as a middleman between savers and borrowers 16. Which financial ratio is used to measure a company’s profitability relative to its total assets? A) Current ratio B) Return on assets (ROA) C) Price-to-earnings (P/E) ratio D) Debt-to-equity ratio Answer: B) Return on assets (ROA) 17. What is the primary function of the stock market? A) To facilitate mergers and acquisitions B) To provide a platform for buying and selling stocks C) To regulate interest rates D) To manage national currency Answer: B) To provide a platform for buying and selling stocks 18. Which of the following is NOT a component of the capital structure? A) Debt B) Equity C) Cash D) Preferred stock Answer: C) Cash 19. What does the term ‘leverage’ refer to in finance? A) The use of debt to finance assets B) The amount of equity in a company C) The profitability of a company D) The number of shares outstanding Answer: A) The use of debt to finance assets 20. Which of the following describes the risk-return tradeoff? A) Higher risk usually results in lower returns B) Lower risk usually results in higher returns C) Higher risk usually results in higher returns D) Risk and return are unrelated Answer: C) Higher risk usually results in higher returns 21. What is a cash flow statement primarily used for? A) To show the company’s revenue B) To show the company’s profits C) To track the inflow and outflow of cash D) To assess the company’s assets Answer: C) To track the inflow and outflow of cash 22. What is the main objective of corporate finance? A) To increase market share B) To maximize shareholder value C) To ensure employee satisfaction D) To expand operations Answer: B) To maximize shareholder value 23. What is the term for the risk that affects all securities in the market? A) Systematic risk B) Unsystematic risk C) Market risk D) Specific risk Answer: A) Systematic risk 24. Which of the following is considered a source of long-term finance? A) Trade payables B) Short-term loans C) Retained earnings D) Bank overdrafts Answer: C) Retained earnings 25. What is the primary focus of financial accounting? A) Internal management decisions B) Reporting financial information to external users C) Tax compliance D) Budgeting Answer: B) Reporting financial information to external users 26. What is the formula for calculating the debt-to-equity ratio? A) Total liabilities / Total assets B) Total liabilities / Total equity C) Total equity / Total assets D) Total assets / Total liabilities Answer: B) Total liabilities / Total equity 27. Which type of analysis examines a company’s financial statements to make decisions? A) Technical analysis B) Fundamental analysis C) Risk analysis D) Statistical analysis Answer: B) Fundamental analysis 28. What is the primary role of the financial manager? A) To manage company personnel B) To oversee marketing strategies C) To make investment decisions and manage finances D) To handle customer relations Answer: C) To make investment decisions and manage finances 29. Which of the following is a form of debt financing? A) Common stock B) Preferred stock C) Bonds D) Retained earnings Answer: C) Bonds 30. What is the impact of high inflation on interest rates? A) Interest rates decrease B) Interest rates remain unchanged C) Interest rates increase D) Interest rates become irrelevant Answer: C) Interest rates increase 31. Which of the following is a method of determining the fair value of an investment? A) Market research B) Fundamental analysis C) Technical analysis D) Portfolio analysis Answer: B) Fundamental analysis 32. Which of the following financial instruments is considered the safest investment? A) Stocks B) Corporate bonds C) Treasury bills D) Real estate Answer: C) Treasury bills 33. What is meant by the term ‘market capitalization’? A) The total market value of a company’s outstanding shares B) The total revenue generated by a company C) The total debt of a company D) The total assets of a company Answer: A) The total market value of a company’s outstanding shares 34. Which of the following is NOT a characteristic of common stock? A) Voting rights B) Fixed dividends C) Ownership in the company D) Residual claims on assets Answer: B) Fixed dividends 35. What does ‘beta’ measure in finance? A) The volatility of a stock relative to the market B) The profitability of a company C) The interest rate risk D) The liquidity of a stock Answer: A) The volatility of a stock relative to the market 36. Which financial model is used to value a company’s stock? A) Capital Asset Pricing Model (CAPM) B) Discounted Cash Flow (DCF) C) Price-to-Earnings (P/E) ratio D) Gordon Growth Model Answer: B) Discounted Cash Flow (DCF) 37. What is a hedge in financial terms? A) An investment strategy to reduce risk B) A type of investment C) A fixed interest rate D) A form of equity Answer: A) An investment strategy to reduce risk 38. What does the term ‘float’ refer to in finance? A) The amount of cash available for investment B) The difference between cash inflows and outflows C) The shares of stock that are publicly traded D) The time taken for a check to clear Answer: D) The time taken for a check to clear 39. Which of the following is a characteristic of preferred stock? A) No fixed dividends B) No voting rights C) Higher claim on assets than common stock D) All of the above Answer: D) All of the above 40. What is the main advantage of using a financial leverage? A) It decreases risk B) It increases potential returns C) It reduces the cost of capital D) It increases taxes Answer: B) It increases potential returns 41. Which of the following is a key indicator of financial health? A) Current ratio B) Inventory turnover C) Gross margin D) All of the above Answer: D) All of the above 42. What does the term ‘underwriting’ mean in finance? A) The process of assessing the risk of insuring a company B) The process of evaluating and assuming the risk of a securities issuance C) The process of valuing assets D) The process of auditing financial statements Answer: B) The process of evaluating and assuming the risk of a securities issuance 43. What is the purpose of a budget in a business? A) To track actual performance B) To forecast future performance C) To control spending D) All of the above Answer: D) All of the above 44. Which of the following is an example of non-operating income? A) Revenue from product sales B) Interest earned on investments C) Revenue from services D) Sales of goods Answer: B) Interest earned on investments 45. What is the primary reason companies conduct financial audits? A) To prepare tax returns B) To assess employee performance C) To ensure accuracy and compliance with regulations D) To reduce expenses Answer: C) To ensure accuracy and compliance with regulations 46. What is a margin call? A) A request for payment on a loan B) A demand by a broker for an investor to deposit more money to cover losses C) A call to reduce debt D) A notification of dividends Answer: B) A demand by a broker for an investor to deposit more money to cover losses 47. Which of the following best describes ‘capital budgeting’? A) The process of evaluating investment opportunities B) The process of budgeting for operational expenses C) The process of forecasting sales D) The process of managing cash flow Answer: A) The process of evaluating investment opportunities 48. Which of the following describes a ‘short position’ in finance? A) Buying stocks in anticipation of rising prices B) Selling borrowed stocks with the intention of buying them back at a lower price C) Holding cash reserves D) Investing in long-term bonds Answer: B) Selling borrowed stocks with the intention of buying them back at a lower price 49. What does the acronym ‘CAPM’ stand for? A) Capital Asset Pricing Model B) Capital Allocation Pricing Model C) Capital Asset Performance Model D) Capital Asset Performance Metric Answer: A) Capital Asset Pricing Model 50. What is the main function of an investment bank? A) To provide loans to individuals B) To facilitate the buying and selling of stocks C) To underwrite new securities issues D) To manage corporate finance Answer: C) To underwrite new securities issues 51. What is a ‘blue-chip’ stock? A) A high-risk investment B) A stock from a well-established and financially sound company C) A stock with high dividends D) A stock that is currently undervalued Answer: B) A stock from a well-established and financially sound company 52. Which of the following is a primary market transaction? A) Buying shares of stock from another investor B) Issuing new shares to the public C) Selling bonds to an investment bank D) Trading options Answer: B) Issuing new shares to the public 53. What is meant by ‘asset allocation’? A) The process of deciding how to distribute investments across different asset classes B) The process of acquiring assets C) The process of valuing assets D) The process of managing cash flow Answer: A) The process of deciding how to distribute investments across different asset classes 54. What is the ‘time value of money’ used for in finance? A) To determine the value of cash today versus its future value B) To calculate depreciation C) To assess market risk D) To manage cash flow Answer: A) To determine the value of cash today versus its future value 55. What does the term ‘liability’ refer to? A) An asset owned by a company B) An obligation or debt owed to another party C) A revenue stream D) An investment Answer: B) An obligation or debt owed to another party 56. Which of the following financial documents provides a snapshot of a company’s financial position at a specific point in time? A) Income statement B) Cash flow statement C) Balance sheet D) Statement of changes in equity Answer: C) Balance sheet 57. Which of the following is a disadvantage of equity financing? A) Dilution of ownership B) Fixed repayment obligations C) High interest rates D) Regulatory scrutiny Answer: A) Dilution of ownership 58. What is the purpose of a financial ratio analysis? A) To measure operational efficiency B) To assess a company’s performance and financial health C) To determine market value D) To evaluate employee productivity Answer: B) To assess a company’s performance and financial health 59. What does the term ‘asset turnover ratio’ indicate? A) The efficiency of a company in using its assets to generate sales B) The amount of debt relative to equity C) The profitability of a company D) The liquidity position of a company Answer: A) The efficiency of a company in using its assets to generate sales 60. What is the primary role of a treasurer in an organization? A) To manage payroll B) To oversee investments and manage cash flow C) To handle customer relations D) To ensure compliance with regulations Answer: B) To oversee investments and manage cash flow 61. What is the purpose of a financial plan? A) To predict economic trends B) To outline a company’s financial goals and how to achieve them C) To assess employee performance D) To evaluate marketing strategies Answer: B) To outline a company’s financial goals and how to achieve them 62. What is the definition of ‘working capital’? A) The difference between a company’s current assets and current liabilities B) The total amount of cash available C) The total value of long-term assets D) The total liabilities of a company Answer: A) The difference between a company’s current assets and current liabilities 63. Which of the following describes a ‘financial bubble’? A) A period of economic growth B) A situation where asset prices significantly exceed their intrinsic value C) A stable market condition D) A consistent rise in interest rates Answer: B) A situation where asset prices significantly exceed their intrinsic value 64. What is a ‘risk premium’? A) The return expected for taking on risk compared to a risk-free rate B) The cost of insuring against risk C) The amount paid to brokers D) The fees associated with investment management Answer: A) The return expected for taking on risk compared to a risk-free rate 65. Which of the following financial tools helps manage currency risk? A) Stock options B) Futures contracts C) Bonds D) Treasury bills Answer: B) Futures contracts 66. What is the primary focus of managerial accounting? A) Reporting to external stakeholders B) Providing information for internal decision-making C) Preparing tax returns D) Evaluating financial performance Answer: B) Providing information for internal decision-making 67. What is the formula for calculating the price-to-earnings (P/E) ratio? A) Market price per share / Earnings per share B) Earnings per share / Market price per share C) Total assets / Total liabilities D) Net income / Total equity Answer: A) Market price per share / Earnings per share 68. Which financial statement shows a company’s revenues and expenses over a specific period? A) Balance sheet B) Income statement C) Cash flow statement D) Statement of equity Answer: B) Income statement 69. What is a convertible bond? A) A bond that can be converted into equity at the holder’s option B) A bond that pays a fixed interest rate C) A bond that is backed by physical assets D) A bond with a variable interest rate Answer: A) A bond that can be converted into equity at the holder’s option 70. What is the main purpose of a cash flow statement? A) To summarize a company’s assets and liabilities B) To report the cash generated and used during a specific period C) To show the net income for a period D) To provide a historical overview of financial performance Answer: B) To report the cash generated and used during a specific period 71. What does the term ‘derivative’ refer to in finance? A) A financial instrument whose value is based on the price of another asset B) A type of equity security C) A loan with a fixed interest rate D) A cash equivalent Answer: A) A financial instrument whose value is based on the price of another asset 72. Which of the following is a common method of valuing a company? A) Book value B) Market capitalization C) Liquidation value D) All of the above Answer: D) All of the above 73. What is a ‘bull market’? A) A market condition where prices are rising or expected to rise B) A market condition where prices are falling C) A stable market without significant changes D) A market dominated by selling Answer: A) A market condition where prices are rising or expected to rise 74. Which of the following best describes the term ‘float’ in accounting? A) The time between a transaction’s execution and its settlement B) The amount of capital available for investment C) The total assets owned by a company D) The difference between current assets and current liabilities Answer: A) The time between a transaction’s execution and its settlement 75. What does ‘interest coverage ratio’ measure? A) The ability to pay off short-term debt B) The ability to pay interest on outstanding debt C) The efficiency of generating income D) The profitability of investments Answer: B) The ability to pay interest on outstanding debt 76. What is a stock split? A) The division of a company’s existing shares into multiple new shares B) The combination of multiple shares into a single share C) The sale of shares to the public D) The purchase of shares by a company Answer: A) The division of a company’s existing shares into multiple new shares 77. What is a financial derivative? A) An asset that has intrinsic value B) A financial instrument whose value depends on the value of another asset C) A loan with fixed repayment terms D) A type of equity investment Answer: B) A financial instrument whose value depends on the value of another asset 78. What is meant by ‘capital structure’? A) The mix of a company’s debt and equity financing B) The total value of a company’s assets C) The rate of return on investment D) The amount of working capital Answer: A) The mix of a company’s debt and equity financing 79. What is the primary role of the Securities and Exchange Commission (SEC)? A) To manage national monetary policy B) To oversee the securities markets and protect investors C) To regulate corporate taxes D) To provide loans to small businesses Answer: B) To oversee the securities markets and protect investors 80. What does the term ‘yield’ refer to in finance? A) The income return on an investment, expressed as a percentage of its cost B) The total profit generated from an investment C) The rate of interest charged on loans D) The return on equity Answer: A) The income return on an investment, expressed as a percentage of its cost 81. Which city is known as the “City of Lights” in Pakistan? A) Islamabad B) Karachi C) Lahore D) Peshawar Answer: B) Karachi 82. What is the primary purpose of the United Nations? A) To conduct trade B) To maintain international peace and security C) To provide education D) To promote sports Answer: B) To maintain international peace and security 83. Which gas is most abundant in the Earth’s atmosphere? A) Oxygen B) Carbon Dioxide C) Nitrogen D) Hydrogen Answer: C) Nitrogen 84. Who wrote the national anthem of Pakistan? A) Allama Iqbal B) Hafeez Jullundhri C) Faiz Ahmed Faiz D) Jamiluddin Aali Answer: B) Hafeez Jullundhri 85. What is the main language spoken in the province of Sindh? A) Punjabi B) Sindhi C) Urdu D) Pashto Answer: B) Sindhi 86. Which organ in the human body is responsible for pumping blood? A) Brain B) Lungs C) Liver D) Heart Answer: D) Heart 87. What is the value of π (pi) approximately? A) 2.14 B) 3.14 C) 3.41 D) 2.71 Answer: B) 3.14 88. Which is the smallest continent in the world? A) Europe B) Australia C) Antarctica D) South America Answer: B) Australia 89. Which is the largest organ in the human body? A) Heart B) Liver C) Skin D) Brain Answer: C) Skin 90. What does HTML stand for? A) High Text Markup Language B) Hyper Text Markup Language C) Hyper Text Multi Language D) High Text Multi Language Answer: B) Hyper Text Markup Language 91. What is the currency of China? A) Yen B) Dollar C) Yuan D) Ringgit Answer: C) Yuan 92. In which country did the Olympic Games originate? A) Egypt B) Greece C) Italy D) China Answer: B) Greece 93. What is the boiling point of water at sea level? A) 90°C B) 100°C C) 110°C D) 120°C Answer: B) 100°C 94. Which planet is closest to the Sun? A) Venus B) Earth C) Mercury D) Mars Answer: C) Mercury 95. What is the sum of the angles in a triangle? A) 90 degrees B) 180 degrees C) 270 degrees D) 360 degrees Answer: B) 180 degrees 96. Which is a non-renewable resource? A) Solar energy B) Wind energy C) Coal D) Biomass Answer: C) Coal 97. Who is known as the “Shakespeare of Urdu”? A) Mirza Ghalib B) Allama Iqbal C) Faiz Ahmed Faiz D) Saadat Hasan Manto Answer: A) Mirza Ghalib 98. Which vitamin is essential for good vision? A) Vitamin A B) Vitamin B C) Vitamin C D) Vitamin D Answer: A) Vitamin A 99. What is the primary function of a computer’s CPU? A) To store data B) To process instructions C) To display graphics D) To connect to the internet Answer: B) To process instructions 100. Which famous physicist developed the theory of relativity? A) Isaac Newton B) Albert Einstein C) Niels Bohr D) Stephen Hawking Answer: B) Albert Einstein