Municipal Officer (Finance) Solved Past Paper 6 June 2026 PDF

Finance & Investment

Q. Technical analysis?
Answer: Study of price movements and patterns using charts and other tools to predict future price trends.

Q. Fundamental analyst?
Answer: Analyzes financial statements, economic factors, and qualitative aspects to determine the intrinsic value of a security.

Q. Transfer price?
Answer: The price charged for goods/services transferred between related parties.

Q. Drawback of profit maximization?
Answer: Ignores the time value of money (TVM).

Q. Profit maximization ignores?
Answer: Risk, uncertainty, ethics, social responsibility, and TVM.

Q. IRR and NPV relationship?
Answer: At IRR, NPV = 0.

Q. CAPM formula?
Answer: Expected Return = Risk-Free Rate + Beta × Market Risk Premium.

Q. EMH stands for?
Answer: Efficient Market Hypothesis.

Q. YTM stands for?
Answer: Yield to Maturity.

Q. Bonds and interest rate relationship?
Answer: Inverse relationship.

Q. Sunk cost?
Answer: Irrelevant to future decision-making.

Q. Break-even point?
Answer: Total Revenue = Total Cost; Profit = 0.

Q. Diversification?
Answer: Spreading investments across various assets to reduce risk.

Q. Capital mix?
Answer: Combination of debt and equity used to finance assets.

Q. Discounting?
Answer: Finding the present value of future cash flows.

Q. PI acceptance criterion?
Answer: PI > 1.

Q. Basel accords relate to?
Answer: Capital adequacy and liquidity management of banks.

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Accounting

Q. Master Budget?
Answer: A comprehensive budget combining all individual budgets of a company.

Q. Which of the following is not an asset?
Answer: Accounts Payable.

Q. Fixed cost per unit varies when?
Answer: When activity level changes.

Q. Depletion?
Answer: Systematic allocation of the cost of a wasting asset over its useful life.

Q. Lien is not on?
Answer: Leasehold Land.

Q. Quick assets exclude?
Answer: Inventory.

Q. Absorption costing differs from variable costing in?
Answer: Fixed Manufacturing Overhead (FMOH).

Q. Errors of omission?
Answer: Transactions completely left out of records.

Q. Errors of principle?
Answer: Applying an incorrect accounting principle.

Q. Diminishing balance method?
Answer: Depreciation charged on reducing book value.

Q. Primary source of shareholders’ equity?
Answer: Share Capital and Retained Earnings.

Q. Matching concept?
Answer: Expenses are matched with related revenues.

Q. Accrual concept?
Answer: Transactions are recorded when they occur.

Q. Exempt income?
Answer: Income not subject to tax.

Q. Trial balance?
Answer: List of ledger balances used to check arithmetic accuracy.

Q. Liquidity ratio (Current Ratio)?
Answer: Current Assets ÷ Current Liabilities.

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Auditing

Q. Receipt and payment audit?
Answer: Audit to verify the accuracy of cash receipts and payments.

Q. Political audit?
Answer: Examination of government programs and policies for economy, efficiency, and effectiveness.

Q. Professional skepticism?
Answer: Questioning mind and critical assessment of audit evidence.

Q. Balance sheet audit does not include?
Answer: Routine checks.

Q. Audit of public debt comes under?
Answer: Government Audit.

Q. Auditor appointment period?
Answer: Within 30 days of incorporation.

Q. Year-end audit?
Answer: Final audit conducted at the end of the financial year.

Q. Walk-through?
Answer: Audit procedure to understand a process from start to finish.

Q. Speculative motive is opposite of?
Answer: Hedging motive.

Q. Stock split has what effect on equity?
Answer: No effect on total equity.