Question

Match the types of financial decisions in List I with their real-life examples in List II: 

• A. A-I, B-II, C-III, D-IV
• B. A-II, B-I, C-IV, D-III
• C. A-III, B-IV, C-I, D-II
• D. A-IV, B-III, C-II, D-I

Hint:

Investment = Long-term assets; Financing = Capital raising; Dividend = Profit sharing; Working Capital = Managing short-term resources.

Answer 1

The Correct Option is C

To address the issue, a clear table will be constructed to align each financial decision category from List I with its practical illustration in List II.

1. Conceptual Clarification:

- Investment Decision: Encompasses choices concerning the acquisition of assets or investments aimed at achieving long-term capital appreciation.
- Financing Decision: Pertains to determinations regarding the procurement of capital, such as through the issuance of equity or the incurrence of debt.
- Dividend Decision: Involves decisions on the allocation of profits among shareholders.
- Working Capital Decision: Relates to the oversight of short-term assets and liabilities essential for the continuity of daily operations.

2. Item Correspondence:

List I (Financial Decisions)	List II (Examples)
A. Investment Decision	III. Acquiring new manufacturing equipment
B. Financing Decision	IV. Selecting between equity issuance and debenture financing
C. Dividend Decision	I. Establishing the profit distribution ratio
D. Working Capital Decision	II. Administering immediate cash flow and inventory stocks

Conclusion:

The accurate pairings are as follows:
A - III,
B - IV,
C - I,
D - II.