CBSE Class 12 Accountancy Financial Statements of a Company Assignment

OBJECTIVE QUESTIONS 

Question. Which of the following is not a tool of financial analysis :
(A) Comparative Income Statement
(B) Comparative Position Statement
(C) Statement of Profit and Loss
(D) Cash Flow Statement
Answer. Option (C) is correct.

Question. Which of the following is a limitation of financial analysis :
(A) It is just a study of reports of the company.
(B) It judges the ability of the firm to repay its debts.
(C) It identifies the reasons for change in financial position.
(D) It ascertains the relative importance of different components of the financial position of the firm.
Answer. Option (A) is correct.

Question. Which of the following is not a limitation of analysis of financial statements :
(A) Window dressing
(B) Price level changes ignored
(C) Subjectivity
(D) Intra firm comparison possible
Answer. Option (D) is correct.

Question. The most commonly used tools for financial analysis are :
(A) Horizontal analysis
(B) Vertical analysis
(C) Ratio analysis
(D) All of the above 
Answer. Option (D) is correct.

Question. Pick the odd one out :
(A) Horizontal Analysis
(B) Comparative Statement of Profit and Loss
(C) Comparative Balance Sheet
(D) Common-Size Balance Sheet 
Answer. Option (D) is correct.


Question. Consider the following statements given below:
(i) In Common-size Balance Sheet, each item is converted into the percentage of share capital.
(ii) In Common-size Statement of Profit and Loss, each item is converted into the percentage of total expenses.
(iii) In Comparative Statement of Profit and Loss, absolute and percentage change in the items during two periods of time are calculated.
Choose the correct option :
(A) Only (i) is correct
(B) Only (ii) is correct
(C) Only (iii) is correct
(D) All are correct
Answer. Option (C) is correct.

Question. Financial Statements Analysis helps in assessing future trends and thus, helps in forecasting and preparation of _________.
(A) Accounts
(B) Budgets
(C) Reports
(D) Statements
Answer. Option (B) is correct.

 

Question. Which of the following points out the nature of financial statements?
(i) Financial statements are prepared on the basis of recorded facts.
(ii) Certain accounting conventions are followed while preparing financial statements.
(iii) Financial statements are prepared on certain basic assumptions (pre-requisites) known as postulates.
(iv) Facts and figures presented through financial statements are based on personal opinion, estimates and judgements.
(A) Only (i)
(B) (i) and (ii)
(C) (i), (ii) and (iii)
(D) (i), (ii), (iiii) and (iv)

Answer : D

Question. 10% debentures are included in
(A) current liability
(B) fixed assets
(C) current assets
(D) None of these

Answer : D

Question. Which of the following are the objectives of financial statements?
(i) To provide information about economic resources and obligations of a business.
(ii) To provide information about the earning capacity of the business.
(iii) To provide information about cash f lows.
(iv) To judge effectiveness of management.
(A) (i) and (ii)
(B) Only (ii)
(C) (i), (ii) and (iv)
(D) (i), (ii), (iii) and (iv)

Answer : D

Question. Under which of the following head/ sub-head is ‘forfeited shares’ presented in the balance sheet of a company?
(A) Reserves and surplus
(B) Share capital
(C) Other long-term liabilities
(D) Other current liabilities

Answer : B

Question. Staff welfare expenses are included in
(A) cost of material consumed
(B) revenue from operation
(C) employees benefit expense
(D) None of the above

Answer : C

Question. Which of the following is not included under the head shareholders’ fund?
(A) Share capital
(B) Reserves and surplus
(C) Money received against share warrants
(D) Long-term provisions

Answer : D

Question. Public deposits appear under which of the following head in a company’s balance sheet?
(A) Current liabilities
(B) Non-current liabilities
(C) Reserves and surplus
(D) Shareholders’ funds

Answer : B

Question. External users of financial statements are
(A) banks
(B) suppliers
(C) Both ((A) and ((B)
(D) director of company

Answer : C

Question. Which of the following is not presented under ‘current liabilities’ in the balance sheet of a company?
(A) Short-term borrowings
(B) Deferred tax liabilities
(C) Short-term provisions
(D) Trade payables

Answer : B

Question. In a trading firm, if stock of finished goods held for a month and credit period is 2 months, then operating cycle will be for ....... month(s).
(A) one
(B) two
(C) three
(D) four

Answer : C

Question. Preliminary expenses are those expenses which are paid before incorporation of a company. A company paid its preliminary expenses to its promoters. Accountant of company is in view that this is an expense, so it will be fully written-off in statement of profit and loss account. How this should have been shown?
(A) Statement of profit and loss account by full amount
(B) Current asset
(C) Deduct from reserve and surplus
(D) None of the above

Answer : C

Question. A company got its mining right recently. You are required to show this right in financial statements of the company as
(A) expense
(B) tangible asset
(C) current asset
(D) intangible asset

Answer : D

Question. A company issued shares calling application, allotment and first and final call. A holder of shares not paid allotment and first call. His shares are forfeited but not re-issued. As on balance sheet date, you are required to show these forfeited shares in the balance sheet of company under the head
(A) current liability
(B) shareholders’ fund
(C) current assets
(D) None of these

Answer : B

Question. You are required to find heading and sub-heading under which sundry debtors can be shown?
(A) Fixed assets, trade receivables
(B) Current assets, trade receivables
(C) Fixed assets, trade payables
(D) Current assets, trade payables

Answer : B

Question. Which of the following item(s) can be presented on the assets side of the balance sheet of company?
(A) Sundry debtors
(B) Public deposits
(C) Livestock
(D) Both (A) and (C)

Answer : D

Question. Financial statements include balance sheet, statement of profit and loss, cash f low statement, etc. Besides these statements, a special statement is also included in financial statements if applicable on company. Name that special statement.
(A) Statement of changes in equity
(B) Statement of assets and liabilities
(C) Statement of cash inflow and outflow
(D) Statement of incomes and expenses

Answer : A

Question. Which of the following is not an item of sub-head other current liabilities in balance sheet?
(A) Creditors
(B) Outstanding expenses
(C) Advance income
(D) Both (B) and (C)

Answer : A

Question. From following information, calculate other incomes. Sales of product = Rs 54,000; Sale of services = Rs 60,000; Commission received = Rs 1,20,000; Excise duty paid = Rs 3,00,000; Dividend from investment = Rs 20,000
(A) Rs 1,40,000
(B) Rs 2,54,000
(C) Rs (46,000) loss
(D) None of these

Answer : A

Question. A company issued capital. A shareholder paid all money on allotment while first call is not called by company. So you are required to show this advance in balance sheet of company as
(A) current liability
(B) long-term liability
(C) current assets
(D) None of these

Answer : A

Question. Format and Contents of a company’s balance sheet must be in accordance with ………, Part 1 of Companies Act, 2013.
(A) Schedule I
(B) Schedule II
(C) Schedule III
(D) Schedule IV

Answer : C

Question. From the following information, you are required to compute profit after tax.
I. Revenue from operation = Rs 80,00,000
II. Cost of material consumed = Rs 10,00,000
III. Purchase of stock-in-trade = Rs 30,00,000
IV. Employees salary = Rs 4,00,000
V. Tax rate = 50%
(A) Rs 20,00,000
(B) Rs 24,00,000
(C) Rs 15,00,000
(D) Rs 18,00,000

Answer : D

Question. What is the total under equity and liabilities side of the balance sheet when the following information is given?
Shareholders’ Funds = Rs 10,00,000; Non-current Liabilities = Rs 5,00,000; Current Liabilities = Rs 3,00,000
(A) Rs 10,00,000
(B) Rs 15,00,000
(C) Rs 18,00,000
(D) Rs 13,00,000

Answer : C

Question. A company purchased a business of a firm. When accountant was tallying all assets and liabilities, he found that the company has paid more amount than the worth of it’s assets. You are required to find what this difference be called and where it will be shown?
(A) Capital reserve, reserve and surplus
(B) Goodwill, intangible assets
(C) Accountants totalling is wrong, assets and liabilities always tally without adjustment
(D) None of the above

Answer : B

Question. Livestock is a item of ……… assets under sub-head fixed assets and the major head non-current assets.
(A) intangible
(B) inventories
(C) trade receivables
(D) tangible

Answer : D

Question. What will be the amount shown under the head current liabilities when the following data is given? Short-term borrowings = Rs 3,00,000; Trade Payables = Rs 2,00,000; Other Current Liabilities = Rs 1,00,000; Short-term Provisions = Rs1,00,000
(A) Rs 5,00,000
(B) Rs 6,00,000
(C) Rs 4,00,000
(D) Rs 7,00,000

Answer : D

Question. In balance sheet, ‘Trade receivables’ is the sub-head under ……… .
(A) non-current assets
(B) current assets
(C) non-current liabilities
(D) current liabilities

Answer : B

Question. Securities premium reserve is shown on the liabilities side in the balance sheet under the head
(A) reserves and surplus
(B) general reserve
(C) share capital
(D) current liabilities

Answer : A

Question. Compute cost of materials consumed from the following information. Opening inventory of materials Rs 5,00,000, materials purchased Rs 40,00,000 and closing inventory of materials Rs 6,00,000.
(A) Rs 40,00,000
(B) Rs 51,00,000
(C) Rs 27,00,000
(D) Rs 39,00,000

Answer : D

Question. What will be the amount shown under the head current assets when the following data is given? Inventories = Rs 2,30,000; Trade Receivables = Rs 70,000; Cash and Cash Equivalents = Rs 50, Current Investments = Rs 50,000
(A) Rs 3,00,000
(B) Rs 3,50,000
(C) Rs 2,80,000
(D) Rs 4,00,000

Answer : D

Question. What is the total under assets side of the balance sheet when the following information is given? Non-current Assets = Rs 5,00,000; Current Assets = Rs 2,00,000; Current Liabilities = Rs 3,00,000
(A) Rs 7,00,000
(B) Rs 10,00,000
(C) Rs 5,00,000
(D) None of these

Answer : A

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R).
Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question. Assertion (A): Financial statements analysis helps in drawing out meaningful conclusions.
Reason (R): Financial Statements Analysis presents financial data in a simplified and understandable form. 
Answer. Option (A) is correct.

Question. Assertion (A): The analysis of financial statements does not disclose the current worth of the business.
Reason (R): Financial statements are prepared on cost principles. 
Answer. Option (A) is correct.

Question. Assertion (A): Comparative statements help in deriving meaningful conclusions regarding the changes in financial position and operating results.
Reason (R): Comparative statements compare financial data of two points of time. 
Answer. Option (A) is correct.
 

Question. Assertion (A): Comparative Balance Sheet provides information regarding progress of the business firm.
Reason (R): The Comparative Balance Sheet shows increase and decrease in absolute terms as well as in percentage in various assets, liabilities and capital. 
Answer. Option (A) is correct.

 

Case-based MCQs

I. Read the following information and answer the given questions:

Following is the data given of Lalit Ltd.

Question. What is the percentage change in the Revenue from Operations?
(A) 50%
(B) 25%
(C) 30%
(D) 20%
Answer. Option (B) is correct.

Question. What is the percentage change in the Total Revenue earned?
(A) 20.41%
(B) 27.27%
(C) 23.88%
(D) 25.41%
Answer. Option (D) is correct.

Question. What is the change in the profit before tax?
(A) Rs 1,50,000
(B) Rs 1,60,000
(C) Rs 3,10,000
(D) Rs 10,000
Answer. Option (B) is correct.

Question. What is the percentage change in the Total Expenses?
(A) 25%
(B) 24.41%
(C) 27.27%
(D) 23.88%
Answer. Option (C) is correct.

 

II. Read the following information and answer the given questions:

The following data is available of Pitambar Ltd.

Question. What is the revenue from operations on 31st March, 2020?
(A) Rs 2,00,000
(B) Rs 4,00,000
(C) Rs 3,00,000
(D) None of these
Answer. Option (B) is correct.

Question. What percentage of total revenue is of revenue from operations for 2019?
(A) 100%
(B) 50%
(C) 66%
(D) 150%
Answer. Option (D) is correct.

Question. What is the value of the tax paid by the firm in 2019?
(A) Rs 1,00,800
(B) Rs 81,000
(C) Rs 2,35,000
(D) Cannot be determined from the given data.
Answer. Option (B) is correct.

Question. What is the Net Profit after Tax in March 2020?
(A) Rs 2,35,200
(B) Rs 1,89,000
(C) Rs 2,70,000
(D) Rs 3,36,000
Answer. Option (A) is correct.

 

III. Read the following information and answer the given questions:

Following information are taken from the books of Agarwal Pvt Ltd.:

Question. What is the value of absolute change in the Total Revenue?
(A) Rs 10,00,000
(B) Rs 40,000
(C) Rs 9,60,000
(D) Rs 9,00,000
Answer. Option (C) is correct.

Question. What is the percentage change in the tax paid?
(A) 5%
(B) 6%
(C) 8%
(D) 7%
Answer. Option (A) is correct.

Question. The absolute change in the Expenses is:
(A) Rs 9,00,000
(B) Rs 60,000
(C) Rs 10,00,000
(D) Rs 12,00,000
Answer. Option (A) is correct.

Question. What is the percentage change in the profit earned after tax?
(A) 40%
(B) 7%
(C) 10%
(D) 5%
Answer. Option (D) is correct.

 

Very Short Answer Type Questions

Question. Name the statement in which the figure of net sales is assumed to be equal to 100 and all other figures are expressed as percentage of net sales. 
Answer. Common-size Income Statement

Question. Mr. Navratan wants to know the progress of the business firm by considering the change in assets, liabilities and capital on different dates.Suggest him to choose the financial statement analysis tool which will be helpful for him for the above study.
Answer. Comparative Balance Sheet

Question. Identity the tool of financial statement analysis stated below :
It is prepared in such a form so as to reflect the operating activities of the business for two or more accounting periods.
Answer. Comparative Income Statement