CBSE Class 12 Accountancy Analysis of Financial Statement and Tools MCQs

Question: Financial Statement Analysis Objectives/Need is

a) All of the options

b) Measure the profitability of the business

c) Measure the financial strength of the business

d) Make comparative study within the firm and with other forms

Answer: All of the options

Question: Significance or Importance of Financial Analysis is

a) All of the options

b) To know the profitability Condition

c) To know the liquidity Condition

d) To know the solvency Condition

Answer: All of the options

Question: To whom Importance of Financial Analysis is

a) All of the options

b) For Management

c) For Investors

d) For Creditors

Answer: All of the options

Question: Which is Types of financial Analysis

a) Horizontal Analysis and Vertical Analysis

b) Horizontal Analysis

c) Vertical Analysis

d) None of the options

Answer: Horizontal Analysis and Vertical Analysis

Question: Horizontal Analysis is also known as

a) Dynamic Analyses

b) Vertical Analysis

c) Dynamic Analyses and Vertical Analysis

d) None of the options

Answer: Dynamic Analyses

Question: In which analysis Financial Statement for a single year analysed

a) Vertical Analysis

b) Dynamic Analyses

c) Vertical Analysis and Dynamic Analyses

d) None of the options

Answer: Vertical Analysis

Question: Tool of Financial Analysis is

a) Comparative Statement and Common Size Statement

b) Comparative Statement

c) Common Size Statement

d) None of the options

Answer: Comparative Statement and Common Size Statement

Question: Comparative Statement is a form of

a) Horizontal Analysis

b) Vertical Analysis

c) Horizontal Analysis and Vertical Analysis

d) None of the options

Answer: Horizontal Analysis

Question: Study of relationship between various items is known as

a) Accounting Ratios

b) Vertical Analysis

c) Horizontal Analysis

d) None of the options

Answer: Accounting Ratios

Question: Operating Expenses is include

a) All of the options

b) Office and Administrative expenses

c) Selling and Distribution expenses

d) Provision for doubtful debts

Answer: All of the options

Question: Non operating Expenses are

a) All of the options

b) Interest on long term debts

c) Loss on sale of fixed assets

d) Intangible assets written off such as goodwill, patents etc

Answer: All of the options

Question: Importance of Comparative Statement is

a) All of the options

b) Make the data simple and more understandable

c) Indicate the trend with respect to the previous year

d) compare the firm performance with the performance of other firm in the same business

Answer: All of the options

Question: Net Reserve and Surplus means total of all reserves less

a) Miscellaneous Expenditure

b) Office Expense

c) Direct expenses

d) All of the options

Answer: Miscellaneous Expenditure

Question: Which of the following items appear in the Statement of Profit and Loss

a) Sales

b) Creditors

c) Goodwill

d) Trade payables

Answer: Sales

Question: When analysis is made on the basis of Published statements, reports and information it is known as

a) External analysis

b) Horizontal analysis

c) Vertical Analysis

d) None of the options

Answer: External analysis

Question: Who is interested in the analysis of financial statement?

a) All of the options

b) Creditors

c) Government

d) Investors

Answer: All of the options

Question: The Real object of Analysis of Financial Statement is

a) To measure the financial strength of the business

b) To assess the total expenses of the firm

c) To know about historical cost concept

d) To assess the total liabilities of the firm

Answer: To measure the financial strength of the business

Question: Limitations of financial analysis except

a) All of the options

b) Dont reflect changes in price level

c) Affected by the personal ability and bias of the Analyst

d) Single years Analysis of financial statement have limited use

Answer: All of the options

Question: Shareholders are interested in the analysis of financial statement because

a) They want to judge the present and future earning capacity of the business

b) For the assessment of tax

c) For Research

d) All of the options

Answer: They want to judge the present and future earning capacity of the business

Question: Horizontal Analysis is

a) Time Series Analysis

b) Cross Section Analysis

c) Profitability Analysis

d) All of the options

Answer: Time Series Analysis

Question: The point where total of sales is exactly equal to the total of cost.

a) Break-even Point

b) Profit Point

c) Loss Point

d) All of the options

Answer: Break-even Point

Question: Non-operating Incomes refers to

a) Which are not from the main revenue producing activities

b) Which are earned in the form of sales

c) the indirect expenses relating to the principal revenue generating activities of the enterprise

d) The expenses and losses which are not related to the operating activities

Answer: Which are not from the main revenue producing activities

Question: Which is not a limitation of financial statement?

a) Assess the financial position and profitability

b) Qualitative aspect is ignored

c) Ignores price level changes

d) All of the options

Answer: Assess the financial position and profitability

Question: Rent received, Profit on sale of fixed assets, Compensation for acquisition of land are example of

a) Non-operating Incomes

b) Operating Incomes

c) Operating expenses

d) None of the options

Answer: Non-operating Incomes

Question: Statement of Profit and Loss is prepared to assess the

a) Net Profit and Net Loss

b) Net Profit

c) Net Loss

d) None of the options

Answer: Net Profit and Net Loss

Question: If the different financial data is analysed and compared over a period of time it is called

a) Intra firm analysis

b) Inter firm analysis

c) Trade analysis

d) None of the options

Answer: Intra firm analysis

Question: Comparison of two or more departments or divisions of the same business unit with the objective of meaningful analysis

a) Intra-firm comparison

b) Inter firm analysis

c) Intra-firm comparison and Inter firm analysis

d) None of the options

Answer: Intra-firm comparison

Question: Internal analysis is done

a) By Management

b) By Shareholders

c) By debenture holder

d) None of the options

Answer: By Management

Question: Financial year always begins on

a) 1st April-31st March

b) 1st January-31st December

c) 1st August -31st July

d) None of the options

Answer: 1st April-31st March

Question: Comparative Financial Statement is an example of

a) Horizontal analysis

b) Vertical Analysis

c) External analysis

d) None of the options

Answer: Horizontal analysis

Question:  Shareholders fund is divided into

a) All of the options

b) Share Capital

c) Reserves and Surplus

d) Money received against share warrant

Answer: All of the options

Question: A technique uses in comparative analysis of financial statement is

a) Common size analysis

b) Graphical analysis

c) Preference analysis

d) Returning analysis

Answer: Common size analysis

Question: Formula such as net income available for common stockholders divided by total assets is used to calculate

a) Return on total assets

b) Return on total equity

c) Return on debt

d) Return on sales

Answer: Return on total assets

Question: A techniques uses to identify financial statements trends are included

a) Common size analysis and Percent change analysis

b) Common size analysis

c) Percent change analysis

d) None of the options

Answer: Common size analysis and Percent change analysis

Question: Price per ratio is divided by cash flow per share ratio which is used for calculating

a) Price to cash flow ratio

b) Dividend to stock ratio

c) Sales to growth ratio

d) Cash flow to price ratio

Answer: Price to cash flow ratio

Question: A formula such as net income available to common stockholders divided by common equity is used to calculate

a) Return on common equity

b) Return on interest

c) Return on earning power

d) None of the options

Answer: Return on common equity

Question: Companies that help to set benchmarks are classified as

a) Benchmark companies

b) Analytical companies

c) Return companies

d) None of the options

Answer: Benchmark companies

Question: Total assets divided common equity is a formula uses for calculating

a) Equity multiplier

b) Graphical multiplier

c) Turnover multiplier

d) None of the options

Answer: Equity multiplier

Question: Profit margin multiply assets turnover multiply equity multiplier is used to calculate

a) Return on equity

b) Return on turnover

c) Return on stock

d) None of the options

Answer: Return on equity

Question: Company low earning power and high interest cost cause financial changes which have

a) High return on assets

b) Low return on assets

c) Low return on equity

d) None of the options

Answer: High return on assets

Question: Financial analysis becomes significant because it:

a) Ignores price level changes

b) Measures the efficiency of business

c) Lacks qualitative analysis

d) Is effected by personal bias

Answer: B

Question: When bad position of the business is tried to be depicted as good, it is known as ................

a) Personal Bias

b) Price Level Changes

c) Window Dressing

d) All of the Above

Answer:  C

Question: For whom the analysis of financial statements is not significant?

a) Investor

b) Government

c) Ambassador of India

d) Company’s Employee

Answer: C

Question: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of

a) Non-current Assets.

b) Current Assets,

c) Non-current Liabilities.

d) Total Assets.

 Answer: D

Question: Which analysis is considered as dynamic?

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: A

Question: Which analysis is considered as static?

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: B

Question: Comparative Statement of Profit & Loss provides information about:

a) Rate of increase or decrease in revenue from operations

b) Rate of increase or decrease in cost of revenue from operations

c) Rate of increase or decrease in net profit

d) All of the above

Answer: D

Question: Which analysis depicts the relationship between two figures :

a) Ratio Analysis

b) Trend Analysis

c) Cumulative figures and averages

d) Dividend Analysis

Answer: A

Question: In which analysis total cost are equal to total revenue from Operations :

a) Trend Analysis

b) Ratio Analysis

c) Break-Even Point Analysis

d) Fund Flow Statement Analysis

Answer: C

Question: If net revenue from operations of a firm are Rs. 1,20,000; cost of revenue from operations is Rs.66,000 and operating expenses are Rs.21,600, what will be the percentage of operating income on net revenue from operations?

a) 55%

b) 45%

c) 73%

d) 27%

Answer: D

Question: If net revenue from operations of a firm are Rs. 15,00,000; Gross Profit is Rs.9,00,000 and operating expenses are Rs.75,000, what will be percentage of operating income on net revenue from operations?

a) 45%

b) 55%

c) 35%

d) 65%

Answer: B

Question: Main objective of Trend Analysis is

a) To make comparative study of the financial statements for a number of years

b) To indicate the direction of movement

c) To help in forecasts of various items

d) All of the Above

Answer: D

Question: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of

a) Current Assets

b) Non-current Assets

c) Non-current Liabilities

d) Total Assets

Answer: D

Question: Under which tool of financial analysis, 100% is taken as base and all other related amounts are expressed as a percentage of base?

a) Comparative Statement

b) Common-size Statement

c) Ratio Analysis

d) Cash Flow Statement

Answer: B

Question: The most commonly used tools for financial analysis are :

a) Comparative Statements

b) Common Size Statements

c) Accounting Ratios

d) All of the above

Answer: D

Question: This item is not used as a tool for Analysis of Financial Statements :

a) Cash Flow Statement

b) Fund Flow Statement

c) Ratio Analysis

d) No. of Employees Statement

Answer: D

Question: Which one of the following items is not a tool used for financial analysis?

a) Comparative Statements

b) Ratio Analysis

c) Common Size Statements

d) Statement of Dividend Distribution

Answer: D

Question: Amount left after deducting gross profit from Revenue from Operations is generally :

a) Cost of Revenue from Operations

b) Material consumed

c) Opening Inventory + Purchases - Closing Inventory

d) All of the above

Answer: D

Question: What is gross profit + materials consumed?

a) Purchases

b) Revenue from Operations

c) Opening Inventory

d) Closing Inventory

Answer: B

Question: Main objective of Common Size statement is :

a) To present the changes in various items

b) To provide for a common base for comparison

c) To establish relationship between various items

d) All of the Above

Answer: D

Question: Financial analysis become useless because it:

a) Measures the profitability

b) Measures the Solvency

c) Lacks Qualitative Analysis

d) Makes a comparative study

Answer: C

Question: Parties interested in financial analysis are :

a) Investors

b) Government

c) Financial Institutions

d) All of the Above

Answer: D

Question: Main limitation of financial analysis is :

a) To know earning capacity

b) To know financial strength

c) Do not reflect changes in price level

d) Comparative study with other firms

Answer: C

Question: Payment of Income Tax is considered as

a) Direct Expenses

b) Indirect Expenses

c) Operating Expenses

d) None of the Above

Answer: B

Question: Interest on Loans is

a) Direct Expenses

b) Indirect Expenses

c) Operating Expenses

d) None of the Above

Answer: B

Question: Ratios which relate firms stock to its book value per share, cash flow and earnings are classified as

a) Market value ratios

b) Marginal ratios

c) Return ratios

d) None of the options

Answer: Market value ratios

Question: An equation in which total assets are multiplied to profit margin is classified as

a) Du DuPont equation

b) Turnover equation

c) Preference equation

d) None of the options

Answer: du DuPont equation

Question: High price to earning ratio shows companys

a) High growth prospect

b) Low dividends paid

c) High marginal rate

d) None of the options

Answer: High growth prospect

Question: Analysis simply means ____________data

a) Simplification

b) Explaining

c) Simplification and Explaining

d) None of the options

Answer: Simplification

Question: Interpretation means _________data

a) Explaining

b) Simplification

c) Explaining and Simplification

d) None of the options

Answer: Explaining

Question: Common size analysis is also known as ______ Analysis

a) Vertical

b) Vertical

c) Vertical

d) None of the options

Answer: Vertical

Question: The analysis of actual movement of money inflow and outflow in an organization is called_________analysis.

a) Cash flow

b) Simplification

c) Explaining

d) None of the options

Answer: Cash flow

Question: The financial statements of a business enterprise include

a) All of the options

b) Balance sheet

c) Profit & Loss Account

d) None of the options

Answer: All of the options

Question: The most commonly used tools for financial analysis are

a) All of the options

b) Horizontal analysis

c) Vertical analysis

d) Ratio analysis

Answer: All of the options

Question: An Annual Report is issued by a company to its:

a) Management

b) Directors

c) Auditors

d) Management

Answer: Management 

Question: Balance Sheet provides information about financial position of the enterprise

a) At a point in time

b) At a point in time

c) For a period of time

d) None of the above

Answer: At a point in time

Question: Comparative statement are also known as

a) Horizontal analysis

b) Dynamic analysis

c) Vertical analysis

d) External analysis

Answer: Horizontal analysis

Question: Ratio analysis establishes relationship between

a) Two financial statements

b) Two Share Holder

c) Two Debentures Holder

d) None of the above

Answer: Two financial statements

Question: Common size statements and financial ratios are the two tools employed in

a) Vertical analysis

b) Horizontal analysis

c) Vertical analysis and Horizontal analysis

d) None of the options

Answer: Vertical analysis

Question: Ratio analysis is a total for analysing the

a) Financial statements of any enterprise and Income statements of any enterprise

b) Financial statements of any enterprise

c) Income statements of any enterprise

d) None of the options

Answer: Financial statements of any enterprise and Income statements of any enterprise

Question: Financial analysis helps an analyst to

a) Arrive at a decision and Making a decision

b) Arrive at a decision

c) Making a decision

d) None of the options

Answer: Arrive at a decision and Making a decision

Question: each item is expressed as a percentage of some common base in

a) Common size statement

b) Fund Flow Statement

c) Cash Flow Statement

d) Cash Flow Statement

Answer: Common size statement

Question: Bring out the importance of Financial Analysis

a) All of the options

b) Helps in evaluating the profit earning capacity and financial feasibility of a business

c) Helps in evaluating the profit earning capacity and financial feasibility of a business

d) Helps in evaluating the relative financial status of a firm comparison to other competitive firms

Answer: All of the options

Question: Those financial statements that enable intra-firm and comparisons of financial statements over a period of time are called

a) Comparative Financial Statements

b) Fund Flow Statement

c) Cash Flow Statement

d) Trend Analysis

Answer: Comparative Financial Statements

Question: These statements depict the relationship between various items of financial statements and some common items

a) Common Size Statements

b) Comparative Financial Statements

c) Trend Analysis

d) None of the options

Answer: Common Size Statements

Question: It is a technique of studying the operational results and financial position over a series of years.

a) Trend Analysis

b) Common Size Statements

c) Comparative Financial Statements

d) Trend Analysis

Answer: Trend Analysis

Question: Trend analysis can be observe the financial position percentage changes over time in the selected data using with

a) Previous years data

b) Next years data

c) Previous years data and Next years data

d) None of the options

Answer: Previous years data

Question: Importance of Trend Analysis

a) All of the options

b) Assists in Forecasting

c) Percentage Terms

d) Presents a Broader Picture

Answer: All of the options

Question: Importance of Comparative Statements

a) All of the options

b) Make Presentation Simpler

c) Help in Drawing Conclusion

d) Help in Detection of Problems

Answer: All of the options

Question: The reasons that advocate in favour of Financial Analysis

a) All of the options

b) Helps in assessing the long-term solvency of the business

c) helps in evaluating the profit earning capacity and financial feasibility of a business

d) Assists management in decision making process, drafting various plans and also in establishing an effective controlling system

Answer: All of the options

Question: Common size statements can be classified into which broad categories

a) Common size statements can be classified into two broad categories and Common Size Balance Sheet

b) Common size statements can be classified into two broad categories

c) Common Size Balance Sheet

d) None of the options

Answer: Common size statements can be classified into two broad categories and Common Size Balance Sheet

Question: Columns prepared in a Common Size Statement

a) All of the options

b) Particulars Column

c) Amount Columns

d) Percentage or Ratio Columns

Answer: All of the options

Question: The comparison of financial data of same time period of different organizations engaged in similar business.

a) Cross-sectional analysis

b) Spatial data analysis

c) Time series analysis

d) None of the options

Answer: Cross-sectional analysis

Question: The symptom of large inventory accumulation in anticipation of price rise in future will be indicated by

a) Inventory turnover ratio

b) Working Capital turnover ratio

c) Asset turnover ratio

d) All of the options

Answer: Inventory turnover ratio

Question: For a healthy business the current ratio lies between

a) 1.5 to 3

b) 0 to 1.5

c) 3 to 4.5

d) 4.5 to 6

Answer: 1.5 to 3

Question: Revenue from Operations less cost of Revenue from Operations is called :

a) Net Profit

b) Operating Profit

c) Gross Profit

d) Total Profit

Answer: C

Question: Which objective is not fulfilled by comparative Statement of Profit & Loss :

a) To compare the items of Statement of Profit & Loss of two years

b) To know the absolute changes in items of Statement of Profit & Loss

c) To show the change in financial position

d) To know the percentage changes in items of Statement of Profit & Loss

Answer: C

Question: What will be the trend percentage, if the Inventory of a firm is Rs.2,00,000; Rs.2,40,000; Rs.3,00,000 and Rs.4,00,000 respectively?

a) 1, 1.2, 1.5,2

b) 10, 12, 15,20

c) 100, 120, 150, 200

d) None of the Above

Answer: C

Question: In a common size Balance Sheet, total liabilities are assumed to be equal to

a) 1

b) 10

c) 100

d) 1,000

Answer: C

Question: In a common size Statement of Profit & Loss, the amount of net revenue from operations is assumed to be equal to

a) 1

b) 10

c) 100

d) 1,000

Answer: C

Question: Comparison of actual values of one firm with those of another firm belonging to the same industry is

a) inter-firm Comparison.

b) intra-firm Comparison.

c) Pattern Comparison.

d) Standard Comparison.

Answer: A

Question: While preparing Common-size income Statement, each item of income Statement is expressed as % of

a) Revenue from Operations.

b) Other income.

c) Total Income.

d) Profit before Tax.

Answer: A

Question: Feature of financial analysis is to present the data contained in financial statements in

a) Easy form

b) Convenient and rational groups

c) Comparable form

d) All of the Above

Answer: D

Question: Which analysis is considered as dynamic :

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: A

Question: Which analysis is considered as static :

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: B

Question: Creditors or Suppliers are interested to know the

a) Profitability of the firm in relation to turnover.

b) Profitability of the firm in relation to investments.

c) Short-term solvency/liquidity of the concern.

d) Effective utilisation of its (firm's) resources.

 Answer: C

Question: Comparison of values of one period with those of another period for the same firm is

a) Intra-firm comparison.

b) Inter-firm comparison.

c) Pattern comparison.

d) Trend comparison.

Answer: A

Question: Which of the following is not a limitation of Financial Statement Analysis?

a) Ignores the Qualitative Elements

b) Not free from personal bias

c) Intra-firm Comparison

d) Ignores the price level changes

Answer: C

Question: A company’s Revenue from Operations are Rs.20,00,000; Cost of Revenue from Operations is Rs. 14,00,000 and indirect expenses are Rs.2,00,000. What is the amount of Gross Profit?

a) Rs. 18,00,000

b) Rs.4,00,000

c) Rs. 8,00,000

d) Rs.6,00,000

Answer: D

Question: Revenue from Operations Rs.4,00,000; Cost of Revenue from Operations 60% of Revenue from Operations; Operating expenses Rs. 30,000 and rate of income tax is 40%. What will be amount of profit after tax?

a) Rs.64,000

b) Rs.78,000

c) Rs.52,000

d) Rs.96,000

Answer: B

Question: Revenue from Operations Rs. 8,00,000; Gross Profit Ratio 32%; Indirect Exp. 10% of Gross Profit and income tax 40%. What will be the amount of profit after tax?

a) Rs. 1,38,240

b) Rs. 1,02,400

c) Rs.92,160

d) Rs.1,53,600

Answer: A

Question: Common Size Statements are prepared

a) In the form of Ratios

b) In the form of Percentages

c) In both of the Above

d) None of the Above

Answer: B

Question: Which of the following is untrue :

a) Common size Balance Sheet

b) Common size Statement of Profit & Loss

c) Common size cash Flow Statement

d) None of the Above

Answer: C

Question: Main objective of Common Size Statment of Profit & Loss is :

a) To present changes in assets and liabilities

b) To judge the financial soundness

c) To establish relationship between revenue from operations and other items of statement of Profit & Loss

d) All of the Above

Answer: C

Question: Which one of the following items is not a method/tool of analysis of financial statements?

a) Trend Analysis

b) Statement of Affairs

c) Cash Flow Statement

d) Comparative Statements

Answer: B

Question: Which one of the following items is not a method/tool of analysis of financial statements?

a) Accounting Ratio

b) Break Even Point

c) Statement of Receipts and Payments

d) Fund Flow Statement

Answer: C

Question: Which one of the following items is not a method/tool of analysis of financial statements?

a) Fund Flow Statement

b) Common Size Statement

c) Statement of Trade Receivables

d) Cash Flow Statement

Answer: C

Question: Main objective of analysis of financial statements is

a) To know the financial strength

b) To make a comparative study with other firms

c) To know the efficiency of management

d) All of the Above

Answer: D

Question: Analysis of Financial Statements is significant:

a) For Creditors

b) For Managers

c) For Employees

d) For all of the above

Answer: D

Question: Which objective is not fulfilled by comparative financial statement:

a) Indicate the extent of change in assets and liabilities

b) Indicate the extent of change in items of Statement of Pofit & Loss

c) Show effect of operative activities on assets and liabilities

d) Show the direction of change in assets and liabilities

Answer: B

Question: The formula used to calculate current ratio is

a) Current assets / Current liabilities

b) Current liabilities / Current assets

c) Inventory / Current liabilities

d) None of the options

Answer: Current assets / Current liabilities

Question: Interpretation of accounts is the

a) All of the options

b) Art and science of translating the figures

c) To know financial strengths and weaknesses of a business

d) To know the causes for the prevailing performance of business

Answer: All of the options

Question: Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?

a) All of the options

b) Ratio Analysis

c) Average Analysis

d) Trend Analysis

Answer: All of the options

Question: Which of the following statements are true

a) All of the options

b) External analysis depends entirely on issued financial statements

c) Interpretation and analysis both are different

d) Financial analysis covers interpretation

Answer: All of the options

Question: Common-size balance sheet shows

a) Relative value of the various items

b) Different value of the various items

c) Relative value of the various items and Different value of the various items

d) None of the options

Answer: Relative value of the various items

Question: Each product is represented as a percentage of the net sales figure

a) In the common size income statement

b) In the Trend analysis

c) In the common size income statement and In the Trend analysis

d) None of the options

Answer: In the common size income statement

Question: Common size income statements represent the various elements as a

a) Percentage of the net sales figure

b) Percentage of the gross profit

c) Percentage of the net sales figure and Percentage of the gross profit

d) None of the options

Answer: Percentage of the net sales figure

Question: Analysis of any financial Statement comprises

a) All of the options

b) Balance sheet

c) P&L Account

d) Trading account

Answer: All of the options

Question: Comparison of financial statements highlights the trend of the ___ of the business.

a) All of the options

b) Financial position

c) Performance

d) Profitability

Answer: All of the options

Question: When ratios of previous years are compared with current years, they are called

a) Trend ratios

b) Current ratios

c) Trend ratios and Current ratios

d) None of the options

Answer: Trend ratios

Question: When financial statements of several years are analysed, it is termed as

a) Vertical analysis

b) Horizontal analysis

c) Current ratios

d) None of the options

Answer: Vertical analysis

Question: Comparative Financial Statement is a tool of

a) Financial analysis

b) Profit analysis

c) Loss Analysis

d) None of the options

Answer: Financial analysis

Question: Common-Size Statement is also known as

a) Hundred Percent Statement

b) External analysis statement

c) Hundred Percent Statement and External analysis statement

d) None of the options

Answer: Hundred Percent Statement

Question: Common-Size Statement is the statement in which amounts of individual items of balance sheet convert into

a) Percentage

b) Profit

c) Loss

d) None of the options

Answer: Percentage

Question: Heterogeneous cash flows can be made comparable by

a) Discounting technique and Compounding technique

b) Discounting technique

c) Compounding technique

d) None of the options

Answer: Discounting technique and Compounding technique

Question: When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

a) Accounting ratio

b) Financial ratio

c) Costing ratio

d) None of the options

Answer: Accounting ratio

Question: The relationship between two financial variables can be expressed in:

a) Either of These

b) Pure ratio

c) Percentage

d) Rate or time

Answer: Either of These

Question: Liquidity ratios are expressed in

a) Pure ratio form

b) Percentage

c) Pure ratio form and Percentage

d) None of the options

Answer: Pure ratio form

Question: Ratio analysis is useful in

a) Financial analysis

b) Profit Analysis

c) Loss Analysis

d) None of the options

Answer: Financial analysis

Question: Ratio Analysis is helpful for

a) All of the options

b) Financial planning

c) Forecasting

d) Financial analysis

Answer: All of the options

Question: Profit for the objective of calculating a ratio may be taken as

a) All of the options

b) Profit before tax but after interest

c) Profit before interest and tax

d) Profit after interest and tax

Answer: All of the options

Question: Which of the following are limitations of ratio analysis?

a) All of the options

b) Ratio analysis may result in false results if variations in price levels are not considered

c) Ratio analysis ignores qualitative factors

d) Ratio Analysis is historical analysis

Answer: All of the options

Question: High price to earning ratio shows companys

a) High growth prospect

b) Low growth prospect

c) Low dividends paid

d) All of the options

Answer: High growth prospect

Question: What financial statement lists assets from current to long term?

a) Balance Sheet

b) Cash Flow statement

c) Balance Sheet and Cash Flow statement

d) All of the options

Answer: Balance Sheet

Question: What balance sheet formal is vertical?

a) Report

b) Standard

c) Account

d) None of the options

Answer: Report

Question: Net income equals

a) Total Revenue - Total Expenses

b) Total Revenue + Total Expenses

c) Total Revenue - Total Expenses and Total Revenue + Total Expenses

d) None of the options

Answer: Total Revenue - Total Expenses

Question: Total assets divided common equity is a formula uses for calculating

a) Equity multiplier

b) Graphical multiplier

c) Turnover multiplier

d) None of the options

Answer: Equity multiplier

Question: What financial ratio helps management evaluate profits available for dividends?

a) Retention Rate

b) Cash Ratio

c) Debt Ratio

d) All of the options

Answer: Retention Rate

Question: Bring out the importance of Financial Analysis

a) All of the options

b) Helps in evaluating the profit earning capacity and financial feasibility of a business

c) Helps in evaluating the profit earning capacity and financial feasibility of a business

d) Helps in evaluating the relative financial status of a firm comparison to other competitive firms

Answer: All of the options

Question: Net Reserve and Surplus means total of all reserves less

a) Miscellaneous Expenditure

b) Office Expense

c) Direct expenses

d) All of the options

Answer: Miscellaneous Expenditure

Question: Which analysis is based only on one year’s data :

a) Cash Flow Statement

b) Dividend Analysis

c) Vertical Analysis

d) Horizontal Analysis

Answer: C

Question: Main limitation of analysis of financial statements is

a) Affected by window dressing

b) Difficulty in forecasting

c) Do not reflect changes in price level

d) All of the Above

Answer: D

Question:  Which of the following is not a limitation of analysis of financial statements?

a) Affected by personal bias

b) To know the financial strength

c) Lack of Qualitative Analysis

d) Based on accounting concepts

Answer: B

Question: For whom analysis of financial statements is not significant?

a) Political Adviser of Prime Minister

b) Investors

c) Management

d) Financial Institutions

Answer: A

Question: Which technique of financial analysis shows a comparative study of items or components of financial statements for two or more years?

a) Common-size Statement

b) Ratio Analysis

c) Comparative Statement

d) Trend Analysis

Answer: C

Question: Which one of the following is tool of financial analysis?

a) Comparative Statements

b) Common-size Statements

c) Cash Flow Statement

d) All of these

Answer: D

Question: In the Balance Sheet of a Common Size Statement:

a) Figure of share capital is assumed to be 100

b) Figure of current liabilities is assumed to be 100

c) Figure of fixed assets is assumed to be 100

d) Figure of total assets is assumed to be 100

Answer: D

Question: Total assets of a firm are Rs.20,00,000 and its fixed assets are Rs.8,00,000. What will be the percentage of fixed assets on total assets?

a) 60%

b) 40%

c) 29%

d) 71%

Answer: B

Question: If total assets of a firm are Rs. 8,20,000 and its fixed assets are Rs.5,90,400, what will be the percentage of current assets on total assets?

a) 42%

b) 58%

c) 28%

d) 72%

Answer: C

Question: Fixed Assets of a company increased from Rs.3,00,000 to Rs.4,00,000. What the percentage of change?

a) 25%

b) 33.3%

c) 20%

d) 40%

Answer: B

Question: A Company’s current liabilities decreased from Rs.4,00,000 to Rs.3,00,000. What is the percentage of change?

a) 25%

b) 33.3%

c) 20%

d) 40%

Answer: A

Question: A company’s working capital is Rs. 10 lakh (Negative balance) in the year 2018. It became Rs.15 lakh (Positive balance) in the year 2019. What is the percentage of change?

a) 150%

b) 100%

c) 250%

d) 50%

Answer: C

Question: Comparative Statements show the changes in

a) Percentages.

b) Absolute amounts,

c) Both (a) and (b).

d) Ratios.

Answer: C

Question: From financial statement analysis, the creditors are interested to know

a) Liquidity.

b) Profit.

c) Efficiencies.

d) Share capital.

Answer: A

Question: Which of the following is the objective of comparative Statements?

a) To make the data simpler and understandable

b) To indicate the trend

c) To help in forecasting

d) All of the Above

Answer: D

Question: Which of the following is device of comparative statements?

a) Comparison expressed in terms of absolute data

b) Comparison expressed in terms of percentages

c) Comparison expressed in terms of ratios

d) All of the Above

Answer: D

Question: Comparative Balance Sheet:

a) Provides a summarized view of the operations of the firm

b) Presents the financial position of the firm

c) Presents the change in various items of balance sheet

d) None of the above

Answer: C

Question: Revenue from Operations Rs.4,00,000; Cost of Revenue from Operations 60% of Revenue from Operations, indirect expenses 15% of Gross Profit; Income Tax 40%. Calculate net profit after tax

a) Rs.64,000

b) Rs. 54,400

c) Rs.81,600

d) Rs.96,000

Answer: C

Question: In comparative statements change in different items is presented in the form of ______

a) Money Values

b) Percentages

c) Both Money Values and Percentages

d) None of the above

Answer: C

Question: Which of the following is not a form of presenting financial analysis :

a) Absolute figure Comparison

b) Ratio Method

c) Cumulative figures and averages

d) Annual Report

Answer: D

Question: Main objective of Common Size Balance Sheet is :

a) To establish relationship between revenue from operations and other items of statement of profit & loss

b) To present changes in assets and liabilities

c) To present changes in various items of income and expenses

d) All of the Above

Answer: B

Question: In the Statement of Profit & Loss of a Common Size Statement:

a) Figure of net revenue from operations is assumed to be equal to 100

b) Figure of gross profit is assumed to be equal to 100

c) Figure of net profit is assumed to be equal to 100

d) Figure of assets is assumed to be equal to 100

Answer: A

Question: ‘No profit no loss’ point is called :

a) Fund Flow Point

b) Cash Flow Point

c) Trend Analysis

d) Break Even Point

Answer: D

Question: Net profit is obtained by deducting ................ from Gross Profit.

a) Operating Expenses

b) Non-Operating Exp.

c) Operating and Non-Operating Exp.

d) None of the Above

Answer: C