CBSE Class 12 Accountancy Financial Statement Of Companies MCQs Set A

Question: ___________ is conducted by bankers and government

a) External Analysis

b) Internal Analysis

c) External Analysis and Internal Analysis

d) None of the options

Answer: External Analysis

Question: Bank overdraft is shown in the balance sheet under the

a) Short Term Borrowings

b) Non-current liabilities

c) Non Current assets

d) None of the options

Answer: Short Term Borrowings

Question: An example of fixed asset is

a) Live stock

b) Value stock

c) Income stock

d) None of the options

Answer: Live stock

Question: The assets held by a business which can be converted in the form of cash, without disturbing the normal operations of a business

a) Current assets

b) Tangible assets

c) Intangible assets

d) Fixed assets

Answer: Current assets

Question: The return which the company pays on borrowed funds is termed as

a) All of the options

b) Interest

c) Dividend

d) Bonus

Answer: All of the options

Question: The following is(are) the type(s) of capital budgeting decision(s)

a) All of the options

b) Diversification

c) Replacements

d) Expansion

Answer: All of the options

Question: The following is(are) the external source(s) of cash

a) All of the options

b) Long terms loans

c) Issue of new shares

d) Short term borrowings

Answer: All of the options

Question: The total cost that arises when the quantity produced is increased by one unit is called

a) Marginal cost

b) Average cost

c) Fixed cost

d) None of the options

Answer: Marginal cost

Question: Current assets are also referred to as

a) Working capital

b) Investments

c) Inventory

d) None of the options

Answer: Working capital

Question: Carriage Inward is normally debited to ____

a) Manufacturing Account

b) Profit and Loss account

c) Capital Account

d) None of the options

Answer: Manufacturing Account 

Question: Reliability of financial analysis depends upon the

a) Reliability of financial data

b) Reliability of Customer

c) Reliability of financial data and Reliability of Customer

d) None of the options

Answer: Reliability of financial data

Question: Objectives of analysis and interpretation of financial statements are

a) All of the options

b) Progress

c) Position

d) Prospects

Answer: All of the options

Question: Sub- headings are Non Current Liabilities are

a) All of the options

b) Long Term borrowing

c) Deferred Tax Liabilities

d) Long Term Provisions

Answer: All of the options

Question: Main headings of assets are

a) Current Assets and Non Current assets

b) Current Assets

c) Non Current assets

d) None of the options

Answer: Current Assets and Non Current assets

Question: Main headings of the liability side of a company balance sheet

a) All of the options

b) Shareholders Fund

c) Current Liabilities

d) Non Current Liabilities

Answer: All of the options

Question: Financial Statement provide a summary of

a) All of the options

b) Assets

c) Liabilities

d) Capital

Answer: All of the options

Question: Calls in advance is to be shown under the heading of

a) Current Liabilities

b) Current Assets

c) Current Liabilities and Current Assets

d) None of the options

Answer: Current Liabilities

Question: Goodwill is shown under which subheading

a) Intangible Assets

b) Current Assets

c) Current Liability

d) None of the options

Answer: Intangible Assets

Question: Prepaid Expenses is

a) Current Assets

b) Current Liabilities

c) Long term loan

d) None of the options

Answer: Current Assets

Question: Non Current Assets is

a) Patents and Trade Marks

b) Bills Receivables

c) Prepaid Expenses

d) Debtors

Answer: Patents and Trade Marks

Question: Security Premium is show under which major head

a) Shareholders fund

b) Current Liabilities

c) Current Assets

d) None of the options

Answer: Shareholders fund

Question: Provision for Provident Fund comes under

a) Long-term Provision

b) Trade Payable

c) Other Current Liabilities

d) None of the options

Answer: Long-term Provision

Question:  Sinking Fund is shown under which subheading

a) Reserve and Surplus

b) Trade Payable

c) Non Current Liabilities

d) None of the options

Answer: Reserve and Surplus

Question: Authorised Capital is shown under which major heading in balance sheet

a) Shareholders Fund

b) Current Liability

c) Current Assets

d) None of the options

Answer: Shareholders Fund

Question: Debenture is shown under which major heading in balance sheet

a) Non Current Liabilities

b) Other Current Liabilities

c) Current Liability

d) None of the options

Answer: Non Current Liabilities

Question: Example of Short-term Provision is

a) Provision for Tax

b) Debentures

c) Loan

d) None of the options

Answer: Provision for Tax

Question: Provision for Tax is our

a) Liability

b) Assets

c) Liability and Assets

d) None of the options

Answer: Liability

Question: Bills Payable shown under major heading Current Liability and Subheading

a) Trade Payable

b) Short-term Provision

c) Other Current Liabilities

d) None of the options

Answer: Trade Payable

Question: Unclaimed Dividend shown under major heading Current Liability and Subheading

a) Other Current Liabilities

b) Trade Payable

c) Short-term Provision

d) None of the options

Answer: Other Current Liabilities

Question: Unclaimed Dividend is shown under which major heading in balance sheet

a) Current Liability

b) Equity and Liability

c) Current Assets

d) None of the options

Answer: Current Liability

Question: Proposed Dividend shown under major heading Current Liability and Subheading

a) Short-term Provision

b) Trade Payable

c) Other Current Liabilities

d) None of the options

Answer: Short-term Provision

Question: Proposed Dividend is shown under which major heading in balance sheet

a) Current Liability

b) Current Assets

c) Equity and Liability

d) None of the options

Answer: Current Liability

Question: Miscellaneous Expenditure are

a) All of the options

b) Preliminary Expenses

c) Discount allowed on the issue of shares/deb

d) Development expenditure not adjusted

Answer: All of the options

Question: Fixed Assets subheading is divided into

a) All of the options

b) Tangible

c) Intangible Assets

d) Capital work in progress

Answer: All of the options

Question: In Balance Sheet Bills Payable is shown under the

a) Current Liabilities

b) Current Assets

c) Equity and Liability

d) None of the options

Answer: Current Liabilities

Question: Long term Liabilities is

a) All of the options

b) Bonds

c) Debenture

d) Loans from Banks

Answer: All of the options

Question: Non Current Liabilities classified in balance sheet

a) All of the options

b) Long term borrowings

c) Deferred tax liabilities

d) Other long term liabilities

Answer: All of the options

Question: Financial Statement also called

a) Final Accounts

b) Profit & Loss A/c

c) Trading A/c

d) None of the options

Answer: Final Accounts

Question: Those expenses which paid in advance by the firm

a) Prepaid expenses

b) Accrued income

c) Prepaid expenses and Accrued income

d) None of the options

Answer: Prepaid expenses

Question: Prepaid expenses are shown under

a) Other current assets

b) Inventories

c) Cash Equivalents

d) None of the options

Answer: Other current assets

Question: Provision for Tax appears in a Company’s Balance Sheet under the Sub-head ................

a) Short-term Provisions

b) Reserves and Surplus

c) Long-term Provisions

d) Other Current Liabilities

Answer: A

Question: Bills Receivables appear in a Company Balance Sheet under the Sub-head

a) Current Investments

b) Cash Equivalents

c) Trade Receivables

d) Short term Loans and Advances

 Answer: C

Question: Marketable securities appear in a Company Balance Sheet under the Sub-head

a) Current Investments

b) Non-Current Investments

c) Intangible Assets

d) Short-term Loans and Advances

Answer: A

Question: While preparing the Balance Sheet of a company ‘Underwriting Commission’ is shown under which head?

a) Unamortized Expenditure

b) Current Assets

c) Non-Current Assets

d) Current Liability

 Answer: A

Question: Which of the following items is shown under the head ‘Current Liabilities’ while preparing the Balance Sheet of a company?

a) Securities Premium Reserve

b) Debentures

c) Livestock

d) None of the above

 Answer: D

Question: While preparing the Balance Sheet of a company ‘Securities Premium’ is shown under :

a) Current Liability

b) Share Capital

c) Long-term Borrowings

d) None of the above

Answer: D

Question: Balance sheet of a company is required to be prepared in the format given in

a) Schedule III Part II

b) Schedule III Part I

c) Schedule III Part III

d) Table A

 Answer: B

Question: As per Companies Act, the Balance Sheet of a company is required to be presented in ................

a) Horizontal Form

b) Vertical Form

c) Either Horizontal or Vertical Form

d) Neither of the above

 Answer: B

Question: Which of the following is not required to be prepared under the Companies Act

a) Statement of Profit and Loss

b) Balance Sheet

c) Report of Director’s and Auditor’s

d) Funds Flow Statement

Answer: D

Question: In a Company's Balance Sheet, Debit (Negative) balance of Statement of Profit and Loss is shown under

a) Non-current Liabilities.

b) Current Liabilities.

c) Non-current Assets.

d) Reserves and Surplus.

 Answer: D

Question: Patents and Trademarks are examples of

a) intangible Fixed Assets.

b) Tangible Fixed Assets.

c) Intangible Assets under Development.

d) Capital Work-in-Progress.

 Answer: A

Question: Identify the item which is not a part of Shareholders' Funds:

a) Share Application Money Pending Allotment

b) Share Capital

c) Reserves and Surplus

d) Money Received against Share Warrants.

Answer: A

Question: Fixed Deposits appear in a Company’s Balance Sheet under :

a) Current Assets

b) Current Liabilities

c) Long-term Provisions

d) Long-term Borrowings

 Answer: D

Question: Goodwill appears in a Company’s Balance Sheet under the Sub-head

a) Unamortized Assets

b) Non-Current Investment

c) Intangible Assets

d) Tangible Assets

Answer: C

Question: Share Forfeiture Account appears in a Company’s Balance Sheet under the Sub-head ................

a) Share Capital

b) Reserve & Surplus

c) Contingent Liability

d) Commitments

Answer: A

Question: Expenses allowed on issue of shares appears in a Company’s Balance Sheet under:

a) Share Capital

b) Current Liability

c) Unamortized Expenditure

d) Contingent Liability

Answer: C

a) Fixed intangible Assets

b) Fixed Tangible Assets

c) Fictitious Assets

d) Current Assets

Answer: A

Question: Those liabilities which may or may not arise as they are dependent on happening in future.

a) Contingent Liability

b) Current Liability

c) Provisions

d) Reserve & surplus

Answer: A

Question: A company prepares its Balance Sheet as per the format in

a) Schedule VI of the Indian Companies Act, 2013

b) Schedule II of the Indian Companies Act, 2013

c) Schedule IV of the Indian Companies Act, 2013

d) None of the options

Answer: A

Question: With the permission of Registrar accounting period can be extended up to

a) 18 Months

b) 13 Months

c) 14 Months

d) 15 Months

Answer: A

Question: Preliminary expenses include

a) All of the options

b) Legal cost

c) Professional fees

d) Stamp duty

Answer: All of the options

Question: Preliminary expenses are shown in the balance sheet.

a) Assets side

b) Liabilities side

c) Assets side and Liabilities side

d) None of the options

Answer: A

Question: Which are written off every year from the profits earned by the business.

a) Preliminary Expenses

b) Liabilities

c) Preliminary Expenses and Liabilities

d) None of the options

Answer: A

Question: Securities Premium Reserve is shown under:

a) Reserve and Surplus

b) Short term provisions

c) Current Liabilities

d) Current Assets

Answer: A

Question: Which Indian Companies Act is in force these days

a) Companies Act 2013

b) Indian Companies Act 1956

c) Indian Companies Act 2015

d) Indian Companies Act 2014

Answer: A

Question: Which of the following is a fictitious Asset?

a) Preliminary Expense

b) Goodwill

c) Land & building

d) None of the options

Answer: A

Question: The basic equation on which a profit & loss statement is based is

a) Revenues - Expenses = Profit

b) Revenues + Expenses = Profit

c) Revenues - Expenses = Profit and Revenues + Expenses = Profit

d) None of the options

Answer: A

Question: The profit & loss statement is also known as the

a) All of the options

b) Income Statement

c) Statement of Earning

d) Statement of Operation

Answer: All of the options

Question: The profit & loss statement summarizes the

a) Revenues and expenses

b) Assets and Liabilities

c) Revenues and expenses and Assets and Liabilities

d) None of the options

Answer: A

Question: Which is not a limitation of Financial Statements

a) Used by various agencies for policy decisions

b) Give information on historic fact

c) Transactions expressed in monetary terms are considered

d) They are the Interim Report and not the final one

Answer: A

Question: ______is a Current Liability.

a) Sundry Creditors

b) Drawings

c) Prepaid Insurance

d) Sundry Creditors

Answer: A

Question: Which are the determinants of dividend policy

a) All of the options

b) Working Capital Requirement

c) Liquidity Position

d) Legal Requirement

Answer: All of the options

Question: Record all the credit balances of real and personal accounts in the

a) Liability side of the balance sheet

b) Assets side of the balance sheet

c) Liability side of the balance sheet and Assets side of the balance sheet

d) None of the options

Answer: A

Question: Record all the debit balances of real and personal accounts in the

a) Assets side of the balance sheet

b) Liability side of the balance sheet

c) Assets side of the balance sheet and Liability side of the balance sheet

d) None of the options

Answer: A

Question: The process of preparing income statement is

a) Trial Balance, Profit & Loss account and Balance Sheet

b) Balance Sheet ,Profit & Loss account, Trial Balance,

c) Balance Sheet, Trial Balance, Profit & Loss account

d) None of the options

Answer: A

Question: Financial statements reflect a combination of

a) All of the options

b) Recorded facts

c) Accounting conventions

d) Personal judgements

Answer: All of the options

Question: Persons who are willing to invest in any organization always wish to know about the profitability and solvency of the business concern

a) All of the options

b) Investors and Potential Investors

c) Employees and Workers

d) Owner

Answer: All of the options

Question: The employee and workers are interested in financial statement for knowing about the

a) All of the options

b) Timely payment of wages and salaries

c) Bonus

d) Appropriate increment

Answer: All of the options

Question: Management interested in financial statements for drafting

a) All of the options

b) Various policies

c) Facilitating planning

d) Decision making process

Answer: All of the options

Question: There are various external parties who are interested in financial statements

a) Creditors and Investors and Potential Investors

b) Creditors

c) Investors and Potential Investors

d) None of the options

Answer: A

Question: When the Profit and Loss account shows a debit balance, i.e., loss which could not be adjusted against general reserves, the same is shown as a last item on

a) Asset side

b) Liability Side

c) Asset side and Liability Side

d) None of the options

Answer: A

Question: Assets which are converted into cash within an operating cycle is known as

a) Current Assets

b) Fixed Assets

c) Intangible Assets

d) None of the options

Answer: A

Question: Fixed Assets are

a) All of the options

b) Land and Building

c) Plant and Machinery

d) Motor Car

Answer: All of the options

Question: Those assets that are used for more than one year are called

a) Fixed Assets

b) Current Assets

c) Current Liabilities

d) All of the options

Answer: A

Question: Current Liabilities are

a) All of the options

b) Bank overdraft

c) Bills payable

d) Creditors

Answer: All of the options

Question: Current Liabilities are those liabilities which are liable to pay with in an operating cycle generally one year

a) Current Liabilities

b) Current Assets

c) Reserves and Surplus

d) None of the options

Answer: A

Question: What are the items shown under heading Miscellaneous Expenditure

a) All of the options

b) Preliminary expenses

c) Discount on Issue of share and debenture

d) Deferred expenses

Answer: All of the options

Question: What are the items shown under heading Reserve and Surplus

a) All of the options

b) Capital Reserve

c) Capital Redemption Reserve

d) Securities Premium

Answer: All of the options

Question: Profit and loss account is also called_____statement

a) Income

b) Capital

c) Loss

d) None of the options

Answer: A

Question: The statement which shows the assets and liabilities of a company is known as

a) Balance sheet

b) Profit & Loss Account

c) Trial Balance

d) None of the options

Answer: A

Question: Financial statements are the ______of information to interested parties.

a) Basic Source

b) External Source

c) Basic Source and External Source

d) None of the options

Answer: A

Question: Financial statements are primarily directed towards the needs of

a) Owners

b) Customers

c) Banks

d) None of the options

Answer: A

Question: Financial statements are the end products of

a) Accounting process

b) Company process

c) Selling Process

d) None of the options

Answer: A

Question: Which includes in Trade Receivables

a) Debtors

b) Creditors

c) Bills Payable

d) None of the options

Answer: A

Question: Inventories include the following are

a) All of the options

b) Raw Material

c) Work in progress

d) Goods acquired for trading

Answer: All of the options

Question: Which is the first thing which is being shown in the liabilities side of balance sheet

a) Share Capital

b) Current Assets

c) Current Liabilities

d) None of the options

Answer: A

Question: 6% Debentures appear in a Company’s Balance Sheet under the Sub-head

a) Long-term Provisions

b) Long-term Borrowings

c) Other Current Liabilities

d) Other Long-term Liabilities

 Answer: B

Question: Interest accrued on Investments appear in a Company’s Balance Sheet under the Sub-head ................

a) Non-Current Investments

b) Current Investments

c) Other Current Assets

d) Other Non-Current Assets

 Answer: C

Question: ‘Accumulated Dividend Arrears’ on preference shares is shown in the Company’s Balance Sheet as :

a) Current Liability

b) Contingent Liability

c) Commitments

d) Short-term Provision

Answer: C

Question: Which of the following is not a Short-term Borrowing?

(a) Deposits

(b) Loans repayable on demand

(c) Bank Overdraft

(d) Trade Receivables

 Answer: D

Question: Which of the following is not a Non-Current Asset?

(a) Fixed Assets

(c) Long-term Loans and Advances

(b) Share Capital

(d) Non-current Investments

 Answer: B

Question: If the Operating Cycle cannot be identified, it is assumed to be a period of

(a) 10 months,

(b) 11 months,

(c) 9 months.

(d) 12 months.

Answer: D

Question: A company has issued 1,00,000 Equity Shares of f 10 each. It has called the total nominal value of the share. lt has received the calls made except the final call off 3 on 1,000 shares. Subscribed capital will be shown as follows:

(a) Subscribed and not fully paid-up:

1,00,000 Equity Shares of f 10 each    10,00,000

Less: Calls-in-Arrears                             3,000  

                                                          9.97.000

(b) Subscribed and fully paid-up: Rs.

1,00,000 Equity Shares of f 10 each     10,00,000

Less: Calls-in-Arrears                             3,000    

                                                           9.97.000

(c) Subscribed and fully paid-up: Rs.

99.000 Equity Shares off 10 each                               9,90,000

(d) Subscribed but not fully paid-up:

1.000 Equity Shares off 10 each               10,000

Less: Calls-in-Arrears                                3,000            7,000      

                                                                                  9.97.000

(d) Can be shown either as (b) or as (c).

 Answer: C

Question: Debentures redeemable after 10 years from the date of issue are shown as

(a) Long-term Borrowings.

(b) Other Long-term Liabilities,

(c) Short-term Borrowings.

(d) Other Short-term Liabilities.

 Answer: A

Question: Name the item out of the following which is shown as Short-term Provision:

(a) Provision for Tax

(b) Interest Accrued but not Due

(c) Employees' Provident Fund

(d) Interest Accrued and Due

Answer: A

Question: According to prescribed order of assets in a Company’s Balance Sheet ................ assets should be shown first of all.

a) Non-Current Assets

b) Current Assets

c) Current Investments

d) Loans and Advances

 Answer: A

Question: In a Company’s Balance Sheet ................ appear under the head ‘non-current assets.

a) Goodwill

b) Patents

c) Vehicles

d) All of the above

Answer: D

Question: Calls in Arrears appear in a Company’s Balance Sheet under

a) Reserve & Surplus

b) Shareholder’s Funds

c) Contingent Liabilities

d) Short-term Borrowings

Answer: B

Question: While preparing the Balance Sheet of a Company which item is shown under the head ‘Long term Borrowings’?

a) 6% Debentures

b) Security Premium Reserve

c) Trade Payables

d) None of the above

 Answer: A

Question: Share Capital of a Company consists of 5,00,000 Shares of Rs.10 each, Rs.8 called up. All the shareholders have duly paid the called-up amount. Share capital will be shown as :

a) Subscribed and Fully Paid

b) Subscribed but not fully paid

c) Any of the above

d) None of the above

 Answer: B

Question: A Company has issued 2,00,000 Equity Shares of Rs.10 each and it has called the entire nominal value of the share. It has received the entire amount except final call of Rs.3 per share on 5,000 shares. Subscribed Capital will be shown as follows:

a) Subscribed and fully paid 2,00,000 Equity Shares

of Rs.10 each                                                                       20,00,000

Less: Call in Arrears                                                                  15,000      19,85,000

b) Subscribed but not fully paid 2,00,000 Equity

Shares of Rs.10 each                                                           20,00,000

Less: Call in Arrears                                                                   15,000      19,85,000

c) Subscribed and fully paid 1,95,000 Equity Shares

of Rs.10 each                                                                                              19,50,000

Subscribed but not fully paid 5,000 Equity Shares of

Rs. 10 each                                                                                 50,000

Less: Call in Arrears                                                                    15,000           35,00   

                                                                                                                     19,85,000

d) Can be shown as b) or as c)

 Answer: C

 Question: Calls in advance appear in a Company’s Balance Sheet under

a) Share Capital

b) Current Liability

c) Long-term Borrowings

d) Reserve & Surplus

Answer: B