CBSE Class 12 Accountancy Financial Statement Of Companies MCQs Set B

Question: Tangible assets are assets which can be physically seen and touched, Like

a) All of the options

b) Land & Building

c) Plant and Equipment

d) Furniture & Fixture

Answer: All of the options

Question: Intangible Assets: Intangible Assets are those which are not tangible like

a) All of the options

b) Goodwill

c) Brand / Trademarks

d) Computer Software & Mining rights

Answer: All of the options

Question: Statement of Profit & Loss - Negative Balance is shown as a minus item under

a) Reserve and Surplus

b) Shareholders Fund

c) Short-term Loan

d) None of the options

Answer: Reserve and Surplus

Question: Fixed assets are classified in

a) All of the options

b) Tangible

c) Intangible

d) Capital Work in progress

Answer: All of the options

Question: Advance payment towards a certain expense is shown under

a) Other current assets

b) Other Current Liabilities

c) Other current assets and Other Current Liabilities

d) None of the options

Answer: Other current assets

Question: Balance Sheet of A Company is prepared according to the Revised Schedule III, Part-I of

a) Section 211

b) Section 213

c) Section 217

d) Section 209

Answer: Section 211

Question: Preliminary Expense is

a) Fictitious Asset

b) Current Assets

c) Current Liabilities

d) None of the options

Answer: Fictitious Asset

Question: Current Maturity of Long term debt will appear in the company s Balance sheet under

a) Other current liabilities

b) Other Current Assets

c) Other current liabilities and Other Current Assets

d) None of the options

Answer: Other current liabilities

Question: Which item is not part of Reserve and Surplus

a) Accumulated Depreciation

b) Capital Reserves

c) General Reserve

d) All of the options

Answer: Accumulated Depreciation

Question: Trade payables on account of purchase of Fixed Assets and interest accrued there on, will come under the head

a) Other Long Term Liabilities

b) Long Term provisions

c) Other Current Assets

d) None of the options

Answer: Other Long Term Liabilities 

Question: Salaries outstanding Rs 50,000 will be record in the balance sheet under

a) Other Current Liabilities

b) Other Current Assets

c) Non-current Liabilities

d) All of the options

Answer: Other Current Liabilities

Question: Trade Receivable is consist of

a) Bills receivable and Debtors

b) Bills receivable

c) Debtors

d) None of the options

Answer: Bills receivable and Debtors

Question: Why government is interested in analysis financial statement

a) Compile National Income and taxes and policy making

b) know whether the business is able to pay debt

c) know the earning capacity

d) know the liquidity of business

Answer: Compile National Income and taxes and policy making

Question: Loss on sale is a

a) Non Operating Expenses

b) Miscellaneous Expenses

c) Sales Expenses

d) All of the options

Answer: Non Operating Expenses

Question: Which items is not the example of operating expenses

a) Loss on sale of fixed assets

b) Cash discount allowed to customers

c) Selling and Distribution expenses

d) All of the options

Answer: Loss on sale of fixed assets

Question: ___________ is conducted by the management

a) Internal Analysis

b) External Analysis

c) Internal Analysis and External Analysis

d) None of the options

Answer: Internal Analysis

Question: Document that compares a particular financial statement with prior period statements or with the same financial report generated by another company.

a) Comparative statement

b) Common Size statements

c) Ratio Analysis

d) None of the options

Answer: Comparative statement

Question: Income Statement represents

a) Statement of Profit and Loss

b) Cash Flow Statement

c) Fund Flow statement

d) All of the options

Answer: Statement of Profit and Loss

Question: Which statement shows the sources related to the inflow and Outflow of cash

a) Cash Flow Statement

b) Fund Flow Statement

c) Ratio Analysis

d) None of the options

Answer: Cash Flow Statement

Question: Name the expenses which refer to the indirect expenses relating to the principal revenue generating activities of the enterprise:

a) Non Operating Expenses

b) Miscellaneous Expenses

c) Sales Expenses

d) All of the options

Answer: Non Operating Expenses

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: Financial management process deals with

a) Financing decisions

b) Investments

c) Financing decisions and Investments

d) None of the options

Answer: Financing decisions

Question: For a business concern capital is a

a) Liability

b) Asset

c) Gain

d) None of the options

Answer: Liability

Question: Gross profit is equal to

a) Sale - cost of sale

b) Sale - Expenses

c) Sale - cost of sale and Sale - Expenses

d) None of the options

Answer: Sale - cost of sale

Question: The accounting equation is

a) Assets= capital + Liabilities

b) Assets= capital - Liabilities

c) Assets= capital + Liabilities and Assets= capital- Liabilities

d) None of the options

Answer: Assets= capital + Liabilities

Question: Any physical thing that has money value

a) Assets

b) Intangible assets

c) Goodwill

d) None of the options

Answer: Assets

Question: Error which affect income statement belongs to

a) Nominal account

b) Real account

c) Personal account

d) None of the options

Answer: Nominal account

Question: Preliminary expense incurred for formation of joint stock company represent

a) Deferred revenue expenditure

b) Revenue loss

c) Capital loss

d) None of the options

Answer: Deferred revenue expenditure

Question: Operating expense represent are

a) Selling and administrative expense

b) Selling expense and general expense

c) Selling and administrative expense and Selling expense and general expense

d) None of the options

Answer: Selling and administrative expense

Question: Bills receivable and debtors are

a) Current assets

b) Fixed assets

c) Long term assets

d) None of the options

Answer: Current assets

Question: Cash and Cash Equivalents does not include

a) Cheques.

b) Balances with banks.

c) Bank deposits with more than 12 months maturity.

d) Inventories.

Answer: D

Question: In a company's Balance Sheet Provision for Employees Benefits to be settled within 12 months is shown under

a) Non-current Liabilities.

b) Current Liabilities.

c) Non-current Assets.

d) Current Assets.

Answer: B

Question: Out of the following items, identify which of the following item is not shown in the Note to Accounts on Other Expenses:

a) Courier Expenses

b) Internet Expenses

c) Rent for factory

d) Wages

Answer: D

Question: Money Received Against Share Warrants is shown as

a) Shareholders'Funds.

b) Other Non-current Liabilities,

c) Long-term Provisions.

d) Trade Payables.

Answer: A

Question: Share Application Money (refundable) is shown as

a) Other Long-term Liabilities.

b) Intangible Fixed Assets.

c) Short-term Provisions.

d) Capital Work-in-Progress.

Answer: B

Question: Cails-in-Advance and interest thereon is shown as

a) Shareholders'Funds.

b) Other Long-term Liabilities,

c) Other Current Liabilities.

d) Other Current Liabilities.

Answer: C

Question: Interest accrued and due on debentures appear in a Company’s Balance Sheet under the Sub-head ______

a) Short-term Borrowings

b) Trade Payables

c) Other Current Liabilities

d) Short-term Provisions

Answer: C

Question: Interest accrued but not due on loans appear in a Company’s Balance Sheet under the Sub-head __________

a) Short-term Borrowings

b) Trade Payables

c) Other Current Liabilities

d) Short-term Provisions

Answer: C

Question: 50,000, 9% Debentures redeemable within 12 months of the date of Balance Sheet will be shown under :

a) Short-term Borrowings

b) Short-term Provision

c) Other Current Liability

d) Trade Payables

Answer: C

Question: Short-term Borrowings appear in a Company’s Balance Sheet under the head

a) Current Assets

b) Current Liabilities

c) Non-Current Liabilities

d) Non-Current Assets

Answer: B

Question: Securities Premium Reserve appears in a Company’s Balance Sheet under :

a) Share Capital

b) Long-term Provision

c) Short-term Provision

d) Reserve & Surplus

Answer: D

Question: Prepaid Expenses appear in a Company’s Balance Sheet under the Sub-head

a) Other Current Assets

b) Short-term Loans & Advances

c) Intangible Assets

d) Other Non-Current Assets

Answer: A

Question: _______ appear in a Company’s Balance Sheet under the Sub-head Short-term Provision

a) Interest Accrued but not due on Borrowings

b) Provision for Tax

c) Unpaid Dividend

d) Calls in Advance

Answer: B

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

a) Underwriting Commission

b) Current Investment

c) Inventory

d) Patents

Answer: D

Question: Under which heading the item ‘Bills Discounted but not yet matured’ will be shown in the Balance Sheet of a company?

a) Current Liability

b) Current Assets

c) Contingent Liabilities

d) Unamortized Expenditure

Answer: C

Question: Which one of the following items is shown under the heading ‘current liabilities’ in the Balance Sheet of a company?

a) Investments

b) Reserve Fund

c) Unclaimed Dividend

d) Livestock

Answer: C

Question: Discount received is a

a) Revenue

b) Liabilities

c) Expenses

d) None of the options

Answer: Revenue

Question: Balance sheet does not contain

a) Income and expense

b) Assets

c) Liabilities

d) None of the options

Answer: Income and expense

Question: Bas debts are shown in

a) Profit and loss account

b) Balance sheet

c) Profit and loss account and Balance sheet

d) None of the options

Answer: Profit and loss account

Question: Nominal accounts are related to

a) Expense + Income

b) Liability

c) Assets

d) None of the options

Answer: Expense + Income

Question: Outstanding wages appear in trial balance will be recorded in the

a) Balance sheet

b) Trading account

c) Balance sheet and Trading account

d) None of the options

Answer: Balance sheet

Question: Discount allowed appear in the trial balance will be recorded in the

a) Profit and loss account

b) Balance sheet

c) Trading account

d) None of the options

Answer: Profit and loss account

Question: Which group contains only fixed assets

a) Land, machinery, vehicles

b) Land, debtors, vehicle

c) Cash, land, debtors

d) None of the options

Answer: Land, machinery, vehicles

Question: Current liabilities do not include

a) Prepaid insurance

b) Sundry creditors

c) Bank overdraft

d) None of the options

Answer: Prepaid insurance

Question: If business assets are more than its liabilities, this position is known as

a) Solvency

b) Insolvency

c) Loan position

d) None of the options

Answer: Solvency

Question: The excess of over liability is

a) Capital

b) Profit

c) Loss

d) None of the options

Answer: Capital

Question: Personal accounts are related to

a) Equity and Drawings

b) Assets and liabilities

c) Income and expenses

d) None of the options

Answer: Equity and Drawings

Question: Closing stock is recorded in the

a) Balance sheet

b) Profit and loss account

c) Trial balance

d) None of the options

Answer: Balance sheet

Question: Receipt on sales of fixed assets is

a) Capital receipt

b) Current receipt

c) Debtor receipt

d) None of the options

Answer: Capital receipt

Question: Net loss is always more than

a) Gross profit

b) Capital

c) Sale

d) None of the options

Answer: Gross profit

Question: Pre received income is shown in

a) Liability

b) Assets

c) Revenue

d) None of the options

Answer: Liability

Question: Prepaid expenses should appear in

a) Assets

b) Liability

c) Revenues

d) None of the options

Answer: Assets

Question: A loss is revenue loss because it is release to

a) Normal reason

b) Decrease in Tax liability

c) Current assets

d) None of the options

Answer: Normal reason

Question: A loss is a capital loss because its due to

a) Fixed assists

b) Abnormal loss

c) Withdrawal of capital

d) None of the options

Answer: Fixed assists

Question: Trial balance is a

a) List of ledger balance

b) Income statement

c) Balance sheet

d) All of the options

Answer: List of ledger balance

Question: Net income is equal to

a) Revenue - Expense

b) Sale - Purchase

c) Assets - Liabilities

d) None of the options

Answer: Revenue - Expense

Question: Any difference in trial balance transferred to

a) Suspense A/c

b) Capital A/c

c) Current A/c

d) None of the options

Answer: Suspense A/c

Question: Raw materials destroyed by fire shows in

a) Revenue loss

b) Abnormal loss

c) Capital loss

d) None of the options

Answer: Revenue loss

Question: Expenses increasing the earning capacity of business are

a) Capital expenses

b) Financial expenses

c) Direct expenses

d) None of the options

Answer: Capital expenses

Question: Interest paid on loan is a

a) Financial expenses

b) Management expenses

c) Selling expenses

d) All of the options

Answer: Financial expenses

Question: The balance sheet, also called the

a) Statement of financial position

b) Profit & Loss Account

c) Cash Flow

d) None of the options

Answer: Statement of financial position

Question: An accounting period cannot be extended to longer than in special permission

a) 18 Months

b) 20 Months

c) 22 Months

d) 24 Months

Answer: 18 Months

Question: Financial management mainly focuses on

a) All elements of acquiring and using means of financial resources for financial activities

b) Efficient management of every business

c) Brand dimension

d) Arrangement of funds

Answer: All elements of acquiring and using means of financial resources for financial activities

Question: Finance Function comprises of

a) Procurement & effective use of funds

b) Safe custody of funds only

c) Expenditure of funds only

d) None of the options

Answer: Procurement & effective use of funds

Question: Financial management process deals with

a) Financing decisions

b) Investments

c) Financing decisions and Investments

d) None of the options

Answer: Financing decisions

Question: Which of the following statements are true?

a) Financial statements are also known as annual records and Financial statements are historic

b) Financial statements are also known as annual records

c) Financial statements are historic

d) None of the options

Answer: Financial statements are also known as annual records and Financial statements are historic

Question: The statement of financial position and the balance sheet are

a) Synonyms

b) Antonyms

c) Synonyms and Antonyms

d) None of the options

Answer: Synonyms

Question: The term current asset doesn't cover

a) Car

b) Debtors

c) Stock

d) Prepaid expenses

Answer: Car

Question: The form of balance sheet is

a) Horizontal and vertical

b) Vertical

c) Horizontal

d) None of the options

Answer: Horizontal and vertical

Question: The term Financial Statement covers

a) Profit & Loss Statement and Balance sheet

b) Profit & Loss Statement

c) Balance sheet and Profit & Loss Statement appropriation account

d) None of the options

Answer: Profit & Loss Statement and Balance sheet

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: Gross Margin - Selling and Administrative Expense

a) Net Operating Profit

b) Gross Margin

c) Net Profit before Taxes

d) None of the options

Answer: Net Operating Profit

Question: Net Profit before Taxes - Income Taxes

a) Net Profit (or Net Loss)

b) Gross Profit (or Net Loss)

c) Net Profit (or Net Loss) and Gross Profit (or Net Loss)

d) None of the options

Answer: Net Profit (or Net Loss)

Question: Net Sales - Cost of Goods Sold =

a) Gross Margin

b) Gross Loss

c) Net Loss

d) None of the options

Answer: Gross Margin

Question: The P & L statement contains categories of

a) All of the options

b) Sales and expenses

c) Costs of goods sold

d) Net sales

Answer: All of the options

Question: Over a specified period of time, A Profit and Loss statement measures

a) Companys sales and expenses

b) Companys Assets and Liabilities

c) Company s sales and expenses and Company s Assets and Liabilities

d) None of the options

Answer: Companys sales and expenses

Question: From the given items which is not shown under Current Liabilities:

a) Trade Payables

b) Short-term Provisions

c) Short-term Borrowings

d) Inventories

Answer: D

Question: From the given items which is a part of Current Liabilities:

a) Inventories

b) Trade Payables

c) Cash and Cash Equivalents

d) Trade Receivables

Answer: B

Question: Which of the following is not shown as Non-Current Liabilities?

a) Trade Payables

b) Long-term Borrowings

c) Deferred Tax Liabilities

d) Long-term Provisions

Answer: A

Question: Surplus, i.e Balance in Statement of Profit and Loss is shown as

a) Share Capital.

b) Reserves and Surplus.

c) Other Long-term Liabilities.

d) Current Liabilities.

Answer: B

Question: ‘Claims against the Company not acknowledged as debts’ is shown under the head _______

a) Current Liabilities

b) Non-Current Liabilities

c) Commitments

d) Contingent Liabilities

Answer: D

Question: Unclaimed dividend appears in a Company’s balance Sheet under the Sub-head

a) Short-term Borrowings

b) Trade Payables

c) Other Current Liabilities

d) Short-term Provisions

Answer: C

Question: Which one of the following is Commitment?

a) Proposed Dividend

b) Interim Dividend

c) Unpaid/Unclaimed Dividend

d) Dividend Arrears on Cumulative Preference Shares

Answer: D

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

a) Trade Investment

b) Underwriting Commission

c) Inventories

d) Livestock

Answer: C

Question: Change in Inventories means :

a) Difference between Opening Inventories and Closing Inventories

b) Difference between Closing Inventories and Opening Inventories

c) Difference between Opening Inventories and Closing Inventories, if Opening Inventories are higher

d) Difference between Closing Inventories and Opening Inventories, if Closing Inventories are higher.

Answer: A

Question: Mining Rights are

a) Tangible Fixed Assets.

b) Other Current Liabilities.

c) Intangible Assets Under Development.

d) Short-term Borrowings.

Answer: B

Question: Premium on Redemption of Debentures is shown as

a) Long-term Borrowings.

b) Short-term Borrowings.

c) Other Long-term Liabilities.

d) Short-term Provisions.

Answer: C

Question: Bills Payable is shown as

a) Long-term Borrowings.

b) Short-term Borrowings.

c) Other Current Liabilities.

d) Trade Payables.

Answer: D

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

a) Bonds

b) Debentures

c) Public Deposits

d) Trade Payables

Answer: D

Question: Out of the following, identify the item that is not shown in the Note to Accounts on Finance Costs:

a) Interest paid on term loan

b) Bank Deposit

c) Interest paid on Bank Overdraft

d) Discount on Issue of Debentures Written off.

Answer: B

Question: Who of the following is not the Internal User of Financial Statements?

a) Creditors

b) Shareholders

c) Management

d) Employees

Answer: A

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

a) Ignore qualitative aspects.

b) Personal bias.

c) Ignores price level change.

d) Provide information about the profitability of the business.

Answer: D