12th Class Accountancy Financial Statement Analysis Question Bank

done Assertion and Reason - Analysis of Financial Statement Total Questions - 5

• question_answer1)

  Directions: Each of the following questions consist? of two statements, one is Assertion (A) and the other is Reason (R). Give answer:

  Assertion (A): Financial statement analysis is the process of analysis financial information in financial statements to understand and take economic decisions.

  Reason (R): Determining operating efficiency and profitability is not an objective of financial analysis.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer2)

  Directions: Each of the following questions consist? of two statements, one is Assertion (A) and the other is Reason (R). Give answer:

  Assertion (A): Vertical analysis is made to review and analysis financial statements for a number of years.

  Reason (R): Vertical analysis is carried out at one particular point of time, generally when the accounts are closed.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer3)

  Directions: Each of the following questions consist? of two statements, one is Assertion (A) and the other is Reason (R). Give answer:

  Assertion (A): Horizontal analysis is made to review and analysis financial statements for a number of years.

  Reason (R): Horizontal analysis is a time series analysis.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer4)

  Directions: Each of the following questions consist? of two statements, one is Assertion (A) and the other is Reason (R). Give answer:

  Assertion (A): External analysis is conducted by those who do not have access to detailed records of an enterprise and therefore depend on published accounts.

  Reason (R): External analysis is conducted by management

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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• question_answer5)

  Directions: Each of the following questions consist? of two statements, one is Assertion (A) and the other is Reason (R). Give answer:

  Assertion (A): Ratio analysis is an important tool or technique for analysis financial statements.

  Reason (R): An analysis of financial statements with the help of accounting ratio is termed as ratio analysis.

  A)
  Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). done clear
  B)
  Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A). done clear
  C)
  Assertion (A) is true but Reason (R) is false. done clear
  D)
  Assertion (A) is false but Reason (R) is true. done clear
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