12th Class Accountancy Financial Statement Analysis Question Bank

done MCQs - Analysis of Financial Statement Total Questions - 37

• question_answer1)
  Which of the following is not an objective of analysis of financial statements?        (CBSE 2020)
  A)
  To judge the financial health of the firm done clear
  B)
  To judge the short-term and long-term liquidity position of the firm done clear
  C)
  To judge the reasons for change in the profitability of the firm done clear
  D)
  To judge the variations in the accounting practices of the business followed by different enterprises done clear
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• question_answer2)
  Which of the following is not a tool of financial statement analysis?                   (CBSE 2020)
  A)
  Balance Sheet done clear
  B)
  Cash Flow Statement done clear
  C)
  Statement of Profit and Loss done clear
  D)
  All of the above done clear
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• question_answer3)
  Which of the following is not a limitation of financial statement analysis?       (CBSE 2020)
  A)
  It is affected by personal bias done clear
  B)
  Inter-firm comparative study possible done clear
  C)
  Lack of qualitative analysis done clear
  D)
  Ignores prices level changes done clear
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• question_answer4)
  Which of the following is not a tool of financial analysis?      (CBSE 2020}
  A)
  Comparative Income Statement done clear
  B)
  Comparative Position Statement done clear
  C)
  Statement of Profit and Loss done clear
  D)
  Cash Flow Statement done clear
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• question_answer5)
  Feature of financial analysis is to present the data contained in financial statements in:
  A)
  easy form done clear
  B)
  convenient and rational groups done clear
  C)
  comparable form done clear
  D)
  All of the above done clear
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• question_answer6)
  Analysis of financial statements is significant:
  A)
  for creditors        done clear
  B)
  for Managers done clear
  C)
  for Employees     done clear
  D)
  All of these done clear
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• question_answer7)
  Main limitation of analysis of financial statements is:
  A)
  affected by window dressing done clear
  B)
  difficulty in forecasting done clear
  C)
  do not reflect changes in price level done clear
  D)
  All of the above done clear
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• question_answer8)
  From financial statements analysis, the creditors are interested to know:
  A)
  liquidity              done clear
  B)
  profit done clear
  C)
  efficiencies          done clear
  D)
  share capital done clear
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• question_answer9)
  Which analysis is considered as dynamic?
  A)
  Horizontal Analysis done clear
  B)
  Vertical Analysis done clear
  C)
  Internal Analysis  done clear
  D)
  External Analysis done clear
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• question_answer10)
  Financial analysis becomes significant because it:
  A)
  ignores price level changes done clear
  B)
  measures the efficiently of business done clear
  C)
  lacks qualitative analysis done clear
  D)
  is effected by personal bias done clear
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• question_answer11)
  Which of the following is not a limitation of analysis of financial statement?
  A)
  Affected by personal bias done clear
  B)
  To know the financial strength done clear
  C)
  Lack of qualitative analysis done clear
  D)
  Based on accounting concepts done clear
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• question_answer12)
  Creditors or suppliers are interested to know the:
  A)
  profitability of the firm in relation to turnover done clear
  B)
  profitability of the firm in relation to investments done clear
  C)
  short-term solvency/liquidity of the concern done clear
  D)
  effective utilisation of its (firm's) resources done clear
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• question_answer13)
  Which analysis is considered as static?
  A)
  Horizontal Analysis done clear
  B)
  Vertical Analysis done clear
  C)
  Internal Analysis  done clear
  D)
  External Analysis done clear
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• question_answer14)
  Financial analysis become useless because it:
  A)
  measures the profitability done clear
  B)
  measures the solvency done clear
  C)
  lacks of qualitative analysis done clear
  D)
  makes a comparative study done clear
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• question_answer15)
  Comparison of values of one period with those of another period for the same firm is:
  A)
  intra-firm comparison done clear
  B)
  inter-firm comparison done clear
  C)
  pattern comparison       done clear
  D)
  trend comparison done clear
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• question_answer16)
  Which analysis is based only on one year's data?
  A)
  Cash Flow Statement done clear
  B)
  Dividend Analysis done clear
  C)
  Vertical Analysis  done clear
  D)
  Horizontal Analysis done clear
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• question_answer17)
  Parties interested in financial analysis are:
  A)
  investors            done clear
  B)
  Government done clear
  C)
  financial Institutions    done clear
  D)
  All of these done clear
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• question_answer18)
  Which of the following is not a limitation of financial statement analysis?
  A)
  Ignores the qualitative elements done clear
  B)
  Not free from personal bias done clear
  C)
  Intra-firm comparison done clear
  D)
  Ignores the price level changes done clear
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• question_answer19)
  Main objective of analysis of financial statements is:
  A)
  to know the financial strength done clear
  B)
  to make a comparative study with other firms done clear
  C)
  to know the efficiency of management done clear
  D)
  All of the above done clear
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• question_answer20)
  When bad position of the business is tried to be depicted as good, it is known as:
  A)
  Personal Bias      done clear
  B)
  Price Level Changes done clear
  C)
  Window Dressing done clear
  D)
  All of these done clear
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• question_answer21)
  Main limitation of financial analysis is:
  A)
  to know earning capacity done clear
  B)
  to know financial strength done clear
  C)
  do not reflect changes in price level done clear
  D)
  comparative study with other firms done clear
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• question_answer22)
  For whom the analysis of financial statements is not significant?
  A)
  Investor done clear
  B)
  Government done clear
  C)
  Ambassador of India done clear
  D)
  Ambassador of India done clear
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• question_answer23)
  For whom analysis of financial statements is not significant?
  A)
  Political Adviser of Prime Minister done clear
  B)
  Investors done clear
  C)
  Management done clear
  D)
  Financial Institutions done clear
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• question_answer24)
  Financial analysis can be used for:
  A)
  security analysis  done clear
  B)
  credit analysis done clear
  C)
  dividend analysis done clear
  D)
  All of these done clear
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• question_answer25)
  The main purpose of analysis of financial statements for short-term creditors is:
  A)
  to determine whether their dues will be paid on time done clear
  B)
  to determine when they should supply more materials to the firm done clear
  C)
  to determine whether they should buy the shares in the firm done clear
  D)
  None of the above done clear
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• question_answer26)
  Generally used tools of financial analysis are:
  A)
  horizontal analysis done clear
  B)
  vertical analysis done clear
  C)
  ratio analysis       done clear
  D)
  All of these done clear
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• question_answer27)
  Analysis of financial statement can be conducted by:
  A)
  Cash flow statement done clear
  B)
  Ratio analysis done clear
  C)
  Comparative & common  done clear
  D)
  All of these done clear
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• question_answer28)
  Analysis of financial statements serve the purpose of
  A)
  investors            done clear
  B)
  shareholder's done clear
  C)
  debentureholder's done clear
  D)
  All of these done clear
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• question_answer29)
  When financial statements for a single year are analysed it is called:
  A)
  Vertical analysis  done clear
  B)
  Horizontal analysis done clear
  C)
  Ratio analysis      done clear
  D)
  Circular analysis done clear
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• question_answer30)
  XYZ Ltd. wants to assess future earning capacity of its business. It will conduct:
  A)
  external analysis done clear
  B)
  short-term analysis done clear
  C)
  long-term analysis  done clear
  D)
  None of these done clear
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• question_answer31)
  Horizontal analysis provide information in:
  A)
  absolute terms done clear
  B)
  percentage terms done clear
  C)
  Both [a] and [b] done clear
  D)
  None of the above done clear
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• question_answer32)
  Who among the following is not an external user of financial statements analysis?
  A)
  Shareholders done clear
  B)
  Debentureholders done clear
  C)
  Creditors done clear
  D)
  Management done clear
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• question_answer33)
  Analysis of financial statement of an enterprise over a period of time is known as:
  A)
  Cross-sectional Analysis done clear
  B)
  Time Series Analysis done clear
  C)
  Static Analysis done clear
  D)
  External Analysis done clear
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• question_answer34)
  Analysis of financial statements of two or more enterprises is known as:
  A)
  Cross-sectional Analysis done clear
  B)
  Time Series Analysis done clear
  C)
  Horizontal Analysis done clear
  D)
  Internal Analysis done clear
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• question_answer35)
  Which of the following is not a limitation of financial statement analysis?
  A)
  Historical analysis done clear
  B)
  Ignores price changes done clear
  C)
  Free from biasness done clear
  D)
  Variation in accounting practices done clear
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• question_answer36)
  Bankers and lenders are interested in financial analysis to judge:
  A)
  profitability                                done clear
  B)
  liquidity done clear
  C)
  solvency                                    done clear
  D)
  Both [b] and [c] done clear
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• question_answer37)
  For whom, analysis of financial statements is not significant?
  A)
  Share Market done clear
  B)
  Taxing Officer done clear
  C)
  Chief Military Officer done clear
  D)
  Shareholder done clear
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