12th Class Accountancy Financial Statement Analysis Question Bank

done MCQs - Analysis of Financial Statement Total Questions - 26

• question_answer1)
  Financial Statement Analysis is done by the:
  A)
  Investors done clear
  B)
  Creditors  done clear
  C)
  Government done clear
  D)
  All of the above done clear
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• question_answer2)
  Horizontal Analysis is :
  A)
  Time Series Analysis done clear
  B)
  Cross Section Analysis done clear
  C)
  Profitability Analysis done clear
  D)
  None of these done clear
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• question_answer3)
  Analysis conducted by the Investors and Creditors is known as:
  A)
  Horizontal Analysis done clear
  B)
  Cross Sectional Analysis done clear
  C)
  Time Series Analysis done clear
  D)
  External Analysis done clear
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• question_answer4)
  Income Statement represents:
  A)
  Trading Account  done clear
  B)
  Statement of Profit and Loss done clear
  C)
  Cash Flow Statement  done clear
  D)
  None of these done clear
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• question_answer5)
  Which of the following statement is false;
  A)
  Financial Statement Analysis is a post mortem of the business transactions. done clear
  B)
  Window dressing means manipulating the books of accounts. done clear
  C)
  Financial Statement Analysis is not free from Bias. done clear
  D)
  Tax Authorities are not interested in Financial Statement Analysis. done clear
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• question_answer6)
  Cross Section Analysis is :
  A)
  Vertical Analysis done clear
  B)
  Horizontal Analysis done clear
  C)
  Time Series Analysis done clear
  D)
  External Analysis done clear
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• question_answer7)
  While preparing Statement of Profit & Loss, net sales is recorded as :
  A)
  Other Income done clear
  B)
  Revenue from operations done clear
  C)
  Finance Cost      done clear
  D)
  Other Expenses done clear
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• question_answer8)
  Identify the correct statement:
  A)
  Main purpose of analyzing the financial statements is to study the trends. done clear
  B)
  Rent paid is the part of 'Revenue from Operations'. done clear
  C)
  Income tax is the part of 'Revenue from Operations'. done clear
  D)
  Provision for tax is shown as other expense in statement of profit and loss. done clear
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• question_answer9)
  ______ Analysis is considered as dynamic
  A)
  External Analysis done clear
  B)
  Internal Analysis done clear
  C)
  Horizontal Analysis done clear
  D)
  Vertical Analysis done clear
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• question_answer10)
  Which of the following is not an objective of Analysis of Financial Statements?                                   [CBSE]
  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 companies. done clear
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• question_answer11)
  Which of the following is not a limitation of Financial Statement Analysis?                                         [CBSE]
  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 price level changes done clear
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• question_answer12)
  Which of the following is not a limitation of Analysis of Financial Statements?                                    [CBSE]
  A)
  Window Dressing done clear
  B)
  Price level change ignored done clear
  C)
  Subjectivity done clear
  D)
  Infra-firm comparison possible done clear
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• question_answer13)
  Which of the following is a limitation of Financial Analysis?
  A)
  It is just a study of reports of the company done clear
  B)
  It judges the ability of the firm to repay its debts. done clear
  C)
  It identifies the reasons for change in financial position done clear
  D)
  It ascertains the relative importance of different components of the financial position of the firm. done clear
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• question_answer14)
  Comparison of values of one period with those of another period for the same firm is:              [CBSE]
  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_answer15)
  Manipulation in the books of account just to present a better financial position of the firm than the actual position, it is called:
  A)
  Variation in Accounting Practices done clear
  B)
  Qualitative Aspect Ignored done clear
  C)
  Window Dressing done clear
  D)
  Historical Analysis done clear
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• question_answer16)
  A Manager is efficient or inefficient, can be judge by the objective:
  A)
  Assessing the Earning Capacity or profitability done clear
  B)
  Assessing the Managerial Efficiency done clear
  C)
  Assessing the Short-term and Long-term Solvency of the Firm done clear
  D)
  Inter-firm Comparison done clear
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• question_answer17)
  Which objective is useful for the external users of financial statements?
  A)
  Assessing the Earning Capacity or profitability done clear
  B)
  Assessing the Managerial Efficiency done clear
  C)
  Assessing the Short-term and Long-term Solvency done clear
  D)
  Inter-firm Comparison of the Firm done clear
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• question_answer18)
  If a firm is planning for merger or acquisition, which objective of financial statement analysis is useful:
  A)
  Assessing the Earning Capacity or profitability  done clear
  B)
  Forecasting and Preparing Budgets done clear
  C)
  Assessing the Short-term and Long-term Solvency done clear
  D)
  Inter-firm Comparison of the Firm done clear
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• question_answer19)
  Match the following:

  (1)	Trade unions are interested in Financial Statement Analysis because	(a)	Interest on loan and repayment of principal amount
  (2)	Bankers and Lenders are interested in Financial Statement Analysis because	(b)	Safety of investment
  (3)	Shareholders are interested in Financial Statement Analysis because	(c)	Negotiation or revision in wage agreement with employer
  (4)	Potential Investors are interested in Financial Statement Analysis because	(d)	They want to know; they should invest in that company or not

  A)
  1 a; 2 c; 3 b; 4 d done clear
  B)
  1 c; 2 a; 3 b; 4 d done clear
  C)
  1 c; 2 d; 3 b; 4 a done clear
  D)
  1 c; 2 a; 3 d; 4 b done clear
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• question_answer20)
  Match the following:

  (1)	Horizontal Analysis	(a)	Conducted by lenders
  (2)	Internal Analysis	(b)	Cross Sectional Analysis
  (3)	External Analysis	(c)	Conducted by the Management
  (4)	Vertical Analysis	(d)	Useful for trend analysis and long-term planning

  A)
  1 a; 2 c; 3 b; 4 d done clear
  B)
  1 c; 2 a; 3 b; 4 d done clear
  C)
  1 c; 2 d; 3 b; 4 a done clear
  D)
  1 d, 2 c; 3 a; 4 b done clear
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• question_answer21)
  Which of the following is not a Tool or Technique of Financial Statement Analysis?
  A)
  Comparative Statement done clear
  B)
  Common size Statement done clear
  C)
  Cash Flow Statement done clear
  D)
  General Business Analysis Statement done clear
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• question_answer22)
  Match the following:

  (1)	Comparative Statement	(a)	Vertical Analysis
  (2)	Change in cash position from one period to another	(b)	Horizontal Analysis
  (3)	Common Size Statement	(c)	Ratio Analysis
  (4)	Helpful in finding Solvency and Liquidity of an enterprise	(d)	Cash Flow Statement

  A)
  1 c; 2 d; 3 b; 4 a done clear
  B)
  1 b; 2 c; 3 a; 4 d done clear
  C)
  1 b; 2 d; 3 a; 4 c done clear
  D)
  1 c; 2 d; 3 a; 4 b done clear
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• question_answer23)
  One objective of the financial analysis is to determine operating efficiency and profitability
  A)
  True done clear
  B)
  False done clear
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• question_answer24)
  Financial statement ignores qualitative elements:
  A)
  True      done clear
  B)
  False done clear
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• question_answer25)
  Financial statements are free from bias;
  A)
  True done clear
  B)
  False done clear
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• question_answer26)
  Competitors are interested in financial statement analysis:
  A)
  True done clear
  B)
  False done clear
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