CBSE Class 12 Accountancy Analysis of Financial Statement and Tools MCQs Set A

Question: Financial Statement Analysis Objectives/Need is

a) All of the options

b) Measure the profitability of the business

c) Measure the financial strength of the business

d) Make comparative study within the firm and with other forms

Answer: All of the options

Question: Significance or Importance of Financial Analysis is

a) All of the options

b) To know the profitability Condition

c) To know the liquidity Condition

d) To know the solvency Condition

Answer: All of the options

Question: To whom Importance of Financial Analysis is

a) All of the options

b) For Management

c) For Investors

d) For Creditors

Answer: All of the options

Question: Which is Types of financial Analysis

a) Horizontal Analysis and Vertical Analysis

b) Horizontal Analysis

c) Vertical Analysis

d) None of the options

Answer: Horizontal Analysis and Vertical Analysis

Question: Horizontal Analysis is also known as

a) Dynamic Analyses

b) Vertical Analysis

c) Dynamic Analyses and Vertical Analysis

d) None of the options

Answer: Dynamic Analyses

Question: In which analysis Financial Statement for a single year analysed

a) Vertical Analysis

b) Dynamic Analyses

c) Vertical Analysis and Dynamic Analyses

d) None of the options

Answer: Vertical Analysis

Question: Tool of Financial Analysis is

a) Comparative Statement and Common Size Statement

b) Comparative Statement

c) Common Size Statement

d) None of the options

Answer: Comparative Statement and Common Size Statement

Question: Comparative Statement is a form of

a) Horizontal Analysis

b) Vertical Analysis

c) Horizontal Analysis and Vertical Analysis

d) None of the options

Answer: Horizontal Analysis

Question: Study of relationship between various items is known as

a) Accounting Ratios

b) Vertical Analysis

c) Horizontal Analysis

d) None of the options

Answer: Accounting Ratios

Question: Operating Expenses is include

a) All of the options

b) Office and Administrative expenses

c) Selling and Distribution expenses

d) Provision for doubtful debts

Answer: All of the options

Question: Non operating Expenses are

a) All of the options

b) Interest on long term debts

c) Loss on sale of fixed assets

d) Intangible assets written off such as goodwill, patents etc

Answer: All of the options

Question: Importance of Comparative Statement is

a) All of the options

b) Make the data simple and more understandable

c) Indicate the trend with respect to the previous year

d) compare the firm performance with the performance of other firm in the same business

Answer: All of the options

Question: Net Reserve and Surplus means total of all reserves less

a) Miscellaneous Expenditure

b) Office Expense

c) Direct expenses

d) All of the options

Answer: Miscellaneous Expenditure

Question: Which of the following items appear in the Statement of Profit and Loss

a) Sales

b) Creditors

c) Goodwill

d) Trade payables

Answer: Sales

Question: When analysis is made on the basis of Published statements, reports and information it is known as

a) External analysis

b) Horizontal analysis

c) Vertical Analysis

d) None of the options

Answer: External analysis

Question: Who is interested in the analysis of financial statement?

a) All of the options

b) Creditors

c) Government

d) Investors

Answer: All of the options

Question: The Real object of Analysis of Financial Statement is

a) To measure the financial strength of the business

b) To assess the total expenses of the firm

c) To know about historical cost concept

d) To assess the total liabilities of the firm

Answer: To measure the financial strength of the business

Question: Limitations of financial analysis except

a) All of the options

b) Dont reflect changes in price level

c) Affected by the personal ability and bias of the Analyst

d) Single years Analysis of financial statement have limited use

Answer: All of the options

Question: Shareholders are interested in the analysis of financial statement because

a) They want to judge the present and future earning capacity of the business

b) For the assessment of tax

c) For Research

d) All of the options

Answer: They want to judge the present and future earning capacity of the business

Question: Horizontal Analysis is

a) Time Series Analysis

b) Cross Section Analysis

c) Profitability Analysis

d) All of the options

Answer: Time Series Analysis

Question: The point where total of sales is exactly equal to the total of cost.

a) Break-even Point

b) Profit Point

c) Loss Point

d) All of the options

Answer: Break-even Point

Question: Non-operating Incomes refers to

a) Which are not from the main revenue producing activities

b) Which are earned in the form of sales

c) the indirect expenses relating to the principal revenue generating activities of the enterprise

d) The expenses and losses which are not related to the operating activities

Answer: Which are not from the main revenue producing activities

Question: Which is not a limitation of financial statement?

a) Assess the financial position and profitability

b) Qualitative aspect is ignored

c) Ignores price level changes

d) All of the options

Answer: Assess the financial position and profitability

Question: Rent received, Profit on sale of fixed assets, Compensation for acquisition of land are example of

a) Non-operating Incomes

b) Operating Incomes

c) Operating expenses

d) None of the options

Answer: Non-operating Incomes

Question: Statement of Profit and Loss is prepared to assess the

a) Net Profit and Net Loss

b) Net Profit

c) Net Loss

d) None of the options

Answer: Net Profit and Net Loss

Question: If the different financial data is analysed and compared over a period of time it is called

a) Intra firm analysis

b) Inter firm analysis

c) Trade analysis

d) None of the options

Answer: Intra firm analysis

Question: Comparison of two or more departments or divisions of the same business unit with the objective of meaningful analysis

a) Intra-firm comparison

b) Inter firm analysis

c) Intra-firm comparison and Inter firm analysis

d) None of the options

Answer: Intra-firm comparison

Question: Internal analysis is done

a) By Management

b) By Shareholders

c) By debenture holder

d) None of the options

Answer: By Management

Question: Financial year always begins on

a) 1st April-31st March

b) 1st January-31st December

c) 1st August -31st July

d) None of the options

Answer: 1st April-31st March

Question: Comparative Financial Statement is an example of

a) Horizontal analysis

b) Vertical Analysis

c) External analysis

d) None of the options

Answer: Horizontal analysis

Question:  Shareholders fund is divided into

a) All of the options

b) Share Capital

c) Reserves and Surplus

d) Money received against share warrant

Answer: All of the options

Question: A technique uses in comparative analysis of financial statement is

a) Common size analysis

b) Graphical analysis

c) Preference analysis

d) Returning analysis

Answer: Common size analysis

Question: Formula such as net income available for common stockholders divided by total assets is used to calculate

a) Return on total assets

b) Return on total equity

c) Return on debt

d) Return on sales

Answer: Return on total assets

Question: A techniques uses to identify financial statements trends are included

a) Common size analysis and Percent change analysis

b) Common size analysis

c) Percent change analysis

d) None of the options

Answer: Common size analysis and Percent change analysis

Question: Price per ratio is divided by cash flow per share ratio which is used for calculating

a) Price to cash flow ratio

b) Dividend to stock ratio

c) Sales to growth ratio

d) Cash flow to price ratio

Answer: Price to cash flow ratio

Question: A formula such as net income available to common stockholders divided by common equity is used to calculate

a) Return on common equity

b) Return on interest

c) Return on earning power

d) None of the options

Answer: Return on common equity

Question: Companies that help to set benchmarks are classified as

a) Benchmark companies

b) Analytical companies

c) Return companies

d) None of the options

Answer: Benchmark companies

Question: Total assets divided common equity is a formula uses for calculating

a) Equity multiplier

b) Graphical multiplier

c) Turnover multiplier

d) None of the options

Answer: Equity multiplier

Question: Profit margin multiply assets turnover multiply equity multiplier is used to calculate

a) Return on equity

b) Return on turnover

c) Return on stock

d) None of the options

Answer: Return on equity

Question: Company low earning power and high interest cost cause financial changes which have

a) High return on assets

b) Low return on assets

c) Low return on equity

d) None of the options

Answer: High return on assets

Question: Financial analysis becomes significant because it:

a) Ignores price level changes

b) Measures the efficiency of business

c) Lacks qualitative analysis

d) Is effected by personal bias

Answer: B

Question: When bad position of the business is tried to be depicted as good, it is known as ................

a) Personal Bias

b) Price Level Changes

c) Window Dressing

d) All of the Above

Answer:  C

Question: For whom the analysis of financial statements is not significant?

a) Investor

b) Government

c) Ambassador of India

d) Company’s Employee

Answer: C

Question: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of

a) Non-current Assets.

b) Current Assets,

c) Non-current Liabilities.

d) Total Assets.

 Answer: D

Question: Which analysis is considered as dynamic?

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: A

Question: Which analysis is considered as static?

a) Horizontal Analysis

b) Vertical Analysis

c) Internal Analysis

d) External Analysis

Answer: B

Question: Comparative Statement of Profit & Loss provides information about:

a) Rate of increase or decrease in revenue from operations

b) Rate of increase or decrease in cost of revenue from operations

c) Rate of increase or decrease in net profit

d) All of the above

Answer: D

Question: Which analysis depicts the relationship between two figures :

a) Ratio Analysis

b) Trend Analysis

c) Cumulative figures and averages

d) Dividend Analysis

Answer: A

Question: In which analysis total cost are equal to total revenue from Operations :

a) Trend Analysis

b) Ratio Analysis

c) Break-Even Point Analysis

d) Fund Flow Statement Analysis

Answer: C

Question: If net revenue from operations of a firm are Rs. 1,20,000; cost of revenue from operations is Rs.66,000 and operating expenses are Rs.21,600, what will be the percentage of operating income on net revenue from operations?

a) 55%

b) 45%

c) 73%

d) 27%

Answer: D

Question: If net revenue from operations of a firm are Rs. 15,00,000; Gross Profit is Rs.9,00,000 and operating expenses are Rs.75,000, what will be percentage of operating income on net revenue from operations?

a) 45%

b) 55%

c) 35%

d) 65%

Answer: B

Question: Main objective of Trend Analysis is

a) To make comparative study of the financial statements for a number of years

b) To indicate the direction of movement

c) To help in forecasts of various items

d) All of the Above

Answer: D

Question: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of

a) Current Assets

b) Non-current Assets

c) Non-current Liabilities

d) Total Assets

Answer: D

Question: Under which tool of financial analysis, 100% is taken as base and all other related amounts are expressed as a percentage of base?

a) Comparative Statement

b) Common-size Statement

c) Ratio Analysis

d) Cash Flow Statement

Answer: B

Question: The most commonly used tools for financial analysis are :

a) Comparative Statements

b) Common Size Statements

c) Accounting Ratios

d) All of the above

Answer: D

Question: This item is not used as a tool for Analysis of Financial Statements :

a) Cash Flow Statement

b) Fund Flow Statement

c) Ratio Analysis

d) No. of Employees Statement

Answer: D

Question: Which one of the following items is not a tool used for financial analysis?

a) Comparative Statements

b) Ratio Analysis

c) Common Size Statements

d) Statement of Dividend Distribution

Answer: D

Question: Amount left after deducting gross profit from Revenue from Operations is generally :

a) Cost of Revenue from Operations

b) Material consumed

c) Opening Inventory + Purchases - Closing Inventory

d) All of the above

Answer: D