CBSE Class 12 Accountancy Financial Statement Of Companies MCQs Set 04

Question: Which of the following is an objective of Comparative Statement?
a) To make data simpler and understandable
b) To help in forecasting
c) To indicate the trend
d) All of the above
Answer: d

Question: In a trading firm, if stock of finished goods is held for a month and credit period is 2 months, then the operating cycle will be for how many months?
a) One
b) Two
c) Three
d) Four
Answer: c

Question: Call in advance appears in a company’s Balance Sheet under:
a) Current liabilities
b) Share Capital
c) Long term Borrowings
d) Reserves and Surplus
Answer: a

Question: Earning capacity of a company is ascertained by:
a) Solvency ratios
b) Profitability ratios
c) Liquidity ratios
d) Working Capital Ratio
Answer: b

Question: Schedule III has prescribed format for presentation of Balance Sheet:
a) Horizontal
b) Vertical
c) Either (a) or (b)
d) Neither (a) nor (b)
Answer: b

Question: Which analysis is considered as dynamic?
a) Horizontal analysis
b) Vertical analysis
c) Internal analysis
d) External analysis
Answer: a

Question: The area of interest for a creditor while analyzing financial statements will be:
a) Solvency
b) Liquidity
c) Profitability
d) Long term solvency
Answer: a

Question: 11% Debentures redeemable within 12 months of the date of Balance Sheet will be shown under:
a) Short term borrowings
b) Short term provisions
c) Other current liability
d) Trade payables
Answer: c

Question: Share Capital of a company consists of 70,000 shares of Rs.10 each, Rs.8 called up. All the shareholders have duly paid the called up amount. Share Capital will be shown as:
a) Subscribed and fully paid
b) Subscribed but not yet fully paid
c) Either (a) or (b)
d) Neither (a) nor (b)
Answer: b

Question: Bills receivable appears in a company’s Balance Sheet under sub-head:
a) Current investments
b) Trade receivables
c) Inventories
d) Cash and cash equivalents
Answer: b

Question: “Claim against the company not acknowledged as debts” is shown under:
a) Current Liabilities
b) Contingent Liabilities
c) Non-current Liabilities
d) Capital Commitment
Answer: b

Question: The following analysis is based on one year data:
a) Cash flow statement
b) Dividend analysis
c) Horizontal analysis
d) Vertical analysis
Answer: a

Question: While preparing the Balance Sheet of a company, Securities Premium Reserve is shown under:
a) Non-current liabilities
b) Share Capital
c) Long term borrowings
d) Reserves and Surplus
Answer: d

Question: Which of the following is not a limitation of Comparative Statement?
a) Ignores price level changes
b) Ignores quantitative aspects
c) Ignores qualitative aspects
d) Variation in accounting policies
Answer: b

Question: 12% Debentures in a company’s Balance Sheet are shown under the sub-head:
a) Long term provisions
b) Other current liabilities
c) Long term borrowings
d) Other long term liabilities
Answer: c

Question: Under which tool of Financial Statement Analysis is 100% taken as a base and all other related items expressed as a percentage of the base?
a) Comparative Statement
b) Common Size Statement
c) Ratio analysis
d) Cash Flow Statement
Answer: b

Question: Interest accrued on investments is shown in a company’s Balance Sheet under the main head:
a) Non-current investments
b) Current assets
c) Other current assets
d) Other non-current assets
Answer: b

Question: Under the sub-head of Short-term Provisions, which one is shown from the following?
a) Interest accrued and due on borrowing
b) Proposed dividend
c) Unpaid dividend
d) Calls in advance
Answer: b

Question: Analysis of financial statements is significant for:
a) Creditors
b) Management
c) Employees
d) All of the above
Answer: d

Question: Which of the following items is shown under the head ‘Current Assets’ while preparing a company’s Balance Sheet?
a) Investment in property
b) Patents
c) Inventories
d) Vehicles
Answer: c

Question: Cash and cash equivalent does not include
a) Cheques
b) Balance with banks
c) Bank deposit with more than 12 months maturity
d) Inventories
Answer: d

Question: While preparing the Balance Sheet of a company, which item is shown under the head ‘Long-term borrowings’?
a) 6% Debentures
b) Security Premium Reserve
c) Trade Payables
d) None of the above
Answer: a

Question: A company issued capital. A shareholder paid all money on allotment while first call is not called by company. This advance is shown in the Balance Sheet of a company as:
a) Current Liability
b) Long-term liability
c) Current assets
d) None of the above
Answer: a

Question: Which of the following is not a part of Finance Cost?
a) Bank charges
b) Interest paid on debentures
c) Interest paid on public deposits
d) Loss on issue of debentures
Answer: a

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: 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: If expected period of payment of trade payables is 13 months and operating cycle is 14 months, then it is a:
a) Current assets
b) Current liability
c) Non-current assets
d) Non-current liability
Answer: b

Question: Inter-Firm Analysis is also known as:
a) Cross-section Analysis
b) Trend analysis
c) Dividend decision Analysis
d) Debt Analysis
Answer: a

Question: It is a statement in which each asset is expressed as a percentage of total assets:
a) Comparative Statement
b) Common Size Statement
c) Ratio analysis
d) Cash Flow Statement
Answer: b

Question: ‘Loose tools’ appears in the company’s Balance Sheet under the head/sub-head:
a) Inventory
b) Non-current assets
c) Other current assets
d) Stores and spares part
Answer: a

Question: Which of the following is not a limitation of analysis of financial statements?
a) Window dressing
b) Subjectivity
c) Intra-firm comparison
d) Only quantitative analysis
Answer: c

Question: Intra-Firm Analysis is also known as:
a) Cross-section Analysis
b) Trend analysis
c) Dividend decision Analysis
d) Debt Analysis
Answer: b

Question: Which tool of analysis of financial statements shows a comparative study of items of two or more years?
a) Ratio analysis
b) Common size statements
c) Comparative statements
d) Cash Flow Statement
Answer: c

Question: Which of the following items is shown under the heading ‘Non-Current liabilities’ in the Balance Sheet of a company?
a) 12% Debentures
b) Reserves and surplus
c) Unclaimed dividend
d) Provision for tax
Answer: a

Question: Match thefollowing
(i) TradeMarks                       (a) Cash and CashEquivalents
(ii) StoresandSpares             (b) Intangibleassets
(iii) Cheque inhand                (c) Inventory
(a) (i)-(c) (ii)-(b)(iii)-(a)
(b) (i)-(c) (ii)-(a)(iii)-(b)
(c) (i)-(b) (ii)-(c)(iii)-(a)
(d) (i)-(a) (ii)-(c)(iii)-(b)
Answer:  c

Question: When financial statement for a single year is analyzed, it is called _________ analysis.
Answer: Vertical

Question: Assets and liabilities of a company are usually marshaled in the order of _______
Answer: Permanence

Question: Claims are expected to be settled beyond twelve month or an operating cycle is classified under ________.
Answer: Long term provision

Question: There are ________ major heads on the assets side of a company’s Balance sheet.
Answer: Two

Question: Financial statement analysis ignores ________ elements.
Answer: Qualitative

Question: When financial statement figures for two or more years are compared, it is __________
Answer: Statements. comparative financial

Question: Bank overdraft and cash credit in the balance sheet of a company are shown under ____________.
Answer: Short term borrowing

Question: There are __________ major head of the equity and liabilities side of a company’s balance sheet.
Answer: 4

Question: Analysis of the financial statement measures _______
Answer: capacity

Question: In the case of operating cycle cannot be determined then the time period of operating cycle is assumed to be ________ months.
Answer: 12

Question: It is not compulsory for a company to prepare balance sheet as per proforma given in Schedule lll of companies Act, 2013.
Answer: False

Question:It is compulsory for the directors of a company to present company’s statement of Profit and Loss Account and Balance Sheet in the annual general meeting of shareholders.
Answer: True

Question: The authorized capital is shown by way of information in the notes to accounts. It is not added to the amount of share capital to be showin balance Sheet. True
Answer: True

Question: Financial statements show price-level changes.
Answer: False

Question: Horizontal analysis is useful in long term planning.
Answer: True

Question: Financial analysis removes the limitations of financial statements.
Answer: False

Question: Financial analysis ignores qualitative factors.
Answer: True

Question: Facts and figures presented in financial statement are not at all based on personal judgments.
Answer: False

Question: Interest accrued and due on debentures is shown under the heading non-current liabilities.
Answer: False 

Question: Contingent liabilities are shown in the balance sheet under the heading Current Liabilities.
Answer: False