CBSE Class 12 Accountancy Financial Statements Of a Company Questions

Question: Nominal accounts are related to
a) Expense + Income
b) Liability
c) Assets
d) None of the options

Answer: a

Question: Which of the following is not the limitation of financial statements?
a) Ignore qualitative aspects.
b) Personal bias.
c) Ignores price level change.
d) Provide information about the profitability of the business.

Answer: d

Question: The statement which shows the assets and liabilities of a company is known as
a) Balance sheet
b) Profit & Loss Account
c) Trial Balance
d) None of the options

Answer: a

Question: Patents and Trademarks are examples of
a) intangible Fixed Assets.
b) Tangible Fixed Assets.
c) Intangible Assets under Development.
d) Capital Work-in-Progress.

Answer: a

Question: Which are written off every year from the profits earned by the business.
a) Preliminary Expenses
b) Liabilities
c) Preliminary Expenses and Liabilities
d) None of the options

Answer: a

Question: Provision for Tax appears in a Company’s Balance Sheet under the Sub-head ................
a) Short-term Provisions
b) Reserves and Surplus
c) Long-term Provisions
d) Other Current Liabilities

Answer: a

Question: Balance Sheet of A Company is prepared according to the Revised Schedule III, Part-I of
a) Section 211
b) Section 213
c) Section 217
d) Section 209

Answer: a

Question: Which items is not the example of operating expenses
a) Loss on sale of fixed assets
b) Cash discount allowed to customers
c) Selling and Distribution expenses
d) All of the options

Answer: a

Question: Which one of the following items is shown under the heading ‘current liabilities’ in the Balance Sheet of a company?
a) Investments
b) Reserve Fund
c) Unclaimed Dividend
d) Livestock

Answer: c

Question: Closing stock is recorded in the
a) Balance sheet
b) Profit and loss account
c) Trial balance
d) None of the options

Answer: a

Question: Any difference in trial balance transferred to
a) Suspense A/c
b) Capital A/c
c) Current A/c
d) None of the options

Answer: a

Question: 6% Debentures appear in a Company’s Balance Sheet under the Sub-head
a) Long-term Provisions
b) Long-term Borrowings
c) Other Current Liabilities
d) Other Long-term Liabilities

Answer: b

Question: Which are the determinants of dividend policy
a) All of the options
b) Working Capital Requirement
c) Liquidity Position
d) Legal Requirement

Answer: a

Question: Bills Payable shown under major heading Current Liability and Subheading
a) Trade Payable
b) Short-term Provision
c) Other Current Liabilities
d) None of the options

Answer: a

Question: Tangible assets are assets which can be physically seen and touched, Like
a) All of the options
b) Land & Building
c) Plant and Equipment
d) Furniture & Fixture

Answer: a

Question: Salaries outstanding Rs 50,000 will be record in the balance sheet under
a) Other Current Liabilities
b) Other Current Assets
c) Non-current Liabilities
d) All of the options

Answer: a

Question: Interest accrued and due on debentures appear 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: Which of the following is not required to be prepared under the Companies Act:
a) Statement of Profit & Loss
b) Balance Sheet
c) Anditor’s Report
d) Fund Flow Statement

Answer: c

Question: Prepaid expenses should appear in
a) Assets
b) Liability
c) Revenues
d) None of the options

Answer: a

Question: The following is (are) the external source (s) of cash
a) All of the options
b) Long terms loans
c) Issue of new shares
d) Short term borrowings

Answer: a

Question: A company prepares its Balance Sheet as per the format in
a) Schedule VI of the Indian Companies Act, 2013
b) Schedule II of the Indian Companies Act, 2013
c) Schedule IV of the Indian Companies Act, 2013
d) None of the options

Answer: a

Question: Which statement shows the sources related to the inflow and Outflow of cash
a) Cash Flow Statement
b) Fund Flow Statement
c) Ratio Analysis
d) None of the options

Answer: a

Question: Bills receivable and debtors are
a) Current assets
b) Fixed assets
c) Long term assets
d) None of the options

Answer: a

Question: ................ appear in a Company’s Balance Sheet under the Sub-head Short-term Provision
a) Interest Accrued but not due on Borrowings
b) Provision for Tax
c) Unpaid Dividend
d) Calls in Advance

Answer: b

Question: Current liabilities do not include
a) Prepaid insurance
b) Sundry creditors
c) Bank overdraft
d) None of the options

Answer: a

Question: Mining Rights are
a) Tangible Fixed Assets.
b) Other Current Liabilities.
c) Intangible Assets Under Development.
d) Short-term Borrowings.

Answer: b

Question: Which of the following is not a Non-Current Asset?
a) Fixed Assets
c) Long-term Loans and Advances
b) Share Capital
d) Non-current Investments

Answer: b

Question: Share Capital of a Company consists of 5,00,000 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 fully paid
c) Any of the above
d) None of the above

Answer: b

Question: While preparing the Balance Sheet of a company ‘Securities Premium’ is shown under :
a) Current Liability
b) Share Capital
c) Long-term Borrowings
d) None of the above

Answer: d

Question: From the given items which is a part of Current Liabilities:
a) Inventories
b)Trade Payables
c) Cash and Cash Equivalents
d)Trade Receivables

Answer: b

Question: The term current asset doesn t cover
a) Car
b) Debtors
c) Stock
d) Prepaid expenses

Answer: a

Question: Calls in advance is to be shown under the heading of
a) Current Liabilities
b) Current Assets
c) Current Liabilities and Current Assets
d) None of the options

Answer: a

Question: Persons who are willing to invest in any organization always wish to know about the profitability and solvency of the business concern
a) All of the options
b) Investors and Potential Investors
c) Employees and Workers
d) Owner

Answer: a

Question: Fixed Assets are
a) All of the options
b) Land and Building
c) Plant and Machinery
d) Motor Car

Answer: a

Question: The balance sheet, also called the
a) Statement of financial position
b) Profit & Loss Account
c) Cash Flow
d) None of the options

Answer: a

Question: Name the item out of the following which is shown as Short-term Provision:
a) Provision for Tax
b) Interest Accrued but not Due
c) Employees' Provident Fund
d) Interest Accrued and Due

Answer: a

Question: Financial Statement also called
a) Final Accounts
b) Profit & Loss A/c
c) Trading A/c
d) None of the options

Answer: a

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: Net Profit before Taxes - Income Taxes
a) Net Profit (or Net Loss)
b) Gross Profit (or Net Loss)
c) Net Profit (or Net Loss) and Gross Profit (or Net Loss)
d) None of the options

Answer: a

Question: Provision for Provident Fund comes under
a) Long-term Provision
b) Trade Payable
c) Other Current Liabilities
d) None of the options

Answer: a

Question: The basic equation on which a profit & loss statement is based is
a) Revenues - Expenses = Profit
b) Revenues + Expenses = Profit
c) Revenues - Expenses = Profit and Revenues + Expenses = Profit
d) None of the options

Answer: a

Question: Objectives of analysis and interpretation of financial statements are
a) All of the options
b) Progress
c) Position
d) Prospects

Answer: a

Question: Gross profit is equal to
a) Sale - cost of sale
b) Sale - Expenses
c) Sale - cost of sale and Sale - Expenses
d) None of the options

Answer: a