This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Accountancy > Class 12 Accountancy Chapter 7 Financial Statements Of Companies – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 4 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Securities Premium Reserve appears i Company's B/S under ..... A) Long Term Provisions. B) Reserve & Surplus. C) Short term provisions. D) Share Capital. Show Answer Correct Answer: B) Reserve & Surplus. 2. When preparing a 6-column worksheet and the balancing figure is placed on the credit side of the Income Statement column, the business has experienced a net income. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 3. Accounting documents that are created to show bankers, shareholders and other 3rd parties. A) Financial Accounting. B) Managerial Accounting. C) All the above. D) None of the above. Show Answer Correct Answer: A) Financial Accounting. 4. Expense on electricity at the place of sales A) Drawings. B) Distribution cost. C) Cost of Goods sold. D) Administrative cost. Show Answer Correct Answer: B) Distribution cost. 5. What does the Cash Flow Statement show about a company's financial health? A) It indicates the company's customer satisfaction levels. B) It provides insights into the company's liquidity, operating activities, investing activities, and financing activities. C) It shows the company's marketing strategies. D) It reveals the company's employee turnover rate. Show Answer Correct Answer: B) It provides insights into the company's liquidity, operating activities, investing activities, and financing activities. 6. What is the equation to calculate Gross profit? A) (Sales revenue + Cost of sales)-Sales returns. B) (Sales revenue-Sales returns)-Cost of sales. C) (Sales revenue + Sales returns)-Cost of sales. D) Sales revenue + Income-Expenses. Show Answer Correct Answer: B) (Sales revenue-Sales returns)-Cost of sales. 7. Profit for the year = Gross profit plus Other income minus ..... A) Expenses. B) Revenue. C) Assets. D) Liabilities. Show Answer Correct Answer: A) Expenses. 8. A statement of financial position shows the ..... of the business at a certain date. A) Assets and Liabilities. B) Revenue and Expenses. C) Only Capital. D) Only Assets. Show Answer Correct Answer: A) Assets and Liabilities. 9. Expense for increasing sales A) Advertising. B) Office wages. C) Accountants fees. D) Interest on loans. Show Answer Correct Answer: A) Advertising. 10. Directors of a limited company are under an obligation to? A) Send financial statements to employees. B) Send the summary of the financial statements to all shareholders. C) File copies of the financial statements with the registrar of companies. D) Produce financial statements which are correct in all respects. Show Answer Correct Answer: D) Produce financial statements which are correct in all respects. 11. Change in Inventories means A) Difference between Opening Inventories and Closing Inventories. B) Difference between Closing Inventories and Opening Inventories. C) Difference between Opening Inventories and Closing Inventories, if Opening Inventories are higher. D) Difference between Closing Inventories and Opening Inventories, if Closing Inventories are higher. Show Answer Correct Answer: A) Difference between Opening Inventories and Closing Inventories. 12. What is the difference between non-current assets and current assets? A) NCA provide benefits that are used within one financial period but CA provide benefits that last beyond one financial period. B) NCA provide benefits that last beyond one financial period but CA provide benefits that are used within one financial period. C) NCA are easily converted to cash but CA are not easily converted to cash easily. D) NCA are not loans but CA are loans. Show Answer Correct Answer: B) NCA provide benefits that last beyond one financial period but CA provide benefits that are used within one financial period. 13. Would you prefer a Savings Account with? A) A higher interest rate. B) A lower interest rate. C) All the above. D) None of the above. Show Answer Correct Answer: A) A higher interest rate. 14. Cash= 1000, Bank = 2000, Accounts payable = 1500 and loans = 1000. What is the value of assets? A) 4500. B) 2500. C) 3000. D) 1550. Show Answer Correct Answer: C) 3000. 15. Which of the following should be disclosed in a summary of significant accounting policies? A) Basis of consolidation. B) Adequacy of pension plan assets in relation to vested benefits. C) Composition of plant assets. D) Concentration of credit risk of financial instruments. Show Answer Correct Answer: A) Basis of consolidation. 16. Noah, Aria, and Abigail are playing a trivia game about financial statements. They come across a question:What is the purpose of the income statement? A) To determine the company's market share. B) To calculate the company's total assets and liabilities. C) To provide a summary of a company's financial performance over a specific period of time. D) To forecast future sales and revenue. Show Answer Correct Answer: C) To provide a summary of a company's financial performance over a specific period of time. 17. This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners of the company are entitled to. A) Income Statement. B) Balance Sheet. C) All the above. D) None of the above. Show Answer Correct Answer: B) Balance Sheet. 18. A = L + OE is proven on the ..... A) Cash Flow Statement. B) Income Statement. C) Sales Journal. D) Balance Sheet. Show Answer Correct Answer: D) Balance Sheet. 19. Cost of sales = ..... + Purchases-Closing inventory A) Sales. B) Purchase Return. C) Salary. D) Opening Inventory. Show Answer Correct Answer: D) Opening Inventory. 20. Share capital of a company consist of 70, 000 shares of ₹ 10 each, ₹ 8 called up. All the shareholders have duly paid up the called amount. Share capital will be shown as A) Subscribed and fully paid. B) Subscribed but not fully paid. C) Both (a) and (b). D) None of the above. Show Answer Correct Answer: B) Subscribed but not fully paid. 21. What do we understand from financial statements? A) A group of reports regarding the organization's various financial aspects. B) A group of reports regarding the employee's data. C) A collection of reports pertaining to the organization's vision and mission. D) None of the above. Show Answer Correct Answer: A) A group of reports regarding the organization's various financial aspects. 22. You have assets totaling $ 10, 000 and all of your debts total $ 13, 000. What is your net worth A) $ 23, 000. B) $ 3. C) $ -3000. D) $ 3000. Show Answer Correct Answer: C) $ -3000. 23. Unclaimed dividend appears in a Company's balance Sheet under the Sub-head ..... A) Other Current Liabilities. B) Short-term Borrowings. C) Short-term Provisions. D) Trade Payables. Show Answer Correct Answer: A) Other Current Liabilities. 24. The section of the Income Statement in which gross profit is claculated is known as: A) Trading Section. B) Profit & Loss Section. C) Statement of Account. D) Statement of Financial Position. Show Answer Correct Answer: A) Trading Section. 25. Balance Sheet is also known as ..... A) Profit and loss Account. B) Petty Cash Book. C) Earnings Account. D) Statement of Financial Position. Show Answer Correct Answer: D) Statement of Financial Position. 26. Provision for tax appears in B/S under the sub head A) Short Term Provisions. B) Other Current Liabilities. C) Ling Term Provisions. D) Reserve & Surplus. Show Answer Correct Answer: A) Short Term Provisions. 27. Pamela acquired 80% of the share capital of Samantha on 1 January 20X1. Part of thepurchase consideration was $ 200, 000 cash to be paid on 1 January 20X4. The applicable costof capital is 10%.What will the deferred consideration liability be at 31 December 20X2? A) $ 150, 262. B) $ 200, 000. C) $ 165, 288. D) $ 181, 818. Show Answer Correct Answer: D) $ 181, 818. 28. ..... are assets which are obtained for use and not for resale, which help the business earn revenue. A) Current Assets. B) Non-Current Assets. C) All the above. D) None of the above. Show Answer Correct Answer: B) Non-Current Assets. 29. Schedule III has prescribed ..... format for preparation of balance sheet A) Horizontal. B) Vertical. C) Both horizontal and vertical. D) None of the above. Show Answer Correct Answer: B) Vertical. 30. The debentures to be redeemed within 12 months from the date of balance sheet is shown under A) Long term borrowings. B) Other current liabilities. C) Long term liabilities. D) Short term borrowings. Show Answer Correct Answer: B) Other current liabilities. 31. Depreciation on motor vehicles should be classified under administration expenses A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 32. Which can't be used to calculate the return of shareholders? A) Dividends per share. B) Net asset value. C) Earnings per share. D) Return on shareholders equity. Show Answer Correct Answer: B) Net asset value. 33. On a common-size income statement, each dollar amount is expressed as a percentage of: A) Net income. B) Sales. C) Total expenses. D) None of the above. Show Answer Correct Answer: B) Sales. 34. Which of the following is the element of financial statements? A) Balance Sheet. B) Profit & Loss A/c. C) Both (a) and (b). D) None of these. Show Answer Correct Answer: C) Both (a) and (b). 35. Interest accrued and due on debentures appear in a Company's Balance Sheet under the Sub-head ..... A) Short-term Provisions. B) Other Current Liabilities. C) Short-term Borrowings. D) Trade Payables. Show Answer Correct Answer: B) Other Current Liabilities. 36. Nora, Abigail, and William are playing a game of 'Business Tycoon'. They are trying to understand the purpose of the statement of cash flows in their game. Can you help them out? A) To provide information about cash inflows and outflows. B) To track the company's stock performance. C) To calculate the company's net income. D) To determine the company's market share. Show Answer Correct Answer: A) To provide information about cash inflows and outflows. 37. Fixed Deposits appear in a Company's B/S under ..... A) Long Term Provisions. B) Current Assets. C) Long Term Borrowings. D) Current Liabilities. Show Answer Correct Answer: C) Long Term Borrowings. 38. Which from the list below is the formula to calculate the mark-up % achieved? A) Net profit / Cost of sales x 100. B) Gross Profit / Sales x 100. C) Gross Profit / Cost of sales x 100. D) Cost of sales x 100 / 150. Show Answer Correct Answer: C) Gross Profit / Cost of sales x 100. 39. Sun Farm bought seed and fertilizer on credit from One Nursery Sdn Bdh. What is the effect of this transaction? A) Increase in both asset and liability. B) Increase in asset and decrease in liability. C) Increase liability and decrease in asset. D) Decrease in both asset and liability. Show Answer Correct Answer: A) Increase in both asset and liability. 40. Extra payment based on goods sold by individual staff A) Salary. B) Wages. C) Commission. D) Discount. Show Answer Correct Answer: C) Commission. 41. ..... appears in a companies balance sheet under the sub-head:short-term provisions: A) Interest accrued and due on borrowings. B) Provision for tax. C) Unpaid dividents. D) Calls in advance. Show Answer Correct Answer: B) Provision for tax. 42. Below are the qualitative characteristics of a useful financial statement, except A) Relevant. B) Understandable. C) Reliable. D) Voluntary. Show Answer Correct Answer: D) Voluntary. 43. Balance Sheet of a company is required to be prepared in the format given in ..... A) Schedule III part II. B) Table A. C) Schedule III part III. D) Schedule III part I. Show Answer Correct Answer: D) Schedule III part I. 44. Henry, Jackson, and David are discussing their accounting homework. They need to identify the main components of an income statement. Can you help them out? A) Gross profit, operating profit, and net profit. B) Assets, liabilities, and equity. C) Cash flow, balance sheet, and statement of retained earnings. D) Revenue, expenses, and net income. Show Answer Correct Answer: D) Revenue, expenses, and net income. 45. Bills Receivables appear in a Company's Balance Sheet under the Sub-head ..... A) Current Investments. B) Cash Equivalents. C) Trade Receivables. D) Short term Loans and Advances. Show Answer Correct Answer: C) Trade Receivables. 46. Avery, Henry, and Aria are playing a game of 'Financial Whiz Kids.' They need to identify which financial statement shows a company's revenues and expenses over a period of time. Can you help them out? A) Cash flow statement. B) Statement of retained earnings. C) Income statement. D) Balance sheet. Show Answer Correct Answer: C) Income statement. 47. An entity shall disclose their revenue in the A) Statement of Financial Position. B) Statement of Profit or Loss and Other Comprehensive Income. C) Social and environmental report. D) Statement of changes in equity. Show Answer Correct Answer: B) Statement of Profit or Loss and Other Comprehensive Income. 48. Why would a company want to encourage the use of non-financial performanceindicators? A) To enable results to be easily manipulated to the benefit of the manager. B) To prevent goal congruence. C) To look at the fuller picture of the business. D) TO encourage short-termism. Show Answer Correct Answer: C) To look at the fuller picture of the business. 49. Which of the following item is shown under the head "current assets" while preparing companies balance sheet A) Inventories. B) Investment in property. C) Vehicles. D) Trade receivables. Show Answer Correct Answer: D) Trade receivables. 50. What a company owes to creditors: A) Assets. B) Liabilitites. C) Equity. D) None of the above. Show Answer Correct Answer: B) Liabilitites. 51. Why is the Balance Sheet considered a snapshot of a company's financial position? A) It only includes qualitative information. B) It reflects future financial projections. C) It provides a summary of the company's financial position at a specific point in time. D) It is updated on a daily basis. Show Answer Correct Answer: C) It provides a summary of the company's financial position at a specific point in time. 52. Badger acquired 30% of Eagle on 1 July 20X3 at a cost of $ 5.5 million. Badger has classifiedEagle as an associate undertaking. For the year ended 30 September 20X3, Eagle hasreported a net profit of $ 625, 000.What is the value of the associate investment in the group statement of financial positionof Badger as at 30 September 20X3? A) $ 5, 546, 875. B) $ 55, 00, 000. C) $ 6, 125, 000. D) $ 5, 968, 750. Show Answer Correct Answer: A) $ 5, 546, 875. 53. Goods purchased during the year A) Sales. B) Inventory. C) Purchases. D) None of the above. Show Answer Correct Answer: C) Purchases. 54. Expense on transportation of goods sold A) Freight inwards. B) Administrative cost. C) Freight outwards. D) None of the above. Show Answer Correct Answer: C) Freight outwards. 55. How is the net cash flow calculated in the cash flow statement? A) By subtracting expenses from revenue. B) By calculating the difference between assets and liabilities. C) By adding revenue and expenses. D) By comparing the opening and closing cash balances. Show Answer Correct Answer: D) By comparing the opening and closing cash balances. 56. Goodwill appears in a company's balance sheet under A) Non-current investments. B) Intangible assets. C) Unamortized assets. D) Tangible assets. Show Answer Correct Answer: B) Intangible assets. 57. The financial statement consists of the following statements, except A) Statement of Financial Position. B) Notes to the financial statement. C) Social and environmental report. D) Statement of changes in equity. Show Answer Correct Answer: C) Social and environmental report. 58. The presentation of financial data over a number of fiscal periods for analysis is referred to as a(n) A) Trend analysis. B) Common size analysis. C) Comparative analysis. D) All of the above are possible. Show Answer Correct Answer: A) Trend analysis. 59. A financial statement includes all of the following items:net income, depreciation, operating activities, and financing activities. What financial statement is this? A) Income statement. B) Balance sheet. C) Statement of changes in stockholders' equity. D) Statement of cash flows. Show Answer Correct Answer: D) Statement of cash flows. 60. Loss of value during this year on a van used for sales and distribution A) Distribution cost. B) Administrative cost. C) Finance cost. D) Cost of Goods sold. Show Answer Correct Answer: A) Distribution cost. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 1Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 2Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 3Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 5Class 12 Accountancy Chapter 1 Accounting For Partnership Firms Fundamentals QuizClass 12 Accountancy Chapter 2 Accounting For Partnership Firms Admission Of A Partner QuizClass 12 Accountancy Chapter 3 Accounting For Partnership Firms Retirement Death Of A Partner QuizClass 12 Accountancy Chapter 4 Accounting For Companies Issue Of Shares Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books