This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Accountancy > Class 12 Accountancy Chapter 7 Financial Statements Of Companies – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 5 (39 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following transaction is NOT a revenue? A) Performed a services worth RM3, 000 on credit for Aliff and further services worth RM5, 500 cash. B) Purchased RM6, 000 worth of drying fuel and RM3, 000 worth of machinery lubricants. C) Received subsidy of RM7, 000 and interest of RM4, 000. D) Sold RM9, 000 worth of grain crops for cash and a small tractor costing RM12, 000 for RM20, 000. Show Answer Correct Answer: B) Purchased RM6, 000 worth of drying fuel and RM3, 000 worth of machinery lubricants. 2. Which of the following is not presented under 'Current Liabilities' in the Balance Sheet of a company? A) Short-term Borrowings. B) Short-term Provisions. C) Deferred Tax Liabilities. D) Trade Payables. Show Answer Correct Answer: C) Deferred Tax Liabilities. 3. Which of the following is not a sub head under the Current Assets? A) Cash and cash equivalents. B) Trademarks. C) Short term loans and advances. D) Inventories. Show Answer Correct Answer: B) Trademarks. 4. Identify the correct statement.Statement 1-Profit and Loss Account is also called as Statement of Profit and LossStatement 2-Statement of Profit and Loss shows the financial performance of the Company. A) Only 1 is correct. B) Only 2 is correct. C) Both 1 and 2 are correct. D) None of the above. Show Answer Correct Answer: C) Both 1 and 2 are correct. 5. While preparing balance sheet of a company, security premium is shown under A) Non current liability. B) Share capital. C) Long term borrowings. D) Reserves and surplus. Show Answer Correct Answer: D) Reserves and surplus. 6. Calculate the amount for current liabilities.Land $ 1 000 5 year loan $ 10 000 Trade payables $ 6 000Bank overdraft $ 700 A) $ 16 700. B) $ 11 000. C) $ 6 700. D) $ 16 000. Show Answer Correct Answer: C) $ 6 700. 7. Expenses allowed on issue of shares appears in a Company's Balance Sheet under: A) Current Liability. B) Share Capital. C) Contingent Liability. D) Unamortized Expenditure. Show Answer Correct Answer: D) Unamortized Expenditure. 8. A business operates on a gross profit margin of 33$^{1}$/$_{3}$%. Gross profit on a sale was $ 800, and expenses were $ 680.What is the net profit margin? A) 11.25%. B) 22.67%. C) 5%. D) 3.75%. Show Answer Correct Answer: C) 5%. 9. 'claims against company not acknowledged as debt' is shown under A) Non current liability. B) Contingent liability. C) Current liability. D) Capital commitment. Show Answer Correct Answer: B) Contingent liability. 10. What is the meaning of Profit for the year? A) Is the overall final money earned from operating the business. B) Is the overall final income earned from operating the business. C) Is the overall final position earned from operating the business. D) Is the overall final profit earned from operating the business. Show Answer Correct Answer: D) Is the overall final profit earned from operating the business. 11. What is the purpose of the Statement of Financial Position? A) Inform stakeholders the assets and liabilities of business. B) Provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time. C) Provides information on how resources are obtained and used in the business at a point in time. D) Inform stakeholders the owner's equity of business. Show Answer Correct Answer: B) Provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time. 12. At the end of his first year of trading, Rashid provided the following information.Revenue $ 72, 500; Purchases $ 49, 700;Closing inventory $ 4, 800; Carriage inwards $ 1, 150; Carriage outwards $ 2, 950What was Rashid's gross profit? A) $ 24, 650. B) $ 22, 800. C) $ 26, 450. D) $ 27, 600. Show Answer Correct Answer: C) $ 26, 450. 13. Expense for hiring the place of sales A) Interest. B) Rates. C) Insurance. D) Shop rent. Show Answer Correct Answer: D) Shop rent. 14. 15% Debentures in the companies balance sheet is shown under the sub-head A) Other long term liabilities. B) Long term borrowings. C) Other current liabilities. D) Long term provisions. Show Answer Correct Answer: B) Long term borrowings. 15. Imagine you're in a business class with Olivia, Samuel, and Luna. The teacher asks, 'What is the purpose of a statement of retained earnings?' How would you answer? A) To track a company's expenses. B) To determine a company's cash flow. C) To calculate a company's net income. D) To show the changes in a company's retained earnings over a specific period of time. Show Answer Correct Answer: D) To show the changes in a company's retained earnings over a specific period of time. 16. What is the accounting equation used in the Statement of Financial Position? A) Total assets = Total liabilities + Equity. B) Total assets = Total Income + Equity. C) Total assets = Total Liabilities-Equity. D) Total assets = Total Loan + Equity. Show Answer Correct Answer: A) Total assets = Total liabilities + Equity. 17. If the tax paid is greater than the tax expense, the amount of tax which has overpaid is known as: A) Tax recoverable. B) Tax payable. C) All the above. D) None of the above. Show Answer Correct Answer: A) Tax recoverable. 18. Balance sheet contains which of the following information A) Debtors. B) Creditors. C) Journal. D) Assets. Show Answer Correct Answer: D) Assets. 19. "Assets = Liabilities + Equity" can be displayed on which financial statement? A) Statement of Owner's Equity. B) Balance Sheet. C) Neither. D) Income Statement. Show Answer Correct Answer: B) Balance Sheet. 20. Which of the following transactions would result in an increase in capital employed? A) Writing off a bad debt. B) Paying a payable in cash. C) Selling inventory at a profit. D) Increasing the bank overdraft to purchase a non-current asset. Show Answer Correct Answer: C) Selling inventory at a profit. 21. Which of the following includes ONLY Current Liabilities include A) Trademark, creditors, mortgage. B) Bank overdraft, mortgage, bank loan. C) Short-term loan, creditors, bank overdraft. D) Cash in hand, bank balance, short term loan. Show Answer Correct Answer: C) Short-term loan, creditors, bank overdraft. 22. What is the cash flow statement used for? A) To show the cash inflows and outflows over a period of time. B) To provide a breakdown of a business's marketing expenses. C) To give investors and lenders an understanding of a business's financial health. D) To track the number of employees in a business. Show Answer Correct Answer: A) To show the cash inflows and outflows over a period of time. 23. The detailed and accurate type of analysis done by the management of the enterprise to determine the financial position and operational efficiency of the organization is known as ..... A) External Analysis. B) Horizontal analysis. C) Internal analysis. D) Static Analysis. Show Answer Correct Answer: C) Internal analysis. 24. Why financial statements might underestimate the value of a business, for instance for startups with intellectual property? A) They do not account for inflation. B) They do not include tangible assets. C) They immediately expense intangible asset expenditures and do not record them as assets. D) They only cover a specific period of time. Show Answer Correct Answer: C) They immediately expense intangible asset expenditures and do not record them as assets. 25. Ethan, Michael, and James are running a lemonade stand. They are trying to calculate their net income. Can you help them figure out the correct formula? A) Total revenue x Total expenses. B) Total revenue-Total expenses. C) Total revenue + Total expenses. D) Total revenue / Total expenses. Show Answer Correct Answer: B) Total revenue-Total expenses. 26. "For Month Ended" is used on a heading when ..... A) The statement is temporary. B) Never. C) Always. D) The statement is a summary report. Show Answer Correct Answer: D) The statement is a summary report. 27. Which of the following statement(s) is/are true?If the turnover of Pind Co increased by 20%, the asset turnover would increaseby 20%.If Pind co has a different depreciation policy to its competitors, the assetturnover ratio will not be comparable. A) (1) only. B) (2) only. C) Both (1) and (2). D) Neither (I) nor (2). Show Answer Correct Answer: C) Both (1) and (2). 28. Would you prefer a credit card with? A) A higher interest rate. B) A lower interest rate. C) All the above. D) None of the above. Show Answer Correct Answer: B) A lower interest rate. 29. 'Accumulated Dividend Arrears' on preference shares is shown in the Company's Balance Sheet as: A) Commitments. B) Contingent Liability. C) Short-term Provision. D) Current Liability. Show Answer Correct Answer: A) Commitments. 30. When revenue > expenses, then there is a A) Net Loss. B) Net Income. C) Mistake in the math. D) Transposition error. Show Answer Correct Answer: B) Net Income. 31. Expense on transportation of purchases A) Delivery expenses. B) Freight outwards. C) Cartage on goods purchased. D) None of the above. Show Answer Correct Answer: C) Cartage on goods purchased. 32. ..... 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. Show Answer Correct Answer: B) Provision for Tax. 33. Every financial statement has a heading that indicates the name of the company, title of the report, and the date. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 34. How can you interpret a company's financial performance using Financial Statements? A) Look at the color of the company's logo. B) Count the number of employees in the company. C) Check the weather forecast for the company's headquarters. D) Analyze key financial ratios such as profitability, liquidity, solvency, and efficiency ratios. Show Answer Correct Answer: D) Analyze key financial ratios such as profitability, liquidity, solvency, and efficiency ratios. 35. Which from the list below can't be used to calculate the liquidity of a business? A) Acid-test ratio. B) Mark-up achieved. C) Stock holding period. D) Stock turnover rate. Show Answer Correct Answer: B) Mark-up achieved. 36. Why are financial statements of different companies not always comparable? A) They have not been verified. B) They use different accounting practices. C) They do not cover non-financial issues. D) They lack auditors' opinions. Show Answer Correct Answer: B) They use different accounting practices. 37. Which current ratio will be the most favourable for a company? A) 1:1. B) 2.2:1. C) 6:1. D) 1.7:1. Show Answer Correct Answer: B) 2.2:1. 38. Which of the following is a disadvantage of the financial statements. A) The ability to tell if a business would be able to pay the debts. B) Determining the sources and use of cash in the organization. C) Chance of manipulation in the report for obtaining debt that the organization cannot payback. D) A yearly report that the investors can refer to. Show Answer Correct Answer: C) Chance of manipulation in the report for obtaining debt that the organization cannot payback. 39. What does the balance sheet show? A) The cash inflows and outflows of a business. B) The revenue and expenses of a business over a period of time. C) What a business owns and what it owes. D) The profitability of a business. Show Answer Correct Answer: C) What a business owns and what it owes. ← PreviousRelated 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 4Class 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