This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Accountancy > Class 12 Accountancy Chapter 8 Analysis Of Financial Statements – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 4 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. To measure value creation, we should look at ..... A) Asset turnover ratio. B) Market-to-book ratio. C) Debt-to-equity ratio. D) Net profit margin. Show Answer Correct Answer: B) Market-to-book ratio. 2. The total amount of money received from the sale of goods or services. A) Profit. B) Expenses. C) Bookeeper. D) Revenue. Show Answer Correct Answer: D) Revenue. 3. Surplus, i.e., Balance in Statement of profit and loss is shown as A) Share capital. B) Reserves and surplus. C) Other long-term liabilities. D) Current liabilities. Show Answer Correct Answer: B) Reserves and surplus. 4. If closing stock appears in Trial Balance then it will be appearing in ; A) Trading Account. B) Profit & Loss Account. C) Balance Sheet. D) Trading A/c & Balance Sheet. Show Answer Correct Answer: C) Balance Sheet. 5. Income Statements answer the simple question: A) Is the company making a profit?. B) Is the company competitive?. C) Is the company ready to go public?. D) None of the answers are correct. Show Answer Correct Answer: A) Is the company making a profit?. 6. ABC Ltd. reported Net Sales of Rs. 9, 00, 000 ; Rs. 9, 90, 000 ; Rs. 10, 80, 000 respectively in year 2013, 2014 and 2015 respectively. If 2013 is the base year, what is the trend percent for 2015? A) 100 %. B) 90 %. C) 120 %. D) 110 %. Show Answer Correct Answer: C) 120 %. 7. What shows the overall worth of a business? A) Its non-current assets. B) Its net assets. C) Its liabilities. D) None of the above. Show Answer Correct Answer: B) Its net assets. 8. Why is the income statement also known as the profit and loss statement? A) It lists shareholder equity. B) It details employee salaries. C) It shows profit or loss over time. D) It tracks asset depreciation. Show Answer Correct Answer: C) It shows profit or loss over time. 9. How does the balance sheet help investors? A) By detailing net worth at a specific time. B) By tracking cash inflows and outflows. C) By showing company profitability. D) By listing employee benefits. Show Answer Correct Answer: A) By detailing net worth at a specific time. 10. What are the three main components of a cash flow statement? A) Income activities, expenditure activities, investment activities. B) Operating activities, investing activities, financing activities. C) Revenue activities, expense activities, capital activities. D) Sales activities, purchase activities, debt activities. Show Answer Correct Answer: B) Operating activities, investing activities, financing activities. 11. Excess of debit in profit and loss account is called A) Net loss. B) Net profit. C) Gross profit. D) Gross loss. Show Answer Correct Answer: A) Net loss. 12. What is the formula to calculate Owner's Equity if the assets are $50, 000 and liabilities are $ A) Liabilities-Assets. B) (Assets + Liabilities) / 2TagsDOK Level 2:Skill/Concept. C) Assets-Liabilities. D) Assets + Liabilities. Show Answer Correct Answer: C) Assets-Liabilities. 13. Why is it important for investors to analyze a company's financial ratios before making investment decisions? A) To assess the financial health, performance, and potential risks of the company. B) To find out the company's favorite food. C) To see if the CEO is left-handed. D) To determine the company's favorite color. Show Answer Correct Answer: A) To assess the financial health, performance, and potential risks of the company. 14. Calculate the current ratio if the current assets are $20, 000 and current liabilities are $ A) 10.0TagsDOK Level 2:Skill/Concept. B) 2.0. C) 0.5. D) 1.5. Show Answer Correct Answer: B) 2.0. 15. Entrepreneurs should prepare income statements A) Daily. B) Monthly. C) Quarterly. D) Yearly. Show Answer Correct Answer: B) Monthly. 16. For a utility, the ratio that is basically an operating asset turnover ratio is A) Funded debt to operating property. B) Operating ratio. C) Return on assets. D) Operating revenue to operating property. E) Percent earned on operating property. Show Answer Correct Answer: D) Operating revenue to operating property. 17. What is the valuie of operating profit margin? A) 45.23%. B) 54.59%. C) 58.16%. D) 61.27%. Show Answer Correct Answer: B) 54.59%. 18. Which market index is commonly used as a benchmark for beta? A) Dow Jones Industrial Average. B) S&P 500. C) Russell 2000. D) NASDAQ. Show Answer Correct Answer: B) S&P 500. 19. Operating Activities show cash generated or used during: A) The initial offering of shares to the public. B) The sale or purchase of buildings, land, or equipment. C) Normal Day to Day activities. D) None of the answers are correct. Show Answer Correct Answer: C) Normal Day to Day activities. 20. What is the formula for calculating the earnings per share (EPS) ratio? A) EPS = (Net Income-Preferred Dividends) * Average Outstanding Shares. B) EPS = (Net Income-Preferred Dividends) / Average Outstanding Shares. C) EPS = (Net Income + Preferred Dividends) / Average Outstanding Shares. D) EPS = Net Income / Average Outstanding Shares. Show Answer Correct Answer: B) EPS = (Net Income-Preferred Dividends) / Average Outstanding Shares. 21. Money owed to a company by its clients or customers who have promised to pay for products at a later date. A) Account Payable. B) Current Assets. C) Current Liabilities. D) Account Receivable. Show Answer Correct Answer: D) Account Receivable. 22. What do financial ratios generally show on a statement? A) Chronological order of entries. B) Exact cash receipts schedule. C) Listing of all asset accounts. D) Comparison between two figures. Show Answer Correct Answer: D) Comparison between two figures. 23. What does the cash flow statement reveal about a company? A) Number of employees. B) Total sales volume. C) Actual cash movement. D) Geographical expansion. Show Answer Correct Answer: C) Actual cash movement. 24. An amount earned by a corporation and not yet distributed to stockholders. A) Retained earnings. B) Dividends. C) Purchases allowance. D) Sales return. Show Answer Correct Answer: A) Retained earnings. 25. Four types of business structures are A) Sole trader. B) Partnership. C) Company. D) Trust. E) All the above. Show Answer Correct Answer: E) All the above. 26. What does a negative beta indicate? A) Lower volatility than the market. B) No correlation with the market. C) Inverse relationship with the market. D) Higher volatility than the market. Show Answer Correct Answer: C) Inverse relationship with the market. 27. If an investor wants to know how much out of every dollar of sales a company actually keeps in earnings, look at the company's financial statements and find the ..... A) Sales. B) Debt margin. C) Profit margin. D) Earnings per share. Show Answer Correct Answer: C) Profit margin. 28. Company has incurred a loss of Rs.10.00 lacs during FY 2021-2022. Under which head the loss of Rs.10.00 lacs will appear in Balance sheet? A) Current Assets. B) Current Liability. C) Intangible Assets. D) Term Liability. Show Answer Correct Answer: C) Intangible Assets. 29. The cash flow equation is A) Cash Outflow-Cash Inflow = Net Profit. B) Cash Outflow-Cash Inflow = Gross Profit. C) Cash Inflow-Cash Outflow = Net Cash. D) Cash Inflow-Cash Outflow = Net Profit. Show Answer Correct Answer: C) Cash Inflow-Cash Outflow = Net Cash. 30. While preparing Common Size Statement, each item of income statement is expressed as % of A) Other Income. B) Profit before tax. C) Total Income. D) Revenue from operation. Show Answer Correct Answer: D) Revenue from operation. 31. Heavy amount spent for advertisement of new company product is: A) Either Revenue or Capital Expenditure. B) Deferred Revenue Expenditure. C) Revenue Expenditure. D) Capital Expenditure. Show Answer Correct Answer: B) Deferred Revenue Expenditure. 32. Calculate the quick ratio for a company with current assets of $ 150, 000, inventory of $ 50, 000, and current liabilities of $ 80, 000. A) 1.25. B) 2.75. C) 0.75. D) 3.50. Show Answer Correct Answer: A) 1.25. 33. Calculate the debt ratio for a company with total liabilities of $ 1, 000, 000 and total assets of $ 2, 500, 000. A) 0.8. B) 0.4. C) 3.2. D) 1.5. Show Answer Correct Answer: B) 0.4. 34. What is net profits as per the income statement? A) $ 105.0M. B) $ 198.1M. C) $ 216.6M. D) $ 358.7M. Show Answer Correct Answer: C) $ 216.6M. 35. What is the formula to calculate net income? A) Net Income = Total Revenue-Total Expenses. B) Net Income = Total Revenue x Total Expenses. C) Net Income = Total Revenue / Total Expenses. D) Net Income = Total Revenue + Total Expenses. Show Answer Correct Answer: A) Net Income = Total Revenue-Total Expenses. 36. What are the four main financial statements? A) Profit Statement. B) Equity Statement. C) Cash Statement. D) Financial Report. E) Income Statement, Balance Sheet, Cash Flow Statement, Statement of Shareholders' Equity. Show Answer Correct Answer: E) Income Statement, Balance Sheet, Cash Flow Statement, Statement of Shareholders' Equity. 37. For Inter Firm comparison ..... A) Income Statement is prepared. B) Balance Sheet is prepared. C) A Comparative Statement is prepared. D) A common size statement is prepared. Show Answer Correct Answer: D) A common size statement is prepared. 38. Capital Stock is the only general ledger account classified as stockholders' equity A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 39. Goodwill, patents, trademarks, brand recognition are all intangible asset examples A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 40. An income statement shows the Financial Position of the company A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 41. The cost of goods sold (COGS) is calculated by which formula? A) Opening Inventory + Purchases + Closing Inventory. B) Closing Inventory-Purchases. C) Purchases + Closing Inventory-Opening Inventory. D) Opening Inventory + Purchases-Closing Inventory. Show Answer Correct Answer: D) Opening Inventory + Purchases-Closing Inventory. 42. Adjustment of interest on capital will be A) On debit side of profit and loss account. B) On credit side of profit and loss account. C) On asset side of balance sheet. D) On debit side of profit and loss account and added to capital on liability side. Show Answer Correct Answer: D) On debit side of profit and loss account and added to capital on liability side. 43. Define the term 'retained earnings' in financial statements. A) Investments made by external stakeholders. B) Profits distributed as dividends to shareholders. C) Operating expenses incurred by the business. D) Accumulated profits not paid out as dividends but retained and reinvested in the business. Show Answer Correct Answer: D) Accumulated profits not paid out as dividends but retained and reinvested in the business. 44. An Income Statement is also knows as a: A) Revenue and Cost Statement. B) Profit and Expense Statement. C) Asset and Liability Statement. D) Profit and Loss Statement. Show Answer Correct Answer: D) Profit and Loss Statement. 45. A financial report that shows an organization's profitability over a period of time-month, quarter, or year. A) Statements of Cash Flow. B) Statement of the Comprehensive Income. C) Cost of Goods Sold. D) Statement of Financial Position. Show Answer Correct Answer: B) Statement of the Comprehensive Income. 46. Wages and salaries account is shown in A) Trading account. B) Profit and loss account. C) Balance sheet. D) Trading account and balance sheet. Show Answer Correct Answer: A) Trading account. 47. The ownership of a corporation is represented by shares of stock A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 48. Which of the following ratio is NOT part of the cash conversion cycle? A) Average payment period. B) Average days in inventory. C) Average payback period. D) Average collection period. Show Answer Correct Answer: C) Average payback period. 49. "NET INCOME also known as NET PROFIT" is: A) Profit before you pay taxes and interest. B) Profit before you deduct operating expenses. C) The money used to pay taxes and health benefits. D) Profit left over after all the expenses have been deducted from your total revenue. Show Answer Correct Answer: D) Profit left over after all the expenses have been deducted from your total revenue. 50. Securities Premium is clubbed under Fictitious Asset A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 51. What can justify a high P/E ratio? A) Limited growth potential. B) Low earnings per share. C) Expected increase in earnings and growth opportunities. D) Low stock price. Show Answer Correct Answer: C) Expected increase in earnings and growth opportunities. 52. What should raise an investor's skepticism when reviewing financial statements? A) Decreased liabilities. B) Increased asset value. C) High profits with low cash flow increase. D) Consistent cash flow. Show Answer Correct Answer: C) High profits with low cash flow increase. 53. The amount a company owes to suppliers for goods and services purchased with credit. A) Account Receivable. B) Current Liabilities. C) Account Payable. D) Current Assets. Show Answer Correct Answer: C) Account Payable. 54. Prepaid expenses are also called: A) Advance expenses. B) Deferred expenses. C) Unexpired expenses. D) All of these. Show Answer Correct Answer: D) All of these. 55. Income earned but not received is shown in: A) Liabilities. B) Foot notes. C) Assets. D) None of them. Show Answer Correct Answer: C) Assets. 56. In ..... income statement sales is considered equal to 100 A) Comparative. B) Income. C) Common Size. D) Balance Sheet. Show Answer Correct Answer: C) Common Size. 57. State whether each of the following is True or False:Statement of profit and loss account shows the operating performance of an enterprise for a period of time. A) False. B) True. C) All the above. D) None of the above. Show Answer Correct Answer: B) True. 58. If Sales for year 2015 are Rs. 50, 00, 000 ; COGS is Rs. 40, 00, 000 ; GOGS and Gross profit as per Common Size analysis is A) 80%, 100%. B) 100%, 80%. C) 80%, 20%. D) 20%, 80%. Show Answer Correct Answer: C) 80%, 20%. 59. A statement that includes a column showing the changes in percentages from the first period to the ending period is called a A) Competitive balance sheet. B) Same-size balance sheet analysis. C) Balance sheet. D) Comparative balance sheet. Show Answer Correct Answer: B) Same-size balance sheet analysis. 60. On the balance sheet ..... A) Assets = Liabilities + Equity. B) Assets = Liabilities-Equity. C) Assets + Liabilities = Equity. D) Assets-Liabilities = Equity. Show Answer Correct Answer: A) Assets = Liabilities + Equity. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 1Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 2Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 3Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 5Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 6Class 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 Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books