This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 7 Financial Statements Of Companies – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 1 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In a Statement of Owner's Equity, if the Beginning Capital is $ 47, 500, Net Income is $ 11, 800 and the Ending Capital is $ 43, 400, what is the Drawings figure? A) $ 7, 700. B) $ 59, 300. C) $ 4, 100. D) $ 15, 900. Show Answer Correct Answer: D) $ 15, 900. 2. Transferring Information from the general journal to the ledger accounts is known as ..... ? A) Posting. B) Copying. C) Extending. D) Calculating. Show Answer Correct Answer: A) Posting. 3. Which account is classified as an Expense? A) Auto Loan. B) College Fund. C) Bank Account. D) Cell phone bill. Show Answer Correct Answer: D) Cell phone bill. 4. Accumulated Dividend Arrears on preference shares is shown is the company's Balance Sheet ..... A) Current Liabilities. B) Contingent Liability. C) Commitments. D) Short Term Provisions of. Show Answer Correct Answer: C) Commitments. 5. Wages paid to the Sales staff A) Administrative cost. B) Finance cost. C) Cost of Goods sold. D) Distribution cost. Show Answer Correct Answer: D) Distribution cost. 6. When asked to calculate the book value of a share, which formula will be used? A) Shareholders equityShares in issue. B) Net profit after taxShares in issue. C) Net before after taxShares in issue. D) Dividends paid and declaredShares in issue. Show Answer Correct Answer: A) Shareholders equityShares in issue. 7. A six-column worksheet is prepared at the end of the fiscal period. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 8. Which proves that the liquidity of a company is not positive? A) Debtors collection is 33 days and the Creditors payment period is 47 days. B) The stock turnover rate of a clothing shop is 4 times a year. C) The acid test ratio is 0, 9:1. D) The current ratio of a fruit and veg is 8:1. Show Answer Correct Answer: D) The current ratio of a fruit and veg is 8:1. 9. Why do businesses need a cash flow statement? A) To reconcile the difference between revenue and expenses. B) To show the cash inflows and outflows over a period of time. C) To calculate the taxes owed by a business. D) To track the inventory of a business. Show Answer Correct Answer: B) To show the cash inflows and outflows over a period of time. 10. Which of the statements about profit is incorrect? A) Profit = Revenue-Expenses. B) Profit includes revenue and other income. C) A loss occurs if expenses are greater than revenues. D) Profit at the end of the year is added to the business's bank balance. Show Answer Correct Answer: D) Profit at the end of the year is added to the business's bank balance. 11. What are the steps to calculate Profit for the year? A) Gross profit + Income-Capital. B) Gross profit + Income + Expenses. C) Gross profit + Income-Expenses. D) Gross profit-Income-Expenses. Show Answer Correct Answer: C) Gross profit + Income-Expenses. 12. Two examples of tangible assets are: A) Trademarks and Patents. B) B. Inventory and Trademarks. C) B. Patents and Cash. D) None of the above. Show Answer Correct Answer: A) Trademarks and Patents. 13. The income statement can be expressed as an equation: A) Income = Income-Expenses. B) Revenue-Expenses = Net Income (Loss). C) Revenue + Expenses = Income/Loss. D) Expenses = Net Income + Revenue. Show Answer Correct Answer: B) Revenue-Expenses = Net Income (Loss). 14. Prepaid Expenses appear in company B/ S under sub head ..... A) Other current Assets. B) Short term Loans and Advances. C) Intangible Assets. D) Other Non Current Asstes. Show Answer Correct Answer: A) Other current Assets. 15. Why do businesses using accrual accounting need a cash flow statement? A) To show the cash inflows and outflows over a period of time. B) To reconcile the difference between revenue and expenses. C) To track the inventory of a business. D) To calculate the taxes owed by a business. Show Answer Correct Answer: A) To show the cash inflows and outflows over a period of time. 16. The owner's equity will increase when ..... i-a business obtained net profitii-a business incurred net lossiii-the owner withdrew cash from the companyiv-the owner brought in machinery to use in the business A) I and iv. B) Ii and iii. C) I and iii. D) Ii and iv. Show Answer Correct Answer: A) I and iv. 17. Which of of the following would be an INCORRECT extension on the Worksheet? A) HST Payable on the credit side of the Balance Sheet columns. B) Sales on the credit side of the Income Statement columns. C) Automobile on the credit side of the Balance Sheet columns. D) Repairs Expense on the debit side of the Income Statement columns. Show Answer Correct Answer: C) Automobile on the credit side of the Balance Sheet columns. 18. Which account is classified as an Liability? A) Concert Tickets. B) Bank Account. C) Allowance. D) Auto Loan. Show Answer Correct Answer: D) Auto Loan. 19. What is the primary objective of financial reporting? A) To provide economic information that is comprehensible to all users. B) To provide management with an accurate evaluation of their financial performance. C) To provide forecasts for future cash flows and financial performance. D) To provide information that is useful for economic decision making. Show Answer Correct Answer: D) To provide information that is useful for economic decision making. 20. Which one of the following would help a company with high gearing to reduce its gearing ratio? A) Making a rights issue of equity shares. B) Issuing further long-term loan notes. C) Making a bonus issue of shares. D) Paying dividends on its equity shares. Show Answer Correct Answer: A) Making a rights issue of equity shares. 21. A ..... business is one which buys and sells goods. A) Service. B) Trading. C) All the above. D) None of the above. Show Answer Correct Answer: B) Trading. 22. According to prescribed order of assets in a Company's Balance Sheet ..... assets should be shown first of all. A) Non-Current Assets. B) Current Assets. C) Current Investments. D) Loans and Advances. Show Answer Correct Answer: A) Non-Current Assets. 23. Petrol, Rego, insurance, repairs etc of the delivery vehicles A) Administrative cost. B) Finance cost. C) Cost of Goods sold. D) Distribution cost. Show Answer Correct Answer: D) Distribution cost. 24. In a company's Balance Sheet ..... appear under the head 'Non-Current Assets' A) Goodwill. B) Patents. C) Vehicles. D) All of the above. Show Answer Correct Answer: D) All of the above. 25. Which financial statement summarizes a business's revenues and expenses over a period of time? A) Income statement. B) Balance sheet. C) Cash flow statement. D) Statement of profit and loss. Show Answer Correct Answer: A) Income statement. 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