This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 7 Financial Statements Of Companies – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 3 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Revenues-Expenses =? A) Net Income or Net Loss. B) Owner's Equity. C) Total Revenue. D) Gross Profit. Show Answer Correct Answer: A) Net Income or Net Loss. 2. How will the debtors collection period be calculated? A) Average debtors / credit sales x 365. B) Credit sales / average debtors x 365. C) Average debtors + average creditors / cost of sales x 365. D) Debtors x credit sales x 365. Show Answer Correct Answer: A) Average debtors / credit sales x 365. 3. 9% Debentures redeemable within 12 months of the date of Balance Sheet will be shown under: A) Short-term Borrowings. B) Short-term Provision. C) Other Current Liability. D) Trade Payables. Show Answer Correct Answer: C) Other Current Liability. 4. Which section of the Companies Act, 2013 requires that the balance sheet be prepared in the prescribed form? A) Section 128. B) Section 130. C) Section 129. D) Section 212. Show Answer Correct Answer: C) Section 129. 5. During a class discussion, Daniel, Liam, and Maya were discussing the purpose of a balance sheet. What is the primary purpose of a balance sheet? A) To determine a company's employee satisfaction. B) To provide a snapshot of a company's financial position. C) To analyze a company's marketing strategies. D) To track a company's sales and revenue. Show Answer Correct Answer: B) To provide a snapshot of a company's financial position. 6. If the current ratio for a company is equal to its quick ratio, which of the following statements is true? A) The current ratio must be greater than one. B) The company does not carry any inventory. C) Receivables plus cash is greater than payables minus inventories. D) Working capital is positive. Show Answer Correct Answer: B) The company does not carry any inventory. 7. Accounting documents intended to help the internal business make decisions. A) Financial Accounting. B) Managerial Accounting. C) All the above. D) None of the above. Show Answer Correct Answer: B) Managerial Accounting. 8. The date of this financial statement DOES NOT include "For Month Ended" A) Income Statement. B) Balance Sheet. C) Cash Flow Statement. D) Worksheet. Show Answer Correct Answer: B) Balance Sheet. 9. Creditors of a business may want to use the accounts to A) Check that any amounts owing to them are likely to be paid when due. B) Be sure of an increasing share of the market. C) Check that the business is making a profit. D) Be sure that after-sales service will continue. Show Answer Correct Answer: A) Check that any amounts owing to them are likely to be paid when due. 10. A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2.Which of the following events is most likely to have caused the increase? A) An increase in sales volume. B) A purchase in December 20X1 mistakenly being recorded as happening in January 20X2. C) Overstatement of the closing inventory at 31 December 20X1. D) Understatement of the closing inventory at 31 December 20X1. Show Answer Correct Answer: D) Understatement of the closing inventory at 31 December 20X1. 11. Expense on buying goods from overseas A) Rates. B) GST. C) Distribution cost. D) Customs duty. Show Answer Correct Answer: D) Customs duty. 12. Net Income / Total Revenues =? A) Sales Ratio. B) Debt Ratio. C) Net Income Ratio. D) Current Ratio. Show Answer Correct Answer: C) Net Income Ratio. 13. Which financial statement gives a snapshot of a business's assets, liabilities, and equity at a single point in time? A) Statement of profit and loss. B) Cash flow statement. C) Balance sheet. D) Income statement. Show Answer Correct Answer: C) Balance sheet. 14. Which of the following definitions is not included within the definition of control perIFRS 10 Consolidated Financial Statements? A) Having power over the investee. B) Having exposure, or rights, to variable returns from its investment with the investee. C) Having the majority of shares in the investee. D) Having the ability to use its power over the investee to affect the amount of theinvestor's returns. Show Answer Correct Answer: C) Having the majority of shares in the investee. 15. Depreciation expense A) Operating. B) Investing. C) Financing. D) Supplemental. Show Answer Correct Answer: A) Operating. 16. Why might a union request financial statements from a business? A) To evaluate the business's competitive strategies. B) To determine the creditworthiness of the business. C) To assess the ability to pay compensation and benefits to union members. D) To decide whether to invest in the business. Show Answer Correct Answer: C) To assess the ability to pay compensation and benefits to union members. 17. What does the cash flow statement show? A) The marketing expenses of a business. B) The profitability of a business over a period of time. C) The cash inflows and outflows of a business. D) The assets, liabilities, and equity of a business. Show Answer Correct Answer: C) The cash inflows and outflows of a business. 18. What is the purpose of the Balance Sheet? 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. 19. When will the reported results in financial statements be suspicious, potentially due to fraud from the below mentioned cases? A) When the results are consistent with industry norms. B) When there is a sudden spike in sales. C) When the statements are audited. D) When non-financial issues are addressed. Show Answer Correct Answer: B) When there is a sudden spike in sales. 20. Which of the following is not the limitation of financial statement analysis? A) Ignores price level changes. B) Window dressing. C) Qualitative aspect ignored. D) Inter firm comparisons. Show Answer Correct Answer: D) Inter firm comparisons. 21. What are the steps to calculate Net 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. 22. A balance sheet shows: A) How much gross profit it has. B) How much net profit it has. C) How much a business owns and owes. D) None of the above. Show Answer Correct Answer: C) How much a business owns and owes. 23. Which of the following is not a part of the financial reports of the organization A) Balance sheet. B) Income statements. C) Report with the vision and mission of the organization. D) Report regarding the flow of cash. Show Answer Correct Answer: C) Report with the vision and mission of the organization. 24. A firm's financial obligations to short-term creditors, which must be repaid within one year. A) Current Assets. B) Current Liabilities. C) Accounts Receivable. D) Accounts Payable. Show Answer Correct Answer: B) Current Liabilities. 25. What is shown as a liability in a statement of financial position? A) Bank overdraft. B) Fixtures and fittings. C) Inventory. D) Prepaid rent. Show Answer Correct Answer: A) Bank overdraft. ← PreviousNext →Related 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 4Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 5Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 6Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 7Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 8Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 9Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 10Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books