This quiz works best with JavaScript enabled. Home > Class 12 > 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 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which users of the financial statements read the financials to understand the profitability, liquidity, and cash flows of the organization? A) Company Management. B) Competitors. C) Customers. D) Employees. Show Answer Correct Answer: A) Company Management. 2. Aiden, Liam, and Ava are running a lemonade stand. They are trying to calculate their gross profit. Can you help them figure out the correct formula? A) Gross Profit = Revenue + Cost of Lemonade. B) Gross Profit = Revenue / Cost of Lemonade. C) Gross Profit = Revenue * Cost of Lemonade. D) Gross Profit = Revenue-Cost of Lemonade. Show Answer Correct Answer: D) Gross Profit = Revenue-Cost of Lemonade. 3. Kai, Jackson, and Oliver are playing a game about financial statements. They need to identify which statement shows the net income or loss of a company. Can you help them? A) Income statement. B) Cash flow statement. C) Statement of retained earnings. D) Balance sheet. Show Answer Correct Answer: A) Income statement. 4. The interest rate on borrowed money is 14%.When the return on capital employed is 16% it means ..... A) The company is positively geared. B) The company is negatively geared. C) Loans have not been paid. D) The company has very little debt. Show Answer Correct Answer: A) The company is positively geared. 5. After proposing a final dividend, Kenilworth Co has a current ratio of 2.0 and a quick ratio of 0.8.If the company now uses its positive cash balance to pay that final dividend, what will be the effect upon these two ratios? A) Increase current ratio and decrease quick ratio. B) Increase current ratio and increase quick ratio. C) Decrease current ratio and decrease quick ratio. D) Decrease current ratio and increase quick ratio. Show Answer Correct Answer: C) Decrease current ratio and decrease quick ratio. 6. What is the accounting equation that the balance sheet must adhere to? A) Assets + Liabilities = Equity. B) Assets = Liabilities-Equity. C) Assets = Liabilities + Equity. D) Assets-Liabilities = Equity. Show Answer Correct Answer: C) Assets = Liabilities + Equity. 7. Which of the following is a ratio which is used to measure how much a business owes in relation to its size? A) Asset turnover. B) Profit margin. C) Gearing. D) Return on capital employed. Show Answer Correct Answer: C) Gearing. 8. Short-term Borrowings appear in a Company's Balance Sheet under the head ..... A) Current Assets. B) Current Liabilities. C) Non-Current Liabilities. D) Non-Current Assets. Show Answer Correct Answer: B) Current Liabilities. 9. Expense on an asset used for sales A) Office equipment repairs. B) Repairs on shop fittings. C) Drawings. D) Insurance-building. Show Answer Correct Answer: B) Repairs on shop fittings. 10. As per Companies Act, the BALANCE SHEET of a company ie required to be presented in ..... A) Horizontal Form. B) Vertical Form. C) Either horizintal or vertical. D) Neither of the above. Show Answer Correct Answer: B) Vertical Form. 11. A public limited company is under a legal duty to disclose information to A) Banks. B) Customers. C) Shareholders. D) Suppliers. Show Answer Correct Answer: C) Shareholders. 12. Cash & Cash Equivalent Includes A) Balances with banks. B) Cheques, drafts on hand. C) Cash on hand. D) All of the above. Show Answer Correct Answer: D) All of the above. 13. Calls in advance appear in the balance sheet under A) Current liability. B) Share capital. C) Long term-borrowings. D) Reserves and surplus. Show Answer Correct Answer: A) Current liability. 14. Give an example of a common Financial Ratio and explain its significance. A) Net Profit Margin ratio. B) Price-to-Earnings (P/E) ratio. C) Debt-to-Equity ratio. D) Return on Investment (ROI) ratio. Show Answer Correct Answer: B) Price-to-Earnings (P/E) ratio. 15. Final dividend payable will be disclosed in the SOFP under current liabilities. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 16. Under which heading the item ' Bills Discounted but not yet matured' will be shown in the balance sheet of a company? A) Current Liability. B) Current Assets. C) Contingent Liability. D) Unamortised Expenditure. Show Answer Correct Answer: C) Contingent Liability. 17. The users' needs for financial information are as follows, except A) Potential investors are interested to know about its profit assurance. B) Employees are interested to know about the future growth prospects. C) Creditors are interested to know how the wealth is generated. D) Companies registered submit their annual financial statements as required by the Companies Act 1965. Show Answer Correct Answer: D) Companies registered submit their annual financial statements as required by the Companies Act 1965. 18. Salesmen's commission should be treated under: A) Other income. B) Distribution cost. C) Administrative expenses. D) Finance costs. Show Answer Correct Answer: B) Distribution cost. 19. Liabilities A) Income Statement. B) Balance Sheet. C) All the above. D) None of the above. Show Answer Correct Answer: B) Balance Sheet. 20. Trade Investment appear in a Company's B/S under the sub head ..... A) Current Investments. B) Non Current Investments. C) Intangble Assets. D) Short Term Loans and Advances. Show Answer Correct Answer: A) Current Investments. 21. List the types of Financial Statements typically prepared by companies. A) Revenue Statement. B) Income Statement, Balance Sheet, Cash Flow Statement, Statement of Stockholders' Equity. C) Equity Statement. D) Profit Statement. Show Answer Correct Answer: B) Income Statement, Balance Sheet, Cash Flow Statement, Statement of Stockholders' Equity. 22. What key information does an Income Statement provide? A) Financial performance metrics such as revenues, expenses, net income, and earnings per share. B) Weather forecast, Historical events, Future predictions. C) All the above. D) None of the above. Show Answer Correct Answer: A) Financial performance metrics such as revenues, expenses, net income, and earnings per share. 23. What are financial statements? A) Records that show the employee salaries of a business. B) Statements that track the inventory of a business. C) Documents that outline the marketing strategies of a business. D) Reports that summarize the activities and financial performance of a business. Show Answer Correct Answer: D) Reports that summarize the activities and financial performance of a business. 24. What happens to the values of assets and liabilities in the balance sheet when financial statements are not adjusted for inflation? A) They appear inordinately high. B) They appear inordinately low. C) They remain unchanged. D) They become irrelevant. Show Answer Correct Answer: B) They appear inordinately low. 25. Examples may include salaries, utilities, rent, insurance, and office supplies. A) Revenue. B) Expense. C) Net Income. D) Net Loss. Show Answer Correct Answer: B) Expense. ← 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 3Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 4Class 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