This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 7 Financial Statements Of Companies – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 7 Financial Statements Of Companies Quiz 8 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Complete this statement with the best option:'The longer the cash-flow cycle ..... ' A) The less cash the business will need. B) The lower will be the firm's working capital needs. C) The less chance there is for the business to run out of cash. D) The more working capital and cash the business will need. Show Answer Correct Answer: D) The more working capital and cash the business will need. 2. Explain the difference between assets and liabilities as seen on a Balance Sheet. A) Assets are intangible, while liabilities are tangible. B) Assets and liabilities are the same thing. C) Assets are what a company owns, while liabilities are what a company owes. D) Assets are what a company owes, while liabilities are what a company owns. Show Answer Correct Answer: C) Assets are what a company owns, while liabilities are what a company owes. 3. If a company has more expenses than revenue for the period, it has a ..... A) Net Income. B) Net Loss. C) All the above. D) None of the above. Show Answer Correct Answer: B) Net Loss. 4. Securities premium account is shown on the liabilities side in the balance sheet under the heading of ..... A) Reserves and surplus. B) Current liabilities and provisions. C) Share capital. D) Contingent liabilities. Show Answer Correct Answer: A) Reserves and surplus. 5. Luna, Anika, and Aiden are learning about income statements. They want to know how to calculate the net income. Can you help them? A) Total revenues minus total expenses. B) Total revenues divided by total expenses. C) Total revenues plus total expenses. D) Total revenues multiplied by total expenses. Show Answer Correct Answer: A) Total revenues minus total expenses. 6. "Loose tools" appear in the company's Balance Sheet under the head/sun-head A) Inventory. B) Non current Assets. C) Other Current Assets. D) Stores and spare parts. Show Answer Correct Answer: A) Inventory. 7. Which of the following is the best definition of the going concern concept? A) The entity will continue in existence forever. B) The entity will continue to make profits for the foreseeable future. C) The entity will continue in operational existence for the foreseeable future. D) The entity will not incur losses in the next three years. Show Answer Correct Answer: C) The entity will continue in operational existence for the foreseeable future. 8. Beginning Capital-Drawing + Net Income =? A) Net Income. B) New Capital. C) Net Earnings. D) Total Assets. Show Answer Correct Answer: B) New Capital. 9. Securities Premium Reserve appears i Company's B/S under ..... A) Share Capital. B) Long Term Provisions. C) Short term provisions. D) Reserve & Surplus. Show Answer Correct Answer: D) Reserve & Surplus. 10. When preparing a 6-column worksheet and the balancing figure is placed on the credit side of the Income Statement column, the business has experienced a net income. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 11. Accounting documents that are created to show bankers, shareholders and other 3rd parties. A) Financial Accounting. B) Managerial Accounting. C) All the above. D) None of the above. Show Answer Correct Answer: A) Financial Accounting. 12. Expense on electricity at the place of sales A) Drawings. B) Distribution cost. C) Cost of Goods sold. D) Administrative cost. Show Answer Correct Answer: B) Distribution cost. 13. What does the Cash Flow Statement show about a company's financial health? A) It indicates the company's customer satisfaction levels. B) It provides insights into the company's liquidity, operating activities, investing activities, and financing activities. C) It shows the company's marketing strategies. D) It reveals the company's employee turnover rate. Show Answer Correct Answer: B) It provides insights into the company's liquidity, operating activities, investing activities, and financing activities. 14. What is the equation to calculate Gross profit? A) Sales revenue + Income-Expenses. B) (Sales revenue-Sales returns)-Cost of sales. C) (Sales revenue + Cost of sales)-Sales returns. D) (Sales revenue + Sales returns)-Cost of sales. Show Answer Correct Answer: B) (Sales revenue-Sales returns)-Cost of sales. 15. Profit for the year = Gross profit plus Other income minus ..... A) Assets. B) Liabilities. C) Expenses. D) Revenue. Show Answer Correct Answer: C) Expenses. 16. A statement of financial position shows the ..... of the business at a certain date. A) Assets and Liabilities. B) Revenue and Expenses. C) Only Capital. D) Only Assets. Show Answer Correct Answer: A) Assets and Liabilities. 17. Expense for increasing sales A) Accountants fees. B) Interest on loans. C) Office wages. D) Advertising. Show Answer Correct Answer: D) Advertising. 18. Directors of a limited company are under an obligation to? A) Send financial statements to employees. B) Send the summary of the financial statements to all shareholders. C) File copies of the financial statements with the registrar of companies. D) Produce financial statements which are correct in all respects. Show Answer Correct Answer: D) Produce financial statements which are correct in all respects. 19. Change in Inventories means A) Difference between Opening Inventories and Closing Inventories. B) Difference between Closing Inventories and Opening Inventories. C) Difference between Opening Inventories and Closing Inventories, if Opening Inventories are higher. D) Difference between Closing Inventories and Opening Inventories, if Closing Inventories are higher. Show Answer Correct Answer: A) Difference between Opening Inventories and Closing Inventories. 20. What is the difference between non-current assets and current assets? A) NCA provide benefits that are used within one financial period but CA provide benefits that last beyond one financial period. B) NCA provide benefits that last beyond one financial period but CA provide benefits that are used within one financial period. C) NCA are easily converted to cash but CA are not easily converted to cash easily. D) NCA are not loans but CA are loans. Show Answer Correct Answer: B) NCA provide benefits that last beyond one financial period but CA provide benefits that are used within one financial period. 21. Would you prefer a Savings Account with? A) A higher interest rate. B) A lower interest rate. C) All the above. D) None of the above. Show Answer Correct Answer: A) A higher interest rate. 22. Cash= 1000, Bank = 2000, Accounts payable = 1500 and loans = 1000. What is the value of assets? A) 3000. B) 2500. C) 1550. D) 4500. Show Answer Correct Answer: A) 3000. 23. Which of the following should be disclosed in a summary of significant accounting policies? A) Basis of consolidation. B) Concentration of credit risk of financial instruments. C) Composition of plant assets. D) Adequacy of pension plan assets in relation to vested benefits. Show Answer Correct Answer: A) Basis of consolidation. 24. Noah, Aria, and Abigail are playing a trivia game about financial statements. They come across a question:What is the purpose of the income statement? A) To determine the company's market share. B) To calculate the company's total assets and liabilities. C) To provide a summary of a company's financial performance over a specific period of time. D) To forecast future sales and revenue. Show Answer Correct Answer: C) To provide a summary of a company's financial performance over a specific period of time. 25. This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners of the company are entitled to. A) Income Statement. B) Balance Sheet. C) All the above. D) None of the above. Show Answer Correct Answer: B) Balance Sheet. ← 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 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 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