This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 8 Analysis Of Financial Statements – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 11 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Fixed Assets Coverage Ratio (FACR) indicates ..... A) Total fixed assets that are created in the business. B) Total fixed assets in relation to current assets. C) Number of times the value of net fixed assets covers term liabilities. D) Number of times the gross block covers term liabilities. Show Answer Correct Answer: C) Number of times the value of net fixed assets covers term liabilities. 2. What is the value of quick ratio A) 75.41%. B) 81.27%. C) 76.59%. D) 68.95%. Show Answer Correct Answer: C) 76.59%. 3. What does the price-earnings (P/E) ratio indicate about a company's stock? A) It indicates the company's total revenue. B) It indicates the company's market share. C) It indicates the company's number of employees. D) It indicates the price of a company's stock relative to its earnings per share. Show Answer Correct Answer: D) It indicates the price of a company's stock relative to its earnings per share. 4. A balance sheet reports: A) A company's cash position and assets. B) A company's profit, loss and expenses. C) A company's assets on one side, and liabilities, and shareholder equity on the other. D) None of the answers are correct. Show Answer Correct Answer: C) A company's assets on one side, and liabilities, and shareholder equity on the other. 5. As an investor, you would typically want ROE (return on equity) to be ..... A) Lower than competitors. B) Higher than competitors. C) Greater than beta. D) Zero. Show Answer Correct Answer: B) Higher than competitors. 6. Who uses financial statements to assess creditworthiness and the strength of a company's operations? A) Government agencies. B) Accountants. C) Lenders. D) All of the above. Show Answer Correct Answer: C) Lenders. 7. In common size income statement thev basis is ..... A) Total Cost. B) N.P. C) G.P. D) Sales. Show Answer Correct Answer: D) Sales. 8. During the current financial year, an advertising campaign was launched for R15 000. The sales were R400 000 in 2021 and R490 000 in 2022. Was the campaign successful? (3 marks) A) Yes, because sales increased. B) No, because sales didn't increase alot. C) Yes, it was successful, because sales increased by R90 000 (22, 5%) and the advertising campaign only cost R15 000. D) No, it was not successful, because the sales only increased by 22, 5%. Show Answer Correct Answer: C) Yes, it was successful, because sales increased by R90 000 (22, 5%) and the advertising campaign only cost R15 000. 9. Which of the following best represents the formula for calculating Gross Profit? A) Revenue-Expenses. B) Revenue-Purchases. C) Revenue-Cost of Goods Sold (COGS). D) Revenue-Net Profit. Show Answer Correct Answer: C) Revenue-Cost of Goods Sold (COGS). 10. What is the value of debt ratio A) 25.19%. B) 28.61%. C) 26.46%. D) 27.17%. Show Answer Correct Answer: C) 26.46%. 11. What is working equity? A) Money owed to a business by debtors. B) Money that is tied up in investments or property. C) Money that a business can access immediately. D) None of the above. Show Answer Correct Answer: C) Money that a business can access immediately. 12. The two major sections on an income statement are ..... A) Revenue and expenses. B) Assets and liabilities. C) Assets and expenses. D) Cash flow and revenue. Show Answer Correct Answer: A) Revenue and expenses. 13. To determine whether the business will be able to meet their long-term obligations, we can use the: A) Solvency ratio. B) Liquidity ratio. C) Return on owner's equity. D) Profitability ratio. Show Answer Correct Answer: A) Solvency ratio. 14. Which statement best describes organizational performance in this context? A) Chart of accounts by department. B) Result of all activities that generate revenue. C) List of obligations due within one year. D) Set of procedures for journal entries. Show Answer Correct Answer: B) Result of all activities that generate revenue. 15. Indirect expenses are transferred to A) Trading account. B) Profit and loss account. C) Balance sheet. D) None of the above. Show Answer Correct Answer: B) Profit and loss account. 16. What is the purpose of financial statement analysis? A) Record every daily transaction detail. B) Review statements to analyze performance. C) Eliminate the need for audits entirely. D) Replace managerial judgment with ratios. Show Answer Correct Answer: B) Review statements to analyze performance. 17. Which financial statement would you analyze to assess a company's profitability over a specific period? A) Balance Sheet. B) Income Statement. C) Cash Flow Statement. D) Equity Statement. Show Answer Correct Answer: B) Income Statement. 18. Why is it important for investors to analyze financial statements? A) To determine the company's employee satisfaction levels. B) To predict the company's future stock price. C) To understand the financial health, performance, and risks of a company. D) To learn about the company's marketing strategies. Show Answer Correct Answer: C) To understand the financial health, performance, and risks of a company. 19. A Cash Flow Statement includes: A) Operating Activities. B) Investing Activities. C) Financing Activities. D) All answers are correct. Show Answer Correct Answer: D) All answers are correct. 20. In common size vertical balance sheet the basis is ..... A) Capital Employed. B) Total Assets. C) Total Liabilities. D) Proprietor's Funds. Show Answer Correct Answer: A) Capital Employed. 21. Performance over two years can be understood from ..... A) Income Statement. B) Balance Sheet. C) Comparative Income Statement. D) Common Size Statement. Show Answer Correct Answer: C) Comparative Income Statement. 22. The financial statements of a business enterprise include: ..... A) Balance sheet. B) Statement of Profit and loss. C) Cash flow statement. D) All the above. Show Answer Correct Answer: D) All the above. 23. If a company has a profit margin of 15% and a net income of $ 500, 000, what is its total revenue? A) $ 750, 000.00. B) $ 2, 000, 000.00. C) $ 3, 333, 333.33. D) $ 1, 000, 000.00. Show Answer Correct Answer: C) $ 3, 333, 333.33. 24. Which of the following is the effect of having long cash conversion cycle? A) Better net profit margin for products/services. B) Greater credibility from the perspective of suppliers. C) More retained earnings in the long-run. D) More reliance on external finance to support growth. Show Answer Correct Answer: D) More reliance on external finance to support growth. 25. Explain the concept of 'double-entry accounting'. A) Double-entry accounting involves recording only debit transactions. B) Double-entry accounting requires only one entry for each transaction. C) Double-entry accounting does not involve balancing the accounting equation. D) Double-entry accounting involves recording a debit entry and a credit entry for each transaction to maintain the balance of the accounting equation. Show Answer Correct Answer: D) Double-entry accounting involves recording a debit entry and a credit entry for each transaction to maintain the balance of the accounting equation. ← PreviousNext →Related 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 4Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 5Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 6Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 7Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 8Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 9Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books