This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 8 Analysis Of Financial Statements – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 3 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Each amount on a financial statement is compared with its corresponding amount on the previous statement A) Horizontal analysis. B) Vertical analysis. C) All the above. D) None of the above. Show Answer Correct Answer: A) Horizontal analysis. 2. If you want to know how a company is financed (that is, the capital structure), which of the following ratios is the LEAST useful? A) Leverage ratio. B) Debt-to-capital ratio. C) Debt-to-equity ratio. D) Interest coverage ratio. Show Answer Correct Answer: D) Interest coverage ratio. 3. Explain the purpose of the income statement. A) The income statement is used to calculate employee salaries. B) The income statement shows a company's financial performance over a specific period, typically a year, by detailing revenues, expenses, and profits. C) The income statement shows a company's social media engagement. D) The income statement details a company's physical assets. Show Answer Correct Answer: B) The income statement shows a company's financial performance over a specific period, typically a year, by detailing revenues, expenses, and profits. 4. Which of the following is not a measure of financial performance A) ROA. B) ROE. C) ROIC. D) ROP. Show Answer Correct Answer: D) ROP. 5. The industry comparisons of the entity's financial information with is as below except: A) Similar industry information. B) Anticipated results of the entity. C) At least-cost indicator for audit procedures. D) Comparable information for prior periods. Show Answer Correct Answer: C) At least-cost indicator for audit procedures. 6. Separation of business and owners is an entity concept A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 7. Discuss the importance of financial statement analysis for decision-making. A) Financial statement analysis is only useful for external stakeholders. B) Financial statement analysis helps stakeholders assess a company's financial health, performance, and risks, enabling informed decision-making. C) Financial statement analysis is irrelevant for decision-making. D) Financial statement analysis only focuses on historical data. Show Answer Correct Answer: B) Financial statement analysis helps stakeholders assess a company's financial health, performance, and risks, enabling informed decision-making. 8. A business has $ 10, 000 in opening inventory, $ 15, 000 in purchases, and $ 8, 000 in closing inventory. What is the cost of goods sold? A) $ 13, 000. B) $ 17, 000. C) $ 5, 000. D) $ 23, 000. Show Answer Correct Answer: B) $ 17, 000. 9. What is the value of return on equity A) 4.81%. B) 6.17%. C) 6.59%. D) 6.62%. Show Answer Correct Answer: D) 6.62%. 10. Balance sheet showes A) Profit and loss. B) Financial position. C) Errors of accounts. D) Total debtors. Show Answer Correct Answer: B) Financial position. 11. Common size statement cannot find out relationship between A) Sales and Capital employed. B) Sales and G.P. C) Expenses and Sales. D) Net profit and sales. Show Answer Correct Answer: A) Sales and Capital employed. 12. Currently, a company has bank loan with interest rate of 8%. Suppose the company did not use bank loan but used shareholder equity instead (while assets remain the same), which of the following statements is FALSE? A) Net profit margin with be higher. B) ROE will be lower. C) ROA will be lower. D) ROA will be higher. Show Answer Correct Answer: C) ROA will be lower. 13. Where do you find the ending balance for Retained Earnings? A) Worksheet. B) Income statement. C) Statement of retained earnings. D) Balance sheet. Show Answer Correct Answer: C) Statement of retained earnings. 14. If cost of goods sold is 150000 closing stock is 40000 opening stock is 60000 then calculate the amount of purchase A) 130000. B) 170000. C) 50000. D) None of these. Show Answer Correct Answer: A) 130000. 15. The Retained Earnings account always increases at the end of the fiscal period. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 16. To calculate the % operating expense on turnover; the formula is: A) Total Expenses / Total Turnover x 100%. B) Total Expenses / Owner's Equity x 100%. C) Operating Expenses / Sales x 100%. D) Operating Expenses / Owner's Equity x 100%. Show Answer Correct Answer: C) Operating Expenses / Sales x 100%. 17. If the operating cycle cannot be identified, it is assumed to be a period of A) 10 months. B) 11 months. C) 9 months. D) 12 months. Show Answer Correct Answer: D) 12 months. 18. Operating ratio best shows which relationship? A) Assets to equity. B) Expenses to sales. C) Liabilities to assets. D) Cash to receivables. Show Answer Correct Answer: B) Expenses to sales. 19. Furniture, equipment, land, buildings owned are all examples of: A) Intangible assets. B) Intellectual Property. C) Shareholders equity. D) Fixed assets. Show Answer Correct Answer: D) Fixed assets. 20. Choose the current assets from following A) Cash. B) Stock. C) Debtors. D) All of these. Show Answer Correct Answer: D) All of these. 21. State whether each of the following is True or FalseIn a Common size statement each item is expressed as a percentage of some common base. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 22. The rate at which the business needs to spend cash to cover overhead costs before beginning to generate a positive cash flow is called the A) Start-up rate. B) Overhead rate. C) Cash flow rate. D) Burn rate. Show Answer Correct Answer: D) Burn rate. 23. What is the value of gross profit margin? A) 71.23%. B) 69.47%. C) 68.52%. D) 75.49%. Show Answer Correct Answer: B) 69.47%. 24. Which ratio measures profit generated per dollar of sales? A) Debt ratio. B) Asset turnover. C) Quick ratio. D) Net profit ratio. Show Answer Correct Answer: D) Net profit ratio. 25. The analysis of increases and decreases in individual items in comparative financial statements is called: A) Vertical analysis. B) Solvency analysis. C) Profitability analysis. D) Horizontal analysis. Show Answer Correct Answer: D) Horizontal analysis. ← 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 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 10Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 11 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books