This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Accountancy Chapter 8 Analysis Of Financial Statements – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Accountancy Chapter 8 Analysis Of Financial Statements Quiz 7 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Money market securities have which of the following characteristics? A) Short maturity, low risk, low liquidity. B) Low default risk, low liquidity, low return. C) High return, high liquidity, low risk. D) High liquidity, low risk, low return. E) Long maturity, low risk, high return. Show Answer Correct Answer: D) High liquidity, low risk, low return. 2. ..... is reported on the income statement A) Net income or net loss. B) A profitability ratio. C) A financial statement. D) Net Worth. Show Answer Correct Answer: A) Net income or net loss. 3. How can discrepancies in profit and cash flow raise concerns? A) Reflects high employee satisfaction. B) Suggests a decrease in market demand. C) Shows strong financial health. D) Indicates potential financial discrepancies. Show Answer Correct Answer: D) Indicates potential financial discrepancies. 4. Prepaid expenses are shown in- A) Liability side. B) Asset side. C) Assets or Liability side. D) None of these. Show Answer Correct Answer: B) Asset side. 5. Depreciation for current year in the trial balance is shown in A) Debit side of profit and loss account and it is deducted from the particular asset in the balance sheet. B) Asset side of balance sheet as a deduction from the concerned asset. C) Debit side of p and L account. D) Debit side of trading account. Show Answer Correct Answer: A) Debit side of profit and loss account and it is deducted from the particular asset in the balance sheet. 6. What does a high P/E ratio indicate? A) The stock is undervalued. B) The stock is overvalued. C) The stock has limited growth potential. D) The stock is expected to grow quickly. Show Answer Correct Answer: D) The stock is expected to grow quickly. 7. For a transportation firm, which ratio gives a measure of the source of funds with which property is obtained? A) Long-term debt to operating property. B) Operating. C) Operating revenue to operating property. D) Per mile-per person-per ton. E) Return on equity. Show Answer Correct Answer: A) Long-term debt to operating property. 8. What does a positive cash flow from operating activities indicate in a Cash Flow Statement? A) The business is investing heavily in long-term assets. B) The business has sold a significant portion of its assets. C) The business is efficiently generating more cash than it spends on its operations. D) The business is borrowing more money than it is repaying.TagsDOK Level 2:Skill/Concept. Show Answer Correct Answer: C) The business is efficiently generating more cash than it spends on its operations. 9. In a Balance sheet, Total Assets are Rs. 15 lakh and Total Outside Liabilities are Rs.10 lakh. what could be the owner's capital? A) Rs. 25 Lakh. B) Rs. 5 Lakh. C) Rs. 7.50 Lakh. D) Rs. 10 Lakh. Show Answer Correct Answer: B) Rs. 5 Lakh. 10. Investing Activities include sources and uses of cash from the company's: A) Purchasing of property, equipment and other assets. B) Long term investments. C) Sale of outdated equipment to make room for new. D) All answers are correct. Show Answer Correct Answer: D) All answers are correct. 11. The income statement consists of Operating Activities, Financing Activities, and Investment activities. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 12. The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the: A) Inventory period. B) Operating cycle. C) Accounts receivable period. D) Accounts payable period. E) Cash cycle. Show Answer Correct Answer: B) Operating cycle. 13. What is the purpose of the cash flow statement? A) To track non-cash expenses. B) To record sales transactions. C) To monitor actual cash transactions. D) To project future earnings. Show Answer Correct Answer: C) To monitor actual cash transactions. 14. Closing stock if given outside the trial balance is shown in A) Trading account and balance sheet. B) Profit and loss account. C) Profit and loss account and balance sheet. D) Balance sheet. Show Answer Correct Answer: A) Trading account and balance sheet. 15. Depreciation is necessary to calculate: A) Net profit correct. B) Net financial position. C) Tax. D) None of them. Show Answer Correct Answer: A) Net profit correct. 16. Common size statement expresses each monetary item of Financial Statements as a percentage. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 17. TokTik has a Debt to Equity of 50. What does this financial measure tell you about TokTik? A) TokTik has a difference of $ 50 per share between their debt and equity. B) TokTik has $ 50 of debt for every $ 1 of a shareholder's equity. C) TokTik is 50 times more likely to pay off its long-term debt. D) Every $ 50 of a shareholder's equity is worth $ 1 of debt. Show Answer Correct Answer: B) TokTik has $ 50 of debt for every $ 1 of a shareholder's equity. 18. Which analysis is considered as dynamic: A) Horizontal Analysis. B) Vertical Analysis. C) Internal Analysis. D) External Analysis. Show Answer Correct Answer: A) Horizontal Analysis. 19. What does a low share price indicate about a stock? A) The stock is undervalued. B) The stock is overvalued. C) The stock has limited growth potential. D) The stock is expected to grow quickly. Show Answer Correct Answer: C) The stock has limited growth potential. 20. If a business has sales revenue of $ 100, 000, cost of goods sold of $ 60, 000, and office expenses of $ 20, 000, what is the net profit? A) $ 20, 000. B) $ 40, 000. C) $ 60, 000. D) $ 80, 000. Show Answer Correct Answer: A) $ 20, 000. 21. ..... are the methods of preparation of comparative statement A) Internal/External %. B) Direct / Indirect %. C) Increase / Decrease %. D) None of the above. Show Answer Correct Answer: C) Increase / Decrease %. 22. What is the primary purpose of analyzing a company's financial statements? A) To decide on hiring practices. B) To design marketing strategies. C) To determine investment viability. D) To prepare for tax season. Show Answer Correct Answer: C) To determine investment viability. 23. Trading and profit and loss account is prepared A) For particular period. B) On particular date. C) For whole year. D) None of these. Show Answer Correct Answer: A) For particular period. 24. Which of the following is not a long-term asset? A) Building. B) Equipment. C) Machinery. D) Accounts receivable. Show Answer Correct Answer: D) Accounts receivable. 25. In an income statement, subtracting the cost of goods sold from the net sales provides the A) Revenue. B) Net operating income. C) Gross profit. D) Net income. Show Answer Correct Answer: C) Gross profit. ← 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 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