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Test: Financial Statements And Their Analysis - 2 - Commerce MCQ


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20 Questions MCQ Test Accountancy Class 12 - Test: Financial Statements And Their Analysis - 2

Test: Financial Statements And Their Analysis - 2 for Commerce 2024 is part of Accountancy Class 12 preparation. The Test: Financial Statements And Their Analysis - 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Financial Statements And Their Analysis - 2 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Financial Statements And Their Analysis - 2 below.
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Test: Financial Statements And Their Analysis - 2 - Question 1

Which of the following is a fixed intangible asset?

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 1

Titles and Mastheads are shown under the heading of Intangible assets.

Test: Financial Statements And Their Analysis - 2 - Question 2

Which section of the Companies Act requires that Balance Sheet is to be prepared in the prescribed form? 

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 2

1. Section 129 of companies act 2013, provides for preparation of financial statements. 
2. 2(40) to include balance sheet, profit and loss account/income and expenditure account, cash flow statement, statement of changes in equity and any explanatory note annexed to the above.

Test: Financial Statements And Their Analysis - 2 - Question 3

Computer software is shown under the __________

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 3

Computer software is an intangible asset. It shown under the heading of Fixed Assets and sub heading Intangible Assets.

Test: Financial Statements And Their Analysis - 2 - Question 4

Prepaid expenses are shown under____________

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 4

Prepaid expenses are those expenses which paid in advance by the firm. These expenses are shown under other current assets.

Test: Financial Statements And Their Analysis - 2 - Question 5

Work in progress is shown under____________

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 5

Work in progress is shown under the heading of current assets and sub heading Inventories. But capital work in progress is shown under the fixed assets.

Test: Financial Statements And Their Analysis - 2 - Question 6

Which of the following items appear in the Balance sheet

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 6

Stores and spares comes in balance sheet under the heading Inventories. Following items do not take place in Balance Sheet:
•Sales
•Purchase
•Expenses

Test: Financial Statements And Their Analysis - 2 - Question 7

Which of the following items appear in the Statement of Profit and Loss

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 7

Sales appear in the Statement of Profit and Loss and the following items are shown in the balance sheet:
•Creditors
•Goodwill 
•Trade Payables

Test: Financial Statements And Their Analysis - 2 - Question 8

The information available from the Analysis, serves which of the following sections

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 8

Information available from the analysis of financial statement will serve the following:
•Potential Investors
•Economist and Researchers 
•Stock Exchange

Test: Financial Statements And Their Analysis - 2 - Question 9

When analysis is made on the basis of Published statements, reports and information it is known as…..

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 9

When analysis is made on the basis of Published statements, reports and information it is known as External Analysis.

Test: Financial Statements And Their Analysis - 2 - Question 10

Who is interested in the analysis of financial statement?

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 10

Following parties are interested in the Financial statement analysis: 
Creditors
Government
Investors

Test: Financial Statements And Their Analysis - 2 - Question 11

The Real object of Analysis of Financial Statement is …………

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 11

The main objective of analysis of financial statement is to measure the financial strength of the firm.

Test: Financial Statements And Their Analysis - 2 - Question 12

Following are the limitations of financial analysis except

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 12

Following are the limitations of financial statement analysis: 
•Don't reflect changes in price level.
•Affected by the personal ability and bias of the Analyst
•Single years' Analysis of financial statement have limited use.

Test: Financial Statements And Their Analysis - 2 - Question 13

When single set of statements of two firms is compared, it is known as …….

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 13

When single set of statements of two firms is compared, it is known as Cross Sectional Analysis.

Test: Financial Statements And Their Analysis - 2 - Question 14

Analysis of Financial statements suffered from the limitation of window dressing which means….

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 14

Window dressing is the limitation of accounting which is directly concerned with: 
hide some vital information
show items at incorrect value to portray better profitability
may overvalue closing stock to show higher profits

Test: Financial Statements And Their Analysis - 2 - Question 15

Shareholders are interested in the analysis of financial statement because….

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 15

Shareholders are interested in the analysis of financial statement because they want to judge the present and future earning capacity of the business.

Test: Financial Statements And Their Analysis - 2 - Question 16

Horizontal Analysis is:

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 16

Horizontal analysis is a time series analysis because it shows comparison of financial data for several years.

Test: Financial Statements And Their Analysis - 2 - Question 17

Comparative Financial Statement is an example of

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 17

Comparative financial statement is an example of Horizontal analysis because it requires comparative financial statements of two or more accounting periods.

Test: Financial Statements And Their Analysis - 2 - Question 18

Interpretation of accounts is the 

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 18
Interpretation of accounts is the:
A: Art and science of translating the figures
- It involves analyzing and understanding the financial information presented in a company's accounts.
- It requires expertise in financial reporting standards, accounting principles, and financial analysis techniques.
- The goal is to accurately interpret the figures and present them in a meaningful way to stakeholders.
B: To know financial strengths and weaknesses of a business
- Interpreting accounts allows businesses to assess their financial health and identify areas of strength and weakness.
- It helps in understanding the profitability, liquidity, and solvency of a business.
- By analyzing the accounts, businesses can make informed decisions regarding investments, budgeting, and future growth strategies.
C: To know the causes for the prevailing performance of business
- Through interpretation of accounts, businesses can identify the factors that have influenced their financial performance.
- It helps in understanding the reasons behind changes in revenues, expenses, and profitability.
- By analyzing the accounts, businesses can assess the impact of various factors such as market conditions, competition, and internal operations on their performance.
D: All of the above
- Interpretation of accounts encompasses all the aspects mentioned above.
- It involves translating the figures, understanding financial strengths and weaknesses, and identifying the causes for the prevailing performance of a business.
- It is a comprehensive process that combines both the art and science of analyzing financial information.
Therefore, the correct answer is d. All of the above.
Test: Financial Statements And Their Analysis - 2 - Question 19

Analysis conducted by the Investors and Creditors is known as:

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 19

Analysis conducted by the Investors and Creditors is known as External Analysis because they both are treated as outsiders.

Test: Financial Statements And Their Analysis - 2 - Question 20

It is a point where total of sales is exactly equal to the total of cost to the total of cost of sales

Detailed Solution for Test: Financial Statements And Their Analysis - 2 - Question 20

Break-even point is a point where total of sales is exactly equal to the total of cost to the total of cost of sales.

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