Test: Financial Statements And Their Analysis - 2


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


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Attempt Test: Financial Statements And Their Analysis - 2 | 20 questions in 20 minutes | Mock test for Commerce preparation | Free important questions MCQ to study Accountancy Class 12 for Commerce Exam | Download free PDF with solutions
QUESTION: 1

Which of the following is a fixed intangible asset?

Solution:

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

QUESTION: 2

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

Solution:

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.

QUESTION: 3

Computer software is shown under the __________

Solution:

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

QUESTION: 4

Prepaid expenses are shown under____________

Solution:

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

QUESTION: 5

Work in progress is shown under____________

Solution:

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.

QUESTION: 6

Which of the following items appear in the Balance sheet

Solution:

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

QUESTION: 7

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

Solution:

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

QUESTION: 8

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

Solution:

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

QUESTION: 9

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

Solution:

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

QUESTION: 10

Who is interested in the analysis of financial statement?

Solution:

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

QUESTION: 11

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

Solution:

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

QUESTION: 12

Following are the limitations of financial analysis except

Solution:

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.

QUESTION: 13

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

Solution:

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

QUESTION: 14

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

Solution:

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

QUESTION: 15

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

Solution:

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

QUESTION: 16

Horizontal Analysis is:

Solution:

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

QUESTION: 17

Comparative Financial Statement is an example of

Solution:

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

QUESTION: 18

Interpretation of accounts is the 

Solution:
QUESTION: 19

Analysis conducted by the Investors and Creditors is known as:

Solution:

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

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

Solution:

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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