# Test: Tools Of Financial Analysis - 2

## 20 Questions MCQ Test Accountancy Class 12 | Test: Tools Of Financial Analysis - 2

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Attempt Test: Tools Of Financial 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

Solution:
QUESTION: 2

### Accounting Ratio is

Solution:

Accounting Ratio is also called financial ratios provide a way of expressing the relationship between one accounting data point and another which is intended to provide a useful comparison.

QUESTION: 3

### Financial statement analysis is of two types i.e. _________

Solution:

Financial statement analysis is of two types i.e. External and internal analysis. External analysis is concerned with comparing business with other firm.

QUESTION: 4

External analysis is concerned with __________

Solution:

External analysis is concerned with:
Creditors
Government
Financial Institutions

QUESTION: 5

Which of the following is not a Quick Asset_______

Solution:

Following are the quick assets except Loose Tools:
Cheques in hand
Bank Balance

QUESTION: 6

Common Size financial statement is ---------------

Solution:

Common Size financial statement is Vertical Analysis of financial statements. It involves amount of each individual item of balance sheet and statement of profit and loss.

QUESTION: 7

Accounting Ratio is

Solution:

Accounting Ratio is arithmetical relationship between two accounting variable. It is a mathematical expression of accounting figures in the form of percentage and time.

QUESTION: 8

_____A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements

Solution:

Ratio Analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements.

QUESTION: 9

Accounting Ratios can be expressed in ….

Solution:

Accounting Ratios can be expressed in:
•Percentage
•Fraction
•Times

QUESTION: 10

If we deduct current liabilities from current assets, we get_________

Solution:

Formula of Calculating Working Capital: Working Capital = Current Assets – Current Liabilities

QUESTION: 11

Which Ratio shows the relationship between current assets with current liabilities

Solution:

Current Ratio shows relationship between current assets and current liabilities.

QUESTION: 12

Ideal Liquid ratio is

Solution:

Ideal liquid ratio is 1:1 i.e. Liquid assets should be equal to the current liabilities. In other words, a firm is able to pay its current liabilities.

QUESTION: 13

Which of the following is a liquidity ratio?

Solution:

Quick Ratio is also known as liquid ratio. Formula: Liquid Assets/ Current Liabilities

QUESTION: 14

The formula of Debt equity ratio is -------

Solution:

Formula of Debt Equity Ratio is:
Formula: Debt/Equity
Debt means long term borrowings and Equity means shareholders’ funds.

QUESTION: 15

Followings are the solvency ratio except

Solution:

Following ratios are solvency ratios except Quick ratio:
Proprietary Ratio
Total Assets to Debt Ratio
Debt equity ratio

QUESTION: 16

Followings are the solvency ratio except

Solution:

Following ratios are solvency ratios except Quick ratio:
Proprietary Ratio
Total Assets to Debt Ratio
Debt equity ratio

QUESTION: 17

Which of the following is not included in quick assets

Solution:

Quick assets do not include inventories. Stores and spares is the part of inventories.

QUESTION: 18

The main purpose of activities ratios is --------

Solution:

Activity ratio is always known as performance or turnover ratio. The main purpose of this ratio is to know that how effectively the resources have been used.

QUESTION: 19

INVENTORY TURNOVER RATIO is also called as

Solution:

Inventory turnover ratio is also known as stock turnover ratio. Inventory is wider term whereas stock is a narrow term.

QUESTION: 20

Which of the following is not part of shareholders’ funds?

Solution:

Following items are part of shareholders’ funds except Proposed Dividend:
Share Capital
General Reserve
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