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B Com Exam  >  B Com Tests  >  Test: Financial Statements - B Com MCQ

Test: Financial Statements - B Com MCQ


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10 Questions MCQ Test - Test: Financial Statements

Test: Financial Statements for B Com 2024 is part of B Com preparation. The Test: Financial Statements questions and answers have been prepared according to the B Com exam syllabus.The Test: Financial Statements MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Financial Statements below.
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Test: Financial Statements - Question 1
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Which of the following financial statements provides information about the financial position of a company at a specific date?

Detailed Solution for Test: Financial Statements - Question 1
The balance sheet, also known as the position statement, provides information about the assets, liabilities, and capital of a company at a specific date. It shows how the money is employed in the business and how the money has been made available to the business.
Test: Financial Statements - Question 2
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Which financial statement summarizes the cash available to finance the activities of an organization?

Detailed Solution for Test: Financial Statements - Question 2
The cash flow statement summarizes the cash receipts and payments classified according to the organization's major activities: operating activities, investing activities, and financing activities. It reports the net cash inflow or outflow for each activity and for the overall business, providing information about the cash available to finance the activities of an organization.
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Test: Financial Statements - Question 3
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Which financial statement indicates the extent of success achieved by a business in earning profit?

Detailed Solution for Test: Financial Statements - Question 3
The income statement, also known as the statement of profit and loss, shows the revenue, expenses, and resulting profit or loss of a business for a specific period of time. It indicates the extent of success achieved by a business in earning profit.
Test: Financial Statements - Question 4
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Which of the following is not one of the financial statements commonly prepared by a business enterprise?
Detailed Solution for Test: Financial Statements - Question 4
While the balance sheet, income statement, and cash flow statement are commonly prepared by a business enterprise, the statement of retained earnings is not always prepared. It provides information about the changes in the retained earnings of a company over a specific period of time.
Test: Financial Statements - Question 5
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Which of the following factor do not contribute to the preparation of financial statements?
Detailed Solution for Test: Financial Statements - Question 5

Financial statements are prepared using a mixture of recorded facts, accounting conventions, and postulates. However, personal judgments do not contribute to the preparation of financial statements. Here's why:
1. Recorded Facts- Recorded facts are the actual figures and data about a company's financial transactions. These include sales, purchases, income, expenses, assets, liabilities, and equity.
2. Accounting Conventions- The accounting conventions are the rules, standards, or guidelines that accountants follow when recording and summarizing transactions, and in the preparation of financial statements.
3. Postulates- Postulates are basic assumptions or fundamental propositions that are accepted without proof.
4. Personal Judgements- Personal judgements do not contribute to the preparation of financial statements. The reason being, financial statements are based on objective data (recorded facts) and established rules and principles (accounting conventions and postulates).


     
Test: Financial Statements - Question 6
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Which of the following refers to the assumptions made by accountants to implement conventional procedures?
Detailed Solution for Test: Financial Statements - Question 6
Accountants make various assumptions, known as postulates, to implement conventional procedures in the preparation of financial statements. These postulates include the assumption of a going concern, the monetary postulate, and the realization postulate, among others.
Test: Financial Statements - Question 7
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Which group of people are directly interested in the financial statements of a company?
Detailed Solution for Test: Financial Statements - Question 7
Suppliers and potential suppliers of funds, such as shareholders, debentureholders, employees, customers, and suppliers of goods and services on credit, are directly interested in the financial statements of a company. They use the information in these statements to assess the financial position and performance of the company.
Test: Financial Statements - Question 8
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Which objective of financial statements provides information about the earning potentials of a business?
Detailed Solution for Test: Financial Statements - Question 8
One of the objectives of financial statements is to provide financial information that assists in estimating the earning potentials of a business. This information helps shareholders, potential shareholders, and other interested parties to assess the profitability and future prospects of the business.
Test: Financial Statements - Question 9
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Which group of people are not indirectly interested in the financial statements of a company?
Detailed Solution for Test: Financial Statements - Question 9

Suppliers' Interest: Suppliers provide goods and services to a company. They are interested in a company's financial statements to assess the financial health of the company. This enables them to determine the company's ability to pay for the goods and services supplied.
Potential Suppliers of Funds' Interest: Potential suppliers of funds, such as investors or lenders, are also interested in a company's financial statements. These documents provide detailed information about the company's financial performance and position.


     
Test: Financial Statements - Question 10
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What is one of the limitations of financial statements?
Detailed Solution for Test: Financial Statements - Question 10
One of the limitations of financial statements is that they focus primarily on financial factors and may not provide information about non-financial factors that can have a significant impact on the operating results and financial conditions of a business. Factors such as public image, management caliber, and worker efficiency are not captured in financial statements.
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