Ques. Which analysis is based only on one year’s data :

(A) Cash Flow Statement

(B) Dividend Analysis

(C) Vertical Analysis

(D) Horizontal Analysis

Answer: C

Ques. Main limitation of analysis of financial statements is

(A) Affected by window dressing

(B) Difficulty in forecasting

(C) Do not reflect changes in price level

(D) All of the Above

 Answer: D

Ques.  Which of the following is not a limitation of analysis of financial statements?

(A) Affected by personal bias

(B) To know the financial strength

(C) Lack of Qualitative Analysis

(D) Based on accounting concepts

Answer: B

Ques. For whom analysis of financial statements is not significant?

(A) Political Adviser of Prime Minister

(B) Investors

(C) Management

(D) Financial Institutions

Answer: A

Ques. Which technique of financial analysis shows a comparative study of items or components of financial statements for two or more years?

(a) Common-size Statement

(b) Ratio Analysis

(c) Comparative Statement

(d) Trend Analysis

 Answer: C

Ques. Which one of the following is tool of financial analysis?

(a) Comparative Statements

(b) Common-size Statements

(c) Cash Flow Statement

(d) All of these

Answer: D

Ques. In the Balance Sheet of a Common Size Statement:

(A) Figure of share capital is assumed to be 100

(B) Figure of current liabilities is assumed to be 100

(C) Figure of fixed assets is assumed to be 100

(D) Figure of total assets is assumed to be 100

 Answer: D

Ques. Total assets of a firm are Rs.20,00,000 and its fixed assets are Rs.8,00,000. What will be the percentage of fixed assets on total assets?

(A) 60%

(B) 40%

(C) 29%

(D) 71%

 Answer: B

Ques. If total assets of a firm are Rs. 8,20,000 and its fixed assets are Rs.5,90,400, what will be the percentage of current assets on total assets?

(A) 42%

(B) 58%

(C) 28%

(D) 72%

Answer: C

Ques. Fixed Assets of a company increased from Rs.3,00,000 to Rs.4,00,000. What the percentage of change?

(A) 25%

(B) 33.3%

(C) 20%

(D) 40%

 Answer: B

Ques. A Company’s current liabilities decreased from Rs.4,00,000 to Rs.3,00,000. What is the percentage of change?

(A) 25%

(B) 33.3%

(C) 20%

(D) 40%

 Answer: A

Ques. A company’s working capital is Rs. 10 lakh (Negative balance) in the year 2018. It became Rs.15 lakh (Positive balance) in the year 2019. What is the percentage of change?

(A) 150%

(B) 100%

(C) 250%

(D) 50%

Answer: C

Ques. Comparative Statements show the changes in

(a) Percentages.

(b) Absolute amounts,

(c) Both (a) and (b).

(d) Ratios.

 Answer: C

Ques. From financial statement analysis, the creditors are interested to know

(a) Liquidity.

(b) Profit.

(c) Efficiencies.

(d) Share capital.

Answer: A

Ques. Which of the following is the objective of comparative Statements?

(A) To make the data simpler and understandable

(B) To indicate the trend

(C) To help in forecasting

(D) All of the Above

 Answer: D

Ques. Which of the following is device of comparative statements?

(A) Comparison expressed in terms of absolute data

(B) Comparison expressed in terms of percentages

(C) Comparison expressed in terms of ratios

(D) All of the Above

 Answer: D

Ques. Comparative Balance Sheet:

(A) Provides a summarized view of the operations of the firm

(B) Presents the financial position of the firm

(C) Presents the change in various items of balance sheet

(D) None of the above

Answer: C

Ques. Revenue from Operations Rs.4,00,000; Cost of Revenue from Operations 60% of Revenue from Operations, indirect expenses 15% of Gross Profit; Income Tax 40%. Calculate net profit after tax

(A) Rs.64,000

(B) Rs. 54,400

(C) Rs.81,600

(D) Rs.96,000

Answer: C

Ques. In comparative statements change in different items is presented in the form of …………….

(A) Money Values

(B) Percentages

(C) Both Money Values and Percentages

(D) None of the above

 Answer: C

Ques. Which of the following is not a form of presenting financial analysis :

(A) Absolute figure Comparison

(B) Ratio Method

(C) Cumulative figures and averages

(D) Annual Report

Answer: D

Ques. Main objective of Common Size Balance Sheet is :

(A) To establish relationship between revenue from operations and other items of statement of profit & loss

(B) To present changes in assets and liabilities

(C) To present changes in various items of income and expenses

(D) All of the Above

Answer: B

Ques. In the Statement of Profit & Loss of a Common Size Statement:

(A) Figure of net revenue from operations is assumed to be equal to 100

(B) Figure of gross profit is assumed to be equal to 100

(C) Figure of net profit is assumed to be equal to 100

(D) Figure of assets is assumed to be equal to 100

Answer: A

Ques. ‘No profit no loss’ point is called :

(A) Fund Flow Point

(B) Cash Flow Point

(C) Trend Analysis

(D) Break Even Point

 Answer: D

Ques. Net profit is obtained by deducting ……………. from Gross Profit.

(A) Operating Expenses

(B) Non-Operating Exp.

(C) Operating and Non-Operating Exp.

(D) None of the Above

 Answer: C

Question: When financial statements of several years are analysed, it is termed as

• a) Vertical analysis
• b) Horizontal analysis
• c) Current ratios
• d) None of the options

Answer: Vertical analysis

Question: Comparative Financial Statement is a tool of

• a) Financial analysis
• b) Profit analysis
• c) Loss Analysis
• d) None of the options

Answer: Financial analysis

Question: Common-Size Statement is also known as

• a) Hundred Percent Statement
• b) External analysis statement
• c) Hundred Percent Statement and External analysis statement
• d) None of the options

Answer: Hundred Percent Statement

Question: Common-Size Statement is the statement in which amounts of individual items of balance sheet convert into

• a) Percentage
• b) Profit
• c) Loss
• d) None of the options

Answer: Percentage

Question: Heterogeneous cash flows can be made comparable by

• a) Discounting technique and Compounding technique
• b) Discounting technique
• c) Compounding technique
• d) None of the options

Answer: Discounting technique and Compounding technique

Question: When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

• a) Accounting ratio
• b) Financial ratio
• c) Costing ratio
• d) None of the options

Answer: Accounting ratio

Question: The relationship between two financial variables can be expressed in:

• a) Either of These
• b) Pure ratio
• c) Percentage
• d) Rate or time

Answer: Either of These

Question: Liquidity ratios are expressed in

• a) Pure ratio form
• b) Percentage
• c) Pure ratio form and Percentage
• d) None of the options

Answer: Pure ratio form

Question: Ratio analysis is useful in

• a) Financial analysis
• b) Profit Analysis
• c) Loss Analysis
• d) None of the options

Answer: Financial analysis

Question: Ratio Analysis is helpful for

• a) All of the options
• b) Financial planning
• c) Forecasting
• d) Financial analysis

Answer: All of the options

Question: Profit for the objective of calculating a ratio may be taken as

• a) All of the options
• b) Profit before tax but after interest
• c) Profit before interest and tax
• d) Profit after interest and tax

Answer: All of the options

Question: Which of the following are limitations of ratio analysis?

• a) All of the options
• b) Ratio analysis may result in false results if variations in price levels are not considered
• c) Ratio analysis ignores qualitative factors
• d) Ratio Analysis is historical analysis

Answer: All of the options

Question: High price to earning ratio shows companys

• a) High growth prospect
• b) Low growth prospect
• c) Low dividends paid
• d) All of the options

Answer: High growth prospect

Question: What financial statement lists assets from current to long term?

• a) Balance Sheet
• b) Cash Flow statement
• c) Balance Sheet and Cash Flow statement
• d) All of the options

Answer: Balance Sheet

Question: What balance sheet formal is vertical?

• a) Report
• b) Standard
• c) Account
• d) None of the options

Answer: Report

Question: Net income equals

• a) Total Revenue – Total Expenses
• b) Total Revenue + Total Expenses
• c) Total Revenue – Total Expenses and Total Revenue + Total Expenses
• d) None of the options

Answer: Total Revenue – Total Expenses

Question: Total assets divided common equity is a formula uses for calculating

• a) Equity multiplier
• b) Graphical multiplier
• c) Turnover multiplier
• d) None of the options

Answer: Equity multiplier

Question: What financial ratio helps management evaluate profits available for dividends?

• a) Retention Rate
• b) Cash Ratio
• c) Debt Ratio
• d) All of the options

Answer: Retention Rate

Question: Bring out the importance of Financial Analysis

• a) All of the options
• b) Helps in evaluating the profit earning capacity and financial feasibility of a business
• c) Helps in evaluating the profit earning capacity and financial feasibility of a business
• d) Helps in evaluating the relative financial status of a firm comparison to other competitive firms

Answer: All of the options

Question: Net Reserve and Surplus means total of all reserves less

• a) Miscellaneous Expenditure
• b) Office Expense
• c) Direct expenses
• d) All of the options

Answer: Miscellaneous Expenditure