Analysis of Financial Statements solved MCQs

1 of 7
chapter:   Financial Statement of Corporate Organisations

1. Business finance includes........

a. procurement of funds and utilization of funds

B. management of funds

c. allocation

d. insurance

2. Funds are required for the..........

a. purchase of land & building

B. purchase of machinery

c. purchase of another fixed asset

d. all of the above

3. Which report gives a review on the profitability of a business?

a. statement of changes in equity

B. cash flow statement

c. balance sheet

d. income statement

4. The term ‘Financial Statement’ covers

a. profit & loss statement

B. balance sheet and profit & loss statement appropriation account

c. profit & loss statement and balance sheet

d. all of above are false

5. Which of the following is true about financial statements?
A) Financial statement gives a summary of accounts. B) Financial statements can be stated as
recorded facts.

a. only a

B. only b

c. both a and b

d. none of the above

6. P&L statement is also known as

a. statement of operations

B. statement of income

c. statement of earnings

d. all of the above

7. Which statement shows the flow of cash and cash equivalents during the financial period?

a. statement of changes in equity

B. cash flow statement

c. balance sheet

d. income statement

8. Subtracting all expenses from revenues yields?

a. net profit / net loss

B. carrying value

c. long term assets

d. net liabilities

9. Balance sheet of a company is required to be prepared in the format given in ………………………

a. schedule iii part ii

B. schedule iii part i

c. schedule iii part iii

d. table a

10. As per Companies Act, the Balance Sheet of a company is required to be presented in ………………………

a. horizontal form

B. vertical form

c. either horizontal or vertical form

d. neither of the above

11. Which of the following is not required to be prepared under the Companies Act?

a. statement of profit and loss

B. balance sheet

c. report of director’s and auditor’s

d. funds flow statement

12. According to prescribed order of assets in a Company’s Balance Sheet ……………………… assets shouldbe shown first of all.

a. non-current assets

B. current assets

c. current investments

d. loans and advances

13. Calls in Arrears appear in a Company’s Balance Sheet under ………………..

a. reserve & surplus

B. shareholder’s funds

c. contingent liabilities

d. short-term borrowings

14. Calls in advance appear in a Company’s Balance Sheet under ………………..

a. share capital

B. current liability

c. long-term borrowings

d. reserve & surplus

15. Bills Receivables appear in a Company’s Balance Sheet under the Sub-head ……………………..

a. current investments

B. cash equivalents

c. trade receivables

d. short term loans and advances

16. Which of the following options is not recorded in the Balance sheet?

a. cash

B. rent expenses

c. building

d. goodwill

17. Which of the given area is NOT addressed by Business Finance?

a. financing

B. investing

c. managing day today expenses

d. none of the given options

18. Which of the following is measured by profit margin?

a. operating efficiency

B. asset use efficiency

c. financial policy

d. dividend policy

19. Business Finance addresses which of the following?

a. capital budgeting

B. capital structure

c. working capital management

d. all of the given options

20. Finance is vital for which of the following business activity (activities)?

a. marketing research

B. product pricing

c. design of marketing and distribution channels

d. all of the given options

21. Which of the following refers to the difference between the sale price and cost of inventory?

a. net loss

B. net worth

c. markup

d. markdown

22. Who of the following make a broader use of accounting information?

a. accountants

B. financial analysts

c. auditors

d. marketers

23. Which of the following statement is considered as the accountant’s snapshot of firm’s accounting valueas of a particular date?

a. income statement

B. balance sheet

c. cash flow statement

d. retained earning statement

24. Balance Sheet is based upon which of the following formula?

a. assets = liabilities – stockholder’s equity

B. assets + liabilities = stockholder’s equity

c. assets + stockholder’s equity = liabilities

d. assets = liabilities + stockholder’s equity

25. The conflict of interest between stockholders and management is known as:

a. agency problem

B. interest conflict

c. management conflict

d. agency cost


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