MCQ Questions for Class 12 Accountancy Chapter 9 Analysis of Financial Statements with Answers

Question 1.
Interpretation of Financial Statements includes:
(a) Criticisms and Analysis
(b) Comparison and Trend Study
(c) Drawing Conclusion
(d) All the above

Answer

Answer: (d) All the above


Question 2.
Horizontal Analysis is also known as :
(a) Dynamic Analysis
(b) Structural Analysis
(c) Static Analysis
(d) None of these

Answer

Answer: (a) Dynamic Analysis


Question 3.
Vertical Analysis is also known as :
(a) Static Analysis
(b) Dynamic Analysis
(c) Structural Analysis
(d) None of these

Answer

Answer: (a) Static Analysis


Question 4.
Comparative Statements are also known as :
(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis

Answer

Answer: (b) Horizontal Analysis


Question 5.
Common-size Statement are also known as:
(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis

Answer

Answer: (c) Vertical Analysis


Question 6.
The most commonly used tools for financial analysis are:
(a) Comparative Statements
(b) Common-size Statement
(c) Accounting Ratios
(d) All the above

Answer

Answer: (d) All the above


Question 7.
The analysis of financial statement by a shareholder is an example of:
(a) External Analysis
(b) Internal Analysis
(c) Vertical Analysis
(d) Horizontal Analysis

Answer

Answer: (a) External Analysis


Question 8.
For calculating trend percentages any year is selected as:
(a) Current year
(b) Previous year
(c) Base year
(d) None of these

Answer

Answer: (c) Base year


Question 9.
Tools for comparison of financial statements are :
(a) Comparative Balance Sheet
(b) Comparative Income Statement
(c) Common-size Statement
(d) All the above

Answer

Answer: (d) All the above


Question 10.
Trend ratios and trend percentage are used in :
(a) Dynamic analysis
(b) Static analysis
(c) Horizontal analysis
(d) Vertical Analysis

Answer

Answer: (c) Horizontal analysis


Question 11.
Comparative Financial Statements show:
(a) Financial position of a concern
(b) Earning capacity of a concern
(c) Both of them
(d) None of these

Answer

Answer: (c) Both of them


Question 12.
Comparative financial analysis process shows the comparison between the items of which statement:
(a) Balance Sheet
(b) Profit & Loss Statement
(c) (a) and (b) both
(d) None of these

Answer

Answer: (c) (a) and (b) both


Question 13.
Which of these are not the method of financial statement analysis ?
(a) Ratio Analysis
(b) Comparative Analysis
(c) Trend Analysis
(d) Capitalisation Method

Answer

Answer: (d) Capitalisation Method


Question 14.
Common-size financial statements are mostly prepared:
(a) In proportion
(b) In percentage
(c) (a) and (b) both
(d) None of these

Answer

Answer: (b) In percentage


Question 15.
Tangible assets of company increased from T 4,00,000 to T 5,00,000. What is the percentage of change ?
(a) 20%
(b) 25%
(c) 33%
(d) 50%

Answer

Answer: (b) 25%


Question 16.
A company’s shareholders fund was 7 8,00,000 in the year 2015. It because 7 12,00,000 in the year 2016. What is percentage of change ?
(a) 100%
(b) 25%
(c) 50%
(d) 33.3%

Answer

Answer: (c) 50%


Question 17.
A company’s net sales are ₹ 15,00,000; cost of sales is ₹ 10,00,000 and indirect expenses are ₹ 3,00,000, the amount gross profit will be:
(a) ₹ 13,00,000
(b) ₹ 5,00,000
(c) ₹ 2,00,000
(d) ₹ 12,00,000

Answer

Answer: (c) ₹ 2,00,000


Question 18.
Sales less Cost of goods sold is called :
(a) Operating Profit
(b) Gross Profit
(c) Net Profit
(d) Total Profit

Answer

Answer: (b) Gross Profit


Question 19.
If total assets of a firm are 7 12,00,000 and its non of non-current assets to total assets ?
(a) 50%
(b) 75%
(c) 25%
(d) 80%

Answer

Answer: (b) 75%


Question 20.
If total assets of a firm are 7 10,00,000 and its non-current assets are 7 6,00,000, what will be the percentage of current assets on total assets ?
(a) 60%
(b) 50%
(c) 40%
(d) 30%

Answer

Answer: (c) 40%


Question 21.
In a common-size Balance Sheet, total equity and liabilities are assumed to be equal to :
(a) 1,000
(b) 100
(c) 10
(d) 1

Answer

Answer: (b) 100


Question 22.
Break-even point refers to that point where :
(a) Total Costs are more than Total Sales
(b) Total Costs are less than Total Sales
(c) Total Costs are half of the Total Sales
(d) Total Cost are equal to total sales

Answer

Answer: (d) Total Cost are equal to total sales


Question 23.
Payment of Income Tax is considered as :
(a) Direct Expenses
(b) Indirect Expenses
(c) Operating Expenses
(d) None of these

Answer

Answer: (b) Indirect Expenses


Question 24.
Vertical Analysis is also known as :
(a) Fluctuation Analysis
(b) Static Analysis
(c) Horizontal Analysis
(d) None of these

Answer

Answer: (b) Static Analysis


Question 25.
Financial analysis is useful:
(a) For Investors
(b) For Shareholders
(c) For Debenture holders
(d) All the above

Answer

Answer: (d) All the above


Question 26.
Analysis of financial statements involve :
(a) Trading A/c
(b) Profit & Loss statement
(c) Balance Sheet
(d) All the above

Answer

Answer: (d) All the above


Question 27.
Financial analysis is significant because it:
(a) Ignores qualitative aspect
(b) Judges operational efficiency
(c) Suffers from the limitations of financial statements
(d) It is affected by personal ability and bias of the analysis

Answer

Answer: (b) Judges operational efficiency


Question 28.
What is shown by the Income Statement ?
(a) Accuracy of books of accounts
(b) Profit or loss of a certain period
(c) Balance of Cash Book
(d) None of these

Answer

Answer: (b) Profit or loss of a certain period


Question 29.
What is shown by Balance Sheet ?
(a) Accuracy of books of accounts
(b) Profit or loss of a specific period
(c) Financial position on a specific date
(d) None of the above

Answer

Answer: (c) Financial position on a specific date


Question 30.
Which of the following is the purpose or objective of financial analysis ?
(a) To assess the current profitability of the firm
(b) To measure the solvency of the firm
(c) To assess the short-term and long-term liquidity position of the firm
(d) All the above

Answer

Answer: (d) All the above


Question 31.
Out of the following which parties are interested in financial statements ?
(a) Managers
(b) Financial Institutions
(c) Creditors
(d) All the these

Answer

Answer: (d) All the these


Question 32.
Which of the following is not a limitations of financial statement analysis ?
(a) To measure the financial strength
(b) Affected by window-dressing
(c) Do not reflect changes in price level
(d) Lack of Qualitative Analysis

Answer

Answer: (a) To measure the financial strength


Question 33.
Break-even Analysis shows:
(a) Relationship between cost and sales
(b) Relationship between production and purchases
(c) Relationship between cost and revenue
(d) None of these

Answer

Answer: (a) Relationship between cost and sales


Question 34.
Which of the following shows the actual financial position of n enterprise ?
(a) Fund Flow
(b) Balance Sheet
(c) P & L A/c
(d) Ratio Analysis

Answer

Answer: (b) Balance Sheet


Question 35.
The financial statements of a business enterprise include:
(a) Balance Sheet
(b) Profit & Loss Account
(c) Cash Flow Statement
(d) All the above

Answer

Answer: (d) All the above


Question 36.
An annual report is issued by company to its :
(a) Directors
(b) Auditors
(c) Shareholders
(d) Management

Answer

Answer: (c) Shareholders


Question 37.
Balance Sheet provides information about financial position of the enterprise :
(a) At a Point of Time
(b) Over a Period of Time
(c) For a Period of Time
(d) None of the above

Answer

Answer: (a) At a Point of Time


Question 38.
Profit & Loss Account is also called :
(a) Balance Sheet
(b) Income Statements
(c) Operating Profit
(d) Investment

Answer

Answer: (b) Income Statements


Question 39.
Which of the following statement is correct ?
(a) Assets = Liabilities + Shareholders funds
(b) Assets = Total funds
(c) Assets = Funds of outsiders .
(d) None of the above

Answer

Answer: (a) Assets = Liabilities + Shareholders funds


Question 40.
In which meeting of company directors report is presented ?
(a) Directors Meeting
(b) Annual General Meeting
(c) Manager’s Meeting
(d) All of the above

Answer

Answer: (b) Annual General Meeting


Question 41.
On the basis of process, which of the following is the type of financial analysis ?
(a) Horizontal Analysis
(b) Vertical Analysis
(c) Ratio Analysis
(d) (a) and (b) both

Answer

Answer: (d) (a) and (b) both


Question 42.
Which Of the following is limitation of financial analysis ?
(a) Window-dressing
(b) Basis of Valuation
(c) Lack of Accuracy
(d) All the above

Answer

Answer: (d) All the above


Question 43.
Which of the following is not the limitations of financial analysis ?
(a) Lack of Accuracy
(b) Based on Historical facts
(c) Basis of Valuation
(d) Information of Profit and Loss

Answer

Answer: (d) Information of Profit and Loss


Question 44.
When Financial Statements of two or more organisations are analysed, it is called :
(a) Intra-firm Analysis
(b) Inter-firm Analysis
(c) Vertical Analysis
(d) None of these

Answer

Answer: (b) Inter-firm Analysis


Question 45.
Which of the following statement correct ?
(a) Retained Earnings = Total Income
(b) Retained Earnings = Revenue-expenses
(c) Retained Earnings = Gross Profit
(d) None of the above

Answer

Answer: (b) Retained Earnings = Revenue-expenses


Question 46.
Which of the following is a type of Financial Analysis on the basis of material used ?
(a) Internal Analysis
(b) External Analysis
(c) Internal Audit
(d) Both (a) and (b)

Answer

Answer: (d) Both (a) and (b)



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