Significance of Financial Analysis

Q.

Analysis of any financial Statement comprises ___.

1. Balance sheet

2. Profit & loss a/c

3. Trading A/c

4. All of these

Q.

The statement of financial position and the balance sheet are synonyms.

1. False

2. Partially true

3. None of these

4. True

Q.

The financial statement includes -

1. Balance sheet

2. All of these

3. Income statement

4. Cash flow and Fund Flow

Q.

Which of the following is the main objective/s of a financial statement?

1. to know the solvency

2. to know the debt capacity

3. to know the earning capacity

4. All of these

Q.

What is followed while preparing the financial statements?

1. Accounting conventions

2. Accounting principles

3. Accounting concepts

4. All of these

Q.

Which of the following statement is true?

Statement A: Financial statements are prepared on the basis of accounting principles.

Statement B: Any changes in the accounting principles or method will affect the utility of the financial statements.

1. Statement B is true but not A

2. Both statements A and B are true.

3. Both statements A and B are false

4. Statement A is true but not B

Q.

Which of the following statements are true?

1. External analysis depends entirely on issued financial statements.

2. Interpretation and analysis both are different.

3. Financial analysis covers interpretation.

4. All of these

Q.

The analysis and interpretations of the financial statement will reveal ________________.

1. Both the profitability and the financial position

2. None of these

3. the profitability

4. the financial position

Q.

Which of the following events will cause retained earnings to increase?

1. Dividends declared by the board of directors

2. Net income reported for the period.

3. Issuance of stock in exchange for cash.

4. Net loss reported for the period.

Q.

What are the 5 basic accounting principles?

Q.

Which of the following is false regarding the Statement of Profit and Loss?

1. The income statement is sometimes called the statement of operations

2. The income statement reports revenues, expenses, and liabilities

3. The income statement reports only revenue at the point of sale

4. It shows financial position of a business at a particular period of time

Q.

What are conservative principles in accounting?

Q.

The preparation of comparative financial statement is only possible in case of presence of past year data.

1. True

2. False

3. Partially true

4. None of these

Q.

Which financial statement presents a summary of the Assets, Liabilities, and Shareholders' Fund of a company?

1. Worksheet

2. Balance sheet

3. Cash flow statement

4. General ledger

Q. All direct & indirect expenses related to business are charged to the ____________.

1. Profit and loss account
2. Trading account
3. Trading account and profit & loss account
4. Directly to balance sheet

Q. Abnormal loss debited to General Profit & Loss A / c = ?

1. 1, 150
2. 2, 150
3. 5, 150
4. 4, 000

Q. Select the most appropriate answer the alternatives given below and rewrite the Sentences.

When Closing Capital is greater than Opening Capital it denotes ___________
a) profit
b) loss
c) no profit, no loss
d) assets.

Q.

what is the difference between profit and loss account and profit and loss appropiation account?

Q. Which of the following is the limitation of financial statement analysis?

1. Historical analysis
2. Ignores price level changes
3. Not free from bias
4. All of the above

Q. Match List-I with List-II and select the correct answer using the codes given the lists.

List-I(Accounting concept)	List-II(Principle involved)
I. Consistency	(a) Losses are anticipated and accounted for in advance but profits are not accounted for until realised
II. Comparability	(b) All the relevant financial information should be summarised and presented in the accounting statements
III. Conservatism	(c) According procedures in an entity should be followed uniformly from period to period
IV. Disclosure	(d) Accounting statement of different periods of an entity and those of different entities of a period should be based on the same accounting principles and procedures
	(e) Personal Judgement of accountants should not influence accounting measurements

1. I-(d), II-(c), III-(e), IV-(b)
2. I-(c), II-(d), III-(a), IV-(b)
3. I-(c), II-(d), III-(b), IV-(e)
4. I-(d), II-(c), III-(a), IV-(e)

Q. Gross profit or gross loss revealed by trading account is transferred to:

1. Balance Sheet
2. Profit and Loss Account
3. Manufacturing Account
4. Profit and Loss Appropriation Account

Q. Operating profit is __________ of operating revenue over operating expense.

1. excess
2. none
3. balance
4. deficit

Q. When a person who is maintaining accounts is not able to differentiate between capital expenditure and revenue expenditure, it is a/an ______________.

1. error of principle
2. error of omission
3. error of commission
4. all of the above

Q. Profit & Loss A/c is closed by transferring its balance to the _______________.

1. Manufacturing A/c
2. Trading A/c
3. Capital A/c
4. Name of these

Q. The difference between revenues and expenses when expenses exceed revenue is termed _______.

1. Net profit
2. Net loss
3. Gross loss
4. Gross profit

Q. Select the most appropriate alternative from those given below and rewrite the statement.

To find out net profit or net loss of the business _________________ account is prepared.
a) trading
b) capital
c) current
d) profit and loss

Q. Answer the following questions in one sentence each:
What is a computerized accounting system?

Q. Entry for transfer of Gross profit is :
Profit and Loss A/c Dr.
To Trading A/c

1. True
2. False

Q. Which of the following are the basic objectives of preparing Financial Statements?

1. None of the above.
2. To view financial performance.
3. To view financial Position.
4. Both (A) & (B).

Q. The Account which shows Net Profit or Net Loss of the business is _____________ .

1. Trading Account
2. Profit and Loss Account
3. Cash Account
4. Capital Account