Bihar Board 12th Accountancy Objective Answers Chapter 9 Analysis of Financial Statements

Bihar Board 12th Accountancy Objective Questions and Answers

Bihar Board 12th Accountancy Objective Answers Chapter 9 Analysis of Financial Statements

Question 1.
Vertical Analysis is also known as :
(A) Fluctuation Analysis
(B) Static Analysis
(C) Horizontal Analysis
(D) None of these
Answer:
(B) Static Analysis

Question 2.
Financial analysis is useful:
(A) For Investors
(B) For Shareholders
(C) For Debentureholders
(D) All the above
Answer:
(D) All the above

Question 3.
Analysis of financial statements involve :
(A) Trading A/c
(B) Profit & Loss statement
(C) Balance Sheet
(D) All the above
Answer:
(D) All the above

Question 4.
Financial anaysis 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:
(B) Judges operational efficiency

Question 5.
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 Bookd
(D) None of these
Answer:
(B) Profit or loss of a certain period

Question 6.
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:
(C) Financial position on a specific date

Question 7.
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:
(D) All the above

Question 8.
Out of the following which parties are interested in financial statements ?
(A) Managers
(B) Financial Institutions
(C) Creditors
(D) All the these
Answer:
(D) All the these

Question 9.
Which of the following is not a limitations of financial statement analysis ?
(A) To meausre the financial strength
(B) Affected by window-dressing
(C) Do not reflect changes in price level
(D) Lack of Qualitative Analysis
Answer:
(A) To meausre the financial strength

Question 10.
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:
(A) Relationship between cost and sales

Question 11.
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:
(B) Balance Sheet

Question 12.
The financial statements of a business enterprise include:
(A) Balance Sheet
(B) Profit & Loss Account
(C) Cash Flow Statement
(D) All the above
Answer:
(D) All the above

Question 13.
An annual report is issued by company to its :
(A) Directors
(B) Auditors
(C) Shareholders
(D) Management
Answer:
(C) Shareholders

Question 14.
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:
(A) At a Point of Time

Question 15.
Profit & Loss Account is also called :
(A) Balance Sheet
(B) Income Statements
(C) Operating Profit
(D) Investment
Answer:
(B) Income Statements

Question 16.
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:
(A) Assets = Liabilities + Shareholders funds

Question 17.
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:
(B) Annual General Meeting

Question 18.
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:
(D) (a) and (b) both

Question 19.
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:
(D) All the above

Question 20.
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:
(D) Information of Profit and Loss

Question 21.
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:
(B) Inter-firm Analysis

Question 22.
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:
(B) Retained Earnings = Revenue-expenses

Question 23.
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:
(D) Both (a) and (b)

Question 24.
Interpretation of Financial Statements includes:
(A) Criticisms and Analysis
(B) Comparison and Trend Study
(C) Drawing Conclusion
(D) All the above
Answer:
(D) All the above

Question 25.
Horizontal Analysis is also known as :
(A) Dynamic Analysis
(B) Structural Analysis
(C) Static Analysis
(D) None of these
Answer:
(A) Dynamic Analysis

Question 26.
Vertical Analysis is also known as :
(A) Static Analysis
(B) Dynamic Analysis
(C) Strctural Analysis
(D) None of these
Answer:
(A) Static Analysis

Question 27.
Comparative Statements are also known as :
(A) Dynamic Analysis
(B) Horizontal Analysis
(C) Vertical Analysis
(D) External Analysis
Answer:
(B) Horizontal Analysis

Question 28.
Common-size Statement are also known as:
(A) Dynamic Analysis
(B) Horizontal Analysis
(C) Vertical Analysis
(D) External Analysis
Answer:
(C) Vertical Analysis

Question 29.
The most commonly used tools for financial analysis are:
(A) Comparative Statements
(B) Common-size Statement
(C) Accounting Ratios
(D) All the above
Answer:
(D) All the above

Question 30.
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:
(A) External Analysis

Question 31.
For calculating trond percentages any year is selected as:
(A) Current year
(B) Previous year
(C) Base year
(D) None of these
Answer:
(C) Base year

Question 32.
Tools for comparison of financial statements are :
(A) Comparative Balance Sheet
(B) Comparative Income Statement
(C) Common-size Statement
(D) All the above
Answer:
(D) All the above

Question 33.
Trend ratios and trend percentage are used in :
(A) Dynamic analysis
(B) Static analysis
(C) Horizontal analysis
(D) Vertical Analysis
Answer:
(C) Horizontal analysis

Question 34.
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:
(C) Both of them

Question 35.
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:
(C) (a) and (b) both

Question 36.
Which of these are not the method of financial statement analysis ?
(A) Ratio Analysis
(B) Comparative Analysis
(C) Trend Analysis
(D) Capitalisation Method
Answer:
(D) Capitalisation Method

Question 37.
Common-size financial statements are mostly prepared:
(A) In proportion
(B) In percentage
(C) (a) and (b) both
(D) None of these
Answer:
(B) In percentage

Question 38.
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:
(B) 25%

Question 39.
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:
(C) 50%

Question 40.
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:
(C) ₹ 2,00,000

Question 41.
Sales less Cost of goods sold is called :
(A) Operating Profit
(B) Gross Profit
(C) Net Profit
(D) Total Profit
Answer:
(B) Gross Profit

Question 42.
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:
(B) 75%

Question 43.
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:
(C) 40%

Question 44.
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:
(B) 100

Question 45.
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 ae equal to total sales
Answer:
(D) Total Cost ae equal to total sales

Question 46.
Payment of Income Tax is considered as :
(A) Direct Expenses
(B) Indirect Expeness
(C) Operating Expenses
(D) None of these
Answer:
(B) Indirect Expeness