Financial Statement Analysis MCQs - Financial Statements MCQs

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Financial Statement Analysis MCQs | Financial IMPORTANT PAGES
Statements MCQs Multiple Choice Questions (MCQs)
by Kumar Nirmal Prasad - September 20, 2021 E-BOOKS AND NOTES
AHSEC
Financial
Statement Analysis MCQs
Dibrugarh University
Financial
Statements MCQs
Gauhati University
Multiple
Choice Questions and Answers
SEBA (Assam Board 9 & 10)

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Financial Statement Analysis MCQs
are also very much for Class 12 CBSE and other state boards
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including AHSEC.
M.Com Notes & Papers
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through various links given below in the article for Chapter wise Management
Accounting
Important Questions For Exams
MCQs.
Syllabus
Table
of Contents
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1. Financial Statement Analysis MCQs and
Financial Statement MCQs
a) Multiple Choice Questions and Answers (35

Questions)
https://www.dynamictutorialsandservices.org/2019/04/financial-statement-analysis-multiple.html 1/22
b) Fill in the blanks (50 Questions)

POPULAR
c) True or False (60 Questions)

Auditing Multiple Choice Questions
Also read: and Answers MCQs| Auditing MCQ
For CA, CS and CMA Exams | Princip
2. Financial Statements & Financial
Statement Analysis MCQs of Auditing MCQs
February 20, 2021
3. Ratio Analysis MCQs
Management Accounting MCQs |
4. Funds Flow Statement MCQs Multiple Choice Questions and
Answers
5. Marginal Costing MCQs
September 14, 2021
6. Budget and Budgetary Control MCQs

MCQ On Budget and Budgetary
Control | Multiple Choice Questions
7. Standard Costing MCQs
and Answers
August 11, 2021
8. Management Accounting MCQs
MCQ on Accounts of Holding

A. Choose the
Correct Answer: Companies | Multiple Choice
Questions and Answers | Company
1. Financial
statements of a company include: Accounts | Corporate Accounts | CM
MCQ
a) Balance Sheet. September 12, 2020
b) Profit or Loss Account. Corporate Accounting Multiple

Choice Questions and Answers for
c) Cash Flow Statements. Upcoming Exam | Company Account
MCQs | Chapter wise MCQs
d) All of the above February 20, 2021
Ans: d) All of the above.
2. Balance Sheet
shows:
a) Financial position of a Company.
b) Profit or Loss of a Company.
c) Cash flow of a Company.
d) None of the above.
Ans: a) Financial position

of a Company.
3. Profit and loss account shows:
a) Financial position of a Company.
b) Operating efficiency
c) Cash flow of a Company.
Ans: b) Operating efficiency
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4. Balance Sheet
provides information about the financial position of the enterprise
a) At a point of time.
b) Over a period of time.
c) For a period of time.
Ans: a) At a point of time.

5. Which section
of the Companies Act requires that Balance Sheet is to be prepared in the
prescribed
form?
a) Sec 125
b) Sec 126
c) Sec 127
d) Sec 129
Ans:
d) Sec 129.
6. Which of the following

is prepared on a particular date?
a) Trading
account
b) Profit &
loss account
c) Balance sheet
d) All of
the above
Ans:
c) Balance sheet
7. Which of the
following financial statements shows a firm's financial position on a
particular date?
a) Cash flow
statement
b) Funds flow
statement
c) Balance sheet
d) Comparative
statements
Ans:
c) Balance sheet
8. Which of the
following is not an internal user of financial statement?
a) Investors
b) Income tax
authorities
c) Trade unions
d) All of the
above
Ans:
d) All of the above
9. Which of the
following is an internal user of financial statement?
a) Owners
b) Employees
c) Managers
d) All of the
above
Ans:
d) All of the above
10. Which of the

following are the external users of financial statements?
a) Government
b) Banks
c) Creditors
d) All of the
above
Ans:
d) All of the above
11. Which of the

following is not an objective of financial statements?
a) To show
company’s financial position.
b) To shown
company’s operating efficiency.
c) To the effectiveness
of management.
d) To determine
income tax liability
Ans:
d) To determine income tax liability
12. Which of the

following is not an objective of financial statements analysis?
a) To assess
operating efficiency of the firm.
b) To assess the
short term and long term financial position.
c) To make
inter-firm comparison.
d) To calculate
income tax liability
Ans: d) To
calculate income tax liability
13. 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.
c) financial
statements are the end products of accounting
process.
d) All of the
above
Ans:
d) All of the above
14. Most commonly

used tools for financial analysis are:
a) Horizontal Analysis.
b) Vertical Analysis.
c) Ratio Analysis.
d) All of the above
Ans: d) All of the above.
15. Annual Report

is issued by a company to it’s:
a) Directors.
b) Auditors.
c) Shareholders.
d) Management.
Ans: c) Shareholders.
16. All of the following

are true of a financial statement analysis report, except:
a) Financial analysis provides an insight

into the structure of financial statements.
b) The term
financial statement analysis includes only analysis and does not include
interpretations
c) Financial
analysis is used only by the creditors.
d) Financial
analysis is based on the financial statement.
Ans: c) Financial analysis

is used only by the creditors.
17. Dividend is
usually paid on:
a) Authorised
capital
b) Issued
share capital
c) Paid up
capital
d) Called up
share capital
Ans: c) Paid up share

capital
18. The 3ps that

is the three objectives of analysis and interpretation of financial statements
does not
include:
a) Progress
b) Prospect
c) Position
d) Profitability
Ans: d) Profitability
19. Which of the

following is not true about vertical analysis?
a) Vertical
analysis is also known as static analysis.
b) Vertical analysis is made on the basis of

Single set of financial statements.
c) Vertical analysis is made on the basis financial

statements of several years.
d) In vertical analysis each element of

financial statements are shown as percentage.
Ans: c) Vertical analysis is

made on the basis financial statements of several years.
20. Horizontal analysis is done by analyzing:
a) Financial statements of more than one year
b) Financial statements of one year
c) Quarterly financial statements
d) Half yearly financial statements
Ans: a) Financial statements

of more than one year
21. In performing
a vertical analysis, the base for prepaid expenses is:
a) Total of
balance sheet
b) Total of
current assets
c) Total of fixed
assets
d) Total sales
Ans: a) Total of balance

sheet
22. All of the

following statements regarding horizontal analysis are true except:
a) Horizontal
analysis is also known as dynamic analysis.
b) Comparative
statements are the form of horizontal analysis.
c) Horizontal
analysis is done by analyzing financial statements of more than one year.
d) Each
particular of financial statements are shown as a percentage of total of some
common base.
Ans: d) Each particular of

financial statements are shown as a percentage of total of some common base.
23. Financial
analysis is significant because it:
a) Ignores
qualitative aspect
b) Judges
financial position and operational efficiency
c) Suffers from
the limitations of financial statements
d) It is affected
by personal ability and bias of the analysis
Ans: b) Judges financial

position and operational efficiency
24. Which one of

the following statement is not a tool in financial statement analysis?
a) Ratio analysis
b) Common size
statement
c) Comparative
statements
d) Marginal
costing
Ans: d) Marginal costing
25. Which of
these are not the methods of financial statement analysis?
a) Ratio analysis
b) Comparative
analysis
c) Trend analysis
d) Capitalization
method
Ans: d) Capitalization
method
26. Which of the

following are techniques, tools or methods of horizontal analysis and
interpretation of
financial statements?
a) Ratio analysis
b) Comparative financial
statements
c) Comparative
income statements
d) Trend analysis
Ans: a) Ratio analysis
27. Which of the

following are techniques, tools or methods of vertical analysis and
interpretation of
financial statements?
a) Common size
balance sheet
b) Common size
income statement
c) Ratio analysis
d) All of the
above
Ans: d) All of the above
28. Which of the

following is generally a false statement for the current ratio analysis?
a) Ideal current
ratio is 2:1.
b) Current ratio
measures short term liquidity position of a company.
c) Current ratio
is also known as working capital ratio.
d) None of the
above
Ans: d) None of the above
29. Accounting
provides data or information on:
a) Income and
cost for the managers
b) Financial
conditions of the institutions
c) Company’s tax
liability for a particular year
d) All the above
30. Which of the

following statements are true?
a) External
analysis depends entirely on issued financial statements.
b) Interpretation
and analysis both are different.
c) Financial
analysis covers interpretation.
d) All of the
above
31. In the long

run analysis of financial statements the stress is on the:
a) Liquidity
b) Profitability
c) Solvency
d) Growth
Ans: c) Solvency
32. Who is
responsible for designing and preparing the financial statements?
a) Company’s
Management
b) Shareholders
c) Auditors
d) Promoters
Ans: a) Company’s Management
33. Analysis of
any financial statement comprises
a) Balance sheet
b) Profit &
loss account
c) Both (a) &

(b)
d) none of these
Ans: c) Both (a) & (b)
34. Comparative
financial analysis process shows the comparison between the items of which
statement?
a) Balance sheet
b) Income
statement
c) Both a) &
b)
d) None of the
above
Ans: c) Both a) & b)
35. Financial
statements are:
a) Anticipated
facts
b) Recorded facts
c) Estimated
facts
d) none of these
Ans: b) Recorded facts
Financial
Financial
Statements MCQs
B. Fill up the
blanks with appropriate word/words.
1.
Financial Statements are
the basic source of information to interested parties.
2.
The balance sheet shows the financial picture of a
company at a given time.
3.
Financial Statements are prepared on the basis of Historical value.
4.
A company is required to publish its Financial
Statements every year.
5.
Profit & Loss Statement shows the Operating
Efficiency of the enterprise.
6.
Balance sheet shows financial Position of
an enterprise.
7.
Financial Statements are basis of
information to interested parties.
8.
Proposed Dividend is shown in the
Balance Sheet of a Company under Current liabilities &
sub
heading Short term provisions.
9.
Preparation of Profit & Loss Statement is based on Accrual
basis.
10.
Shareholders of a company are called Owners.
11.
Financial Facts are recorded at Cost Price.
12.
Current liabilities are payable within 12 months.
13.
Number of main headings in Equity & Liabilities side of a
Company Balance Sheet is four (4).
14.
The number of main headings in the asset side of the balance sheet
is two (2).
15.
Preliminary Expenses are shown in the Balance Sheet under Other
non-current assets.
16.
Common-size statement reports the same percentage that appears in
a vertical analysis.
17.
Common Size Statement Analysis is known as _____ (Vertical Analysis/Horizontal
Analysis).
18.
Long-term solvency of the business is reflected by _____ (Acid
Test/Ratio/Debt-equity Ratio/Stock
Turnover Ratio).
19.
Accounting Standards Board (ASB) was set up in India in the year
_____ (1973/1975/1977)
20.
The basic objective of financial statements is to ____ (provide
information/meet legal
requirement/show
performance of management).
21.
Comparative statement analysis is also known as ____ (vertical
analysis/static analysis/horizontal
analysis)
22.
The ____ of a company has primary responsibility for the
corporation’s external financial reporting
functions (management/members/board of
directors).
23.
At present ASB of ICAI formulates the AS based on ____ (GAAP/IFRS/IAS).
24.
Ratio of net profit before interest and taxes to sales is ____
ratio (net profit/profit/operative profit)
25.
Financial statement analysis helps to measure ________ (Operating
efficiency/Management
efficiency/Employee’s
efficiency)
26.
An organization's internal stakeholders consist of company
owners, employees, owners, and managers.
27.
GAAP stands for Generally
Accepted Accounting Principles.
28.
Financial system are______. (estimates of fact/ recorded facts/anticipated facts.)
29.
Long term solvency ratio is the same as_____(current
ratio/acid-test ratio/ debt-equity
ratio)
30.
The AICPA’s Code of Professional Conduct requires
that members prepare financial statements in
accordance with GAAP.
31.
The objective of financial reporting for business enterprises are
based on_____ (GAAP/the need of
conservatism/need of the users of the information).
32.
The institute of chartered Accountant Of India has decided to
converge the Indian reporting of
corporate India with effect from 1st April 2011. (2011/2012/2013).
33.
Quick assets are current assets less _____ and _____
expenses (stock, prepaid/debtor, outstanding/bank
overdraft, prepaid).
34.
The basic objective of financial statements is to _____ (provide accounting information/meet
legal
requirement/show performance of management).
35.
According to IFRS, banking companies are to adopt _____ (fair value accounting/historical value
accounting).
36.
Profit or Loss of Life Insurance
business is determined by preparing _____. (Revenue Account/Valuation
Balance Sheet).
37.
Banking Company incorporate in India shall have to transfer a sum
equal to 25%. (25%/30%) of profit to
a Statutory
Reserve.
38.
According to RBI Guidelines a Provision of _____ (20%/30%) is required for any advance
remains
doubtful up to one year.
39.
Compliance of Corporate Governance was made mandatory by SEBI as
listing requirement vide _____
(Clause 49/Clause
32).
40.
Disclosure in financial statements of banks and similar financial
institutions is associated with (IAS-
30/IAS-31/IAS-32)
41.
Reporting to corporate governance
reflects __________. (Company Management/Earning status/Socio
economic status).
42.
The institute of chartered accountants if India (ICAI) has decided
to adopt IFRS in India from
____. (2011/2012/2013)
43.
According to IFRS, banking companies are to adopt _______ (Fair value accounting/Historical value
accounting).
44.
Disclosures in financial statement of banks and similar financial
institutions are associated with IAS
30.
(IAS 30/IAS
31/IAS 32)
45.
the primary objective of external reporting is to provide useful
financial information to the external
users.
46.
A measurement of key relations between financial statement items
is called ratio analysis.
47.
The information provided by financial statements is in summarized
nature.
48.
ASB stands for Accounting standard board.
49.
An analysis done by management is an example of internal
analysis.
50.
The ultimate aim of any financial statement is to provide financial
information of the business to its
various stakeholders.
Financial
Financial
Statements MCQs
B. State whether
the following statements are true or false.
1. Financial
statements are the end products of accounting
process. True
2. Financial
statements are primarily directed towards the need of
owners. True
3. Facts &
figures presented in financial statements may be affected by may be personal
bias. False
4. Recorded facts
are based on replacement
cost. False
5. The two most

useful financial statements are balance sheet and profit loss account. True
6. Going concerns
concept assumes that the enterprise continues for a long period of
time. True
7. Financial
statements provide a summary of
accounts. False
8. Financial
statements are based on recorded
facts. True
9. Patent is an
intangible
asset. True
10. Financial
Statements are prepared on historical
cost. True
11. A balance
sheet includes owner’s equity, liabilities and assets. True
12. Balance Sheet

is a statement containing all the ledger balances contained in the
ledger. False
13. The term

financial statement analysis includes only analysis and does not include
interpretations. False
14. The term

“Interpretation” means explaining the meaning & significance of data.
True
15. The term

“Analysis” means simplification of financial data by proper clarification of
the
data. True
16. Comparative
Statements are the form of Horizontal
Analysis. True
17. Common size

statements are a tool in vertical
analysis. True
18. Common-size
financial statements are an example of vertical analysis. True
19. Common size

statements and financial ratios are the two tools employed in vertical
analysis. True
20. In common
size statement, every item is expresses as a percentage of some common bases. True
21. Trend
Analysis determines the direction upwards or
downward. True
22. Financial analysis
provides an insight into the structure of financial
statements. True
23. Vertical
analysis is also known as static analysis. True
24. Horizontal
analysis is also known as dynamic analysis. True
25. Financial
analysis is used only by the
creditors. False
26. Financial
statements accomplish only external
reporting. False, Both Internal and External
reporting
27. Current ratio

is also known as liquid
ratio. False,
Working Capital Ratio
28. IFRS-4 is
associated with insurance
contracts. True
29. Financial
statement analysis is an important means of assessing past performance and
planning future
performance. True
30. The new name

of standards issued the IASB is international financial reporting standards
(IFRS). True
31. Higher the

price earnings ratio, better it is, as it indicates growth of the
company. True
32. Financial
statements disclose only monetary
facts. True
33. The figures

shown in financial statements are on historical cost
basis. True
34. Current Ratio

is calculated to compare current assets and fixed
assets. False,
Current
Assets/Current Liabilities
35. A decrease in
Stock Turnover Ratio indicates that business is becoming more
efficient. False
36. Corporate
social responsibility reporting is not mandatory for any business in India. False, The
following companies are necessary to constitute a CSR committee: Companies with
a net worth of Rs. 500
crores or greater, or Companies with a turnover of Rs.
1000 crores or greater, or Companies with a net
profit of Rs. 5 crores or
greater.
37. Financial
statements reflect the recorded
facts. True
38. The new name

of Accounting Standards issued by IASB is International Financial Reporting
Standards
(IFRS). True
39. Current Ratio

indicates short-term debt paying ability of a
firm. True
40. Analysis of
financial statements ignores the issue of price level
changes. True
41. Capital
gearing is a term used to express the relationship between ordinary share
capital and fixed
interest bearing securities of a
company. True
42. The IRDA was

incorporated as statutory body in April
1999. False,
April 2000
43. Financial
statements are Summarized report of recorded
facts. True
44. Financial
statements include Profit & Loss statement, Balance Sheet and Cash Flow
Statement. True
45. The
prescribed form of the Balance Sheet for the Companies has been in the Schedule
III. True
46. IFRS-4 is
associated with insurance contracts. True
47. Corporate
social responsibility reporting is not mandatory for any business in
India. False
48. Corporate
financial reporting in fact is an effective communication of accounting
information between
the management and the user groups of the financial
statements. True
49. The new name

for standard issued by the FASB is International Financial Reporting Standards
(IFRS).
True
50. The IRDA was

incorporated as a statutory body in April
2000. True
51. Financial
statements are the end product of financial accounting
process. True
52. Liquidity
ratios indicate the firm’s ability to pay its current
liability. True
53. Financial
statements also disclose such facts which are not recorded in accounting
books. True
54. Current ratio

is also known as acid test
ratio. False
55. Liquid ratio

is also known as the acid-test ratio. True
56. Financial
statements are the product of accounting process. True
57. Ratio
analysis is the most powerful and useful of financial analysis. True
58. Preparation
of financial statement is duty of company director. False
59. Financial
statements are meaningful and useful only when they are analysed and
interpreted. True
60. Comparison of
financial statements highlights the trend of the financial position,
profitability and
performance of the business. True
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4/11/22, 12:43 AM Financial Statement Analysis MCQs | Financial Statements MCQs

Home  Financial Statement Analysis MCQs

Financial Statement Analysis MCQs | Financial IMPORTANT PAGES

Statements MCQs Multiple Choice Questions (MCQs)

by Kumar Nirmal Prasad - September 20, 2021 E-BOOKS AND NOTES

SEBA (Assam Board 9 & 10)

a) Multiple Choice Questions and Answers (35

b) Fill in the blanks (50 Questions)

c) True or False (60 Questions)

6. Budget and Budgetary Control MCQs

MCQ on Accounts of Holding

b) Profit or Loss Account. Corporate Accounting Multiple

Ans: d) All of the above.

a) Financial position of a Company.

b) Profit or Loss of a Company.

c) Cash flow of a Company.

d) None of the above.

Ans: a) Financial position

3. Profit and loss account shows:

a) Financial position of a Company.

c) Cash flow of a Company.

d) None of the above.

Ans: b) Operating efficiency

b) Over a period of time.

c) For a period of time.

d) None of the above.

Ans: a) At a point of time.

6. Which of the following

10. Which of the

11. Which of the

12. Which of the

13. Which of the

14. Most commonly

d) All of the above

Ans: d) All of the above.

15. Annual Report

16. All of the following

a) Financial analysis provides an insight

Ans: c) Financial analysis

Ans: c) Paid up share

18. The 3ps that

19. Which of the

b) Vertical analysis is made on the basis of

c) Vertical analysis is made on the basis financial

d) In vertical analysis each element of

Ans: c) Vertical analysis is

20. Horizontal analysis is done by analyzing:

a) Financial statements of more than one year

b) Financial statements of one year

c) Quarterly financial statements

d) Half yearly financial statements

Ans: a) Financial statements

Ans: a) Total of balance

22. All of the

Ans: d) Each particular of

Ans: b) Judges financial

24. Which one of

Ans: d) Marginal costing

26. Which of the