MCQExams
0:0:1
CBSE
JEE
NTSE
NEET
Practice
Homework
×
CBSE Questions for Class 12 Commerce Accountancy Financial Statements Of A Company Quiz 4 - MCQExams.com
CBSE
Class 12 Commerce Accountancy
Financial Statements Of A Company
Quiz 4
Earning yield is ___________.
Report Question
0%
$$6.2$$
0%
$$7.8$$
0%
$$5.9$$
0%
$$9.3$$
Financial statements are prepared on the basis of facts in the form of cost data recorded in the ______ period.
Report Question
0%
Accounting
0%
Financial
0%
Managerial
0%
None of the above
Explanation
Financial statement are summarized financial reports which provide the operating results and financial position of companies, and the detailed information contained therein is useful for assessing the operational efficiency and financial soundness of a company. Generally financial statements are prepared based on the data recorded in the accounting period.
The valuing of assets at _________ principle for balance sheet is followed while preparing financial statements.
Report Question
0%
Cost less depreciation
0%
Cost plus depreciation
0%
Depreciation minus accumulated depreciation
0%
Accumulated depreciation plus depreciation
Explanation
Asset valuation is the process of assessing the value of a company, real property or any other item of worth, in particular assets that produce cash flows. While preparing financial statement The fixed asset is depreciated until the book value equals scrap value. Book value at the end of year becomes book value of next year.
Which of the following statements are true?
a. Financial statements are only interim report.
b. Financial statements are also known as annual records.
c. Financial statements are historic.
Report Question
0%
Both (a) and (b)
0%
Both (a) and (c)
0%
Both (b) and (c)
0%
A, B, C
Explanation
Financial statement of companies are summarized financial reports which provide the operating results and financial positions of the companies. Financial statements are based on historical data e.g. ratio analysis. Financial statements are also known as annual records because they are prepared on annual basis.
The ____________ statement is also taken as an integral component of the financial statements of a company.
Report Question
0%
Fund flow
0%
Cash flow
0%
Comaprative
0%
Common size
Explanation
Cash flow statement refers to the analysis of actual movement of cash into and out of an organisation. The flow of cash into the business is called as cash inflow or positive cash flow and the flow of cash out of the firm is called as cash outflow or negative cash flow. This statement is also an integral component of financial statement.
If a company uses a predetermined rate for absorbing factory overhead, the volume variance is the _______________________.
Report Question
0%
Underapplied or overapplied variable cost element of factory overhead.
0%
Underapplied or overapplied fixed cost element of factory overhead.
0%
Difference in budgeted costs and actual costs of fixed factory overhead items.
0%
Difference in budgeted costs and actual costs of variable factory overhead items.
Explanation
The fixed overhead volume variance is the difference between the amount of fixed overhead actually applied to produced goods based on production volume and the amount that was budgeted to be applied on produced goods.
The dividend declared by Neetu limited is Rs.$$2$$ per share of face value of Rs.$$10$$ and the average market value is Rs.$$25$$. The yield is ______________.
Report Question
0%
$$5\%$$
0%
$$8\%$$
0%
$$10\%$$
0%
$$12.5\%$$
Which of the following is true?
Report Question
0%
Depreciation is a use of funds.
0%
Increase in a Non-current liability is a source.
0%
Decrease in an asset, other than cash is a use.
0%
Increase in bills payable is a use.
0%
Increase in equity is a use.
Explanation
Depreciation
is the
decrease
in the value of
assets
and the method used to reallocate, or "write down" the cost of a tangible
asset
(such as equipment) over its useful life span.
A
non
-
cash item
refers to an expense listed on an income statement, such as
depreciation
,that does not involve a
cash
payment.
Hence, option C is correct.
Which of the following statement is true?
A. Financial statement provide information about cash flow.
B. Financial statement provide information about the credit earning capacity of the business.
Report Question
0%
Only A
0%
Only B
0%
Both A and B
0%
None of the above
Explanation
The primary objective of financial statement is to assist the users in their decision making. Financial statement provide information useful to investors and creditors for predicting, comparing and evaluating, potential cash flows in term of amount, timing and related uncertainties.
The _______ objective of financial statements is to assist the users in their decision-making.
Report Question
0%
Primary
0%
Secondary
0%
Treasury
0%
None of the above
Explanation
Financial statements provide information about the results of the business concern during a specified period of time in terms of assets and liabilities, which provide the basis for taking decisions. Thus the primary objective of financial statements is to assist the users in their decision-making.
The depreciation is provided taking into consideration the useful ______ life of fixed assets.
Report Question
0%
Annual
0%
Accounting
0%
Economic
0%
Current
Explanation
Under more than one circumstances, facts and figures presented through financial statements based on personal judgments. The depreciation is provided taking into consideration the useful economic life of fixed assets. Provisions for doubtful debts are made on estimates and personal judgments.
Financial statement are prepared to provide adequate, _______ and periodical information about economic resources and obligations of a business firm.
Report Question
0%
Reliable
0%
Non material
0%
Material
0%
Non-reliable
Explanation
Financial statements are the basic source of information to the shareholders and other external parties for understanding the profitability and financial position of any concern. One of the objective of financial statement is providing information about economic resources and obligation of a business. They provide adequate, reliable and periodic information about economic resources and obligations of a business firm to investors and other external parties who have limited authority, or ability to obtain information.
If the market value of debt of a firm is Rs. 40 lakhs, that of equity is Rs. 60 lakhs and the costs of equity and debt are $$16\%$$ and $$14\%$$ respectively, the net operating income for the firm if the firm has $$100\%$$ dividend payment and no taxes is _______________.
Report Question
0%
Rs. 13.8 lakhs
0%
Rs. 14.2 lakhs
0%
Rs. 15.2 lakhs
0%
Rs. 15.8 lakhs
0%
Rs. 16.2 lakhs
Explanation
K$$_o$$= O / V = Net operating incomes / Market value of the firm
Also K$$_o$$ = K$$_d$$(D/D+S) + K$$_e$$(S/D+S)
=0.14(40/100)+0.16(60/100)
=0.152
Net operating income = K X market value of the firm
= 0.152 X 100 lakh = 15.2 lakh.
ROI is the ratio between _________________.
Report Question
0%
Net profit and capital employed
0%
Investment and profit
0%
Turnover and capital employed
0%
Cost of capital and Profit
_______ statements are the basic sources of information to the shareholders and other external parties for understanding the profitability and financial position of any concern.
Report Question
0%
Financial
0%
Accounting
0%
Common size
0%
Comparative
Explanation
Financial statements are the summarised reports of recorded facts and are prepared following the accounting concepts, conventions and requirement of law. It is the basic source of information to the shareholders other external parties.
Which statement is prepared to show resources and obligations for acquiring its resources?
Report Question
0%
Statement of fund flow
0%
Statement of cash flow
0%
Statement of balance sheet
0%
Statement of profit & loss
Explanation
Balance sheet is a statement that shows the resources and obligations for acquiring its resources this means this shows the balances of assets and liabilities of the company at the end of the year. It shows the resources available for acquiring the resources and the obligations that have to be met to acquire resources.
Credit granting institutions take decisions based on the________ performance of the undertakings.
Report Question
0%
managarial
0%
financial
0%
social
0%
economical
Explanation
Credit gaining institutions take decisions based on the financial performance of the undertakings. They refer the financial statements to analyse the performance of the business. Credit gaining institutions need to check whether the company is capable of repaying the credit they are taking or not.
Financial statements help the investors to assess __________solvency.
Report Question
0%
fixed
0%
immediate
0%
current
0%
long term
Explanation
Investors are the owners of the company. Financial statements help them to assess the long term solvency of the business in which they have invested. They asses whether they will get fair returns or not for the money they have invested in the business.
The financial statements enable the stock brokers to take decisions about the ______________.
Report Question
0%
cost to be charge
0%
prices to be quoted
0%
both of the above
0%
none of the above
Explanation
The financial statements help the investors to calculate market price of the shares. Market price of shares is determined by the net income of the company for equity share holder. This income is basically after deducting all interest, tax, dividend of preference shareholders etc,. divided by the number of equity shares.
User of Financial Statements are ____________.
Report Question
0%
creditor
0%
employee
0%
owner
0%
all of the above
Explanation
Users of financial statements are the people who refer the financial statements for various reasons. Creditors, employees and owners are some of the users of financial statements. Creditors use the financial statements to ascertain whether the company to whom they are lending money are capable to repay the same. The employees use the financial statements to understand the business better which will ensure active participation. The owners use the financial statements to understand whether their business is profitable or not.
Importance of financial statements are _________.
Report Question
0%
basis for granting of credit
0%
report on stewardship function
0%
basis for prospective investors
0%
all of the above
Explanation
The financial statements of a company show the financial position of an organisation and helps in comparison with the past results. The financial statements helps the credit lending institutions to understand the liquidity, solvency of the company and thereby helping them with the decision to whether grant credit or not. The steward is a person who manages the resources and financial statements helps to understand if resource utilisation was useful or not. The investors of the company want to know whether the company will be profitable or not.
Financial statements show _______information but not _____information.
Report Question
0%
correct,detailed
0%
aggregate,detailed
0%
detailed,correct
0%
detailed,aggregate
Explanation
Financial statements of a company show the aggregate information. By aggregate we mean that all the transactions that have taken place in the business during the whole year. The financial statements do not show detailed information regarding about every transaction only recording of transaction takes place, not all details of the same are disclosed in the statements.
Financial statements, provide the necessary information about the performance of the ____________.
Report Question
0%
owner
0%
management
0%
emplyoee
0%
none of the above
Explanation
Financial statements provide necessary information about the performance of management. The financial statements show the financial position of an organisation, thereby telling if the policies, procedures and methods used by the management were useful or not.
Following are limitations of financial information ________________.
Report Question
0%
Helps stock exchanges
0%
Report on stewardship function
0%
Assets may not realise
0%
Aids trade associations in helping their members
Explanation
Financial statements have a lot of limitations one being that the financial statements show the assets at the historical cost and not the current market price. They do not record the fluctuations in the price, there by the profit or loss from the same is not taken into account.
The gaps between the management performance and ownership expectations are understood through _________.
Report Question
0%
cash flow statements
0%
financial statements
0%
fund flow statement
0%
income statement
Explanation
The financial statements show the financial position of an organisation, thereby telling if the policies, procedures and methods used by the management were useful or not. They show the gap between the actual performance by the management and the owner's expectation.
Select the most appropriate alternative from those given below:
_______ is a statement which shows the financial position of business on a specified date.
Report Question
0%
Trading Account
0%
Trail Balance
0%
Balance Sheet
0%
Profit and Loss A/c
Explanation
Balance sheet is a statement which shows the financial position of business on a specified date
. It shows the balances of assets and liabilities at a particular time, which is at the end of the year. It is one of the main financial statements of the company.
From the following __________ limitations of financial statements.
Report Question
0%
bias
0%
assets may not realise
0%
vital information missing
0%
all of the above
Explanation
Financial statements are very important for a business but it has many limitations being personal bias, assets may not realise, vital or qualitative information missing. The financial statements may be affected by personal bias as the person making the statements is a human being. Financial statements do not show detailed information about every transaction and they also do not record the qualitative information. The statements only record quantitative information.
Select the most appropriate alternative from those given below:
Outstanding expenses are shown on the _______ side of Balance Sheet.
Report Question
0%
liabiltiy
0%
asset
0%
rigtht
0%
both
Explanation
Outstanding expenses are the expenses that are due but are yet to be paid. It is an obligation on the part of the company that is to be met. Hence, an obligation is a liability and will appear on liabilities side of the balance sheet.
Select the most appropriate alternative from the given below:
Unearned income is shown on _______ side of Balance Sheet.
Report Question
0%
Assets
0%
Liabilities
0%
Credit
0%
Debit
Explanation
Income received in advance is a liability because under the accrual concept of accounting income is recorded in the books of accounts when they are earned and not when actually received. Hence, it is an obligation on the part of the company and will be recorded as income as and when it is earned.
Profit and loss account discloses the profit/loss for a ___________period.
Report Question
0%
over time
0%
specified
0%
not specified
0%
none of the above
Explanation
Profit and loss account discloses the profit/loss for a specified period. The period can be for a year or for a quarter. The
Statement of Profit and loss shows the revenues and expenses of the business earned or incurred during the accounting year. The statement helps in understanding the financial position of the business.
0:0:1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0
Answered
0
Not Answered
0
Not Visited
Correct : 0
Incorrect : 0
Report Question
×
What's an issue?
Question is wrong
Answer is wrong
Other Reason
Want to elaborate a bit more? (optional)
Practice Class 12 Commerce Accountancy Quiz Questions and Answers
<
>
Support mcqexams.com by disabling your adblocker.
×
Please disable the adBlock and continue.
Thank you.
Reload page
