Financial Statements of a Company Test 1

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Financial Statements of a Company Test 1

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Question 1
1 / -0

Financial statements contain only_____information.

A
monetary

B
non-monetary

C
qualitative

D
all of the above

Solution

The financial statements show only the monetary/quantitative information and ignores the impact of a qualitative information on the financial statements. Qualitative information like efficiency of the management, employer employee relationship, customer satisfaction, loyalty of customers etc. are ignored by the financial statements. However, these are equally important to understand the financial position of an organisation.
Question 2
1 / -0

Statements included in financial statements are________.

A
Profit and loss account

B
Balance sheet

C
Cash flow

D
All of the above

Solution

The Financial Statements of a company generally includes three statement namely Income statement.
Balance sheet and cash flow statement. Income statement shows the profit earned or loss incurred by the company during the financial year.

Balance sheet shows the balances of assets and liabilities at the end of the year and cash flow statements show the inflow and outflow of cash in the business.
Question 3
1 / -0

Balance sheet does not disclose information relating to ___________.

A
asset

B
loss of markets

C
liabilties

D
investment

Solution

Financial statements of the company record the assets at historical cost and not at market price. They fail to record the profit/loss that arise from the fluctuations in the market price of the assets. Hence, we can say that the financial statements do not show the complete picture of the business.
Question 4
1 / -0

The financial statements generally include _____statement.

A
three

B
five

C
two

D
four

Solution

The Financial Statements of a company generally includes three statement namely Income statement, Balance sheet and cash flow statement.

Income statement shows the profit earned or loss incurred by the company during the financial year.
Balance sheet shows the balances of assets and liabilities at the end of the year and cash flow statements show the inflow and outflow of cash in the business.
Question 5
1 / -0

Financial statements does not provide _____information.

A
monetary

B
qualitative

C
both

D
none

Solution

The financial statements show only the monetary/quantitative information and ignores the impact of a qualitative information on the financial statements. Qualitative information like efficiency of the management, employer employee relationship, customer satisfaction, loyalty of customers etc. are ignored by the financial statements. However, these are equally important to understand the financial position of an organisation.
Question 6
1 / -0

The difference between gross dividend receivable and dividend received is debited to _________.

A
interim dividend

B
tax deducted at source

C
net dividend

D
difference adjustment

Solution

Dividend is a taxable item. When the company is paying a dividend, it is subject to tax deduction. Hence difference between dividend receivable and dividend received is the amount of tax deduction.
Question 7
1 / -0

Advance payment of tax is a _______.

A
Prepaid Expense

B
General Reserve

C
Interim Dividend

D
Provision for Taxation

Solution

An amount paid in advance against which the services are yet to receive is a prepaid expenses and shown in balance sheet as other current assets.
Question 8
1 / -0

Which of the following does not represent application of fund of a company?

A
Fixed Asset.

B
Goodwill.

C
Debentures.

D
Repayment of loan.

Solution

Debenture is like a debt which is a source of fund not the application of fund. If debentures are issued, this will increase the sources. When debenture are paid off, its an application of fund.
Question 9
1 / -0

Which of the following is not shown on the liability side of a balance sheet of a company?

A
Authorised capital

B
Issued capital

C
Paid up capital

D
Reserve capital

Solution

Reserve capital is part of the authorized capital of the company which is not called by the company. It is available for the company in case of need.
Question 10
1 / -0

Unclaimed dividend is shown on the liability side of the balance sheet of a company as ___________.

A
Share Capital

B
Current Liabilities

C
Reserves & Surplus

D
Non-Current Liability

Solution

Share capital is reported by a company on its balance sheet in the shareholder's equity section.
Unclaimed dividend is a short term liability which need to be paid in the next years. This has to be shown as current liability in balance sheet.
Unclaimed dividend is shown on the liability side of a balance sheet under the head “Reserves and Surplus” along with capital. If a company incurs losses then it is not created.
Non-current liabilities are reported on a company's balance sheet along with current liabilities, assets, and equity.

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Re-Attempt Weekly Quiz Competition

Financial Statements of a Company Test 1

Result

Financial Statements of a Company Test 1

Score

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Rank

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SHARING IS CARING

Question 1

monetary

non-monetary

qualitative

all of the above

Solution

Question 2

Profit and loss account

Balance sheet

Cash flow

All of the above

Solution

Question 3

asset

loss of markets

liabilties

investment

Solution

Question 4

three

five

two

four

Solution

Question 5

monetary

qualitative

both

none

Solution

Question 6

interim dividend

tax deducted at source

net dividend

difference adjustment

Solution

Question 7

Prepaid Expense

General Reserve

Interim Dividend

Provision for Taxation

Solution

Question 8

Fixed Asset.

Goodwill.

Debentures.

Repayment of loan.

Solution

Question 9

Authorised capital

Issued capital

Paid up capital

Reserve capital

Solution

Question 10

Share Capital

Current Liabilities

Reserves & Surplus

Non-Current Liability

Solution

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