Financial Statements of a Company Test 11

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Financial Statements of a Company Test 11

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Weekly Quiz Competition

Question 1
1 / -0

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 _______________.

A
Rs. 13.8 lakhs

B
Rs. 14.2 lakhs

C
Rs. 15.2 lakhs

D
Rs. 15.8 lakhs

E
Rs. 16.2 lakhs

Solution

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.
Question 2
1 / -0

ROI is the ratio between _________________.

A
Net profit and capital employed

B
Investment and profit

C
Turnover and capital employed

D
Cost of capital and Profit
Question 3
1 / -0

_______ statements are the basic sources of information to the shareholders and other external parties for understanding the profitability and financial position of any concern.

A
Financial

B
Accounting

C
Common size

D
Comparative

Solution

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.
Question 4
1 / -0

Which statement is prepared to show resources and obligations for acquiring its resources?

A
Statement of fund flow

B
Statement of cash flow

C
Statement of balance sheet

D
Statement of profit & loss

Solution

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.
Question 5
1 / -0

Credit granting institutions take decisions based on the________ performance of the undertakings.

A
managarial

B
financial

C
social

D
economical

Solution

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.
Question 6
1 / -0

The financial statements enable the stock brokers to take decisions about the ______________.

A
cost to be charge

B
prices to be quoted

C
both of the above

D
none of the above

Solution

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.
Question 7
1 / -0

Financial statements help the investors to assess __________solvency.

A
fixed

B
immediate

C
current

D
long term

Solution

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.
Question 8
1 / -0

User of Financial Statements are ____________.

A
creditor

B
employee

C
owner

D
all of the above

Solution

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.
Question 9
1 / -0

Importance of financial statements are _________.

A
basis for granting of credit

B
report on stewardship function

C
basis for prospective investors

D
all of the above

Solution

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.
Question 10
1 / -0

Financial statements show _______information but not _____information.

A
correct,detailed

B
aggregate,detailed

C
detailed,correct

D
detailed,aggregate

Solution

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.

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Re-Attempt Weekly Quiz Competition

Financial Statements of a Company Test 11

Result

Financial Statements of a Company Test 11

Score

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Rank

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SHARING IS CARING

Question 1

Rs. 13.8 lakhs

Rs. 14.2 lakhs

Rs. 15.2 lakhs

Rs. 15.8 lakhs

Rs. 16.2 lakhs

Solution

Question 2

Net profit and capital employed

Investment and profit

Turnover and capital employed

Cost of capital and Profit

Question 3

Financial

Accounting

Common size

Comparative

Solution

Question 4

Statement of fund flow

Statement of cash flow

Statement of balance sheet

Statement of profit & loss

Solution

Question 5

managarial

financial

social

economical

Solution

Question 6

cost to be charge

prices to be quoted

both of the above

none of the above

Solution

Question 7

fixed

immediate

current

long term

Solution

Question 8

creditor

employee

owner

all of the above

Solution

Question 9

basis for granting of credit

report on stewardship function

basis for prospective investors

all of the above

Solution

Question 10

correct,detailed

aggregate,detailed

detailed,correct

detailed,aggregate

Solution

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