Financial Statements and Analysis Test

Result

Financial Statements and Analysis Test - 21

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Weekly Quiz Competition

Question 1
1 / -0

In certainty-equivalent approach, adjusted cash flows are discounted at __________.

A
Accounting Rate of Return

B
Internal Rate of Return

C
Hurdle Rate

D
Risk-free Rate

Solution

In Certainty-equivalent approach, adjusted cash flows are discounted at Risk free Rate.
In this approach the investors will analyse the risk free and risky cash flows. They will evaluate the risk and understand , how much money will be received with certainty.
Question 2
1 / -0

Minimum Alternate Tax (MAT) is imposed on

A
All companies

B
Public Limited Companies only

C
Private Limited Companies only

D
Partnership Firms and Companies
Question 3
1 / -0

Consider the following statements :.
1. To know about the profitability, ownership, solvency, financial strength, trends, gearing, trends, gearing and cover etc. is the main objective of financial analysis.
2. 'Vertical Financial Analysis' is also known as Dynamic Analysis.
3. Analysis done by CEO of the company is known as 'External Financial Analysis'.
Which of the above statement/s is/are not true?

A
$$1$$, $$2$$ and $$3$$

B
$$2$$ and $$3$$

C
Only $$1$$

D
Only $$2$$
Question 4
1 / -0

Payment received from Debtor ___________.

A
Decreases the total assets

B
Increases the total assets

C
Results in no change in the total assets

D
Increases the total liabilities

Solution

Accounting is based on dual concept. For every debit there will be a credit and for every credit there will be a debit.

Payment received from debtor will effect two accounts i,e. debtors and cash. Debtors and cash, both are current assets. Accounting entry will be as under:

Cash A/c Dr.
To Debtors A/c

In such case, cash will increase and debtors will decrease, hence no change in assets.
Question 5
1 / -0

Recording of all business transactions is based on ________.

A
Sales journal

B
Accounting equation

C
Formula

D
Policies

Solution

Accounting equation is the foundation of double entry system of book-keeping. It displays that all the assets are either financed by borrowing money or paying from the shareholder's equity. The balance sheet being the complex version shows explain the equation very clearly and it shows that total assets is equal to total liability plus shareholder's equity. Hence, recording of all business transactions is based on accounting equation.
Question 6
1 / -0

NPV of a proposal, as calculated under Risk Adjusted Discount Rate(RADR) & Real Certainty Equivalent(CE) Approach will be __________.

A
Same

B
Unequal

C
Both A and B

D
None of A and B
Question 7
1 / -0

Cash purchases _________.

A
Increases assets

B
Results in no change in the total assets

C
Decreases assets

D
Increases liability

Solution

Every business transaction gives two affects because financial accounting is based on double entry system of accounting.

Cash purchases will affect two account i.e. purchases and cash.

Accounting entry will be done as under:

Purchases A/c Dr.
To Cash A/c.

Cash is a current assets which gets reduced. Hence it decreases the assets.
Question 8
1 / -0

"Dividend is not relevant in determining the value of the company". Who among the following held this opinion?

A
J.E. Walter

B
Ezra Soloman

C
Modigilani-Miller

D
M.J. Gordon
Question 9
1 / -0

Payment received from debtor _____________.

A
Decreases the total assets

B
Increases the total assets

C
Results in no change in total assets

D
Increase the total liabilities

Solution

Every business transaction affects two accounts as accounting is based on double entry system of accounting. For every debit there will be a credit and vice versa.

Accounting entry for payment received from debtors will be:

Cash A/c Dr.
To Debtors

Cash and debtors both are current assets. One is increasing and another is decreasing. There will be no change in total assets.
Question 10
1 / -0

A scale of typewriter that as been used in the office should be credited to ______________.

A
Cash Account.

B
Sales Account.

C
Office Equipment Account.

D
Bank Account.

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Re-Attempt Weekly Quiz Competition

Financial Statements and Analysis Test - 21

Result

Financial Statements and Analysis Test - 21

Score

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Rank

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SHARING IS CARING

Question 1

Accounting Rate of Return

Internal Rate of Return

Hurdle Rate

Risk-free Rate

Solution

Question 2

All companies

Public Limited Companies only

Private Limited Companies only

Partnership Firms and Companies

Question 3

$$1$$, $$2$$ and $$3$$

$$2$$ and $$3$$

Only $$1$$

Only $$2$$

Question 4

Decreases the total assets

Increases the total assets

Results in no change in the total assets

Increases the total liabilities

Solution

Question 5

Sales journal

Accounting equation

Formula

Policies

Solution

Question 6

Same

Unequal

Both A and B

None of A and B

Question 7

Increases assets

Results in no change in the total assets

Decreases assets

Increases liability

Solution

Question 8

J.E. Walter

Ezra Soloman

Modigilani-Miller

M.J. Gordon

Question 9

Decreases the total assets

Increases the total assets

Results in no change in total assets

Increase the total liabilities

Solution

Question 10

Cash Account.

Sales Account.

Office Equipment Account.

Bank Account.

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