Financial Statements and Analysis Test

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Financial Statements and Analysis Test - 22

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Weekly Quiz Competition

Question 1
1 / -0

Risk-aversion of an investor can be measured by______________.

A
Market Rate of Return

B
Risk-free Rate of Return

C
Portfolio Return

D
None of the above

Solution

Risk aversion means the tendency of a person to avoid a decision/investment when there is risk involved. Risk aversion is a personal trait of a person. Risk-aversion of an investor cannot be measured by market rate of return, risk free rate of return or portfolio profit.
Question 2
1 / -0

The most commonly used tools for financial analysis are _______________.

A
Horizontal analysis

B
Vertical analysis

C
Ratio analysis

D
All of the above

Solution

Commonly used tools of financial analysis are: Comparative statements, Common size statements, trend analysis, ratio analysis, funds flow analysis, and cash flow analysis.
Question 3
1 / -0

Directions For Questions

Capital structure of a company is

...view full instructions

Calculate dividend yield on the ordinary shares _______________.

A
$$15\%$$

B
$$10\%$$

C
$$5\%$$

D
$$2\%$$
Question 4
1 / -0

_____________ increases both total assets as well as owner's equity.

A
Credit purchases

B
Retained earnings

C
Bank loans

D
Drawings

Solution

Profits earned by the business are generally considered as retained earning, if not withdrawn by the owners. If firm generate the profits and retained in the business, cash of the firm increases which is part of the total assets. Parallel to this, all profits which are retained in the business are ultimately part of owners capital, hence it increases.
Question 5
1 / -0

Accounts which relates to assets tangible or intangible are called ________ .

A
Personal a/c

B
Real a/c

C
Nominal a/c

D
Impersonal a/c

Solution

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural and Representative. All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts". Tangible real accounts are related to things that can b touched and felt physically, e.g., building, machinery, stock, land, etc. Intangible real accounts are related to things that can't be touched and felt physically, e.g., goodwill, patents, trademarks, etc.
Question 6
1 / -0

When each co-venturer open his own account, the profit from Joint Venture A/c is

A
Credited to joint venture with other A/c

B
Debited to joint venture with other A/c

C
Debited to memorandum A/c

D
Credited to general profit and loss A/c
Question 7
1 / -0

Bills Receivable A/c is _________.

A
Personal A/c

B
Real A/c

C
Nominal

D
None of the above

Solution

There are mainly three types of account: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Natural, Artificial and Representative. Bills Receivable and Bills Payable are personal accounts. Both these accounts represent debtors and creditors of a particular entity. The rule of personal account is Debit the receiver, Credit the giver. Suppose when Bills Receivable is issued, its debited because that represents debtor from whom money is receivable. In a way the entity has given those debtors a benefit i.e. credit so as per the rule Bills Receivable A/c is debited. Hence, bills receivable is a personal a/c.

Question 8

1 / -0

Match the following

List-I (Types of Financial Analysis)	List-II (Main Characteristics)
(a) Dynamic Analysis	1. Depends on published
(b) Static Analysis	2. Horizontal Analysis
(c) Internal Analysis	3. Vertical Analysis
(d) External Analysis	4. More confidential

(a)-3, (b)-4, (c)-1, (d)-2

(a)-2, (b)-3, (c)-4, (d)-1

(a)-1, (b)-4, (c)-2, (d)-3

(a)-4, (b)-2, (c)-1, (d)-3

Question 9
1 / -0

Loss of stock by fire would lead to ____________.

A
No change in total assets

B
Total assets to decrease

C
Total assets to increase

D
Total assets and owners equity to decrease

Solution

Loss of stock by fire will lead to decrease in closing stock on the asset side of balance sheet and decrease in net income of profit and loss account, i.e. decrease in owner's equity on the liability side of the balance sheet.
Question 10
1 / -0

Tick the false statements

A
Cash basis of accounting is valid under the Companies Act

B
Cash basis and accrual basis of accounting will show different operating results

C
Unexpired discount is a personal account

D
Consistency concept facilitate inter firm comparison

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Re-Attempt Weekly Quiz Competition

Financial Statements and Analysis Test - 22

Result

Financial Statements and Analysis Test - 22

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Rank

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SHARING IS CARING

Question 1

Market Rate of Return

Risk-free Rate of Return

Portfolio Return

None of the above

Solution

Question 2

Horizontal analysis

Vertical analysis

Ratio analysis

All of the above

Solution

Question 3

$$15\%$$

$$10\%$$

$$5\%$$

$$2\%$$

Question 4

Credit purchases

Retained earnings

Bank loans

Drawings

Solution

Question 5

Personal a/c

Real a/c

Nominal a/c

Impersonal a/c

Solution

Question 6

Credited to joint venture with other A/c

Debited to joint venture with other A/c

Debited to memorandum A/c

Credited to general profit and loss A/c

Question 7

Personal A/c

Real A/c

Nominal

None of the above

Solution

Question 8

(a)-3, (b)-4, (c)-1, (d)-2

(a)-2, (b)-3, (c)-4, (d)-1

(a)-1, (b)-4, (c)-2, (d)-3

(a)-4, (b)-2, (c)-1, (d)-3

Question 9

No change in total assets

Total assets to decrease

Total assets to increase

Total assets and owners equity to decrease

Solution

Question 10

Cash basis of accounting is valid under the Companies Act

Cash basis and accrual basis of accounting will show different operating results

Unexpired discount is a personal account

Consistency concept facilitate inter firm comparison

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