Financial Statements and Analysis Test

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Financial Statements and Analysis Test - 27

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following statements is/ are NOT correct?

A
Provision for bad debts appears as a liability on the balance sheet

B
The provision for bad debts is owed to the proprietor

C
Bad debts could be less than the provision for bad debts

D
Bad debts could exceeds the provision for bad debts
Question 2
1 / -0

Stimulus: Your are always late
Response: Sorry Sir!
How will you classify the above transaction as per concept of transactional analysis _______________.

A
Adult - Child

B
Child - Adult

C
Parent - Child

D
Child - Child
Question 3
1 / -0

In accordance with IAS 1 Presentation of Financial Statements, which one of the following statements is correct?

A
Assets and liabilities must be presented broadly in the order of their liquidity.

B
Assets and liabilities can be offset if they result from the same transaction or event.

C
Intangible assets must be presented separately in the statement of financial position.

D
Even if less than 12 months, the length of an entity's operating cycle must be disclosed.

Solution

In accordance with IAS 1 Presentation of Financial Statements, Intangible assets must be presented separately in the statement of financial position. IAS 1 sets out guidelines for presentation of financial statements, guidelines for their presentation etc
Question 4
1 / -0

Stimulus: I wish you were better educated.
Response: I am not so lucky
How will you classify the above transaction as per concept of transactional analysis ____________.

A
Adult - Child

B
Child - Adult

C
Parent - Child

D
Child - Child
Question 5
1 / -0

Withdrawals by proprietor would.

A
Reduce both Assets and Owner's Equity

B
Reduce Assets and increase Liabilities

C
Reduce Owner's Equity and increase Liabilities

D
Have no affect on the Balance Sheet
Question 6
1 / -0

Which of the following are significance of Financial Analysis?

A
Assessing the earning capacity.

B
Assessing managerial efficiency.

C
Inter-firm Comparison.

D
All of the above

Solution

Financial analysis means analysing the financial statements of the firm to make financial decisions. It helps in assessing the earning capacity, present position, past performance, managerial efficiency and helps in inter-firm comparison.
Question 7
1 / -0

Parties interested in the analysis of financial statements are ___________.

A
Management

B
Shareholders

C
Bankers and Lenders

D
All of the above

Solution

Parties interested in the analysis of financial statements are known as stakeholders. The stakeholders are management, shareholders and bankers and lenders etc. The management is interested whether the organisational objectives are achieved or not, the shareholders want to know whether their money is used properly and whether they are getting proper returns or not, Bankers and lenders will be interested when granting loans or advances whether or not the company will be able to repay the debt.
Question 8
1 / -0

Financial data can be made more comprehensive by _______________.

A
Charts

B
Graphs

C
Diagrams

D
All of the above

Solution

Financial analysis can be made more comprehensive by charts, graphs and diagrams. It will be more comprehensive as all the elements will be covered and will be easier for the users of the financial statements to understand the same.
Question 9
1 / -0

Long-term and short-term solvency of the enterprise can be assessed on the basis of ___________ statement analysis.

A
cash flow

B
income

C
financial

D
all of the above
Question 10
1 / -0

Which of the following is the limitation of financial statement analysis?

A
Historical analysis

B
Ignores price level changes

C
Not free from bias

D
All of the above

Solution

Financial statements of a company as useful as they are have a few limitations as well. They are prepared on historical cost as all the assets of the company are recorded at the cost.
They ignore price level changes because of the historical cost concept. They are not free from personal bias, as the statements are prepared by humans personal bias being a human tendency might affect the financial statements.

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Re-Attempt Weekly Quiz Competition

Financial Statements and Analysis Test - 27

Result

Financial Statements and Analysis Test - 27

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SHARING IS CARING

Question 1

Provision for bad debts appears as a liability on the balance sheet

The provision for bad debts is owed to the proprietor

Bad debts could be less than the provision for bad debts

Bad debts could exceeds the provision for bad debts

Question 2

Adult - Child

Child - Adult

Parent - Child

Child - Child

Question 3

Assets and liabilities must be presented broadly in the order of their liquidity.

Assets and liabilities can be offset if they result from the same transaction or event.

Intangible assets must be presented separately in the statement of financial position.

Even if less than 12 months, the length of an entity's operating cycle must be disclosed.

Solution

Question 4

Adult - Child

Child - Adult

Parent - Child

Child - Child

Question 5

Reduce both Assets and Owner's Equity

Reduce Assets and increase Liabilities

Reduce Owner's Equity and increase Liabilities

Have no affect on the Balance Sheet

Question 6

Assessing the earning capacity.

Assessing managerial efficiency.

Inter-firm Comparison.

All of the above

Solution

Question 7

Management

Shareholders

Bankers and Lenders

All of the above

Solution

Question 8

Charts

Graphs

Diagrams

All of the above

Solution

Question 9

cash flow

income

financial

all of the above

Question 10

Historical analysis

Ignores price level changes

Not free from bias

All of the above

Solution

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