Financial Statements and Analysis Test

Result

Financial Statements and Analysis Test - 7

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Weekly Quiz Competition

Question 1
1 / -0

The Real object of Analysis of Financial Statement is …………

A
To assess the total liabilities of the firm

B
To assess the total expenses of the firm

C
To know about historical cost concept

D
To measure the financial strength of the business

Solution

The main objective of analysis of financial statement is to measure the financial strength and performance of the firm.
Question 2
1 / -0

Following are the limitations of financial analysis except

A
Affected by the personal ability and bias of the Analyst

B
Don't reflect changes in price level.

C
To make comparative study within the firm and with other firms

D
Single years' Analysis of financial statement have limited use.

Solution

Following are the limitations of financial statement analysis:
•Don't reflect changes in price level.
•Affected by the personal ability and bias of the Analyst
•Single years' Analysis of financial statement have limited use.
Question 3
1 / -0

When single set of statements of two firms is compared, it is known as …….

A
Time Analysis

B
Intra firm analysis

C
Managerial Analysis

D
Cross Sectional Analysis

Solution

Cross sectional analysis is the analysis of a financial ratio of a company with the same ratio of different companies in the same industry. For example, one may conduct a cross-sectional ratio analysis of the debt ratios of multiple companies in the telecommunications industry. Quite simply, one does this by taking the debt ratios of each company and comparing them to one another. An analyst does this in order to find the company with healthiest financial status. This is helpful in making informed investment decisions.
Question 4
1 / -0

Analysis of Financial statements suffers from the limitation of window dressing which means….

A
hide some vital information

B
may overvalue closing stock to show higher profits

C
show items at incorrect value to portray better profitability

D
All of these

Solution

Window dressing is the limitation of accounting which is directly concerned with:
hide some vital information
show items at incorrect value to portray better profitability
may overvalue closing stock to show higher profits
Question 5
1 / -0

Shareholders are interested in the analysis of financial statement because….

A
For Research

B
For the assessment of tax

C
They want to judge the present and future earning capacity of the business.

D
For the payment to the financial institutions

Solution

Shareholders are interested in the analysis of financial statement because they want to judge the present and future earning capacity of the business. They want to know whether their investment would yield how many returns.
Question 6
1 / -0

Horizontal Analysis is:

A
Cross Section Analysis

B
Time Series Analysis

C
Profitability Analysis

D
None of these

Solution

Horizontal analysis is a time series analysis because it shows comparison of financial data for several years.
Question 7
1 / -0

Comparative Financial Statement is an example of

A
Internal Analysis

B
External analysis

C
Horizontal analysis

D
Vertical Analysis

Solution

Comparative financial statement is an example of Horizontal analysis because it requires comparative financial statements of two or more accounting periods.
Question 8
1 / -0

Following Items that can be shown as contingent Liabilities in a company‘s Balance sheet except

A
Claims against the Company not acknowledged as debts.

B
Advance to Subsidiaries

C
Uncalled Liability on partly paid shares.

D
Arrears of Dividend on Cumulative preference shares

Solution

Following Items that can be shown as contingent Liabilities in a company‘s Balance sheet except Advance to Subsidiaries.

1)Claims against the Company not acknowledged as debts

2)Uncalled Liability on partly paid shares.

3)Arrears of Dividend on Cumulative preference shares

Contingent liabilities are those which may or may not arise as they are dependenT on happening in future.
Question 9
1 / -0

Analysis conducted by the Investors and Creditors is known as:

A
Horizontal Analysis

B
Time Series Analysis

C
Cross Sectional Analysis

D
External Analysis

Solution

Analysis conducted by the Investors and Creditors is known as External Analysis because they both are treated as outsiders.
Question 10
1 / -0

The point where total of sales is exactly equal to the total of cost.

A
Profit Point

B
Zero Point

C
Break-even Point

D
Loss Point

Solution

Break-even point is a point where total of sales is exactly equal to the total of cost to the total of cost of sales.

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Re-Attempt Weekly Quiz Competition

Financial Statements and Analysis Test - 7

Result

Financial Statements and Analysis Test - 7

Score

-

Rank

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SHARING IS CARING

Question 1

To assess the total liabilities of the firm

To assess the total expenses of the firm

To know about historical cost concept

To measure the financial strength of the business

Solution

Question 2

Affected by the personal ability and bias of the Analyst

Don't reflect changes in price level.

To make comparative study within the firm and with other firms

Single years' Analysis of financial statement have limited use.

Solution

Question 3

Time Analysis

Intra firm analysis

Managerial Analysis

Cross Sectional Analysis

Solution

Question 4

hide some vital information

may overvalue closing stock to show higher profits

show items at incorrect value to portray better profitability

All of these

Solution

Question 5

For Research

For the assessment of tax

They want to judge the present and future earning capacity of the business.

For the payment to the financial institutions

Solution

Question 6

Cross Section Analysis

Time Series Analysis

Profitability Analysis

None of these

Solution

Question 7

Internal Analysis

External analysis

Horizontal analysis

Vertical Analysis

Solution

Question 8

Claims against the Company not acknowledged as debts.

Advance to Subsidiaries

Uncalled Liability on partly paid shares.

Arrears of Dividend on Cumulative preference shares

Solution

Question 9

Horizontal Analysis

Time Series Analysis

Cross Sectional Analysis

External Analysis

Solution

Question 10

Profit Point

Zero Point

Break-even Point

Loss Point

Solution

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