Statement Analysis Tools and Accounting Ratios Test

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Statement Analysis Tools and Accounting Ratios Test - 1

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Weekly Quiz Competition

Question 1
1 / -0

While preparing Statement of Profit and Loss , net sales is Recorded as:

A
Other Expenses

B
Other income

C
Finance Cost

D
Revenue from operations

Solution

Explanation:

Money generated by the company from its main operation can be termed as revenue
Question 2
1 / -0

While preparing Statement of P/L, Salaries and wages are shown under:

A
Employee benefit expense

B
Finance Cost

C
Other Expenses

D
Cost of material consumed

Solution

Explanation:

Company can disclose information regarding aggregate expenditure and income on this items.
Question 3
1 / -0

Vinod Limited takes loan from HDFC Bank of Rs.25 Lakhs which is to be paid in 15 years. Where will you show this loan amount in balance sheet?

A
Long Term Borrowings

B
Current Liability

C
Short Term Borrowings

D
Reserve and Surplus

Solution

Explanation:

Loan taken for more than one year can be termed as long term borrowings
Question 4
1 / -0

Loss on sale of investment is:

A
Cost of material consumed

B
Other expenses

C
Depreciation

D
Amortization Expense

Solution

Explanation:

It is a capital loss, therefore do not comes under any expense category.
Question 5
1 / -0

Rent received is shown under:

A
Other income

B
Material consumed

C
Finance Cost

D
Other Expenses

Solution

Explanation:

Rent received is shown as other income and it is added to the revenue from operations to find out the total revenue.
Question 6
1 / -0

An ideal Current Ratio is:

A
2 : 1

B
1 : 1

C
4 : 1

D
3 : 1

Solution

Explanation:

An ideal current ratio is 2:1. It means a business must try to maintain its current assets twice of current liabilities. High ratio indicates under trading and over capitalisation.
Question 7
1 / -0

Liquid Ratio is also known as:

A
Current Ratio

B
Debt Equity Ratio

C
Acid Test Ratio

D
Gross Profit Ratio

Solution

Explanation:

Liquid Ratio is also known as Acid Test Ratio which helps in assessing the short term liquidity position of the firm.
Question 8
1 / -0

Quick Assets do not include:

A
Cash

B
Inventories

C
B/R

D
Bank

Solution

Explanation:

Quick Assets do not include inventories because it cannot be converted into cash quickly ie., illiquid asset
Question 9
1 / -0

Low ‘Working Capital Turnover Ratio’ indicates:

A
There is no working capital

B
No use of working capital

C
Under-utilization of working capital

D
Over-utilization of working capital

Solution

Explanation:

Low working capital turnover ratio indicates that the working capital of business is under-utilized. It means firm is investing in too many account receivable and inventory to support its sales.
Question 10
1 / -0

Deferred Tax Asset is treated as:

A
Current Assets

B
Fixed Assets

C
Fictitious Assets

D
Liquid Assets

Solution

Explanation:

Deferred tax asset is treated as a fictitious asset because it doesn’t play any role in the firm. It refers to a situation where a business has overpaid taxes or taxes paid in advance. These are eventually returned to the business.

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 1

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Statement Analysis Tools and Accounting Ratios Test - 1

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SHARING IS CARING

Question 1

Other Expenses

Other income

Finance Cost

Revenue from operations

Solution

Question 2

Employee benefit expense

Finance Cost

Other Expenses

Cost of material consumed

Solution

Question 3

Long Term Borrowings

Current Liability

Short Term Borrowings

Reserve and Surplus

Solution

Question 4

Cost of material consumed

Other expenses

Depreciation

Amortization Expense

Solution

Question 5

Other income

Material consumed

Finance Cost

Other Expenses

Solution

Question 6

2 : 1

1 : 1

4 : 1

3 : 1

Solution

Question 7

Current Ratio

Debt Equity Ratio

Acid Test Ratio

Gross Profit Ratio

Solution

Question 8

Cash

Inventories

B/R

Bank

Solution

Question 9

There is no working capital

No use of working capital

Under-utilization of working capital

Over-utilization of working capital

Solution

Question 10

Current Assets

Fixed Assets

Fictitious Assets

Liquid Assets

Solution

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