Accountancy Chapter 4 (Part 1) – Analysis of financial statements MCQ Question and Answers – MCQs for Practice

1. The most commonly used tools for financial analysis are:

2. The process of critical _________ of the financial information contained in the financial statements in order to understand and make decisions regarding the operations of the firm is called ‘Financial Statement Analysis’

3. By Analysing Common Size Statements Which Analysis can be Processed?

4. ___________ describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm.

5. Who are also interested in the firm’s capital structure to ascertain its influences on firm’s earning, Risk and Also evaluate the efficiency of the management and determine whether a change is needed or not?

6. The financial statements of a business enterprise include:

7. Comparative Statements are also known as:

8. Common Size Statement is of immense use for ______________.

9. The main and sole Objective of Analysis of financial statements is to

10. Whose analysis will evaluate the ability of the company to meet its short-term obligations & firm’s liquidity position?

11. What is Not Incorrect About Common Size Statements?

12. In Which analysis, each item in the statement is stated as a percentage of the aggregate, or revenue from operations of which that item is a part.

13. Using the previous years’ data of a business enterprise, __________can be done to observe the percentage changes over time in the selected data.

14. Conclusion base on financial analysis may be non-reliable because financial statement is based on certain concepts and conventions. This Statement Can be Limitation of __________.

15. Trend analysis is important because, with its _________ view, it may point to basic changes in the nature of the business

16. The following are the reasons that advocate in favour of Financial Analysis.

17. This is Not a feature of Trend Analysis

18. Limitation of Financial Analysis.

19. The term Financial Analysis includes both ____________.

20. Whose analysis help in studying accounting data so as to determine the continuity of the operating policies, investment value of the business, credit ratings and testing the efficiency of operations?