Class 12 Accountancy Chapter 4 (Part 1) – Analysis of financial statements MCQ Question and Answers – MCQs for Practice by Meenu Saini | May 25, 2022 | General | 0 comments Class 12 Accountancy Chapter 4 (Part 1) – Analysis of financial statements MCQ Question Answers for CUET 2024 1. Using the previous years’ data of a business enterprise, __________can be done to observe the percentage changes over time in the selected data.a.Trend Analysisb.Time Datac.Vertical Analysisd.Periodical Analysis Technique Loading... 2. The financial statements of a business enterprise include:a.Profit and loss accountb.Balance sheetc.Cash flow statementd.All the above Loading... 3. By Analysing Common Size Statements Which Analysis can be Processed?a.Ratio Analysisb.Horizontal Analysisc.Vertical Analysisd.Proportion Analysis Loading... 4. This is Not a feature of Trend Analysisa.Assists in Forecastingb.Consider Only Monetary Aspectc.Presents a Broader Pictured.Percentage Terms Loading... 5. 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 __________.a.Internal Analysisb.Vertical Analysisc.Trend Analysisd.Financial Analysis Loading... 6. ___________ describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm.a.Cash flow analysisb.Trend Analysisc.Ratio Analysisd.Proportion Analysis Loading... 7. 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’a.Analysisb.Evaluationc.Evolutiond.Study Loading... 8. Whose analysis will evaluate the ability of the company to meet its short-term obligations & firm’s liquidity position?a.Shareholdersb.Lendersc.Investorsd.Trade Payables Loading... 9. 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?a.Trade Payablesb.Othersc.Investorsd.Top Management Loading... 10. Limitation of Financial Analysis.a.Misleading without the knowledge of the changes in accounting procedureb.Nonmonetary Aspects re Ignoredc.Ignorance of changes in Price leveld.All of the above Loading... 11. The main and sole Objective of Analysis of financial statements is toa.Ascertain the assets and Liabilities of firmb.Ascertain the loss or Profitc.Measure the financial Strength of the businessd.Recognize the Profitability Loading... 12. Common Size Statement is of immense use for ______________.a.Intra firm Comparisonb.Financial Analysisc.Trend analysisd.Inter firm Comparison Loading... 13. What is Not Incorrect About Common Size Statements?a.Common size statements are useful, both, in intra-firm comparisons over different yearsb.This analysis is also known as Horizontal Analysisc.Percentage calculated can be easily compared with the results of corresponding percentages of the previous yeard.The numbers are brought to common base Loading... 14. Trend analysis is important because, with its _________ view, it may point to basic changes in the nature of the businessa.Long Runb.None of the abovec.Short Timed.Short run Loading... 15. The most commonly used tools for financial analysis are:a.Ratio analysisb.Vertical analysisc.All the aboved.Horizontal analysis Loading... 16. 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?a.Finance Managersb.Top Managementc.Investorsd.Trade Payables Loading... 17. 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.a.Vertical Analysisb.Dynamic Analysisc.External Analysisd.Horizontal Analysis Loading... 18. The following are the reasons that advocate in favour of Financial Analysis.a.It helps in assessing the long-term solvency of the business.b.Helps to ascertain the relative importance of different components of the financial position of the firmc.All of the aboved.It helps in evaluating the profit earning capacity and finance feasibility of a business. Loading... 19. Comparative Statements are also known as:a.Horizontal Analysisb.External Analysisc.Dynamic Analysisd.Vertical Analysis Loading... 20. The term Financial Analysis includes both ____________.a.Analysis and Forecastingb.Interpretation and Studyc.Evaluation and Interpretationd.Analysis and Interpretation Loading... Loading... Also See : Accountancy Part 1 Accountancy Chapter 1 (Part 1) – Accounting for share capital MCQs Accountancy Chapter 2 (Part 1) – Accounting for partnership: basic concepts MCQs Accountancy Chapter 3 (Part 1) – Financial statements of a company MCQs Accountancy Chapter 5 (Part 1) – Accounting ratios MCQs Accountancy Chapter 6 – Cash flow statement MCQs Accountancy Part 2 Accountancy Chapter 1 (Part 2) – Accounting for not for profit organisation MCQs Accountancy Chapter 2 (Part 2) – Issue and redemption of debentures MCQs Accountancy Chapter 3 (Part 2) – Reconstitution of a partnership firm – admission of a partner MCQs Accountancy Chapter 4 (Part 2) – Retirement/death of a partner MCQs Accountancy Chapter 5 (Part 2) – Dissolution of partnership firm MCQs Submit a Comment Cancel replyYou must be logged in to post a comment.