MCQ Questions Chapter 4 Analysis of Financial Statement Class 12 Accountancy

Please refer to MCQ Questions Chapter 4 Analysis of Financial Statement Class 12 Accountancy with answers provided below. These multiple-choice questions have been developed based on the latest NCERT book for class 12 Accountancy issued for the current academic year. We have provided MCQ Questions for Class 12 Accountancy for all chapters on our website. Students should learn the objective based questions for Chapter 4 Analysis of Financial Statement in Class 12 Accountancy provided below to get more marks in exams.

Chapter 4 Analysis of Financial Statement MCQ Questions

Please refer to the following Chapter 4 Analysis of Financial Statement MCQ Questions Class 12 Accountancy with solutions for all important topics in the chapter.

MCQ Questions Answers for Chapter 4 Analysis of Financial Statement Class 12 Accountancy

Question: If net revenue from operations of a firm are Rs.1,20,000; cost of revenue from operations isRs.66,000 and operating expenses are Rs.21,600, what will be the percentage of operating income on net revenue from operations ?
(a) 55%
(b) 45%
(c) 73%
(d) 27%

Question: Total assets of a firm are Rs.20,00,000 and its fixed assets are Rs.8,00,000. What will be the percentage of fixed assets on total assets?
(a) 60%
(b) 40%
(c) 29%
(d) 71%

Question: If total assets of a firm are Rs.8,20,000 and its fixed assets are Rs5,90,400, what will be the percentage of current assets on total assets?
(a) 42%
(b) 58%
(c) 28%
(d) 72%

Question: Financila Analysis becomes significant because it
(a) Ignores price level changes
(b) Measures the efficiency of business
(c) Lacks qualitative analysis
(d) Is effected by personal bias

Question: The most commonly used tools for financial analysis are:
(a) Comparative Statements
(b) Common Size Statements
(c) Accounting Ratios
(d) All of the above

Question: Which of the following is the objective of comparative statements?
(a) To make the data simpler and understandable
(b) To indicate the trend
(c) To help in forecasting
(d) All of the above

Question: Comparative Balance Sheet :
(a) Provides a summarized view of the operations of the firm
(b) Presents the financial position of the firm
(c) Presents the change in various items of balance sheet
(d) None of the above

Question: Which one of the following is not a method/tool of analysis of financial statements?
(a) Accounting Ratios
(b) Break Even Point
(c) Statements of Receipts and Payments
(d) Fund Flow Statement

Question: Comparative Statement of Profit and Loss provides information about:
(a) Rate of increase or decrease in revenue from operations
(b) Rate of increase or decrease in cost of revenue from operations
(c) Rate of increase or decrease in net profit
(d) All of the above

Question: A company’s current liabilities decreased from Rs.4,00,000 to Rs.3,00,000. What is the percentage of
change?
(a) 25%
(b) 33.3%
(c) 20%
(d) 40%

Question: A company’s working capital is Rs.10 Lakh (Negative balance) in the year 2018.It became Rs.15Lakh(positive balance) in the year 2019. What is the percentage of change?
(a) 150%
(b) 100%
(c) 250%
(d) 50%

Question: Revenue from Operations Rs.4,00,000; Cost of Revenue from Operations 60% of Revenue from Operations;Operating expenses Rs.30,000 and rate of income tax is 40%. What will be the amount of profit after tax?
(a) Rs.64,000
(b) Rs.78,000
(c) Rs.52,000
(d) Rs.96,000

Question: Which analysis depicts the relationship between two figures:
(a) Ratio Analysis
(b) Trend Analysis 
(c) Cumulative figures and averages
(d) Dividend Analysis

Question: Fixed Assets of a company increased from Rs.3,00,000 to Rs.4,00,000. What is the percentage of change?
(a) 25%
(b) 33.3%
(c) 20%
(d) 40%

Questio: If total assets of a firm are Rs.8,20,000 and its fixed assets are Rs5,90,400, what will be the percentage ofcurrent assets on total assets?
(a) 42%
(b) 58%
(c) 28%
(d) 72%

Question: Main objective of Common Size statement is:
(a) To present the changes in various items
(b) To provide for a common base for comparison
(c) To establish relationship between various items
(d) All of the Above

Question: Common Size Statements are prepared
(a) In the form of ratios
(b) In the form of Percentages
(c) In both of the above
(d) None of the above

Question: Which of the following is untrue:
(a) Common size Balance Sheet
(b) Common size Statement of Profit and Loss
(c) Common size Cash Flow Statement
(d) None of the above

Question: Main objective of Common Size Statement of Profit and Loss is :
(a) To present changes in assets and liabilities
(b) To judge the financial soundness
(c) To establish relationship between revenue from operations and other items of statement of Profit and Loss.
(d) All of the above

Question: In the Balance Sheet of a Common size Statement:
(a) Figure of current liabilities is assumed to be 100
(b) Figure of fixed assets is assumed to be 100
(c) Figure of total assets is assumed to be 100
(d) Figure of share capital is assumed to be 100

Question: Total assets of a firm are Rs.20,00,000 and its fixed assets are Rs.8,00,000. What will be the percentage offixed assets on total assets?
(a) 60%
(b) 40%
(c) 29%
(d) 71%

Question: Main objective of Common Size Balance Sheet is:
(a) To establish relationship between revenue from operations and other items of statement of profit and loss
(b) To present changes in assets and liabilities
(c) To present changes in various items of income and expenses
(d) All of the above

Question: In the statement of Profit and Loss of a Common Size Statement:
(a) Figure of net revenue from operations is assumed to be equal to 100
(b) Figure of gross profit is assumed to be equal to 100
(c) Figure of net profit is assumed to be equal to 100
(d) Figure of assets is assumed to be equal to 100

Question: If net revenue from operations of a firm are Rs.1,20,000; cost of revenue from operations is Rs.66,000 and operating expenses are Rs.21,600, what will be the percentage of operating income on net revenue from operations ?
(a) 55%
(b) 45%
(c) 73%
(d) 27%

Question: Which analysis is considered as Static?
(a) Horizontal Analysis
(b) vertical Analysis
(c) internal Analysis
(d) external Analysis

Question: Main limitation of Analysis of Financial Statement is
(a) Affected by window dressing
(b) Difficulty in forecasting
(c) Do not reflect changes in price level
(d) All the above

Question: Main Objective of Analysis of Financial Statement is
(a) To know the financial strength
(b) To make a comparative study with other firms
(c) To know the efficiency of management
(d) All the above

Question: Analysis of Financial Statement is significant
(a) For creditors
(b) For Managers
(c) For employees
(d) All the above

Question: Feature of financial analysis is to present the data contained in financial statements in
(a) Easy form
(b) Convenient and rational groups
(c) Comparable form
(d) All of the above

Question: When bad position of the business is tried to be depicted as good it is known as
(a) Personal bias
(b) Price level changes
(c) Window dressing
(d) All the above

Question: Which analysis is considered as dynamic?
(a) Horizontal Analysis
(b) vertical Analysis
(c) internal Analysis
(d) external Analysis

Question: Which Analysis is based on one year’s data?
(a) Horizontal Analysis
(b) vertical Analysis
(c) Cash Flow Statement
(d) Dividend Analysis

Question: Financial Analysis becomes useless because it
(a) Measures the profitability
(b) Measures the solvency
(c) Lacks qualitative analysis
(d) Makes a comparative study

Question: Financial Analysis becomes significant because it
(a) Ignores price level changes
(b) Measures the efficiency of business
(c) Lacks qualitative analysis
(d) Is affected by personal bias

True or False.

Question: Comparative financial statements show only absolute changes in the figures.

Question: Vertical analysis is useful in time series analysis.

Question: In case of common size statement, figures of previous years are taken as base for comparison.

Question: Common size statements enable horizontal analysis.

Question: Comparative statement of profit and loss aims to measure increase or decrease in income and expenditure in terms of rupees as well as in percentage.

Question: The accountant of a company has shown credit balance of statement of profit and loss in other current assets.

Question: A company has call in arrears of Rs 4,00,000 and calls in advance of Rs. 1,50,000. The company shown net balance of Rs 2,50,000 under current assets .

Question: Comparative balance sheet shows the increase or decrease in various items of balance sheet as compared to single year balance sheet, which shows the balance of accounts at a certain date.

Question: The operating cycle of a company is 17 months and the expected period of realization of trade receivables is 14 months. Trade receivable is shown as current assets.

Question: Securities premium reserves is shown under share capital head.

Question: Financial statements do not show _________ information.

Question: Prepaid expenses are shown under the main head _______ in the balance sheet of a company.

Question: If the operating cycle cannot be identified, it is assumed to have duration of __________. 

Question: __________ analysis is based upon the information available to the internal groups.

Question: The debit balance of statement of profit and loss will be disclosed under the head _________ as the _______ figure.

Question: ________ are interested in knowing the firm’s ability to meet its short-term liabilities.

Question: Financial statements are ________ in nature as they record past events and facts.

Question: Provision for tax is shown under the sub-head ___________

Question: Financial statement refers to the statement of profit and loss and __________.

Question: Provision for employee benefits is shown under the sub-head _________.

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