NCERT Class 12 Accountancy MCQ Chapter 7 Financial Statements of a Company Solutions, AHSEC Class 12 Accountancy Multiple Choice Question Answer to each chapter is provided in the list so that you can easily browse throughout different chapters NCERT Class 12 Accountancy MCQ Chapter 7 Financial Statements of a Company Question Answer and select needs one.
NCERT Class 12 Accountancy MCQ Chapter 7 Financial Statements of a Company
Also, you can read the SCERT book online in these sections NCERT Class 12 Accountancy Multiple Choice Solutions by Expert Teachers as per SCERT (CBSE) Book guidelines. AHSEC Class 12 Accountancy MCQ Solutions. These solutions are part of SCERT All Subject Solutions. Here we have given HS 2nd Year Accountancy Objective Type Question Answer for All Subjects, You can practice these here.
Financial Statements of a Company
Chapter: 7
| PART – ⅠⅠ |
MULTIPLE CHOICE QUESTION ANSWER
1. What is a limitation of financial statements?
(i) They provide a complete analysis of a company’s future prospects.
(ii) They are based on historical data and may not reflect future conditions.
(iii) They are useful for tax purposes only.
(iv) They offer a subjective view of the company’s performance.
Ans: (ii) They are based on historical data and may not reflect future conditions.
2. Who are the primary users of financial statements?
(i) Only investors.
(ii) Only government agencies.
(iii) External parties like investors, employees, and tax authorities.
(iv) Only the company’s management.
Ans: (iii) External parties like investors, employees, and tax authorities.
3. Which financial statement provides insight into a company’s liquidity and cash movements?
(i) Statement of Profit and Loss.
(ii) Balance Sheet.
(iii) Cash Flow Statement.
(iv) Dividend Statement.
Ans: (iii) Cash Flow Statement.
4. Which statement reflects the financial position of a company at the end of an accounting period?
(i) Statement of Profit and Loss.
(ii) Balance Sheet.
(iii) Cash Flow Statement.
(iv) Income Tax Return.
Ans: (ii) Balance Sheet.
5. Which of the following financial statements shows the company’s profitability over a period?
(i) Balance Sheet.
(ii) Statement of Profit and Loss.
(iii) Statement of Cash Flow.
(iv) Budget Report.
Ans: (ii) Statement of Profit and Loss.
6. The balance sheet of a company shows a total of Rs. 10,00,000 in assets and liabilities. The company’s equity is Rs. 4,00,000. What is the total amount of liabilities?
(i) Rs. 10,00,000
(ii) Rs. 6,00,000
(iii) Rs. 4,00,000
(iv) Rs. 2,00,000
Ans: (ii) Rs. 6,00,000
7. In a Company’s Balance Sheet _____________ appear under the head ‘non-current assets’.
(i) Goodwill.
(ii) Patents.
(iii) Vehicles.
(iv) All of the above.
Ans: (iv) All of the above.
8. A company has reported a gross profit of Rs. 8,00,000 and operating expenses of Rs. 3,00,000. What is the operating profit?
(i) Rs. 5,00,000
(ii) Rs. 8,00,000
(iii) Rs. 3,00,000
(iv) Rs. 6,00,000
Ans: (i) Rs. 5,00,000
9. A company’s current liabilities are Rs. 3,00,000 and its current assets are Rs. 5,00,000. What is its current ratio?
(i) 1.5
(ii) 2.5
(iii) 0.6
(iv) 1.0
Ans: (ii) 1.5
10. A company’s statement of profit and loss shows a net profit of Rs. 5,00,000. During the year, the company paid Rs. 1,00,000 as dividends. What is the retained earnings for the year?
(i) Rs. 5,00,000
(ii) Rs. 6,00,000
(iii) Rs. 4,00,000
(iv) Rs. 1,00,000
Ans: (iii) Rs. 4,00,000
11. Which of the following is not required to be prepared under the Companies Act:
(i) Statement of Profit & Loss.
(ii) Balance Sheet.
(iii) Auditor’s Report.
(iv) Fund Flow Statement.
Ans: (iv) Fund Flow Statement.
12. What would be the effect on the balance sheet if a company borrows Rs. 2,00,000 from a bank?
(i) Increase in assets by Rs. 2,00,000 and an increase in liabilities by Rs. 2,00,000.
(ii) Decrease in assets by Rs. 2,00,000 and an increase in liabilities by Rs. 2,00,000.
(iii) Increase in assets by Rs. 2,00,000 with no change in liabilities.
(iv) No change in assets or liabilities.
Ans: (i) Increase in assets by Rs. 2,00,000 and an increase in liabilities by Rs. 2,00,000.
13. What is the convention of materiality in financial accounting?
(i) Only large transactions are recorded.
(ii) Small items like pencils, pens, and postage stamps are treated as expenses.
(iii) All transactions are valued at market prices.
(iv) Only tangible assets are recorded.
Ans: (ii) Small items like pencils, pens, and postage stamps are treated as expenses.
14. Which postulate assumes that the enterprise will continue to operate for a longer period of time?
(i) Money measurement postulate.
(ii) Realization postulate.
(iii) Going concern postulate.
(iv) Business entity postulate.
Ans: (iii) Going concern postulate.
15. A company’s current liabilities are Rs. 3,00,000 and its current assets are Rs. 5,00,000. What is its current ratio?
(i) 1.5
(ii) 2.5
(iii) 0.6
(iv) 1.0
Ans: (ii) 1.5
