NCERT Class 12 Accountancy MCQ Chapter 8 Analysis of Financial Statements 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 8 Analysis of Financial Statements Question Answer and select needs one.
NCERT Class 12 Accountancy MCQ Chapter 8 Analysis of Financial Statements
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.
Analysis of Financial Statements
Chapter: 8
| PART – ⅠⅠ |
MULTIPLE CHOICE QUESTION ANSWER
1. What is required for proper analysis and interpretation of financial statements?
(i) Advanced software only.
(ii) Knowledge of international markets.
(iii) Specific techniques developed by financial experts.
(iv) Random guesswork.
Ans: (iii) Specific techniques developed by financial experts.
2. Financial analysis primarily considers which of the following?
(i) Non-monetary factors.
(ii) The current market price of assets.
(iii) Historical cost data.
(iv) Monetary information from financial reports.
Ans: (iv) Monetary information from financial reports.
3. If the net profit of a company is ₹5,00,000 and its sales are ₹25,00,000, what is the net profit ratio?
(i) 10%
(ii) 20%
(iii) 30%
(iv) 40%
Ans: (ii) 20%
4. A company’s current assets are ₹8,00,000, and current liabilities are ₹4,00,000. What is the current ratio?
(i) 2:1
(ii) 2:3
(iii) 3:4
(iv) 4:2
Ans: (i) 2:1
5. If a company’s cost of goods sold is ₹12,00,000 and the average inventory is ₹3,00,000, what is the inventory turnover ratio?
(i) 2 times.
(ii) 4 times.
(iii) 6 times.
(iv) 8 times.
Ans: (iii) 6 times.
6. Who uses financial statements to study the present business and economic conditions?
(i) Investors.
(ii) Labour unions.
(iii) Economists and researchers.
(iv) All of the above.
Ans: (iii) Economists and researchers.
7. Which financial statement provides information about a company’s financial position at a specific point in time?
(i) Income Statement.
(ii) Cash Flow Statement.
(iii) Balance Sheet.
(iv) Statement of Retained Earnings.
Ans: (iii) Balance Sheet.
8. A company’s net credit sales are ₹10,00,000, and the average accounts receivable is ₹2,00,000. What is the accounts receivable turnover ratio?
(i) 2 times.
(ii) 4 times.
(iii) 5 times.
(iv) 10 times.
Ans: (iii) 5 times.
9. The debt-equity ratio of a company is calculated as:
(i) Total Assets / Total Liabilities.
(ii) Total Liabilities / Shareholders’ Equity.
(iii) Current Liabilities / Current Assets.
(iv) None of the above.
Ans: (ii) Total Liabilities / Shareholders’ Equity.
10. If a company’s earnings before interest and taxes (EBIT) are ₹3,00,000 and its interest expenses are ₹1,00,000, what is the interest coverage ratio?
(i) 2 times.
(ii) 3 times.
(iii) 1.5 times.
(iv) 4 times.
Ans: (ii) 3 times.
11. Financial analysis can serve as a basis for which of the following governmental actions?
(i) Pricing and licensing decisions.
(ii) Employee recruitment policies.
(iii) Customer loyalty programs.
(iv) Operational cost-cutting measures.
Ans: (i) Pricing and licensing decisions.
12. Comparative statements are also known as:
(i) Horizontal analysis.
(ii) Vertical analysis system.
(iii) Trend analysis system.
(iv) All of the above.
Ans: (i) Horizontal analysis.
13. In cash flow analysis, the flow of cash into the business is called:
(i) Cash outflow.
(ii) Negative cash flow.
(iii) Negative cash inflow.
(iv) Net cash flow.
Ans: (i) Cash inflow.
14. For whom analysis of financial statements is not significant?
(i) Political Adviser to the Prime Minister.
(ii) Investors.
(iii) Management.
(iv) Financial Institutions.
Ans: (i) Political Adviser to the Prime Minister.
15. A company’s equity capital is ₹6,00,000, retained earnings are ₹4,00,000, and total liabilities are ₹10,00,000. What is the debt-equity ratio?
(i) 1:1
(ii) 2:1
(iii) 3:1
(iv) 4:1
Ans: (ii) 2:1
