Deck 7: Financial Statements and Ratio Analysis

Question 1

Single entry system is mixture of single entry, double entry and no entry.

A)true
B)may be false
C)only true
D)none of the above

Answer 1

true

Question 2

They record a few translation completely just like the double entry system but a majority of the transactions are recorded only partially is known as incomplete records.

A)true
B)false
C)both a and b
D)none of the above

Answer 2

true

Question 3

Under single entry system the profit and loss can be found out and also it's comparison will be available.

A)true
B)false
C)both and b
D)only false

Answer 3

false

Question 4

Profit and losses can't be ascertained because Trading and Profit and loss account can't be prepared.

A)true
B)false
C)may be true
D)may be false

Question 5

When the concept of ratio is defined in respect to the item shown in the financial statements, it is termed as

A)Accounting ratio
B)Financial ratio
C)costing ratio
D)none of the above

Question 6

The relationship between two financial variables can be expressed in:

A)Pure ratio
B)Percentage
C)Rate or time
D)all the above

Question 7

Stock is considered as a liquid asset as anytime it can be converted into cash immediately.

A)Yes
B)No
C)Only YES
D)None of the above

Question 8

Return on properties funds is also known as.

A)Return on net worth
B)Return on shareholders fun
C)Return on the shareholders investment
D)All the above

Question 9

What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & sales return is Rs10,000 ?

A)13 %
B)28%
C)26%
D)20%

Question 10

Liquid asset is determined by

A)Current asset - stock - prepaid expense
B)Current asset + Stock +prepaid expense
C)Current asset + prepaid expense
D)None of the above

Question 11

Which of the following is not included in current assets.

A)Debtors
B)Stock
C)Cash at bank
D)Cash in hand

Question 12

Liquidity ratios are expressed in

A)Pure ratio form
B)Percentage
C)Rate or time
D)None of the above

Question 13

Working capital turnover ratio can be determined by :

A)( Gross profit / Working capital )
B)( Cost of goods sold / Net sales )
C)( Cost of goods sold / Working capital)
D)None of the above

Question 14

Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000 & cost of goods sold is Rs 3,00,000.

A)5 times
B)6 times
C)3 times
D)1.5 times

Question 15

The ratio analysis is helpful to management in taking several decisions, but as a mechanical substitute for judgement and thinking, it is worse than useless.

A)True
B)False
C)may be false
D)both a and b

Question 16

Profit for the objective of calculating a ratio may be taken as

A)Profit before tax but after interest
B)Profit before interest &tax
C)Profit after interest & tax
D)All the above

Question 17

If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is

A)24%
B)416%
C)60%
D)None of the above

Question 18

General profitability ratios are based on

A)Investment
B)Sales
C)A & B
D)None of the above

Question 19

Financial Statement Analysis can be used for assessment of past performance only.

A)false
B)true
C)either true or false
D)only true

Question 20

Ratio analysis is an important means of expressing the relationship between two numbers.

A)true
B)false
C)may be false
D)a and b both

Question 21

Ratio analysis helps in investment decision.

A)true
B)false
C)may be true
D)a & b both

Question 22

Liquid Ratio is also known as 2:1 ratio.

A)false
B)true
C)either true or false
D)none of the above

Question 23

Current ratio indicates the solvency position of the business.

A)true
B)false
C)may be false
D)a and b

Question 24

An ideal Liquid ratio is considered as 1:1

A)true
B)false
C)a and b both
D)none of the above

Question 25

The gross profit represents the net margin.

A)false
B)true
C)both a and b
D)may be false