This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Given instrument is always appears under Unsecured Loan A) Public Deposits. B) Debentures. Show Answer Correct Answer: A) Public Deposits. 2. The question "Did the common stockholders receive an adequate return on their investment?" is answered through the use of A) Liquidity ratios. B) Profitability ratios. C) Asset management ratios. D) Leverage ratios. Show Answer Correct Answer: B) Profitability ratios. 3. Comparison of values of one period with those of another period for the same firm is A) Intra-firm comparison. B) Inter-firm comparison. C) Pattern comparison. D) Trend comparison. Show Answer Correct Answer: A) Intra-firm comparison. 4. Accountants need a related concept that addresses when to recognize the costs associated with the recognized revenue:the matching concept A) True. B) False. Show Answer Correct Answer: A) True. 5. Marty Company's benchmark total operating expense ratio is between 32.0% and 34.0%. An increase in its operating expense ratio from 33.1% to 34.2% is a favorable trend. A) True. B) False. Show Answer Correct Answer: B) False. 6. The price-earnings ratio is an example of a A) Solvency ratio. B) Profitability ratio. C) Liquidity ratio. D) Market ratio. Show Answer Correct Answer: D) Market ratio. 7. According to the IASB Conceptual Framework, the fundamental qualitative characteristics that make financial statements useful are: A) Verifiability and timeliness. B) Relevance and faithful representation. C) Understandability and relevance. D) None of above. Show Answer Correct Answer: B) Relevance and faithful representation. 8. Contingent Liabilities on account of disputed tax liabilities will be shown in the Balance Sheet under? A) Asset side. B) Liabilities side. C) As a footnote. D) Both assets and liabilities side. Show Answer Correct Answer: C) As a footnote. 9. What does ROA stand for? A) Rate of Return on Equity. B) Rate of Return on Income. C) Rate of Return on New Worth. D) Rate of Return on Assets. Show Answer Correct Answer: D) Rate of Return on Assets. 10. Working Capital Gap is equal to? A) Total Current Assets less Net Working Capital. B) Net working Capital plus other current liabilities. C) Net working capital plus Short Term Bank Borrowings. D) Other Current Liabilities plus Bank Borrowings. Show Answer Correct Answer: C) Net working capital plus Short Term Bank Borrowings. 11. Calculate the quick ratio for a company with current assets of $ 300, 000, inventory of $ 100, 000, and current liabilities of $ 150, 000. A) 0.75. B) 1.33. C) 1.1. D) 2.5. Show Answer Correct Answer: B) 1.33. 12. Which of the following parties would perform an external financial analysis? A) A firm's compensation committee. B) A financial analyst forecasting the next period's borrowing needs. C) A firm's creditors. D) A CFO comparing the performance of the firm's various divisions. Show Answer Correct Answer: C) A firm's creditors. 13. If the interest rate on debt is higher than ROA, a firm will ..... by increasing the use of debt in the capital structure. A) A. increase the ROE. B) Not change the ROE. C) Decrease the ROE. D) Change the ROE in an indeterminable manner. Show Answer Correct Answer: C) Decrease the ROE. 14. Which of the following is not one of the three basic financial statements? A) Balance sheet. B) Income and expense statement. C) Uses of revenue accounts. D) Statement of cash flows. Show Answer Correct Answer: C) Uses of revenue accounts. 15. Preparation of Financial Statement is the responsibility of the management. What are the responsibilities of the Independent / Statutory Auditors? A) To express an opinion on the financial statement. B) Comments on the compliance of the various Acts, Accounting Standards etc. C) Assurance for True and Fair representation of financial statements. D) All the above. Show Answer Correct Answer: D) All the above. 16. Which of the statements about profit is incorrect? A) Profit = Revenue-Expenses. B) Profit includes revenue and other income. C) A loss occurs if expenses are greater than revenues. D) Profit at the end of the year is added to the business's bank balance. Show Answer Correct Answer: D) Profit at the end of the year is added to the business's bank balance. 17. The ..... is a measure of liquidity which excludes ....., generally the least liquid asset: A) Current ratio, trade receivable. B) Liquid ratio, trade receivable. C) Current ratio, inventory. D) Acid test ratio, inventory. Show Answer Correct Answer: D) Acid test ratio, inventory. 18. Which are components of Current Assets? A) Shareholder Debt. B) Land & building. C) Account receivable. D) Retained Earnings. Show Answer Correct Answer: C) Account receivable. 19. Under which sub-head will the following be classified or shown:(i) Long-term Borrowings; (ii) Deferred Tax Liabilities (Net); and (iii) Long-term Provision? A) Non Current Liabilities. B) Other Non Current Liabilities. Show Answer Correct Answer: A) Non Current Liabilities. 20. Which of the basic financial statements is best used to answer the question, "How profitable is the business?" A) Balance sheet. B) Statement of shareholder's equity. C) Income statement. D) Accounts receivable aging schedule. Show Answer Correct Answer: C) Income statement. Next →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 2Financial Statement Analysis Quiz 3Financial Statement Analysis Quiz 4Financial Statement Analysis Quiz 5Financial Statement Analysis Quiz 6Financial Statement Analysis Quiz 7Financial Statement Analysis Quiz 8Financial Statement Analysis Quiz 9Financial Statement Analysis Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books