This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If Nico Corporation has annual purchases of RM300, 000 and accounts payable of RM30, 000, then average purchases per day are ..... and the average payment period is ..... A) 36.5; 821.9. B) 36.0; 833.3. C) 821.9; 36.5. D) 833.3; 36.0. Show Answer Correct Answer: C) 821.9; 36.5. 2. Choose the appropriate ratio analysis:Current ratio A) Liquidity ratios. B) Profitability ratios. C) Solvency Ratios. D) Financial Ratios. Show Answer Correct Answer: A) Liquidity ratios. 3. Why is FS analysis important? A) To determine the profitability of the business. B) To check the growth of the business. C) All of the above. D) None of above. Show Answer Correct Answer: C) All of the above. 4. Non-written off Miscellaneous Expenditure will appear under this head in Balance Sheet ..... A) Owner's Fund. B) Loan Fund. C) Current Liabilities. D) Working Capital. Show Answer Correct Answer: A) Owner's Fund. 5. Indicates how quickly a firm's credit accounts are being collected and is a good measure of how efficiently a firm is managing its accounts receivable. A) Average collection period. B) Efficiency ratios. C) Working capital. D) Current ratio. Show Answer Correct Answer: A) Average collection period. 6. Opening Inventory Rs.1, 00, 000; Closing Inventory Rs.1, 50, 000; Purchases Rs.6, 00, 000; Carriage Rs.25, 000; wages Rs.2, 00, 000. Inventory Turnover Ratio will be: A) 6.6 Times. B) 7.4 Times. C) 7 Times. D) 6.2 Times. Show Answer Correct Answer: D) 6.2 Times. 7. What is the inventory holding period in months for a unit with sales of Rs. 49.60 lakh, inventory of Rs. 6.50 lakh, cost of goods sold Rs. 39.00 lakh and trade receivables of Rs. 12.40 lakh? A) 1 Month. B) 1.57 Month. C) 3 Month. D) 2 Month. Show Answer Correct Answer: D) 2 Month. 8. An example of liquidity ratio is? A) Current Ratio. B) Fixed Assets Turnover Ratio. C) TOL / TNW ratio. D) None of the above. Show Answer Correct Answer: A) Current Ratio. 9. Before a credit proposal is submitted to the Credit Decision, whose approval does the use of KAP not recommended by CIMB Niaga require? A) Head of Business (D-1). B) Head of Non Retail Credit Risk Management (D-1). C) Business Banking Director. D) Risk Management Director. Show Answer Correct Answer: C) Business Banking Director. 10. Measures to what degree the assets of the firm have been financed with borrowed funds. A) Debt-to-equity-ratio. B) Liquidity ratio. C) Profitability ratio. D) Debt-to-assets ratio. Show Answer Correct Answer: D) Debt-to-assets ratio. 11. A firm's financial obligations to short-term creditors, which must be repaid within one year. A) Current Assets. B) Current Liabilities. C) Accounts Receivable. D) Accounts Payable. Show Answer Correct Answer: B) Current Liabilities. 12. The gross profit margin is unchanged, but the net profit margin declined over the same period. This could have happened when A) Cost of goods sold increased relative to sales. B) The government has increased the tax rate. C) Dividends were decreased. D) Sales increased relative to expenses. E) All of above. Show Answer Correct Answer: B) The government has increased the tax rate. 13. In performing a vertical analysis, the base for prepaid expenses is A) Total current assets. B) Total assets. C) Total liabilities. D) Prepaid expenses in a previous year. Show Answer Correct Answer: B) Total assets. 14. How can financial statement analysis help in decision making? A) Financial statement analysis is not useful in decision making. B) Financial statement analysis is too complex and time-consuming to be useful in decision making. C) Financial statement analysis only provides historical data and is not relevant for decision making. D) Financial statement analysis provides insights into a company's financial performance and helps stakeholders make informed decisions. Show Answer Correct Answer: D) Financial statement analysis provides insights into a company's financial performance and helps stakeholders make informed decisions. 15. The operating income after interest of a manufacturing unit is Rs. 6.35 lakh. During the financial year, the unit has booked a profit of Rs. 1.15 lakh on sale of investment and amortised Rs. 0.35 lakh. What will be profit before tax and profit after tax assuming tax rate @ 20%? A) Rs. 7.50 lakh & Rs. 6.00 lakh. B) Both will be Rs. 7.15 lakh. C) Rs. 7.15 lakh & Rs. 5.74 lakh. D) Rs. 6.00 lakh and Rs. 4.80 lakh. Show Answer Correct Answer: C) Rs. 7.15 lakh & Rs. 5.74 lakh. 16. Potential investors use the financial reports as an aid in deciding whether to buy the stock A) True. B) False. Show Answer Correct Answer: A) True. 17. Why we prepare Fund Flow Statement? A) Its Bank's requirement. B) To know the movement of NWC, liquidity, sources and uses of long term funds, diversion, siphoning. C) To comply with the instructions. D) To know the availability of current assets. Show Answer Correct Answer: B) To know the movement of NWC, liquidity, sources and uses of long term funds, diversion, siphoning. 18. Accounting rules require companies with finance leases to report leased assets and lease liabilities on A) Cash flow statement. B) Income statement. C) Financial Position Report. D) Notes to Financial Reports. Show Answer Correct Answer: C) Financial Position Report. 19. If we reduce the Non Current Liabilities from the Non Current assets, then what we will get? A) Net Working Capital. B) Long Term Surplus. C) Working Capital Gap. D) Other Current Liabilities. Show Answer Correct Answer: A) Net Working Capital. 20. Current assets include all assets such as cash that are expected to be sold between one and 5 years. A) True. B) False. Show Answer Correct Answer: B) False. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 1Financial 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