This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 21 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Choose the appropriate ratio analysis:Times interest earned A) Liquidity ratios. B) Profitability ratios. C) Solvency Ratios. D) Financial Ratios. Show Answer Correct Answer: C) Solvency Ratios. 2. The consistency concept requires the entity to give the same treatment to comparable transactions from period to period A) True. B) False. Show Answer Correct Answer: A) True. 3. Under which main head and sub-head of Equity and Liabilities part of the Balance Sheet are the following item classified or shown:(i) Bonds; (ii) Debentures A) Long term borrowings & Long term provision. B) Non current Liabilities & other Current Liabilities. C) Non current liabilities and long term borrowings. D) None of above. Show Answer Correct Answer: C) Non current liabilities and long term borrowings. 4. On the income statement, sales revenue, minus cost of goods sold and operating expenses, equals which of the following? A) Net profit. B) Retained earnings. C) Net income available to preferred shareholders. D) Earning Before Interest and Tax. Show Answer Correct Answer: D) Earning Before Interest and Tax. 5. A "snapshot" of an organization's financial position at a given time. A) Statement of Financial Position. B) Statement of the Comprehensive Income. C) Statements of Cash Flow. D) Cost of Goods Sold. Show Answer Correct Answer: A) Statement of Financial Position. 6. Which of the following best describes why the notes that accompany the financial statements are required? The notes: A) Permit flexibility in statement preparation. B) Standardize financial reporting across companies. C) Provide information necessary to understand the financial statements. D) Notes to the financial statements. Show Answer Correct Answer: C) Provide information necessary to understand the financial statements. 7. If total assets are P1, 000, 000 and total equity is P650, 000, how much is the debt ratio? A) 35.00%. B) 45.00%. C) 55.00%. D) 65.00%. E) NOT IN THE CHOICES. Show Answer Correct Answer: A) 35.00%. 8. Which supplier of funds bears the greatest risk and should earn the greatest return? A) Bondholder. B) Banks. C) Common shareholders. D) Preferred shareholders . Show Answer Correct Answer: C) Common shareholders. 9. The average trade receivables period of a unit has increased from 65 days to 80 days. Is there any change in the requirement of working capital? A) No, the unit has to manage its receivable in an efficient manner. B) Yes, the working capital requirement will decrease. C) No, the working capital requirement will remain at existing level. D) Yes, the working capital requirement will go up. Show Answer Correct Answer: D) Yes, the working capital requirement will go up. 10. Money owed to a company by its clients or customers who have promised to pay for products at a later date. A) Current Assets. B) Account Receivable. C) Current Liabilities. D) Account Payable. Show Answer Correct Answer: B) Account Receivable. 11. Vertical analysis ratios are an example of a A) Solvency ratio. B) Profitability ratio. C) Liquidity ratio. D) Market ratio. Show Answer Correct Answer: B) Profitability ratio. 12. Which is not a quick asset? A) Cash equivalents. B) Notes receivable. C) Inventories. D) Cash substitutes. E) NOT IN THE CHOICES. Show Answer Correct Answer: C) Inventories. 13. A transaction that will increase the quick ratio but cause the current ratio to decline is: A) Short-term borrowing. B) Investing cash in plant assets. C) Sale of inventory at a price below cost. D) Collection of an accounts receivable. Show Answer Correct Answer: C) Sale of inventory at a price below cost. 14. What is the purpose of preparing the Statement of Financial Performance? A) Inform stakeholders the profitability of business. B) Inform stakeholders the income and expenses of business. C) Inform stakeholders the nature of business. D) Inform stakeholders the size of business. Show Answer Correct Answer: A) Inform stakeholders the profitability of business. 15. Allocation of the costs of acquiring natural resource assets is more appropriate using the method A) Sum of Years. B) Double Declining Balance. C) Unit of Production / Activity Unit. D) Straight-Line. Show Answer Correct Answer: C) Unit of Production / Activity Unit. 16. Analysis of Financial Statements comprises, analysis and interpretation of? A) Profit and Loss Account. B) Balance Sheet. C) Cash Flow Statement. D) All of the above. Show Answer Correct Answer: D) All of the above. 17. Which ratio tells us if a business might struggle to pay off its short term debts? A) Profit margin. B) Current ratio. C) Acid test ratio. D) YEARS. Show Answer Correct Answer: B) Current ratio. 18. The ratios that are used to determine a company's short-term debt paying ability are A) Asset turnover, times interest earned, current ratio, and receivables turnover. B) Times interest earned, inventory turnover, current ratio, and receivables turnover. C) Times interest earned, acid-test ratio, current ratio, and inventory turnover. D) Current ratio, acid-test ratio, receivables turnover, and inventory turnover. Show Answer Correct Answer: D) Current ratio, acid-test ratio, receivables turnover, and inventory turnover. 19. The acid test ratio is also known as ..... A) Current ratio. B) Quick/ Liquid ratio. C) Holding ratio. D) Operating ratio. Show Answer Correct Answer: B) Quick/ Liquid ratio. 20. While preparing fund flow statement, increase in capital will be considered as? A) Short Term Source. B) Long Term Surplus. C) Long Term Source. D) Any of the above. Show Answer Correct Answer: C) Long Term Source. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 1Financial 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 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books