This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Stock at the beginning of the year A) Opening Inventory. B) Sales. C) Purchases. D) Drawings. Show Answer Correct Answer: A) Opening Inventory. 2. Calculate the current ratio for a company with current assets of $ 500, 000 and current liabilities of $ 250, 000. A) 2. B) 1.5. C) 0.5. D) 3. Show Answer Correct Answer: A) 2. 3. If net sales is P200, 000 and cost of sales is P150, 000, how much is the gross profit margin in percent? A) 25.00%. B) 50.00%. C) 75.00%. D) 133.33%. E) NOT IN THE CHOICES. Show Answer Correct Answer: A) 25.00%. 4. The impact on long-term asset capitalization is except A) A reasonable solvency ratio in accordance with actual conditions. B) Reduced volatility of profit and return measurements. C) Delay recognition of income and expenses. D) Cash outflow from investment activities is too high. Show Answer Correct Answer: A) A reasonable solvency ratio in accordance with actual conditions. 5. What are profitability ratios used for? A) Assessing the cash holdings of the company. B) Evaluating the firm's ability to pay its current debts. C) Gauge the company's effectiveness in its use of assets. D) Measure the firm's ability to retain revenues as earnings. Show Answer Correct Answer: D) Measure the firm's ability to retain revenues as earnings. 6. What do we deduct from the current asset to calculate the quick asset ratio? A) Receivables. B) Prepaid expense. C) Inventory. D) Short-term investment. Show Answer Correct Answer: C) Inventory. 7. A firm has an ROE of 2%, a debt/equity ratio of 1.0, a tax rate of 0%, and an interest rate on debt of 10%. The firm's ROA is A) 2%. B) 4%. C) 6%. D) 8%. E) None of the options are correct. Show Answer Correct Answer: B) 4%. 8. Following is deducted while calculating COGS. A) Opening Stock. B) Closing Stock. C) Direct Expenses. D) None of above. Show Answer Correct Answer: B) Closing Stock. 9. Which one of the following is not a Current Liability? A) Statutory Dues Payable. B) Long Term Deposits received from dealer. C) Term Loan Installment payable within next one year. D) All are current liabilities. Show Answer Correct Answer: B) Long Term Deposits received from dealer. 10. The ratio that measures the relationship between cash and current assets is the quick ratio. A) True. B) False. Show Answer Correct Answer: B) False. 11. Which one of the following ratios would most likely not be used by a short-term creditor in evaluating whether to sell on credit to a company? A) Current ratio. B) Quick ratio. C) Total asset turnover. D) Account receivable turnover. Show Answer Correct Answer: C) Total asset turnover. 12. As on 31.03.2018, Adjusted TNW was Rs. 243 lakh, Deferred Tax Assets outstanding was Rs. 6 lakh, Investment in associates was Rs. 60 lakh. Work out the Net Worth of the unit? A) Rs. 249 lakh. B) Rs. 309 lakh. C) Rs. 303 lakh. D) Rs. 177 lakh. Show Answer Correct Answer: B) Rs. 309 lakh. 13. A financial report that shows an organization's profitability over a period of time-month, quarter, or year. 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: B) Statement of the Comprehensive Income. 14. Disclosure for Related Party Transactions is mandatory on the Audited Financial Statements under which Accounting Standard (AS)? A) AS-18. B) AS-15. C) AS-3. D) None of the above. Show Answer Correct Answer: A) AS-18. 15. State whether each of the following is True or False:Statement of profit and loss account shows the operating performance of an enterprise for a period of time. A) False. B) True. Show Answer Correct Answer: B) True. 16. Financial statements are prepared based on A) Past data. B) Future cost. C) Terminal cost. D) Historical cost. Show Answer Correct Answer: D) Historical cost. 17. Compares the total debt of the firm with the owner's equity. A) Debt-to-assets ratio. B) Debt-to-equity ratio. C) Asset turnover ratio. D) Efficiency ratio. Show Answer Correct Answer: B) Debt-to-equity ratio. 18. All of the following are assets, except for? A) Goodwill. B) Patents. C) Loans to other businesses. D) Loans from other businesses. Show Answer Correct Answer: D) Loans from other businesses. 19. The trade receivables period will be impacted under which scenario? A) The competitors in the market have increase the credit period. B) Sales are increased on the existing terms. C) Invoicing are now being done through computers in place of manual. D) The unit is offering additional discounts for bulk purchases. Show Answer Correct Answer: A) The competitors in the market have increase the credit period. 20. Assertion (A):Current ratio is computed to assess the short-term financial position of the enterprise. Reason (R):Current ratio explains the relation between long term assets and current liabilities of a business. A) Both (A) and (R) are correct and (R) is the correct explanation of (A). B) Both (A) and (R) are correct and (R) is not the correct explanation of (A). C) (A) is correct, but (R) is incorrect. D) (A) is incorrect, but (R) is correct. Show Answer Correct Answer: C) (A) is correct, but (R) is incorrect. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 1Financial Statement Analysis Quiz 2Financial 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