This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 7 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The Cash Credit Limit of a unit was enhanced from Rs. 220 lakh to Rs. 250 lakh on 30.01.2017. On 11.01.2018, the unit has requested for enhancement in limit by Rs. 50 lakh. Can it be sanctioned without obtaining any approval for deviation considering that the request of the Company otherwise acceptable under all the parameters? A) Yes. B) No, approval for deviation is required as the enhancement is more than 15% within 12 month from last sanction or in next renewal, whichever is later. C) No need of any deviation as the enhancement is acceptable in all the parameters. D) None of the above. Show Answer Correct Answer: B) No, approval for deviation is required as the enhancement is more than 15% within 12 month from last sanction or in next renewal, whichever is later. 2. The accrual basis of accounting recognizes revenue when realized (realization concept) and expenses when incurred (matching concept). A) True. B) False. Show Answer Correct Answer: A) True. 3. The number of times during an operating period that the average inventory was sold. A) Working capital. B) Return on investment. C) Inventory turnover. D) Debt-to-assets ratio. Show Answer Correct Answer: C) Inventory turnover. 4. The debt ratio is an example of a A) Solvency ratio. B) Profitability ratio. C) Liquidity ratio. D) Market ratio. Show Answer Correct Answer: A) Solvency ratio. 5. What are the tools, techniques or methods for analysis and interpretation of financial statements? A) Ratio Analysis. B) Trend Analysis. C) Comparison with the previous year data. D) All of the above. Show Answer Correct Answer: D) All of the above. 6. The Raw Materials holding level is compared in terms of? A) Months' Purchase. B) Months' Cost of Production. C) Months' Cost of Sales. D) Months' Consumption. Show Answer Correct Answer: D) Months' Consumption. 7. Choose the appropriate ratio analysis:Debt to assets ratio A) Liquidity ratios. B) Profitability ratios. C) Solvency Ratios. D) Financial Ratios. Show Answer Correct Answer: C) Solvency Ratios. 8. What is the purpose of the Statement of Financial Position? A) Inform stakeholders the assets and liabilities of business. B) Provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time. C) Provides information on how resources are obtained and used in the business at a point in time. D) Inform stakeholders the owner's equity of business. Show Answer Correct Answer: B) Provides information on how resources are obtained and used and the claim by the owner on the net assets of the business at a point in time. 9. Which suppliers of funds bear the greatest risk and should therefore earn the greatest return? A) Common stockholders. B) General creditors such as banks. C) Preferred shareholders. D) Bondholders. Show Answer Correct Answer: A) Common stockholders. 10. What is the formula for calculation of Current Ratio? A) Current Assets + Current Liabilities. B) Current Assets / Current Liabilities. C) Current Assets-Current Liabilities. D) Current Liabilities / Current Assets. Show Answer Correct Answer: B) Current Assets / Current Liabilities. 11. Indicates the number of dollars in sales the firm generates from each dollar it has invested in assets. A) Asset turnover ratio. B) Acid test/ quick ratio. C) Debt-to-assets ratio. D) Debt-to-equity ratio. Show Answer Correct Answer: A) Asset turnover ratio. 12. ..... provides a snapshot of the financial condition of the firm at a particular time. A) The balance sheet. B) The income statement. C) The statement of cash flows. D) All of the options are correct. E) None of the options are correct. Show Answer Correct Answer: A) The balance sheet. 13. The following are examples of real assets except: A) Machinery. B) Common stock. C) Office buildings. D) Patents. Show Answer Correct Answer: B) Common stock. 14. What is Multi-step income statement? A) A multi-step income statement provides a subtotal for gross pro. B) A multi-step income statement provides a revenue, profit. C) The multi-step income statement details the gains or losses of a business. D) A multi-step income statement, on the other hand, separates operational revenues and expenses from non-operational ones. Show Answer Correct Answer: A) A multi-step income statement provides a subtotal for gross pro. 15. Your firm has the following balance sheet statement items:Total current liabilities of RM805, 000; Total assets of RM2, 655, 000Fixed and other assets of RM1, 770, 000; and Long-term debt of RM200, 000. What is the amount of the firm's total current assets? A) RM885, 000. B) RM1, 550, 000. C) RM600, 000. D) RM325, 000. Show Answer Correct Answer: A) RM885, 000. 16. In order to increase ROIC, a business should ..... A) Find a business with large total addressable market. B) Use more debt financing as source of capital. C) Increase the life cycle of its product portfolio. D) Identify inefficiencies in the business process and cut cost. Show Answer Correct Answer: D) Identify inefficiencies in the business process and cut cost. 17. A more recent issue that is causing major problems in the business community is A) The privatization of ownership. B) Short-term versus long-term financial goals of. C) Management. D) Ethical problems. Show Answer Correct Answer: D) Ethical problems. 18. Creditors or suppliers are interested to know the A) Profitability of the firm in relation to turnover. B) Profitability of the firm in relation to investors. C) Short-term solvency/liquidation of the concern. D) Effective utilisation of its (firm's) resources. Show Answer Correct Answer: C) Short-term solvency/liquidation of the concern. 19. Reasons for reduction in Net Working Capital could be? A) Losses in business. B) Conversion of current assets into non-current assets. C) Use of short term funds for long term purposes. D) All of the above. Show Answer Correct Answer: D) All of the above. 20. While preparing Common Size Statement, each item of income statement is expressed as % of A) Total Income. B) Revenue from operation. C) Other Income. D) Profit before tax. Show Answer Correct Answer: B) Revenue from operation. ← 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 8Financial Statement Analysis Quiz 9Financial Statement Analysis Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books