Financial Statements Questions

Match List-I with List-II as per AS-3 (Cash Flow Statements):List-IList-II(A) Cash from Operating Activities(I) Dividends paid on equity and preference capital.(B) Cash from Financing Activities(II) Cash receipts from sale of goods and the rendering of services(C) Cash from Investing Activities(III) Bank balance(D) Cash and cash equivalents(IV) Cash receipt from disposal of fixed assets including intangibles.Choose the correct answer from the options given below:

Match the items in List I with their appropriate classifications under Schedule III of the Companies Act, 2013 in List II:List I (Items)List II (Classification)A. Shareholders' fundsI. Furniture and FittingsB. Current liabilitiesII. Prepaid expensesC. Current AssetsIII. Calls in AdvanceD. Non-current assetsIV. Surplus of Balance on statement of P and LChoose the correct answer from the options given below:

Which of the following statements are true-(A) The financial statements of a business enterprise include a cash flow statement.(B) Comparative statements are a form of horizontal analysis.(C) Ratio analysis helps a business in identifying problem areas.(D) Financial analysis is used only by creditors.Choose the correct answer from the options given below:

What are the different types of liquidity ratiosA. Interest coverage ratioB. Current ratioC. Inventory turnover ratioD. Gross profit ratioE. Acid test ratio Choose the correct answer from the options given below:

Consider the following financial metrics of a firm:Total Assets = Rs. $3,00,000$ Non-current Liabilities = Rs. $80,000$ Shareholders' Fund = Rs. $2,00,000$ Fixed Assets = Rs. $1,60,000$ Non-current Investments = Rs. $1,00,000$ The Current Ratio of the firm is:

Match the activities in List I with their correct corresponding examples in List II with regard to Cash Flow Statement:List IList IIA. Operating activityI. Raising of loanB. Investing activityII. Current investmentC. Financing activityIII. Selling of investmentD. Cash and Cash equivalentIV. Buying of raw materialChoose the correct answer from the options given below:

Match List-I with List-II based on Cash Flow Statement classifications:List-IList-II(A) Operating Activities(I) Current Investment(B) Investing Activities(II) Dividends paid on equity and preference capital(C) Financing Activities(III) Cash receipt from disposal of fixed assets including intangibles(D) Cash equivalents(IV) Cash receipts from royalties, fees, commissions and other revenuesChoose the correct answer from the options given below:

Current ratio is $2:5$, current liabilities Rs. $25,000$, the amount of current assets will be:

Arrange the following items in the chronological order in which they appear in a Cash Flow Statement as per Accounting Standard-3 (AS-3):(A) Investing activities(B) Operating activities(C) Financing Activities(D) Cash and cash equivalentsChoose the correct answer from the options given below:

Which of the following is an inflow of cash in financing activities?

Match List-I with List-II as per Schedule III of the Companies Act, 2013:List-IList-II(A) SHAREHOLDERS FUND(I) Non-current investments(B) CURRENT LIABILITIES(II) Reserves and Surplus(C) CURRENT ASSET(III) Trade Payables(D) FIXED ASSET(IV) InventoriesChoose the correct answer from the options given below:

Nitin Ltd. provides you the following information.Particulars1 April 202131 March 2022Machinery$2,40,000$$3,50,000$ Accumulated Depreciation$50,000$$45,000$ During the year, a machine costing Rs. $90,000$ with accumulated depreciation of Rs. $31,500$ was sold for Rs. $52,000$.Calculate Cash Flow from Investing Activities on the basis of the above information.

Based on Case Study 1, find the Average Payment Period.

If the net profit earned during the year is ₹50,000 and the amount of depreciation charged during the year is ₹15,000, then the cash flow from operating activities (assuming no working capital adjustments) will be equal to ₹ _______.

Based on Case Study 1, find the value of total Trade Payables.

Cash payment to and on behalf of employees is:

Choose the correct statements from the following:(A) The financial statements of a business enterprise include cash flow statements.(B) Common size statements and financial ratios are two tools employed in vertical analysis.(C) Financial analysis helps an analyst to arrive at a decision.(D) Comparative statements are a form of vertical analysis.Choose the correct answer from the options given below:

Match List I with List II regarding accounting ratios and their descriptions:List I (Ratios)List II (Descriptions)A. Debt-Equity RatioI. Primarily indicates the rate of external funds in financing assets.B. Total assets to Debt ratioII. Higher proportion provides security to creditors.C. Proprietary ratioIII. It reveals the efficiency of business in utilization of funds.D. Return on InvestmentIV. It measures the degree of indebtedness of an enterprise.Choose the correct answer from the options given below:

Match List-I with List-II based on standard financial ratio classifications:List-IList-II(A) Liquidity Ratios(I) Debt to Capital Employed Ratio(B) Solvency Ratios(II) Net profit ratio(C) Activity Ratios(III) Current Ratio(D) Profitability Ratios(IV) Working capital Turnover RatioChoose the correct answer from the options given below:

If net profit made during the year are Rs. $50,000$ and the bills receivables have decreased by Rs. $10,000$ during the year then the cash flow from operating activities will be:

Financial analysis is useful and important to different users. Which of the following is not the user of Financial analysis:

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The accounting treatment for the expenditure incurred on the construction of the pavilion (₹20,00,000) is:

_________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

Which of the following is True about analysis of financial statements-(A) The financial statements of a business enterprise include cash flow statement.(B) Financial analysis is used only by the creditors.(C) Comparative statements are the form of horizontal analysis.(D) Financial analysis helps an analyst to arrive at a decision.Choose the correct answer from the options given below:

Which one of the following activities relate to financing activities?

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The Life Membership fees received from the 10 members is:

Match List-I with List-IIList-IList-II(A) Liquidity Ratio(II) Quick Ratio(B) Solvency Ratio(III) Proprietary Ratio(C) Activity Ratio(I) Trade payable Turnover Ratio(D) Profitability Ratio(IV) Price earning ratioChoose the correct answer from the options given below:

The current ratio is $2.5:1$. Current assets are $\text{Rs. }50,000$ and current liabilities are $\text{Rs. }20,000$. How much must be the reduction in the current assets to bring the ratio to $2:1$

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: The amount of recurring subscription revenue credited to the Income and Expenditure Account during the year will be:

Match List-I with List-IIList-IList-II(A) Shareholders fund(II) Reserves and Surplus(B) Non-current Liabilities(III) Long term provisions(C) Current Liabilities(IV) Trade payables(D) Non-Current Assets(I) Long-term loans and advancesChoose the correct answer from the options given below:

The _________ may indicate that the firm is experiencing stockouts and lost sales.

Match List - I with List - II.List - I ||| List - II(A) Receipts and Payment A/c ||| (I) Special fund(B) Capital receipt ||| (II) Life membership fees(C) Match fund ||| (III) Accrual basis(D) Income and Expenditure A/c ||| (IV) Cash basisChoose the correct answer from the options given below :

When the ratio is low, the firm is said to have favourable indication.

Case Study Information:Pragya Madan, an ex-Indian hockey player, decided to start a hockey academy named "Bright Hockey Academy" on 1st April 2022 to train young girls.Her neighbor, Ishwar, died and willed his land to start the academy.Her father, Ramkumar, spent ₹20,00,000 for the construction of a pavilion.100 young girls joined the academy and paid an annual subscription of ₹1,000 each.10 members paid a single amount of ₹25,000 each to obtain life membership.Hockey sticks and balls purchased during the year amounted to ₹27,000. Closing stock of these items is nil.Question: Sports material consumed during the financial year 2022-2023 will be:

Which of the following statements are True about ratio analysis-(A) A ratio reflects quantitative and qualitative aspects of results.(B) Long-term borrowings are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount(C) A ratio is always expressed as a quotient of one number divided by another.(D) Ratios help in comparisons of a firm's results over a number of accounting periods as well as with other business enterprises.Choose the correct answer from the options given below:

Calculate credit revenue from operations using following information:Total revenue from operations : $\text{Rs }4,00,000$, Cash received from operations are $25\%$ of Credit revenue from operations.

Match List-I with List-IIList-IList-II(A) Comparative Statements(I) It describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm.(B) Common Size Statements(III) These are the statements which indicate the relationship of different items of a financial statement with a common item by expressing each item as a percentage of that common item.(C) Trend Analysis(II) It is a technique of studying the operational results and financial position over a series of years.(D) Ratio Analysis(IV) These are the statements showing the profitability and financial position of a firm for different periods of time.Choose the correct answer from the options given below:

Debt-equity ratio is a sub-part of:

Arrange different items of Balance Sheet as per revised Schedule III to the Companies Act, 2013-(A) Shareholder's Funds(B) Non-Current Assets(C) Current Liabilities(D) Share Application money pending allotment(E) Current AssetsChoose the correct answer from the options given below:

Arrange different Classification of Activities for the Preparation of Cash Flow Statement-(A) Cash and Cash equivalents(B) Cash flow from Financing Activities(C) Cash flow from Investing Activities(D) Cash flow from Operating ActivitiesChoose the correct answer from the options given below:

Which combination of statements is correct in accordance with the presentation format prescribed under the revised Schedule III to the Companies Act, 2013?(A) Shareholders' funds are sub-classified as Share Capital, Reserves and Surplus, and Money received against Share Warrants.(B) Reserves and Surplus include Revaluation Reserve.(C) Both tangible and intangible assets are current assets.(D) Deferred tax assets/liabilities are always non-current.Choose the correct answer from the options given below:

Identify which combination from the following options includes transactions classified purely as financing activities within a Cash Flow Statement:(A) Proceeds from the issue of equity share capital.(B) Purchase of goodwill.(C) Proceeds from long-term borrowings.(D) Interim dividend paid on equity shares.Choose the correct answer from the options given below:

Identify the correct sequence of current assets in company's Balance sheet?A. Bills ReceivablesB. Cash & cash equivalentsC. Short term loans & advancesD. InventoriesE. Current investments Choose the correct answer from the options given below:

Value of $12\%$ government securities as at 31 March 2021 was Rs. $85,000$ which were purchased at that date at par. Additional $12\%$ securities worth Rs. $50,000$ were purchased on 31 March, 2022. Total interest debited to receipts and payments A/c during the year on the above securities is Rs. $9,000$. calculate Accrued interest on 31 March, 2022.

Which one of the following is not a 'Cash Outflow'?

Based on the case study details provided, determine the Return on Investment (ROI) for the firm:

Based on the case study details provided, find the Earnings Per Share (EPS) for the equity stockholders:

A trader carries an average inventory of Rs. 40,000. His inventory turnover ratio is 8 times. If he sells goods at a profit of 20% on Revenue from operations, find out the gross profit.

Arrange the following components of financial statements in the correct accounting sequence of preparation:(A) Cash Flow Statement(B) Balance Sheet(C) Profit and Loss A/c(D) Trading AccountChoose the correct answer from the options given below:

Based on the case study details provided, calculate the Price/Earnings (P/E) Ratio:

Which one of the following is not true?

Match List-I with List-II:List-IList-II(A) Accounting Standard Rules(I) 2013(B) Companies Act(II) 1932(C) Financial Statement of Company(III) 2006(D) Partnership Act(IV) Schedule IIIChoose the correct answer from the options given below:

Which items are not added to the net profit for calculating cash from operating activities?(I) Interest and dividend received(II) Transfer to reserves(III) Discount on issue of shares(IV) Loss on sale of fixed assets

Arrange the following Balance Sheet items in the top-to-bottom sequence prescribed for the format of a corporate Balance Sheet under the revised Schedule III to the Companies Act, 2013:(A) Current Assets(B) Shareholder's Funds(C) Non-current Liabilities(D) Non-Current Assets(E) Current LiabilitiesChoose the correct answer from the options given below:

Which of the following combinations of statements are NOT true regarding financial analysis and financial reporting metrics?(A) Financial analysis is used only by the creditors.(B) Comparative statements are a form of vertical analysis.(C) The financial statements of a business enterprise include a cash flow statement.(D) Ratio analysis establishes relationships between two financial variables.Choose the correct answer from the options given below:

Calculate prize fund expenses incurred during the year 2021-22 from the following informationPrize fund as on 1 April, 2021 Rs. $80,000$ Donation received for Prize Fund Rs. $15,000$$10\%$ Prize Fund Investment Rs. $80,000$ Interest Received Rs. $5,000$ Interest Accrued Rs. $3,000$ Prize fund as on 31 March, 2022 Rs. $70,000$

On the basis of the information given below, find the value of the Closing Inventory:
$$\text{Opening Inventory}=\text{Rs. }20,000$$
$$\text{Average Inventory}=\text{Rs. }40,000$$

Common size statements are the form of:

Which of the following is NOT classified as a tool for the analysis of Financial Statements?

Match the transaction classifications in List-I with their corresponding examples in a Cash Flow Statement (AS-3) listed in List-II:List-IList-II(A) Operating activity(I) Bank(B) Investing activity(II) Redemption of preference shares(C) Financing activity(III) Purchase of machinery(D) Cash equivalents(IV) Cash receipt from trade receivables.Choose the correct option from the answers given below:

What is the percentage change in Share Capital from 2023 to 2024?

Rearrange the following items in a sequence while preparing common size statement.(A) Calculate percentage of the total as per common base(B) Prepare the format of Balance sheet and Profit and Loss A/c(C) List out absolute figures in rupees at two points of time(D) Choose a common baseChoose the correct answer from the options given below :

From the following information calculate how much amount of depreciation will be shown in the Income and Expenditure A/c for the year 2021-22 :ParticularsAs on 31 March, 2021As on 31 March, 2022FurnitureRs. $1,80,000$ Rs. $1,60,250$ Furniture worth Rs. $8,000$ was sold for Rs. $10,000$ on 1 April, 2021.

If a machinery is purchased, how will it be treated while preparing the cash flow statement as per AS-3 (Revised)?

Based on the case study details provided, calculate the Return on Shareholders' Funds:

Based on the case study details provided, what is the value of Profit Before Interest and Tax (EBIT)?

The value of Reserves and Surplus as on March 31, 2024 stood at:

A low stock turnover ratio indicates:

Arrange the given item heads in the correct logical sequence from top to bottom as they appear within the Expenses section of a Statement of Profit and Loss according to Schedule III of the Companies Act, 2013:(A) Finance costs(B) Purchase of Stock-in-Trade(C) Cost of materials consumed(D) Employee benefits expenseChoose the correct answer from the options given below:

Which among the following are the non-cash items?A. Deferred TaxB. Goodwill write-offC. DepreciationD. Increase in StockChoose the correct answer from the options given below:

Match List-I with List-IIList-I(Accounting ratio)List-II(Type of accounting ratio)(A) Current ratio(I) Liquidity ratios(B) Stock turnover ratio(II) Activity ratios(C) Debt Equity ratio(III) Solvency ratios(D) Operating ratio(IV) Profitability ratiosChoose the correct answer from the options given below:

Which of the following indicate limitation of Financial analysis:

Profit after interest and tax is ₹ $1,60,000$.$10\%$ Long-term borrowing is ₹ $20,00,000$.Rate of Tax is $20\%$.Profit before interest and tax will be:

Collections from book debts:

The main objective of common size statement of profit and loss is:

Match List-I with List-IIList-IList-II(A) Cash Outflows from financing activities(I) Redemption of debentures(B) Cash Inflows from operating activities(II) Current Investment(C) Cash and cash equivalents(III) Cash from royalties, fees, commissions and other revenues(D) Cash Inflows from investing activities(IV) Cash receipt from disposal of fixed assets including intangiblesChoose the correct answer from the options given below:

The common size statements are useful, both, in intra-firm comparisons over different years and also in making inter-firm comparisons for several years. This analysis is also known as

A fixed deposit with a bank maturity term of five years will be classified under which of the following lines in a corporate Balance Sheet?

If the net profit earned during the year is Rs. $1,00,000$ and the amount of Bills receivables in the beginning and the end of the year is Rs. $20,000$ and Rs. $40,000$ respectively, then cash flow from operating activities will be:

Which of the following are the objectives of Ratio Analysis?(A) To know the areas of the business which need more attention.
(B) To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.
(C) To know about the potential areas which can be improved with the effort in the desired direction.
(D) To provide information derived from financial statements useful for making projections and estimates for the future.Choose the correct answer from the options given below:

Which analysis is a judgemental process which aims to estimate current and past financial positions and the results of the operation of an enterprise, with primary objective of determining the best possible estimates and predictions about the future conditions?

From the following details, calculate net profit before tax:Net Profit after tax is Rs. 50,000;15% Long-term debt 12,00,000;Tax rate 20%.

Which one higher ratio is not favourable?

As per AS-26, Intangible assets like goodwill should be written off:

Match List - I with List - II.
$$\begin{array}{ll}\text{List - I}& \text{List - II}\\ \text{(A) The accounting basis for a Cash Flow Statement is}& \text{(I) Investment in shares}\\ \text{(B) Dividend paid on Equity and Preference capital comes under}& \text{(II) Cash Basis}\\ \text{(C) It cannot be considered as cash and cash equivalents}& \text{(III) Treasury bills}\\ \text{(D) It can be classified as cash and cash equivalents}& \text{(IV) Cash outflow from Financing Activities}\end{array}$$
Choose the correct answer from the options given below:

Profit after tax and interest is $\text{Rs. }1,60,000$. The tax rate is $20\%$. $10\%$ long term borrowing is $\text{Rs. }20,00,000$. Find the profit before tax and after interest.

From the following information of I Ltd., calculate Net Increase / Decrease in cash and cash equivalents during the year 2021-22.i) Cash flow from Operating Activities: Rs. $2,35,000$ ii) Cash used in investing Activities: Rs. $4,35,000$ iii) Cash flow from financing activities: Rs. $2,35,000$

The standard Debt-Equity ratio is:

Match List - I with List - II.
$$\begin{array}{ll}\text{List - I (Accounting Ratios)}& \text{List - II (Functional Classification)}\\ \text{(A) Current Ratio}& \text{(I) Solvency Ratios}\\ \text{(B) Inventory Turnover Ratio}& \text{(II) Liquidity Ratios}\\ \text{(C) Return on Investment}& \text{(III) Profitability Ratios}\\ \text{(D) Proprietary Ratio}& \text{(IV) Activity Ratios}\end{array}$$
Choose the correct answer from the options given below:

A trader carries an average inventory of $\text{Rs. }60,000$. His inventory turnover ratio is $12$ times. If he sells goods at a profit of $20\%$ on revenue from operations (sales), calculate the value of gross profit.

According to AS-3, cash proceeds from issue of share is:

Identify the salient features of the Income and Expenditure account from the following:A. It is prepared on an accrual basis.B. It includes both revenue as well as capital items.C. It is prepared after taking into account the additional information regarding outstanding/prepaid expenses and depreciation etc.D. Its result is surplus or deficit.E. It is prepared with the help of the Receipts and Payments Account. Choose the correct answer from the options given below:

Which one of the following statements is true?

Match List I with List IILIST IA. Cash EquivalentsB. Financing ActivitiesC. Operating ActivitiesD. Investing ActivitiesLIST III. Interim Dividend paidII. Selling & Distribution expenses paidIII. Marketable securitiesIV. Dividend received on Shares held as investmentChoose the correct answer from the options given below:

Common size analysis is also known as

While preparing common-size Balance sheet, each item of Balance sheet is expressed as $\%$ of

Calculate subscription received during the year 2021-22 from the following information :Amount of subscription credited to Income and Expenditure A/c for the year ended 2021-22 Rs. $1,05,000$ Subscription received in advances as on 31 March, 2022 Rs. $10,000$ Subscription received in advances as on 31 March, 2021 Rs. $7,000$ Subscription outstanding as on 31 March, 2021 Rs. $10,500$ Subscription outstanding as on 31 March, 2022 Rs. $20,500$

Which one of the following items will be added in debit balance of cash book in the preparation of bank reconciliation statement?

Gross profit ratio of a company was 25%, its credit revenue from operations was Rs. 20,00,000 and its cash revenue from operations was 20% of the total revenue from operations. If the indirect expenses of the company was Rs. 50,000. Calculate its net profit.

Match List-I with List-IIList-IList-II(A) Reserves and Surplus(I) Share Options Outstanding Account(B) Non-current Liabilities(II) Long term provisions(C) Current Liabilities(III) Short-term borrowing(D) Shareholder's Fund(IV) Calls in arrearChoose the correct answer from the options given below: