Financial Statements Questions

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Quick Assets of the firm are:

Which of the following ratios is not a profitability ratio?

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Quick Ratio (Liquid Ratio) of the firm is:

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:

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Total amount of Current Assets is:

Operating profit before working capital changes amounted to ₹85,000. The following further information is given:Particulars31.3.2020 (₹)31.3.2019 (₹)Cash36,00030,000Trade receivable18,00012,000Provision for tax9,0008,000Trade payables20,00016,000Bank overdraft18,000-The Net cash flow from operating activities after tax is:

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:

Which one of the following statement is false?

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:

Identify the items not to be shown under Financing activities while making a cash flow statement:A. Payment of dividend and interestB. Interest paid by financial enterpriseC. Redemption of debenturesD. Proceeds from issue of equity sharesE. Loss due to theftChoose 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:

The commonly used Techniques of financial Statements Analysis includes :(A) Common size statements(B) Ratio Analysis(C) Trend Analysis(D) Capital Budgeting StatementChoose the correct answer from the options given below :

Choose the pair of correct statements from the following:(A) The only purpose of financial reporting is to keep the managers informed about the progress of operations.(B) Analysis of data provided in the financial statements is termed as financial analysis.(C) Long-term borrowings are analyzed to check the ability of a firm to discharge its obligations to pay interest and repay the principal amount.(D) Financial ratios reflect both quantitative and qualitative aspects of business performance. 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:

Long-term solvency is indicated by:

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

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:

Based on Case Study 1, what is the Trade Payables Turnover Ratio?

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:

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.

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:

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:

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:

Cash flow statement helps in which form of financial planning?

A club has an opening balance of ₹8,50,000 in the Match Fund. Donations received for matches during the current year amounted to ₹4,25,000. Sale of match tickets amounted to ₹1,15,000. Match expenses incurred were ₹14,00,000. The balance in the Match Fund at the year-end will be:

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:

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:

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:

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

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

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. $20,500$

Comparative statements are the form of:

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 ₹ _______.

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 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:

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:

Vertical analysis uses financial data of a company for:

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 $2:1$

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

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:

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:

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:

Identify the correct sequence in calculation of Cash Flow from Operating Activities.(A) Addition and subtraction of Non cash/Non operating items(B) Payment of income tax(C) Calculation of operating profit before working capital changes.(D) Calculation of net profit/loss before tax and extraordinary itemsChoose the correct answer from the options given below :

Cash payment to and on behalf of employees is:

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:

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

X Ltd. has a current ratio of 3:1 and quick ratio of 2:1. If excess of current assets over quick assets, represented by inventories is Rs. 5,000, calculate current assets and quick assets.

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:

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:

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

Match List-I with List-II:List-IList-II(A) AS-3(I) Statement of profit & loss(B) Schedule III of Companies Act(II) Cash flow statement(C) Financial status of the undertaking(III) Final accounts of company(D) Performance report(IV) Balance sheetChoose 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

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:

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

Which of the following is not included in Non-current liabilities, while preparing a Balance Sheet of a company :

In order to bring clarity regarding the identity of ultimate owners of a company, disclosure of shares in the company held by each shareholder is required for anyone holding more than _____ of the shares, specifying the exact number of shares held.

Debt-equity ratio is a sub-part of:

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

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

The value of long-term borrowings as on March 31, 2023 was:

If there is Revenue from Operation Rs. $1,20,000$ and gross profit is $20\%$ of cost, then the amount of gross profit will be :

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.

A low stock turnover ratio indicates:

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

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

What is the percentage change in Cash and Cash Equivalents from 2023 to 2024?

Common size statements are the form of:

Which of the following is NOT classified as a Profitability Ratio?

X Ltd. has a Current Ratio of $3.5:1$ and Quick Ratio of $2:1$. If excess of current assets over quick assets represented by inventories is Rs. $24,000$. Calculate current liabilities.

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) 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:

Match List-I with List-II:List-I (Ratio Category)List-II (Specific Ratio Example)(A) Liquidity Ratio(I) Interest Coverage Ratio(B) Profitability Ratio(II) Acid-Test Ratio(C) Solvency Ratio(III) Fixed Assets Turnover Ratio(D) Activity Ratio(IV) Return on Capital Employed RatioChoose the correct answer from the options given below:

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

Collections from book debts:

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:

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 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:

Match List I with List IILIST I: Major HeadA. Fixed assetsB. Current AssetsC. Current LiabilitiesD. Shareholder's FundsLIST II: Sub HeadI. Short term provisionsII. Money received against share warrantsIII. Non current investmentIV. InventoriesChoose the correct answer from the options given below:

While preparing financial statements on certain basic assumptions such as going concern, money measurement, and realization etc, they are known as:

Dividend paid by a company to its shareholder is classified as which type of activity under cash flow statement?

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:

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

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

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:

The standard Debt-Equity ratio is:

Earning Capacity of a Company is measured by:

Employee benefit Expenses do not include:

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:

Match List-I with List-IIList-I (Expenses)List-II (Explanation)(A) Purchase of Stock-in-trade(I) Expenses towards interest charges during the year on the borrowings(B) Employees benefit expenses(II) Diminution in the value of fixed assets(C) Finance cost(III) Purchases of goods for the purpose of trading(D) Depreciation(IV) Expenses incurred on employees towards salary, wages, leave encashment, staff welfare, etc.Choose the correct answer from the options given below:

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

Select the sub-head under which loose tools will be shown in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.

Which one of the following statements is true?

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

Sale of copy rights are considered as a part of

Identify the limitations of financial statements :A. Can be biasedB. Report on stewardship functionC. Aggregate informationD. Only interim reportsE. Basis of fiscal policiesChoose the correct answer from the options given below:

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 :

If the net operating profit of the business is Rs. $90,000$ and the debtors have decreased during the year by Rs. $40,000$. Cash from operations is:

Which of the following indicate limitation of Financial analysis:

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