This is Financial Accounting and Analysis MCQ practice set and memorize for your exam. These multiple choice question based on MBA Financial Accounting and Analysis books and term end exam. After practice all mcq of finance, you must try DistPub MCQ Exam Quiz, so that you can assess your preparation.
MCQ Practice set of Financial Accounting and Analysis
Q1. Subsidiary book called as
a. Journal
b. Ledger
c. Account
d. Non of these
Answer
a. Journal
Q2. Decrease in the number of creditors results in —–
a. Increase in cash
b. Decrease in cash
c. Decrease in assets
d. No change in assets
Answer
b. Decrease in cash
Q3. Dividend paid is always classified as a/an
a. Operating activity
b. Investing activity
c. Financing activity
d. None of the above
Answer
c. Financing activity
Q4. Securities premium account can be used for
A. Paying tax liability
B. paying dividend on shares
C. allowing discount in reissue of forfeited shares
D. to write off preliminary expenses
Answer
D. to write off preliminary expenses
Q5. What is the full form of ASB?
a. Accounting Standards Bureau
b. Accounting Standards Bulletin
c. Accounting Standards Board
d. None of the above
Answer
c. Accounting Standards Board
Q6. How many mandatory accounting standards are there in India?
a. 27
b. 29
c. 35
d. 39
Answer
b. 29
Q7. A company must have sufficient —– to meet its short-term obligations:
a. Shares
b. Fixed assets.
c. liquid assets.
d. Profit margin.
Answer
c. liquid assets.
Q8. Dividing the expenditure into capital and revenue is according to
A. business entity concept
B. going concern concept
C. money measurement concept
D. accounting period concept
Answer
D. accounting period concept
Q9. In year —– the ICAI commenced the process of developing a complete set of accounting standards that are converged with IFRS.
a. 2007
b. 2009
c. 2010
d. 2005
Answer
a. 2007
Q10. Land, Buildings, Investment, Fixed deposits, Cash balance & Furniture fall in which category
a. Real accounts
b. Personal accounts
c. Nominal accounts
d. Non of these
Answer
a. Real accounts
Q11. Long term assets having no physical existence but, possessing a value are called
a. Intangible assets
b. Fixed assets
c. Current assets
d. Investments
Answer
a. Intangible assets
Q12. The statement of cash flows does not include cash inflows and outflows for which of the following activities?
a. Financing activities
b. Investing activities
c. Operating activities
d. Revenue activities
Answer
d. Revenue activities
Q13. The assets of business as on 31st Mar are worth Rs.8 lac & its capital is Rs.5 lac. Its liabilities on that date shall be
a. Rs.13 lac
b. Rs.8 lac
c. Rs.5 Lac
d. Rs.3 lac
Answer
d. Rs.3 lac
Q14. Two important ratios used to measure short term liquidity are —– and —–
a. Current ratio and quick ratio.
b. Gross profit ratio and net profit ratio.
c. Debt, equity ratio and interest coverage ratio.
d. Dividend payout ratio and dividend yield ratio
Answer
. Current ratio and quick ratio
Q15. The current ratio of a company depends on a number of factors listed below, except one of the following options:
a. volatility of the working capital requirement.
b. nature of company’s business.
c. Imminence of current liabilities.
d. long term investments of the company.
Answer
d. long term investments of the company.
Q16. As per Indian GAAP financial statements are presented at:
a. Market Value
b. Fair value
c. Cost
d. None of the above
Answer
b. Fair value
Q17. The profitability ratios are used to check:
a. Shares of company.
b. Acceptable return for its owners.
c. Net profit.
d. Interest from bank.
Answer
b. Acceptable return for its owners.
Q18. Which of the following statements is incorrect?
a. Liabilities + Assets = Capital
b. Assets Liabilities = Capital
c. Liabilities + Capital = Assets
d. Assets – Capital = Liabilities
Answer
a. Liabilities + Assets = Capital
Q19. Ind AS stands for?
a. Indian Financial Reporting Standard
b. International Financial Reporting Standards
c. International Accounting Standards
d. Indian Accounting Standards
Answer
d. Indian Accounting Standards
Q20. If a company purchased treasury stock with cash, this would be reported on the statement of cash flows as?
a. An operating cash outflow
b. An investing cash outflow
c. A financing cash outflow
d. A financing cash inflow
Answer
d. A financing cash inflow
Q21. Lack of adequate profitability adversely affects:
a. Liquidity of the company.
b. Ability to raise external financing.
c. Growth prospectus.
d. All of the above.
Answer
d. All of the above.
Q22. Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial?
a. Conservatism
b. Going concern
c. Cost concept
d. Materiality
Answer
d. Materiality
Q23. Accounting Standard board of India was set up by –
a. IFRS
b. ICAI
c. IGAAP
d. SEBI
Answer
b. ICAI
Q24. Financial analysis of a business may not be able to achieve anyone of the following issue:
a. improve the profitability of the project.
b. Delineate the risk involved in the project.
c. highlight the salient factors that did to the greatest uncertainty
d. possibly suggest methods by which the risk might be reduced.
Answer
a. improve the profitability of the project.
Q25. Which financial statement presents a summary of the Assets, Liabilities, and Owners’ Equity of a firm?
a. General ledger
b. Work sheet
c. Balance sheet
d. Cash flow statement
Answer
d. Cash flow statement
Q26. Acid test ratio is the other name of
a. Current ratio
b. Quick ratio.
c. Depth on equity ratio.
d. Return on investment ratio.
Answer
b. Quick ratio.
Q27. The creditors turnover ratio shows the relations between:
a. Purchases and outstanding amount due to the creditors.
b. Debtors and creditors.
c. Creditors and sales.
d. creditors and profit margin.
Answer
a. Purchases and outstanding amount due to the creditors.
Q28. Which of the following would normally be included in the calculation of debt equity ratio:
a. Debentures
b. Preference shares
c. bank overdraft.
d. All of the above.
Answer
d. All of the above.
Q29. —– helps to bridge the gap between India GAAP and IFRS?
a. ICAI Rules
b. IND. AS
c. Both A & B
d. None of the above
Answer
b. IND. AS
Q30. Which of the following is not a financing activity in the cash flow statement of a non-finance company?
a. Issue of share
b. Payment of dividends
c. Receipt of dividends
d. Borrowing money from a bank
Answer
c. Receipt of dividends
Q31. Ratio analysis is usually employed to assess —– of company:
a. Profitability.
b. Efficiency.
c. Financial condition of an enterprise.
d. All of the above.
Answer
d. All of the above.
Q32. Profit margins generally used are
a. Gross profit margin.
b. Operating profit margin.
c. Net profit margin.
d. All of the above.
Answer
d. All of the above.
Q33. Transactions are first recorded in the books are called as
a. Subsidiary book
b. Ledger
c. Journal
d. Purchase book
Answer
a. Subsidiary book
Q34. Subtracting all expenses from revenues yields?
a. Net profit/Loss
b. Carrying value
c. Long-term assets
d. Net liabilities
Answer
a. Net profit/Loss
Q35. The two approaches to reporting cash flows provided by operating activities are?
a. Direct and indirect methods
b. The basic and standard methods
c. The gross margin and contribution margin methods
d. The liquidity and profitability methods
Answer
a. Direct and indirect methods
Q36. Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?
a. Current asset
b. Current liability
c. Long term assets
d. Stockholder’s equity
Answer
a. Current asset
Q37. Which of the following groups uses accounting information to determine whether the company can pay its obligations?
a. Investor in common stock
b. Marketing managers
c. Creditors
d. Chief financial officer
Answer
c. Creditors
Q38. Profit margins are used to analyse the profit made on:
a. Net profit.
b. Per unit of sales.
c. Cash balance.
d. Expenses.
Answer
b. Per unit of sales.
Q39. The debt collection. May increase or decrease between one period and another for a number of reasons, except for any one of those mentioned below:
a. if credit is given to unsatisfactory customers.
b. earlier the business had a zero debt collection period.
c. Credit terms to an existing customer changes.
d. If there is no consistent follow up of overdue debts.
Answer
b. earlier the business had a zero debt collection period.
Q40. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The expenses must be?
a. Rs. 3,750
b. Rs. 1,250
c. Rs. 4,150
d. Rs. 6,250
Answer
a. Rs. 3,750
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