Study Financial Accounting and Analysis MCQ 2nd set and memorize for your exam. These multiple choice question from Financial Accounting and Analysis books and exam and most important for coming exam.
Important MCQ practie set for FAA
Q1. Customers, Suppliers, lenders & Bankers fall in which category
a. Real accounts
b. Personal accounts
c. Nominal accounts
d. Non of these
Answer
b. Personal accounts
Q2. The report of company that shows overall profit on the sale of their goods or the provision of their services?
a. Trading and Profit & loss account
b. Cash flow statement
c. Income Statement
d. Both a and c
Answer
d. Both a and c
Q3. Return on equity depends on 3 factors, namely, profit margin, asset turnover, and:
a. Sales.
b. Leverage.
c. Inventory.
d. Share capital.
Answer
b. Leverage.
Q4. The accounting equation states that
a. Capital = Assets + Liabilities
b. Assets = Liabilities + Capital
c. Assets = Liabilities – Capital
d. Liabilities = Assets + Capital
Answer
b. Assets = Liabilities + Capital
Q5. Which of the following is not regarded as the fundamental concept?
a. Going concern concept
b. Dual aspect concept
c. Business entity concept
d. Correction concept
Answer
d. Correction concept
Q6. Copyrights, Patents and Trademarks are
a. Current assets
b. Tangible assets
c. Investments
d. Intangible assets
Answer
d. Intangible assets
Q7. Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?
a. Ratio Analysis
b. Average Analysis
c. Trend Analysis
d. All of the above
Answer
d. All of the above
Q8. The —– relates the cost of goods sold to the average inventory:
a. Return on equity ratio.
b. Return on asset ratio.
c. Debtor’s turnover ratio.
d. Inventory turnover ratio.
Answer
d. Inventory turnover ratio.
Q9. —–Kinds of profit margins are generally used:
a. 1.
b. 2.
c. 3.
d. 4.
Answer
c. 3.
Q10. The common characteristics possessed by all assets is
a. long life
b. Great monetary value
c. tangible nature
d. future economic benefit
Answer
d. future economic benefit
Q11. The determination of expenses for an accounting period is based on the principle of
a. Objectivity
b. Materiality
c. Matching
d. Periodicity
Answer
c. Matching
Q12. Which of the following would not be considered a cash flow from “operating” activities?
a. Payments for the inventory
b. Interest received on loans
c. Tax payments
d. Payment of debt principle
Answer
d. Payment of debt principle
Q13. How many effects on the accounting equation
a. Single / One effect
b. Dual/ Two effect
c. Triple / Three effect
d. None of above
Answer
b. Dual/ Two effect
Q14. Analysis of any financial Statement comprises
a. Balance sheet
b. P&L Account
c. Trading account
d. All of the above
Answer
d. All of the above
Q15. Gross profit ratio is calculated as:
a. Gross profit/ sales *100.
b. Gross profit/Purchase *100.
c. Net profit/Sales * 100
d. Net profit/Purchase *100.
Answer
a. Gross profit/ sales *100.
Q16. A method used in a comparative analysis of financial statement is:
a. Returning analysis
b. Common size analysis
c. Preference analysis
d. Graphical analysis
Answer
b. Common size analysis
Q17. Capital brought in by the proprietor is an example of –
a. Increase in asset and increase in liability equity
b. Increase in liability and decrease in assets
c. Increase in assets and decrease in liability
d. Increase in one assets and decrease in another assets.
Answer
a. Increase in asset and increase in liability equity
Q18. Earnings per share is calculated as:
a. Net profit/ sales. *100
b. gross profit /Net profit.
c. Net profit. -100 /number of equity shares.
d. Net profit – preference dividend/Number of equity shares.
Answer
d. Net profit – preference dividend/Number of equity shares.
Q19. Debts and obligations of a business are referred to as —–
a. Assets
b. Equity
c. Liabilities
d. Expenses
Answer
c. Liabilities
Q20. Ratio Analysis is used to make:
a. Important financial decision.
b. Balance sheet.
c. Accounting equations.
d. Profit and loss account.
Answer
a. Important financial decision.
Q21. The going concern concept assumes that
a. The entity continue running until the end of accounting period
b. The entity will close its operating in 10 years
c. The entity can’t be liquidated
d. The entity continue running for foreseeable future
Answer
d. The entity continue running for foreseeable future
Q22. Gross profit is the difference between:
a. Purchase value and cost of goods sold.
b. Net profit and gross profit.
c. Purchase value and sales value.
d. Sales value and cost of goods sold.
Answer
d. Sales value and cost of goods sold.
Q23. Comparison of financial statements highlights the trend of the —– of the business.
a. Financial position
b. Performance
c. Profitability
d. All of the above
Answer
d. All of the above
Q24. To maintained the accounting record & all the accounts kept together is called as
a. Journal
b. Ledger
c. Subsidiary books
d. Financial statements
Answer
b. Ledger
Q25. Revenue is considered as being earned on the date at which it is realised
a. Money measurement concept
b. Cost concept
c. Consistency concept
d. Realization concept
Answer
d. Realization concept
Q26. What information would you find in a statement of cash flow that you would not be able to get from the other two primary financial statements?
a. Cash provided by or used in financial activities
b. Cash balance at the of the period
c. Total liabilities due to creditors at the end of the period
d. Net income
Answer
a. Cash provided by or used in financial activities
Q27. Commonly used books in subsidiary books are
a. Cash book
b. Purchase & Purchase return book
c. Sales & sales return book
d. All of these
Answer
d. All of these
Q28. Ratio Analysis of financial analysis that is used by:
a. Owner and proprietor.
b. Wholesaler and retailer.
c. Investors and lenders.
d. Employer and employees.
Answer
c. Investors and lenders.
Q29. Which of the following cash flow activities represents a non-cash financing transaction?
a. Purchase of goods for cash
b. Issue of shares
c. Sale of equipment for cash
d. Purchase of plant by issuing shares
Answer
d. Purchase of plant by issuing shares
Q30. The debts which are to be repaid after 3-4 years referred to as
a. Current liabilities
b. Long term liabilities
c. Fixed liabilities
d. None of the above
Answer
b. Long term liabilities
Q31. Which statement is first component of financial statements?
a. Balance sheet
b. Cash flow statement
c. Income statement
d. Statement of changes in Equity
Answer
c. Income statement
Q32. Resources owned by a business are preferred to as —–
a. Owners equity
b. Liabilities
c. Assets
d. Revenue
Answer
c. Assets
Q33. Which of the following financial statements is also known as financial condition?
a. Balance Sheet
b. Income Statement
c. Statement of Cash flows
d. Bank Statement
Answer
a. Balance Sheet
Q34. Which one of the following tangible fixed assets would not normally be depreciated?
a. Building
b. Land
c. Machinery
d. Equipment
Answer
b. Land
Q35. As per Accounting Standard – 3, Cash Flow is classified into
a. Operating activities and investing activities
b. Investing activities and financing activities
c. Operating activities and financing activities
d. Operating activities, financing activities and investing activities
Answer
d. Operating activities, financing activities and investing activities
Q36. A decrease in the balance of Accounts Receivable.
a. Operating activities
b. Investing activities
c. Financing activities
d. Revenue activities
Answer
a. Operating activities
Q37. The financial statement helps in forecasting:
a. Prospects for future earnings.
b. Expected dividend.
c. Ability of the business to pay interest and debt.
d. All of the above.
Answer
d. All of the above.
Q38. Earnings per share are the net income available:
a. On gross profit.
b. Profit before interest and tax.
c. Per equity share.
d. Preference dividend.
Answer
c. Per equity share.
Q39. Which statement shows the flow of cash and cash equivalents during the financial period?
a. Statement of changes in equity
b. Cash flow statement
c. Balance sheet
d. Income statement
Answer
b. Cash flow statement
Q40. Classification of accounts
a. Assets accounts
b. Liability & capital accounts
c. Expenses & Income accounts
d. All of these
Answer
d. All of these
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