Explore topic-wise InterviewSolutions in Current Affairs.

Interest on capital will be credited to partners current account when fixed capital account method is there.

False.

Explanation: A partner may be entitled to receive salary or commission if mentioned in the partnership deed. However, if the partnership deed is silent in this regard, then, remuneration is not provided to any of the partners. Hence, the above statement is false.

False.

Explanation: It is not necessary that a partner’s capital account will always show a positive balance (i.e. credit balance). The capital account of a partner might show a debit balance when a partner withdraws more than his or her share of profits from the firm. Hence, the given statement is incorrect.

True.

Explanation: Under fixed capital method, all transactions other than introduction of fresh capital or withdrawal of capital are recorded in Partners’ Current Accounts. This is done so that the balance of Partners’ Capital Accounts remains intact. Hence, the given statement is correct.

Fixed capital account method is also known as permanent capital account method.

Types of Bar Diagrams:

• Simple Bar Diagram: A simple bar diagram is drawn for only one variable over a base, say various place, times, things, etc.
• Clustered Bar Diagram: This type of diagram is drawn for more than one related variables over a common base say various places, times, things, etc.
• Divided Bar Diagram: It is drawn when every single value of the variable over a common base, say places, times, things, etc. has sub-categories.

Points to be considered while drawing a Bar Diagram:

• The width of each bar should be equal.
• The length (height) of respective bars should be proportional to the value of the variable they represent.
• The distance between all bars should be equal and it should be maintained equal to the distance between the origin and the first bar.
• All bars are usually drawn on X-axis. Instead it can also be drawn horizontal on Y-axis.
• All bars should be arranged from left to right in order of the data series.

Correct option is (c) Capital reserve

Correct option is (b) Capital reserve

Correct option is (c) By making more provisions for depreciation

Correct option is (d) Secret reserve

Correct option is (c) Capital reserve

Correct option is (d) Reserve created for workers accident compensation

Correct option is (d) General reserve

(i) Fixed Assets. 

(ii) Miscellaneous Expenditures 

(iii) Current Assets Loans & Advance under Current Assets. 

(iv) Reserve and Surplus. 

 (v) Fixed Assets.

(i) Capital Reserve 

(ii) Debenture Redemption Reserve

Correct option is (a) General reserve

Correct option is (a) General reserve

Correct option is (c) Capital reserve

Correct option is (c) Specific reserve

Correct option is (b) Secret reserve

You will discover here the CBSE Class 12 Accountancy MCQ Questions of Financial Statements of Companies with Answers free. This might help you to comprehend and check your insight about the parts. These MCQ Questions are chosen upheld by the most up-to-date exam pattern and syllabus as declared by CBSE. Understudies likewise can take a free test of the Multiple Choice Questions of Financial Statements of a Company. Each question has four choices followed by the right answer. 

Our educators have given beneath Financial Statements of a Company Class 12 Accountancy MCQs Questions with answers which will assist understudies with changing and get more marks in exams. This might help you to understand and check your insight about the sections. Understudies additionally can step through a free exam of the Multiple Choice Questions of Class 12 Accountancy. Each question has four alternatives followed by the right answer.

1. Which of the following is the element of financial statements?

(a) Balance Sheet
(b) Profit & Loss A/c
(c) Both (a) and (b)
(d) None of these

2. Which of the following is not required to be prepared under the Companies Act:

(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Anditor’s Report
(d) Fund Flow Statement

3. Equity ₹ 90,000 Liabilities ₹ 60,000 Profit of the year ₹ 20,000. Then total assets will be :

(a) ₹ 1.70,000
(b) ₹ 1,50,000
(c) ₹1,10,000
(d) ₹ 80,000

4. The reserve which is created for a particular (specific) purpose and which is a charge against revenue is called:

(a) Capital Reserve
(b) General Reserve
(c) Secret Reserve
(d) Specific Reserve

5. An Annual Report is issued by a company to its:

(a) Directors
(b) Authors
(c) Shareholders
(d) Management

6. The profit and loss disclosed by the accounts of a company is:

(a) Transferred to share capital account
(b) Shown under the head of ‘Current liabilities’ and provisions
(c) Shown under the head ‘Reserves and Surplus
(d) None of these

7. Under which heading the item ‘Bills discounted but not yet matured’ will
be shown in the Balance Sheet of a company?

a) Current liability
b) Current Assets
c) Contingent Liabilities
d) Unamortized Expenditure

8. Financial statements are summarized statements of accounting data that provide information of the business about

a) Current Assets and Quick Assets
b) Debt and Equity
c) Profitability and Financial Position
d) Operating and Non-operating Income

9. While preparing the Balance Sheet of a company, 6% debentures is shown under
which head?

a) Share capital
b) Long term borrowings
c) Short term borrowings
d) None of these

10. Which of the following will not cover under finance cost?

a) Discount on issue of debentures written off
b) Interest paid on bank overdraft
c) Bank charges
d) Premium payable on redemption of debentures written off

11. The format of the financial statement of a company is prescribed in:

a) Section 129, Schedule III
b) Section 121, Schedule III
c) Section 130, Schedule III
d) Section 129, Schedule I

12. Surplus, i.e, Balance in Statement of Profit and Loss is shown as

a) Share capital
b) Reserves and Surplus
c) Other Long term Liabilities
d) Current Liabilities

13. ___________ is conducted by bankers and government

a) External Analysis

b) Internal Analysis

c) External Analysis and Internal Analysis

d) None of the options

14. Bank overdraft is shown in the balance sheet under the

a) Short Term Borrowings

b) Non-current liabilities

c) Non Current assets

d) None of the options

15.  An example of fixed asset is

a) Live stock

b) Value stock

c) Income stock

d) None of the options

16. The assets held by a business which can be converted in the form of cash, without disturbing the normal operations of a business

a) Current assets

b) Tangible assets

c) Intangible assets

d) Fixed assets

17. The return which the company pays on borrowed funds is termed as

a) All of the options

b) Interest

c) Dividend

d) Bonus

18. The following is(are) the type(s) of capital budgeting decision(s)

a) All of the options

b) Diversification

c) Replacements

d) Expansion

19. Securities Premium Reserve is shown on the liabilities side in the Balance sheet under the head :

(a) Reserves and Surplus
(b) Current Liabilities
(c) Share Capital
(d) None of these 

20. Nominal accounts are related to

(a) Expense + Income
(b) Liability
(c) Assets
(d) None of the options

21. Interest on Loans given by a financial company is shown in the statement of profit and loss as :

(a) Revenue from Operations
(b) Other Income
(c) Sundry Expenses
(d) None of these 

22. Closing stock is recorded in the

(a) Balance sheet
(b) Profit and loss account
(c) Trial balance
(d) None of the options

23. Prepaid expenses should appear in

(a) Assets
(b) Liability
(c) Revenues
(d) None of the options

24. Gain on sale of fixed assets by a financial company is shown in the statement of profit and loss as :

(a) Revenue from Operations
(b) Other Income
(c) Both (a) and (b)
(d) None of these 

25. Current liabilities do not include

(a) None of the options
(b) Sundry creditors
(c) Bank overdraft
(d) Prepaid insurance

Answer:

1. Answer (c) Both (a) and (b)

2. Answer (c) Anditor’s Report

3. Answer (a) ₹ 1.70,000

4. Answer (d) Specific Reserve

5. Answer (c) Shareholders

6. Answer (c) Shown under the head ‘Reserves and Surplus

7. Answer (c) Contingent Liabilities

8. Answer (a) Non-current Assets

9. Answer (c) Profitability and Financial Position

10. Answer (c) Bank charges

Reason:- The Bank charges are not shown under Finance Costs but under ‘Other Expenses’, as they are expenses for the services availed from the bank.

11. Answer (a) Section 129, Schedule III

12. Answer (b) Reserves and Surplus

13. Answer (a) External Analysis

14. Answer (a) Short Term Borrowings

15. Answer (a) Live stock

16. Answer (a) Current assets

17. Answer (a) All of the options

18. Answer (a) All of the options

19. Answer (a) Reserves and Surplus.

20. Answer (a) Expense + Income

21. Answer (a) Revenue from Operations.

22. Answer (a) Balance sheet

23. Answer (a) Assets

24. Answer (b) Other Income.

25. Answer (d) Prepaid insurance

CBSE Class 12 Accountancy MCQ Questions of Financial Statements Analysis with Answers available here. MCQ Questions for Class 12 Accountancy with Answers were Prepared Based on Latest Exam Pattern. Students can solve Class 12 Accountancy Financial Statements Analysis MCQ Questions with Answers to realize their preparation level. 

Various Choice Questions for a significant part of exams for Class 12 Accountancy and whenever practiced appropriately can assist you with getting better marks. Every one of the Multiple choice questions has been given arrangements and has been arranged depending on the normal example in forthcoming board tests. This might help you to comprehend and check your insight about the chapters.

1. Interpretation of Financial Statements includes:

(a) Criticisms and Analysis
(b) Comparison and Trend Study
(c) Drawing Conclusion
(d) All the above

2. Horizontal Analysis is also known as :

(a) Dynamic Analysis
(b) Structural Analysis
(c) Static Analysis
(d) None of these

3. Vertical Analysis is also known as :

(a) Static Analysis
(b) Dynamic Analysis
(c) Structural Analysis
(d) None of these

4. Comparative Statements are also known as :

(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis

5. Common-size Statement are also known as:

(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis

6. The most commonly used tools for financial analysis are:

(a) Comparative Statements
(b) Common-size Statement
(c) Accounting Ratios
(d) All the above

7. Which of the following is not an objective of Analysis of Financial Statements?

a) To judge the financial health of the firm
b) To judge the short term and long term liquidity position of the firm
c) To judge the reasons for the change in the profitability of the firm
d) To judge the variations in the accounting practices of the business followed by different enterprises

8. From financial statement analysis, the creditors are interested to know

a) Liquidity
b) Profit
c) Efficiencies
d) Share Capital

9. Feature of financial analysis is to present the data contained in financial
statement in

a) Easy form
b) Convenient and rational groups
c) Comparable form
d) All of the above

10. Which analysis is considered as dynamic?

a) Horizontal Analysis
b) Vertical Analysis
c) Internal Analysis
d) External Analysis

11. Financial Analysis is significant for

a) Employees
b) Creditors
c) Management
d) All of these

12. Who among the following is not an external user of the financial statement
analysis?

a) Shareholders
b) Debenture holders
c) Creditors
d) Management

13. Which of the following is not a tool of financial statement analysis?

(i) Cash Flow Statement
(ii) Statement showing distribution of dividend
(iii) Ratio Analysis
(iv) Comparative Financial Statements

14. The financial statements of a business enterprise include :

(i) Balance sheet
(ii) Statement of Profit and loss account
(iii) Cash flow statement
(iv) All the above

15. Vertical Analysis is also known as :

(i) Static Analysis
(ii) Dynamic Analysis
(iii) Structural Analysis
(iv) None of these

16. Which of the following is not recognized as tool for the analysis of financial statements?

(i) Cash Flow Statement
(ii) Funds Flow Statement
(iii) Trend Analysis
(iv) Statement showing distribution of dividends

17. When financial statements of several years are analyzed, it is termed as

(i) None of the options
(ii) Horizontal analysis
(iii) Current ratios
(iv) Vertical analysis

18. Comparative Statements are also known as :

(i) Dynamic Analysis
(ii) Horizontal Analysis
(iii) Vertical Analysis
(iv) External Analysis

19. Financial Statement Analysis Objectives/Need is

a) All of the options

b) Measure the profitability of the business

c) Measure the financial strength of the business

d) Make comparative study within the firm and with other forms

20. Significance or Importance of Financial Analysis is

a) All of the options

b) To know the profitability Condition

c) To know the liquidity Condition

d) To know the solvency Condition

21. To whom Importance of Financial Analysis is

a) All of the options

b) For Management

c) For Investors

d) For Creditors

22. Which is Types of financial Analysis

a) Horizontal Analysis and Vertical Analysis

b) Horizontal Analysis

c) Vertical Analysis

d) None of the options

23. Horizontal Analysis is also known as

a) Dynamic Analyses

b) Vertical Analysis

c) Dynamic Analyses and Vertical Analysis

d) None of the options

24. In which analysis Financial Statement for a single year analysed

a) Vertical Analysis

b) Dynamic Analyses

c) Vertical Analysis and Dynamic Analyses

d) None of the options

25. Tool of Financial Analysis is

a) Comparative Statement and Common Size Statement

b) Comparative Statement

c) Common Size Statement

d) None of the options

Answer:

1. Answer (d) All the above

2. Answer (a) Dynamic Analysis

3. Answer (a) Static Analysis

4. Answer (b) Horizontal Analysis

5. Answer (c) Vertical Analysis

6. Answer (d) All the above

7. Answer (d) To judge the variations in the accounting practices of the business followed by different enterprises

8. Answer (a) Liquidity

9. Answer (d) All of the above

10. Answer (a) Horizontal Analysis

11. Answer (d) All of these

12. Answer (d) Management

13. Answer (ii) Statement showing distribution of dividend

14. Answer (iv) All of the above

15. Answer (i) Static Analysis

16. Answer (iv) Statement showing distribution of dividends

17. Answer (iv) Vertical analysis

18. Answer (ii) Horizontal Analysis

19. Answer (a) All of the options

20. Answer (a) All of the options

21. Answer (a) All of the options

22. Answer (a) Horizontal Analysis and Vertical Analysis

23. Answer (a) Dynamic Analyses

24. Answer (a) Vertical Analysis

25. Answer (a) Comparative Statement and Common Size Statement

Correct option is (D) efficiency

Main three uses of financial analysis are as follows :

1. For dividend decision : In the company form dividend decision is analysed by different parties like existing investors, potential investors and company itself. The payment of dividend is based on earning capacity of company which can be decided by profitability analysis and to take proper decision regarding dividend payment financial statement is useful.

2. For lending decision: short term and long term loan and advances are provided to the business entities by banks and financial institutions. To know how far their advances are safe, financial statement analysis is useful.

3. For borrowing decision: From the analysis of financial statements of their own, business entity can estimate its own borrowings capacity to borrow funds from the market. Based on this evaluation, opportunities for new investments can be explored.

Following are the users of financial analysis :

1. Equity Shareholders: By financial statements analysis, equity shareholders are interested in knowing whether their investment is safe or not and whether regular and increasing dividend shall be received on capital invested or not. They are also expecting appreciation in market price of shares with the growth of the company.

2. Preference Shareholders: They are interested in analysing financial statements to know whether they will be able to get regular dividends or not; whether their investment is safe; whether they will be able to get back their capital on expiry of specified term, etc.

3. Potential Investors: Prospective or potential investors are interested in analysis to know whether to invest in shares of company or not, whether their investment is safe, regularity of return, probability of capital gain due to growth of the company etc.

4. Debenture holders and other lenders or institutions: This class is interested in analysing financial statements to know about safety of money and regular return on investment.

5. Creditors: They are interested in financial statements analysis to know whether they will be able to recover the money in respect of goods or services supplied to company and also to know about the possibility of continued business with the company.

6. Management: By financial statement analysis, management of the company wants to measure its efficiency in managing company.

7. Employee / Trade Unions: They are interested in analysing financial statements from the viewpoint of possibility of better salaries, perks and operating efficiency.

8. Society or Public: Company emerges and develops in the society and accordingly is a part of the society. It has to fulfil its obligations towards society. By financial statement analysis, the society or public gets information relating to the manner and method by which the company has discharged its social responsibility.

9. Government: Government is interested in financial statements analysis from the viewpoint of taxation and planning.

10. Competitors: Competitors are interested in knowing the strategies of an enterprise by financial statement analysis so that they can also formulate their appropriate policies.

Correct option is (C) makes interpretation

Following are three sources of capital reserve :

1. Profit on sale of fixed assets and investments.
2. Premium received on issue of shares or debentures and
3. Balance of share for forfeiture account after reissue of shares forfeited by the company.

Following are the types of reserves :

1. Revenue reserve and
2. Capital reserve.

Correct option is (B) ₹ 5,00,000

Interpretation of information or result given in financial statements is known as financial analysis.

On the basis of parties types of financial analysis are as follows :

• External party
• Internal party.

Meaning: The reserve which is created out of capital profit and cannot be used for distribution of dividend is known as Capital reserve.
Sources of capital reserve: Following are the sources of capital reserve :

• From profit on sale of fixed assets and investments.
• From profit on revaluation of fixed assets.
• From profit made at the purchase of an existing business at lower cost than the actual one.
• From profit prior to incorporation of the company.
• From premium received by the company on issue of shares or debentures.
• From balance of Share Forfeiture Account, after reissue of forfeited shares by the company.
• From the profit earned at the time of redemption of debentures.
• From capital redemption reserve for redeeming preference shares.

Use of capital reserve:

A company cannot declare dividend from the capital reserve, but it can be put to following uses :

• To write off capital losses.
• To issue bonus shares; if Articles of Association provides.
• To write off fictitious assets like goodwill, preliminary expenses, discount on debentures.
• In special circumstances under special conditions dividends can be declared out of capital reserve also.

Considering the future, the amount set apart from the profit is known as a reserve. According to accepted business principles, reserve is the portion of profit set aside for meeting known or unknown future contingencies.

In short, the amount which is allocated from the profit for any specific purpose or without any purpose is known as reserve. This reserve is created from the Profit and Loss Appropriation Account, e.g., General reserve, Workers accident compensation fund, Investment fluctuation reserve, Dividend equalization fund, Capital redemption reserve, Debenture redemption fund, etc.

• It strengthens the liquidity position for the solvency of the business.
• In order to meet any loss that may arise in future or to meet the future contingent loss, a reserve is maintained.
• Required necessary funds for expansion of the business is available from the reserve or profit of the business only.
• Reserve can be used to honor long term liabilities.
• Company can maintain dividend equalization by using reserve.
• Cash liquidity is to be maintained in the business by using reserve.
• A reserve is to provide for any known liabilities to be paid easily in future like provident fund, etc.
• Reserves are created to fulfil some of the statutory requirements.

सही विकल्प है (ब) फुटकर व्यवसाय करनेवाले

लाभ या हानि दर्शाते पत्रक में अंतिम पूँजी में रोकड़ आहरण, माल का आहरण तथा धंधे में से चुकाये निजी खर्च जैसे : जीवन बीमा प्रीमियम, आयकर वगैरह को जोड़ा जाता है तथा प्रारंभिक पूँजी तथा वर्ष के दरम्यान लाई गई पूँजी को घटाया जाता है ।

पूँजी की तुलना की पद्धति में प्रत्येक वर्ष के अंत में लाभ या हानि ज्ञात करने के लिये प्रारंभ की पूँजी और अंत की पूँजी की तुलना की जाती है ।

एकहरा लेना पद्धति अर्थात् जब व्यापार-धंधा सीमित प्रमाण में हो ऐसे छोटे व्यापारियों द्वारा संपूर्ण हिसाब तैयार न करके सिर्फ रोकड़बही या खाताबही बनाकर उसमें सिर्फ नकद के व्यवहार और व्यक्तिगत खाते से संबंधित व्यवहार ही लिखे जाते है । उसमें व्यवसाय के सभी व्यवहारों की दोहरी असर नहीं दी जाती । जिस प्रकार की व्यवसाय की आवश्यकता हो उस प्रकार अमुक व्यवहारों की सिर्फ एक ही असर दी जाती है, इसलिए यह एकहरा लेखा प्रणाली के रूप में जानी जाती है ।

एकहरा लेखा प्रणाली के लक्षण (Characteristics of Single Entry System) :

• फुटकर व्यवसाय करनेवाले : सामान्य रूप से लारीवाले, गल्लेवाले, फेरिया या फुटकर व्यवसाय करनेवाले छोटे व्यापारी ही एकहरा प्रणाली के अनुसार हिसाब रखते है ।
• दिनोंधी नामा पद्धति का सिद्धांत : एकहरा लेखा प्रणाली में अमुक व्यवहारों की दो असर दी जाती है वहाँ द्विलेखा प्रणाली के सिद्धांतों का उपयोग किया जाता है ।
• एकहरा और दिलेखा प्रणाली का संयुक्त मिश्रण : इस प्रणाली में अमुक व्यवहारों की एक ही असर जबकि अमुक व्यवहारों की दो असर दी जाती है । जिससे दोनों पद्धतियों का संयुक्त मिश्रण देखने को मिलता है ।
• समानता में कमी : इस प्रणाली में कोई व्यापारी रोकड़बही रखता है तो कोई व्यापारी सहायक बही रखता है । अर्थात्, व्यापारियों के हिसाब रखने की पद्धति में कोई समानता देखने को नहीं मिलती ।
• आवश्यकता अनुसार बहियाँ : व्यापारी सिर्फ आवश्यकता के अनुसार मर्यादित बहियाँ जैसे : रोकड़बही या खाताबही रखते है ।
• आंतरिक व्यवहारों का लेखा : इस पद्धति में संपत्ति पर घिसाई या पूँजी पर ब्याज जैसे व्यवसाय के आंतरिक व्यवहारों की कोई असर नहीं दी जाती ।
• अपूर्ण लेखा : व्यापारी द्वारा अमुक व्यवहारों की सिर्फ एक ही असर दी जाने से व्यवहारों का लेखा अपूर्ण रहता है ।

सही विकल्प है (ब) स्थितिदर्शक पत्रक

आर्थिक चिट्टे की तरह तैयार किये जानेवाले इस पत्रक में व्यवसाय का मालिक वर्ष के अंत में लाभ या हानि ज्ञात करने के लिये प्रारंभ की पूँजी और अंतिम पूँजी की तुलना करते है और यदि अंतिम पूँजी में वृद्धि हुई हो तब अंतर लाभ और कमी हई हो तब अंतर हानि गिना जाता है । प्रारंभ की पूँजी न दी गई हो तब प्रारंभ का स्थितिदर्शक पत्रक या अंतिम पूँजी न दी गई हो तब अंतिम का स्थितिदर्शक पत्रक तैयार किया जाने से इस पद्धति को स्थितिदर्शक निवेदनपत्रक की पद्धति कहते हैं ।

छोटे व्यापारी खुद की आवश्यकता के अनुसार अपूर्ण लेखा के साथ के हिसाब या बहीयाँ रखते है । ऐसे हिसाब अपूर्ण या अव्यवस्थित स्वरूप में होने से, उसमें हिसाबों को नियम के अनुसार का स्वरूप दिया जाता है, जिसे एकहरा लेखा हिसाबी प्रणाली के रूप में जाना जाता है ।

एकहरा लेखा प्रणाली के उपयोग (लाभ) (Uses of Single Entry System) :

• कम खर्चीली और कम समय : यह पद्धति सभी प्रणालियों से अलग है । इस पद्धति में सभी हिसाब द्विलेखा पद्धति के अनुसार तैयार न किये जाने से यह कम खर्चीली होती है और कम समय में इसे तैयार किया जाता है ।
• मर्यादित बहियाँ : इस पद्धति में छोटे व्यापारी अपने व्यवसाय की आवश्यकता के अनुसार बहियाँ रखते है । व्यापारी माल संपत्ति या उपज-खर्च के खाते नहीं बनाते परंतु सिर्फ व्यक्ति के ही खाते बनाते है । इसलिये इस पद्धति में मर्यादित बहियों की आवश्यकता होती है ।
• मर्यादित उद्देश्य : प्रतिरोज कार्य करके आवक प्राप्त करके अपने जीवन-निर्वाह करनेवाला छोटा व्यापारी गल्लेवाले, लारीवाले या फेरियावाले या फुटकर व्यवसाय करनेवालों का हिसाब तैयार करने का उद्देश्य खूब ही मर्यादित होता है । उनके लिये यह पद्धति अधिक उपयोगी मानी जाती है ।

एकहरा लेखा प्रणाली में प्रत्येक व्यवहार की दोहरी असर नहीं होती, अमुक प्रकार के व्यवहारों की मात्र एक ही असर होती है । जबकि दोहरा लेखा प्रणाली में सभी व्यवहारों की कम से कम दो असर होती है ।

सही विकल्प है (ब) अपूर्ण जानकारी पर से हिसाबों की पद्धति

सही विकल्प है (ड) अमुक व्यवहारों की एक ही असर जबकि शेष व्यवहारों की दो असर होती है ।

सही विकल्प है (ब) स्थितिदर्शक पत्रक

Correct option is (D) All of the above