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MCQs on Analysis of Financial Statements

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MCQs on Analysis of Financial Statements

Question 11:

What will be the effect of “Purchase of Marketable Securities for cash” on Cash Flow Statement?

  1. *No effect
  2. Inflow from financing activities
  3. Outflow from investing activities
  4. Outflow from financing activities

Question 12:

₹5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹30,000 after acquisition.

  1. Cash outflow from financing activities ₹4,70,000
  2. Cash inflow from investing activities ₹4,70,000
  3. Cash inflow from financing activities ₹4,70,000
  4. *Cash outflow from investing activities ₹4,70,000

Question 13:

The Debt-Equity Ratio of a company is 3 : 2. Which of the following transactions will result in increase in this ratio?

  1. Purchase of goods on credit
  2. *Issue of Debentures
  3. Issue of Equity Shares
  4. Cash received from Debtors

Question 14:

Statement I: Issue of fully paid bonus shares out of Securities Premium Account will result in inflow of cash.

Statement II: Cash withdrawn from bank will result in inflow of cash.

In the context of the above two statements, choose the correct option:

  1. Both statement I and statement II are correct
  2. *Both statement I and statement II are incorrect
  3. Statement I is correct, and statement II is incorrect
  4. Statement I is incorrect, and statement II is correct

Question 15:

Which of the following tools of Analysis of Financial Statements indicate the trend and direction of financial position and operating results?

  1. *Comparative statements
  2. Common size statements
  3. Cash flow analysis
  4. Ratio analysis

MCQs on Analysis of Financial Statements

Question 16:

________ indicate the speed at which activities of the business are being performed.

  1. Liquidity ratios
  2. *Turnover ratios
  3. Solvency ratios
  4. Profitability ratios

Question 17:

Which of the following transactions will result in cash flows from operating activities?

  1. Cash receipts from sale of investments ₹60,000
  2. *Cash receipts from sale of goods ₹94,000
  3. Dividend received ₹31,000
  4. Payment of cash for purchase of fixed assets ₹3,00,000

Question 18:

Dividend paid by a Finance Company is classified under which of the following:

  1. Operating Activities
  2. Investing Activities
  3. *Financing Activities
  4. Cash and Cash Equivalents

Question 19:

The Quick Ratio of a company is 1 : 1. Which of the following transactions will result in increase of this ratio?

  1. Purchase of inventory ₹1,50,000 through cheque
  2. *Sold inventory on credit ₹ 50,000
  3. Outstanding expenses of ₹ 40,000 paid
  4. Machinery purchased for cash ₹50,000

Question 20:

Which of the following transactions will result in cash outflow from operating activities?

  1. *Payment to creditors
  2. Proceeds from sale of investments
  3. Dividend received by a non-finance company
  4. Depreciation charged on furniture

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