NCERT Class 11 Chapter 9 Accountancy Financial Statement 1 MCQ

NCERT Class 11 Chapter 9 Accountancy Financial Statement 1 MCQ | Questions & Answers: Want to know your expertise in the NCERT Class 11 Chapter 9 Accountancy Financial Statement 1 concept? If so, then here we have come up with another NCERT Class 11 Chapter 9 Accountancy Financial Statement 1 MCQ Quiz. Make sure that you submit your answers at the end to get the instant results.

Page 1 of 3

1. The term ‘Financial Statement’ covers

A. Profit & Loss Statement

B. Balance sheet and Profit & Loss Statement appropriation account

C. Profit & Loss Statement and Balance sheet

D. All of above are false

2. Which of the following items is included in the adjustment of net income to obtain cash flow from operating activities?

A. Depreciation expense for the period.

B. The change in deferred taxes.

C. The amount by which equity income recognized exceeds cash received.

D. All of the above.

3. A financial statement that summarizes company revenue and expenses is?

A. Balance sheet

B. Statement of owner equity

C. Income statement

D. Cash flow statement

4. How would revenue from sales of goods and services be classified?

A. Operating outflow.

B. Operating inflow.

C. Investing inflow.

D. Financing inflow

5. What is a limitation common to both the current and quick ratio?

A. Accounts receivable may not be truly liquid.

B. Inventories may not be truly liquid.

C. Marketable securities are not liquid.

D. Prepaid expenses are potential sources of cash.

6. What is Form 10-K?

A. A document filed with the AICPA, containing supplementary schedules showing management remuneration and elaborations of financial statement disclosures

B. A document filed with the Securities and Exchange Commission by companies selling securities to the public, containing much of the same information as the annual report as well as additional detail.

C. A document filed with the Securities and Exchange Commission containing key business ratios and forecasts of earnings.

D. A document filed with the Securities and Exchange Commission containing nonpublic information.

7. What does an increasing collection period for accounts receivable suggest about a firm’s credit policy?

A. The credit policy is too restrictive.

B. The firm is probably losing qualified customers.

C. The credit policy may be too lenient.

D. The collection period has no relationship to a firm’s credit policy.

8. What type of accounts are accounts receivable and inventory?

A. Cash accounts.

B. Operating accounts.

C. Financing accounts.

D. Investing accounts.

9. Subtracting all expenses from revenues yields?

A. Net profit/Loss

B. Carrying value

C. Long-term assets

D. Net liabilities

10. What information does the auditor’s report contain?

A. The results of operations.

B. An unqualified opinion.

C. An opinion as to the fairness of the financial statements

D. A detailed coverage of the firm’s liquidity, capital resources, and operations.

Page 2 of 3

11. The primary source of revenue for a wholesaler is?

A. Investment income

B. Service fees

C. The sale of merchandise

D. The sale of fixed assets the company owns

12. How would short-term investments in marketable securities be classified?

A. Cash.

B. Operating activities.

C. Financing activities.

D. Investing activities.

13. What information can be gained from sources such as Industry Norms and Key Business Ratios, Annual Statement Studies, Analyst’s Handbook, and Industry Surveys?

A. The general economic condition.

B. Forecasts of earnings.

C. Elaborations of financial statement disclosures.

D. A company’s relative position within its industry.

14. How is the balance sheet linked to the other financial statements?

A. The beginning retained earnings balance on the statement of retained earnings becomes the amount of retained earnings reported on the balance sheet

B. Retained earnings is added to total assets and reported on the balance sheet

C. Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet

D. There is no link between the balance sheet and the other statements

15. Profit and loss Account discloses:

A. Gross profit

B. Gross profit or Gross loss

C. Gross profit or Gross loss

D. None of these

16. Which ratio or ratios measure the overall efficiency of the firm in managing its investment in assets and in generating return to shareholders?

A. Gross profit margin and net profit margin.

B. Return on investment.

C. Total asset turnover and operating profit margin.

D. Return on investment and return on equity.

17. Which of the following is not required to be discussed in Management’s Discussion and Analysis of the Financial Condition and Results of Operations?

A. Liquidity.

B. Capital resources.

C. Operations.

D. Earnings projections.

18. What do the asset turnover ratios measure?

A. The liquidity of the firm’s current assets.

B. Management’s effectiveness in generating sales from investments in assets.

C. The overall efficiency and profitability of the firm.

D. The distribution of assets in which funds are invested.

19. An inflow of cash would result from which of the following?

A. The increase in an asset account other than cash.

B. The decrease in an asset account other than cash.

C. The decrease in an equity account.

D. The decrease in a liability account.

20. What is the first step in an analysis of financial statements?

A. Check the auditor’s report.

B. Check references containing financial information.

C. Specify the objectives of the analysis.

D. Do a common size analysis.

Page 3 of 3

21. Why is the quick ratio a more rigorous test of short-term solvency than the current ratio?

A. The quick ratio considers only cash and marketable securities as current assets.

B. The quick ratio eliminates prepaid expenses for the numerator.

C. The quick ratio eliminates prepaid expenses for the denominator.

D. The quick ratio eliminates inventories from the numerator.

22. How would the repayment of debt principal be classified?

A. Operating outflow.

B. Operating inflow.

C. Investing outflow.

D. Financing outflow.

23. What is the most widely used liquidity ratio?

A. Quick ratio.

B. Current ratio.

C. Inventory turnover.

D. Debt ratio.

24. How would payments for taxes be classified?

A. Operating outflow.

B. Operating inflow.

C. Investing outflow.

D. Financing outflow.

25. Which of the following statements are true?
A) Financial statements are only interim report.
B) Financial statements are also known as annual records.
C) Financial statements are historic.

A. Both A and B

B. Both A and C

C. Both B and C

D. A, B, C