laboursonline – MCQs, Mock Tests | ICSE XII MCQ Questions for Class 12 Accountancy set-10

Which Of the following is limitation of financial analysis ?

1. Window-dressing
2. Basis of Valuation
3. Lack of Accuracy
4. All the above

✅ Correct Answer: 4

Which of the following is not the limitations of financial analysis ?

1. Lack of Accuracy
2. Based on Historical facts
3. Basis of Valuation
4. Information of Profit and Loss

✅ Correct Answer: 4

When Financial Statements of two or more organisations are analysed, it is called :

1. Intra-firm Analysis
2. Inter-firm Analysis
3. Vertical Analysis
4. None of these

✅ Correct Answer: 2

Which of the following statement correct ?

1. Retained Earnings = Total Income
2. Retained Earnings = Revenue-expenses
3. Retained Earnings = Gross Profit
4. None of the above

✅ Correct Answer: 2

Which of the following is a type of Financial Analysis on the basis of material used ?

1. Internal Analysis
2. External Analysis
3. Internal Audit
4. Both (a) and (b)

✅ Correct Answer: 4

Proprietory Ratio indicates the relationship between proprietor’s funds and….

1. Reserve
2. Share Capital
3. Total Assets
4. Debentures

✅ Correct Answer: 3

Which one of the following ratios is most important in determining the long-term solvency of a company ?

1. Profitability Ratio
2. Debt-Equity Ratio
3. Stock Turnover Ratio
4. Current Ratio

✅ Correct Answer: 2

Total Assets ₹ 8,10,000 Total Liabilities ₹ 2,60,000 Current Liabilities ₹ 40,000 Debt-equity ratio is:

1. 0.05 : 1
2. 0.4 : 1
3. 2.5 : 1
4. 4 : 1

✅ Correct Answer: 3

Equity share capital ₹ 15,00,000 Reserve and Surplus ₹ 7,50,000 Total Assets ₹ 45,00,000 Properletory Ratio ?

1. 50%
2. 33.3%
3. 200%
4. 60%

✅ Correct Answer: 1

Total Assets ₹ 7,70,000 Total Liabilities ₹ 2,60,000 Current Liabilities ₹ 40,000 Total Assets to Debt Ratio is:

1. 3.5 : 1
2. 2.56 : 1
3. 2.8 : 1
4. 3 : 1

✅ Correct Answer: 1

Profitability Ratios are generally expressed in :

1. Simple Ratio
2. Percentage
3. Times
4. None of these

✅ Correct Answer: 2

The ratios are primarily measures of earning capacity of the business.

1. Liquidity
2. Activity
3. Debt
4. Profitability

✅ Correct Answer: 4

The gross profit ratio is the ratio of gross profit to :

1. Net Cash Sales
2. Net Credit Sales
3. Closing Stock
4. Net Total Sales

✅ Correct Answer: 4

Operating Ratio is:

1. Profitability Ratio
2. Activity Ratio
3. Solvency Ratio
4. None of these

✅ Correct Answer: 1

Which of the following is an operating’ income ?

1. Sale of Merchandise
2. Interest Income
3. Dividend Income
4. Profit on the sale of old car

✅ Correct Answer: 1

Which of the following non-operating expense?

1. Rent
2. Selling Expenses
3. Wages
4. Loss on Sale of Machinery

✅ Correct Answer: 4

The following groups of ratios primarily measure risk

1. Liquidity, activity and profitability
2. Liquidity, activity and common stock
3. Liquidity, activity and debt
4. Activity, debt and profitability

✅ Correct Answer: 4

To know the return on investment, by capital employed we mean:

1. Net Fixed Assets
2. Current Asset-Current Liabilities
3. Gross Block
4. Fixed Assets + Current Assets-Current Liabilities

✅ Correct Answer: 4

The term fixed assets include :

1. Cash
2. Machinery
3. Debtors
4. Prepaid Expenses

✅ Correct Answer: 2

Ratio based on figures of profit & loss as well a the Balance sheet are:

1. Profitability Ratios
2. Operation Ratio
3. Liquidity Ratio
4. Composite Ratio

✅ Correct Answer: 4

When opening stock is ₹ 50,000 closing stock ₹ 60,000 and cost of goods sold is ₹ 2,20,000, then stock turn over ratio is:

1. 2 times
2. 3 times
3. 4 times
4. 5 times

✅ Correct Answer: 1

What does Creditors Turnover Ratio take into account:

1. Total credit purchases
2. Total credit sales
3. Total cash sales
4. Total cash purchases

✅ Correct Answer: 1

Cost of goods sold :

1. Sales – Net profit
2. Sales – Gross profit
3. Purchases – Opening Stock
4. None of the above

✅ Correct Answer: 2

The ideal liquid ratio is :

1. 2 : 1
2. 1 : 1
3. 5 : 1
4. 4 : 1

✅ Correct Answer: 2

The ideal current ratio is :

1. 2 : 1
2. 1 : 2
3. 3 : 2
4. 3 : 4

✅ Correct Answer: 1

Profitability Ratio is generally shown in :

1. Simple Ratio
2. Percentage
3. Times
4. None of these

✅ Correct Answer: 2

Stock turnover ratio comes under :

1. Liquidity Ratio
2. Profitability Ratio
3. Activity Ratio
4. None of these

✅ Correct Answer: 3

The satisfactory ratio between internal and external equity is. :

1. 1 : 2
2. 2 : 1
3. 3 : 1
4. 4 : 1

✅ Correct Answer: 2

Current Ratio includes:

1. Stock
2. Debtors
3. Cash
4. All of these

✅ Correct Answer: 3

Current Ratio =

1. Current Assets/Current Liabilities
2. Liquid Assets/Current Liabilities
3. Liquid Assets/Current Assets
4. Fixed Assets/Current Assets

✅ Correct Answer: 1

Liquid Assets include :

1. Bills Receivable
2. Debtors
3. Cash Balance
4. All of these

✅ Correct Answer: 4

Which of the following assets is not taken into consideration in calculating acid-test ratio ?

1. Cash
2. Bills Receivable
3. Stock
4. None of these

✅ Correct Answer: 3

When Cash is 7 10,000 Stock is 7 25,000, B/R is 7 5,000 Creditors is 7 22,000 and Bank Overdraft is 7 8,000 then current ratio is :

1. 2 : 1
2. 4 : 3
3. 3 : 4
4. 1 : 2

✅ Correct Answer: 2

The two basic measures of liquidity are :

1. Inventory Turnover and Current Ratio
2. Current Ratio and Liquid Ratio
3. Current Ratio and Average Collection Period
4. Current Ratio and Debtors Turnover Ratio

✅ Correct Answer: 2

The term ‘Current Liabilities’ does not include: .

1. Sundry Creditors
2. Debentures
3. Bills Payable
4. Outstanding Expenses

✅ Correct Answer: 2

The term‘Current Assets’include

1. Long-term Investment
2. Short-term Investment
3. Furniture
4. Preliminary Expenses

✅ Correct Answer: 2

Liquid Ratio is also known as:

1. Current Ratio
2. Quick Ratio
3. Capital Ratio
4. None of these

✅ Correct Answer: 2

To test the liquidity of a concern which of the following ratios is useful ?

1. Capital Turnover Ratio
2. Acid Test Ratio
3. Stock Turnover Ratio
4. Net Profit Ratio

✅ Correct Answer: 2

Which of the following transactions will improve the current ratio ?

1. Purchase of good for cash
2. Cash received from customers
3. Payment of creditors
4. Credit purchase of goods

✅ Correct Answer: 3

Debt-equity ratio is :

1. Liquidity Ratio
2. Activity Ratio
3. Solvency Ratio
4. Operating Ratio

✅ Correct Answer: 3

The formula for finding out Debt-Equity Ratio is:

1. Long-term Debts/Shareholders’ Funds
2. Debentures/Equity Capital
3. Net Profit/Total Capital
4. None of these

✅ Correct Answer: 1

Preparation of cash flow statement is :

1. Mendatory
2. Recommendatory
3. Required under the Companies Act
4. None of these

✅ Correct Answer: 1

Issue of shares in consideration of purchase of plant and machinery results into :

1. Inflow of Cash
2. Outflow of Cash
3. Neither Inflow nor Outflow
4. None of these

✅ Correct Answer: 3

If net profit is 7 50,000 after writing off goodwill 7 10,000 then the cash flow from operating activities will be:

1. ₹ 60,000
2. ₹ 40,000
3. ₹ 50,000
4. ₹ 30,000

✅ Correct Answer: 1

If net profit is ₹ 35,000 after writing off good will ₹ 6,000 and loss on sale of furniture ₹ 1,000, cash flow from operating activities will be :

1. ₹ 35,000
2. ₹ 42,000
3. ₹ 29,000
4. ₹ 28,000

✅ Correct Answer: 2

Cash sales in :

1. Operating Activity
2. Investing Activity
3. Financing Activity
4. None of these

✅ Correct Answer: 1

Cash from operating activities will decrease due to :

1. Increase in Current Assets
2. Decrease in Current Liabilities
3. Neither of the two
4. Both (a) and (b)

✅ Correct Answer: 4

Which of the following is an example of Cash Flow from Operating Activities ?

1. Purchase of Machinery
2. Issue of Shares
3. Purchases of Inventory for Cash
4. Purchases of Investment

✅ Correct Answer: 3

While calculating cash flow from operating netivities which will be deducted ?

1. Increase in Creditors
2. Increase in Debtors
3. Decrease in Debtors
4. Decrease in Prepaid Expenses

✅ Correct Answer: 2

While calculating cash flow from operating activities, which will be added ?

1. Increase in Stock
2. Increase in Creditors
3. Decrease in Bills Payable
4. Increase in Debtors

✅ Correct Answer: 2