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FINC001 - Part1

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54 views

FINC001 - Part1

Uploaded by

sourabh
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FINC001-Test1

Q1. What are the basic financial statements provided in an annual report?
a.Balance sheet and Income statement
b.Statement of financial earnings and statement of stockholder's equity:
c.Balance sheet, income statement and statement of cash flows
d.Balance sheet, income statement statement of cash tows and statement of
stockholder's
equity
Ans. C
Q2. Which statutory act requires that financial statements of companies shall
comply with the
accounting standards
a.The Companies Act, 2013
b.The Partnership Act 1932
c.The Income Tax Act, 1961
d.all of these
Ans.A
Q3. What is revenue?
a.The amount of money owed to a business by its customers
b. The amount spent by a business to sell its goods and services
c.The amount of money a business earns from selling its goods and services
d.The cash received from selling goods and services
Ans. C
Q4. The existence of significant off-balance sheet financing mainly specifies:
a.A lack of comprehensiveness which decreases financial reporting quality
b.A decrease in debt, which decreases financial results quality
c.A lack of transparency which decreases financial reporting quality
d.A lack of unbiased dimension which decreases financial reporting quality
Ans. C
Q5. The concept of financial statements quality implies:
a.Accuracy of using the monetary reports to inform about predicted cashflows to
stakeholders
b.how the financial reports of a firm correspond its fundamental social position.
c.unfair and non transparent financial information about the firm
d.Both a and b
Ans.D
Q6. What does the income statement measure for a firm?
a.The changes in assets and liabilities that occurred during the period
b.The financing and investment activities for a period
c.The results of operations for a period
d.The financial position of a firm for a period

Q7. The primary objective of high quality financial reporting is presenting


information about
a.Social benefits
b.Environmental issues
c.Monetary units
d.All of the above
Ans. C
Q8. Misclassification of revenue expense as a capital expense leads to
a.an increase in expenses and a decrease in profits
b. decrease in expenses and an increase in profits
c.Leads finance managers to treat recurring expenses as a one-time expense.
d.Leads to increase in inventory turnover ratio
Ans.A
Q9. State which of the following statement is true:
a. Internal auditor may be or may not be a practicing Chartered Accountant or Cost
Accountant
b. Internal auditor must be a practicing Chartered Accountant or Cost Accountant
c. Internal auditor should not be a practicing Chartered Accountant or Cost
Accountant
Internal
d.auditor may be or may not be a practicing Company Secretary or Cost Accountant
Ans. A
Q10. Use the following information to determine when a business should record (or
recognize)
revenue A contract was signed in March for legal work completed by a law firm in
April. The client
agreed to pay for the completed work in May and the law firm received payment in
early June.
a.March
b.April
c.June
d.May
Ans. D
Q11. What are the other motives behind influenced accounting?
a.Management Perks and benefits
b.To forgo tax benefits
c.Cleaning at the time of new CEO Joining.
d.Both a and c
Ans. D
Q12. One of the example of influenced accounting problems is
a.Measurement of revenues as operating and non-operating
b.Valuation of reserves
c.Aggressive revenue identification Categorizing non-operating
d.revenue income as non-operating
Ans. C
Q13. All the assets that an entity controls are recognised in the
a. Profit & loss statement
b.Financial statement
c.Accounting book
d.Balance sheet
Ans. D
Q14. Primary objective of cash flow statement is to provide information about
a.Future plans of company
b.Profit earned during the year
c.Cash flow position of the company
d.All of these
Ans. C
Q15. Which of the following would be considered a cash flow item from an
"investing" activity?
a.cash inflow from interest income
b.cash inflow from dividend income
c.cash outflow to acquire fixed assets
d.all of these
Ans. C
Q16. The capital structure of AB Ltd. is as follows 9% preference shares of Rs. 10
each Rs. 3,00,000
Equity shares of Rs. 10 each Rs. 8,00,000. The following further information is
available: Profit after
tax Rs. 2,70,000 Equity dividend paid 0% Market price of equity shares Rs 40 each.
From the above
information, the EPS and PE ratio are
a.Rs 3.12 ,10.80
b.Rs. 3.33, 10.34
c.0
d.Rs. 3.04, 13.16
Ans. A
Q17. The factors that may affect the quality of financial statements are
a.Measurement and timing problems
b.Classification problems.
c.Influenced Accounting
d.All of the above.
Ans. D
Q18. The following information is extracted from the financial statement of KTS Ltd.
Cost of goods
sold Rs. 25,00,000 Sales Rs. 50,00,000 Average accounts receivable Rs 4,00,000
Average inventory Rs
15.00.000 Average assets Rs. 50,00,000 Net profit Rs. 10,00,000. The accounts
receivable turnover,
inventory turnover and total assets turnover for a firm are
a.11.1 times 1.2 times 0.63 times
b.12.0 times 1.3 times 0.79 times
c.12.5 times 2.2 times 0 12 times
d.12.5 times. 1.67 times. 1 times
Ans. D
Q19. Which of the following statement is true about Ratio Analysis?
a.Ratio analysis does not helps in facilitating trend analysis
b.Ratio analysis does not helps in identification of attention-seeking domains
c.Ratio analysis helps in data simplification and association
d.Ratio analysis does not assist in comparative analysis.
Ans.C
Q20. The profit and loss account format as per Companies Act 2013 is given in
Schedule-
a.lll
b.VI
c.VII
d.IV
Ans. A
Q21. Out of the fund flow statement and cash flow statement which one is a broader
concept: -
A.Fund flow statement
B.Cash flow statement
C. Cash budget
D. None of the above
Ans. B
Q22. The Accounting Standards Board was set up by
a. Reserve Bank of India
b.Institute of Chartered Accountants of India
c.Comptroller and Auditor General of India
d.Central Board of Direct Taxes
Ans.B
Q23. The quality of financial statements is majorly determined by:
a.Earnings quality
b.Cashflows quality
c.Balance sheet quality
d.All of the above
Ans.D
Q24. What does balance sheet summarize for a business enterprise
a.Operating results for a period
b.Financial position at a point in time.
c.C. Financing and investment activities for a period
d.D. Profit or loss at a point in time.
Ans. B
Q25. Financial statements should be submitted within ____days from the end of each
quarter except
for days in case of last quarter
a.45,60
b.60,45
c.15,30
d.None of these
Ans. D
Q26. Under indirect method how will the changes in accounts receivables are
reflected?
a.Adjustment to sales
b.Adjustment to net income
c. Adjustment to balance sheet
d. Can be adjusted in any statement
Ans. B
Q27. Income is increase in economic benefits during the accounting period in the
form of
a.Increases in assets and decreases in liabilities
b.Increases in assets and increases in liabilities
c.Increase in asset but no change in liability
d.Decrease in asset but no change in liability
Ans. A
Q28. Which of the following statements are true? A) Financial statements are only
interim report B)
Financial statements are also known as annual recordsC) Financial statements are
historic
a.Option A
b.Option A & B
c.Option B
d.Option B & C
Ans. D
Q29. For Ramesha Industries some details are furnished below. Inventory is Rs
90,000, Prepaid
expenses Rs. 25,000, Quick ratio 2.5 to 1 and current liabilities Rs.60,000. The
current ratio is
a.4.42
b.4.10
c.3.16
d.5.2
Ans. C
Q30. Which of the following is TRUE about the revenue recognition principle?
a.A rule that accountants can choose to follow
b.Revenue is recorded when a contract is signed
c.Revenue is recorded when cash is received
d.Revenue must be recorded when it is earned
Ans.D

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