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MCQ Questions for Class 12 Accountancy set-10
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1. Which Of the following is limitation of financial analysis ?
Window-dressing
Basis of Valuation
Lack of Accuracy
All the above
2. Which of the following is not the limitations of financial analysis ?
Lack of Accuracy
Based on Historical facts
Basis of Valuation
Information of Profit and Loss
3. When Financial Statements of two or more organisations are analysed, it is called :
Intra-firm Analysis
Inter-firm Analysis
Vertical Analysis
None of these
4. Which of the following statement correct ?
Retained Earnings = Total Income
Retained Earnings = Revenue-expenses
Retained Earnings = Gross Profit
None of the above
5. Which of the following is a type of Financial Analysis on the basis of material used ?
Internal Analysis
External Analysis
Internal Audit
Both (a) and (b)
6. Proprietory Ratio indicates the relationship between proprietor’s funds and….
Reserve
Share Capital
Total Assets
Debentures
7. Which one of the following ratios is most important in determining the long-term solvency of a company ?
Profitability Ratio
Debt-Equity Ratio
Stock Turnover Ratio
Current Ratio
8. Total Assets ₹ 8,10,000 Total Liabilities ₹ 2,60,000 Current Liabilities ₹ 40,000 Debt-equity ratio is:
0.05 : 1
0.4 : 1
2.5 : 1
4 : 1
9. Equity share capital ₹ 15,00,000 Reserve and Surplus ₹ 7,50,000 Total Assets ₹ 45,00,000 Properletory Ratio ?
50%
33.3%
200%
60%
10. Total Assets ₹ 7,70,000 Total Liabilities ₹ 2,60,000 Current Liabilities ₹ 40,000 Total Assets to Debt Ratio is:
3.5 : 1
2.56 : 1
2.8 : 1
3 : 1
11. Profitability Ratios are generally expressed in :
Simple Ratio
Percentage
Times
None of these
12. The ratios are primarily measures of earning capacity of the business.
Liquidity
Activity
Debt
Profitability
13. The gross profit ratio is the ratio of gross profit to :
Net Cash Sales
Net Credit Sales
Closing Stock
Net Total Sales
14. Operating Ratio is:
Profitability Ratio
Activity Ratio
Solvency Ratio
None of these
15. Which of the following is an operating’ income ?
Sale of Merchandise
Interest Income
Dividend Income
Profit on the sale of old car
16. Which of the following non-operating expense?
Rent
Selling Expenses
Wages
Loss on Sale of Machinery
17. The following groups of ratios primarily measure risk
Liquidity, activity and profitability
Liquidity, activity and common stock
Liquidity, activity and debt
Activity, debt and profitability
18. To know the return on investment, by capital employed we mean:
Net Fixed Assets
Current Asset-Current Liabilities
Gross Block
Fixed Assets + Current Assets-Current Liabilities
19. The term fixed assets include :
Cash
Machinery
Debtors
Prepaid Expenses
20. Ratio based on figures of profit & loss as well a the Balance sheet are:
Profitability Ratios
Operation Ratio
Liquidity Ratio
Composite Ratio
21. 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:
2 times
3 times
4 times
5 times
22. What does Creditors Turnover Ratio take into account:
Total credit purchases
Total credit sales
Total cash sales
Total cash purchases
23. Cost of goods sold :
Sales – Net profit
Sales – Gross profit
Purchases – Opening Stock
None of the above
24. The ideal liquid ratio is :
2 : 1
1 : 1
5 : 1
4 : 1
25. The ideal current ratio is :
2 : 1
1 : 2
3 : 2
3 : 4
26. Profitability Ratio is generally shown in :
Simple Ratio
Percentage
Times
None of these
27. Stock turnover ratio comes under :
Liquidity Ratio
Profitability Ratio
Activity Ratio
None of these
28. The satisfactory ratio between internal and external equity is. :
1 : 2
2 : 1
3 : 1
4 : 1
29. Current Ratio includes:
Stock
Debtors
Cash
All of these
30. Current Ratio =
Current Assets/Current Liabilities
Liquid Assets/Current Liabilities
Liquid Assets/Current Assets
Fixed Assets/Current Assets
31. Liquid Assets include :
Bills Receivable
Debtors
Cash Balance
All of these
32. Which of the following assets is not taken into consideration in calculating acid-test ratio ?
Cash
Bills Receivable
Stock
None of these
33. 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 :
2 : 1
4 : 3
3 : 4
1 : 2
34. The two basic measures of liquidity are :
Inventory Turnover and Current Ratio
Current Ratio and Liquid Ratio
Current Ratio and Average Collection Period
Current Ratio and Debtors Turnover Ratio
35. The term ‘Current Liabilities’ does not include: .
Sundry Creditors
Debentures
Bills Payable
Outstanding Expenses
36. The term‘Current Assets’include
Long-term Investment
Short-term Investment
Furniture
Preliminary Expenses
37. Liquid Ratio is also known as:
Current Ratio
Quick Ratio
Capital Ratio
None of these
38. To test the liquidity of a concern which of the following ratios is useful ?
Capital Turnover Ratio
Acid Test Ratio
Stock Turnover Ratio
Net Profit Ratio
39. Which of the following transactions will improve the current ratio ?
Purchase of good for cash
Cash received from customers
Payment of creditors
Credit purchase of goods
40. Debt-equity ratio is :
Liquidity Ratio
Activity Ratio
Solvency Ratio
Operating Ratio
41. The formula for finding out Debt-Equity Ratio is:
Long-term Debts/Shareholders’ Funds
Debentures/Equity Capital
Net Profit/Total Capital
None of these
42. Preparation of cash flow statement is :
Mendatory
Recommendatory
Required under the Companies Act
None of these
43. Issue of shares in consideration of purchase of plant and machinery results into :
Inflow of Cash
Outflow of Cash
Neither Inflow nor Outflow
None of these
44. If net profit is 7 50,000 after writing off goodwill 7 10,000 then the cash flow from operating activities will be:
₹ 60,000
₹ 40,000
₹ 50,000
₹ 30,000
45. 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 :
₹ 35,000
₹ 42,000
₹ 29,000
₹ 28,000
46. Cash sales in :
Operating Activity
Investing Activity
Financing Activity
None of these
47. Cash from operating activities will decrease due to :
Increase in Current Assets
Decrease in Current Liabilities
Neither of the two
Both (a) and (b)
48. Which of the following is an example of Cash Flow from Operating Activities ?
Purchase of Machinery
Issue of Shares
Purchases of Inventory for Cash
Purchases of Investment
49. While calculating cash flow from operating netivities which will be deducted ?
Increase in Creditors
Increase in Debtors
Decrease in Debtors
Decrease in Prepaid Expenses
50. While calculating cash flow from operating activities, which will be added ?
Increase in Stock
Increase in Creditors
Decrease in Bills Payable
Increase in Debtors
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