Analysis of Financial Statements Class 12 MCQs Questions with Answers
Financial Statement Analysis Class 12 MCQ Chapter 9 Question 1.
Which of the following is not a tool of financial analysis ?
(A) Comparative Income Statement
(B) Comparative Position Statement
(C) Statement of Profit and Loss
(D) Cash Flow Statement
Answer:
(C) Statement of Profit and Loss
Explanation:
Statement of Profit and Loss is the part of the financial statement used by the tools of financial analysis. Rest all help in financial analysis.
Financial Statement Analysis MCQ Chapter 9 Class 12 Question 2.
Which of the following is a limitation of financial analysis ?
(A) It is just a study of reports of the company.
(B) It judges the ability of the firm to repay its debts.
(C) It identifies the reasons for change in financial position.
(D) It ascertains the relative importance of different components of the financial position of the firm.
Answer:
(A) It is just a study of reports of the company.
Explanation:
Financial analysis is just a study of reports of a company, ignores qualitative information, does not disclose current worth, etc.
Analysis Of Financial Statements Class 12 MCQ Chapter 9 Question 3.
Which of the following is not a limitation of analysis of financial statements ?
(A) Window dressing
(B) Price level changes ignored
(C) Subjectivity
(D) Intra firm comparison possible
Answer:
(D) Intra firm comparison possible
Explanation:
Intra firm comparison is a strength of the financial statement as it allows to compare the financial position of the company not only with its past years but also with that of the competitors.
Financial Statement Analysis MCQ Class 12 Chapter 9 Question 4.
The most commonly used tools for financial analysis are :
(A) Horizontal analysis
(B) Vertical analysis
(C) Ratio analysis
(D) All of the above
Answer:
(D) All of the above
MCQ On Financial Statement Analysis Class 12 Chapter 9 Question 5.
Pick the odd one out:
(A) Horizontal Analysis
(B) Comparative Statement of Profit and Loss
(C) Comparative Balance Sheet
(D) Common-Size Balance Sheet
Answer:
(D) Common-Size Balance Sheet
Explanation:
Except common size balance sheet, all are part of comparative statement.
Analysis Of Financial Statements MCQ Chapter 9 Class 12 Question 6.
Consider the following statements given below :
(i) In Common-size Balance Sheet, each item is converted into the percentage of share capital.
(ii) In Common-size Statement of Profit and Loss, each item is converted into the percentage of total expenses.
(iii) In Comparative Statement of Profit and Loss, absolute and percentage change in the items during two periods of time are calculated. Choose the correct option :
(A) Only (i) is correct
(B) Only (ii) is correct
(C) Only (iii) is correct
(D) All are correct
Answer:
(C) Only (iii) is correct
Explanation:
Comparative statement compare financial data at two points of time and help in driving meaningful conclusions regarding the changes in financial position and operating results.
Question 7.
Financial Statements Analysis helps in assessing future trends and thus, helps in forecasting and preparation of ……………
(A) Accounts
(B) Budgets
(C) Reports
(D) Statements
Answer:
(B) Budgets
Assertion And Reason Based MCQs
Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
Question 1.
Assertion (A): Financial statements helps in drawing out meaning conclusions.
Reason (R): Financial Statements Analysis presents financial data in a simplified and understandable form.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Question 2.
Assertion (A): The analysis of financial statements does not disclose the current worth of the business.
Reason (R): Financial statements are prepared on cost principles.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
As the financial statements are prepared on the cost principle, its analysis does not disclose the current financial position of the company.
Question 3.
Assertion (A): Comparative statements help in deriving meaningful conclusions regarding the changes in financial position and operating results. Reason (R): Comparative statements compare financial data of two points of time.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
Statements showing financial data for two or more years, placed side by side to facilitate comparison are called Comparative Financial Statements.
Question 4.
Assertion (A): Comparative Balance Sheet provides information regarding progress of the business firm.
Reason (R): The Comparative Balance Sheet shows increase and decrease in absolute terms as well as in percentage in various assets, liabilities and capital.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
Comparative statements compare financial data of two points of time and help in deriving meaningful conclusions regarding the changes in financial position and operating results.
Case-Based MCQs
I. Read the following information and answer the given questions:
| Particulars | 31.3.2020 (₹) | 31.3.2019 (₹) |
| Revenue from Operations | 15,00,000 | 12,00,000 |
| Other Income | 30,000 | 20,000 |
| Cost of Materials Consumed | 7,00,000 | 5,50,000 |
Question 1.
What is the percentage change in the Revenue from operations?
(A) 50%
(B) 25%
(C) 30%
(D) 20%
Answer:
(B) 25%
Explanation:
\(\frac {3,00,000}{2}\)
Question 2.
What is the percentage change in the Total Revenue earned?
(A) 20.41%
(B) 27.27%
(C) 23.88%
(D) 25.41%
Answer:
(D) 25.41%
Explanation:
\(\frac {3,00,000 + 10,000}{12,00,000 + 20,000}\) x 100 = 24.18 %
Question 3.
What is the change in the profit before tax?
(A) ₹ 1,50,000
(B) ₹ 1,60,000
(C) ₹ 3,10,000
(D) ₹ 10,000
Answer:
(B) ₹ 1,60,000
Explanation:
Total Revenue in 2013 = ₹ 12,00,000 + ₹ 20,000 = ₹ 12,20,000
Total Expenses = ₹ 5,50,000
Profit = ₹ 12,20,000 – ₹ 5,50,000 = ₹ 6,70000
In 2014, Total Revenue = ₹ 15,00,000 + ₹ 30,000 = ₹ 15,30,000
Total Expenses = ₹ 7,00,000
Profit = ₹ 15,30,000 – ₹ 7,00,000
= ₹ 8,30,000
Change in profit = ₹ 8,30,000 – ₹ 6,70,000 = ₹ 1,60,000
Question 4.
What is the percentage Expenses?
(A) 25%
(B) 24.41%
(C) 27.27%
(D) 23.88%
Answer:
(C) 27.27%
Explanation:
\(\frac {1,50,000}{5,50,000}\) = 27.27%
II. Read the following information and answer the given questions:
The following data is available of Pitambar Ltd.
| Particulars | 31st March, 2020 (₹) | 31st March, 2019 (₹) |
| Revenue From Operations (% of Other Income) | 200% | 200% |
| Other Income | 2,00,000 | 1,50,000 |
| Cost of Material Consumed (% of Operating Revenue) | 60% | 50% |
| Other Expenses (% of Material Cost) | 10% | 20% |
| Tax Rate | 30% | 30% |
Question 1.
What is the revenue from operations on 31st March, 2020?
(A) ₹ 2,00,000
(B) ₹ 4,00,000
(C) ₹ 3,00,000
(D) None of these
Answer:
(B) ₹ 4,00,000
Explanation:
200% of 2,00,000 = ₹ 4,00,000
Question 2.
What is the percentage of the Total Revenue from Revenue from operations in 2019?
(A) 100%
(B) 50%
(C) 66%
(D) 150%
Answer:
(D) 150%
Explanation:
Revenue from operations = 200% of ₹ 1,50,000 = ₹ 3,00,000
Total Revenue = ₹ 3,00,000 + ₹ 1,50,000 = ₹ 4,50,000
Required Percentage = \(\frac {4,50, 000}{3,00, 000}\) x 100 = 150%
Question 3.
What is the value of the tax paid by the firm in 2019?
(A) ₹ 1,00,800
(B) ₹ 81,000
(C) ₹ 2,35,000
(D) Cannot be determined from the given data.
Answer:
(B) ₹ 81,000
Explanation:
Tax Paid = (₹ 3,00,000 + ₹ 1,50,000 – ₹ 1,50,000 30 – ₹ 30,000) x \(\frac {30}{100}\)
= ₹ 2,70,000 x \(\frac {30}{100}\)
= ₹ 81,000
Question 4.
What is the Net Profit after Tax in March 2020?
(A) ₹ 2,35,200
(B) ₹ 1,89,000
(C) ₹ 2,70,000
(D) ₹ 3,36,000
Answer:
(A) ₹ 2,35,200
Explanation:
Net Profit before Tax = ₹ 4,00,000 + ₹ 2,00,000 – ₹ 2,40,000 – ₹ 24,000 = ₹ 3,36,000
Tax = ₹ 3,36,000 x \(\frac {30}{100}\) = ₹ 1,00,800
Net Profit after Tax= ₹ 3,36,000 – ₹ 1,00,800 = ₹ 2,35,200
III. Read the following information and answer the given questions:
Following information are taken from the books of Agarwal Pvt Ltd.
| Particulars | 2020 (₹) | 2019 (₹) |
| Revenue From Operations | 30,00,000 | 20,00,000 |
| Expenses | 21,00,000 | 12,00,000 |
| Other Income | 3,60,000 | 4,00,000 |
| Income Tax | 50% | 50% |
Question 1.
What is the value of absolute change in the Total Revenue?
(A) ₹ 1o,00,000
(B) ₹ 4o,ooo
(C) ₹ 9,60,000
(D) ₹ 9,00,000
Answer:
(C) ₹ 9,60,000
Explanation:
Total Revenue = Revenue from operations + Other Income For 2019 = ₹24,00,000 For 2020 = *33,60,000 Absolute Change = ₹ 24,00,000 – ₹ 33,60,000 =₹ 9,60,000
Question 2.
What is the percentage change in the tax paid?
(A) 5%
(B) 6%
(C) 8%
(D) 7%
Answer:
(A) 5%
Explanation:
Net Profit before Tax for 2020 = ₹ 12,60,000
2019 = ₹ 12,00,000
Tax paid for 2020 = ₹ 6,30,000
2019 = ₹ 6,00,000
Percentage Change = \(\frac {₹ 30,000}{6,00,000}\) x 100
= 5%
Question 3.
The absolute change in the Expenses is:
(A) ₹ 9,00,000
(B) ₹ 60,000
(C) ₹ 10,00,000
(D) ₹ 12,00,000
Answer:
(A) ₹ 9,00,000
Explanation:
= ₹ 21,00,000 – ₹ 12,00,000 = ₹ 9,00,000
Question 4.
What is the percentage change in the profit earned after tax?
(A) 40%
(B) 7%
(C) 10%
(D) 5%
Answer:
(D) 5%
Explanation:
Net Profit after Tax for 2020 = ₹ 6,30,000
2019 = ₹ 6,00,000
Percentage Change = \(\frac {₹ 30,000}{6,00,000}\) x 100
= 5%