Analysis & interpretation of financial statement Set 2
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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Analysis & interpretation of financial statement Set 2
Q1 | Operating ratio is calculated by
- (operating cost/gross sales) *100
- (operating cost/net sales) *100
- none of the above
Q2 | The financial decision making that relates to current assets or short term asset is known as__________________.
- working capital
- non-working capital
- venture capital
- all of the above
Q3 | In what order should current assets be present on a statement of financial position?
- cash, bank, trade receivables, inventories
- trade receivables, bank, cash, inventories
- inventories, cash, bank, trade receivables
- inventories, trade receivables, bank, cash
Q4 | If value of opening inventories increases, what happens to the value of gross profit?
- decreases
- increases
- stays the same
- gets closer to net profit
Q5 | What does the statement of comprehensive income show?
- the liquidity position of a business at a point in time
- the value of assets bought by a business over a period point in time
- the profit or loss made by a business over a period of time
- the value of a business at a point in time
Q6 | Depreciation is applied to non-current assets in the statement of financial position in order to
- show a profitability valuation of the non-current assets
- show a true and fair value of the non-current assets
- show how the non-current assets are affected by inflation
- show what the non-current assets could make if leased out
Q7 | What would be the most likely impact on trade receivables days if invoice discounting wasoffered to and accepted by a large customer of a business?
- trade receivables days would no longer exist
- trade receivables days would reduce
- trade receivables days would increase
- trade receivable days would not be affected
Q8 | ___________in accounting, is when the costs to acquire an asset are expensed over the life ofthat asset rather than in the period it was incurred?
- purchasing.
- capitalization.
- selling.
- financing
Q9 | Capitalization is the sum of a corporation’s stock, long term debts &________?
- liquid liability
- retained earnings
- fixed asset.
- short term debts.
Q10 | __________ is a situation in which actual profits of a company are not sufficient enough topay interest on debentures, on loans and pay dividends on shares over a period of time?
- under capitalization
- over capitalization
- market capitalization
- none of the above
Q11 | Asset structure = _________+__________.
- current asset+fixed asset
- tangible asset+fixed asset
- fixed asset+current asset
- intangible asset+current asset
Q12 | In finance, "working capital" means the same thing as __________.
- total assets.
- fixed assets.
- current assets.
- current assets minus current liabilities.
Q13 | In deciding the appropriate level of current assets for the firm, management is confrontedwith_____________.
- a trade-off between profitability and risk.
- a trade-off between liquidity and marketability.
- a trade-off between equity and debt.
- a trade-off between current assets and profitability.
Q14 | Permanent working capital ___________.
- varies with seasonal needs.
- includes fixed assets.
- is the amount of current assets required to meet a firm\s long-term minimum needs.
- includes accounts payable.
Q15 | Net working capital refers to ___________.
- total assets minus fixed assets.
- current assets minus current liabilities.
- current assets minus inventories.
- current assets.
Q16 | To financial analysts, "gross working capital" means the same thing as ________.
- fixed assets.
- current assets.
- working capital.
- cost of capital.
Q17 | An example of fixed asset is________.
- live stock.
- value stock.
- income stock.
- all of the above.
Q18 | Which one of the following is not the determinant of the working capital?
- size of the firm
- operating cycle
- terms of credit
- competitors
Q19 | Permanent working capital ___
- will vary at all times
- will vary with volumes
- fixed at all times
- fluctuates according to the season
Q20 | Which one of the following is not a method to find working capital requirement?
- percent of sales method
- working capital components method
- operating cycle method
- physical method
Q21 | The Capital used for meeting routine and repetitive expenses of day to day businessoperations is called____.
- reserve capital
- working capital
- fixed capital
- regular capital
Q22 | Gross working capital represents __________.
- total current liabilities
- the excess of current assets over current liabilities
- total current assets
- total liquid assets
Q23 | Net working capital is the excess of current assets over ________.
- current liabilities
- long term liabilities
- contingent liabilities
- fixed liabilities
Q24 | A positive (net) working capital will arise when current assets exceed _________.
- fixed liabilities
- contingent liabilities
- long term liabilities
- current liabilities
Q25 | The net working capital, being the difference between current assets and current liabilities isa _______.
- misleading concept
- quantitative concept
- qualitative concept
- none of the above