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- Question 1 of 104
1. Question
What is the process of evaluating a company’s economic and future prospects and risks?
CorrectIncorrect - Question 2 of 104
2. Question
To accurately forecast future payoffs, it is important to evaluate both the company’s business prospects and its
CorrectIncorrect - Question 3 of 104
3. Question
While calculating operating profit which will be added to net profit
CorrectIncorrect - Question 4 of 104
4. Question
Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?
CorrectIncorrect - Question 5 of 104
5. Question
Which of the following statements are true?
A) Common-size balance sheet shows relative value of the various items.
B) In the common size income statement, each product is represented as a percentage of the net sales figure.
C) Common size income statements represent the various elements as a percentage of the gross profit.CorrectIncorrect - Question 6 of 104
6. Question
Standards issued by the International Accounting Standards Board (IASB) are known as
CorrectIncorrect - Question 7 of 104
7. Question
IFRS1 First-time Adoption of International Financial Reporting Standards defines the date of transition to IFRS as
CorrectIncorrect - Question 8 of 104
8. Question
The 2010 version of the IASB Conceptual Framework was developed jointly with
CorrectIncorrect - Question 9 of 104
9. Question
The enhancing qualitative characteristics of financial information include
CorrectIncorrect - Question 10 of 104
10. Question
The elements of financial statements which relate to financial position are
CorrectIncorrect - Question 11 of 104
11. Question
Recognition is the process of
CorrectIncorrect - Question 12 of 104
12. Question
A firm has a higher quick (or acid test) ratio than the industry average, which implies
CorrectIncorrect - Question 13 of 104
13. Question
Which one of the following provides a snapshot of the financial condition of the firm at a particular time?
CorrectIncorrect - Question 14 of 104
14. Question
State which of them are true?
A) When ratios of previous years are compared with current years, they are called trend ratios.
B) Trend percentages and trend ratios are used in static analysis.
C) Reliability of financial analysis depends upon the reliability of financial data.CorrectIncorrect - Question 15 of 104
15. Question
Which of the following statements are true?
A) Common-size balance sheet shows relative value of the various items.
B) In the common size income statement, each product is represented as a percentage of the net sales figure.
C) Common size income statements represent the various elements as a percentage of the gross profit.CorrectIncorrect - Question 16 of 104
16. Question
Which one of the following is a summary of the profitability of the firm over a period of time such as a year?
CorrectIncorrect - Question 17 of 104
17. Question
Earnings per share shows investors the __________ earned per outstanding share of stock.
CorrectIncorrect - Question 18 of 104
18. Question
What is a measure of what the firm would have earned if it didn’t have any obligations to creditors or tax authorities?
CorrectIncorrect - Question 19 of 104
19. Question
Common size financial statements make it easier to compare firms
CorrectIncorrect - Question 20 of 104
20. Question
Stock is not included in the current assets when calculating the acid test ratio because
CorrectIncorrect - Question 21 of 104
21. Question
Comparison of the market price of the share with the earnings per share gives us which ratio?
CorrectIncorrect - Question 22 of 104
22. Question
If we want to examine the efficiency of a firm, which of the following ratios would be helpful?
CorrectIncorrect - Question 23 of 104
23. Question
What are resources controlled by the company as a result of past events and from which future economic benefits are expected to flow to the entity?
CorrectIncorrect - Question 24 of 104
24. Question
What represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity?
CorrectIncorrect - Question 25 of 104
25. Question
The capital of a company should have which of the following important characteristics?
CorrectIncorrect - Question 26 of 104
26. Question
An information uses by the investors for expecting future earnings is all recorded in
CorrectIncorrect - Question 27 of 104
27. Question
Firms will not have both relatively high profit margins and total asset turnover for long periods of time because
CorrectIncorrect - Question 28 of 104
28. Question
Which one of the following is a statement depicting change in cash position from one period to another?
CorrectIncorrect - Question 29 of 104
29. Question
Which one of the following is not a category of cash flows required to be shown on the statement of cash flows?
CorrectIncorrect - Question 30 of 104
30. Question
An increase in which one of the following will cause the operating cash flow to increase?
CorrectIncorrect - Question 31 of 104
31. Question
What refers to the cash flow that results from the firm’s ongoing, normal business activities?
CorrectIncorrect - Question 32 of 104
32. Question
Debt is a contractual obligation that
CorrectIncorrect - Question 33 of 104
33. Question
What is generally refers to items that contribute to or become part of a firm’s product output?
CorrectIncorrect - Question 34 of 104
34. Question
In services, _______________ generally refers to the tangible goods to be sold and the supplies necessary to administer the service.
CorrectIncorrect - Question 35 of 104
35. Question
A B2B exchange is a ____________ Internet marketplace that matches supply and demand by real-time auction bidding.
CorrectIncorrect - Question 36 of 104
36. Question
Costing system which omits some of journal entries in accounting system is known as
CorrectIncorrect - Question 37 of 104
37. Question
Decision model to calculate optimal quantity of inventory to be ordered is called
CorrectIncorrect - Question 38 of 104
38. Question
The balance in the Accumulated Depreciation account represents the
CorrectIncorrect - Question 39 of 104
39. Question
Depreciation is the process of allocating the cost of a plant asset over its useful life in a
CorrectIncorrect - Question 40 of 104
40. Question
When the depreciated cost of a tangible asset is higher than its recoverable amount
CorrectIncorrect - Question 41 of 104
41. Question
Which of the following best describes the higher of an asset’s net selling price and its value in use?
CorrectIncorrect - Question 42 of 104
42. Question
A piece of machinery held for continued use in the business would usually be stated in the balance sheet at
CorrectIncorrect - Question 43 of 104
43. Question
Income received or deemed to be received in India (whether accrued in or outside India) is taxable in case of
CorrectIncorrect - Question 44 of 104
44. Question
Loss from speculation business cannot be set off against profit from any non-speculation business, however
CorrectIncorrect - Question 45 of 104
45. Question
The tax expense related to profit or loss of the period is required to be presented
CorrectIncorrect - Question 46 of 104
46. Question
To the extent that tax payable exists and has not yet been paid a company will recognize
CorrectIncorrect - Question 47 of 104
47. Question
For companies that choose to adopt the Simplified Tax System (STS), tax calculations are based upon the
CorrectIncorrect - Question 48 of 104
48. Question
The financial statement that shows the financial position of an enterprise at a particular point in time is the
CorrectIncorrect - Question 49 of 104
49. Question
Assuming that none of the following have been disclosed in the financial statements, the most appropriate item for footnote disclosure is the
CorrectIncorrect - Question 50 of 104
50. Question
With respect to disclosure, the unqualified short-form audit report
CorrectIncorrect - Question 51 of 104
51. Question
For interim financial reporting, an inventory loss from a temporary market decline in the first quarter which can reasonably be expected to be restored in the fourth quarter
CorrectIncorrect - Question 52 of 104
52. Question
Footnote disclosure that summarizes information that does not meet the measurement and reporting requirements for presentation in a company’s financial statements, but is useful to informed readers, is required in order to meet the concept of
CorrectIncorrect - Question 53 of 104
53. Question
The regulation of the banking industry is of particular importance in modern economies because
CorrectIncorrect - Question 54 of 104
54. Question
Moral hazard caused by regulation can only be removed from financial transactions if
CorrectIncorrect - Question 55 of 104
55. Question
The social security committee of the House of Commons was, as a result of the Maxwell pension fund scandal, particularly critical of
CorrectIncorrect - Question 56 of 104
56. Question
The principal regulatory authority of the financial services industry in the UK is now
CorrectIncorrect - Question 57 of 104
57. Question
Given the results of the study by Clayman, you would __________ the stocks of firms with high ROEs and __________ the stocks of firms with low ROEs.
CorrectIncorrect - Question 58 of 104
58. Question
In periods of inflation, accounting depreciation is __________ relative to replacement cost and real economic income is ________.
CorrectIncorrect - Question 59 of 104
59. Question
A firm has a P/E ratio of 12 and a ROE of 13% and a market to book value of
CorrectIncorrect - Question 60 of 104
60. Question
A firm has an ROE of -2%, a debt/equity ratio of 1.0, a tax rate of 0%, and an interest rate on debt of 10%. The firm’s ROA is
CorrectIncorrect - Question 61 of 104
61. Question
If the market price of a share is £2.41 and the dividends per share is 9p, then the dividend yield is
CorrectIncorrect - Question 62 of 104
62. Question
If the EPS is 12p and the market price of the share is £3.60 then the Price/Earnings ratio would be
CorrectIncorrect - Question 63 of 104
63. Question
Which of the following would not be normally considered as ratio concerned with profitability?
CorrectIncorrect - Question 64 of 104
64. Question
If net revenue from operations of a firm are Rs.15,00,000; Gross Profit is Rs.9,00,000 and operating expenses are Rs.75,000, what will be percentage of operating income on net revenue from operations?
CorrectIncorrect - Question 65 of 104
65. Question
Total assets of a firm are Rs.20,00,000 and its fixed assets are Rs.8,00,000. What will be the percentage of fixed assets on total assets?
CorrectIncorrect - Question 66 of 104
66. Question
If net revenue from operations of a firm are Rs.1,20,000; cost of revenue from operations is Rs.66,000 and operating expenses are Rs.21,600, what will be the percentage of operating income on net revenue from operations?
CorrectIncorrect - Question 67 of 104
67. Question
If total assets of a firm are Rs.8,20,000 and its fixed assets are Rs.5,90,400, what will be the percentage of current assets on total assets?
CorrectIncorrect - Question 68 of 104
68. Question
A firm has Rs. 450 in inventory, Rs. 700 in fixed assets, Rs. 210 in accounts receivable, Rs. 50 in accounts payable, and Rs. 60 in cash. What is the amount of the current assets?
CorrectIncorrect - Question 69 of 104
69. Question
Brad’s Company has equipment with a book value of $500 that could be sold today at a 50% discount. Its inventory is valued at Rs.450 and could be sold to a competitor for that amount. The firm has Rs.100 in cash and customers owe it Rs.250. What is the accounting value of its liquid assets?
CorrectIncorrect - Question 70 of 104
70. Question
If a company changes from offering 30 days’ credit to customers to offering 50 days credit, which of the following statements is correct?
CorrectIncorrect - Question 71 of 104
71. Question
Which one of the following courses of action will increase the bank balance of a company?
CorrectIncorrect - Question 72 of 104
72. Question
Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in
CorrectIncorrect - Question 73 of 104
73. Question
If relevant incremental costs are Rs. 5000 and relevant opportunity cost of invested capital is Rs. 2500 then relevant inventory carrying costs would be
CorrectIncorrect - Question 74 of 104
74. Question
If required rate of return is 12% and per unit cost of units purchased is Rs.35 then relevant opportunity cost of capital will be
CorrectIncorrect - Question 75 of 104
75. Question
If an average inventory is 2000 units and annual relevant carrying cost of each unit is Rs.5 then annual relevant carrying cost will be
CorrectIncorrect - Question 76 of 104
76. Question
On 1 January 2011 the books of Travelite show accrued rent payable of Rs. 250. During the year it pays rent bills amounting to Rs. 1,275 including a bill for Rs. 375 in respect of the quarter ending 31 January 2012. What is the charge in the profit and loss for rent payable for the year ending 31 December 2011?
CorrectIncorrect - Question 77 of 104
77. Question
A firm bought a new vehicle for Rs. 10,000. It is expected to be used for 5 years and then sold for Rs. 2,000. What is the annual amount of deprecation if the straight line method is used?
CorrectIncorrect - Question 78 of 104
78. Question
Which one of the following types of business face a particularly difficult problem when determining the point of revenue recognition and will often recognize revenue before all of the work necessary to generate the revenue is complete?
CorrectIncorrect - Question 79 of 104
79. Question
Pooja & Co. had a temporary difference of Rs. 45m resulting in a deferred tax liability of Rs. 15m. What is the impact of an increase in the tax rate on deferred taxes and net profit?
CorrectIncorrect - Question 80 of 104
80. Question
Differences between the carrying amounts of an entity’s net assets determined under accounting standards and accrual accounting and the tax bases of those net assets determined under the Income Tax Assessment Act, are described as
CorrectIncorrect - Question 81 of 104
81. Question
Select the two words that best fit the gaps in the following sentence. When dealing with ‘bad and doubtful debts’ a difference will arise between accounting and tax treatment of the item because under accounting principles the item is recognized when_________ while under tax law the item is written off when________.
CorrectIncorrect - Question 82 of 104
82. Question
The tax base for an asset is determined using which of the following formulae?
CorrectIncorrect - Question 83 of 104
83. Question
Chandra’s bakery business has the following account balances at 30 September 2018: ovens £38,000, inventories £4,100, trade payables £2,650, loan of £5,000 and a bank overdraft of £1,090. Chandra’s capital account as at 30 September 2018 is
CorrectIncorrect - Question 84 of 104
84. Question
‘A series of reports that are time-consuming and expensive to prepare is presented to the board of directors each month even though the reports are never used’. Which of the following qualitative characteristics or constraints is violated by this statement?
CorrectIncorrect - Question 85 of 104
85. Question
Which of the following statements is true of the qualitative characteristics of ‘understandability’ in relation to information in financial statements?
CorrectIncorrect - Question 86 of 104
86. Question
A firm has an ROA of 14%, a debt/equity ratio of 0.8, a tax rate of 35%, and the interest rate on the debt is 10%. The firm’s ROE is
CorrectIncorrect - Question 87 of 104
87. Question
FOX Company has a ratio of (total debt/total assets) that is above the industry average, and a ratio of (long term debt/equity) that is below the industry average. These ratios suggest that the firm
CorrectIncorrect - Question 88 of 104
88. Question
A firm has a (net profit / pretax profit ratio) of 0.625, a leverage ratio of 1.2, a (pretax profit / EBIT) of 0.9, an ROE of 17.82%, a current ratio of 8, and a return on sales ratio of 8%. The firm’s asset turnover is
CorrectIncorrect - Question 89 of 104
89. Question
A company had a doubtful debt provision of $14,000 at 31 December 2018. Its trade receivables at 31 December 2019 were $198,200. The company considers that receivables totaling $12,200 will not be paid and in addition planned to make a doubtful debts provision for 10% of its net receivables at 31 December 2019. What is the charge for bad and doubtful debts in the income statement for the year ended 31 December 2019?
CorrectIncorrect - Question 90 of 104
90. Question
A company’s issued share capital throughout an accounting period consists of 500,000 ordinary shares of 20p and 80,000 preference shares of £1. Profit after tax for the period is £320,000 and the preference dividend is £8,000. Basic EPS for the period is
CorrectIncorrect - Question 91 of 104
91. Question
A company’s profit after tax for the year to 30 June 2014 was £1m. The company’s issued share capital at 1 July 2013 consisted of 2,400,000 ordinary shares of 50p each. A further 300,000 shares were issued at full market price on 1 September 2013. Basic EPS for the year is
CorrectIncorrect - Question 92 of 104
92. Question
ABC Co. performed services for Client Kay in December and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January ABC received the $4,000 from Kay. In January ABC will debit Cash, since cash was received. What account should ABC credit in the January entry?
CorrectIncorrect - Question 93 of 104
93. Question
ABC Co. incurs cleanup expense of $500 on December 30. The supplier’s invoice states that the $500 is due by January 10 and ABC will pay the invoice on January 9. ABC follows the accrual basis of accounting and its accounting year ends on December 31. What is the effect of the cleanup service on the December balance sheet of ABC?
CorrectIncorrect - Question 94 of 104
94. Question
At the beginning of the year, long-term debt of a firm is Rs. 310 and total debt is Rs. 350. At the end of the year, long-term debt is Rs. 280 and total debt is Rs.370. The interest paid is Rs. 50. What is the amount of the cash flow to creditors?
CorrectIncorrect - Question 95 of 104
95. Question
Peggy Grey’s Cookies has net income of Rs.360. The firm pays out 40% of the net income to its shareholders as dividends. During the year, the company sold Rs. 80 worth of common stock. What is the cash flow to stockholders?
CorrectIncorrect - Question 96 of 104
96. Question
Thompson’s Jet Skis has operating cash flow of Rs. 218. Depreciation is Rs. 45 and interest paid is Rs. 35. A net total of Rs. 69 was paid on long-term debt. The firm spent Rs. 180 on fixed assets and increased net working capital by Rs. 38. What is the amount of the cash flow to stockholders?
CorrectIncorrect - Question 97 of 104
97. Question
Ninety-percent of Vogel Bird Seed’s total sales of Rs. 600,000 is on credit. If its year-end receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end receivables are, respectively
CorrectIncorrect - Question 98 of 104
98. Question
If relevant opportunity cost of capital is Rs. 2950 and relevant carrying cost of inventory is Rs. 6700 then relevant incremental cost will be
CorrectIncorrect - Question 99 of 104
99. Question
The H&W Co. acquired a new industrial washing machine, the list price of which was Rs.52,000. The supplier allowed a trade discount of Rs.4,000 off the list price. On delivery, the cost of installing the machine in its desired location was Rs.950. According to IAS 16 – ‘Property, Plant and Equipment’, what is the cost of the machine to be capitalized?
CorrectIncorrect - Question 100 of 104
100. Question
The carrying value of furniture and fittings at 1 October 2004 was Rs.20,976, being cost of Rs.35,672 less accumulated depreciation and impairment losses of Rs.14,696. During the year, fittings costing Rs.2,972 were purchased. Depreciation is charged on the diminishing balance basis at 15% per annum. The depreciation charge, to the nearest Rs., for the year ended 30 September 2005 would be
CorrectIncorrect - Question 101 of 104
101. Question
A business has net assets at the beginning of 2010 of Rs. 101,700. The profit earned by the business during 2010 was Rs. 72,500. The owner withdrew goods for his own private use which had cost Rs. 2,500. What were the net assets at the end of 2010?
CorrectIncorrect - Question 102 of 104
102. Question
On 1 January 2016 Transport & Co. had:
PPE (book value) – Rs.230,000
PPE (tax base) – Rs.160,000
Deferred tax liability – Rs.7,500
During 2016, the government announce an unexpected increase in the level of income taxes from 30% to 40%. The amount of deferred tax liability as at 31 December 2016 isCorrectIncorrect - Question 103 of 104
103. Question
ABC Limited adopted tax effect accounting during the current financial period. When estimating the balance date adjustments at the end of the financial period the following information was determined: Current tax liability Rs. 10 000; Deferred tax liability Rs. 12 000; Deferred tax asset Rs. 15 000. The amount that this company will recognize as current Income tax expense is
CorrectIncorrect - Question 104 of 104
104. Question
Juicy Limited has an accounting profit of $100 000. The following items are included in that profit: depreciation on motor vehicles $8 000; non-tax deductible entertainment expenses $5 000. Depreciation on motor vehicles is double the accounting rate. The tax on company income is 30%. Which of the following is the amount of taxable income for this company?
CorrectIncorrect