Online Test — Analysis of Financial Statements
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Analysis of financial statements aims to:
Hide figures
Interpret figures for decisions
Increase tax
Replace the ledger
Explanation: It interprets figures to judge performance and position.
Question 2 of 15
Comparing figures across several years is:
Vertical analysis
Horizontal analysis
Cash analysis
No analysis
Explanation: Across-time comparison is horizontal analysis.
Question 3 of 15
Comparing items within one year as a % of a base is:
Horizontal analysis
Vertical analysis
Trend analysis
Cash analysis
Explanation: Within-year percentage comparison is vertical analysis.
Question 4 of 15
Which is a tool of analysis?
Common-size statements
Cash memo
Voucher
Pay-in slip
Explanation: Common-size statements are a tool of analysis.
Question 5 of 15
A limitation of analysis is that it ignores:
Qualitative (non-money) factors
All figures
Revenue
The balance sheet
Explanation: It ignores qualitative factors like management quality.
Question 6 of 15
A comparative statement shows figures of:
One year
Two or more years side by side
Cash only
Ratios only
Explanation: It places several years' figures side by side.
Question 7 of 15
Percentage change =
Change ÷ previous year × 100
Change ÷ current year × 100
Current − previous
Previous ÷ current
Explanation: % change = absolute change ÷ previous-year figure × 100.
Question 8 of 15
Revenue rose 4,00,000 → 4,80,000. The % change is:
20%
16.7%
80%
25%
Explanation: 80,000 / 4,00,000 × 100 = 20%.
Question 9 of 15
A comparative statement is an example of:
Vertical analysis
Horizontal analysis
Ratio analysis
Cash flow
Explanation: It is horizontal (across-time) analysis.
Question 10 of 15
In a common-size income statement, 100% is:
Total assets
Revenue from operations
Profit
Capital
Explanation: Revenue from operations is the base (100%).
Question 11 of 15
In a common-size balance sheet, 100% is:
Revenue
Total assets
Cash
Profit
Explanation: Total assets (or total equity & liabilities) is the base.
Question 12 of 15
Cost of materials 7,00,000 on revenue 10,00,000 is, in common-size terms:
70%
30%
7%
143%
Explanation: 7,00,000 / 10,00,000 × 100 = 70%.
Question 13 of 15
Common-size statements are useful mainly because they:
Allow comparison of firms of different sizes
Hide proportions
Remove percentages
Use only cash
Explanation: Reducing items to percentages enables size-neutral comparison.
Question 14 of 15
If revenue rises 15% and profit rises 30%, it suggests:
Costs rose faster
Costs rose more slowly than sales
A loss
No change
Explanation: Profit growing faster than revenue means costs grew more slowly.
Question 15 of 15
Analysis is only as reliable as the:
Underlying financial statements
Weather
Share price
Auditor's age
Explanation: It inherits the limitations of the statements analysed.