Financial Statements Of A Company(12th Grade > Accountancy ) Questions and Answers

Question 1.


Cash Balance will be classified under -


  1.     Current Asset
  2.     Non-Current Asset
  3.     Current Liabilities
  4.     Non- Current Liabilities
Explanation:-
Answer: Option A. -> Current Asset
:
A

Cash Balance will be classified under Current Asset


Question 2.


Under the accrual basis of accounting, revenues are recognised in the accounting period in which -


  1.     Revenues are earned
  2.     Cash is received
  3.     Either revenues are earned or cash is received
  4.     None of these
Explanation:-
Answer: Option A. -> Revenues are earned
:
A

Under the accrual basis of accounting, revenues are recognized in the accounting period in which revenues are earned.


Question 3.


Information about accounting policies assists financial readers in better interpreting a company’s financial statements. It is given in ___


  1.     Balance sheet
  2.     Statement of profit & loss
  3.     Notes to accounts
  4.     None of these
Explanation:-
Answer: Option C. -> Notes to accounts
:
C

It is given in notes to accounts.


Question 4.


Stock is-


  1.     included in the category of fixed assts
  2.     an investment
  3.     a part of current assets
  4.     an intangible fixed asset
Explanation:-
Answer: Option C. -> a part of current assets
:
C

Stock is a part of current assets.


Question 5.


Goodwill is -


  1.     a current asset
  2.     an intangible fixed asset
  3.     a tangible fixed asset
  4.     an investment
Explanation:-
Answer: Option B. -> an intangible fixed asset
:
B

Goodwill is an intangible fixed asset.


Question 6.


Which of the following would not be a current asset?


  1.     Accounts Receivable
  2.     Land
  3.     Prepaid Insurance
  4.     Supplies
Explanation:-
Answer: Option B. -> Land
:
B

Land is not a current asset, because land will NOT turn to cash within one year of the balance sheet date, or within the operating cycle if the operating cycle is longer than one year.


Question 7.


Loan taken from bank will be classified as -


  1.     Assets
  2.     Liabilities
  3.     Shareholders' funds
  4.     None of these
Explanation:-
Answer: Option B. -> Liabilities
:
B

Loan taken from bank will be classified as liabilities


Question 8.


Patent is a/an: 


  1.     Currrent Asset
  2.     Fictitous Asset 
  3.     Tangible Asset
  4.     Intangible Asset
Explanation:-
Answer: Option D. -> Intangible Asset
:
D

Patent is an intangible asset 


Question 9.


Furniture is a/an:


  1.     Current Asset
  2.     Fictitous Asset
  3.     Tangible Fixed Asset
  4.     Intangible Asset
Explanation:-
Answer: Option C. -> Tangible Fixed Asset
:
C

Furniture is a tangible fixed asset


Question 10.


Bills Receivable is a: 


  1.     Current Asset
  2.     Fictitous Asset
  3.     Intangible Asset
  4.     Tangible Fixed Asset
Explanation:-
Answer: Option A. -> Current Asset
:
A

Bills Receivable is a current asset.


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