Tag: accountancy

Questions Related to accountancy

The accounts shown in the chart of accounts can be broadly classified into two categories: Balance sheet accounts and ___________ accounts.

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  1. Income statement

  2. Expense

  3. Revenues

  4. Cash

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Correct Option: A

A collection of records pertaining to one of the main subjects of an information system, such as customers, employees, products and vendors is known as ___________.

accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

  1. Master File

  2. Transaction File

  3. Master data management

  4. Customer File

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Correct Option: A

______________ a snapshot of the financial condition of the firm at a particular time.

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  1. The balance sheet provides

  2. The income statement provides

  3. The cash flow statement provides

  4. All of the above provides

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Correct Option: A
Explanation:

The balance sheet provides a snapshot of the financial condition of the firm at a particular time. It shows the balance of assets, equities and liabilities at a single moment of time. 


The Income Statement is one of a company's core financial statements that shows their profit and loss. The P&L statement shows a company's ability to generate sales, manage expenses, and create profits. over a period of time.

Cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Comparative Statement of profit and loss is the horizontal analysis of Statement of profit and loss which shows :

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. the operating results for the compared accounting periods.

  2. changes in data in terms of absolute amount.

  3. percentage from one period to another.

  4. all of the above

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Correct Option: D
Explanation:

Comparative Statement of profit and loss is the horizontal analysis of statement of profit and loss which shows the operating results for the compared accounting periods, changes in data in terms of absolute amount and percentage from one period to another.  Horizontal analysis is a trend analysis where the firm compares ratios, statements etc over a period of time. 

Comparative Statements is prepared to check _______.

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. increase or decrease as on different dates

  2. balances of account as on different dates

  3. summaries of different operational activities of different periods

  4. All of the above

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Correct Option: D
Explanation:

Comparative analysis is comparison of various ratios balances of different years. It is basically done to understand the trend off the company. Comparative statements is prepared to check increase or decrease as on different dates, balances of accounts as on different dates and summaries of different operational activities of different periods. 

Comparative Income statement shows the _________________.

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. Revenue and expenses in absolute values.

  2. Increase or decrease of revenues and expenses in absolute values.

  3. Percentage changes in revenues and expenses.

  4. All of the above

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Correct Option: D

Comparative statement when prepared for comparing the enterprise's financial statements with that of another enterprise, is known as Inter-firm comparison.

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  1. True

  2. False

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Correct Option: A
Explanation:

True. Comparative analysis is comparison of various ratios balances of different years. It is basically done to understand the trend of the company. When the comparison is done between the firms its known as inter firm comparison. 

Comparative Statement when prepared for comparing the enterprise's financial statements of two or more years, is known Intra-firm Comparison.

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. True

  2. False

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Correct Option: A
Explanation:

True. Comparative analysis is comparison of various ratios balances of different years of the same firm. When the comparison is done within the firm its known as intra-firm comparison. It is basically done to understand the trend of the company. 

Comparative Financial Statements mean comparative study of items or components of financial statements for two or more years or with that of other enterprises.

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. True

  2. False

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Correct Option: A
Explanation:

True. Comparative Financial statements mean comparative study of items or components of financial statements of two or more years with that of the same or other company. It is comparison of various ratios, balances, statements of different years of the company. It is basically done to understand the trend off the company.

Comparative financial statements are prepared for ____________ comparison.

accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

  1. inter-firm

  2. intra-firm

  3. both (a) and (b)

  4. none of these

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Correct Option: C