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1)
In the vertical analysis of income statement, all the accounts are expressed as a percentage of which of the following?
- A) Net sales
- B) Gross sales
- C) Net income
- D) Total expenses
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2)
A company has a cost of goods sold of Rs. 530,000; the beginning inventory is Rs. 120,000, and ending inventory is Rs. 180,000. Calculate the number of days to sell the inventory. (Round the figures to the nearest whole)
- A) 83 days
- B) 125 days
- C) 104 days
- D) 100 days
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3)
Which of the following equations properly represents a derivation of the fundamental accounting equation?
- A) Assets + liabilities = owner's equity
- B) Assets = owner's equity
- C) Cash = assets
- D) Assets - liabilities = owner's equity
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4)
What will be effect of purchase of inventory on open account on quick ratio of the company?
- A) Increase
- B) No effect
- C) Decrease
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5)
Which of the following statement is the LEAST LIKELY to be correct?
- A) A firm that has a high degree of business risk is less likely to want to incur financial risk
- B) There exists little or no negotiation with suppliers of capital regarding the financing needs of the firm
- C) Financial ratios are relevant for making internal comparisons
- D) It is important to make external comparisons or financial ratios
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6)
Which of the following provides the basis for the trial balance?
- A) Income statement
- B) Statement of cash flow
- C) Ledger
- D) Adjusting entries
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7)
In order to know the percentage of assets financed by creditors, which of the following ratio is calculated?
- A) Debt Ratio
- B) Equity Ratio
- C) Operating credit Ratio
- D) Quick Ratio
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8)
The cash flow from investing activities shows the cash effects of which of the following?
- A) Income statement items
- B) Long term assets items
- C) Long term liability & stockholder’s equity
- D) Long term liability and long term assets
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9)
In a perpetual inventory system, which of the following is NOT part of the series of journal entries made when merchandise is sold on credit?
- A) Credit the Cost of Goods Sold account
- B) Credit the Sales account
- C) Credit the Merchandise Inventory account
- D) Debit the Accounts Receivable account
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10)
As stated in the audit report, or Report of Independent Accountants, the primary responsibility for a company's financial statements lies with which of the following?
- A) The owners of the company
- B) Independent financial analysts
- C) The auditors
- D) The company's management
