Financial Statement Analysis Multiple Choice Questions#9

NOTE: Attempt all Questions to see the Result at the bottom of this page.

  1. 1)

    ABC Company now wants to further raise its capital; it is going to offer its shares first to current shareholders. The issuance of further capital to Present Shareholders is called:

    • A) Paid-in capital
    • B) Preferred-stock Issue
    • C) Right Issue
    • D) Additional capital

  2. 2)

    Which of the following is MORE concerned with the short-term solvency?

    • A) Short term Creditors
    • B) Long term Creditors
    • C) Short term Debtors
    • D) Long term Debtors

  3. 3)

    The increasing Return on Sales (ROS) shows:

    • A) Company is facing financial troubles
    • B) Company is retaining more than 65% of its profit for operational efficiency
    • C) Company is paying dividends consistently over the past years
    • D) Company is growing by leaps and bounds

  4. 4)

    Which of the following represents the main step(s) of accounting cycle?

    • A) Recording the transactions
    • B) Classifying the transactions
    • C) Ordering, summarizing, counting the transactions
    • D) Recording, classifying, summarizing transactions

  5. 5)

    Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically Rs.10,000 per week. Which of the following journal entries would Blankenship ordinarily record on the Friday payday?

    • A) Salary expense Rs. 10,000 - Debit; Salary payable Rs. 10,000 - Credit
    • B) Salary expense Rs. 10,000 - Debit; Cash Rs. 10,000 - Credit
    • C) Salary payable Rs. 10,000 - Debit; Cash Rs. 10,000 - Credit
    • D) Salary payable Rs. 10,000 - Debit; Salary expense Rs. 10,000 - Credit

  6. 6)

    Retained earnings change over time because of several factors. Which of the following factors would explain an INCREASE in retained earnings?

    • A) Net Income
    • B) Dividends payment
    • C) Investment by the stockholders
    • D) Net Loss

  7. 7)

    When using the perpetual inventory system, each time a sale is recorded the:

    • A) Inventory account is increased
    • B) Inventory account is decreased
    • C) Cost of Goods Sold account is decreased
    • D) Cost of goods available for sale decreases

  8. 8)

    In perpetual inventory system, a return of defective merchandise is recorded by crediting __________.

    • A) Purchases
    • B) Purchase Returns
    • C) Purchase Allowance
    • D) Merchandise Inventory

  9. 9)

    Audit opinions can NOT be classified as which of the following?

    • A) Adverse opinion
    • B) Unqualified opinion
    • C) Qualified opinion
    • D) Disagreement of opinion

  10. 10)

    Which of the following is a type of preferred stock that entitles the holder to a fixed dividend and, in addition, to the right to get any surplus profits after payment of agreed levels of dividends to holders of common stock?

    • A) In arrears preferred shares
    • B) Call able preferred shares
    • C) Cumulative preferred shares
    • D) Participating preferred shares