1.

Comparative analysis of financial statement, technique used is

a) graphical analysis
b) preference analysis
c) common size analysis
d) returning analysis
2. Low price to earnings ratio is result of
a) low riskier firms
b) high riskier firms
c) low dividends paid
d) high marginal rate
3. Best measure of competiveness is classified as
a) gross margin
b) income margin
c) sales margin
d) cost margin
4. Gross margin is added to cost of goods sold to calculate
a) revenues
b) selling price
c) unit price
d) bundle price
5. Type of distribution which describes whether events to be occurred are mutually
exclusive or collectively exhaustive is classified as
a) mutual distribution
b) probability distribution
c) collective distribution

d) marginal distribution
6. Fixed cost is divided by break even revenues to calculate
a) cost margin
b) fixed margin
c) revenue margin
d) contribution margin
7. Accounting is called the language of business because__________:
a
b
c
d

It communicates the financial information to the Management only

In order to run a business one must have knowledge about accounting
Different business accounts are involved in financial statements
It helps to organize and communicate financial information to end
users

8. Generally speaking, investors want to buy shares at which of the following price?
a
b
c
d

At face value
Below face value
Above face value
At market value

9. The true and fair presentation of the financial statements depends, among other things,
upon which of the following?
a
b
c
d

Strong financial position

Concept of materiality
Matching principle
Realization principle

10. Which of the following explains the debit and credit rules relating to recording
revenues and expenses?
a
b
c
d

Realization and matching principle

The effect of revenues and expenses in the owners equity
Expenses appear on the left side of the income statement
Liabilities are recorded as debit on the balance sheet

11. Net current assets are equivalent to:

a
b
c
d

Stock plus debtors plus cash

Current liabilities less current assets
Working capital
Fixed assets plus current assets less current liabilities

12. Which of the following is NOT an example of cash equivalents?

a
b
c
d

Certificates of Deposit
Money market accounts
Money market mutual funds
Euro Bond

13. Which of the following principle provides the definite and factual basis for assets
valuation?
a
b
c
d

Stable Currency principle

Objectivity Principle
Matching Principle
Cost Principle

14. Which of the following principle states that the assets are purchased for the use and
not for resale purpose?
a
b
c
d

Stable Currency principle

Objectivity Principle
Going-concern principle
Cost Principle

15. Comparison of financial statements highlights the trend of the _________ of the
business.
a) Financial position
b) Performance
c) Profitability
d) All of the above
16. Interpretation of accounts is the
a)
b)
c)
d)

Art and science of translating the figures

To know financial strengths and weaknesses of a business
To know the causes for the prevailing performance of business
All of the above

17. Best measure of competitiveness is classified as

a)
b)
c)
d)

gross margin
income margin
sales margin
cost margin

18. Fixed cost is divided by break even revenues to calculate

a) cost margin
b) fixed margin

c) revenue margin
d) contribution margin
19. Current assets are those assets which management intends to convert into cash or
consume within:
a
b
c
d

The operating cycle

One year
The longer of operating cycle or one year
The shorter of operating cycle or one year

20. Identify the statement that is NOT true about the Incomes Account and Expenses
Account:
a
b
c
d

These are the temporary accounts

These are closed in Income summery account
These may include in closing trial balance
These are also known as Nominal Accounts