Financial Statement of Corporate Organisations Solved MCQs with PDF Download (2024)

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1. Business Finance and Fund Procurement:

   • Business finance encompasses the procurement of funds and utilization of funds. This includes activities such as managing funds and making allocations.

2. Funds Requirement:

   • Funds are required for various purposes, including the purchase of land & building, machinery, and other fixed assets.

3. Profitability Review:

   • The income statement provides a review of the profitability of a business.

4. Financial Statements:

   • Financial statements comprise the profit & loss statement and balance sheet. The term 'Financial Statement' covers both.

5. Nature of Financial Statements:

   • Financial statements give a summary of accounts and can be considered recorded facts.

6. P&L Statement:

   • The Profit and Loss (P&L) statement is also known as the statement of income.

7. Cash Flow Statement:

   • The cash flow statement shows the flow of cash and cash equivalents during a financial period.

8. Net Profit/Loss:

   • Subtracting all expenses from revenues yields net profit or net loss.

9. Balance Sheet Format:

   • The balance sheet of a company is required to be prepared in the format given in Schedule III Part I.

10. Presentation of Balance Sheet:

    • As per the Companies Act, the balance sheet is required to be presented in vertical form.

11. Financial Statements Under Companies Act:

    • The funds flow statement is not required to be prepared under the Companies Act.

12. Order of Assets in Balance Sheet:

    • Non-current assets should be shown first in a company's balance sheet.

13. Calls in Arrears:

    • Calls in arrears appear in a company's balance sheet under shareholder's funds.

14. Calls in Advance:

    • Calls in advance appear in a company's balance sheet under current liability.

15. Bills Receivables:

    • Bills Receivables appear in a company's balance sheet under the sub-head trade receivables.

16. Balance Sheet Exclusions:

    • Rent expenses are not recorded in the balance sheet.

17. Business Finance Scope:

    • Business finance addresses financing, investing, and managing day-to-day expenses.

18. Profit Margin Measurement:

    • Operating efficiency is measured by profit margin.

19. Business Finance Functions:

    • Business finance addresses capital budgeting, capital structure, and working capital management.

20. Finance Vital for Activities:

    • Finance is vital for marketing research, product pricing, and design of marketing and distribution channels.

21. Markup Definition:

    • Markup refers to the difference between the sale price and the cost of inventory.

22. Use of Accounting Information:

    • Financial analysts make broader use of accounting information.

23. Snapshot of Accounting Value:

    • The balance sheet is considered as the accountant's snapshot of a firm's accounting value as of a particular date.

24. Balance Sheet Formula:

    • The balance sheet is based upon the formula: assets = liabilities + stockholder's equity.

25. Agency Problem:

    • The conflict of interest between stockholders and management is known as the agency problem.

26. Intangible Assets:

    • Buildings are not examples of intangible assets.

27. Financial Assets Examples:

    • Raw material is not an example of financial assets.

28. Business Finance Components:

    • Business finance refers to both money and credit employed in a business.

29. Concerns of Business Finance:

    • Business finance is concerned with the estimation and raising of funds from different sources.

30. Functions of Finance Manager:

    • Manipulating share price of the company is not a function of a finance manager.

31. Financial Manager Decision:

    • Financing decision is a main decision taken by the financial manager in a company.

32. Finance Function Components:

    • Finance function comprises the procurement and effective use of funds.

33. Responsibility of Finance Manager:

    • The finance manager is accountable for the arrangement of financial resources.

34. Focus of Financial Management:

    • The focal point of financial management in a firm is the creation of value for shareholders.