Question : Choose the correct statement
Statement 1: In order to interpret financial statements in a useful way, ratio analysis involves a comparison that provides a good interpretation of the financial statement. Statement 2: An individual ratio by itself cannot determine if a position is favorable or unfavorable. It should be compared to another company in the same industry or to previous ratios of the same company.
Option 1: Statement 1 is correct, Statement 2 is wrong
Option 2: Statement 2 is correct, and Statement 1 is wrong
Option 3:
Both Statements are correct
Option 4: Both Statements are wrong
Correct Answer:
Solution : Ratio analysis is a helpful way to interpret financial statements. And, an individual ratio by itself cannot determine if a position is favorable or unfavorable. It should be compared to another company in the same industry or to previous ratios of the same company. Hence, the correct option is 3.
Question : Statement 1: Current Ratio of 2:1 is considered an Ideal Ratio.
Statement 2: Quick Ratio of 1:1 is considered an Ideal Ratio.
Option 1:
Statement 1 is correct, Statement 2 is wrong
Question : Choose the correct statement:
Statement 1: Cross-sectional Analysis compares a firm's ratios to those of a few chosen companies in the same industry or to the industry average at the same period. A similar comparison is beneficial in determining the firm's relative performance.
Statement 2: Comparing a company's present ratios to its prior ratios is another technique to make comparisons using time-series analysis.
Option 2: Statement 2 is correct, Statement 1 is wrong
Option 3: Both Statements are correct
Question : Statement 1: For efficient analysis and interpretation, the financial accounting data is categorised and codified. Statement 2: The accounts are categorised according to their nature.
Option 1: Both the statements are true
Option 2: Both the statements are false
Option 3: Statement 1 is true and statement 2 is false
Option 4: Statement 1 is false and statement 2 is true
Question : Statement 1: Non-financial incentives include financial rewards and bonuses.
Statement 2: Non-financial incentives impact employee motivation.
Option 1: Both statements are correct.
Option 2: Statement 1 is correct, and statement 2 is false.
Option 3: Both statements are incorrect.
Option 4: Statement 2 is correct, and statement 1 is incorrect.
Question : Statement 1: Financial incentives can fulfill both physiological and self-actualization needs.
Statement 2: Financial incentives are effective only for addressing physiological needs.
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