Question : Which of the following is not a tool of Analysis of Financial Statements?
Option 1: Ratio Analysis
Option 2: Common-size Statement
Option 3: Comparative Statement
Option 4: Statement of Profit & Loss
Correct Answer: Statement of Profit & Loss
Solution : The financial accounts of a company record significant financial data about all aspects of its business. As such, their performance in the past, present, and future can be evaluated. Cash flow statements, ratio analysis, common-size statements, and comparative statements are a few helpful methods for financial statement analysis. Hence, the correct option is 4.
Question : Tools or Techniques of Financial Statement Analysis are
Option 1: Comparative Statements
Option 2: Common-size Statements
Option 3: Ratio and Cash flow statement
Option 4: All of the above
Question : Which of the following statement is correct with respect of Analysis of Financial Statements?
Option 1: Analysis of Financial Statements is a systematic process of analyzing the financial Information in the financial statements to understand and take economic decisions.
Option 2: Analysis of Financial Statements is a study of relationships among various financial values as set out in the financial statements, i.e., Balance Sheet, Statement of Profit and Loss and Cash Flow Statement.
Option 3: Financial Statement Analysis is largely a study of relationships among the various financial factors in a business,
Question : Which of the following statements is incorrect?
Option 1: Ignores the Qualitative Elements is a limitation of Financial Statement Analysis
Option 2: Not free from personal bias is a limitation of Financial Statement Analysis
Option 3: Ignores the price level changes is a limitation of Financial Statement Analysis
Option 4: None of the above
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