Question 1

Horizontal Analysis shows the comparison of data for several years against a chosen ---------------- year.

Accepted Answer

Horizontal analysis involves comparing financial data over a series of periods against a chosen base year to identify trends and growth patterns.

Question 2

Vertical analysis is made to review and analyse the financial statements of -----------------accounting period.

Accepted Answer

Vertical analysis is a method used to analyze financial statements where each entry for each of the three major categories (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account. This method is applied to a single accounting period, making it possible to assess the structure of the financial statements for that period.

Question 3

Comparison of financial variables of a firm over a period of time is known as--------------

Accepted Answer

Trend analysis involves comparing financial variables of a firm over a period of time to identify patterns and changes.

Question 4

Interpretation requires analysis and ----------------------------------

Accepted Answer

The answer of Interpretation requires analysis and ----------------------------------
...

Question 5

The process of deriving conclusions from the analysis is commonly termed as ----------------

Accepted Answer

Interpretation is the process of deriving conclusions from the analysis. It involves explaining the meaning of the data that has been analyzed, making sense of the results, and determining the implications of those results.

Question 6

Common size Income Statement present the various items as a percentage of ----------------

Accepted Answer

Common size income statements present various items as a percentage of total sales, allowing for easier comparison across time periods or companies by standardizing the figures.

Question 7

External analysis is based on ------------- financial statements

Accepted Answer

External analysis often relies on published financial statements because these documents are publicly available and provide a standardized way to assess a company's financial health and performance.

Question 8

Financial Statements provide a summary of --------------------------

Accepted Answer

Financial Statements provide a summary of Accounts.

Question 9

When financial statements for a number of years are reviewed and analysed, the analysis is known as ---------------------

Accepted Answer

Horizontal analysis involves the comparison of financial data over a series of reporting periods, allowing for the assessment of trends and growth patterns. This type of analysis is used to review and analyze financial statements for multiple years.

Question 10

When ratios are calculated from the financial statements of one year, it is known as ---------------------

Accepted Answer

Vertical analysis is the method of analyzing financial statements where each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account. This approach is useful for understanding the structure of a company's finances in a single fiscal period.

Question 11

Horizontal analysis is also known as -----------------------

Accepted Answer

Horizontal analysis is also known as dynamic analysis because it involves comparing financial data over multiple periods to identify trends and growth patterns.

Question 12

Trend analysis is significant for

Accepted Answer

Trend analysis helps in predicting future financial performance, which is essential for forecasting and budgeting.

Question 13

In trend percentage the base year is ----------------------------

Accepted Answer

In trend percentage analysis, the base year is typically the first year in the series. This year serves as the reference point against which all other years are compared to assess trends over time.

Question 14

Comparative statements are a form of ---------------------------

Accepted Answer

Comparative statements are a form of horizontal analysis, where financial statements for multiple periods are analyzed and compared to identify trends and changes over time.

Question 15

The term financial ananlysis include both --------- and interpretation

Accepted Answer

The answer of The term financial ananlysis include both ---------...

Question 16

Vertical analysis is also known as ------------------

Accepted Answer

Vertical analysis, used in financial statement analysis, is considered a form of static analysis because it examines financial statements at a single point in time, comparing each line item to a base amount within the same period.

Question 17

The statement prepared to disclose accounting information are known as-----

Accepted Answer

Financial statements are the formal records of the financial activities and position of a business, person, or other entity. They provide an overview of a business's financial condition in both short and long term.

Question 18

------------- gives a diagnosis of the profitability and financial position

Accepted Answer

Analysis of financial statements involves interpreting the numbers found in financial statements in order to assess a company's profitability, financial health, and operational efficiency, making it the correct choice for diagnosing profitability and financial position.

Question 19

------------------------ helps in drawing inferences of conclusions

Accepted Answer

Interpretation is the process of explaining or understanding the meaning of something, which is essential for drawing inferences or conclusions from data, texts, or situations.

Question 20

---------------- establishes the relationship of different individual items which same common items

Accepted Answer

Common size statements establish the relationship of different individual items which same common items

Quiz 1: Financial Analysis Techniques and Terminologies