Assertion Reason MCQs of Comparative and Common Size Statements Accountancy with Answers
Assertion Reason MCQs of Comparative and Common Size Statements Accountancy with Answers for class 12 CBSE, ISC, CUET and State Board
Assertion (A): Comparative Balance Sheet is the horizontal analysis of Balance Sheet items.
Reason (R): In Comparative Balance Sheet, each item of assets, liabilities and shareholder’s funds is placed side-by-side to facilitate comparison.
Options:
(a) Both (A) and (R) are correct and (R) is the correct reason of (A)
(b) Both (A) and (R) are correct and (R) is not the correct reason of (A)
(c) Only (R) is correct
(d) Both (A) and (R) are wrong
Ans – (a)
Assertion (A): Common-size Statement of Profit and Loss in the vertical analysis of items of Revenue and Expenses.
Reason (R): In Common Size Statement of Profit and Loss, Revenue from operations is taken as 100 and all other items of Revenue and Expenses are expressed as percentage of Revenue from Operations.
Options
(a) Both (A) and (R) are correct and (R) is the correct reason of (A).
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(c) Only (R) is correct.
(d) Both (A) and (R) are wrong.
Ans – (a)
Assertion (A): Comparative Income Statement is the horizontal analysis of Income Statement.
Reason (R): In Comparative Income Statement, each item of Revenue from Operations, Other Income and Expenses is analysed horizontally for two or more accounting periods
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (a)
Assertion (A): Common-size Balance Sheet is the Horizontal analysis of Balance Sheet.
Reason (R): In Common-Size Balance Sheet total of assets is taken as 100 and all other items of assts, liabilities and shareholder’s funds are expressed as percentage of Total Assts.
Options:
(a) Both (A) and (R) are true, but (R) is on the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Comparative Statements of Profit and Loss is the Vertical analysis of revenue and expense items.
Reason (R): In Comparative Statement of Profit & Loss, each item of revenue and expenses is analysed vertically for two or more accounting periods.
Options:
(a) Both (A) and (R) are true, but (R) is not correct explanation of (A)
(b) Both (A) and (R) ar true and (R) is the correct explanation of (A)
(c) Both (A) and (R) is false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Comparative Balance Sheet is the Horizontal analysis of Balance Sheet.
Reason (R): Common-Size Balance Sheet is the Vertical analysis of Balance Sheet.
Options:
(a) Both (A) and (R) are correct and (R) is the correct reason of (A).
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(c) Only (R) is correct.
(d) Both (A) and (R) are wrong.
Ans – (b)
Assertion (A): Comparative Balance Sheet is the horizontal analysis of Balance Sheet.
Reason (R): In Comparative Balance Sheet, each item of Assets and Liabilities is analysed vertically for two or more accounting periods
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (d)
Assertion (A): Comparative Statements show the change in various items not only in absolute figures but in percentage form also.
Reason (R): Comparative Statements indicate trend of change and the strong and weak points of the firm.
Options:
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): In a Common-Size statement, each item is expressed as a percentage of common base.
Reason (R): Common size statements are prepared both in the form of percentages and ratios.
Option:
(a) Both (A) and (R) are correct and (R) is the correct reason of (A)
(b) Both (A) and (R) are correct but (R) is not the correct reason of (A)
(c) Only (A) is correct
(d) Both (A) and (R) are wrong
Ans – (c)
Assertion (A): Comparative Statements consider the qualitative aspect in the analysis.
Reason (R): Comparative Statements consider only the monetary information in the analysis while qualitative aspects are not considered.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (c)
Assertion (A): In a Common-size Statement of Profit & Loss figure of revenue from Operations is assumed to be qual to 100
Reason (R): In a Common-size Balance Sheet Share Capital is assumed to be equal to 100.
Options:
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is true, but (R) is false
Ans – (d)
Assertion (A): Comparative statements consider the monetary as well as qualitative elements of the business.
Reason (R): Comparative Statements ignore the qualitative elements of business.
Options:
(a) Both (A) and (R) are correct and (R) is the correct reason of (A)
(b) Both (A) and (R)0 are correct but (R) is not the correct reason of (a)
(c) Only (R) is correct
(d) Both (A) and (R) are wrong
Ans – (c)
Assertion (A): In a Common-Size Statement, figures of previous year are taken as base for comparison.
Reason (R): Common-Size Statements enable horizontal analysis
Options:
(a) (A) and (R) both are correct and (R) correctly explains (A)
(b) Both (A) and (R) are correct but (R) does not explain (A)
(c) Both (A) and (R) are incorrect
(d) (A) is correct but (R) is incorrect
Ans – (c)
Assertion (A): Common-size Income Statement is the vertical analysis of Income Statement.
Reason (R): In Common-size Income Statement, Revenue from Operations is taken as 100 while Other Income and Expenses are expressed as percentage of Revenue from Operations.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (a)
Assertion (A): Comparative Statements give due importance to price level changes.
Reason (R): Comparative statements are an analysis of historical records i.e., analysis of past financial statements. As such, they indicate trend in the past and do not reflect future.
Options:
(a) (A) and (R) both are correct and (R) correctly explains (A)
(b) Both (A) and (R) are correct but (R) does not explain (A)
(c) Both (A) an (R) are incorrect
(d) (A) is incorrect but (R) is correct
Ans – (d)
Assertion (A): Common-Size Balance Sheet is not a vertical analysis of Balance Sheet.
Reason (R): In Common-Size Balance Sheet, total assets value is taken as 100 and all other values of Assets, Equity and Liabilities are expressed as percentage of Total Assets value.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (c)
Assertion (A): Break-even point is no profit no loss point.
Reason (R): Break even point is the point where total costs are exactly equal to total sales. As such, there is neither profit nor any loss at this point.
Options:
(a) (A) and (R) both are correct and (R) correctly explains (A)
(b) Both (A) and (R) are correct but (R) does not explain (A)
(c) Both (A) and (R) are incorrect
(d) (A) is correct but (R) is incorrect
Ans – (a)
Assertion (A): Common-size Balance Sheet is the Vertical Analysis of Balance Sheet.
Reason (R): In Common-Size Balance Sheet, Total Assets figure is taken as 100 and all other figures of Assets and Liabilities are expressed as percentage of Total Assets figure.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation for Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation for Assertion (A)
(c) Assertion (A) is false and Reason (R) is true
(d) Assertion (A) is true and Reason (R) is false
Ans – (a)
Assertion (A): If a firm has no interest income in the year 2023 and ₹ 10,000 of interest income in the year 2024, the change will be 10%.
Reason (R): If other income is ₹ 20,000 in the year 2023 and Nil in the year 2024, the change will be (100%).
Options:
(a) (A) and (R) both are correct
(b) (A) is incorrect but (R) are correct
(c) Both (A) and (R) are incorrect
(d) (A) is correct but (R) is incorrect
Ans – (b)
