State which of the following statements are True or False.
(a) The only purpose of financial reporting is to keep the managers informed about the progress of operations.
(b) Analysis of data provided in the financial statements is termed as financial analysis.
(c) Long-term borrowings are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount.
(d) A ratio is always expressed as a quotient of one number divided by another.
(e) Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises.
(f) A ratio reflects quantitative and qualitative aspects of results.
Answers
false
true
true
true
false
Explanation:
(a) False : The purpose of financial reporting is to interpret and analyze
financial operations of a business.
(b) True : Financial statement are data to analyze the business structure for
proper planning.
(c) True : Long term borrowings are Loans which are taken for more than
one year and concerned about the repayment of amont along with
interest.
(d) True : A ratio is the mathematical expression of two quotients.
(e) False : if financial statements do not reveal the true state of affairs of the
enterprises, then ratios will also not give the true picture.
Reliability of ratio and its analysis depends upon the correctness
of financial statements.
(f) False : Accounting provides information about quantitative aspects of
business only. Hence, ignoring completely the non-monetary
factors.