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Financial Forensics · Quiz 1 · 26 Oct 2025 (Afternoon)

25 questions · 25 marks · 60 min

Answer key Take as mock

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

Financial Forensics

Quiz 1 · 26 Oct 2025 (Afternoon)

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
NAT: Numerical response. No negative marking.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Q1MCQ1 Mark·Choose one option
Key ↓
The Slugger and K Corporation produces custom-made dog toys. During the current fiscal year, Slugger and K had revenues of $460,000 and cost of goods sold of $310,000. The company pays 36 percent in taxes. What was Slugger and K’s net income in the current fiscal year?
1. A$460,000
2. B$150,000
3. C$96,000
4. D$354,000
Q2MCQ1 Mark·Choose one option
Key ↓
1. ARetained earnings are $302,000 and expenses incurred totaled $894,000.
2. BRetained earnings are $302,000 and expenses incurred totaled $962,000.
3. CRetained earnings are $618,000 and expenses incurred totaled $646,000
4. DRetained earnings are $618,000 and expenses incurred totaled $934,000.
Q3MCQ1 Mark·Choose one option
Key ↓
Which of the following best describes the balance sheet?
1. AIt includes the amount of revenues minus expenses for the period.
2. BIt includes three primary categories of cash flows.
3. CIt provides information pertaining to a company's economic resources and the sources of financing for those resources.
4. DIt provides information pertaining to a company's liabilities for a period of time.
Q4MCQ1 Mark·Choose one option
Key ↓
Which of the following would not be found on the statement of cash flows?
1. ACost flow from manufacturing activities.
2. BCash flow from operating activities.
3. CCash flow from investing activities.
4. DCash flow from financing activities.
Q5MCQ1 Mark·Choose one option
Key ↓
Duck Corporation's retained earnings increased $41,200 during the current year. What was Duck's current year net income or loss given that Duck declared $51,200 of dividends during this year?
1. ANet income was $10,000.
2. BNet income was $92,400.
3. CNet loss was $92,400.
4. DNet loss was $10,000.
Q6MCQ1 Mark·Choose one option
Key ↓
Which of the following equations best describes the income statement?
1. AAssets − Liabilities = Stockholders' Equity
2. BNet income = Revenues + Expenses
3. CNet income = Revenues − Expenses
4. DRetained earnings = Net Income + Dividends
Q7MCQ1 Mark·Choose one option
Key ↓
Kelly Tiles Incorporated has provided the following data for its 2024 operations (ignore income taxes): 2024 revenues were $149,000. 2024 expenses were $72,700. Dividends declared and paid during 2024 totaled $14,500. Total assets at December 31, 2024 were $305,000. Total liabilities at December 31, 2024 were $150,000. Common stock at December 31, 2024 was $35,000. Which of the following is correct?
1. A2024 net income was $61,800.
2. BTotal stockholders' equity at December 31, 2024 was $318,000.
3. CRetained earnings at December 31, 2024 were $120,000.
4. DRetained earnings at December 31, 2024 were $61,800.
Q8MCQ1 Mark·Choose one option
Key ↓
Total assets are $37,500, total liabilities are $20,000 and common stock is $10,000; therefore, retained earnings are $7,500.
1. ATrue
2. BFalse
Q9MCQ1 Mark·Choose one option
Key ↓
For the current year, net income of Carol Company is $20,000 and dividends declared are $6,000; therefore, retained earnings have increased $26,000 during the year.
1. ATrue
2. BFalse
Q10MCQ1 Mark·Choose one option
Key ↓
The amount of cash paid by a business for dividends would be reported as an operating activity cash flow on the statement of cash flows.
1. ATrue
2. BFalse
Q11MCQ1 Mark·Choose one option
Key ↓
When would a company report a net loss on the income statement?
1. AWhen revenues are less than the sum of expenses plus dividends during an accounting period.
2. BIf assets decreased during an accounting period.
3. CIf liabilities increased during an accounting period.
4. DWhen expenses exceeded revenues for an accounting period.
Q12MCQ1 Mark·Choose one option
Key ↓
Which of the following would immediately cause a change in a corporation's retained earnings?
1. ANet income or net loss and declaration of dividends.
2. BDeclaration of dividends and issuance of common stock to new stockholders.
3. CNet income and issuance of stock to new stockholders.
4. DDeclaration of dividends and purchase of new machinery.
Q13MCQ1 Mark·Choose one option
Key ↓
Which of the following would most likely increase retained earnings?
1. AAn increase in expenses.
2. BAn increase in revenues.
3. CDeclaring a cash dividend.
4. DIssuing additional common stock.
Q14MCQ1 Mark·Choose one option
Key ↓
Which of the following transactions increases both cash and net income?
1. ACash receipts from a bank loan.
2. BCash receipts from sale of common stock.
3. CCash receipts from customers for services provided.
4. DCash payments for cost of goods sold.
Q15MCQ1 Mark·Choose one option
Key ↓
A calendar year reporting company preparing its annual financial statements should use the phrase "At December 31, 2024" in the heading of which financial statement(s)?
1. AOn all of the required financial statements.
2. BOn the income statement only.
3. COn the income statement and balance sheet, but not the statement of cash flows.
4. DOn the balance sheet only.
Q16MCQ1 Mark·Choose one option
Key ↓
Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?
1. ANet income increases $20,000.
2. BAssets decrease $20,000.
3. CStockholders' equity increases $20,000.
4. DLiabilities increase $20,000.
Q17MCQ1 Mark·Choose one option
Key ↓
Which of the following statements is correct regarding activities and how they impact financial statements?
1. AThe payment of a cash dividend reduces net income.
2. BCash received from issuing common stock to stockholders is reported as a financing activity cash flow within the statement of cash flows.
3. CProviding services to a customer on account does not impact net income.
4. DThe purchase of manufacturing equipment is reported within the statement of cash flows as a financing activity.
Q18MCQ1 Mark·Choose one option
Key ↓
Husky Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $91,100. Cash borrowed from banks totaled $35,300. Cash paid to employees for salaries totaled $33,900. Cash received from selling Husky common stock to stockholders totaled $59,000. Cash payments to banks for repayment of money borrowed totaled $9,300. Cash paid to suppliers totaled $14,300. Land costing $37,000 was sold for $37,000 cash. Cash paid for dividends to stockholders totaled $5,100. How much was Husky's cash flow from operating activities?
1. A$47,500
2. B$42,900
3. C$35,900
4. D$31,700
Q19MCQ1 Mark·Choose one option
Key ↓
Which of the following statements regarding income is correct?
1. ARevenues are reported on the income statement regardless of whether the customer has paid for the goods or services.
2. BExpenses are reported on the income statement during the period they are paid for.
3. CNet income includes a deduction for dividend payments made to stockholders.
4. DNet income normally equals the net cash generated by operations.
Q20MCQ1 Mark·Choose one option
Key ↓
Which of the following transactions affects both the income statement and the statement of cash flows?
1. ASelling stock in exchange for cash.
2. BDeclaring and paying a cash dividend.
3. CSelling a product to a customer which creates an account receivable.
4. DPaying employee salaries as they are earned.
Q21MCQ1 Mark·Choose one option
Key ↓
During the current year, Rock Company's cash balance increased from $79,000 to $91,300. Rock's net cash flow from operating activities was $37,300 and its net cash flow from financing activities was $11,100. How much was Rock's net cash flow from investing activities?
1. AA net cash flow of $42,900.
2. BA net cash flow of ($36,100).
3. CA net cash flow of $60,700.
4. DA net cash flow of ($60,700).
Read the passage below, then answer Q22–Q25
Answer the given subquestions based on the information below:
Fulton Company was established at the beginning of 2024 when several investors paid a total of $200,000 to purchase Fulton common stock. No additional investments in common stock were made during the year. By December 31, 2024, Fulton had cash on hand of $45,000, office equipment of $40,000, inventory of $156,000, and accounts payable of $10,000. Sales for the year were $812,000. Of this amount, customers still owed $20,000. Fulton declared and paid dividends of $25,000 to its stockholders during 2024.
Q22NAT1 Mark·Write the number
Key ↓
What is the Asset of the company as 31st, December 2024 (in $)?
Your answer:
Q23NAT1 Mark·Write the number
Key ↓
What is the Liability of the company as 31st, December 2024 (in $)?
Your answer:
Q24NAT1 Mark·Write the number
Key ↓
What is the Retained earnings of the company as 31st, December 2024 (in $)?
Your answer:
Q25NAT1 Mark·Write the number
Key ↓
Net income of the company for the given duration is ____. (in $)
Your answer:

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q1C

Q2A

Q3C

Q4A

Q5B

Q6C

Q7C

Q8A

Q9B

Q10B

Q11D

Q12A

Q13B

Q14C

Q15D

Q16D

Q17B

Q18B

Q19A

Q20D

Q21B

Q22261000

Q2310000

Q2451000

Q2576000

Questions and answer keys are reproduced from the official IIT Madras BS papers. BTechi is not affiliated with IIT Madras.