Choose a pair of correct statements.
(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) The ratio reflects quantitative and qualitative aspects of the results.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (B) and (C) only
(A) The only purpose of financial reporting is to keep the managers informed about the progress of operations. Incorrect. Financial reports also serve investors, lenders, creditors, the government and other outside users, so informing managers is not their only purpose.
(B) Analysis of data provided in the financial statements is termed as financial analysis. Correct. Studying the figures of the statements to judge profitability and financial position is 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. Correct. Those who lend for the long term look at solvency: whether the firm can keep paying interest and return the loan.
(D) The ratio reflects quantitative and qualitative aspects of the results. Incorrect. A ratio is built from figures only, so it shows the quantitative side; qualitative factors such as the quality of management or staff morale are left out.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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