Which of the following combination of statements are NOT true-
(A) Financial analysis is used only by the creditors.
(B) Comparative statements are the form of vertical analysis
(C) The financial statements of a business enterprise include cash flow statement.
(D) Ratio analysis establishes relationship between two financial statements.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A) and (B) only
(A) Financial analysis is used only by the creditors. Not true. Creditors use it, but so do management, investors, employees and the government; each looks at the same statements for its own decision.
(B) Comparative statements are the form of vertical analysis. Not true. A comparative statement places the figures of two or more years side by side, which is horizontal analysis. Vertical analysis studies one year’s items against a common base, as in a common size statement.
(C) The financial statements of a business enterprise include cash flow statement. True. A cash flow statement is prepared along with the balance sheet and the statement of profit and loss.
(D) Ratio analysis establishes relationship between two financial statements. True. A ratio can link an item of the statement of profit and loss with an item of the balance sheet, such as revenue from operations with trade receivables.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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