POA Practice Questions Quiz

What is the accounting equation?

• Assets = Liabilities - Equity

• Assets = Liabilities + Equity

• Liabilities = Assets + Equity

• Assets - Liabilities = Equity

Which of the following is a component of the accounting equation? A) Assets B) Liabilities C) Equity D) All of the above

• A) Expenses

• D

• B) Revenue

• C) Cost of goods sold

What are the three main financial statements?

• Expense report, liability statement, and revenue statement

• Cash statement, income report, and asset statement

• Profit statement, equity statement, and investment statement

• Income statement, balance sheet, and cash flow statement

Which financial statement reports a company's financial performance over a specific accounting period?

• Balance sheet

• Cash flow statement

• Income statement

• Statement of retained earnings

Which financial statement shows a company's revenues and expenses over a period of time?

• Balance sheet

• Statement of retained earnings

• Cash flow statement

• Income statement

What is the purpose of the income statement?

• To determine the market share of the company

• To track employee attendance

• To show the financial performance of a company

• To calculate the company's tax liability

Which financial statement provides a snapshot of a company's financial position at a specific point in time?

• Statement of retained earnings

• Income statement

• Balance sheet

• Cash flow statement

What is the formula for calculating equity in the accounting equation?

• Equity = Assets + Liabilities

• Equity = Assets x Liabilities

• Equity = Assets / Liabilities

• Equity = Assets - Liabilities

Which financial statement shows the changes in a company's cash and cash equivalents over a period of time?

• Statement of retained earnings

• Statement of cash flows

• Income statement

• Balance sheet