Accounting and Financial Management Quiz

What is another name for the Statement of Changes in Owner's Equity?

• Income Statement

• Cash Flow Statement

• Statement of Owner's Equity

• Balance Sheet

What is the formula for calculating the Current Ratio?

• Total Assets / Total Liabilities

• Total Liabilities / Current Assets

• Current Liabilities / Current Assets

• Current Assets / Current Liabilities

What does the Acid Test Ratio measure?

• Number of times a company's inventory is sold and replaced in a year

• Company's ability to pay its short-term obligations using its most liquid assets

• Short-term liquidity of the company

• Company's efficiency in collecting the amount due from its customers

What does the Debt Ratio measure?

• Measures the business' ability to pay the interest coming from its liabilities

• Extent of total assets financed by liabilities

• Extent of assets financed by the owner

• Compares the financing provided by the creditor against those provided by the owner

What is the formula for calculating the Receivable Turnover?

• Net Sales / Average Trade Receivable

• Average Trade Receivable / Net Sales

• 360 / Trade Receivable Turnover

• Beginning Trade Receivable + Ending Trade Receivable / 2

What is the purpose of the Statement of Cash Flow?

• Summarizes the cash receipts and cash disbursements for the accounting period

• Shows the financial condition of a business in a given period

• Compares the accounts against the total in a balance sheet

• Compares a company's current financial position and performance with those of past years

What is the main activity involved in the Operating Inflow or Outflow in the Statement of Cash Flow?

• Inflows or outflows arising from the normal operations of the business

• Inflow or outflow from the owner's and creditors of the business

• Inflow or outflow from the acquisition and disposal of non-current assets

• Inflow or outflow from the acquisition and disposal of marketable securities and receivables

What is the Accounting Equation?

• Assets = Capital - Liabilities

• Assets = Liabilities + Capital

• Liabilities = Assets - Capital

• Capital = Assets - Liabilities

What is the main purpose of Horizontal Analysis?

• Comparison of the current period to its prior period

• Comparison of the company to the average for that certain industry

• Comparison of the company to another company

• Comparison of the company's current financial position and performance with those of past years

What does the Gross Profit Ratio measure?

• Percentage of sales earned after deducting the cost of goods sold

• Company's ability to pay its short-term obligations

• Company's efficiency in collecting the amount due from its customers

• Number of times a company's inventory is sold and replaced in a year