Glencoe Accounting Chapter 8 & 9 Vocabulary Test

What is the Accounting Equation?

• Assets = Liabilities - Equity

• Assets = Liabilities + Equity

• Assets + Liabilities = Equity

• Assets - Liabilities = Equity

Explain the purpose of Financial Statements.

• The purpose of Financial Statements is to provide information about a company's financial performance and position to stakeholders.

• Financial Statements are designed to hide a company's financial performance.

• The purpose of Financial Statements is to confuse stakeholders.

• Financial Statements are used for entertainment purposes only.

Define Income Statement and its components.

• Income Statement is a balance sheet

• Income Statement is a financial statement that shows a company's revenues and expenses over a specific period of time. The main components include revenues, expenses, gains, losses, and net income.

• Income Statement does not show net income

• Income Statement only includes revenues

What is included in a Balance Sheet?

• Income Statement, Cash Flow Statement, Retained Earnings

• Expenses, Revenue, Dividends

• Debits, Credits, Journal Entries

• Assets, Liabilities, Shareholders' Equity

Describe the importance of a Cash Flow Statement.

• The Cash Flow Statement is only used for tax purposes.

• The Cash Flow Statement is important for analyzing the cash position and financial performance of a business.

• The Cash Flow Statement is irrelevant for financial analysis.

• Businesses do not need to prepare a Cash Flow Statement.

What is the Statement of Changes in Owners Equity?

• A report detailing the salaries of company executives

• A financial statement that shows the changes in the equity section of a company's balance sheet over a specific period of time.

• A document that lists all the expenses incurred by a company

• A summary of the company's cash flow

Differentiate between Net income and net loss.

• Net income is always higher than net loss

• Net income represents profit, while net loss represents a deficit.

• Net income is calculated before taxes, while net loss is calculated after taxes

• Net income is a short-term financial gain, while net loss is a long-term financial loss

What is Profitability Ratio and how is it calculated?

• Profitability Ratio is calculated by (Net Income / Total Liabilities) * 100

• Profitability Ratio is calculated by (Net Income / Total Expenses) * 100

• Profitability Ratio is calculated by (Net Income / Total Assets) * 100

• Profitability Ratio is calculated by (Net Income / Total Revenue) * 100

Tags

CCSS.7.RP.A.3

Explain the concept of return on sales.

• Return on sales (ROS) is a financial metric used to evaluate a company's profitability by measuring the percentage of revenue that translates into profit after all expenses are deducted.

• Return on sales is only relevant for service-based businesses.

• Return on sales is calculated by dividing revenue by expenses.

• Return on sales measures the number of products sold by a company.

How is Net income calculated?

• Net income = Total Revenue - Total Expenses

• Net income = Total Revenue / Total Expenses

• Net income = Total Revenue x Total Expenses

• Net income = Total Revenue + Total Expenses

Tags

CCSS.5.OA.A.1

CCSS.5.OA.A.2