Statement of Profit or Loss + Statement of Financial Position

What is the main purpose of a Statement of Profit or Loss?

• To show the financial position of a company

• To summarize the revenues and expenses over a period

• To record cash inflows and outflows

Which of the following items is typically found in a Statement of Profit or Loss?

• Assets

• Liabilities

• Revenues

In a Statement of Profit or Loss, what is subtracted from revenues to determine gross profit?

• Operating expenses

• Cost of goods sold

• Interest expenses

What is the primary purpose of a Statement of Financial Position?

• To display the financial performance over a period

• To list all the cash inflows and outflows

• To show the company's assets, liabilities, and equity at a specific point in time

Which of the following is considered a current asset?

• Buildings

• Inventory

• Long-term investments

How is net profit calculated in the Statement of Profit or Loss?

• Revenues minus liabilities

• Gross profit minus operating expenses

• Assets minus liabilities

Which section of the Statement of Financial Position lists items such as loans and accounts payable?

• Assets

• Liabilities

• Equity

What does equity represent in the Statement of Financial Position?

• The company's liabilities

• The owner's residual interest in the company

• The company's total revenue

Which of the following would be classified as a liability in the Statement of Financial Position?

• Accounts Receivable

• Retained Earnings

• Accounts Payable

Which financial statement would you use to determine the liquidity of a company?

• Statement of Profit or Loss

• Statement of Financial Position

• Cash Flow Statement