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Understanding Financial Statements

Authored by Bindu Nair

Other

10th Grade

Used 1+ times

Understanding Financial Statements
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15 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the impact of adjustments on net income?

Adjustments only increase net income.

Adjustments can either increase or decrease net income depending on the nature of the adjustments made.

Adjustments have no effect on net income.

Adjustments can only decrease net income.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do adjustments affect the balance sheet?

Adjustments are irrelevant to financial statements.

Adjustments only affect cash flow statements.

Adjustments only change revenue figures.

Adjustments modify asset, liability, and equity values on the balance sheet.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the difference between accrual and cash basis accounting?

Accrual basis accounting records transactions when they occur, while cash basis accounting records transactions when cash is exchanged.

Accrual basis accounting focuses on cash flow, while cash basis accounting focuses on profit margins.

Accrual basis accounting records transactions only at year-end, while cash basis accounting records transactions at the beginning of the year.

Accrual basis accounting is used by individuals, while cash basis accounting is used by corporations.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does accrual accounting recognize revenue?

Revenue is recognized at the end of the fiscal year.

Revenue is recognized when earned, not when cash is received.

Revenue is recognized when a customer places an order.

Revenue is recognized when cash is received.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is an example of an adjustment in financial statements?

Adjusting inventory valuation due to overstatement.

Reclassifying long-term debt as current liabilities.

Recording depreciation on a non-existent asset.

Changing the accounting period for revenue recognition.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does cash basis accounting recognize expenses?

Cash basis accounting recognizes expenses when cash is paid.

Expenses are recognized at the end of the accounting period.

Expenses are recognized when they are incurred.

Expenses are recognized when the invoice is received.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the effects of not making necessary adjustments?

Increased collaboration and teamwork

Negative outcomes such as decreased efficiency, increased errors, and missed opportunities.

Enhanced decision-making capabilities

Improved efficiency and productivity

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