Financial Concepts Quiz

The Statement of Profit and Loss is also called the—--------------

• Balance Sheet

• Income Statement

• Statement of Cash Flows

• Statement of Financial Position

Which of the following is not a type of cash flows shown in the Cash Flow Statement?

• Operating cash flow

• Investing cash flow

• Accounting cash flow

• Financing cash flow

Which of the following is not a current asset?

• Cash

• Accounts receivable

• Inventory

• Property, plant, and equipment

What are the effects on the balance sheet when a company borrows a two-year bank loan of Rs. 1,000?

• Rs. 1,000 credit in current liabilities; Rs. 1,000 debit in current assets

• Rs. 1,000 credit in current liabilities; Rs. 1,000 debit in non-current assets

• Rs. 1,000 credit in non-current liabilities; Rs. 1,000 debit in current assets

• Rs. 1,000 credit in non-current liabilities; Rs. 1,000 debit in non-current assets

What happens to the balance sheet when a company makes sales of Rs. 500, of which Rs. 300 is paid in cash and Rs. 200 is sold on credit?

• Rs. 300 debit in cash; Rs. 200 debit in accounts receivable; Rs. 500 credit in retained earnings

• Rs. 300 credit in cash; Rs. 200 credit in accounts receivable; Rs. 500 debit in retained earnings

• Rs. 300 debit in cash; Rs. 200 debit in accounts payable; Rs. 500 credit in retained earnings

• Rs. 300 credit in cash; Rs. 200 credit in accounts payable; Rs. 500 debit in retained earnings

What happens to the balance sheet when a company pays salaries of Rs. 5,000?

• Rs. 5,000 credit in cash; Rs. 5,000 debit in accounts payable

• Rs. 5,000 credit in cash; Rs. 5,000 debit in retained earnings

• Rs. 5,000 debit in cash; Rs. 5,000 credit in retained earnings

• Rs. 5,000 credit in cash; Rs. 5,000 debit in accounts receivable

Which of the following is the correct formula to calculate operating income?

• Operating income = Revenue - Direct operating cost

• Operating income = Revenue - Indirect operating cost

• Operating income = Gross profit - Direct operating cost

• Operating income = Gross profit - Indirect operating cost

Which of the following is true about the accrual concept?

• It requires companies to recognize revenues and costs as the business receives or pays the actual cash for them

• It requires companies to recognize revenues and costs as the business incurs them

• The cash flow statement records transactions when the business incurs them

• Profits on the income statement equal the closing cash flow on the cash flow statement

Which of the following is the correct formula for calculating retained earnings?

• Earnings Before Interest & Taxes - Dividends

• Earnings Before Taxes - Dividends

• Net Income - Dividends

• Operating Income - Dividends

Accounting entries involve a minimum of how many accounts?

• One

• Two

• Three

• Four