Understanding Financial Statements Quiz

What is an income statement used for?

• To show the weather forecast

• To show how much money a company makes and spends

• To show the number of employees in a company

Which of the following is a component of a balance sheet?

• Weather report

• Assets

• Shopping list

What is revenue?

• The money a company spends

• The money a company earns

• The number of employees in a company

What are expenses?

• The money a company earns

• The money a company spends

• The number of products a company sells

Which of the following is an asset?

• A company's debt

• A company's building

• A company's expenses

What is a liability?

• Something a company owns

• Something a company owes

• Something a company sells

How do you calculate net profit?

• Revenue minus expenses

• Assets minus liabilities

• Revenue plus expenses

Which of the following is an example of revenue?

• Paying rent

• Selling products

• Buying office supplies

Which of the following is an example of an expense?

• Receiving a loan

• Paying for electricity

• Earning interest

What does a balance sheet show?

• The weather forecast

• A company's financial position

• A company's employee list