Basic Understanding of Financial Statements

Which of the following is NOT a primary financial statement?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Trial Balance

The statement that shows the financial position of a company at a specific point in time is called:

• Income Statement

• Statement of Cash Flows

• Balance Sheet

• Statement of Retained Earnings

Which component of the financial statements measures a company's profitability?

• Cash Flow Statement

• Income Statement

• Balance Sheet

• Statement of Equity

What does the equity section of the balance sheet primarily represent?

• Assets owned by the company

• The company's debts

• Owners' residual interest in the company after liabilities

• Net cash flow for the period

The Cash Flow Statement is divided into three categories. These are:

• Assets, Liabilities, and Equity

• Investing, Operating, and Financing activities

• Revenue, Expenses, and Net Income

• Current Assets, Non-Current Assets, and Liabilities

Which of the following activities would be classified as an investing activity in the cash flow statement?

• Payment of dividends

• Purchase of equipment

• Issuing shares

• Payment to suppliers

Which of the following is another name for the income statement?

• Statement of Operations

• Statement of Financial Position

• Statement of Changes in Equity

• Statement of Comprehensive Income

What is the formula to calculate Net Income?

• Revenue - Liabilities

• Total Assets - Total Liabilities

• Revenue - Expenses

• Current Assets - Current Liabilities

Which financial statement is most useful for assessing a company's liquidity?

• Balance Sheet

• Income Statement

• Statement of Equity

• Statement of Retained Earnings