accounting financial statements

1. What is the primary purpose of a balance sheet?

• To show a company’s revenue and expenses

• To present the financial position of a company at a specific point in time

  
  

• To summarize cash inflows and outflows

• To display changes in shareholders' equity

Which of the following is NOT a component of equity on the balance sheet?

• Common stock

• Retained earnings

• Revenue

• Additional paid-in capital

Which accounting equation does the balance sheet adhere to?

• Assets = Liabilities + Equity

• Revenue - Expenses = Net Income

• Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

• Cash Inflows - Cash Outflows = Net Cash Flow

The income statement shows a company's performance over:

• A single day

• A month

• A fiscal period (e.g., quarter or year)

• A specific point in time

Revenue is typically recognized when:

• . Payment is received from customers

• Services are performed or goods are delivered

• A sales order is placed

• At the end of the fiscal year

What does the "operating income" line item represent on the income statement? 

• Total revenue before expenses

• Profit before taxes and interest

• Profit from core business operations

• Cash inflow from operations

Which of the following is NOT one of the three sections of the cash flow statement?

• Operating activities

• Investing activities

• Financing activities

• Equity activities

An example of an investing activity in the cash flow statement is:

• Paying employee wages

• Purchasing equipment

• Issuing stock

• Repaying loans

Which of the following is a cash outflow for financing activities?

• Paying dividends

• Purchasing equipment

• Receiving interest income

• Collecting receivables

What does a positive cash flow from operating activities indicate? 

• The company is profitable

• The company has excess cash reserves

• The company generates enough cash from its operations

• The company borrowed funds