FP2 Unit 3 Test Review

Which department maintains records of all business expenses?

• accounting

• communication

• marketing

• production

Sweet Suzie’s Bakery had yearly sales equal to $85,000 and expenses equal to $122,000. Using these numbers, her accountant determined that the bakery had a net:

• loss of $37,000.

• loss of $207,000.

• income of $37,000.

• income of $207,000.

By subtracting total expenses from the gross margin, a business can determine its:

• sales.

• total liability.

• owner’s income.

• net income/loss.

What is a common criticism of annual reports and letters to shareholders?

• They contain too much financial information.

• They are typically vague and full of jargon.

• They are too short.

• They are too long.

Which is excluded from the expense section of an income statement?

• interest

• revenues

• supplies

• utilities

When Jack examines the balance sheet of a company, he sees a “picture” of

• A. operating standards

• B. accounting schedules

• C. accounting information

The company's: A. accounting method. B. financial situation. C. income statement. D. pre-tax profit.

• accounting method

• financial situation

• income statement

• pre-tax profit

The "Management Discussion and Analysis" section of the annual report: A. provides a ten-year summary of financial figures. B. reviews the results of company operations.

• provides a ten-year summary of financial figures.

• reviews the results of company operations.

Which of the following is true about a company's annual report?

• provides a summary of financial data.

• contains the company's mission statement.

• explains what the company sells.

• includes a letter to shareholders.

To balance the balance sheet, assets must equal:

• income

• liabilities

• equity plus income

• liabilities plus equity