Financial Statements Quiz

Which of the basic financial statements is best used to answer the question, "How profitable is the business?"

• Balance sheet

• Statement of shareholder's equity

• Income statement

• Accounts receivable aging schedule

Which one of the following statements provides a snapshot at a point of time rather than flows over time?

• Income statement

• Balance sheet

• Statement of cash flows

• Sources and uses statement

Which of the following is NOT included in computing EBT (Earnings before tax)?

• Marketing expenses

• Depreciation expense

• Cost of goods sold

• Dividends

Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm's gross profit?

• $18,000,000

• $15,225,000

• $5,000,110

• $6,632,000

Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. What is the amount of the firm's profit before tax?

• $4,360,000

• $750,000

• $10,865,000

• $25,115,000

Which of the following is NOT included in operating income?

• Cost of goods sold

• Sales

• Taxes

• Operating expenses

Your firm has the following balance sheet statement items: total current liabilities of $805,000; total assets of $2,655,000; fixed assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm's net working capital?

• $25,000

• $325,000

• $770,000

• $80,000

Which of the following would NOT be included as an asset on a corporate balance sheet?

• Accounts receivable

• Ordinary shares

• Inventory

• Buildings

When a company pays a dividend on ordinary shares, it appears as

• an expense on the income statement.

• a reduction in the amount of retained earnings.

• a current liability on the balance sheet.

• dividend payments have no effect on the financial statements.

Grass Gadgets had sales of $30 million and net income of $2 million in 2008. Grass paid a dividend of $1.5 million. Assuming that their beginning balance for retained earnings was $3 million, calculate their ending balance for retained earnings.

• $2.5 million

• $3 million

• $3.5 million

• $4 million