Understanding Financial Statements Quiz

Which of the following best describes the purpose of a statement of comprehensive income?

• To show the assets and liabilities of a business at a specific date

• To show the profit or loss of a business over a period of time

• To show the cash inflows and outflows of a business

• To show the changes in equity over a period of time

Which of the following is NOT included in the calculation of gross profit?

• Revenue

• Cost of sales

• Administrative expenses

• Opening inventory

What is the correct formula for calculating net profit?

Which of the following is classified as a current asset in the statement of financial position?

• Land and buildings

• Inventory

• Bank loan (due in 5 years)

• Share capital

• \$20,000

• \$80,000

• \$30,000

• \$50,000

Which of the following is a non-current liability?

• Trade payables

• Bank overdraft

• 5-year bank loan

• Inventory

Which equation correctly represents the accounting equation?

Which of the following would increase the equity of a business?

• Paying off a loan

• Making a net profit

• Purchasing inventory

• Paying dividends

In the statement of financial position, which of the following is an example of a current liability?

• Trade receivables

• Trade payables

• Machinery

• Retained earnings

• \$50,000

• \$70,000

• \$120,000

• \$190,000