Beginners’ Guide to Financial Statement Quiz

What is the main purpose of the "Beginners’ Guide to Financial Statement" brochure?

• To help readers gain a basic understanding of how to read financial statements

• To train readers to become accountants

• To teach advanced financial analysis

• To provide investment advice

According to the brochure, learning to read financial statements is compared to which of the following activities?

• Reading a nutrition label or a baseball box score

• Performing surgery

• Writing a novel

• Building a house

Which analogy is used in the brochure to describe learning the basics of financial statements?

• A CPR class teaching the basics of cardiac pulmonary resuscitation

• A cooking class teaching gourmet recipes

• A sports team training for a championship

• A music lesson teaching advanced piano techniques

What does a balance sheet show?

• How much money a company made and spent over a period of time

• What a company owns and what it owes at a fixed point in time

• The exchange of money between a company and the outside world

• Changes in the interests of the company’s shareholders over time

Which term describes things a company owns that have value?

• Liabilities

• Assets

• Shareholders’ equity

• Expenses

What are liabilities?

• Things a company owns that have value

• Amounts of money a company owes to others

• Money left after selling assets and paying debts

• Company profits

What is shareholders’ equity?

• Money borrowed from a bank

• Money owed to suppliers

• Money left after selling all assets and paying all liabilities

• Value of company inventory

Which of the following is an example of an asset that cannot be touched but has value?

• Trucks

• Payroll

• Trademarks

• Rent

What does the statement of shareholders’ equity show?

• The exchange of money between a company and the outside world

• Changes in the interests of the company’s shareholders over time

• What a company owns and owes at a fixed point in time

• How much money a company made and spent over a period of time

What is the basic accounting equation that a balance sheet shows?

• Assets = Liabilities + Shareholders’ Equity

• Assets = Revenue + Expenses

• Assets = Cash + Inventory

• Assets = Liabilities - Shareholders’ Equity