WorksheetsFinancial Statement & Analysis Ch. 1, 3 &4
Total questions: 20
Worksheet time: 20mins
What is the primary purpose of a balance sheet?
To show the company's revenue and expenses
To display the financial position of a company at a specific point in time
To record the company's transactions over a period
To outline the company's future financial plans
What equation best represents the accounting equation?
Assets + Liabilities = Stockholders’ Equity
Assets - Liabilities = Stockholders’ Equity
Assets = Liabilities + Stockholders’ Equity
Assets + Stockholders’ Equity = Liabilities
What is the primary purpose of the income statement?
To show the financial position of a company at a specific point in time.
To summarize the company's revenues, expenses, and net income over a specific period.
To display the company's cash inflows and outflows over a specific period.
To reconcile the beginning and ending balances of the company's equity accounts.
The gross profit is calculated as:
Net Sales - Operating Expenses
Net Sales - Cost of Goods Sold
Total Revenues - Total Expenses
Operating Income - Interest Expense
What does GAAP stand for?
Generally Accepted Accounting Procedures
Generally Accepted Accounting Policies
General Accounting and Auditing Practices
Generally Accepted Accounting Principles
The multiple-step income statement separates:
Operating and non-operating activities only
Gross profit, operating income, and net income
Only extraordinary items from regular business operations
Investments from financing activities
Which of the following would typically be classified as a current liability?
Mortgage payable
Bonds payable in 10 years
Accounts payable
Deferred income taxes
The balance sheet is also known as:
The statement of financial position
The income statements
The statement of cash flows
The statement of comprehensive income
What are the three major sections of a balance sheet?
Revenue, Expenses, Net Income
Assets, Liabilities, Stockholders' Equity
Current Assets, Long-Term Assets, Depreciation
Operating Activities, Investing Activities, Financing Activities
The matching principle requires that expenses be recognized in the same period as the related revenues.
True
False
What is the main purpose of financial reporting?
To determine the taxes owed by a company
To provide financial information that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity
To calculate the salary of employees
None of the above
What does 'Current Assets' include?
Cash and other assets expected to be converted to cash within a year
Investments in long-term securities
Buildings and machinery
Goodwill
Which of the following is a characteristic of a single-step income statement?
It provides a detailed breakdown of all revenues and expenses
It separates operating revenues and expenses from non-operating ones
It totals all revenues and gains together and subtracts all expenses and losses together
It calculates gross profit separately
Which of the following is typically found on an income statement?
Current assets and liabilities
Investments by and distributions to owners
Revenues and expenses
Cash and cash equivalents
Which of the following is not users of financial statements?
Competitors
Tax authorities
Potential investors
News media
The bottom line of the income statement shows:
Gross profit
Operating income
Net income or net loss
Total comprehensive income
Which of the following is NOT a basic element of the balance sheet?
Assets
Liabilities
Stockholders' Equity
Revenue
What distinguishes 'Noncurrent Assets' from 'Current Assets'?
Noncurrent assets can be easily converted to cash within a year
Noncurrent assets include cash and cash equivalents
Noncurrent assets are expected to be held for more than one year
Noncurrent assets are primarily financial instruments
How are assets typically classified on the balance sheet?
Fixed and Variable
Current and Noncurrent
Short-term and Long-term
B and C are correct
What format might an income statement follow?
Single-step
Multiple-step
Both A and B are correct
Neither A nor B is correct
