WorksheetsQ4 Finals TLE08 Genetal Quiz
Total questions: 30
Worksheet time: 10mins
What is the primary purpose of the balance sheet?
To summarize income and expenses
To show how profitable the firm has been
To show the financial condition of a business at a specific time
To display cash inflows and outflows
Which equation represents the fundamental structure of the balance sheet?
Assets = Liabilities
Assets = Liabilities + Owner's Equity
Owner's Equity = Liabilities - Assets
Liabilities = Owner's Equity + Assets
Which of the following is NOT a category of assets?
Cash
Liabilities
Accounts receivables
Inventory
What are liabilities?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
The residual claim of the owners on the remaining assets
The physical assets of the business
What is owner's equity?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
The residual claim of the owners on the remaining assets
The physical assets of the business
Which financial statement summarizes income and expenses?
Balance Sheet
Statement of Income
Statement of Cash Flows
Notes to Financial Statements
What is the purpose of the statement of income?
To show the financial condition of a business at a specific time
To summarize income and expenses
To show the movement of cash
To provide additional information about financial statements
What are revenues?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
Transactions that represent the inflow of assets
Transactions involving the outflow of assets
What are expenses?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
Transactions that represent the inflow of assets
Transactions involving the outflow of assets
Which financial statement shows the movement of cash?
Balance Sheet
Statement of Income
Statement of Cash Flows
Notes to Financial Statements
What is the purpose of the statement of cash flows?
To show the financial condition of a business at a specific time
To summarize income and expenses
To show the movement of cash
To provide additional information about financial statements
What is included in the notes to financial statements?
Summarized income and expenses
Additional information clarifying items in the financial statements
Movement of cash
Details of assets and liabilities
What is working capital?
The difference between current assets and current liabilities
The total assets of a business
The total liabilities of a business
The net income of a business
What are the usual sources of working capital?
Expenses
Assets
Liabilities
Net income, long-term notes payable, sale of property, short-term borrowings
What are the advantages of having sufficient working capital?
Decreased efficiency
Inability to meet cash demands
Ability to maintain credit standing and prompt payments
Increased risk of bankruptcy
What are the disadvantages of having excess working capital?
Decreased risk of bankruptcy
Inability to purchase necessary materials and equipment
Improved standing with banks
Increased efficiency in operations
What is the working capital ratio?
The ratio of current assets to total assets
The ratio of current liabilities to total liabilities
The ratio of current assets to current liabilities
The ratio of total assets to total liabilities
How is the working capital ratio computed?
By subtracting current liabilities from total assets
By subtracting current assets from total liabilities
By dividing current assets by current liabilities
By dividing current liabilities by current assets
What does a working capital ratio greater than 1 indicate?
The company has sufficient assets to pay its liabilities
The company has insufficient assets to pay its liabilities
The company is bankrupt
The company has excessive liabilities
Which financial statement reflects the assets, liabilities, and net worth of a business at a specific date?
Statement of Income
Statement of Cash Flows
Balance Sheet
Statement of Changes in Equity
What represents the residual claim of the owners on the remaining assets of a business?
Liabilities
Expenses
Owner's Equity
Revenues
Which of the following is NOT a type of asset?
Cash
Inventory
Liabilities
Accounts receivables
What are liabilities in accounting?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
The residual claim of the owners on the remaining assets
The physical assets of the business
What is the purpose of the statement of income?
To show the financial condition of a business at a specific time
To summarize income and expenses
To show the movement of cash
To provide additional information about financial statements
What are revenues in accounting?
Economic resources that provide potential future for the business
Obligations that the business must remit to other parties
Transactions that represent the inflow of assets
Transactions involving the outflow of assets
What is the main function of the statement of cash flows?
To show the firm's assets and liabilities
To summarize income and expenses
To show the movement of cash in different activities
To provide additional information about financial statements
What is the purpose of notes to financial statements?
To summarize income and expenses
To show the movement of cash
To provide additional information about financial statements
To detail assets and liabilities
What is working capital?
Total assets minus total liabilities
The difference between current assets and current liabilities
The total liabilities of a business
The net income of a business
What are the advantages of having sufficient working capital?
Increased risk of bankruptcy
Ability to maintain credit standing and prompt payments
Decreased efficiency in operations
Inability to meet cash demands
What does a working capital ratio greater than 1 indicate?
The company has insufficient assets to pay its liabilities
The company is bankrupt
The company has excessive liabilities
The company has sufficient assets to pay its liabilities
