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WorksheetsUnderstanding Balance Sheets
Total questions: 80
Worksheet time: 55mins
A Balance Sheet shows:
The financial position of a company at a specific point in time.
The income and expenses over a period of time.
The cash inflows and outflows over a period of time.
The changes in equity over a period of time.
What is included in an Income Statement?
Assets, Liabilities, and Equity
Revenue, Expenses, and Net Income
Cash Flows from Operating, Investing, and Financing Activities
Budgeted and Actual Figures
What is the purpose of analyzing Ratios in financial statements?
To assess the financial health of a company
To calculate tax liabilities
To determine employee satisfaction
To forecast weather patterns
What information does a Cash Flow Statement provide?
Financial position of a company
Cash inflows and outflows
Profit and loss details
Shareholder equity
A balance sheet tells you about:
The financial position of a company at a specific point in time
The income and expenses over a period of time
The cash flow activities of a company
The market share of a company
Fill in the blank: Liabilities + Net Worth = ________.
Assets
Revenue
Expenses
Equity
Which of the following is considered an asset?
Cash
Accounts Receivable
Furniture
All of the above
What are the two categories of liabilities?
Current liabilities and long-term liabilities
Fixed liabilities and variable liabilities
Tangible liabilities and intangible liabilities
Operating liabilities and non-operating liabilities
True or False: The balance sheet shows income or expenses over a period of time.
True
False
What is the total amount of Current Assets for Max Computer Company as of December 31, 2004?
$500,000
$750,000
$1,000,000
$1,250,000
Which of the following is considered a Non-Current Asset?
Cash
Accounts Receivable
Fixed Assets
Inventory
What is the total amount of Liabilities for Max Computer Company as of December 31, 2004?
$500,000
$750,000
$1,000,000
$1,250,000
Which accounting method records a sale when money is collected?
The Accrual Method
The Cash Method
What is the total amount of Capital or Net Worth for Max Computer Company as of December 31, 2004?
The question has a diagram associated with it. The diagram has been stored separately.
$500,000
$750,000
$1,000,000
What is another name for an Income Statement?
What does an Income Statement tell you about your business?
It shows the financial position of the business at a specific point in time.
It provides a summary of the company's revenues and expenses over a period.
It details the cash inflows and outflows of the business.
It lists the assets and liabilities of the business.
Which of the following is NOT shown by an Income Statement?
How often is an Income Statement usually developed?
What is the Gross Profit of Max Computer Company for the year ending December 31, 2004?
$360,000
$540,000
$900,000
$625,000
According to the instructions, what should you do to get a more accurate picture of your financial performance?
A) Compare numbers directly
B) Convert numbers to percentages
C) Ignore percentages
D) Only look at net profit.
What does a Cash Flow Statement show?
The financial position of a company at a specific point in time
The revenue and expenses over a period of time
The inflows and outflows of cash during a period
The changes in equity during a period
Which of the following is NOT shown by a Cash Flow Statement?
A) How much you have in Accounts Receivable
B) The maximum loan payment the business can afford
C) The need for additional working capital
D) Your weaknesses in generating cash
What is the importance of having a cash flow for a business?
It helps in tracking the financial health of the business.
It is not necessary for business operations.
It only affects large businesses.
It is only important for tax purposes.
What are some weaknesses that a Cash Flow Statement can reveal?
Inability to generate sufficient cash flow
High profitability
Strong balance sheet
Increasing revenue
It is important for new companies to cover months with negative balances because:
It helps in maintaining a positive cash flow.
It ensures the company can pay its debts.
It prevents the company from going bankrupt.
All of the above.
What is the total cash available in March?
A) 89,991
B) 91,720
C) 98,830
D) 100,940
Fill in the blank: The total cash paid out in July is ______.
83,640.
75,000.
90,000.
100,000.
What is the purpose of using ratios in business?
Fill in the blank: The formula for Accounts Receivable Turnover is Accounts Receivable divided by ________.
Net Credit Sales
Total Assets
Net Income
Gross Profit
Which of the following ratios shows how many days it takes to collect money owed to you?
What does the Leverage (or Debt to Worth) Ratio indicate?
The company's ability to pay term debts
How much money owners have invested in the business versus lenders
The percentage of net profit for every dollar of sales
What is the formula for calculating the Profit Margin on Sales?
Total Liabilities / Total Capital
Net Profit / Net Sales
Accounts Payable / Purchases
Which of the following is NOT a source to get numbers for Asset Management Ratios?
Balance Sheet
Income Statement
Cash Flow Statement
The ability to pay loans from future business' profits is called:
Liquidity
Solvency
Profitability
Debt Capacity
Expenses incurred from purchases made on credit are known as:
Cash Expenses
Credit Expenses
Accrued Expenses
Deferred Expenses
Sales made but money not collected are referred to as:
Accounts Receivable
Accounts Payable
Deferred Revenue
Accrued Expenses
What does a company own?
Assets
Liabilities
Revenue
Expenses
Financing secured by pledging assets is called:
Unsecured Loan
Secured Loan
Revolving Credit
Equity Financing
The unused portion of a line of credit is called:
Credit limit
Available credit
Credit balance
Credit utilization
A stop point or early maturity of a loan is known as?
Prepayment
Default
Amortization
Refinancing
Loans made to businesses in the form of a term loan or a line of credit are called:
Personal loans
Business loans
Mortgage loans
Student loans
An overview of a new or existing company used to obtain financing is called:
Business Plan
Financial Statement
Marketing Strategy
Operational Plan
The borrower's ability to handle a certain level of debt is called:
Creditworthiness
Debt capacity
Financial stability
Liquidity
A loan on business’ real estate is called:
Personal loan
Mortgage
Auto loan
Student loan
What is the cost to make a product, including materials, labor, and related overhead called?
Cost of Goods Sold
Manufacturing Cost
Production Expense
Total Cost
What is credit rating as determined by a credit reporting agency called?
Credit Score
Credit Limit
Credit Report
Credit Inquiry
What is a process used to approve or reject commercial loan applications called?
Underwriting
Auditing
Budgeting
Forecasting
Assets that can be converted into cash in one year are called:
Fixed Assets
Current Assets
Intangible Assets
Long-term Investments
Liabilities due within one year are called:
Long-term liabilities
Current liabilities
Contingent liabilities
Deferred liabilities
What is the term for assets that wear out and are devalued every year?
Depreciation
Appreciation
Amortization
Capitalization
Taking an advance on a line of credit is called:
A cash advance
A credit withdrawal
A loan disbursement
A credit extension
The book value of a business is called:
Market Value
Net Asset Value
Equity Value
Intrinsic Value
The price of an asset, product, or service in a current, competitive market is called:
Market Price
Retail Price
Wholesale Price
List Price
Assets including furniture, fixtures, equipment, machinery, and real estate are called:
Current Assets
Fixed Assets
Intangible Assets
Liquid Assets
What is gross sales less cost of goods sold called?
Net Income
Gross Profit
Operating Income
Net Sales
What is revenue or income from sales after returns and allowances called?
Net Sales
Gross Profit
Operating Income
Net Income
Assets held for resale are called:
Fixed assets
Current assets
Inventory
Intangible assets
Collateral that can be converted to cash quickly is called:
Fixed assets
Liquid assets
Intangible assets
Long-term investments
A short-term loan usually used to finance accounts receivable and/or inventory is called:
Term Loan
Revolving Credit
Bridge Loan
Working Capital Loan
An asset that can be turned into cash quickly, within one year, is called:
Fixed Asset
Current Asset
Intangible Asset
Long-term Investment
Expenses, loans, and payables due after one year are called:
Current liabilities
Long-term liabilities
Short-term liabilities
Contingent liabilities
What is money left after all expenses have been paid called?
Revenue
Profit
Loss
Debt
Revenue or income from sales after returns and allowances are deducted is called:
Gross Revenue
Net Sales
Operating Income
Gross Profit
Assets less liabilities is called:
Net Worth
Gross Income
Net Income
Total Revenue
Assets that take one year or more to turn into cash are called:
Current assets
Fixed assets
Long-term assets
Intangible assets
Leases which allow you to buy the item at the end of the lease are called:
Operating leases
Finance leases
Capital leases
Purchase option leases
The money owners have invested in a business is called:
Revenue
Equity
Liability
Expense
What is projecting or forecasting future income, expenses, and cash flow called?
Budgeting
Auditing
Investing
Accounting
What are profits accumulated through the company’s life and reported in the net worth or equity section of the balance sheet called?
Retained Earnings
Capital Stock
Dividends
Revenue
A loan’s maturity, stated in months or years, is called:
Term
Interest Rate
Principal
Amortization
What is analysis of financial statements and ratios to determine the financial strength over time called?
Financial Forecasting
Financial Auditing
Financial Analysis
Financial Planning
The difference between current assets and current liabilities is called:
Net Income
Working Capital
Gross Profit
Equity
What is a balance sheet?
Shows a picture of a company's financial position over a period of time, it shows expenses, revenue, and profitability. Also called a profit and loss statement.
Equity: The owner's interest in property after deduction of all liabilities.
Summary statement of the firm's financial position at a given point in time. A balance sheet shows assets and liabilities and owner's equity
A summary of sales and employee deductions as well as taxes.
An ergonomic balance of ethos and primary wants and needs.
The (a) is a snapshot of a business Asstes, Liability, and Equity at any given time.
If a company has total liabilities of $50,000 and owners equity of 30,000, what are its total assets?
$20,000
$50,000
$80,000
$30,000
Which financial statement reports the assets, liabilities, and stockholders' (owner's) equity at a specific date?
Balance Sheet
Profit and Loss Statement
Trading Account
If total liabilities are $50,000 and total equity is $100,000, what is the total assets?
$50,000
$150,000
$200,000
$250,000
A = L + OE is proven on the...
Income Statement
Balance Sheet
Cash Flow Statement
Sales Journal
The Balance Sheet must (a) balance
A balance sheet reports:
A company's cash position and assets
A company's profit, loss and expenses
a company's assets, liabilities, and shareholder equity
None of the answers are correct
