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Financial Statements

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. Cost allocated to each year of the assets life
Depreciation Expense
Current liabilites
Treasury stock
Financing activities

2. Expected to be converted into cash - sold - or consumed within the next 12 months
Expenses
Return on Common Equity
Vertical common size income statement
Current assets

3. Amounts paid by stockholders to purchase common stock and preferred stock
Solvency ratios
Depreciation Expense
Return on Equity
Contributed Capital

4. Contributed capital - beginning + issuance of shares - (Repurchase to retire shares)
Noncurrent assets
Noncurrent liabilities
Times Interest Earned Ration
Contributed capital (ending)

5. Relate to how a company finances its assets with debt or stockholders' equity
Financing activities
Retained earnings(ending)
Accounts recievable
Stockholders' Equity

6. A legal value assigned to each share of stock
Contributed capital (ending)
Par value
Horizontal common size statement
Noncurrent liabilities

7. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors
Television costs
Cost of Goods Sold
Debtor
Earnings per share

8. Recorded in stockholders equity 1. unrealized gains/losses on certain securities 2. Foreign currency translation adjustments 3. Certain gains/losses on pension plans
Cost of Goods Sold
Accounts recievable
Accumulated other comprehensive income
Debtor

9. Subtracting operating expenses from gross profit (Income from Operations)
Vertical common size income statement
Goodwill
Creditor
Operating Income

10. Borrowing corporation records bonds payable
Noncurrent assets
Depreciation Expense
Debtor
Investing activities

11. Smaller proportional increases in the number of shares outstanding
Stock dividends
Cost of Goods Sold
Times Interest Earned Ration
Television costs

12. Net Income-Preferred Dividends/Common Stockholders equity - To analyze stock performance
Return on Common Equity
GAAP
Net Income
Operating Expenses

13. Contracts that give their holders the right to buy or sell shares of stock at a certain market price
Nonrecurring items
Accounts recievable
Shares Outstanding
Stock options

14. Compares all amounts within on year to total assets of that same year
Asset Turnover
Accumulated other comprehensive income
Financial Leverage
Common-size balance sheet

15. Revenues-Expenses
Net Income
Statement of cash flows
Accumulated Depreciation
Example of Current Asset

16. Attest to whether a company's financial statements comply with the GAAP rules
Revenue Recognition Principle
Audits
Vertical common size balance sheet
Expenses

17. Cash - Accounts Recievable - Inventory
Statement of cash flows
Cash- Basis Accounting
Goodwill
Example of Current Asset

18. Defines ethical behavior code of professional conduct
Operating Income
Return on Asset
CPAS
AICPAs

19. Are liabilities due within 12 months
Current liabilites
Depreciation Expense
Net Income
Contributed capital (ending)

20. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Operating Expenses
Extraordinary items
Return on Common Equity
Revenues

21. A company's ability to pay liabilities for many years into the future
Common-size balance sheet
Vertical common size income statement
Solvency
Accumulated other comprehensive income

22. Operating Income/Interest Expense - compares the amount of income available to make interest payments to interest payment requirements
Operating Income
Current assets
Times Interest Earned Ration
Cash and Cash equivalents

23. Cost of bringing in revenues
Expenses
Balance Sheet
Net Sales
Cost of Goods Sold(COGS)

24. Equals the difference between revenues and cost of sales
Stock options
Price earnings ratio
Gross Profit
Noncurrent liabilities

25. Amounts that the corporation must pay to suppliers in the future
Accounts Payable
Accumulated other comprehensive income
Vertical common size balance sheet
Productivity

26. Items of value such as inventory and equipment are financed with liabilities(debt) or stockholders' equity(owners' shares
Publicly traded
Common-size balance sheet
Television costs
Asset

27. Expresses each income statement item as a percentage of sales
Retained earnings(ending)
Operating Income
Accounts recievable
Vertical common size income statement

28. Sales revenue/ total assets measures how efficiently the company uses assets to generate revenue
Retained Earnings
Asset Turnover
Dividend rate
Solvency

29. Monies to be recieved by the company from customers
Return on Common Equity
Net Sales
Recievables
Net Income

30. Reports if the earnings of this accounting period are distributed as dividends or retained in the business as retained earnings. Also reports amounts paid by stockholders to purchase common stock and preferred stock
Cost of Goods Sold
Stockholders' Equity
Solvency ratios
Statement of Stockholders equity

31. Current amount/base year amount x 100 measures the percentage of change from the base year and indicates growth trends for a company
Contributed Capital
Stock dividends
Trend index
Dividend rate

32. Revenues are recorded in the period earned - not necessarily in the period that the company collects the money
Accounts Payable
Revenue Recognition Principle
Operating Expenses
Extraordinary items

33. Accountants deem unusual and infrequent - may appear in the bottom section of the income statement
Goodwill
Asset
Liquidity ratios
Nonrecurring items

34. This is what it costs to produce a product or provide a service
Accounting Equation
Statement of cash flows
Revenue Recognition Principle
Cost of Goods Sold(COGS)

35. Amounts recieved from customers for products sold or services provided
Cost of Goods Sold
Revenues
Expenses
Creditor

36. Provides a snapshot of a company's financial position as of a certain date
Financing activities
Publicly traded
Inventories
Balance Sheet

37. legislative authority to set the reporting rules for accounting info of publicly held corporations
SEC
Intangible assets
Net Income
Earnings per share

38. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Times Interest Earned Ration
Price earnings ratio
Gross Profit Margin
Accounts recievable

39. Amounts to be recieved in the future from customers
Recievables
Common-size balance sheet
Accumulated Depreciation
Accounts recievable

40. Total liabilities/ Total assets reveals the proportion of assets financed with debt and solvency
Debt Ratio
Operating activities
Television costs
Current ratio

41. Indicate that returns or discounts were subtracted from total sales
Net Income
Net Sales
Basic earnings per share
Accounts Payable

42. Merchandise held for sale to customers
Inventories
Return on Equity
Expenses
Preferred stock

43. Records transactions when cash is recieved or paid
Operating Expenses
Goodwill
Financing activities
Cash- Basis Accounting

44. Relate to a company's main business: selling products or services to earn net income
Expenses
Operating activities
Asset
Solvency ratios

45. Cost of television programs that will be aired during the next year
Television costs
Net Income
liabilities + stockholders' equity
Gains and Losses

46. Relate to the need for investing in property - plant - and equipment or expanding by making investments in other companies
Vertical common size income statement
Accumulated other comprehensive income
Investing activities
AICPAs

47. When a company sells stock to the public for the first time as a publicly traded corporation
Debt Ratio
Solvency ratios
Return on Asset
Initial Public Offering (IPO)

48. Includes all costs of generating sales besides cost of sales
Contributed capital (ending)
CPAS
Operating Expenses
Vertical common size income statement

49. Actual currency - bank accounts - and investments that can be liquidated immediately
Cash and Cash equivalents
Operating Expenses
Asset Turnover
Trend index

50. Patents - trademarks - and copyrights that have value but not any physical presence
Intangible assets
Inventories
Contributed Capital
Stockholders' Equity