Test your basic knowledge |

Financial Statements

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

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. Current assets/current liabilites - measure short term liquidity and the ability to pay current liabilities as they come due






2. Shares are bought and sold on stock exchanges such as the New york stock exchange






3. Revenues are recorded in the period earned - not necessarily in the period that the company collects the money






4. When a company sells stock to the public for the first time as a publicly traded corporation






5. Rules that management must follow when preparing financial statements available to investors






6. Refer to revenues from the sale of merchandise






7. Monies to be recieved by the company from customers






8. Due after 12 months






9. Arise from the sale of long-lived assets or investments






10. Recorded when a company closes down or sells part of its business






11. Stock bought back from investors not recorded as an asset because it is impossible for a company to own itself






12. Standardizes each item as based on a base year and reports data for subsequent years as a multiple of the standard






13. All assets not listed as current






14. Idea that accountants usually record transactions when they occur - not necessarily when cash is recieved or paid






15. Amounts that the corporation must pay to suppliers in the future






16. Total assets/Stockholders equity - Explains the difference between return on assets and return on equity. A high debt ratio and the high financial risk can boost profits






17. 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






18. Extra value that is recorded when buying another company






19. Market price per share/EPS - to measure how expensive a company's stock is compared to EPS






20. legislative authority to set the reporting rules for accounting info of publicly held corporations






21. A company's ability to pay liabilities as they come due in the next year






22. Indicate that returns or discounts were subtracted from total sales






23. Retained earnings + Net Income - (Dividends)






24. Net Income/ total assets reveals how efficiently assets are used to generate profit






25. States that companies should record assets and services at their acquisition cost - the amount paid for them - because this is the most reliable information






26. Proportional increases in the number of shares outstanding






27. Companies divide net income by the actual average number of common shares outstanding






28. Smaller proportional increases in the number of shares outstanding






29. Establish auditing standards and conduct inspections of the public accounting firm that perform audits






30. Assets- Liabilitie+ Equity OR Assets Liabilities- assets






31. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors






32. Entities owning shares of stock are the owners of the corporation






33. Largest expense item which reports the wholesale costs of inventory sold during the accounting period






34. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue






35. Relate to a company's main business: selling products or services to earn net income






36. Recorded in stockholders equity 1. unrealized gains/losses on certain securities 2. Foreign currency translation adjustments 3. Certain gains/losses on pension plans






37. Merchandise held for sale to customers






38. Records transactions when cash is recieved or paid






39. The total number of shares actually held by investors at a given time - =Shares issued-treasury shares






40. Highly unusual transactions that are considered unusual in nature and infrequent in occurence






41. Cost of bringing in revenues






42. Licensed by the state/conduct audits






43. Net income earned by the company since its incorporation and not yet distributed as dividends






44. Firm's ability to satisfy short term debt






45. Total amount of depreciation expensed since the assets' date of purchase






46. Contracts that give their holders the right to buy or sell shares of stock at a certain market price






47. Portion of assets the owners are free and clear of any liabilities

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48. Net Income/Sales Revenue measures the profitability of each dollar of revenue






49. Includes all costs of generating sales besides cost of sales






50. Expresses each balance sheet item as a percentage of total assets