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Test your basic knowledge |
Financial Statements
Start Test
Study First
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. Items of value such as inventory and equipment are financed with liabilities(debt) or stockholders' equity(owners' shares
Noncurrent liabilities
Net Income
Asset
Inventories
2. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Gross Profit Margin
Horizontal common size statement
Financing activities
CPAS
3. Merchandise held for sale to customers
Inventories
Net Income
Discontinued Operations
Solvency
4. Firm's ability to satisfy long term debt
Stockholders
Noncurrent liabilities
Solvency ratios
Productivity
5. 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
Basic earnings per share
Market value per share
Stockholders
Statement of Stockholders equity
6. Recorded when a company closes down or sells part of its business
Discontinued Operations
Gross Profit
Vertical common size income statement
Horizontal common size statement
7. Largest expense item which reports the wholesale costs of inventory sold during the accounting period
Revenues
Cost of Goods Sold
Horizontal common size statement
Liquidity
8. Portion of assets the owners are free and clear of any liabilities
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9. This is what it costs to produce a product or provide a service
Extraordinary items
Contributed Capital
Creditor
Cost of Goods Sold(COGS)
10. Equals the difference between revenues and cost of sales
Gross Profit
Revenues
Preferred stock
Par value
11. Net Income-Preferred Dividends/Common Stockholders equity - To analyze stock performance
Current liabilites
Return on Common Equity
Example of Current Asset
Return on Sales
12. Relate to how a company finances its assets with debt or stockholders' equity
Expenses
Financing activities
Sales
Contributed Capital
13. Costs incurred to produce revenues
Preferred stock
Common size income statement
Expenses
Contributed Capital
14. Amounts to be recieved in the future from customers
Nonrecurring items
Operating activities
Accounts recievable
Initial Public Offering (IPO)
15. Net income earned by the company since its incorporation and not yet distributed as dividends
Accounts recievable
Retained Earnings
Common size income statement
Cost of Goods Sold(COGS)
16. Refer to revenues from the sale of merchandise
Debtor
Sales
Vertical common size balance sheet
Operating Expenses
17. Expresses each income statement item as a percentage of sales
Vertical common size income statement
Net Sales
Intangible assets
Liquidity ratios
18. Monies to be recieved by the company from customers
Recievables
Solvency
Audits
Contributed Capital
19. Standardizes each item as based on a base year and reports data for subsequent years as a multiple of the standard
Cash and Cash equivalents
Financing activities
Horizontal common size statement
Discontinued Operations
20. Extra value that is recorded when buying another company
Goodwill
PCAOB
Depreciation Expense
Net Income
21. Defines ethical behavior code of professional conduct
Common size income statement
AICPAs
Creditor
Net Sales
22. Current amount/base year amount x 100 measures the percentage of change from the base year and indicates growth trends for a company
FASB
Current assets
Investing activities
Trend index
23. Records transactions when cash is recieved or paid
Stockholders' Equity
Revenue Recognition Principle
FASB
Cash- Basis Accounting
24. Licensed by the state/conduct audits
Debtor
CPAS
Accounts Payable
Accumulated Depreciation
25. Amounts paid by stockholders to purchase common stock and preferred stock
Statement of cash flows
Contributed Capital
Publicly traded
Investing activities
26. Accountants deem unusual and infrequent - may appear in the bottom section of the income statement
Common size income statement
Preferred stock
Nonrecurring items
Expenses
27. Net Income/ total assets reveals how efficiently assets are used to generate profit
Cash- Basis Accounting
Operating Income
Treasury stock
Return on Asset
28. Shares are bought and sold on stock exchanges such as the New york stock exchange
Recievables
Publicly traded
Extraordinary items
Par value
29. Borrowing corporation records bonds payable
Financing activities
Gains and Losses
Dividend rate
Debtor
30. Carries a dividend rate which must be paid to preferred stockholders before any dividends can be paid to common stockholders
Cost of Goods Sold
Inventories
Solvency ratios
Preferred stock
31. Amounts recieved from customers for products sold or services provided
Cost of Goods Sold
Common size income statement
Operating activities
Revenues
32. Contracts that give their holders the right to buy or sell shares of stock at a certain market price
Stock options
Statement of cash flows
Operating Expenses
Current liabilites
33. Compares all amounts within one year to revenue of that same year
Stockholders' Equity
Common size income statement
Cost of Goods Sold
Current liabilites
34. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Publicly traded
Accounts Payable
Extraordinary items
Contributed Capital
35. Attest to whether a company's financial statements comply with the GAAP rules
Return on Equity
Audits
GAAP
Statement of Stockholders equity
36. Actual currency - bank accounts - and investments that can be liquidated immediately
Expenses
Cash and Cash equivalents
Return on Equity
Retained Earnings
37. Reports cash inflows + cash outflows during an accounting period
Statement of cash flows
Expenses
Dividend rate
Stockholders
38. Idea that accountants usually record transactions when they occur - not necessarily when cash is recieved or paid
Accrual Accounting
Contributed Capital
FASB
Preferred stock
39. Expected to be converted into cash - sold - or consumed within the next 12 months
Cash- Basis Accounting
Accumulated other comprehensive income
Current assets
Extraordinary items
40. Net Income/Sales Revenue measures the profitability of each dollar of revenue
Return on Sales
Expenses
Creditor
Operating activities
41. States that companies should record assets and services at their acquisition cost - the amount paid for them - because this is the most reliable information
Net Income
Solvency
Accounting Equation
Historical cost principle
42. Establish auditing standards and conduct inspections of the public accounting firm that perform audits
Cash- Basis Accounting
Balance Sheet
Operating Income
PCAOB
43. Are liabilities due within 12 months
Goodwill
Operating Expenses
Cost of Goods Sold(COGS)
Current liabilites
44. Entities owning shares of stock are the owners of the corporation
Sales
Publicly traded
Stockholders
Television costs
45. Cost allocated to each year of the assets life
Cost of Goods Sold(COGS)
Accounts Payable
Depreciation Expense
Goodwill
46. Reports the company's profitability during an accounting period
Revenues
Income Statement
Accumulated other comprehensive income
CPAS
47. Cost of television programs that will be aired during the next year
Preferred stock
Contributed capital (ending)
Television costs
Creditor
48. When a company sells stock to the public for the first time as a publicly traded corporation
Current ratio
Depreciation Expense
Initial Public Offering (IPO)
Creditor
49. Assets- Liabilitie+ Equity OR Assets Liabilities- assets
Preferred stock
Common size income statement
Example of Current Asset
Accounting Equation
50. Recorded in stockholders equity 1. unrealized gains/losses on certain securities 2. Foreign currency translation adjustments 3. Certain gains/losses on pension plans
Accumulated other comprehensive income
Solvency
Current assets
Publicly traded