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Test your basic knowledge |
Financial Statements
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Subject
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business-skills
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. Relate to how a company finances its assets with debt or stockholders' equity
Initial Public Offering (IPO)
SEC
Current liabilites
Financing activities
2. Attest to whether a company's financial statements comply with the GAAP rules
Depreciation Expense
Audits
FASB
Gross Profit Margin
3. Cost allocated to each year of the assets life
Return on Common Equity
Current ratio
Depreciation Expense
Liquidity
4. Portion of assets the owners are free and clear of any liabilities
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5. Costs incurred to produce revenues
Stock dividends
Gross Profit
Operating activities
Expenses
6. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Gross Profit Margin
Expenses
Net Income
GAAP
7. Establish auditing standards and conduct inspections of the public accounting firm that perform audits
Asset Turnover
PCAOB
Publicly traded
Solvency
8. Monies to be recieved by the company from customers
Common-size balance sheet
Return on Equity
Recievables
Return on Common Equity
9. Relate to a company's main business: selling products or services to earn net income
Noncurrent assets
Times Interest Earned Ration
Discontinued Operations
Operating activities
10. Net Income-Preferred Dividends/Common Stockholders equity - To analyze stock performance
Current ratio
Extraordinary items
Investing activities
Return on Common Equity
11. Provides a snapshot of a company's financial position as of a certain date
Net Sales
Vertical common size balance sheet
FASB
Balance Sheet
12. Are liabilities due within 12 months
FASB
Noncurrent assets
Current liabilites
Net Income
13. Firm's ability to satisfy short term debt
Liquidity ratios
Accrual Accounting
Depreciation Expense
Goodwill
14. A company's ability to pay liabilities for many years into the future
Cash and Cash equivalents
SEC
Cost of Goods Sold(COGS)
Solvency
15. Defines ethical behavior code of professional conduct
FASB
Extraordinary items
Net Sales
AICPAs
16. Proportional increases in the number of shares outstanding
Initial Public Offering (IPO)
Treasury stock
Stock splits
Extraordinary items
17. Amounts recieved from customers for products sold or services provided
Goodwill
Accounting Equation
Current liabilites
Revenues
18. Expresses each income statement item as a percentage of sales
Example of Current Asset
Operating Expenses
Return on Sales
Vertical common size income statement
19. A company's ability to pay liabilities as they come due in the next year
Liquidity
Revenues
Accounting Equation
Expenses
20. Assets- Liabilitie+ Equity OR Assets Liabilities- assets
Accounting Equation
Market value per share
Asset
Retained earnings(ending)
21. Largest expense item which reports the wholesale costs of inventory sold during the accounting period
Historical cost principle
Cost of Goods Sold
liabilities + stockholders' equity
Contributed capital (ending)
22. Expected to be converted into cash - sold - or consumed within the next 12 months
Shares Outstanding
Current assets
Cost of Goods Sold
Stockholders' Equity
23. Sales revenue/ total assets measures how efficiently the company uses assets to generate revenue
Return on Sales
Asset Turnover
Preferred stock
Balance Sheet
24. States that companies should record assets and services at their acquisition cost - the amount paid for them - because this is the most reliable information
Investing activities
Accounts Payable
Cost of Goods Sold(COGS)
Historical cost principle
25. Stock bought back from investors not recorded as an asset because it is impossible for a company to own itself
Treasury stock
Return on Sales
Net Income
Depreciation Expense
26. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Extraordinary items
Return on Asset
Basic earnings per share
Cost of Goods Sold(COGS)
27. Compares all amounts within on year to total assets of that same year
Operating Expenses
Accrual Accounting
Statement of cash flows
Common-size balance sheet
28. Rules that management must follow when preparing financial statements available to investors
Income Statement
Extraordinary items
Asset
GAAP
29. Reports cash inflows + cash outflows during an accounting period
Extraordinary items
Statement of cash flows
Accumulated Depreciation
Inventories
30. Reports the company's profitability during an accounting period
Example of Current Asset
Inventories
Nonrecurring items
Income Statement
31. Standardizes each item as based on a base year and reports data for subsequent years as a multiple of the standard
Accounting Equation
Horizontal common size statement
Market value per share
Liquidity ratios
32. Market price per share/EPS - to measure how expensive a company's stock is compared to EPS
Goodwill
AICPAs
Price earnings ratio
Gross Profit
33. Indicate that returns or discounts were subtracted from total sales
Accrual Accounting
Net Sales
PCAOB
Contributed capital (ending)
34. Contributed capital - beginning + issuance of shares - (Repurchase to retire shares)
Accounts Payable
Initial Public Offering (IPO)
Contributed capital (ending)
GAAP
35. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors
liabilities + stockholders' equity
Earnings per share
Goodwill
Preferred stock
36. Refer to revenues from the sale of merchandise
Trend index
Sales
Stock splits
Goodwill
37. Net income earned by the company since its incorporation and not yet distributed as dividends
Retained Earnings
Operating activities
Historical cost principle
Solvency
38. 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
Contributed Capital
Retained earnings(ending)
Operating Expenses
Statement of Stockholders equity
39. This is what it costs to produce a product or provide a service
SEC
Current assets
Cost of Goods Sold(COGS)
Publicly traded
40. Total amount of depreciation expensed since the assets' date of purchase
SEC
Contributed Capital
Preferred stock
Accumulated Depreciation
41. Amounts that the corporation must pay to suppliers in the future
Asset Turnover
Liquidity
Stock splits
Accounts Payable
42. A legal value assigned to each share of stock
Productivity
Par value
CPAS
Stock options
43. The total number of shares actually held by investors at a given time - =Shares issued-treasury shares
Vertical common size balance sheet
Net Income
Expenses
Shares Outstanding
44. Due after 12 months
Cash and Cash equivalents
Productivity
Noncurrent liabilities
Recievables
45. Extra value that is recorded when buying another company
Goodwill
Historical cost principle
Return on Common Equity
Horizontal common size statement
46. Compares all amounts within one year to revenue of that same year
Discontinued Operations
Return on Common Equity
Liquidity
Common size income statement
47. Accountants deem unusual and infrequent - may appear in the bottom section of the income statement
Par value
Cost of Goods Sold(COGS)
Solvency
Nonrecurring items
48. Annual common stock dividends paid/average number of common shares outstanding - amount of dividends paid annually for each share of stock held by investors
Price earnings ratio
Dividend rate
Goodwill
Trend index
49. Revenues-Expenses
Net Income
Accounts Payable
Contributed Capital
Common-size balance sheet
50. Retained earnings + Net Income - (Dividends)
Noncurrent liabilities
Retained earnings(ending)
Liquidity ratios
Sales
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