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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. Establish auditing standards and conduct inspections of the public accounting firm that perform audits
PCAOB
Creditor
Cost of Goods Sold
Vertical common size income statement
2. Expected to be converted into cash - sold - or consumed within the next 12 months
Noncurrent liabilities
Net Income
Current assets
Solvency ratios
3. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Current assets
Common size income statement
Investing activities
Gross Profit Margin
4. All assets not listed as current
Debtor
Treasury stock
Asset Turnover
Noncurrent assets
5. Items of value such as inventory and equipment are financed with liabilities(debt) or stockholders' equity(owners' shares
Gross Profit Margin
Operating Income
Asset
Historical cost principle
6. Expresses each income statement item as a percentage of sales
Vertical common size income statement
Statement of Stockholders equity
Par value
Liquidity ratios
7. Total amount of depreciation expensed since the assets' date of purchase
Common-size balance sheet
Example of Current Asset
Solvency
Accumulated Depreciation
8. Borrowing corporation records bonds payable
Sales
Initial Public Offering (IPO)
Current assets
Debtor
9. States that companies should record assets and services at their acquisition cost - the amount paid for them - because this is the most reliable information
Retained earnings(ending)
Accumulated other comprehensive income
Historical cost principle
Operating Expenses
10. Net Income/Sales Revenue measures the profitability of each dollar of revenue
Dividend rate
Financing activities
Horizontal common size statement
Return on Sales
11. Defines ethical behavior code of professional conduct
Net Sales
AICPAs
Debt Ratio
Cost of Goods Sold(COGS)
12. Amounts paid by stockholders to purchase common stock and preferred stock
Productivity
Audits
Net Sales
Contributed Capital
13. Are liabilities due within 12 months
Statement of cash flows
Current liabilites
Balance Sheet
Nonrecurring items
14. Licensed by the state/conduct audits
CPAS
Current ratio
Accounts recievable
Stock splits
15. Amounts that the corporation must pay to suppliers in the future
Debtor
Stock splits
Accounts Payable
Retained Earnings
16. Sales revenue/ total assets measures how efficiently the company uses assets to generate revenue
Asset Turnover
Historical cost principle
Liquidity ratios
Basic earnings per share
17. Rules that management must follow when preparing financial statements available to investors
Depreciation Expense
Par value
GAAP
Asset
18. 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
SEC
Shares Outstanding
Publicly traded
19. Attest to whether a company's financial statements comply with the GAAP rules
Television costs
Accrual Accounting
SEC
Audits
20. The total number of shares actually held by investors at a given time - =Shares issued-treasury shares
Shares Outstanding
Statement of Stockholders equity
Nonrecurring items
Trend index
21. When a company sells stock to the public for the first time as a publicly traded corporation
Television costs
Sales
Solvency ratios
Initial Public Offering (IPO)
22. Market price per share/EPS - to measure how expensive a company's stock is compared to EPS
Accounts recievable
Price earnings ratio
Depreciation Expense
Financial Leverage
23. Firm's ability to satisfy long term debt
Contributed Capital
Television costs
Earnings per share
Solvency ratios
24. Entities owning shares of stock are the owners of the corporation
Audits
Stockholders
Accounts Payable
Goodwill
25. Contracts that give their holders the right to buy or sell shares of stock at a certain market price
Creditor
Stock options
AICPAs
Market value per share
26. Provides a snapshot of a company's financial position as of a certain date
Expenses
Goodwill
Asset
Balance Sheet
27. Compares all amounts within on year to total assets of that same year
Initial Public Offering (IPO)
Common-size balance sheet
Creditor
Stock dividends
28. Indicate that returns or discounts were subtracted from total sales
Inventories
Net Sales
Audits
Current assets
29. Amounts to be recieved in the future from customers
Accounts recievable
Historical cost principle
Sales
Current liabilites
30. Measures how efficiently you can generate desired outputs from given inputs
Productivity
Debtor
Contributed capital (ending)
GAAP
31. Arise from the sale of long-lived assets or investments
Gains and Losses
Historical cost principle
Accounting Equation
Financial Leverage
32. Relate to the need for investing in property - plant - and equipment or expanding by making investments in other companies
Accounts Payable
Operating activities
Trend index
Investing activities
33. A legal value assigned to each share of stock
Par value
Treasury stock
Example of Current Asset
Expenses
34. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors
Stock dividends
Liquidity
Example of Current Asset
Earnings per share
35. Entity loaning the money records a bond recievable
Example of Current Asset
Stock dividends
Earnings per share
Creditor
36. Costs incurred to produce revenues
Noncurrent liabilities
Dividend rate
Discontinued Operations
Expenses
37. This is what it costs to produce a product or provide a service
Vertical common size income statement
Cost of Goods Sold(COGS)
Expenses
Investing activities
38. Assets- Liabilitie+ Equity OR Assets Liabilities- assets
Gross Profit
Expenses
Accounting Equation
Earnings per share
39. Current assets/current liabilites - measure short term liquidity and the ability to pay current liabilities as they come due
Current ratio
Net Sales
Accounts Payable
Extraordinary items
40. Standardizes each item as based on a base year and reports data for subsequent years as a multiple of the standard
Return on Asset
Horizontal common size statement
Current liabilites
Debt Ratio
41. Retained earnings + Net Income - (Dividends)
Retained earnings(ending)
Extraordinary items
Audits
Stock dividends
42. Proportional increases in the number of shares outstanding
Productivity
Stock splits
Operating activities
Operating Expenses
43. Smaller proportional increases in the number of shares outstanding
Stock dividends
Return on Sales
Expenses
Goodwill
44. Reports cash inflows + cash outflows during an accounting period
Financial Leverage
Retained Earnings
Statement of cash flows
Gains and Losses
45. A company's ability to pay liabilities for many years into the future
Solvency
Return on Equity
Vertical common size income statement
Accounts recievable
46. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Gross Profit
Extraordinary items
Treasury stock
Return on Common Equity
47. Due after 12 months
Earnings per share
Noncurrent liabilities
Gross Profit
Asset
48. Largest expense item which reports the wholesale costs of inventory sold during the accounting period
Cost of Goods Sold
Net Income
Noncurrent liabilities
Current liabilites
49. Firm's ability to satisfy short term debt
Debt Ratio
Accounts recievable
Common size income statement
Liquidity ratios
50. Shares are bought and sold on stock exchanges such as the New york stock exchange
Cash- Basis Accounting
Vertical common size income statement
Accumulated Depreciation
Publicly traded
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