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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. legislative authority to set the reporting rules for accounting info of publicly held corporations
Operating Income
SEC
Common-size balance sheet
Historical cost principle
2. Reports the company's profitability during an accounting period
Cash and Cash equivalents
Income Statement
Times Interest Earned Ration
Cost of Goods Sold
3. Amounts paid by stockholders to purchase common stock and preferred stock
Cash- Basis Accounting
Liquidity ratios
Contributed Capital
Debtor
4. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Accumulated Depreciation
Treasury stock
Noncurrent liabilities
Extraordinary items
5. Indicate that returns or discounts were subtracted from total sales
Net Sales
Net Income
Stock options
Liquidity ratios
6. Shares are bought and sold on stock exchanges such as the New york stock exchange
liabilities + stockholders' equity
Publicly traded
Common size income statement
Expenses
7. Firm's ability to satisfy short term debt
Audits
Expenses
Liquidity ratios
Retained earnings(ending)
8. Subtracting operating expenses from gross profit (Income from Operations)
Creditor
Operating Income
SEC
Contributed Capital
9. When a company sells stock to the public for the first time as a publicly traded corporation
Initial Public Offering (IPO)
Cash and Cash equivalents
Stockholders
Par value
10. Cost allocated to each year of the assets life
Depreciation Expense
Gains and Losses
liabilities + stockholders' equity
Intangible assets
11. Largest expense item which reports the wholesale costs of inventory sold during the accounting period
Cost of Goods Sold
Revenue Recognition Principle
Gains and Losses
Financing activities
12. Actual currency - bank accounts - and investments that can be liquidated immediately
Earnings per share
GAAP
Asset
Cash and Cash equivalents
13. Entity loaning the money records a bond recievable
Creditor
Net Income
CPAS
Horizontal common size statement
14. Net Income/Sales Revenue measures the profitability of each dollar of revenue
Dividend rate
Accounts Payable
Return on Sales
Par value
15. Provides a snapshot of a company's financial position as of a certain date
Discontinued Operations
Balance Sheet
Net Income
Current liabilites
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
AICPAs
Gains and Losses
FASB
Financial Leverage
17. Amounts recieved from customers for products sold or services provided
Balance Sheet
Gross Profit
Revenues
Nonrecurring items
18. A company's ability to pay liabilities for many years into the future
Solvency
FASB
Stock splits
Creditor
19. Extra value that is recorded when buying another company
Accounts Payable
Goodwill
Initial Public Offering (IPO)
Sales
20. Stock bought back from investors not recorded as an asset because it is impossible for a company to own itself
Retained Earnings
Cost of Goods Sold
Cash and Cash equivalents
Treasury stock
21. Patents - trademarks - and copyrights that have value but not any physical presence
Operating Income
Horizontal common size statement
Intangible assets
Solvency ratios
22. Cost of bringing in revenues
Stock dividends
Expenses
Dividend rate
SEC
23. Expresses each balance sheet item as a percentage of total assets
Vertical common size balance sheet
GAAP
Recievables
Earnings per share
24. Relate to the need for investing in property - plant - and equipment or expanding by making investments in other companies
Sales
Investing activities
Noncurrent liabilities
Accrual Accounting
25. Expresses each income statement item as a percentage of sales
Stockholders
Return on Equity
Vertical common size income statement
Return on Asset
26. Amounts that the corporation must pay to suppliers in the future
Creditor
Return on Equity
Publicly traded
Accounts Payable
27. Revenues are recorded in the period earned - not necessarily in the period that the company collects the money
Cost of Goods Sold
Expenses
Revenue Recognition Principle
Market value per share
28. Items of value such as inventory and equipment are financed with liabilities(debt) or stockholders' equity(owners' shares
Asset
Return on Sales
Example of Current Asset
Net Income
29. Most accounting reporting standards that formulate GAAP are set by the 7 full time voting members
Statement of cash flows
Retained Earnings
CPAS
FASB
30. Due after 12 months
Return on Asset
Return on Common Equity
Stock options
Noncurrent liabilities
31. Total amount of depreciation expensed since the assets' date of purchase
Vertical common size balance sheet
GAAP
Retained earnings(ending)
Accumulated Depreciation
32. Measures how efficiently you can generate desired outputs from given inputs
Productivity
Operating activities
Statement of Stockholders equity
Stockholders
33. Idea that accountants usually record transactions when they occur - not necessarily when cash is recieved or paid
Stock splits
Operating Income
Accrual Accounting
Noncurrent assets
34. Cash - Accounts Recievable - Inventory
Example of Current Asset
Solvency
AICPAs
Publicly traded
35. All assets not listed as current
Return on Equity
Noncurrent assets
Stock options
Retained earnings(ending)
36. Reports cash inflows + cash outflows during an accounting period
Return on Common Equity
Statement of cash flows
Return on Asset
Creditor
37. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors
Earnings per share
FASB
Return on Common Equity
Debt Ratio
38. Borrowing corporation records bonds payable
Recievables
Solvency ratios
Discontinued Operations
Debtor
39. Expected to be converted into cash - sold - or consumed within the next 12 months
Current assets
Contributed Capital
Investing activities
Par value
40. Operating Income/Interest Expense - compares the amount of income available to make interest payments to interest payment requirements
Gross Profit
Historical cost principle
Times Interest Earned Ration
Revenues
41. Licensed by the state/conduct audits
CPAS
Shares Outstanding
Solvency
Statement of cash flows
42. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Accounts Payable
Recievables
Revenues
Gross Profit Margin
43. Equals the difference between revenues and cost of sales
Gross Profit
Financing activities
Financial Leverage
Retained Earnings
44. Smaller proportional increases in the number of shares outstanding
Accumulated Depreciation
Example of Current Asset
Stock dividends
GAAP
45. Are liabilities due within 12 months
Current liabilites
Current ratio
Par value
SEC
46. Attest to whether a company's financial statements comply with the GAAP rules
Liquidity
Current ratio
Asset
Audits
47. Compares all amounts within on year to total assets of that same year
Income Statement
Common-size balance sheet
Return on Equity
Vertical common size income statement
48. A legal value assigned to each share of stock
Current assets
Return on Common Equity
Par value
Basic earnings per share
49. Includes all costs of generating sales besides cost of sales
PCAOB
Current liabilites
Operating Expenses
Initial Public Offering (IPO)
50. Merchandise held for sale to customers
Operating Expenses
Investing activities
Inventories
Goodwill
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