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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. Portion of assets the owners are free and clear of any liabilities
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2. Rules that management must follow when preparing financial statements available to investors
GAAP
Recievables
Accrual Accounting
Noncurrent assets
3. 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
Operating Expenses
Vertical common size balance sheet
PCAOB
Financial Leverage
4. Includes all costs of generating sales besides cost of sales
Operating Expenses
Liquidity
Return on Asset
Inventories
5. Compares all amounts within one year to revenue of that same year
Gross Profit
Common size income statement
liabilities + stockholders' equity
Vertical common size income statement
6. Highly unusual transactions that are considered unusual in nature and infrequent in occurence
Vertical common size income statement
Solvency ratios
Extraordinary items
Asset
7. Merchandise held for sale to customers
Current liabilites
CPAS
Return on Sales
Inventories
8. Firm's ability to satisfy long term debt
Solvency ratios
Expenses
Par value
Balance Sheet
9. Measures how efficiently you can generate desired outputs from given inputs
Cash- Basis Accounting
Expenses
Productivity
Expenses
10. States that companies should record assets and services at their acquisition cost - the amount paid for them - because this is the most reliable information
Recievables
Historical cost principle
PCAOB
Dividend rate
11. Contracts that give their holders the right to buy or sell shares of stock at a certain market price
Par value
Stock options
Stock dividends
Example of Current Asset
12. Reports the company's profitability during an accounting period
Income Statement
Stockholders' Equity
PCAOB
Debt Ratio
13. Actual currency - bank accounts - and investments that can be liquidated immediately
Depreciation Expense
Accumulated Depreciation
Cash and Cash equivalents
Intangible assets
14. Equals the difference between revenues and cost of sales
Basic earnings per share
AICPAs
PCAOB
Gross Profit
15. Net Income-Preferred Dividends/Common Stockholders equity - To analyze stock performance
Return on Common Equity
Stockholders
Accumulated Depreciation
Stock options
16. Borrowing corporation records bonds payable
PCAOB
Noncurrent liabilities
Liquidity
Debtor
17. Total amount of depreciation expensed since the assets' date of purchase
Expenses
Return on Equity
Inventories
Accumulated Depreciation
18. A legal value assigned to each share of stock
AICPAs
Par value
Return on Equity
Common size income statement
19. Records transactions when cash is recieved or paid
Treasury stock
Cash- Basis Accounting
Stockholders' Equity
Discontinued Operations
20. Amounts that the corporation must pay to suppliers in the future
PCAOB
Dividend rate
Net Income
Accounts Payable
21. Net Income/ Stockholders Equity - measures how effectively stockholders' equity is used to produce net income
Solvency
Gross Profit
Statement of cash flows
Return on Equity
22. A company's ability to pay liabilities as they come due in the next year
Liquidity
Accumulated Depreciation
Trend index
Current ratio
23. Entities owning shares of stock are the owners of the corporation
Treasury stock
Stock dividends
Stockholders
Vertical common size income statement
24. Establish auditing standards and conduct inspections of the public accounting firm that perform audits
PCAOB
Treasury stock
Nonrecurring items
Financing activities
25. Idea that accountants usually record transactions when they occur - not necessarily when cash is recieved or paid
Debtor
Audits
Accrual Accounting
Noncurrent liabilities
26. Gross profit/Sales revenue - compares gross profit to revenue expressing gross profit as a percentage of net revenue
Return on Common Equity
Vertical common size income statement
Gross Profit Margin
Revenue Recognition Principle
27. Amounts recieved from customers for products sold or services provided
Accumulated other comprehensive income
Revenues
Contributed Capital
Return on Asset
28. 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
Common-size balance sheet
Statement of Stockholders equity
Accounts recievable
Asset
29. Carries a dividend rate which must be paid to preferred stockholders before any dividends can be paid to common stockholders
Preferred stock
Dividend rate
SEC
Gains and Losses
30. Firm's ability to satisfy short term debt
Television costs
Statement of Stockholders equity
Goodwill
Liquidity ratios
31. Stock bought back from investors not recorded as an asset because it is impossible for a company to own itself
Dividend rate
Asset Turnover
Treasury stock
Debtor
32. Cost of bringing in revenues
Expenses
Current assets
Goodwill
Debtor
33. Due after 12 months
Noncurrent liabilities
Stockholders' Equity
Operating Expenses
AICPAs
34. Relate to how a company finances its assets with debt or stockholders' equity
CPAS
Inventories
Historical cost principle
Financing activities
35. Licensed by the state/conduct audits
GAAP
CPAS
Audits
Investing activities
36. Standardizes each item as based on a base year and reports data for subsequent years as a multiple of the standard
Horizontal common size statement
Gross Profit
Sales
Times Interest Earned Ration
37. Market price per share/EPS - to measure how expensive a company's stock is compared to EPS
Investing activities
Treasury stock
Horizontal common size statement
Price earnings ratio
38. A company's ability to pay liabilities for many years into the future
Example of Current Asset
Current liabilites
Solvency
AICPAs
39. Expresses each balance sheet item as a percentage of total assets
Liquidity
Stock splits
Vertical common size balance sheet
Gains and Losses
40. Compares all amounts within on year to total assets of that same year
Operating activities
Statement of cash flows
Common-size balance sheet
Stock splits
41. Monies to be recieved by the company from customers
Operating Income
Recievables
liabilities + stockholders' equity
Publicly traded
42. Reports cash inflows + cash outflows during an accounting period
Statement of cash flows
Par value
Contributed capital (ending)
SEC
43. Contributed capital - beginning + issuance of shares - (Repurchase to retire shares)
Accumulated other comprehensive income
CPAS
Contributed capital (ending)
Creditor
44. Cash - Accounts Recievable - Inventory
Example of Current Asset
Basic earnings per share
Vertical common size income statement
Stockholders' Equity
45. Defines ethical behavior code of professional conduct
Revenue Recognition Principle
SEC
AICPAs
Financing activities
46. Indicate that returns or discounts were subtracted from total sales
Noncurrent assets
Times Interest Earned Ration
Trend index
Net Sales
47. legislative authority to set the reporting rules for accounting info of publicly held corporations
Accumulated other comprehensive income
Nonrecurring items
SEC
Asset Turnover
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
Noncurrent assets
Creditor
Dividend rate
Gross Profit Margin
49. Net Income/ total assets reveals how efficiently assets are used to generate profit
Cash- Basis Accounting
Return on Asset
Stock options
Liquidity
50. Net Income-Preferred dividends/Average number of common shares outstanding - Amount of net income earned by each individual share of stock held by investors
Return on Sales
Cost of Goods Sold
Earnings per share
Asset