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Financial Statements
(Practice Quiz)
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reading our Financial Statements
(Explanation).
1. Which accounting method will result in financial
statements that report a more complete picture of a
corporation’s financial position and a better measure of
profitability during a recent accounting year?
Accrual Method
Cash Method
2. Which type of journal entries are made at the end of
each accounting period so that the financial statements
better reflect the accrual method of accounting?
Adjusting
Closing
Reversing
3. The generally accepted accounting principles used in
the financial statements of U.S corporations are
researched and developed by which organization?
American Accounting Association (AAA)
Financial Accounting Standards Board (FASB)
Internal Revenue Service (IRS)
4. Which financial statement will allow you to determine
the gross margin for a retailer or manufacturer?
Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity
5. Does the heading of a balance sheet indicate a period
of time or a point in time?
Period Of Time
Point In Time
6. A corporation's net income will cause a change in which
component of stockholders' equity?
Accumulated Other Comprehensive Income
Paid-in Capital
Retained Earnings
7. Which financial statement's structure is closest to that of
the basic accounting equation?
Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity
8. Is it true or false that a grocery store’s sale of its old
delivery van to one of its employees for $2,000 should
be recorded in the general ledger account Sales?
True
False
9. Is it true or false that the total amount of stockholders’
equity reported on the balance sheet is intended to
show the fair market value of the corporation?
True
False
10. Comprehensive income is defined as
_______________ plus other comprehensive income.
Extraordinary Items
Gains And Losses
Net Income
11. Which financial statement reports the adjustments for
changes in the market value of available-for-sale
investment securities and adjustments for foreign
currency translation?
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Income
12. Ten years ago, a corporation started a new brand name
that is now considered to be its most valuable asset. On
which financial statement and at what amount will you
see the brand name reported?
Balance Sheet At Its Present Value
Statement Of Comprehensive Income With No Value
Not Reported On A Financial Statement
13. A corporation's working capital is calculated using which
amounts?
Total Assets and Total Liabilities
Total Assets and Current Liabilities
Current Assets and Current Liabilities
14. The changes that occurred during a recent year in the
accounts Retained Earnings and Treasury Stock will be
found in which financial statement?
Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity
15. The amount spent for capital expenditures will be
reported in which section of the statement of cash
flows?
Cash Provided/used In Financing Activities
Cash Provided/used In Investing Activities
Cash Provided/used In Operating Activities
Supplemental Information
16. Which of the following will appear as a negative amount
on a statement of cash flows that was prepared using
the indirect method?
A Decrease In Inventory
An Increase In Accounts Payable
An Increase In Accounts Receivable
Depreciation Expense
17. Which of the following will appear as a positive amount
on a statement of cash flows that was prepared using
the indirect method?
An Increase In Accounts Receivable
An Increase In Inventory
A Decrease In Accounts Payable
Depreciation Expense
18. What is usually presented first in the notes to the
financial statements?
Accumulated Other Comprehensive Income
Commitments And Contingencies
Significant Accounting Policies
19. Which is the annual report to the SEC that contains the
financial statements of a publicly-traded corporation?
Form 1040
Form 10-K
Form 10-Q
Schedule C
20. Important disclosures regarding likely losses that could
not be estimated are found where?
General Ledger Accounts
Income Statement
Notes To The Financial Statements
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university accounting instructor, accountant, and
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