Exam 10: Understanding a Firms Financial Statements

Match the term with its definition. a.Cost of goods sold b.Current ratio c.Debt ratio d.Depreciable assets e.Statement of profit and loss and other comprehensive income f.Interest expense g.Inventory h.Net fixed assets -A financial report showing the amount of profits or losses from a business's operations over a given period of time.

Match the term with its definition. a.Cost of goods sold b.Gross profit c.Long-term notes d.Net profits e.Operating profits f.Profit margins g.Profits before taxes h.Total asset turnover -Earnings that may be distributed to the owners or reinvested in the company.

Match the term with its definition. a.Accrual-basis accounting b.Cash-basis accounting c.Current ratio d.Financial statements e.Liquidity f.Operating profit margin g.Return on assets h.Return on equity -The degree to which a business has working capital available to meet maturing debt obligations.

Total assets less current liabilities equal ownership equity.

In order to derive a statement of cash flows, the owner must add back the _____ to the statement of profit or loss and other comprehensive income.

Match the term with its definition. a.Trade and other payables b.Trade receivables c.Accumulated depreciation d.Common shares e.Current assets f.Current debt g.Current ratio h.Depreciation expense -Assets that can be converted to cash relatively quickly.

Stephanie ordered merchandise from one of her vendors but she doesn't have to pay for it right away.The amount of this purchase will increase Stephanie's:

The three activities that explain the cash inflows and outflows of a business are the operating, selling and financing activities.

To determine his company's net profits, Edward should:

Horace is reviewing a document that shows the results of his business's operations over a period of one year.Horace is looking at the:

A new business needs to manage cash flows carefully because if a business runs out of cash, it is out of business.

Dan wants to make sure he puts his company's assets in the correct categories.Which of the following is an example of a current asset?

Anna is using a software application to prepare the statement of financial position.She wasn't sure which of the following should be included in the non-current asset category.What would you tell her?

The cash flow statement answers the questions "From where did the cash come?' and "Where did the cash go?"

From her sales income, Barbara has subtracted cost of goods sold, operating expenses, interest expense and taxes.What she has left is her company's _____ profit.

Martina invested her savings into her business when she started it.Later she added more capital and she has kept some of her profits.Together these are known as:

Match the term with its definition. a.Trade and other payables b.Trade receivables c.Accumulated depreciation d.Common shares e.Current assets f.Current debt g.Current ratio h.Depreciation expense -Total depreciation taken over time.

For Winston to understand how his company performed during calendar year 2016, he must begin with the business's financial position on:

Match the term with its definition. a.Statement of financial position b.Debt c.Dividend d.Financial leverage e.Mortgage f.Equity g.Retained earnings h.Working capital cycle -The impact of financing with debt rather than with equity.

Ronnie needed an expensive piece of equipment to expand his business.He borrowed the money from the bank and pledged the equipment as ___________.If Ronnie does not repay the loan, the bank can take his equipment.