Question 1

Which of the following financial statements contains gross profit?

Accepted Answer

A)  Income statement 
B)  Balance Sheet 
C)  Statement of cash flows 
D)  Statement of equity 
E)  None of the above 
A)  Income statement 
B)  Balance Sheet 
C)  Statement of cash flows 
D)  Statement of equity 
E)  None of the above A

Question 2

A balance sheet is arranged in order of

Accepted Answer

A)  relative importance of an item 
B)  book values 
C)  market values 
D)  liquidity 
E)  taxability 
A)  relative importance of an item 
B)  book values 
C)  market values 
D)  liquidity 
E)  taxability D

Question 3

Outside investors tend to focus more on

Accepted Answer

A)  Gross Margin 
B)  Profit Margin 
C)  ROA 
D)  ROE 
E)  Debt Ratio 
A)  Gross Margin 
B)  Profit Margin 
C)  ROA 
D)  ROE 
E)  Debt Ratio C

Question 4

Advantages of the indirect method of computing cash flows from operating activities include the following except

Accepted Answer

A)  more intuitive and easier to understand 
B)  connecting back to the income statement and balance sheets 
C)  satisfies the reconciliation requirement of GAAP 
D)  shows cash receipts and disbursement clearly 
E)  all of the above are advantages of the indirect method 
A)  more intuitive and easier to understand 
B)  connecting back to the income statement and balance sheets 
C)  satisfies the reconciliation requirement of GAAP 
D)  shows cash receipts and disbursement clearly 
E)  all of the above are advantages of the indirect method

Question 5

A common size income statement expresses all items as a percentage of

Accepted Answer

A)  Total Assets 
B)  Total Equity 
C)  Total Liabilities 
D)  Revenues 
E)  Net Income 
A)  Total Assets 
B)  Total Equity 
C)  Total Liabilities 
D)  Revenues 
E)  Net Income

Question 6

Which of the following accounting methods is recommended for management?

Accepted Answer

A)  cash accounting method 
B)  accrual accounting method 
C)  modified cash accounting method 
D)  modified accrual accounting method 
E)  hybrid accounting method 
A)  cash accounting method 
B)  accrual accounting method 
C)  modified cash accounting method 
D)  modified accrual accounting method 
E)  hybrid accounting method

Question 7

Which of the following financial statements contains retained earnings?

Accepted Answer

A)  Income statement 
B)  Balance Sheet 
C)  Statement of cash flows 
D)  Statement of equity 
E)  None of the above 
A)  Income statement 
B)  Balance Sheet 
C)  Statement of cash flows 
D)  Statement of equity 
E)  None of the above

Question 8

The main categories of equity include

Accepted Answer

A)  contributions from owners 
B)  accumulated earnings 
C)  accumulated dividends 
D)  A and B 
E)  A, B, and C 
A)  contributions from owners 
B)  accumulated earnings 
C)  accumulated dividends 
D)  A and B 
E)  A, B, and C

Question 9

Private companies are not required to use GAAP but they should because following GAAP makes:

Accepted Answer

A)  training new employees easier 
B)  obtaining outside equity financing easier 
C)  obtaining loans from banks easier 
D)  obtaining independent audit possible 
E)  all of the above 
A)  training new employees easier 
B)  obtaining outside equity financing easier 
C)  obtaining loans from banks easier 
D)  obtaining independent audit possible 
E)  all of the above

Question 10

Factors to consider when setting up a chart of accounts include the following except

Accepted Answer

A)  time and efforts involved in training employees and the entrepreneur 
B)  level of details needed to make informed decisions 
C)  flexibility and comprehensiveness for growth 
D)  industry norms 
E)  initial set-up costs 
A)  time and efforts involved in training employees and the entrepreneur 
B)  level of details needed to make informed decisions 
C)  flexibility and comprehensiveness for growth 
D)  industry norms 
E)  initial set-up costs

Which of the following financial statements contains gross profit?

A balance sheet is arranged in order of

Outside investors tend to focus more on

Advantages of the indirect method of computing cash flows from operating activities include the following except

A common size income statement expresses all items as a percentage of

Which of the following accounting methods is recommended for management?

Which of the following financial statements contains retained earnings?

The main categories of equity include

Private companies are not required to use GAAP but they should because following GAAP makes:

Factors to consider when setting up a chart of accounts include the following except

Forms of Business Organization

Starting a New Venture

Financing a Business

Cash and Working Capital Management

Forecasting Cash Flows

Pro Forma Financial Statements

Capital Budgeting and Costs of Capital

Business Valuation

Exit and Harvest

Filters

Exam 4: Financial Statements and Analysis

Which of the following financial statements contains gross profit?

A balance sheet is arranged in order of

Outside investors tend to focus more on

Advantages of the indirect method of computing cash flows from operating activities include the following except

A common size income statement expresses all items as a percentage of

Which of the following accounting methods is recommended for management?

Which of the following financial statements contains retained earnings?

The main categories of equity include

Private companies are not required to use GAAP but they should because following GAAP makes:

Factors to consider when setting up a chart of accounts include the following except

Forms of Business Organization

Starting a New Venture

Financing a Business

Cash and Working Capital Management

Forecasting Cash Flows

Pro Forma Financial Statements

Capital Budgeting and Costs of Capital

Business Valuation

Exit and Harvest

Filters