Deck 14: Financial Statements Structure and Interpretation

Question 1

The financial statement that represents an accumulation of all of a company's transactions since it began is the

A) income statement.
B) balance sheet.
C) annual report.
D) budget.
E) statement of cash flow.

Answer 1

B

Question 2

A management team tracks the effectiveness of its decisions and product/service offerings with respect to growth,profitability,and asset productivity by __________.

A) watching its stock price.
B) analyzing its bank accounts.
C) analyzing its financial ratios.
D) analyzing its commercial invoices.
E) analyzing its financial statements.

Answer 2

E

Question 3

An income statement shows

A) revenues, expenses, and net income over a period of time.
B) assets, liabilities, and equity.
C) the company's status at a particular point in time.
D) how much income each employee earned.
E) how much income the CEO earned.

Answer 3

A

Question 4

_____ refers to how effective the organization is in deploying its resources and managing its operational processes in the delivery of goods and/or services to the marketplace.

A) Solvency
B) Liquidity
C) Current assets
D) Capacity
E) Efficiency

Question 5

The financial statement that explains how a firm's cash changed from the beginning of the accounting period to the end is called the

A) statement of cash flow.
B) balance sheet.
C) income statement.
D) master budget.
E) profit-loss statement.

Question 6

Financial ________ is a general term which relates to an organization's cash reserves and borrowing power

A) Solvency
B) Liquidity
C) Current assets
D) Capacity
E) Efficiency

Question 7

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is:

A) Operational Transactions
B) Liquidity Transactions
C) Strategic Transactions
D) Current Asset Transactions
E) Credit Transactions

Question 8

Operational transactions represent the flow of money within the organization which is directly related to ______ business dealings.

A) routine
B) day-to-day
C) long-term
D) quarterly
E) annually

Question 9

All of the following are considered in an organization's solvency analysis,EXCEPT:

A) future revenues
B) products/services under development
C) past cash disbursements
D) market position
E) the ability to acquire additional capital resources

Question 10

Which of the following equations is equivalent to the accounting equation?

A) Equity = liabilities - assets
B) Owners' equity = assets - liabilities
C) Revenues - expenses = net income
D) Net income = expenses - revenues + taxes
E) Profit = sales - revenues

Question 11

_____ refers to the ability of the company,on the basis of the cash it has on hand and the cash it is generating within its operations,to meet its ongoing financial obligations.

A) Solvency
B) Liquidity
C) Current assets
D) Capacity
E) Efficiency

Question 12

_______ refers to a longer-term assessment of the financial stability of the organization.

A) Solvency
B) Liquidity
C) Current assets
D) Capacity
E) Efficiency

Question 13

Financial statements provide vital information,to managers,regarding an organization's current _______ position.

A) liquidity and solvency
B) assets and affluence
C) liquidity and wealth
D) assets and solvency
E) cash flow and solvency

Question 14

Although Capital Asset Transaction do not directly related to the current year's profit of the organization,they do impact on the _______ of the organization over the period of time.

A) credit
B) liquidity
C) strategy
D) cash flow
E) wealth fluctuations

Question 15

which may be needed,or are no longer needed.

A) Credit Transactions
B) Liquidity Transactions
C) Strategic Transactions
D) Current Asset Transactions
E) Capital Asset Transactions

Question 16

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is:

A) Credit Transactions
B) Liquidity Transactions
C) Strategic Transactions
D) Current Asset Transactions
E) Capital Asset Transactions

Question 17

With respect to Financial Statements,managers generate the clearest picture of what is happening within an organization by reviewing ________.

A) Income Statement
B) Balance Sheet
C) Cash Flow Statement
D) all three together
E) one at a time

Question 18

Which of the following is NOT tracked by managers' analysis of financial statements?

A) success of the organization's sales and marketing initiatives
B) success of the organization's human resources initiatives
C) the ability of the organization to control its costs and maintain its operating margin
D) the ability of the organization to control its costs and maintain its profitability margin
E) delivering its products and/or services to its target market.

Question 19

The role of the senior management team is to determine an organization's overall direction and then _________ the execution of the tactics and strategic thrusts.

A) command and run
B) dictate and govern
C) direct and manage
D) give orders and operate
E) tell and manage

Question 20

A) income statement.
B) balance sheet.
C) annual report.
D) budget.
E) statement of cash flow.

Question 21

_______ is the process of assessing the impact of the amount of debt which an organization has incurred in order to finance its asset base.

A) Ratio Analysis
B) Leverage Analysis
C) Trend Analysis
D) Absolute Analysis
E) Proportional Analysis

Question 22

A management team tracks the effectiveness of its decisions and product/service offerings with respect to growth,profitability,and asset productivity by analyzing its bank accounts.

Question 23

A management team tracks the effectiveness of its decisions and product/service offerings with respect to growth,profitability,and asset productivity by analyzing its commercial invoices.

Question 24

______,whereby we look at trends occurring over time by analyzing financial statements across multiple time periods.

A) Ratio Analysis
B) Leverage Analysis
C) Trend Analysis
D) Absolute Analysis
E) Proportional Analysis

Question 25

The role of the senior management team is to determine an organization's overall direction and then direct and manage the execution of the tactics and strategic thrusts.

Question 26

All of the following are reasons for the importance of forecasting and budgeting,EXCEPT:

A) requires the organization to think about what is happening in the markets
B) sets specific strategic objectives for the various divisions and departments within the organization
C) sets specific operational parameters for the various divisions and departments within the organization
D) requires managers to make decisions related to resource allocation, when measured against specific outcomes
E) become benchmarks/targets against which actual results can be measured

Question 27

All of the following are ways that NFPs generate the dollars needed to sustain their charitable and community-based mission,EXCEPT:

A) the receiving of grants
B) the receiving of government subsidies
C) the selling of stock
D) the receiving of private donations
E) the receiving of charitable donations

Question 28

The role of the senior management team is to determine an organization's overall direction and then give orders and operate the execution of the tactics and strategic thrusts.

Question 29

The role of the senior management team is to determine an organization's overall direction and then command and run the execution of the tactics and strategic thrusts.

Question 30

Success of the organization's sales and marketing initiatives is tracked by managers' analysis of financial statements.

Question 31

______ is the process by which we assess and interpret the relationships between the financial results shown on an organization's financial statements.

A) Ratio Analysis
B) Leverage Analysis
C) Trend Analysis
D) Absolute Analysis
E) Proportional Analysis

Question 32

statements to determine its anticipated profitability position.

A) pro-forma
B) future
C) estimated
D) expected
E) planned

Question 33

All of the following are steps in the forecasting and budgetary process,EXCEPT:

A) Market analysis
B) SWOT analysis
C) Sales forecast
D) Preparation of budgets
E) Development of pro-forma statements

Question 34

A management team tracks the effectiveness of its decisions and product/service offerings with respect to growth,profitability,and asset productivity by watching its stock price.

Question 35

A management team tracks the effectiveness of its decisions and product/service offerings with respect to growth,profitability,and asset productivity by analyzing its financial statements.

Question 36

All of the following are issues that NFP managers must manage,EXCEPT:

A) Liquidity
B) Solvency
C) Efficiency
D) Profitability
E) Capacity

Question 37

_______ is where we look at the specific dollar amount of financial resources available.

A) Ratio Analysis
B) Leverage Analysis
C) Trend Analysis
D) Absolute Analysis
E) Proportional Analysis

Question 38

Success of the organization's human resources initiatives is tracked by managers' analysis of financial statements.

Question 39

The role of the senior management team is to determine an organization's overall direction and then dictate and govern the execution of the tactics and strategic thrusts.

Question 40

______ is the process by which we assess and interpret the relationships between the financial results shown on an organization's financial statements.

A) Ratio Analysis
B) Leverage Analysis
C) Trend Analysis
D) Absolute Analysis
E) Proportional Analysis

Question 41

Financial statements provide vital information,to managers,regarding an organization's current assets and solvency position.

Question 42

With respect to Financial Statements,managers generate the clearest picture of what is happening within an organization by reviewing the Income Statement.

Question 43

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is credit transactions.

Question 44

Financial statements provide vital information,to managers,regarding an organization's current assets and affluence position.

Question 45

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is liquidity transactions.

Question 46

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is operational transactions.

Question 47

Operational transactions represent the flow of money within the organization which is directly related to routine business dealings.

Question 48

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is liquidity transactions.

Question 49

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is capital asset transactions.

Question 50

With respect to Financial Statements,managers generate the clearest picture of what is happening within an organization by reviewing all three together.

Question 51

With respect to Financial Statements,managers generate the clearest picture of what is happening within an organization by reviewing the Cash Flow Statement.

Question 52

Financial statements provide vital information,to managers,regarding an organization's current liquidity and wealth position.

Question 53

Operational transactions represent the flow of money within the organization which is directly related to day-to-day business dealings.

Question 54

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is current asset transactions.

Question 55

With respect to Financial Statements,managers generate the clearest picture of what is happening within an organization by reviewing the Balance Sheet.

Question 56

The ability of the organization to control its costs and maintain its operating margin is tracked by managers' analysis of financial statements.

Question 57

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is strategic transactions.

Question 58

Financial statements provide vital information,to managers,regarding an organization's current liquidity and solvency position.

Question 59

The ability of the organization to control its costs and maintain its profitability margin is tracked by managers' analysis of financial statements.

Question 60

One of the fundamental types of business transactions that managers are constantly making decisions about and reviewing is credit transactions.

Question 61

Liquidity refers to how effective the organization is in deploying its resources and managing its operational processes in the delivery of goods and/or services to the marketplace.

Question 62

Efficiency refers to a longer-term assessment of the financial stability of the organization.

Question 63

Efficiency refers to the ability of the company,on the basis of the cash it has on hand and the cash it is generating within its operations,to meet its ongoing financial obligations.

Question 64

Credit transactions are decisions which managers make with respect to investment and divestment of capital assets (buildings, equipment, business subsidiaries) which may be needed, or are no longer needed.

Question 65

Current assets refers to a longer-term assessment of the financial stability of the organization.

Question 66

Liquidity refers to the ability of the company,on the basis of the cash it has on hand and the cash it is generating within its operations,to meet its ongoing financial obligations.

Question 67

Liquidity refers to a longer-term assessment of the financial stability of the organization.

Question 68

Solvency refers to how effective the organization is in deploying its resources and managing its operational processes in the delivery of goods and/or services to the marketplace.

Question 69

Solvency refers to the ability of the company,on the basis of the cash it has on hand and the cash it is generating within its operations,to meet its ongoing financial obligations.

Question 70

Solvency refers to a longer-term assessment of the financial stability of the organization.

Question 71

Capacity refers to the ability of the company,on the basis of the cash it has on hand and the cash it is generating within its operations,to meet its ongoing financial obligations.

Question 72

Although Capital Asset Transaction do not directly related to the current year's profit of the organization,they do impact on the credit of the organization over the period of time.

Question 73

Although Capital Asset Transaction do not directly related to the current year's profit of the organization,they do impact on the liquidity of the organization over the period of time.

Question 74

Operational transactions represent the flow of money within the organization which is directly related to long-term business dealings.

Question 75

Although Capital Asset Transaction do not directly related to the current year's profit of the organization,they do impact on the wealth fluctuations of the organization over the period of time.

Question 76

Operational transactions represent the flow of money within the organization which is directly related to quarterly business dealings.

Question 77

Current asset transactions are decisions which managers make with respect to investment and divestment of capital assets (buildings, equipment, business subsidiaries) which may be needed, or are no longer needed.

Question 78

Capital asset transactions are decisions which managers make with respect to investment and divestment of capital assets (buildings, equipment, business subsidiaries) which may be needed, or are no longer needed.

Question 79

Although Capital Asset Transaction do not directly related to the current year's profit of the organization,they do impact on the cash flow of the organization over the period of time.

Question 80

Liquidity transactions are decisions which managers make with respect to investment and divestment of capital assets (buildings, equipment, business subsidiaries) which may be needed, or are no longer needed.