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Financial Statements, Balance Sheets & Income Statements Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Which of the following is the equation used for the basic income statement?

Question 2 2. On which of the following financial statements is cost of goods sold reported?

Question 3 3. The Widget Company is changing the way it does its accounting. They used to report revenue only when the money was received, but now they will report it once an order is made. How will this show in the notes?

Question 4 4. Which of the following is the simple formula for retained earnings?

Question 5 5. What is the balance sheet equation?

Page 2

Question 6 6. Which of the sections of the statement of cash flows includes activities that involve cash receipts or cash payments from changes on long-term liabilities?

Question 7 7. A company had total revenue of $20,000 for the month ending March 31. In the same time period, the company had $12,000 in expenses. What was the company's net income or net loss?

Question 8 8. What is the section of the statement of cash flows that includes activities that occur during the normal day-to-day operations of a company?

Question 9 9. Which of the following financial reports tells how much money that was made was reinvested in the company?

Question 10 10. Two people have differing opinions on the reporting period for a company's income. What typical problem are they most likely experiencing with their financial information?

Page 3

Question 11 11. Which of the following is one of the reports that are part of the Financial Statements?

Question 12 12. A company's financial statements include an income statement, a statement of retained earnings, a statement of cash flows and a _____.

Question 13 13. Why is a Balance Sheet an important financial statement?

Question 14 14. What's the difference between a credit line and a promissory note?

Question 15 15. Why is it necessary to complete the basic income statement prior to completing the statement of retained earnings?

Page 4

Question 16 16. Which principle states that any costs associated with doing business should be recorded in the same period as the revenue that those costs help generate?

Question 17 17. Which of the following is a reason why the statement of cash flows is important to users of financial statements?

Question 18 18. The term GAAP stands for_____.

Question 19 19. Which financial statement tells whether a company made or lost money in a given time period?

Question 20 20. Why do business owners depend on the income statement?

Page 5

Question 21 21. What's the best explanation of cost of goods sold?

Question 22 22. What are events that occurred after the date on the balance sheet but before the financial statements have been issued called?

Question 23 23. What is the difference between a Statement of Cash Flows and Income Statement?

Question 24 24. Which of the following are components of the Statement of Cash Flows?

Question 25 25. Which of the following is not a non-current liability?

Page 6

Question 26 26. What is the balance sheet equation?

Question 27 27. What account are retained earnings added to?

Question 28 28. The goal of the _____ is to provide financial data that is so accurate and concise that it can paint a vivid picture of how well a company is doing at a specific point in time.

Question 29 29. Ben, a company accountant, accidentally reported $5300 of earnings as $3500 on a company financial statement. Ben's mistake is an example of _____.

Question 30 30. How can money be brought into a company?

Financial Statements, Balance Sheets & Income Statements Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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