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Financial Statements(Quick Test #3)

Author:
Harold Averkamp, CPA, MBA

After you have answered all 50 questions, click "Grade This Quick Test" at the bottom of the page to view your grade and receive feedback on your answers.

Note: Some of the following test questions may not have been covered in the Explanation or Practice Quiz for this topic. For more insight regarding a specific question, use the search box at the top of the page.

    1. 1. The financial statements discussed in the AccountingCoach Financial Statements Video Training are used __________.

    2. 2. Which method or basis of accounting best measures the net income earned by a company during a short period of time?

    3. 3. Which of the following would you expect in the heading of a balance sheet?

    4. 4. Another name for the balance sheet is the statement of financial __________.

    5. 5. The unexpired portion of prepaid insurance is __________.

    6. 6. A retailer’s inventory should be reported on the balance sheet at its __________.

    7. 7. Property, plant and equipment are __________ assets.

    8. 8. The title of the contra asset account that is reported in the section with the heading property, plant and equipment is __________ __________.

    9. 9. Goodwill, trademarks, mailing lists and patents are examples of __________ assets.

    10. 10. The cost of equipment used in a business minus its accumulated depreciation is the equipment’s __________ value or carrying value.

    11. 11. The main purpose of depreciating the equipment used in a business is to report the equipment’s current market value on the balance sheet.

    12. 12. A corporation’s unamortized organization costs are reported on the balance sheet in the section with the heading __________ assets

    13. 13. The amount of expenses that have been incurred but have not yet been paid are reported on the balance sheet under the classification current __________.

    14. 14. Under the accrual method of accounting, a repair expense is reported as a liability only if the invoice for the repair has been received as of the balance sheet date.

    15. 15. In December, CentCorp receives a deposit from one of its customers for work that is to be done in the following month. The deposit will be reported on CentCorp’s December financial statements as __________.

    16. 16. A company has a loan which requires monthly interest and principal payments for the next four years. The amount that should be reported as a current liability as of today is the total of the next 12 __________ payments.

    17. 17. Long-term liabilities are also known as __________ liabilities.

    18. 18. The future __________ payments on a note payable, which are not due within one year of the balance sheet date are reported as a long-term liability.

    19. 19. The two main components of stockholders’ equity are paid-in capital (such as common stock) and __________ earnings.

    20. 20. The cash __________ declared by a corporation will cause a reduction in the stockholders’ equity section of the balance sheet.

    21. 21. Assets = Liabilities + Stockholders’ Equity is known as the bookkeeping or accounting __________.

    22. 22. The amount of stockholders’ equity reported on the balance sheet should be approximately the same as the fair market value of the corporation.

    23. 23. The __________ ratio is the amount of the current assets divided by the amount of the current liabilities.

    24. 24. A corporation’s financial leverage is often determined by comparing its total liabilities to its total stockholders’ equity or to its total __________.

    25. 25. Information about a company’s lease commitments, contingent liabilities, and significant accounting policies can be found in the __________ to the financial statements.

    26. 26. Financial statements that report the current year amounts plus the amounts for the previous year or years are referred to as __________ financial statements.

    27. 27. The trademarks and logos that were developed by highly successful consumer products companies are often not reported on their balance sheets.

    28. 28. Under the accrual method of accounting the income statement should indicate the change in the company’s cash balance.

    29. 29. The heading of the income statement is more likely to include which of the following?

    30. 30. A retailer’s cost of goods sold consists of the cost of the merchandise it purchased during the period plus or minus the change in its __________.

    31. 31. SG&A is the acronym for selling, __________ and administrative expenses.

    32. 32. The amount of the depreciation expense reported on a U.S. company’s income statement will likely be __________ the depreciation expense reported on the company’s income tax return.

    33. 33. The percentages appearing on a retailer’s income statement result from dividing all of the dollar amounts by the amount of net __________.

    34. 34. A corporation’s net income will also change the amount of __________ earnings, which is reported on the balance sheet.

    35. 35. Depreciation is recorded to comply with the __________ principle.

    36. 36. Which income statement format will actually display the amount of gross profit and the amount of operating income?

    37. 37. Interest expense incurred by a retailer or manufacturer is __________ expense.

    38. 38. The heading of the statement of cash flows is more likely to show which of the following?

    39. For questions 39 through 48, assume that the statement of cash flows is prepared under the indirect method:

    40. 39. The statement of cash flows explains the change in __________ and cash equivalents.

    41. 40. In the statement of cash flows, depreciation expense appears as a positive amount after net income because depreciation is __________ expense.

    42. 41. If inventory increases during the period of the statement of cash flows, the amount of the increase will appear in the cash flows from operating activities section as a __________ amount.

    43. 42. If accounts payable increases during the period of the statement of cash flows, the amount of the increase will appear in the cash flows from operating activities section as a __________ amount.

    44. 43. The amount of a company’s capital expenditures is reported as a __________ amount on the statement of cash flows.

    45. 44. The first section of the three major sections of the statement of cash flows is the cash flows from __________ activities.

    46. 45. The cost of new equipment acquired and the proceeds from the disposal of equipment are reported on the statement of cash flows in the section entitled cash flows from __________ activities.

    47. 46. The amount of dividends declared and paid by a corporation should appear in the cash flows from __________ activities section of the statement of cash flows.

    48. 47. The amount of cash flows from operating activities minus the amount of the required capital expenditures is known as __________ cash flow.

    49. 48. Generally a company’s earnings are considered to be of a high quality when the net amount of the cash flows from __________ activities is consistently greater than the amount of net income.

    50. 49. The statement of changes in owner’s equity includes these items occurring during the current period: owner’s investments, owner’s draws (withdrawals), and the amount of the company’s __________ __________.

    51. 50. The amounts reported for equipment and the related depreciation are based on the equipment’s __________.

Any questions left unanswered will be marked incorrect.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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