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Financial Statements(Quick Test #2)

Author:
Harold Averkamp, CPA, MBA

After you have answered all 45 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 statement that is often referred to as the P&L is the __________ __________.

    2. 2. The financial statement that reports assets, liabilities, and owner’s equity is the __________ __________.

    3. 3. Assets that will turn to cash within one year are reported as __________ assets.

    4. 4. The use of accounts such as Accounts Payable, Accounts Receivable, and Deferred Revenues are indicators that the company is using the __________ basis of accounting.

    5. 5. Costs that are used up or expire in the current accounting period are reported on the income statement as __________.

    6. 6. The Allowance for Doubtful Accounts reduces the amount reported on the balance sheet for the asset having the title __________ __________.

    7. 7. A withdrawal of cash for personal use by a sole proprietor is reported on the income statement.

    8. 8. Sales taxes collected from customers should be reported on the income statement as part of revenues.

    9. 9. If a company has a loan payable, it is reasonable for its income statement to report Interest Expense.

    10. 10. Retained Earnings is part of stockholders’ equity.

    11. 11. Reporting revenues when the money is received instead of when it is earned is known as the __________ basis of accounting.

    12. 12. Reporting revenues when they are earned (even if the money is not yet received at the time it is earned) is known as the __________ basis of accounting.

    13. 13. Generally, the amounts reported in the accounts Land, Buildings, and Equipment are the historical __________ of these assets and not their current market values.

    14. 14. The major financial statement that explains how the amount of cash and cash equivalents has changed during an accounting period is the statement of __________ __________.

    15. 15. Sales minus the cost of goods sold is the __________ profit.

    16. 16. Sales minus the total amount of sales returns, sales allowances, and sales discounts is __________ sales.

    17. 17. __________ and owner’s equity (or stockholders’ equity) can be thought of as the major classifications of claims against a company’s assets.

    18. 18. The major financial statement which is sometimes referred to as a “snapshot” because it reports amounts as of a point in time is the __________ __________.

    19. 19. Assets minus __________ equals owner’s equity (or stockholders’ equity).

    20. 20. An income statement reports revenues, __________, gains, and losses.

    21. 21. The balance sheet is also known as the statement of financial position.

    22. 22. The income statement reports amounts for a __________ time.

    23. 23. The balance sheet reports amounts for a __________ __________ time.

    24. 24. The statement of cash flows reports amounts for a __________ __________ time.

    25. 25. Unexpired costs are reported on the balance sheet under the major classification __________.

    26. 26. Accrued expenses are reported on the balance sheet under the major classification known as __________.

    27. 27. A more accurate representation of a company’s liabilities occurs under the __________ method or basis of accounting.

    28. 28. A more accurate measurement of a company’s net income during a short period of time is achieved under the__________ basis or method of accounting.

    29. 29. If the amount of supplies on hand is significant, it should be reported as an __________.

    30. Use the following information to answer Questions 30 and 31:
      A company has $500,000 of total assets, which includes $230,000 of current assets. The company has current liabilities of $100,000 plus long-term liabilities of $95,000.

    31. 30. The company’s working capital is $__________.

    32. 31. The company’s current ratio is __________: 1.

    33. 32. Freight-In is part of a company’s cost of goods sold.

    34. 33. Patents, copyrights, and goodwill are examples of __________ assets.

    35. 34. Financial statements issued between the annual financial statements are referred to as __________ financial statements.

    36. 35. A retailer’s cost of goods sold can be computed as follows: beginning inventory + net purchases – __________ __________.

    37. 36. Revenues which are earned from activities outside of a company’s main business activities are considered to be nonoperating revenues or __________ revenues.

    38. 37. A __________ income statement will display the amounts for the most recent accounting year and also the amounts for the prior year or two.

    39. 38. A corporation’s stockholders’ equity is an excellent indicator of the corporation’s market value.

    40. 39. Treasury stock is a corporation’s own shares of stock that have been purchased from its stockholders but have not been retired.

    41. 40. The statement of cash flows consists of cash flows from __________ activities, cash flows from investing activities, and cash flows from financing activities.

    42. 41. The statement of operations is another name for a company’s __________ __________.

    43. 42. The __________ to the financial statements contain important financial disclosures.

    44. 43. Two classifications for contributions received by a not-for-profit organization are (1) with and (2) without __________ __________.

    45. 44. A not-for-profit organization’s statement of financial position will report the amount of assets minus the amount of liabilities as the amount of __________ __________.

    46. 45. A not-for-profit organization’s statement of __________ explains the change in the organization’s net assets during an accounting period.

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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