Financial Statements Quiz

1. The provides a snapshot of a company's financial position at a specific point in time.

2. The accounting equation states: Assets = Liabilities + .

3. The summarizes a company's revenues, expenses, and net income (or loss) over a period of time.

4. Revenue less cost of goods sold equals profit.

5. The of cash flows reports the cash generated and used by a company during a period.

6. Cash flows are typically categorized into operating, investing, and activities.

7. are economic resources controlled by the company that are expected to provide future economic benefits.

8. Obligations of the company to transfer economic benefits as a result of past transactions are known as .

9. The residual interest in the assets of the entity after deducting all its liabilities is equity.

10. An statement is also known as the profit and loss (P&L) statement.

11. The principle states that revenues should be recognized when earned, regardless of when cash is received.

12. The principle states that expenses should be recognized in the same period as the revenues they helped generate.

13. Depreciation is an example of a expense.

14. The total amount of money a company receives from its sales of goods or services is called .

15. are short-term assets that are expected to be converted into cash within one year.

16. liabilities are obligations due beyond one year.

17. The of changes in equity reports the movements in the components of shareholders' equity.

18. Retained earnings are accumulated income less dividends.

19. The direct and indirect methods are two ways to prepare the statement of flows.

20. Publicly traded companies in the U.S. must follow GAAP, which stands for Generally Accepted Principles.

21. The total assets must always equal the sum of total liabilities and total equity on the sheet.

22. An increase in an asset account is typically a , while an increase in a liability or equity account is a credit.

23. The income statement ends with income or net loss.

24. The cash flow statement helps users understand a company's to generate cash and cash equivalents.

25. Financial statements are typically prepared on an basis, meaning transactions are recorded when they occur, not necessarily when cash is exchanged.