Which of the following is reported on the income statement?
a) Liabilities
b) Revenue
c) Assets
d) Shareholder equity
What does the balance sheet represent?
a) A summary of revenues and expenses
b) A snapshot of a company’s financial position at a specific point in time
c) The cash flow from operating activities
d) The company’s profit and loss over a period of time
Which of the following is NOT a component of the income statement?
a) Net income
b) Sales revenue
c) Operating expenses
d) Current liabilities
Which of the following is typically reported as a liability on the balance sheet?
a) Inventory
b) Accounts payable
c) Sales revenue
d) Retained earnings
What does the income statement show?
a) The financial position of the company at a given date
b) The cash flows from financing activities
c) The profitability of a company over a period of time
d) The value of assets and liabilities
In the balance sheet, which section lists the company’s liabilities?
a) Income statement
b) Shareholder equity
c) Current liabilities section
d) Non-operating income section
Which of the following accounts appears in the balance sheet under assets?
a) Net income
b) Revenues
c) Cash
d) Cost of goods sold
Which financial statement reflects the company’s financial performance over a specific period?
a) Balance sheet
b) Statement of retained earnings
c) Income statement
d) Statement of cash flows
Where is depreciation expense shown in the income statement?
a) Under operating expenses
b) Under liabilities
c) Under revenue
d) Under assets
What is the main purpose of the balance sheet?
a) To show the company’s profitability
b) To show the financial position of the company at a specific point in time
c) To report cash flows from operating activities
d) To record income and expenses over a period
Which of the following is considered a current asset on the balance sheet?
a) Equipment
b) Accounts payable
c) Inventory
d) Long-term investments
What type of account is retained earnings on the balance sheet?
a) Asset
b) Liability
c) Equity
d) Expense
Which of the following is an example of a non-current liability?
a) Accounts payable
b) Long-term debt
c) Accrued expenses
d) Income taxes payable
What does the gross profit margin on the income statement represent?
a) Operating expenses as a percentage of total revenue
b) The company’s ability to pay its debts
c) Revenue minus the cost of goods sold
d) Total revenue minus total expenses
Which of the following would be found under liabilities on the balance sheet?
a) Retained earnings
b) Accounts payable
c) Sales revenue
d) Equipment
How is net income calculated on the income statement?
a) Revenue minus expenses
b) Revenue plus expenses
c) Assets minus liabilities
d) Assets minus equity
Which of the following accounts is NOT typically included on the income statement?
a) Depreciation expense
b) Interest expense
c) Common stock
d) Sales revenue
Which of the following would appear in the shareholders’ equity section of the balance sheet?
a) Net income
b) Retained earnings
c) Accounts payable
d) Cost of goods sold
Which of the following best describes the relationship between the income statement and balance sheet?
a) The income statement shows past performance, while the balance sheet shows future performance
b) The income statement records assets and liabilities, while the balance sheet records revenues and expenses
c) The income statement reflects the profitability over a period, while the balance sheet reflects the company’s financial position at a point in time
d) The balance sheet and income statement are completely independent
Which of the following is included in the shareholder’s equity section of the balance sheet?
a) Cost of goods sold
b) Common stock
c) Short-term debt
d) Accounts payable
What is typically included in the “current liabilities” section of the balance sheet?
a) Long-term debt
b) Accounts payable
c) Retained earnings
d) Equipment
What does the balance sheet equation state?
a) Assets = Liabilities + Revenue
b) Assets = Liabilities + Equity
c) Assets = Liabilities + Expenses
d) Assets = Revenue + Expenses
Which of the following is NOT an expense that would appear on the income statement?
a) Cost of goods sold
b) Depreciation expense
c) Sales revenue
d) Interest expense
What is included in “Operating Income” on the income statement?
a) Net income after taxes
b) Income from regular business operations before interest and taxes
c) Interest income
d) Revenues from the sale of fixed assets
What type of accounts are typically found in the balance sheet’s non-current asset section?
a) Inventory and accounts receivable
b) Equipment and intangible assets
c) Accounts payable and accrued liabilities
d) Short-term investments and cash
What is the purpose of the statement of cash flows?
a) To report the company’s profitability
b) To show the sources and uses of cash during a period
c) To summarize liabilities and assets
d) To calculate the equity value of the company
