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Questions and Answers
Which financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time?
Which financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time?
- Statement of Retained Earnings
- Balance Sheet (correct)
- Income Statement
- Statement of Cash Flows
What is the purpose of the statement of cash flows?
What is the purpose of the statement of cash flows?
- To show changes in the company's retained earnings over a period
- To report the company's revenues and expenses for a specific period
- To disclose significant events or uncertainties affecting the company
- To present the sources and uses of cash by operating, investing, and financing activities (correct)
What is the basic equation for calculating net income?
What is the basic equation for calculating net income?
- Net Income = Revenue - Expenses (correct)
- Net Income = Revenue / Expenses
- Net Income = Revenue + Expenses
- Net Income = Revenue * Expenses
Which accounting principle assumes that a business will continue to operate indefinitely?
Which accounting principle assumes that a business will continue to operate indefinitely?
What is the main purpose of the statement of cash flows?
What is the main purpose of the statement of cash flows?
Which accounting principle assumes that a business will continue to operate indefinitely?
Which accounting principle assumes that a business will continue to operate indefinitely?
What is the basic equation for calculating net income?
What is the basic equation for calculating net income?
Which financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time?
Which financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time?
The balance sheet reports a company's financial position at a specific point in time, rather than over a period of time?
The balance sheet reports a company's financial position at a specific point in time, rather than over a period of time?
The statement of cash flows only includes information about cash inflows and outflows from operating activities?
The statement of cash flows only includes information about cash inflows and outflows from operating activities?
The basic accounting equation is Assets = Liabilities + Shareholders' Equity?
The basic accounting equation is Assets = Liabilities + Shareholders' Equity?
The accrual accounting principle records revenues and expenses when they are incurred, not necessarily when cash is exchanged?
The accrual accounting principle records revenues and expenses when they are incurred, not necessarily when cash is exchanged?
Flashcards
What is a balance sheet?
What is a balance sheet?
A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.
What does the statement of cash flows show?
What does the statement of cash flows show?
The statement of cash flows reports the sources and uses of cash by operating, investing, and financing activities over a period of time.
How do you calculate net income?
How do you calculate net income?
Net income is calculated by subtracting total expenses from total revenue.
What is the going concern principle?
What is the going concern principle?
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What is the main purpose of the statement of cash flows?
What is the main purpose of the statement of cash flows?
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Explain the going concern principle.
Explain the going concern principle.
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How do you calculate net income?
How do you calculate net income?
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What does a balance sheet tell you?
What does a balance sheet tell you?
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Does the balance sheet report financial position over time?
Does the balance sheet report financial position over time?
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Does the statement of cash flows only include operating activities?
Does the statement of cash flows only include operating activities?
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What is the basic accounting equation?
What is the basic accounting equation?
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What is the accrual accounting principle?
What is the accrual accounting principle?
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Study Notes
Financial Statements and Accounting Principles
- The balance sheet reports a company's financial position at a specific point in time, rather than over a period of time.
Statement of Cash Flows
- The main purpose of the statement of cash flows is to report a company's cash inflows and outflows over a period of time.
- The statement of cash flows includes information about cash inflows and outflows from operating, investing, and financing activities.
Accounting Principles
- The going concern principle assumes that a business will continue to operate indefinitely.
- The accrual accounting principle records revenues and expenses when they are incurred, not necessarily when cash is exchanged.
Net Income Calculation
- The basic equation for calculating net income is not provided in the text, but it is typically calculated as revenue minus total expenses.
Balance Equation
- The basic accounting equation is Assets = Liabilities + Shareholders' Equity.
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