40 Questions
Which financial statement reports on a company's cash inflow and outflows over a period of time?
Statement of Cash Flows
How many basic financial statements are there?
Four
Which key actor in the financial accounting and reporting process is responsible for setting accounting standards?
FASB
Which of the following is a key actor in the financial accounting and reporting process?
Auditors
What is the main difference between a single-step and a multi-step income statement?
Single-step income statement lists all revenues together and all expenses together, while multi-step income statement includes multiple subtotals before calculating net income.
What information can be found in financial statement footnotes?
Accounting methods, assumptions, contingencies
Which of the following is a key assumption of the accounting conceptual framework?
All of the above
What is the effect of a credit in the accounting equation?
Increase liabilities and equity, decrease assets and expenses
How is the current ratio calculated?
Current Assets / Current Liabilities
What does the net profit margin ratio measure?
How much profit a company makes for each dollar of sales
Which of the following statements best describes the single-step income statement?
It lists all revenues and expenses together, with one step to calculate net income.
What is the purpose of the disclosure process in financial reporting?
To provide additional notes and supplementary information to financial statements.
Which ratio is calculated as Gross Profit divided by Sales?
Gross profit percentage
How is Return on Total Assets (ROA) calculated?
Net Income / Average Total Assets
What information can be found in financial statement footnotes?
Accounting methods, assumptions, contingencies, etc.
What does the auditor's report provide?
An opinion on whether the financial statements are presented fairly.
Which report provides management's perspective on the company's performance?
MD&A (Management Discussion & Analysis)
What are the key actors in financial accounting and reporting?
Internal parties, external parties, and intermediaries
What is the main difference between a single-step and a multi-step income statement?
The single-step income statement lists all revenues together and all expenses together, while the multi-step income statement includes multiple subtotals before calculating net income.
How is the gross profit percentage calculated?
Gross Profit / Sales
Which of the following is a key assumption of the accounting conceptual framework?
The business will continue in operation for the foreseeable future.
How is the current ratio calculated?
Current Assets divided by Current Liabilities
What is the effect of a credit in the accounting equation?
Increases liabilities and decreases assets
Which financial statement reports on a company's cash inflow and outflows over a period of time?
Statement of cash flows
What are the five major types of adjusting entries?
Prepayments, accruals, and estimates
What is the main difference between a single-step and a multi-step income statement?
The inclusion of non-operating revenues and expenses
Which key actor in the financial accounting and reporting process is responsible for setting accounting standards?
Financial Accounting Standards Board (FASB)
What does the net profit margin ratio measure?
How much profit a company makes for each dollar of sales
Which of the following is a key actor in the financial accounting and reporting process?
Financial Accounting Standards Board (FASB)
What information can be found in financial statement footnotes?
Details about the company's accounting policies
Which financial statement shows the company's assets, liabilities, and equity at a specific point in time?
The Balance Sheet
Which financial statement reports on a company's revenues, expenses, and profits or losses over a period of time?
The Income Statement
Which financial statement shows changes in retained earnings over a period of time?
The Statement of Retained Earnings
Which financial statement reports on a company's cash inflow and outflows over a period of time?
The Statement of Cash Flows
How are the four basic financial statements related to one another?
Net income from the income statement affects the retained earnings on the statement of retained earnings, which then affects equity on the balance sheet.
Who are the key actors in the financial accounting and reporting process?
Accountants, auditors, regulatory bodies, and standard-setting bodies
What is the primary purpose of financial accounting?
To provide information about a firm's performance to external parties
What is financial accounting?
A branch of accounting that keeps track of a company's financial transactions
Which regulatory body is responsible for setting accounting standards?
The FASB
What is the role of the CPA profession in business today?
To audit financial statements and provide assurance on their accuracy
Test your knowledge of financial accounting with this quiz! Learn about the primary purpose of financial accounting and its role in producing crucial financial reports. Explore the four basic financial statements and enhance your understanding of this specialized branch of accounting.
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