Accounting and Financial Statements Quiz

What is the main purpose of financial statements?

• To communicate financial information to interested users

• To confuse investors

• To hide the financial position of the company

• To entertain external parties

Who uses financial statements to assess the viability of investing in a company?

• Suppliers

• Employees

• Management

• Investors

Which form of business entity has its capital contributed by shareholders?

• Company

• Partnership

• Sole Trader

• None of the above

What is the formula for calculating the owner's equity in the balance sheet?

• Liabilities - Assets

• Assets = Liabilities + Owner's Equity

• Assets - Liabilities

• Assets + Liabilities

Which financial statement gives the operating results for a specific period?

• Statement of Financial Position

• Statement of Cashflows

• Statement of Changes in Equity

• Income Statement

What does the income statement show?

• Assets

• Expenses

• Liabilities

• Revenues

What is the main purpose of the statement of cashflows?

• To provide information about the financial position of the company

• To communicate financial information to external parties

• To show the company's worth at a specific date

• To show the sources and uses of cash by the company

Who uses financial statements to assess the risk and return of their investment in the company?

• Suppliers

• Financial Institutions/Banks

• Shareholders

• Management

What is the purpose of the income statement?

• To show the company's worth at a specific date

• To provide information about the financial position of the company

• To communicate financial information to interested users

• To show the operating results for a specific period

What is the main function of the statement of changes in equity?

• To communicate financial information to external parties

• To show the company's worth at a specific date

• To provide information about the financial position of the company

• To show the changes in equity over a specific period