Financial Statement Quiz

What is the purpose of an income statement?

• To track the company's employee turnover

• To show the company's financial performance over a specific period of time.

• To determine the company's customer satisfaction

• To calculate the company's market share

What are the main components of an income statement?

• Inventory, accounts receivable, accounts payable

• Assets, liabilities, equity

• Revenue, expenses, gains, and losses

• Cash flow, balance sheet, statement of retained earnings

Why is the income statement important for a business?

• It provides information about the company's employees

• It helps in determining the company's marketing strategy

• It shows the company's inventory levels

• It shows the company's profitability and financial performance.

How is net income calculated on an income statement?

• By multiplying the total revenue by the number of employees

• By adding all expenses to the total revenue of a company

• By dividing the total revenue by the number of customers

• By subtracting all expenses, including taxes, from the total revenue of a company.

What is the purpose of a balance sheet?

• To track employee attendance

• To measure customer satisfaction

• To determine the company's marketing strategy

• To provide a snapshot of a company's financial position

What are the two main sections of a balance sheet?

• Assets and liabilities

• Debits and credits

• Income and expenses

• Cash and inventory

Why is the balance sheet important for understanding a company's financial position?

• It provides a snapshot of a company's assets, liabilities, and equity at a specific point in time, allowing stakeholders to assess the financial health and position of the company.

• It only includes information about the company's revenue

• It is only important for tax purposes

• It has no relevance to a company's financial position

What is the cash flow statement used for?

• To show the inflow and outflow of cash within a company during a specific period of time.

• To display the company's stock price

• To show the number of employees in the company

• To track the company's social media engagement

What are the three main sections of a cash flow statement?

• Sales activities, purchase activities, and equity activities

• Revenue activities, expense activities, and asset activities

• Operating activities, investing activities, and financing activities

• Income activities, expenditure activities, and investment activities

How does the cash flow statement differ from the income statement and balance sheet?

• The cash flow statement shows actual cash generated and used, while the income statement shows revenues and expenses, and the balance sheet provides a snapshot of the financial position.

• The cash flow statement shows revenues and expenses, while the income statement shows actual cash generated and used, and the balance sheet provides a snapshot of the financial position.

• The cash flow statement shows revenues and expenses, while the income statement provides a snapshot of the financial position, and the balance sheet shows actual cash generated and used.

• The cash flow statement provides a snapshot of the financial position, while the income statement shows actual cash generated and used, and the balance sheet shows revenues and expenses.