5. Basics of Income and Balance sheet statements

What is the primary purpose of financial statements?

• A) To forecast future market trends
• B) To provide information about the financial position, performance, and changes in financial position of an enterprise
• C) To promote the company to investors
• D) To calculate the company's tax liabilities

Which of the following is NOT a type of financial statement?

• A) Income Statement
• B) Balance Sheet
• C) Funds Flow Statement
• D) Sales Report

Who among the following would be least interested in a company's financial statements?

• A) Creditors
• B) Employees
• C) Competitors
• D) Potential Investors

Which statement provides information about a company’s profitability over a period?

• A) Balance Sheet
• B) Cash Flow Statement
• C) Income Statement
• D) Funds Flow Statement

What does a Balance Sheet primarily show?

• A) The profit or loss for a specific period
• B) The financial position of a business as on a particular date
• C) The cash inflows and outflows over a period
• D) The detailed breakdown of sales and expenses

Which of the following is a limitation of financial statements?

• A) They are based on historical data and do not reflect the future
• B) They provide accurate predictions for future earnings
• C) They include non-monetary information
• D) They exclude personal judgments and estimates

What is another name for an Income Statement?

• A) Revenue Account
• B) Balance Sheet
• C) Cash Flow Statement
• D) Funds Flow Statement

What does the Funds Flow Statement help to understand?

• A) The profitability of a business
• B) The sources and uses of funds between two balance sheet periods
• C) The cash position of a business
• D) The detailed sales performance

Which statement shows the changes in cash position from one period to another?

• A) Balance Sheet
• B) Income Statement
• C) Funds Flow Statement
• D) Cash Flow Statement

Which of the following is considered a long-term asset?

• A) Cash
• B) Accounts Receivable
• C) Machinery
• D) Inventory