Element 8 8.1.9 Completion Financial statement Quiz

What is the purpose of an income statement?

• To track cash flow

• To calculate net profit or loss

• To record all company assets

• To list liabilities

In an income statement, which of the following is subtracted from revenue to determine gross profit?

• Operating expenses

• Taxes

• Cost of goods sold

• Depreciation

What adjustment is made on the income statement for bad debts?

• Added to sales

• Deducted from gross profit

• Deducted from total expenses

• Deducted from net profit

Which of the following is considered a current asset?

• Land

• Buildings

• Inventory

• Patents

How is closing inventory treated in the income statement?

• Added to sales

• Subtracted from cost of goods sold

• Added to cost of goods sold

• Deducted from total revenue

Which of the following is a non-current liability?

• Trade payables

• Bank overdraft

• Mortgage loan

• Accrued expenses

What is depreciation?

• Increase in value of an asset

• Decrease in value of an asset over time

• Cost of selling an asset

• Profit from selling an asset

In the statement of financial position, where are intangible assets listed?

• Under current assets

• Under non-current assets

Which of the following is included in the equity section of the statement of financial position?

• Inventory

• Trade receivables

• Retained earnings

• Accrued expenses

How are prepayments treated in the statement of financial position?

• As a current asset

• As a non-current asset

• As a current liability

• As an equity item