Business Finance Midterm Exam

What are the three basic financial statements?

• Balance Sheet, Profit & Loss Statement, and Cash Flow Statement

• Income Statement, Statement of Financial Position, and Cash Flow Statement

• Income Statement, Statement of Stockholders' Equity, and Balance Sheet

• Statement of Assets, Statement of Liabilities, and Statement of Equity

A business has sales revenue of ₱150,000 and total expenses of ₱85,000, what is the net income?

• ₱235,000

• ₱65,000

• ₱150,000

• ₱85,000

What does the Statement of Financial Position show?

• Revenues, Expenses, and Net Profit/Loss

• Cash inflows and outflows

• Assets, Liabilities, and Equity

• Current assets and current liabilities

Why is accuracy and integrity considered important when preparing financial statements?

• To attract more customers to the business

• To ensure owners can make informed decisions

• To avoid paying taxes to the government

• To track employee performance and payroll

If a company has a sales revenue of ₱500,000 and total expenses of ₱205,000, what is the net income?

• ₱705,000

• ₱205,000

• ₱500,000

• ₱295,000

What is the primary purpose of a Cash Flow Statement?

• To show a company's assets, liabilities, and equity at a specific point in time.

• To summarize a company's financial performance over a period of time.

• To show the cash inflows and outflows of a business.

• To calculate a business's profit or loss for the year.

What is the Net Profit Margin for a company with a net income of ₱40,000 and sales of ₱100,000?

• 25%

• 40%

• 2.5

• ₱60,000

Which of the following is considered an Asset on a Balance Sheet?

• Accounts Payable

• Loan Payable

• Accounts Receivable

• Capital

During the financial review, the total liabilities for the balance sheet were determined to be ₱80,000. Which of the following items were NOT considered in this total?

• Loans Payable

• Accounts Receivable

• Accrued Expenses

• Notes Payable

Which financial statement shows a company's financial position at a specific point in time?

• Income Statement

• Cash Flow Statement

• Statement of Financial Position

• Statement of Owner's Equity