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Financial Statements
(Practice Quiz)
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For multiple-choice and true/false questions,


simply press or click on what you think is the
correct answer. For fill-in-the-blank questions
press or click on the blank space provided.

If you have difficulty answering the following


questions, learn more about this topic by
reading our Financial Statements
(Explanation).

1. Which accounting method will result in financial


statements that report a more complete picture of a
corporation’s financial position and a better measure of
profitability during a recent accounting year?

Accrual Method
Cash Method

2. Which type of journal entries are made at the end of


each accounting period so that the financial statements
better reflect the accrual method of accounting?

Adjusting
Closing
Reversing

3. The generally accepted accounting principles used in


the financial statements of U.S corporations are
researched and developed by which organization?

American Accounting Association (AAA)


Financial Accounting Standards Board (FASB)
Internal Revenue Service (IRS)

4. Which financial statement will allow you to determine


the gross margin for a retailer or manufacturer?

Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity

5. Does the heading of a balance sheet indicate a period


of time or a point in time?

Period Of Time
Point In Time

6. A corporation's net income will cause a change in which


component of stockholders' equity?

Accumulated Other Comprehensive Income


Paid-in Capital
Retained Earnings

7. Which financial statement's structure is closest to that of


the basic accounting equation?

Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity

8. Is it true or false that a grocery store’s sale of its old


delivery van to one of its employees for $2,000 should
be recorded in the general ledger account Sales?

True
False

9. Is it true or false that the total amount of stockholders’


equity reported on the balance sheet is intended to
show the fair market value of the corporation?

True
False

10. Comprehensive income is defined as


_______________ plus other comprehensive income.

Extraordinary Items
Gains And Losses
Net Income

11. Which financial statement reports the adjustments for


changes in the market value of available-for-sale
investment securities and adjustments for foreign
currency translation?

Statement Of Cash Flows


Statement Of Comprehensive Income
Statement Of Income

12. Ten years ago, a corporation started a new brand name


that is now considered to be its most valuable asset. On
which financial statement and at what amount will you
see the brand name reported?

Balance Sheet At Its Present Value


Statement Of Comprehensive Income With No Value
Not Reported On A Financial Statement

13. A corporation's working capital is calculated using which


amounts?

Total Assets and Total Liabilities


Total Assets and Current Liabilities
Current Assets and Current Liabilities

14. The changes that occurred during a recent year in the


accounts Retained Earnings and Treasury Stock will be
found in which financial statement?

Balance Sheet
Income Statement
Statement Of Cash Flows
Statement Of Comprehensive Income
Statement Of Stockholders’ Equity

15. The amount spent for capital expenditures will be


reported in which section of the statement of cash
flows?

Cash Provided/used In Financing Activities


Cash Provided/used In Investing Activities
Cash Provided/used In Operating Activities
Supplemental Information

16. Which of the following will appear as a negative amount


on a statement of cash flows that was prepared using
the indirect method?

A Decrease In Inventory
An Increase In Accounts Payable
An Increase In Accounts Receivable
Depreciation Expense

17. Which of the following will appear as a positive amount


on a statement of cash flows that was prepared using
the indirect method?

An Increase In Accounts Receivable


An Increase In Inventory
A Decrease In Accounts Payable
Depreciation Expense

18. What is usually presented first in the notes to the


financial statements?

Accumulated Other Comprehensive Income


Commitments And Contingencies
Significant Accounting Policies

19. Which is the annual report to the SEC that contains the
financial statements of a publicly-traded corporation?

Form 1040
Form 10-K
Form 10-Q
Schedule C

20. Important disclosures regarding likely losses that could


not be estimated are found where?

General Ledger Accounts


Income Statement
Notes To The Financial Statements

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