1 A financial statement that summarizes company revenue and expenses is?
(a) Balance sheet
(b) Statement of owner equity
(c) Income statement
(d) Cash flow statement
2. Which one of the following tangible fixed assets would not normally be depreciated?
(a) Buildings
(b) Machinery
(c) Land
(d) Equipment
3. Which financial statement presents a summary of the Assets, Liabilities, and Owners' Equity of a firm?
(a) General ledger
(b) Work sheet
(c) Balance sheet
(d) Cash flow statement
4. Subtracting all expenses from revenues yields?
(a) Net profit/Loss
(b) Carrying value
(c) Long-term assets
(d) Net liabilities
5. A financial statement to show what a business owns and owes at a particular point in time?
(a) A cash flow statement
(b) The bank statement for the business
(c) A balance sheet
(d) A statement of retained earnings
6. If the Gross profit is Rs. 5,000 and the net profit is 25% of the Gross profit. The expenses must be?
(a) Rs. 3,750
(b) Rs. 1,250
(c) Rs. 4,150
(d) Rs. 6,250
7. A financial document that indicates the success or failure of a business trading over a period of time is called?
(a) A cash flow statement
(b) A retained earnings statement
(c) An income statement
(d) A bank statement
8. The report of company that shows overall profit on the sale of their goods or the provision of their services?
(a) Trading and Profit & loss account
(b) Cash flow statement
(c) Income Statement
(d) Both a and c
9. A company has, by the end of its financial period, paid out more Tax than it has to pay. How would this be shown in the balance sheet?
(a) As an accrual Revenue
(b) As a Prepaid within current assets
(c) As a 'creditor due within one year'
(d) As a creditor due after more than one year'
10. Which of the following financial statements is also known as financial condition?
(a) Balance Sheet
(b) Income Statement
(c) Statement of Cash flows
(d) Bank Statement
>> Read Financial Statement.
MCQs 11 To 20
11. Prepaid interest given in the adjusted trial balance will be treated as a (an)?
(a) Asset
(b) Liability
(c) Revenue
(d) Deferred expense
12. Which of the following is the largest single expense of most merchandising firms?
(a) Cost of goods sold
(b) Rent Expense
(c) Amortization Expense
(d) Salaries Expense
13. The primary source of revenue for a wholesaler is?
(a) Investment income
(b) Service fees
(c) The sale of merchandise
(d) The sale of fixed assets the company owns
14. Retained earnings will change over time because of several factors. Which of the following factors would explain a decrease in retained earnings?
(a) Net loss
(b) Net income
(c) Dividends
(d) Investments by stock holders
15. A Profit is earned if?
(a) Assets exceed Expenditure
(b) Income exceeds Expenditure
(c) Cash Inflow exceeds Cash Outflow
(d) Income exceeds Liabilities
16. What is the difference between the total incoming and the total outgoings?
(a) Net cash flow
(b) Cash inflow
(c) Direct cost
(d) Indirect cost
17. Which of the following is true regarding the income statement?
(a) The income statement is sometimes called the statement of operations
(b) The income statement reports revenues, expenses, and liabilities
(c) The income statement reports only revenue at the point of sale
(d) It shows financial position of a business at a particular period of time
18. Presents the revenue earned and expenses are incurred by an entity during a specific time period?
(a) Income statement
(b) Statement of owner equity
(c) Balance sheet
(d) None of them
19. The format of the balance sheet reflects which of the following?
(a) The basic accounting equation
(b) Worksheet
(c) Statement of Owner Equity
(d) Income statement
20. How is the balance sheet linked to the other financial statements?
(a) The beginning retained earnings balance on the statement of retained earnings becomes the amount of retained earnings reported on the balance sheet
(b) Retained earnings is added to total assets and reported on the balance sheet
(c) Net income increases retained earnings on the statement of retained earnings, which ultimately increases retained earnings on the balance sheet
(d) There is no link between the balance sheet and the other statements
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