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Understanding Financial Statements Company Performance

Understanding Financial Statements Company Performance Quiz Answer. In this post you will get Quiz & Assignment Answer Of Understanding Financial Statements Company Performance

 

Understanding Financial Statements Company Performance

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Module 1 Quiz

1.
Question 1
What is the measurement question that is not answered by the balance sheet but can be answered by looking at the income statement?

1 point

  • What do you know?
  • How did you perform?
  • What do you own?
  • What do you owe?

2.
Question 2
What financial statement looks at what occurred during a period of time that changed the company’s financial position?

1 point

  • Income statement
  • Both balance sheet and income statement
  • Statement of cash flows
  • Balance sheet

3.
Question 3
Which account would be found on the income statement?

1 point

  • Revenue
  • Cost of goods sold
  • Selling, general, and administrative expense
  • All of the above

4.
Question 4
Say you buy a sandwich from a shop. The shop’s revenue is an increase in assets or a decrease in liabilities brought about by a normal activity for the shop. True or false?

1 point

  • True
  • False

5.
Question 5
Revenue has to be brought about by an activity that is central to the company’s normal operations. True or false?

1 point

  • True
  • False

6.
Question 6
What is revenue minus cost of goods sold equal to?

1 point

  • Income taxes
  • Total expenses
  • Gross profit
  • Net income

7.
Question 7
Income taxes are deducted to calculate net income. True or false?

1 point

  • True
  • False

8.
Question 8
An athletic apparel store that sells you a cupcake would report that money as revenue on its financial statements. True or false?

1 point

  • True
  • False

9.
Question 9
The income statement represents a substitute attribute for a company’s what?

1 point

  • Performance
  • Position
  • Liquidity
  • All of the above

10.
Question 10
What are the “goods” defined as in “cost of goods sold”?

1 point

  • Assets purchased with the intent to be sold to customers
  • Assets manufactured with the intent to be sold to customers
  • Both of the above
  • None of the above

11.
Question 11
There is no relationship between cost of goods sold and inventory. True or false?

1 point

  • True
  • False

12.
Question 12

The total cost of goods available for sale can be thought of as the cost of inventory that was sold during the year plus the cost of inventory that wasn’t sold left on the balance sheet as inventory. True or false?

1 point

  • True
  • False

13.
Question 13
Which is NOT a cost flow assumption?

1 point

  • FIFO
  • Average cost
  • SIFO
  • LIFO

14.
Question 14
What is an important indicator of the company’s performance and future prospects?

1 point

  • Average cost
  • Cost of goods sold
  • Gross profit
  • LIFO

15.
Question 15
The cost flow assumption that a company adopts need not match the physical flow of goods. True or false?

1 point

  • True
  • False

16.
Question 16
If a company has a large gross profit, it might suggest what about the company?

1 point

  • It is more at risk to small changes in the price of manufacturing.
  • It is less at risk to small changes in the price of BOTH purchasing inventory and manufacturing.
  • It is less at risk to small changes in the price of manufacturing.
  • It is less at risk to small changes in the price of purchasing inventory.

17.
Question 17
What is another name for cost of goods sold that might appear instead on the income statement?

1 point

  • Cost of sales
  • Revenue
  • Cost of assets
  • All of the above

18.
Question 18
If a company adopts a FIFO cost flow assumption and sells only one item during the year, the cost of the first item of inventory it acquired would be the cost used on the financial statements, regardless of whether the item acquired first was the one actually sold. True or false?

1 point

  • True
  • False

19.
Question 19
How would a company assign costs when using the average cost assumption?

1 point

  • Calculate the cost using the last-in-first-out approach
  • Estimate the average cost for each good remaining in inventory and assign that cost to each item sold
  • Calculate the weighted average cost for goods available for sale during the year and assign that cost to each item sold
  • None of the above

20.
Question 20
Cost of goods sold is found on both the balance sheet and income statement. True or false?

1 point

  • True
  • False

 

Module 2 Quiz

1.
Question 1
What represents outlays of resources as part of normal operating activities?

1 point

Revenue

Expenses

Liabilities

Assets

2.
Question 2
Expenses are associated with operating transactions that …

1 point

Decrease company assets AND increase company liabilities

Decrease company assets

Increase company assets

Increase company liabilities

3.
Question 3
An employee working at the store gets wages that will be shown as an expense on the income statement. True or false?

1 point

True

False

4.
Question 4
Advertising expense would not be shown on the income statement but rather on the balance sheet only. True or false?

1 point

True

False

5.
Question 5
Which is an example of an expense that a company might incur?

1 point

Salaries and wages

Advertising expense

Selling, general, and administrative expense

All of the above

6.
Question 6
An expensive mixer at a bakery is an example of an item that the company would not expense in the year it purchases the mixer, but rather depreciate over a set number of years. True or false?

1 point

True

False

7.
Question 7
What would
be recorded on the income statement if a bakery sold one of the two mixers it
uses to prepare cookie dough and cake batter?

1 point

Revenue

Asset

Gain/loss on sale of equipment

None of the above

8.
Question 8
Depreciation expense allows a company to spread the cost of an asset over the periods it expects to benefit from the asset. True or false?

1 point

True

False

9.
Question 9
What is a gain or loss that arises from events that are both unusual AND infrequent, where unusual means that the event could be judged as unforeseen?

1 point

Unusual gain or loss

Normal gain or loss

Extraordinary gain or loss

All of the above

10.
Question 10
What account on the income statement often serves as a summary measure for a company’s performance?

1 point

Total revenue

Total expenses

Cost of goods sold

Net income

11.
Question 11
Which is an activity that could indicate a company would have other comprehensive income?

1 point

Holding an investment in another company that has a change in value

Offering employees a pension for retirement

Having significant operations outside of its home country

All of the above

12.
Question 12
Even if a company has no other comprehensive income, the company still has to prepare a statement of comprehensive income. True or false?

1 point

True

False

13.
Question 13
Which financial statement tells us the story of how the company’s cash position changed from the beginning of the period to the end of the period?

1 point

Statement of comprehensive income

Balance sheet

Statement of cash flows

Income statement

14.
Question 14
“Cash flow” refers to cash leaving the company or arriving into the company as a result of transactions or events. True or false?

1 point

True

False

15.
Question 15
Which is NOT one of the three sections on the cash flow statement?

1 point

Financing activities

Normal activities

Investing activities

Operating activities

16.
Question 16
When using the indirect method, there are adjustments on the statement of cash flows for items that affect net income but don’t affect cash. True or false?

1 point

True

False

17.
Question 17
Which is an adjustment found on the operating activities section of the statement of cash flows?

1 point

Items that affect net income but don’t affect cash

Items that affect net income and cash but aren’t related to operating activities

Timing differences between transactions’ effect on net income and their
effect on cash

All of the above

18.
Question 18
Which activity on the statement of cash flows relates to the impact of transactions associated with the company’s long-term assets?

1 point

Operating

Investing

Financing

All of the
above

19.
Question 19
Which activity on the statement of cash flows relates to the impact of transactions associated with the company’s long-term liabilities or its equity?

1 point

Operating

Investing

Financing

All of the above

20.
Question 20
At the bottom of the cash flow statement, there is a sum of cash inflows and outflows of all three sections. True or False?

1 point

True

False

 

Module 3 Quiz

1.
Question 1
Financial statement notes usually accompany financial statements and usually appear after the statement of cash flows. True or false?

1 point

True

False

2.
Question 2
Where would a company disclose the cost assumption of FIFO on their financials?

1 point

Gross profit

Beginning of balance sheet

Net income

Note

3.
Question 3
There are some notes that are required to be reported by companies.

1 point

True

False

4.
Question 4
The note labeled “summary of significant accounting policies” would include the assumption about what flow of inventory the company uses when determining cost of goods sold. True or false?

1 point

True

False

5.
Question 5
Where would the type of depreciation the company uses be disclosed?

1 point

It does not need to be disclosed.

Summary of significant accounting policies note

Contingency note

Subsequent event note

6.
Question 6
If something significant and relevant happens to the company after the fiscal year end, but before the financial statements are issued, where should the company report it on the financials?

1 point

Subsequent event note

It does not need to be disclosed since it happened after fiscal year end.

Summary of significant accounting policies note

Contingency note

7.
Question 7
A contingent liability depends on the outcome of some future event. True or false?

1 point

True

False

8.
Question 8
What companies are required to produce an auditor’s report?

1 point

Public

Private

Both of the above

No companies require an auditor’s report

9.
Question 9
The auditor’s report is a formal opinion regarding a set of financial statements written by whom?

1 point

Public

Independent auditor

Internal auditor

Investors

10.
Question 10
Notes on most company’s financial statements have declined over the years. True or false?

1 point

True

False

11.
Question 11
The auditor’s report may include which of the following elements?

1 point

Description of auditor’s responsibility

Description of management’s responsibility

Scope of the audit

All of the above

12.
Question 12
A company with a clean auditor’s report means that investors should invest in the company. True or false?

1 point

True

False

13.
Question 13
The public can use the auditor’s report to learn that the financials are a fair representation of the company. True or false?

1 point

True

False

14.
Question 14
Which should be disclosed by a company in its notes?

1 point

Change in methodology to estimate allowance for bad debt

Change in depreciation

Both of the above

None of the above

15.
Question 15
What are reasons why there are more notes disclosed by companies now as compared to the past?

1 point

More standards in accounting require more notes

More complexity of business

More transparency wanted from investors

All of the above

16.
Question 16
The auditor’s signature is included in the auditor’s report. True or false?

1 point

True

False

17.
Question 17
Disclosures in notes can be a means for a company to manage its own risk as it relates to informing readers of risks. True or false?

1 point

True

False

18.
Question 18
A contingency loss should be recorded as a liability on the balance sheet if what?

1 point

The loss is probable.

The amount of loss can be estimated.

Both of the above

A contingency loss should never be recorded as a liability on the balance sheet.

19.
Question 19
A contingency loss should only be presented as a disclosure in the notes if what?

1 point

The loss is not judged probable.

The amount of loss CAN be estimated.

The amount of loss is probable and CAN be estimated.

The amount of loss is probable and CANNOT be estimated.

20.
Question 20
Companies want to get a qualified opinion on their financial statements, not an unqualified opinion. True or false?

1 point

True

False

 

 

Module 4 Quiz

1.
Question 1
Comparing different companies’ net incomes but nothing else can give you a clear picture of who is doing well. True or false?

1 point

True

False

2.
Question 2
What profitability ratio divides net income by the average total assets?

1 point

Return on assets

Current ratio

Risk ratio

Earnings per share

3.
Question 3
Which profitability ratio indicates the amount of net income earned for each share of common stock outstanding?

1 point

Return on assets

Current ratio

Earnings per share

Risk ratio

4.
Question 4
Companies whose stock is sold on public exchanges are NOT required to report earnings per share on their income statements. True or false?

1 point

True

False

5.
Question 5
Financial ratios are useful when comparing companies that are different sizes or in different industries. True or false?

1 point

True

False

6.
Question 6
What risk ratio would indicate a company’s ability to meet its liabilities by using its current assets?

1 point

Current ratio

Return on assets

Earnings per share

None of the above

7.
Question 7
Accounting is fundamentally about measurement. True or false?

1 point

True

False

8.
Question 8
The cash flow statement shows how one balance sheet item changed from the beginning to the end of the period. True or false?

1 point

True

False

9.
Question 9
What financial statement would tell you what events or transactions increased assets or decreased liabilities, or decreased assets or increased liabilities?

1 point

Balance sheet

Income statement

Statement of cash flows

All of the above

10.
Question 10
A company’s financial performance can be represented through the balance sheet. True or false?

1 point

True

False

11.
Question 11
A company’s assets and liabilities are presented on the balance sheet. True or false?

1 point

True

False

12.
Question 12
A company’s revenue and expenses are reported in which financial statement?

1 point

Balance sheet

Income statement

Statement of cash flows

All of the above

13.
Question 13
The balance sheet is a representation of the company’s what?

1 point

Position

Performance

Successfulness

Position AND performance

14.
Question 14
Detail about a company’s operating, investment, and financing activities can be found on which financial statement?

1 point

Balance sheet

Income statement

Statement of cash flows

All of the above

15.
Question 15
Notes can be an important part of understanding the financial statements. True or false?

1 point

True

False

16.
Question 16
When deciding between two companies to invest in, you only need to look at each company’s cash and choose the larger of the two. True or false?

1 point

True

False

17.
Question 17
Benchmarks of ratios can help us analyze companies against each other and a standard. True or false?

1 point

True

False

18.
Question 18
Which is one way that ratios can be helpful?

1 point

Help compare companies of different sizes

Help compare a company to prior periods

Help compare a company to its competitors

All of the above

19.
Question 19
EPS stands for what?

1 point

Equity per share

Earnings per share

Earnings performance standard

None of the above

20.
Question 20
The income statement is a snapshot of the position of the company. True or false?

1 point

True

False

 

 

Peer-graded Assignment: Company Performance Peer Review Assignment

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