CF Quiz 1 - Understanding of Financial Statements
Quiz by Jamal Haider Naqvi
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- Q1
The annual report contains four basic financial statements: the income statement, the balance sheet, the cash flow statement, and statement of stockholders 'equity.
truefalseTrue or False30s - Q2
The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm's future earnings and dividends, and the riskiness of those cash flows.
truefalseTrue or False30s - Q3
Companies typically provide four basic financial statements: the fixed income statement, the current income statement, the balance sheet, and the cash flow statement
falsetrueTrue or False30s - Q4
On the balance sheet, total assets must always equal the sum of total liabilities and equity
truefalseTrue or False30s - Q5
If we were describing the income statement and the balance sheet, it would be correct to say that the income statement is more like a video while the balance sheet is more like a snapshot.
truefalseTrue or False30s - Q6
Consider the following balance sheet, for Games Inc. Because Games has $800,000 of retained earnings, we know that the company would be able to pay cash to buy an asset with a cost of $200,000.
falsetrueTrue or False45s - Q7
Both interest and dividends paid by a corporation are deductible operating expenses, hence they decrease the firm's taxes.
falsetrueTrue or False30s - Q8
An increase in accounts receivable represents an increase in net cash provided by operating activities because receivables will produce cash when they are collected.
falsetrueTrue or False30s - Q9
The retained earnings account on the balance sheet does not represent cash. Rather, it represents part of the stockholders' claims against the firm's existing assets.
truefalseTrue or False30s - Q10
Which of the following statements is CORRECT?
The balance sheetgives us a picture of the firm's financial position at a point in time.
The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders' equity
The income statement gives us a picture of the firm's financial position at a point in time
The statement of cash flows tells us how much cash the firm must pay out in interest during the year.
45s
