Chapter 10

Question 1

3 fundamental statements

Answer 1

-Statement of changes in financial position
-statement of comprehensive income
-statement of cash flows

Question 2

2 fundamental types of business transactions

Answer 2

Operational transaction (revenue and expenses)
Capital Asset transactions
(investment and divestment)

Question 3

liquidity

Answer 3

The amount of assets and organization possesses that can easily be converted to cash

Question 4

Capacity

Answer 4

The ability of an organization to generate revenue and to grow its revenue streams

Question 5

Solvency

Answer 5

The ability of an organization to meet long-term fixed expense requirements and to fund future growth

Question 6

Efficiency

Answer 6

The ability of n organization to effectively manage its operations and allocate its resources

Question 7

Statement of comprehensive income

Answer 7

-summarizes the operational transactions of an organization
-it is a good barometer of an organizations efficiency and effectiveness
-shows the organization’s profit (over a defined period) after expenses and taxes