Reading Balance Sheet, Income Statement, and Statement of Cash Flows

Question 1

Of the following accounts, which is likely to be listed first on a Balance Sheet?

A Accounts Receivable

B Common Stock

C Cash

D Accounts Payable

Answer 1

C

Question 2

Which of the following statements correctly identifies when assets are considered “current”?

A It is expected to be received within a year or operating cycle

B It is expected to be used up or converted to cash within a year or operating cycle

C It must be paid within a year or operating cycle

D It was used up within the past year or operating cycle

Answer 2

B

Question 3

Which of the following equations accurately defines operating income?

A Revenues – Expenses + Gains – Losses

B Revenues – Expenses

C Revenues + Gains

D Revenues only

Answer 3

B

Question 4

What is subtracted from Net Income to arrive at the change in Retained Earnings?

A Dividends paid

B Dividends declared

C Dividends payable

D Dividends received

Answer 4

B

Question 5

How is Net Increase (Decrease) in Cash calculated from the Statement of Cash Flows?

A Operating Cash Flows – Investing Cash Flows – Financing Cash Flows

B Operating Cash Flows – Investing Cash Flows + Financing Cash Flows

C Operating Cash Flows + Investing Cash Flows – Financing Cash Flows

D Operating Cash Flows + Investing Cash Flows + Financing Cash Flows

Answer 5

D