#1
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
ExplanationSummarizes assets, liabilities, and equity on a specific date.
#2
What does the income statement primarily show?
Revenue and expenses
ExplanationDetails income, expenses, and profits over a specific period.
#3
What is the purpose of analyzing personal financial statements?
To evaluate financial health and make informed decisions
ExplanationAssessment for informed financial decision-making and overall financial health.
#4
Which of the following is an example of an asset?
Savings account
ExplanationA savings account represents a financial asset.
#5
What is the purpose of a personal budget?
To track both income and expenses
ExplanationAids in monitoring and managing personal income and expenditures.
#6
Which of the following is a liquidity ratio?
Current ratio
ExplanationCompares current assets to current liabilities, indicating short-term liquidity.
#7
What does the debt-to-equity ratio measure?
The proportion of debt financing relative to equity financing
ExplanationIndicates the balance between debt and equity in a company's capital structure.
#8
What is the formula for calculating the current ratio?
Current assets / Current liabilities
ExplanationExpresses the ratio of a company's short-term assets to its short-term liabilities.
#9
Which financial statement reports changes in a company's retained earnings over a specific period?
Statement of retained earnings
ExplanationDetails changes in retained earnings, including dividends and profits.
#10
What does net worth represent in personal finance?
Total value of assets minus liabilities
ExplanationThe residual value of personal wealth after deducting liabilities from assets.
#11
Which financial statement provides information about a company's sources and uses of cash over a specific period?
Cash flow statement
ExplanationShows cash inflows and outflows, highlighting liquidity.
#12
What does the quick ratio measure?
The company's ability to cover its short-term liabilities with its most liquid assets
ExplanationAssesses a company's ability to meet immediate obligations with highly liquid assets.
#13
Which of the following is not a component of the cash flow statement?
Non-operating activities
ExplanationNon-operating activities are typically excluded from the cash flow statement.
#14
What does the debt ratio indicate?
The proportion of debt relative to the company's assets
ExplanationShows the extent of a company's financing provided by debt.
#15
What is the formula for calculating net worth?
Total assets - Total liabilities
ExplanationExpresses the difference between total assets and total liabilities.