#1
Which financial statement reports a company's revenues and expenses over a period?
Income Statement
ExplanationReports company's financial performance by detailing revenues and expenses during a specific timeframe.
#2
What is typically listed first on a balance sheet?
Assets
ExplanationAssets are the primary entries on a balance sheet, representing what a company owns.
#3
Which financial statement provides information about a company's cash receipts and cash payments?
Statement of Cash Flows
ExplanationSummarizes cash inflows and outflows from operating, investing, and financing activities.
#4
What does the term 'GAAP' stand for in accounting?
Generally Accepted Accounting Principles
ExplanationStandard set of accounting principles and practices.
#5
Which financial statement shows the changes in a company's cash balance over a period?
Statement of Cash Flows
ExplanationTracks changes in cash position from various business activities.
#6
Which financial statement presents an overview of a company's financial position at a specific point in time?
Balance Sheet
ExplanationProvides snapshot of company's assets, liabilities, and equity at a specific moment.
#7
What does 'EBITDA' stand for in finance?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationMeasures operating performance by excluding certain expenses.
#8
Which financial statement reports changes in a company's retained earnings over a period?
Statement of Retained Earnings
ExplanationDetails how retained earnings have changed over a specific timeframe.
#9
What does the debt-to-equity ratio measure?
The proportion of debt financing compared to equity financing
ExplanationCompares the relative contributions of debt and equity to a company's capital structure.
#10
Which financial statement shows a company's net income or loss over a period?
Income Statement
ExplanationDetails company's revenues, expenses, and overall profitability.
#11
Which of the following would not be included in the operating activities section of a statement of cash flows?
Interest paid on loans
ExplanationInterest paid on loans is a financing activity, not an operating activity.
#12
What is the formula for calculating return on investment (ROI)?
(Net Income / Total Assets) * 100%
ExplanationCalculates the percentage return generated on investments relative to the total assets.
#13
Which of the following is a non-cash expense typically added back to net income when calculating cash flow from operations?
Depreciation expense
ExplanationNon-cash expense, added back to reflect cash generated from operations.
#14
In finance, what does the term 'EBIT' stand for?
Earnings Before Interest and Taxes
ExplanationMeasures operating performance, excluding interest and taxes.
#15
What is the formula for calculating earnings per share (EPS)?
(Net Income / Average Number of Shares Outstanding)
ExplanationCalculates the portion of net income attributable to each outstanding share of common stock.