Classification of Financial Statement Elements Quiz

Inventory is considered an asset on a company's balance sheet.

The Income Statement reports a company's revenues and expenses over a specific period.

A Patent is an example of an intangible asset, representing intellectual property.

Accounts Payable is a liability, representing amounts owed by a company to its creditors.

The Balance Sheet reports a company's financial position at a specific point in time.

The Balance Sheet provides a snapshot of a company's financial position at a specific point in time.

Accumulated Depreciation is a contra account that offsets the value of an asset on the balance sheet.

The Statement of Cash Flows is used to assess a company's ability to generate cash.

Gross Profit is calculated as Net Sales minus the Cost of Goods Sold.

The Statement of Retained Earnings reports changes in a company's retained earnings over a specific period.

The Statement of Cash Flows reports a company's cash inflows and outflows during a specific period.

The Statement of Retained Earnings reflects changes in a company's retained earnings over a specific period.

Return on Assets (ROA) is calculated as Net Income divided by Average Total Assets.

Gross Profit Margin measures the percentage of each sales dollar that represents profit after deducting the cost of goods sold.

The Current Ratio measures a company's liquidity and ability to cover short-term liabilities with short-term assets.