#1
Which financial statement shows a company's revenues and expenses over a specific period?
Income Statement
ExplanationReports company's financial performance by detailing revenues and expenses.
#2
What does equity represent in accounting?
The ownership interest in a company's assets after liabilities are deducted
ExplanationDenotes residual interest in assets after deducting liabilities.
#3
What does the term 'EBITDA' stand for in finance?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationMeasures operating performance excluding certain expenses.
#4
Which financial statement reports changes in the retained earnings account of a business over a specific period?
Statement of Retained Earnings
ExplanationDetails changes in retained earnings over time.
#5
What is the purpose of a cash flow statement?
To provide information about a company's cash receipts and cash payments during a specific period
ExplanationDetails cash movements during a specified time.
#6
Which of the following is NOT a component of shareholders' equity?
Long-term Liabilities
ExplanationLong-term liabilities are not part of shareholders' equity.
#7
What does a high debt-to-equity ratio indicate?
The company relies more on debt financing than equity financing
ExplanationSignifies a higher reliance on debt for financing.
#8
Which of the following financial ratios measures a company's ability to pay its short-term obligations with its most liquid assets?
Current Ratio
ExplanationAssesses short-term liquidity using current assets.
#9
How are dividends typically classified on a company's financial statements?
As a financing activity
ExplanationCategorized under financing activities in financial statements.
#10
What does the term 'book value' represent in accounting?
The value of an asset as reported on the balance sheet
ExplanationAsset value as stated on the balance sheet.
#11
Which financial statement provides information about a company's cash receipts and cash payments during a specific period?
Statement of Cash Flows
ExplanationDetails cash inflows and outflows over a specified time.
#12
What is the formula for calculating Return on Equity (ROE)?
Net Income / Total Equity
ExplanationExpresses profitability as a ratio of net income to total equity.
#13
What does the term 'float' refer to in finance?
The time it takes for a check to clear through the banking system
ExplanationTime taken for a check to clear in the banking system.
#14
What does the DuPont analysis measure?
A company's ability to generate profits from its assets
ExplanationAssesses the efficiency of profit generation from assets.