#1
Which financial statement provides an overview of a company's financial position at a specific point in time?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
#2
Which of the following is an example of an operating activity in a cash flow statement?
Purchasing equipment
Issuing stock to investors
Receiving interest income
Paying salaries to employees
#3
Which of the following is NOT a primary financial statement used by businesses?
Statement of cash flows
Statement of changes in equity
Statement of expenses
Income statement
#4
What is the purpose of a trial balance in accounting?
To determine the net income of a company
To identify errors in the recording process
To calculate the return on investment
To prepare financial statements
#5
Which financial statement reports a company's revenues and expenses over a specific period?
Balance sheet
Income statement
Statement of cash flows
Statement of retained earnings
#6
What does the term 'accounts receivable' represent in financial transactions?
Money owed by the company to its creditors
Money owed by customers to the company
Money invested by shareholders
Money paid to suppliers
#7
Which of the following is NOT considered a method for calculating depreciation?
Straight-line method
Double-declining balance method
Sum-of-the-years-digits method
Profit and loss method
#8
Which financial ratio measures a company's ability to pay off its short-term liabilities with its short-term assets?
Current ratio
Debt-to-equity ratio
Return on investment
Earnings per share
#9
What does the term 'liquidity' refer to in finance?
The ease of converting assets into cash without affecting their market price
The total value of a company's assets
The ability of a company to generate profits
The ratio of debt to equity in a company
#10
Which accounting principle requires that assets and liabilities should be recorded at their original purchase price?
Revenue recognition principle
Conservatism principle
Historical cost principle
Materiality principle
#11
What is the purpose of the 'matching principle' in accounting?
To ensure that financial statements reflect economic reality
To match revenues with expenses in the period they are incurred
To ensure consistency in financial reporting
To minimize tax liabilities
#12
Which of the following is a component of the DuPont analysis of return on equity?
Interest coverage ratio
Leverage ratio
Operating margin
Inventory turnover ratio
#13
In finance, what does the term 'net present value' (NPV) represent?
The total value of a company's assets minus its liabilities
The total cash flows a project will generate over its lifetime
The difference between the present value of cash inflows and outflows
The percentage return on an investment
#14
What is the primary purpose of financial leverage?
To increase the volatility of returns
To decrease the risk of bankruptcy
To increase the return on equity
To minimize the cost of debt
#15
Which financial ratio measures a company's ability to generate profit from its operating activities?
Return on assets (ROA)
Gross profit margin
Operating profit margin
Debt-to-equity ratio