Financial Reporting MCQs (Chapterwise Multiple Choice Questions)

Which of the following does the cash flow cycle measure?

The time between purchase of raw materials and collection of cash

The time it takes to invest liquid funds

The time it takes for a check to get cleared in the bank

The maturity date of corporate bonds

The time between offering a marketable security and receiving funds from sale of one

Answer & Explanation

Correct Answer: The time between purchase of raw materials and collection of cash

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The balance sheet is also referred to as what?

Profit & Loss Report

Statement of Revenue & Expense

Statement of Financial Position

Statement of Comprehensive Income

Answer & Explanation

Correct Answer: Statement of Financial Position

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The financial crisis of 2008 led to more

(None of these)

transparency

bankruptcies

(All of these)

Answer & Explanation

Correct Answer: (All of these)

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Revenue - Expenses = what?

Net income

Cost of Sales

Gross Revenue

Sales Revenue

Answer & Explanation

Correct Answer: Net income

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What are the three parts of a firm's balance sheet?

Assets, Liabilities, Equity

Loss, Profits, Equity

Assets, Loss, Profit

Liabilities, Equity, Profit

Answer & Explanation

Correct Answer: Assets, Liabilities, Equity

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Which is an example of a variable cost?

Management salaries

Utilities

Property taxes

Raw material

Depreciation

Answer & Explanation

Correct Answer: Raw material

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Which of the following transactions would have no impact on the stockholder

Purchase of land from the proceeds of a bank loan

Dividends to stockholders

Net loss

Investments in cash by stockholders

Answer & Explanation

Correct Answer: Purchase of land from the proceeds of a bank loan

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How does Gross Income differ from Net Income?

Gross Income determines the company's cash flow, Net Income does not

Gross Income includes several fixed costs, Net Income does not

Gross Income includes all fixed costs, Net Income does not include any

Gross Income measures profitability before operating expenses, whereas Net Income is calculated after all operating expenses

Answer & Explanation

Correct Answer: Gross Income measures profitability before operating expenses, whereas Net Income is calculated after all operating expenses

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Net profit margin =

Net Profit * Expenses

Net Profit / Revenue

Net Profit * Margin

Net Profit / Expenses

Answer & Explanation

Correct Answer: Net Profit / Revenue

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If the Net Present Value of a project is postive then __________?

the firm should not invest in the project

the firm should invest in the project

the firm should invest in more than one project

Answer & Explanation

Correct Answer: the firm should invest in the project

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Financial Reporting Quick Quiz

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