Financial Reporting MCQ Questions Answers

1. What purpose would a company's financial statements have for the lending institutions?

2. Which errors/s can a trial balance be used to detect?

3. Which item would be shown separately on the income statement after the normal operations?

4. How are the Statement of Retained Earnings & the Balance Sheet related?

5. A company prepays for 6 months of insurance. What effect does this have on their current assets?

6. Which operating section of a cash flow statement not contain?

7. Which is the method of preparing the cash flow statement?

8. Which is a part of 'Other Revenues'?

9. Which would not be included in a balance sheet?

10. Which is the four general groups of outside users of a company's financial reports?

11. Why would R&D be possibly included on both or either the Income Statement and Balance Sheet?

12. Which would not appear on an income statement?

13. What number is transferred from the Income Statement to the Cash Flow statement?

14. Why would a company repurchase their own stock?

15. Which item would be accounted for as an expense?

16. Why would a company repurchase their own stock?

17. Why would the general public be interested in a company's financial statements?

18. Why would someone be interested in how the company used its cash?

19. Why is depreciation added back in the cash flow statement?

20. Why is the Statement of RE created?

21. Which is an example of a variable cost?

22. With which regulatory bodies would a publicly traded company be much more involved than a private company would be?

23. Why do companies include notes along with the financial statements?

24. What is the purpose of an audit?

25. Which is a difference between a public company and a private one?

26. Which is/are the primary financial statements used to measure stability?

27. Retained earnings will change over time because of several factors. Which factors would lead to an increase in the Retained Earnings?

28. Pro forma statements are _______ statements.

29. Which is not a fundamental of accounting?

30. Purpose of the statement of cash flows?

31. How would the financial statements be useful for a Company Manager?

32. By doing/issuing which could a company raise short-term funds by selling receivables and inventory?

33. How are the income statement and balance sheet linked?

34. Which is the primary financial statement used to measure profitability?

35. What is the one problem while comparing financial statements with companies based in different countries?

36. What way is government accounting different from public company accounting?

37. What are the main categories of a balance sheet?

38. What does Treasury Stock appear on the balance sheet as?

39. When a company files a statement of their financial plans for the next two years with the SEC, it is called a ______.

40. What is historical value?

41. How does Gross Income differ from Net Income?

42. What does the Balance Sheet reflect?

43. Which transaction is a non cash event but would be disclosed in the notes of the Statement of Cash Flows?

44. Which transaction would have no impact on the stockholder's equity?

45. Which does the cash flow cycle measure?

46. Which is the 3 main sections of Statement of Cash Flows?

47. What is one possible use employees would have of the company financial statements?

48. Which financial statement best allows a firm to assess its ability to pay dividends?

49. What does GAAP stand for?

50. The formula to calculate Ending Retained Earnings is ______.

51. How do investors turn the information on the financial statements into more useful data which is comparable to other companies?

52. What is Treasury Stock?

53. What are the four traits of a useful financial statement?

54. How are the Cash Flow Statement and Balance Sheet related?

55. What is another name for the Balance Sheet?

56. Financial managers use the _____________ to plan for monthly financing needs.

57. What purpose would a company's financial statements have for the lending institutions?

58. The best financial report to see a company's cash balance is ______.

59. What is the purpose of a trial balance?

60. A company pays out a previous declared common stock dividend. What is its effect on the cash?

61. What is the primary reason a government entity would want to look at a company's financial statements?

62. How are the Cash Flow Statement and Balance Sheet related?

63. A company declares a dividend. What is its effect on the cash?

64. Which does Financing Activities not include?

65. Which is not a part of cost of goods sold?

66. In what general way do investors use the information in the financial statements?

67. How does the income statement of a charity differ from that of a public company?

68. What is one procedure a Company Manager would take to make the information on financial reports more useful for examination?

69. How often do companies typically generate standard financial reports?

70. How does Treasury Stock differ from Trading Stock?

71. Which cash collection technique is the most cost-effective for companies with many locations?

72. What does the indirect method of preparing the cash flow statement effectively accomplish?

73. True or False? Financial reporting is not needed by small companies listed on the OTC bulletin board.

74. True or False? Working capital is the money it takes to pay off its current liabilities.

75. True or False? The SEC and FASB have similar duties.

76. True or False? Net operating gains are added to net income when calculating a cash flows operating activity?

77. The qualitative characteristics of financial statements include Materiality and

78. The DuPont Analysis measures breaks down the Return of Equity into how many parts?

79. Return on Asset = Net income / Sales * ?

80. A decrease in non-current assets is _________ net income.

81. Which of the following are not considered financial reports?

82. Operational efficiency is measured by which part of the DuPont ratio?

83. How do you calculate goodwill?

84. The financial crisis of 2008 led to more

85. What do you obtain from this expression: (Earnings After Tax / Net Profit After Tax) - Payable Dividends

86. True or False? There are three basic types of accounting models?

87. In 2001, the International Accounting Standards Board (IASB) took over from what prior organization?

88. A 10Q is a financial report for a company that is given

89. True or False? Earnings per share do not include taxes for the year.

90. Earnings per share = ?

91. Current Dividend Yield = ?

92. If the price per share of a company is $10 and and its EPS is $1, then what is its PE ratio?

93. The cost principle is:

94. The revenue recognition principle is:

95. The SEC usually deals with:

96. Which of the following is a general purpose financial report

97. Which form corresponds to an annual summary?

98. True or False? Dividends appear on the income statement.

99. How do you calculate market capitalization?

100. True or False? A form 8k is used to notify investors of some meaningful event arising.