AFP QUIZ EXAM 2024
Which statement is true about profits? - answer-Profit is a measurement, not a tangible object like cash.
The value of assets are recorded at their market value at the time of purchase. - answer-False
Which of the following is the appropriate definition of "liabilities"? - answer-Amount of money owed by
the company to outsiders.
Which of the following assets would be amortized over its estimated life? - answer-Patent
Which of the following would be a correct implementation of the matching principle? - answer-
Recording the cost of purchasing inventory in the same month as when the inventory is sold.
Which of the following should be the primary source of cash for any business? - answer-Business's own
cash flow from operations
Expenses necessary to support overall operations of the company but difficult to link directly to sales
include - answer-a and c above
Who has responsibility for the financial decisions of a company? - answer-All of the above
The amount that remains from revenues after all expenses have been paid is called - answer-net
income.
Which ratios measure the company's ability to meet its financial obligations? - answer-Liquidity ratios
In reviewing his income statement, Travis was surprised to see that his company was still showing a
profit even though there was not enough money in the company's checking account to pay monthly
expenses. Why might Travis' business show a profit and yet experience cash shortages? - answer-All of
the above.
Kyle will be purchasing a considerable amount of equipment for his self-service car wash business. Every
year a portion of the value of the equipment is depreciated, or allocated, from equipment to
depreciation expense. Depreciation makes Kyle's financial statements more accurate - answer-all of the
above.
At what point is revenue shown on the Income Statement? - answer-When the product is shipped
The primary reason(s) that profitable companies may experience increasing cash shortages as sales grow
is (are) - answer-a and b above.
Which category of expenses tells the entrepreneur about how much it costs to make the
products/services that were sold? - answer-Cost of Sales
Which statement is true about profits? - answer-Profit is a measurement, not a tangible object like cash.
The value of assets are recorded at their market value at the time of purchase. - answer-False
Which of the following is the appropriate definition of "liabilities"? - answer-Amount of money owed by
the company to outsiders.
Which of the following assets would be amortized over its estimated life? - answer-Patent
Which of the following would be a correct implementation of the matching principle? - answer-
Recording the cost of purchasing inventory in the same month as when the inventory is sold.
Which of the following should be the primary source of cash for any business? - answer-Business's own
cash flow from operations
Expenses necessary to support overall operations of the company but difficult to link directly to sales
include - answer-a and c above
Who has responsibility for the financial decisions of a company? - answer-All of the above
The amount that remains from revenues after all expenses have been paid is called - answer-net
income.
Which ratios measure the company's ability to meet its financial obligations? - answer-Liquidity ratios
In reviewing his income statement, Travis was surprised to see that his company was still showing a
profit even though there was not enough money in the company's checking account to pay monthly
expenses. Why might Travis' business show a profit and yet experience cash shortages? - answer-All of
the above.
Kyle will be purchasing a considerable amount of equipment for his self-service car wash business. Every
year a portion of the value of the equipment is depreciated, or allocated, from equipment to
depreciation expense. Depreciation makes Kyle's financial statements more accurate - answer-all of the
above.
At what point is revenue shown on the Income Statement? - answer-When the product is shipped
The primary reason(s) that profitable companies may experience increasing cash shortages as sales grow
is (are) - answer-a and b above.
Which category of expenses tells the entrepreneur about how much it costs to make the
products/services that were sold? - answer-Cost of Sales
