AU /
60
/ /
Chapter
/ //
5 Practice Questions With Correct Answers
// // // // //
The //primary //purpose //of //financial //statements //is: //- //verified //answer(s)-
✔✔To /
/communicate //information //about //an //organization's //financial //activities //to //decision //makers.
What //best //describes //the //purpose //of //financial //statements? //- //verified //answer(s)-
✔✔To //communicate //information //about //an //organization's //financial //status.
What /
/best /
/describes /
/the /
/result //of //the //four //major //financial //statements //all //taken //together? //- //verified //answer(s)-
✔✔The //financial //condition //of //the //organization.
The /
/four /
/primary /
/types /
/of /
/financial /
/statements /
/include /
/the /
/balance /
/sheet, /
,/the /
/statement /
/of /
/changes /
/in //shareholders' //equity, //the //statement //of //cash //flows, //and //the: //- //verified //answer(s)-
✔✔Income //statement.
The /
/four /
/primary /
/types /
/of //financial //statements //include //the //balance //sheet, //the //income //statement, //the //statement
//of //cash //flows, //and //the //- //verified //answer(s)-
✔✔Statement //of //changes //in //shareholders' //equity.
What //layout //best //represents //the //general //form //of //a //balance //sheet? //- //verified //answer(s)-
✔✔Assets //Liabilities, //Owners' //Equity, //Total //Liabilities //and //Owners' //Equity.
The /
/balance /
/sheet //provides //a //snapshot //of //an //organization's //financial //condition: //- //verified //answer(s)-
✔✔At //a //given //point //in //time.
The /
/basic /
/accounting //equation //on //which //the //balance //sheet //is //structured //is: //- //verified //answer(s)-
✔✔Assets //= //Liabilities //+ //Net //Worth.
Assets /
/on /
/the /
/balance /
/sheet /
, /are /
/classified /
/as /
/current /
/and //noncurrent. //What //would //classify //as //a //noncurrent //asset? //- //verified //answer(s)-
✔✔A //copyright //that //expires //in //10 //months.
Liabilities /
/are /
/claims /
/against /
/the /
/organization's //assets. //What //would //best //describe //a //current //liability? //- //verified //answer(s)-
✔✔Unpaid //invoices //from //vendors,
The //"bottom /
/line" //of //an //income //statement //shows //the //organization's: //- //verified //answer(s)-
✔✔Net //income. //(Profit)
The /
/Financial /
/Accounting /
/Standards /
/Board /
/(FASB) /
/requires /
/organizations /
/to /
/report /
/comprehensive /
/income. /
/Comprehensive //income //includes //an //organization's //net //income //and: //- //verified //answer(s)-
✔✔Unrealized //gains //on //securities //available //for //sale.
60
/ /
Chapter
/ //
5 Practice Questions With Correct Answers
// // // // //
The //primary //purpose //of //financial //statements //is: //- //verified //answer(s)-
✔✔To /
/communicate //information //about //an //organization's //financial //activities //to //decision //makers.
What //best //describes //the //purpose //of //financial //statements? //- //verified //answer(s)-
✔✔To //communicate //information //about //an //organization's //financial //status.
What /
/best /
/describes /
/the /
/result //of //the //four //major //financial //statements //all //taken //together? //- //verified //answer(s)-
✔✔The //financial //condition //of //the //organization.
The /
/four /
/primary /
/types /
/of /
/financial /
/statements /
/include /
/the /
/balance /
/sheet, /
,/the /
/statement /
/of /
/changes /
/in //shareholders' //equity, //the //statement //of //cash //flows, //and //the: //- //verified //answer(s)-
✔✔Income //statement.
The /
/four /
/primary /
/types /
/of //financial //statements //include //the //balance //sheet, //the //income //statement, //the //statement
//of //cash //flows, //and //the //- //verified //answer(s)-
✔✔Statement //of //changes //in //shareholders' //equity.
What //layout //best //represents //the //general //form //of //a //balance //sheet? //- //verified //answer(s)-
✔✔Assets //Liabilities, //Owners' //Equity, //Total //Liabilities //and //Owners' //Equity.
The /
/balance /
/sheet //provides //a //snapshot //of //an //organization's //financial //condition: //- //verified //answer(s)-
✔✔At //a //given //point //in //time.
The /
/basic /
/accounting //equation //on //which //the //balance //sheet //is //structured //is: //- //verified //answer(s)-
✔✔Assets //= //Liabilities //+ //Net //Worth.
Assets /
/on /
/the /
/balance /
/sheet /
, /are /
/classified /
/as /
/current /
/and //noncurrent. //What //would //classify //as //a //noncurrent //asset? //- //verified //answer(s)-
✔✔A //copyright //that //expires //in //10 //months.
Liabilities /
/are /
/claims /
/against /
/the /
/organization's //assets. //What //would //best //describe //a //current //liability? //- //verified //answer(s)-
✔✔Unpaid //invoices //from //vendors,
The //"bottom /
/line" //of //an //income //statement //shows //the //organization's: //- //verified //answer(s)-
✔✔Net //income. //(Profit)
The /
/Financial /
/Accounting /
/Standards /
/Board /
/(FASB) /
/requires /
/organizations /
/to /
/report /
/comprehensive /
/income. /
/Comprehensive //income //includes //an //organization's //net //income //and: //- //verified //answer(s)-
✔✔Unrealized //gains //on //securities //available //for //sale.
