ACCOUNTING FUNDAMENTALS CFI
EXAM QUESTIONS & CORRECT
SOLUTIONS
What are the 3 components of a balance sheet? - correct answer ✔✔Assets = Liabilities + Equity
What are the three components of an income statement? - correct answer ✔✔Revenues
Expenses
Profit or loss
What are the three components of a cash flow statement? - correct answer ✔✔Operating
Investing
Financing
What are the components of Assets on the Balance sheet? - correct answer ✔✔Current - used
in a year
Noncurrent - used longer than a year
How are non current assets broken into 2 categories? - correct answer ✔✔Tangible and non
tangible
What are the components of Liabilities on the balance sheet? - correct answer ✔✔Current and
noncurrent.
, What are retained earnings? - correct answer ✔✔Total profit ever earned - (all losses &
dividends)
What are the two ways to balance a balance sheet? - correct answer ✔✔1. Double entry once
on the assets and once on the liabilities.
2. twice on the same side one as a positive and one as a negative.
How is an income statement constructed? - correct answer ✔✔Revenue - operating expenses =
Gross Profits -Indirect Operating costs = Operating Income - Cost of debt financing -Tax =Net
Income
What are the 3 components of Expenses on the Income Statement? - correct answer
✔✔General and Administrative
Research and Development
Sales and Marketing
How is Gross Profit calculated? - correct answer ✔✔Sales - COGS
How do you calculate EBIT - correct answer ✔✔Gross Profit - Expenses
What are the usual 3 components of the Current assets on the balance sheet?
What are the usual 2 components of the long term asssets? - correct answer ✔✔1. Cash
2. AR (Accounts Receivable)
3. Inventory
EXAM QUESTIONS & CORRECT
SOLUTIONS
What are the 3 components of a balance sheet? - correct answer ✔✔Assets = Liabilities + Equity
What are the three components of an income statement? - correct answer ✔✔Revenues
Expenses
Profit or loss
What are the three components of a cash flow statement? - correct answer ✔✔Operating
Investing
Financing
What are the components of Assets on the Balance sheet? - correct answer ✔✔Current - used
in a year
Noncurrent - used longer than a year
How are non current assets broken into 2 categories? - correct answer ✔✔Tangible and non
tangible
What are the components of Liabilities on the balance sheet? - correct answer ✔✔Current and
noncurrent.
, What are retained earnings? - correct answer ✔✔Total profit ever earned - (all losses &
dividends)
What are the two ways to balance a balance sheet? - correct answer ✔✔1. Double entry once
on the assets and once on the liabilities.
2. twice on the same side one as a positive and one as a negative.
How is an income statement constructed? - correct answer ✔✔Revenue - operating expenses =
Gross Profits -Indirect Operating costs = Operating Income - Cost of debt financing -Tax =Net
Income
What are the 3 components of Expenses on the Income Statement? - correct answer
✔✔General and Administrative
Research and Development
Sales and Marketing
How is Gross Profit calculated? - correct answer ✔✔Sales - COGS
How do you calculate EBIT - correct answer ✔✔Gross Profit - Expenses
What are the usual 3 components of the Current assets on the balance sheet?
What are the usual 2 components of the long term asssets? - correct answer ✔✔1. Cash
2. AR (Accounts Receivable)
3. Inventory
