Financial Reporting & Analysis Flashcards
6 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Reporting & Analysis flashcards as text
What is the purpose of the income statement?
Answer: To assess net income
The income statement shows a company’s revenues and expenses over a specific period to determine profit or loss.
What does the balance sheet represent?
Answer: Financial position at a point in time
The balance sheet provides a snapshot of a company's financial position, including assets, liabilities, and equity at a specific date.
Which financial ratio is used to evaluate liquidity?
Answer: Current ratio
The current ratio compares current assets to current liabilities and measures a firm’s ability to pay short-term obligations.
Why is the statement of cash flows important?
Answer: It shows cash inflows and outflows
It helps assess a company’s liquidity and financial flexibility by showing how cash is generated and used.
What does horizontal analysis compare?
Answer: Financial results over time
Horizontal analysis evaluates financial data across time periods to identify trends and growth patterns.
Which section of the cash flow statement includes buying equipment?
Answer: Investing activities
Investing activities in the cash flow statement include purchases of long-term assets like equipment and property.
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