Financial Reporting Flashcards
6 cards from real CAA 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 flashcards as text
Which financial statement provides a snapshot of a company’s financial position at a specific point in time?
Answer: Balance sheet
The balance sheet reports a company’s assets, liabilities, and shareholders' equity at a specific point in time.
What is the purpose of an income statement?
Answer: To show a company's profitability over time
An income statement shows a company’s revenues, expenses, and profits over a specific period, indicating financial performance.
Which principle requires that revenue be recognized when earned, not when cash is received?
Answer: Revenue recognition principle
The revenue recognition principle states that revenue should be recorded when it is earned, regardless of when payment is received.
Which financial statement shows how cash moves in and out of a business?
Answer: Cash flow statement
The cash flow statement tracks cash inflows and outflows from operating, investing, and financing activities.
What is the matching principle in accounting?
Answer: Expenses should be matched with related revenues
The matching principle states that expenses should be recorded in the same period as the revenues they help generate.
What is the purpose of Generally Accepted Accounting Principles (GAAP)?
Answer: To ensure financial statements are consistent and comparable
GAAP ensures consistency, transparency, and comparability in financial reporting across different companies.