FA Financial Reporting and Analysis

Question 1

Which financial statement summarizes a company's revenues and expenses over a specific period?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Cash Flow Statement

Answer

Statement of Retained Earnings

Question 2

What does the current ratio measure?

Accepted Answer

Short-term liquidity

Answer

Long-term solvency

Answer

Asset profitability

Answer

Revenue growth

Question 3

Under US GAAP, which inventory costing method assumes the most recently purchased items are sold first?

Accepted Answer

LIFO

Answer

FIFO

Answer

Weighted Average

Answer

Specific Identification

Question 4

Which ratio measures how efficiently a company collects receivables?

Accepted Answer

Accounts Receivable Turnover Ratio

Answer

Debt-to-Equity Ratio

Answer

Gross Profit Margin

Answer

Return on Assets

Question 5

What is the primary purpose of a common-size income statement?

Accepted Answer

To express all line items as a percentage of net sales

Answer

To show absolute dollar changes year-over-year

Answer

To calculate earnings per share

Answer

To summarize cash inflows and outflows

Question 6

Which of the following is classified as a non-cash item that reduces net income but not operating cash flow?

Accepted Answer

Depreciation

Answer

Interest expense

Answer

Cost of goods sold

Answer

Income tax expense