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5 Written questions

5 Matching questions

  1. Profit margin
  2. Other assets
  3. Financing activities
  4. Percent-of-sales method
  5. Owner's equity
  1. a the equity invested in the business by the owners plus the accumulated earnings retained by the business after paying dividends.
  2. b miscellaneous assets, including accumulated goodwill.
  3. c include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.
  4. d a method for expressing each expense item as a percentage of sales.
  5. e or return on sales, is computed by dividing net income by net sales.

5 Multiple choice questions

  1. a report similar to the annual report except that it contains more detailed information about the company's business.
  2. a simple ratio that measures the price of a company's stock against its earnings.
  3. provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.
  4. point where total revenue received equals total costs associated with the output or sale of the product.
  5. the ability to earn a profit.

5 True/False questions

  1. Pro forma financial statementsprojections for future periods based on forecasts and are typically completed for two to three years in the future.


  2. Income statementa written report that quantitatively describes a firm's financial health.


  3. Operating expensesinclude marketing, administrative costs, and other expenses not directly related to producing a product or service.


  4. Constant ratio method of forecastingif a firm uses percent-of-sales method, then the net result that each expense item (except depreciation) on its income statement will grow at the same rate as sales.


  5. Stabilitya company's ability to meet its short-term financial obligations.