Financial Accounting Quiz (20 Questions)
1) Where is the “auditor’s report” usually found in an annual report?
A) Notes to financial statements
B) Management discussion and analysis
C) Auditor’s report
D) Balance sheet
2) Which assumption says the business will keep operating long enough to meet its
obligations?
A) Monetary unit
B) Economic entity
C) Time period
D) Going concern
3) Net income is generally calculated as:
A) Revenue + Expenses
B) Revenue − Dividends
C) Revenue − Expenses
D) Assets − Liabilities
4) Buying equipment for cash is reported in the statement of cash flows as:
A) Operating
B) Investing
C) Financing
D) It doesn’t appear
5) Issuing long-term notes payable to buy an asset is usually a:
A) Noncash investing/financing activity (if no cash changes hands for the purchase)
B) Operating cash flow
C) Investing cash flow
D) Financing cash flow only
6) Deferred tax liability mostly comes from:
A) Differences that are temporary between accounting and tax rules
B) A contingent lawsuit
C) Permanent differences only
D) It is never recorded
7) Liquidity is best measured by which ratio?
A) Return on assets
B) Current ratio
C) Debt-to-assets ratio
D) Net profit margin
1) Where is the “auditor’s report” usually found in an annual report?
A) Notes to financial statements
B) Management discussion and analysis
C) Auditor’s report
D) Balance sheet
2) Which assumption says the business will keep operating long enough to meet its
obligations?
A) Monetary unit
B) Economic entity
C) Time period
D) Going concern
3) Net income is generally calculated as:
A) Revenue + Expenses
B) Revenue − Dividends
C) Revenue − Expenses
D) Assets − Liabilities
4) Buying equipment for cash is reported in the statement of cash flows as:
A) Operating
B) Investing
C) Financing
D) It doesn’t appear
5) Issuing long-term notes payable to buy an asset is usually a:
A) Noncash investing/financing activity (if no cash changes hands for the purchase)
B) Operating cash flow
C) Investing cash flow
D) Financing cash flow only
6) Deferred tax liability mostly comes from:
A) Differences that are temporary between accounting and tax rules
B) A contingent lawsuit
C) Permanent differences only
D) It is never recorded
7) Liquidity is best measured by which ratio?
A) Return on assets
B) Current ratio
C) Debt-to-assets ratio
D) Net profit margin
