Title: Key Financial Statements
Course: Demo 1

Q: The ________ shows the income and expenses of a company over a period of time.
- balance sheet
- statement of cash flows
- income statement
A: income statement

Q: The accounting equation is:
- liabilities = assets + owners equity
- owners equity = assets + liabilities
- assets = liabilities + owners equity
A: assets = liabilities + owners equity

Q: The ________ provides a snapshot of the company’s financial position at a specific point in time.
- income statement
- statement of cash flows
- balance sheet
A: balance sheet

Q: The four financial statements a company is required to prepare according to GAAP are:
- income statement, corporate tax return, balance sheet, and statement of cash flows.
- income statement, statement of financial position, balance sheet, and statement of cash flow.
- income statement, balance sheet, statement of cash flow, and statement of owner’s equity.
A: income statement, balance sheet, statement of cash flow, and statement of owner’s equity.

Q: The balance sheet shows which types of accounts?
- assets
- liabilities
- owners equity
A: assets; liabilities; owners equity

Q: The accounting equation for a given point in time can be calculated using which financial statement?
- income statement
- statement of cash flows
- balance sheet
A: balance sheet

Q: The income statement shows which types of accounts?
- income
- expenses
- assets
A: income; expenses

Q: In order to calculate the net income from business operations a manager would apply which of the following equations?
- net income = liabilities + equity
- net income = debits – credits
- net income = total revenue – total expenses
A: net income = total revenue – total expenses

Q: Although a business has had record sales it is having a hard time paying the bills each month. As a manager you are uncertain why this is occurring and ask the financial accountant to explain this situation to you. When the accountant comes to your office they will bring which of the following financial statements as supporting documentation?
- the income statement
- the statement of owner’s equity
- the statement of cash flows
A: the statement of cash flows

Q: The ________ provides users of the financial statements with a reconciliation of the company’s beginning and ending equity accounts.
- income statement
- statement of cash flows
- statement of owner’s equity
A: statement of owner’s equity

Q: Eliza has just opened a new business near campus that is a combination of a laundromat, a nail salon, and a tanning studio. At the end of the first quarter (three months of business), Eliza wants to see if she has made a profit so she makes an appointment to meet with her accountant. When she gets to the appointment, her accountant will review which of the following financial statements with Eliza?
- balance sheet
- statement of owner's equity
- income statement
A: income statement

Q: Eliza has just opened a new business near campus that is a combination of a laundromat, a nail salon, and a tanning studio. There is an accounting firm located just down the street and Eliza is paying them to do all of her accounting. At the end of the first quarter (three months of business), Eliza has several questions about how things are going. If she wants to understand how much debt the business has right now, then she should look at the ________ that her accountant has prepared.
- the income statement
- the statement of owner’s equity
- the balance sheet
A: the balance sheet

Q: Eliza has just opened a new business near campus that is a combination of a laundromat, a nail salon, and a tanning studio. There is an accounting firm located just down the street and Eliza is paying them to do all of her accounting. At the end of the first quarter (three months of business), Eliza has several questions about how things are going. If she wants to understand how much total cash has come into the business this quarter, then she should look at the ________ that her accountant has prepared.
- the income statement
- the statement of owner’s equity
- the statement of cash flows
A: the statement of cash flows

Q: Eliza has just opened a new business near campus that is a combination of a laundromat, a nail salon, and a tanning studio. There is an accounting firm located just down the street and Eliza is paying them to do all of her accounting. At the end of the first quarter (three months of business), Eliza has several questions about how things are going. If she wants to understand how much money she has put into the business so far, then she should look at the ________ that her accountant has prepared.
- the balance sheet
- the statement of cash flows
- the statement of owner’s equity
A: the statement of owner’s equity