Financial Reporting MCQs
Financial Reporting MCQs
The following Financial Reporting MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Financial Reporting. We encourage you to answer these 100+ multiple-choice questions to assess your proficiency.
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1: A balance sheet typically has:
A. equity
B. liabilties
C. assets
D. (All of these)
2: Who typically needs to approve a financial statement when they are a SEC filing?
A. accountant
B. (None of these)
C. lawyer
D. employee
3: True or False? The diluted earnings per share is a more reliable way to measure earnings per share.
A. True
B. False
4: The single step income statement approach totals revenues and subtracts ________?
A. Expenses
B. Assets
C. Equity
D. Liabilities
5: The general formula for a balance sheet is
A. Assets = Liabilities * Equity
B. Assets = Liabilities + Equity
C. Assets = Liabilities / Equity
D. Assets = Liabilities - Equity
6: What does the SEC stand for?
A. Security Exchange Commission
B. Security Entitlement Commission
C. Standard Exchange Commission
7: True or False? Creditors use financial reports to make decisions on loans.
A. False
B. True
8: If the Net Present Value of a project is postive then __________?
A. the firm should not invest in the project
B. the firm should invest in the project
C. the firm should invest in more than one project
9: Financial reports are filled out based on the:
A. Generally Accepted Accounting Principles
B. (None of these)
C. Direct write-off Accounting Principles
10: The balance sheet reports a company's assets, liabilities and what?
A. Expense
B. Profits
C. Ownership Equity
D. Revenue
11: True or False? A cash flow statement shows only the inflows of cash into the company.
A. False
B. True
12: True or False? A personal financial statement is useful when trying to obtain a loan.
A. True
B. False
13: The Three Parts of the Cash Flow Statements include Operating, Investing and ______?
A. Financing
B. Purchasing
C. Borrowing
D. Amoritizating
14: Which of the following is a current asset?
A. Accounts Receivable
B. Equipment
C. Property
D. Intangible Assets
15: The balance sheet is also referred to as what?
A. Profit & Loss Report
B. Statement of Revenue & Expense
C. Statement of Financial Position
D. Statement of Comprehensive Income
16: If a bond is trading at par, what is its face value?
A. 101
B. 100
C. 99
D. 102
17: True or False? Financial reporting is a financial statement that is a proper documentation of the financial activities of a business.
A. False
B. True
18: Financial reports are used to find:
A. EPS
B. PEG ratio
C. (All of these)
D. PE ratio
19: Which of the following is an example of a non-current asset?
A. Prepaid expenses
B. Cash
C. Property
D. Accounts receivable
20: The GAAP is comprised of:
A. matching principle
B. cost principle
C. revenue recognition principle
D. (All of these)
21: True or False? The balance sheet is a snapshot of a firm's financial position.
A. True
B. False
22: True or False? Financial reports are not important in making investment decisions.
A. True
B. False
23: True or False? ROA stands for Return on Asset.
A. False
B. True
24: An item needed for financial reporting is:
A. cash flow statement
B. (All of these)
C. a balance sheet
D. income statement
25: What are the three parts of a firm's balance sheet?
A. Assets, Liabilities, Equity
B. Loss, Profits, Equity
C. Assets, Loss, Profit
D. Liabilities, Equity, Profit
26: An example of an SEC filing is a:
A. 17U
B. 10K
C. 14J
D. 10Z
27: The full disclosure principle indicates...
A. a company must disclose all pertininant information in regards to the financial statement which would affect an investor's decision
B. when the cost of something matches up with the accounting information on the balance sheet
C. when a company will record its revenue
D. that a company must declare its expenses and revenues together in the same period
28: True of False? Financial statements need to be audited.
A. True
B. False
29: What does it mean if a company has a negative EPS?
A. The company is losing money
B. The company is making money
C. Cannot happen
30: Accrual Basis Accounting matches what?
A. Revenues and Expenses
B. Cash and Expenses
C. Cash
D. Cash and Revenues
31: When are current liabilities due?
A. Within 6 months
B. After one year
C. Within 3 months
D. Within one year
32: The cash flow statement details a firm's _________?
A. efficiency
B. liquidity
C. profitability
33: Which activity is represented first in the Cash Flow Statements?
A. Operating
B. Investing
C. Purchasing
D. Financing
34: If a firm's payout ratio is greater than 1, the firm is __________?
A. paying less dividends out than they earned
B. paying more dividends out than they earned
C. not paying out any dividends
35: True or False? Only businesses use financial reports.
A. False
B. True
36: True or false? Operating margin is a good tool when deciding to invest in a company.
A. False
B. True
37: What was the purpose of the Sarbanes-Oxley Act of 2002?
A. lower taxes on larger corporations
B. (None of these)
C. raise taxes on larger corporations
D. decrease fraudulent activity of businesses
38: An example of a financial report is a:
A. 10Q
B. 20R
C. 14J
D. 17U
39: Which is the correct accounting equation?
A. net worth - asset = liabilities
B. asset - net worth = liabilities
C. assets - liabilities = net worth
D. liabilities - net worth = asset
40: Revenue - Expenses = what?
A. Net income
B. Cost of Sales
C. Gross Revenue
D. Sales Revenue
41: Net profit margin =
A. Net Profit * Expenses
B. Net Profit / Revenue
C. Net Profit * Margin
D. Net Profit / Expenses
42: A firm with a low profit margin indicates __________________?
A. a higher risk that a decline in sales will erase profits and result in net loss
B. a higher risk that an increase in sales will erase profits and result in net loss
C. a lower risk that a decline in sales will erase profits and result in net loss
D. a lower risk that an increase in sales will erase profits and result in net loss
43: The matching principle is:
A. when a company must disclose all pertininant information in regards to the financial statement which would affect an investor's decision
B. when a company will record its revenue
C. when the cost of something matches up with the accounting information on the balance sheet
D. that a company must declare its expenses and revenues together in the same period
44: True or False? Charitable organizations that are required to publish financial statements do not produce income statements. Instead they publish statement of activities.
A. True
B. False
45: Nowadays most financial statements can be found on
A. (All of these)
B. yahoo finance pages
C. google finance pages
D. the SEC website
46: What does the I stand for in EBITDA?
A. Income
B. Intangible
C. Interest
D. Increase
47: True or False? The notes to financial statements are additional information that is added to the beginning of the financial statements
A. False
B. True
48: True or False: The asset turnover ratio measure the firm's efficient use of its liabilities in generating sales income?
A. False
B. True
49: True or False? A form 8k is used to notify investors of some meaningful event arising.
A. False
B. True
50: How do you calculate market capitalization?
A. Number of shares outstanding / share price
B. Share price * total assets
C. Number of shares outstanding * share price
D. Share price / Number of shares outstanding
List of Financial Reporting MC...
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Financial Reporting MCQs
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