FAR — Financial Accounting & Reporting — Quiz 70

Questions in this quiz (10)

1. Which of the following increases net income?

   • Increase in expenses
   • Decrease in revenue
   • Increase in revenue
   • Increase in liabilities

2. Which of the following best defines profitability?

   • Ability to pay short-term obligations
   • Ability to generate earnings from operations
   • Ability to reduce liabilities
   • Ability to increase assets

3. Which ratio measures profitability relative to revenue?

   • Profit margin ratio
   • Current ratio
   • Debt ratio
   • Asset turnover ratio

4. Why is income statement analysis important?

   • It determines asset values
   • It evaluates profitability and performance
   • It reduces liabilities
   • It increases revenue

5. Which of the following best describes the statement of cash flows?

   • Shows revenues and expenses
   • Reports cash inflows and outflows
   • Lists assets and liabilities
   • Reports owner equity

6. Which of the following is an operating cash flow activity?

   • Issuing stock
   • Paying dividends
   • Cash received from customers
   • Purchasing equipment

7. Which of the following is an investing activity?

   • Paying salaries
   • Purchasing land
   • Issuing bonds
   • Paying dividends

8. Which of the following is a financing activity?

   • Issuing stock
   • Paying suppliers
   • Selling inventory
   • Paying wages

9. Which section reports cash collected from customers?

   • Operating activities
   • Investing activities
   • Financing activities
   • Equity activities

10. Which section reports purchases of equipment?

    • Operating activities
    • Investing activities
    • Financing activities
    • Equity activities