FAR — Financial Accounting & Reporting — Quiz 4

Questions in this quiz (10)

1. Which of the following best describes a loss?

   • Decrease in equity from incidental transactions
   • Increase in equity from operating activities
   • Increase in assets from financing activities
   • Decrease in liabilities from operations

2. Which accounting concept requires companies to use the same accounting methods across reporting periods?

   • Materiality principle
   • Consistency principle
   • Conservatism principle
   • Revenue recognition principle

3. Which concept allows companies to ignore strict accounting rules when the impact is insignificant?

   • Conservatism principle
   • Matching principle
   • Materiality principle
   • Cost principle

4. Which accounting principle encourages caution when reporting uncertain financial events?

   • Conservatism principle
   • Matching principle
   • Cost principle
   • Revenue recognition principle

5. Which financial statement presents the accounting equation?

   • Statement of retained earnings
   • Income statement
   • Balance sheet
   • Statement of cash flows

6. Which type of cash flow activity involves purchasing equipment or long-term investments?

   • Operating activities
   • Investing activities
   • Financing activities
   • Non-cash activities

7. Which type of cash flow activity includes issuing stock or borrowing funds?

   • Operating activities
   • Financing activities
   • Investing activities
   • Non-cash activities

8. Which type of cash flow activity includes payments to suppliers and employees?

   • Financing activities
   • Investing activities
   • Operating activities
   • Non-cash activities

9. Which accounting element represents distributions of earnings to shareholders?

   • Dividends
   • Expenses
   • Gains
   • Revenues

10. Which financial statement connects net income to retained earnings?

    • Income statement
    • Statement of retained earnings
    • Balance sheet
    • Statement of cash flows