FAR — Financial Accounting & Reporting — Quiz 9

Questions in this quiz (10)

1. Which financial statement element represents obligations that a company must settle in the future?

   • Asset
   • Liability
   • Revenue
   • Equity

2. Which qualitative characteristic requires financial information to be available when needed for decision-making?

   • Relevance
   • Timeliness
   • Consistency
   • Comparability

3. Which financial statement reports changes in retained earnings due to net income and dividends?

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

4. Which accounting assumption assumes a business will continue operating in the foreseeable future?

   • Economic entity assumption
   • Going concern assumption
   • Periodicity assumption
   • Monetary unit assumption

5. Which equation represents the fundamental accounting relationship?

   • Assets = Revenues − Expenses
   • Assets = Liabilities + Equity
   • Equity = Assets − Revenue
   • Revenue = Assets − Liabilities

6. Which financial statement reports revenues, expenses, and net income?

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

7. Which transaction increases both assets and liabilities?

   • Borrowing money from a bank
   • Issuing stock for cash
   • Paying dividends
   • Purchasing equipment with cash

8. Which accounting principle requires recognizing expenses in the same period as related revenues?

   • Revenue recognition principle
   • Matching principle
   • Cost principle
   • Disclosure principle

9. Which financial statement is most useful for evaluating short-term liquidity?

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

10. Which financial statement element reduces equity due to operating costs?

    • Revenue
    • Expenses
    • Gains
    • Assets